Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | ||
Mar. 31, 2014 | Apr. 25, 2014 | Apr. 25, 2014 | |
Class A Common Stock | Class B Convertible Common Stock | ||
Document Information [Line Items] | ' | ' | ' |
Entity Registrant Name | 'VMWARE, INC. | ' | ' |
Entity Central Index Key | '0001124610 | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Document Type | '10-Q | ' | ' |
Document Period End Date | 31-Mar-14 | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Document Fiscal Period Focus | 'Q1 | ' | ' |
Amendment Flag | 'false | ' | ' |
Entity Common Stock, Shares Outstanding | ' | 130,515,393 | 300,000,000 |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Consolidated_Statements_Of_Inc
Consolidated Statements Of Income (USD $) | 3 Months Ended | |||
In Millions, except Share data in Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Revenues: | ' | ' | ||
License | $561 | $488 | ||
Services | 799 | 703 | ||
Total revenues | 1,360 | 1,191 | ||
Operating expenses: | ' | ' | ||
Cost of license revenues | 50 | [1] | 57 | [1] |
Cost of services revenues | 151 | [1] | 125 | [1] |
Research and development | 293 | [1] | 271 | [1] |
Sales and marketing | 474 | [1] | 417 | [1] |
General and administrative | 151 | [1] | 98 | [1] |
Realignment charges | 0 | [1] | 63 | [1] |
Operating income | 241 | 160 | ||
Investment income | 9 | 8 | ||
Interest expense with EMC | -5 | -1 | ||
Other income (expense), net | 0 | -3 | ||
Income before income taxes | 245 | 164 | ||
Income tax provision (benefit) | 46 | -9 | ||
Net income | $199 | $173 | ||
Net income per weighted-average share, basic for Class A and Class B | $0.46 | $0.41 | ||
Net income per weighted-average share, diluted for Class A and Class B | $0.46 | $0.40 | ||
Weighted-average shares, basic for Class A and Class B | 430,546 | 428,005 | ||
Weighted-average shares, diluted for Class A and Class B | 434,729 | 432,631 | ||
[1] | Includes stock-based compensation as follows: Cost of license revenues $1 $1 , Cost of services revenues $9 $7 , Research and development $60 $62 , Sales and marketing $41 $36 , General and administrative $17 $14 , Realignment charges $0 $5 |
Consolidated_Statements_Of_Inc1
Consolidated Statements Of Income (Parentheticals) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cost of license revenues | ' | ' |
Stock-based Compensation | $1 | $1 |
Cost of services revenues | ' | ' |
Stock-based Compensation | 9 | 7 |
Research and development | ' | ' |
Stock-based Compensation | 60 | 62 |
Sales and marketing | ' | ' |
Stock-based Compensation | 41 | 36 |
General and administrative | ' | ' |
Stock-based Compensation | 17 | 14 |
Realignment charges | ' | ' |
Stock-based Compensation | $0 | $5 |
Consolidated_Statements_Of_Com
Consolidated Statements Of Comprehensive Income (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Net income | $199 | $173 |
Changes in market value of available-for-sale securities: | ' | ' |
Unrealized gains, net of taxes of $1 for all periods | 1 | 1 |
Reclassification of (gains) realized during the period, net of taxes of $0 for all periods | 0 | -1 |
Total other comprehensive income | 1 | 0 |
Total comprehensive income, net of taxes | $200 | $173 |
Consolidated_Statements_Of_Com1
Consolidated Statements Of Comprehensive Income (Parentheticals) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' |
Tax effect on unrealized gains (losses) on available-for-sale securities | $1 | $1 |
Tax effect on reclassification of (gains) losses on available-for-sale securities realized during the period | $0 | $0 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $2,788 | $2,305 |
Short-term investments | 3,828 | 3,870 |
Accounts receivable, net of allowance for doubtful accounts of $2 and $2 | 830 | 1,220 |
Deferred tax assets | 201 | 190 |
Other current assets | 150 | 96 |
Total current assets | 7,797 | 7,681 |
Property and equipment, net | 886 | 845 |
Other assets, net | 190 | 107 |
Deferred tax assets | 89 | 60 |
Intangible assets, net | 831 | 607 |
Goodwill | 3,906 | 3,027 |
Total assets | 13,699 | 12,327 |
LIABILITIES AND STOCKHOLDERSb EQUITY | ' | ' |
Accounts payable | 93 | 109 |
Accrued expenses and other | 596 | 608 |
Due to related parties, net | 26 | 18 |
Unearned revenues | 2,572 | 2,558 |
Total current liabilities | 3,287 | 3,293 |
Note payable to EMC | 1,500 | 450 |
Unearned revenues | 1,600 | 1,534 |
Other liabilities | 242 | 234 |
Total liabilities | 6,629 | 5,511 |
Contingencies (see Note I) | ' | ' |
Stockholdersb equity: | ' | ' |
Additional paid-in capital | 3,550 | 3,496 |
Accumulated other comprehensive income | 5 | 4 |
Retained earnings | 3,511 | 3,312 |
Total stockholdersb equity | 7,070 | 6,816 |
Total liabilities and stockholdersb equity | 13,699 | 12,327 |
Class A Common Stock | ' | ' |
Stockholdersb equity: | ' | ' |
Common stock | 1 | 1 |
Class B Convertible Common Stock | ' | ' |
Stockholdersb equity: | ' | ' |
Common stock | $3 | $3 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parentheticals) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, except Share data in Thousands, unless otherwise specified | ||
Allowance for doubtful accounts | $2 | $2 |
Class A Common Stock | ' | ' |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (shares) | 2,500,000 | 2,500,000 |
Common stock, shares issued (shares) | 130,884 | 130,349 |
Common stock, shares outstanding (shares) | 130,884 | 130,349 |
Class B Convertible Common Stock | ' | ' |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (shares) | 1,000,000 | 1,000,000 |
Common stock, shares issued (shares) | 300,000 | 300,000 |
Common stock, shares outstanding (shares) | 300,000 | 300,000 |
Consolidated_Statements_Of_Cas
Consolidated Statements Of Cash Flows (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Operating activities: | ' | ' |
Net income | $199 | $173 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 83 | 91 |
Stock-based compensation | 128 | 116 |
Excess tax benefits from stock-based compensation | -15 | -22 |
Deferred income taxes, net | -29 | -28 |
Non-cash realignment charges | 0 | 14 |
Other | 1 | -2 |
Changes in assets and liabilities, net of acquisitions: | ' | ' |
Accounts receivable | 418 | 380 |
Other assets | -29 | -41 |
Due to/from related parties, net | 33 | 59 |
Accounts payable | -11 | -8 |
Accrued expenses | -104 | -115 |
Income taxes payable | 41 | 2 |
Unearned revenues | 35 | 57 |
Net cash provided by operating activities | 750 | 676 |
Investing activities: | ' | ' |
Additions to property and equipment | -77 | -78 |
Purchases of available-for-sale securities | -531 | -737 |
Sales of available-for-sale securities | 411 | 486 |
Maturities of available-for-sale securities | 153 | 182 |
Business acquisitions, net of cash acquired | -1,068 | -184 |
Increase in restricted cash | -76 | -1 |
Other investing | -10 | 1 |
Net cash used in investing activities | -1,198 | -331 |
Financing activities: | ' | ' |
Proceeds from issuance of common stock | 88 | 68 |
Proceeds from issuance of note payable to EMC | 1,500 | 0 |
Repayment of note payable to EMC | -450 | 0 |
Reduction in capital from EMC | -24 | 0 |
Repurchase of common stock | -169 | -182 |
Excess tax benefits from stock-based compensation | 15 | 22 |
Shares repurchased for tax withholdings on vesting of restricted stock | -29 | -22 |
Net cash provided by (used in) financing activities | 931 | -114 |
Net increase in cash and cash equivalents | 483 | 231 |
Cash and cash equivalents at beginning of the period | 2,305 | 1,609 |
Cash and cash equivalents at end of the period | 2,788 | 1,840 |
Non-cash items: | ' | ' |
Changes in capital additions, accrued but not paid | -7 | -13 |
Fair value of stock options assumed in acquisition | $24 | $0 |
Overview_and_Basis_of_Presenta
Overview and Basis of Presentation | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Overview And Basis Of Presentation | ' |
Overview and Basis of Presentation | |
Company and Background | |
VMware, Inc. (“VMware” or the “Company”) is the leader in virtualization infrastructure solutions utilized by organizations to help them transform the way they build, deliver and consume information technology (“IT”) resources. VMware’s virtualization infrastructure solutions, which include a suite of products designed to deliver a software-defined data center, run on industry-standard desktop computers and servers and support a wide range of operating system and application environments, as well as networking and storage infrastructures. | |
Accounting Principles | |
The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). | |
Unaudited Interim Financial Information | |
These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, for a fair statement of VMware’s condensed consolidated results of operations, financial position and cash flows for the periods presented. Results of operations are not necessarily indicative of the results that may be expected for the full year 2014. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in VMware’s 2013 Annual Report on Form 10-K. | |
As of March 31, 2014, EMC held approximately 79.6% of VMware’s outstanding common stock and 97.2% of the combined voting power of VMware’s outstanding common stock, including 43 million shares of VMware’s Class A common stock and all of VMware’s Class B common stock. VMware is a majority-owned and controlled subsidiary of EMC, and its results of operations and financial position are consolidated with EMC’s financial statements. | |
Management believes the assumptions underlying the condensed consolidated financial statements are reasonable. However, the amounts recorded for VMware’s intercompany transactions with EMC and Pivotal Software, Inc. (“Pivotal”, previously known as “GoPivotal, Inc.”) may not be considered arm’s length with an unrelated third party. Therefore, the financial statements included herein may not necessarily reflect the financial position, results of operations and cash flows had VMware engaged in such transactions with an unrelated third party during all periods presented. Accordingly, VMware’s historical financial information is not necessarily indicative of what the Company’s financial position, results of operations and cash flows will be in the future if and when VMware contracts at arm’s length with unrelated third parties for the services the Company receives from and provides to EMC and Pivotal. | |
Principles of Consolidation | |
The condensed consolidated financial statements include the accounts of VMware and its subsidiaries after elimination of intercompany transactions and account balances between VMware and its subsidiaries. All intercompany transactions with EMC and Pivotal in the condensed consolidated statements of cash flows will be settled in cash, and changes in the current intercompany balances are presented as a component of cash flows from operating, investing and financing activities. | |
Use of Accounting Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reporting periods, and the disclosure of contingent liabilities at the date of the financial statements. Estimates are used for, but not limited to trade receivable valuation, marketing rebates, useful lives assigned to fixed assets and intangible assets, valuation of goodwill and definite-lived intangibles, income taxes, stock-based compensation and contingencies. Actual results could differ from those estimates. |
Business_Combinations_Goodwill
Business Combinations, Goodwill and Intangible Assets, Net | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Business Combinations [Abstract] | ' | |||||||
Business Combinations, Goodwill and Intangible Assets, Net | ' | |||||||
Business Combinations, Goodwill and Intangible Assets, Net | ||||||||
Business Combinations | ||||||||
On February 24, 2014, VMware acquired for cash all of the outstanding membership units of A.W.S. Holding, LLC (“AirWatch Holding”), the sole member and equity holder of AirWatch LLC (“AirWatch”). AirWatch is a leader in enterprise mobile management and security solutions. VMware acquired AirWatch to expand VMware's solutions within the enterprise mobile and security space. The total preliminary purchase price of $1,128 million included cash of $1,104 million and the fair value of assumed unvested equity attributed to pre-combination services totaling $24 million. | ||||||||
Merger consideration totaling $300 million, including $75 million being held in escrow, will be payable to certain employees of AirWatch subject to specified future employment conditions and will be recognized as expense over the requisite service period on a straight-line basis. Compensation expense totaling $19 million was recognized from the date of acquisition through March 31, 2014. | ||||||||
VMware assumed all of AirWatch's unvested stock options and restricted stock outstanding at the completion of the acquisition with an estimated fair value of $134 million. Of the total consideration, $24 million was allocated to the purchase price and $110 million was allocated to future services and will be expensed over the remaining requisite service periods on a straight-line basis. The estimated fair value of the stock options assumed by the Company was determined using the Black-Scholes option pricing model. The share conversion ratio of 0.4 was applied to convert AirWatch's outstanding stock awards into shares of VMware's common stock. | ||||||||
The following table summarizes the preliminary allocation of the consideration to the fair value of the assets acquired and liabilities assumed (table in millions): | ||||||||
Cash | $ | 36 | ||||||
Other current assets | 60 | |||||||
Intangible assets | 250 | |||||||
Goodwill | 879 | |||||||
Other acquired assets | 17 | |||||||
Total assets acquired | 1,242 | |||||||
Unearned revenues | (45 | ) | ||||||
Other assumed liabilities | (69 | ) | ||||||
Total liabilities assumed | (114 | ) | ||||||
Fair value of assets acquired and liabilities assumed | $ | 1,128 | ||||||
The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The estimated fair value assigned to the tangible assets, identifiable intangible assets, and assumed liabilities were based on management's estimates and assumptions. The preliminary allocation of the purchase price was based on a preliminary valuation and assumptions and is subject to change within the purchase price allocation period. Additionally, indirect taxes, income taxes payable and deferred taxes may be subject to change as additional information is received and tax returns are finalized. VMware expects to finalize the allocation of purchase consideration as soon as practicable and no later than one year from the acquisition date. | ||||||||
Management expects that the majority of goodwill and identifiable intangible assets will be deductible for U.S. income tax purposes. | ||||||||
The following table summarizes the components of the intangible assets acquired and their estimated useful lives by VMware in conjunction with the acquisitions of AirWatch (amounts in table in millions): | ||||||||
Useful Lives | Weighted-Average | Fair Value | ||||||
(in years) | Useful Lives | Amount | ||||||
(in years) | ||||||||
Purchased technology | 6-Feb | 5.9 | $ | 118 | ||||
Customer relationships and customer lists | 8-Feb | 7.9 | 78 | |||||
Trademarks and tradenames | 8 | 8 | 40 | |||||
Other | 8-Feb | 3.2 | 14 | |||||
Total intangible assets, net, excluding goodwill | $ | 250 | ||||||
The following net income pro forma financial information summarizes the combined net income for VMware and AirWatch, which was significant for purposes of the unaudited pro forma financial information disclosure, as though the companies were combined at the beginning of the Company’s fiscal year 2013. The amount of revenue of AirWatch was not considered material, and as such, has not been included in the unaudited pro forma financial information disclosure below. | ||||||||
Supplemental information on an unaudited pro forma basis, as if AirWatch had been acquired on January 1, 2013, is presented as follows (table in millions): | ||||||||
For the Three Months | ||||||||
Ended March 31, | ||||||||
2014 | 2013 | |||||||
Pro forma adjusted net income | $ | 162 | $ | 114 | ||||
Goodwill | ||||||||
The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 31, 2014 (table in millions): | ||||||||
Balance, January 1, 2014 | $ | 3,027 | ||||||
Increase in goodwill related to business combination | 879 | |||||||
Balance, March 31, 2014 | $ | 3,906 | ||||||
Realignment_Charges
Realignment Charges | 3 Months Ended |
Mar. 31, 2014 | |
Restructuring and Related Activities [Abstract] | ' |
Realignment Charges | ' |
Realignment Charges | |
In January 2013, VMware approved and initiated a business realignment plan to streamline its operations. The realignment plan included the elimination of approximately 710 positions and personnel across all major functional groups and geographies. In the three months ended March 31, 2013, $63 million of realignment charges were recorded on the condensed consolidated statements of income, which consisted of workforce reduction charges and asset impairments. As of December 31, 2013, the plan had been completed. |
Earnings_per_Share
Earnings per Share | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Earnings per Share | ' | |||||||
Earnings per Share | ||||||||
Basic net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted-average number of common shares outstanding and potentially dilutive securities outstanding during the period, as calculated using the treasury stock method. Potentially dilutive securities primarily include unvested restricted stock units, stock options and purchase options under VMware’s employee stock purchase plan. Securities are excluded from the computations of diluted net income per share if their effect would be anti-dilutive. VMware uses the two-class method to calculate earnings per share as both classes share the same rights in dividends, therefore basic and diluted earnings per share are the same for both classes. | ||||||||
The following table sets forth the computations of basic and diluted net income per share for the three months ended March 31, 2014 and 2013 (table in millions, except per share data): | ||||||||
For the Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Net income | $ | 199 | $ | 173 | ||||
Weighted-average shares, basic for Class A and Class B | 431 | 428 | ||||||
Effect of dilutive securities | 4 | 5 | ||||||
Weighted-average shares, diluted for Class A and Class B | 435 | 433 | ||||||
Net income per weighted-average share, basic for Class A and Class B | $ | 0.46 | $ | 0.41 | ||||
Net income per weighted-average share, diluted for Class A and Class B | $ | 0.46 | $ | 0.4 | ||||
For both the three months ended March 31, 2014 and 2013, stock options to purchase 1 million shares of VMware Class A common stock were excluded from the diluted earnings per share calculations because their effect would have been anti-dilutive. | ||||||||
For the three months ended March 31, 2014, the number of shares of restricted stock that were excluded from the diluted earnings per share calculations because their effect would have been anti-dilutive was not material. For the three months ended March 31, 2013, 2 million shares of restricted stock were excluded from the diluted earnings per share calculations because their effect would have been anti-dilutive. |
Investments
Investments | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||||||
Investments | ' | |||||||||||||||
Investments | ||||||||||||||||
Investments as of March 31, 2014 and December 31, 2013 consisted of the following (tables in millions): | ||||||||||||||||
March 31, 2014 | ||||||||||||||||
Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate | |||||||||||||
Fair Value | ||||||||||||||||
U.S. Government and agency obligations | $ | 558 | $ | — | $ | — | $ | 558 | ||||||||
U.S. and foreign corporate debt securities | 2,314 | 6 | (1 | ) | 2,319 | |||||||||||
Foreign governments and multi-national agency obligations | 44 | — | — | 44 | ||||||||||||
Municipal obligations | 768 | 3 | — | 771 | ||||||||||||
Mortgage-backed securities | 137 | — | (1 | ) | 136 | |||||||||||
Total investments | $ | 3,821 | $ | 9 | $ | (2 | ) | $ | 3,828 | |||||||
December 31, 2013 | ||||||||||||||||
Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate | |||||||||||||
Fair Value | ||||||||||||||||
U.S. Government and agency obligations | $ | 537 | $ | — | $ | — | $ | 537 | ||||||||
U.S. and foreign corporate debt securities | 2,351 | 6 | (3 | ) | 2,354 | |||||||||||
Foreign governments and multi-national agency obligations | 37 | — | — | 37 | ||||||||||||
Municipal obligations | 811 | 3 | — | 814 | ||||||||||||
Mortgage-backed securities | 129 | — | (1 | ) | 128 | |||||||||||
Total investments | $ | 3,865 | $ | 9 | $ | (4 | ) | $ | 3,870 | |||||||
VMware evaluated its fixed income investments as of March 31, 2014 and December 31, 2013 to determine whether or not any security had experienced an other-than-temporary decline in fair value. As of March 31, 2014 and December 31, 2013, VMware did not consider any of its fixed income investments to be other-than-temporarily impaired. Both the realized gains and realized losses on fixed income investments in the three months ended March 31, 2014 and 2013 were not material. | ||||||||||||||||
Unrealized losses on investments as of March 31, 2014 and December 31, 2013, which have been in a net loss position for less than twelve months, were classified by investment category as follows (table in millions): | ||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
U.S. and foreign corporate debt securities | $ | 536 | $ | (1 | ) | $ | 750 | $ | (3 | ) | ||||||
Mortgage-backed securities | 42 | — | 91 | (1 | ) | |||||||||||
Total | $ | 578 | $ | (1 | ) | $ | 841 | $ | (4 | ) | ||||||
As of March 31, 2014 and December 31, 2013, unrealized losses on investments in other investment categories, which have been in a net loss position for less than twelve months, were not material. Additionally, unrealized losses on investments, which have been in a net loss position for twelve months or greater, were not material as of March 31, 2014 and December 31, 2013. | ||||||||||||||||
Strategic Investments | ||||||||||||||||
VMware evaluated the strategic investments in its portfolio that are accounted under the cost method, to assess whether any of its strategic investments were other-than-temporarily impaired. VMware uses Level 3 inputs as part of its impairment analysis, including, pre- and post-money valuations of recent financing events and the impact of those on its fully diluted ownership percentages, as well as other available information regarding the issuer’s historical and forecasted performance. The estimated fair value of these investments is considered in VMware's impairment review if any events or changes in circumstances occur that might have a significant adverse effect on their value. During the three months ended March 31, 2014 and 2013, VMware did not recognize impairment charges on any of the strategic investments in its portfolio. | ||||||||||||||||
During the three months ended March 31, 2014, VMware did not have material realized gains or realized losses on strategic investments. During the three months ended March 31, 2013, VMware did not have realized gains or realized losses on strategic investments. | ||||||||||||||||
Contractual Maturities | ||||||||||||||||
The contractual maturities of investments held at March 31, 2014 consisted of the following (table in millions): | ||||||||||||||||
Amortized | Aggregate | |||||||||||||||
Cost Basis | Fair Value | |||||||||||||||
Due within one year | $ | 956 | $ | 956 | ||||||||||||
Due after 1 year through 5 years | 2,674 | 2,681 | ||||||||||||||
Due after 5 years | 191 | 191 | ||||||||||||||
Total investments | $ | 3,821 | $ | 3,828 | ||||||||||||
Fair_Value_Measurements
Fair Value Measurements | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||
Fair Value Measurements | ' | |||||||||||
Fair Value Measurements | ||||||||||||
Certain financial assets and liabilities are measured at fair value on a recurring basis. | ||||||||||||
VMware’s Level 1 classification of the fair value hierarchy includes money market funds and certain available-for-sale fixed income securities because these securities are valued using quoted prices in active markets for identical assets. Fixed income available-for-sale securities consist of high quality, investment-grade securities from diverse issuers. | ||||||||||||
VMware’s Level 2 classification includes the remainder of the available-for-sale fixed income securities because these securities are priced using inputs other than quoted prices that are observable either directly or indirectly. The valuation techniques used to measure the fair value of financial instruments having Level 2 inputs were derived from non-binding market consensus prices that are corroborated by observable market data, quoted market prices for similar instruments, or pricing models such as discounted cash flow techniques. VMware’s procedures include controls to ensure that appropriate fair values are recorded such as comparing prices obtained from multiple independent sources. VMware is ultimately responsible for the financial statements and underlying estimates. | ||||||||||||
Additionally, VMware’s Level 2 classification includes foreign currency forward contracts as the valuation inputs for these are based upon quoted prices and quoted pricing intervals from public data sources. The fair value of these contracts was not material for any period presented. | ||||||||||||
VMware does not have any material assets or liabilities that fall into Level 3 of the fair value hierarchy as of March 31, 2014 and December 31, 2013, and there have been no transfers between fair value measurement levels during the three months ended March 31, 2014 and 2013. | ||||||||||||
The following tables set forth the fair value hierarchy of VMware’s money market funds and available-for-sale securities, including those securities classified within cash and cash equivalents on the condensed consolidated balance sheets, that were required to be measured at fair value as of March 31, 2014 and December 31, 2013 (tables in millions): | ||||||||||||
March 31, 2014 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Money-market funds | $ | 2,255 | $ | — | $ | 2,255 | ||||||
U.S. Government and agency obligations | 411 | 147 | 558 | |||||||||
U.S. and foreign corporate debt securities | — | 2,329 | 2,329 | |||||||||
Foreign governments and multi-national agency obligations | — | 44 | 44 | |||||||||
Municipal obligations | — | 771 | 771 | |||||||||
Mortgage-backed securities | — | 136 | 136 | |||||||||
Total | $ | 2,666 | $ | 3,427 | $ | 6,093 | ||||||
December 31, 2013 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Money-market funds | $ | 1,808 | $ | — | $ | 1,808 | ||||||
U.S. Government and agency obligations | 385 | 152 | 537 | |||||||||
U.S. and foreign corporate debt securities | — | 2,366 | 2,366 | |||||||||
Foreign governments and multi-national agency obligations | — | 37 | 37 | |||||||||
Municipal obligations | — | 816 | 816 | |||||||||
Mortgage-backed securities | — | 128 | 128 | |||||||||
Total | $ | 2,193 | $ | 3,499 | $ | 5,692 | ||||||
Derivatives_and_Hedging_Activi
Derivatives and Hedging Activity | 3 Months Ended |
Mar. 31, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' |
Derivatives and Hedging Activities | ' |
Derivatives and Hedging Activity | |
VMware conducts business in several foreign currencies and has international sales and expenses denominated in foreign currencies, subjecting the Company to foreign currency risk. To mitigate this risk, VMware enters into hedging activities as described below. The counterparties to VMware’s foreign currency forward contracts are multi-national commercial banks considered to be credit-worthy. VMware does not enter into speculative foreign exchange contracts for trading purposes. | |
Cash Flow Hedging Activities | |
To mitigate its exposure to foreign currency fluctuations resulting from operating expenses denominated in certain foreign currencies, VMware enters into foreign currency forward contracts. The Company designates these forward contracts as cash flow hedging instruments as the accounting criteria for such designation has been met. Therefore, the effective portion of gains or losses resulting from changes in the fair value of these hedges is initially reported in accumulated other comprehensive income on the condensed consolidated balance sheet and is subsequently reclassified to the related operating expense line item in the condensed consolidated statements of income in the same period that the underlying expenses are incurred. For the three months ended March 31, 2014 and 2013, the effective portion of gains or losses reclassified to the condensed consolidated statements of income were not material. Interest charges or “forward points” on VMware’s forward contracts are excluded from the assessment of hedge effectiveness and are recorded in other income (expense), net in the condensed consolidated statements of income as incurred. | |
VMware generally enters into cash flow hedges semi-annually with maturities of six months or less. As of March 31, 2014 and December 31, 2013, VMware had forward contracts to purchase foreign currency designated as cash flow hedges with a total notional value of $41 million and $82 million, respectively. The fair value of these forward contracts was immaterial as of March 31, 2014 and December 31, 2013, and therefore excluded from the fair value tables above. For the three months ended March 31, 2014 and 2013, all cash flow hedges were considered effective. | |
Balance Sheet Hedging Activities | |
In order to manage exposure to foreign currency fluctuations, VMware enters into foreign currency forward contracts to hedge a portion of its net outstanding monetary assets and liabilities against movements in certain foreign exchange rates. These forward contracts are not designated as hedging instruments under applicable accounting guidance, and therefore all changes in the fair value of the forward contracts are reported in other income (expense), net in the condensed consolidated statements of income. | |
VMware’s foreign currency forward contracts are generally traded on a monthly basis with a typical contractual term of one month. As of March 31, 2014 and December 31, 2013, VMware had outstanding forward contracts with a total notional value of $399 million and $498 million, respectively. The fair value of these forward contracts was immaterial as of March 31, 2014 and December 31, 2013 and therefore excluded from the fair value tables above. | |
Losses derived from the settlement of foreign forward contracts during the three months ended March 31, 2014 were immaterial, and a gain of $11 million was recognized during the three months ended March 31, 2013. The combined gains and losses derived from the settlement of foreign forward contracts and the underlying foreign-currency denominated assets and liabilities were immaterial during the three months ended March 31, 2014 and 2013. |
Unearned_Revenues
Unearned Revenues | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Deferred Revenue Disclosure [Abstract] | ' | |||||||
Unearned Revenues | ' | |||||||
Unearned Revenues | ||||||||
Unearned revenues as of March 31, 2014 and December 31, 2013 consisted of the following (table in millions): | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Unearned license revenues | $ | 459 | $ | 465 | ||||
Unearned software maintenance revenues | 3,378 | 3,304 | ||||||
Unearned professional services revenues | 335 | 323 | ||||||
Total unearned revenues | $ | 4,172 | $ | 4,092 | ||||
Unearned license revenues are either recognized ratably, recognized upon delivery of existing or future products or services, or will be recognized ratably upon delivery of future products or services. Future products include, in some cases, products that are offered as part of product promotions where the purchaser of an existing product is entitled to receive a promotional product at no additional charge. VMware regularly offers product promotions to improve awareness of its emerging products. To the extent promotional products have not been delivered and VSOE of fair value is not established, revenue for the entire order is deferred until such time as all product delivery obligations have been fulfilled. Unearned license revenue may also be recognized ratably, which is generally due to a right to receive unspecified future products. | ||||||||
Unearned software maintenance revenues are attributable to VMware’s maintenance contracts and are recognized ratably, typically over terms of one to five years. Unearned professional services revenues result primarily from prepaid professional services, including training, and are recognized as the services are delivered. |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
Contingencies | ' |
Contingencies | |
Litigation | |
VMware is subject to legal, administrative and regulatory proceedings, claims, demands and investigations in the ordinary course of business, including claims with respect to commercial, product liability, intellectual property, employment, class action, whistleblower and other matters. In the ordinary course of business, VMware also receives inquiries from and has ongoing discussions with government entities regarding the compliance of its contracting and sales practices with laws and regulations. VMware accrues for a liability when and if a determination has been made that a loss is both probable of occurrence and the amount of the loss can be reasonably estimated. Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. VMware considers the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. As of March 31, 2014 and December 31, 2013, the amounts accrued were not material. To the extent there is a reasonable possibility that the losses could exceed the amounts already accrued, management believes that the amount of any such additional loss would also be immaterial to VMware’s condensed consolidated financial position, results of operations and cash flows. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Stockholders' Equity Note [Abstract] | ' | |||||||
Stockholders' Equity | ' | |||||||
Stockholders’ Equity | ||||||||
VMware Stock Repurchases | ||||||||
The following table summarizes stock repurchase authorizations that remain open as of March 31, 2014 (amounts in table in millions): | ||||||||
Authorization Date | Amount Authorized | Expiration Date | Status | |||||
Aug-13 | $700 | End of 2015 | Open | |||||
From time to time, future stock repurchases may be made pursuant to the August 2013 authorization in open market transactions or privately negotiated transactions as permitted by securities laws and other legal requirements. VMware is not obligated to purchase any shares under its stock repurchase programs. The timing of any repurchases and the actual number of shares repurchased will depend on a variety of factors, including VMware’s 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 VMware feels additional purchases are not warranted. All shares repurchased under VMware’s stock repurchase programs are retired. | ||||||||
The following table summarizes stock repurchase activity in the three months ended March 31, 2014 and 2013 (table in millions, except per share amounts): | ||||||||
For the Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Aggregate purchase price | $ | 169 | $ | 182 | ||||
Class A common shares repurchased | 2 | 2 | ||||||
Weighted-average price per share | $ | 95.56 | $ | 77.05 | ||||
The amount of repurchased shares includes commissions and was classified as a reduction to additional paid-in capital. As of March 31, 2014, the cumulative authorized amount remaining for repurchase was $491 million. | ||||||||
VMware Stock Options | ||||||||
The following table summarizes option activity since January 1, 2014 (shares in millions): | ||||||||
Number of | Weighted- | |||||||
Shares | Average | |||||||
Exercise Price | ||||||||
(per share) | ||||||||
Outstanding, January 1, 2014 | 6 | $ | 44.12 | |||||
Granted | 1 | 14.64 | ||||||
Exercised | (1 | ) | 39.13 | |||||
Outstanding, March 31, 2014 | 6 | 38.12 | ||||||
The above table includes stock options substituted for unvested stock options in connection with business combinations. As a result, the weighted-average exercise price per share may be less than the VMware stock price at time of grant. | ||||||||
VMware Restricted Stock | ||||||||
VMware restricted stock primarily consists of restricted stock unit (“RSU”) awards granted to employees. RSUs are valued based on the VMware stock price on the date of grant, and shares underlying RSU awards are not issued until the restricted stock units vest. Upon vesting, each RSU converts into one share of VMware Class A common stock. | ||||||||
VMware restricted stock also includes performance stock unit (“PSU”) awards, which have been granted to certain of VMware's executives and employees. The PSU awards include performance conditions and, in certain cases, a time-based vesting component. Upon vesting, each PSU award will convert into VMware’s Class A common stock at various ratios ranging from 0.5 to 3.0 shares per PSU, depending upon the degree of achievement of the performance target designated by each individual award. If minimum performance thresholds are not achieved, then no shares will be issued. | ||||||||
The following table summarizes restricted stock activity since January 1, 2014 (units in millions): | ||||||||
Number of Units | Weighted- | |||||||
Average Grant | ||||||||
Date Fair | ||||||||
Value | ||||||||
(per unit) | ||||||||
Outstanding, January 1, 2014 | 13 | $ | 85.85 | |||||
Granted | 1 | 97.6 | ||||||
Vested | (1 | ) | 92.76 | |||||
Outstanding, March 31, 2014 | 13 | 86.15 | ||||||
As of March 31, 2014, the 13 million units outstanding included 12 million of RSUs and 1 million of PSUs. The above table includes RSUs substituted for unvested RSUs in connection with business combinations. | ||||||||
The total fair value of VMware restricted stock, including restricted stock, RSUs and PSUs, that vested in the three months ended March 31, 2014 was $72 million. As of March 31, 2014, restricted stock representing 13 million shares of VMware’s Class A common stock were outstanding, with an aggregate intrinsic value of $1,349 million based on VMware’s closing price as of March 31, 2014. | ||||||||
Accumulated Other Comprehensive Income | ||||||||
The changes in components of accumulated other comprehensive income in the three months ended March 31, 2014 were as follows (table in millions): | ||||||||
Unrealized Gains on | Total | |||||||
Available-for-Sale Securities | ||||||||
Balance, January 1, 2014 | $ | 4 | $ | 4 | ||||
Other comprehensive gain before reclassifications, net of taxes of $1 | 1 | 1 | ||||||
Other comprehensive income, net | 1 | 1 | ||||||
Balance, March 31, 2014 | $ | 5 | $ | 5 | ||||
Gains (losses) on VMware’s available-for-sale securities are reclassified to investment income on the condensed consolidated statement of income in the same period that they are realized. | ||||||||
The effective portion of gains (losses) resulting from changes in the fair value of forward contracts designated as cash flow hedging instruments are reclassified to its related operating expense line item on the condensed consolidated statement of income in the same period that the underlying expenses are incurred. The amounts recorded to their related operating expense line items on the condensed consolidated statements of income in the three months ended March 31, 2014 were not material. |
Related_Parties
Related Parties | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Related Party Transactions [Abstract] | ' | |||||||||||||||
Related Parties | ' | |||||||||||||||
Related Parties | ||||||||||||||||
EMC Reseller Arrangement, Other Services and Note Payable | ||||||||||||||||
VMware and EMC engaged in the following ongoing intercompany transactions, which resulted in revenues and receipts and unearned revenues for VMware: | ||||||||||||||||
• | Pursuant to an ongoing reseller arrangement with EMC, EMC bundles VMware's products and services with EMC's products and sells them to end-users. | |||||||||||||||
• | EMC purchases products and services from VMware for internal use. | |||||||||||||||
• | VMware recognizes revenues for professional services based upon such contractual agreements with EMC. | |||||||||||||||
• | From time to time, VMware and EMC enter into agreements to collaborate on technology projects, and EMC pays VMware for services that VMware provides to EMC in connection with such projects. | |||||||||||||||
Information about VMware's revenues and receipts and unearned revenues from such arrangements with EMC for the three months ended March 31, 2014 and 2013 consisted of the following (table in millions): | ||||||||||||||||
Revenues and Receipts from | Unearned Revenues from | |||||||||||||||
EMC | EMC | |||||||||||||||
For the Three Months Ended | As of | As of December 31, | ||||||||||||||
March 31, | March 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Reseller revenues | $ | 46 | $ | 36 | $ | 173 | $ | 188 | ||||||||
Professional services revenues | 23 | 15 | 13 | 12 | ||||||||||||
Internal-use revenues | 7 | 3 | 14 | 20 | ||||||||||||
Collaborative technology project receipts | — | 2 | n/a | n/a | ||||||||||||
VMware and EMC engaged in the following ongoing intercompany transactions, which resulted in costs to VMware: | ||||||||||||||||
• | VMware purchases products and services for internal use from EMC. | |||||||||||||||
• | From time to time, VMware and EMC enter into agreements to collaborate on technology projects, and VMware pays EMC for services provided to VMware by EMC related to such projects. | |||||||||||||||
• | In certain geographic regions where VMware does not have an established legal entity, VMware contracts with EMC subsidiaries for support services and EMC personnel who are managed by VMware. The costs incurred by EMC on VMware's behalf related to these employees are passed on to VMware and VMware is charged a mark-up intended to approximate costs that would have been charged had VMware contracted for such services with an unrelated third party. These costs are included as expenses in VMware's condensed consolidated statements of income and primarily include salaries, benefits, travel and rent. EMC also incurs certain administrative costs on VMware's behalf in the U.S. that are recorded as expenses in VMware's condensed consolidated statements of income. | |||||||||||||||
• | VMware incurs interest expense on its note payable with EMC. See below. | |||||||||||||||
Information about VMware's costs from such arrangements with EMC for the three months ended March 31, 2014 and 2013 consisted of the following (table in millions): | ||||||||||||||||
For the Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Purchases of products and services | $ | 21 | $ | 13 | ||||||||||||
Collaborative technology project costs | 3 | 1 | ||||||||||||||
EMC subsidiary support and administrative costs | 41 | 36 | ||||||||||||||
Interest expense on note payable | 5 | 1 | ||||||||||||||
Certain Stock-Based Compensation | ||||||||||||||||
Effective September 1, 2012, Pat Gelsinger succeeded Paul Maritz as Chief Executive Officer of VMware. Prior to joining VMware, Pat Gelsinger was the President and Chief Operating Officer of EMC Information Infrastructure Products. Paul Maritz remains a board member of VMware and currently serves as Chief Executive Officer of Pivotal, a majority-owned subsidiary of EMC in which VMware has an ownership interest, and as an executive officer of EMC. Both Paul Maritz and Pat Gelsinger retain and continue to vest in certain of their respective equity awards that they held as of September 1, 2012. Stock-based compensation related to Pat Gelsinger’s EMC awards will be recognized on VMware’s condensed consolidated statements of income over the awards’ remaining requisite service periods. Effective since September 1, 2012, stock-based compensation costs related to Paul Maritz’s VMware awards have been charged to EMC and have not been recognized by VMware. | ||||||||||||||||
Pivotal | ||||||||||||||||
During 2013, VMware transferred certain assets and liabilities to Pivotal. VMware contributed certain assets, including intellectual property, to Pivotal, and Pivotal assumed substantially all liabilities, related to certain of its Cloud Application Platform products and services, including VMware’s Cloud Foundry, VMware vFabric (including Spring and GemFire) and Cetas organizations, except for certain tangible assets related to Cloud Foundry. As of March 31, 2014, VMware's ownership interest in Pivotal is 28%. | ||||||||||||||||
Additionally, VMware and Pivotal entered into an agreement pursuant to which VMware will act as the selling agent for the products and services it contributed to Pivotal in exchange for a customary agency fee. In the three months ended March 31, 2014, VMware recognized revenues of $2 million from its contractual arrangement with Pivotal. VMware also agreed to provide various transition services to Pivotal. Pursuant to the support agreement, costs incurred by VMware to support Pivotal services are reimbursed to VMware by Pivotal. During the three months ended March 31, 2014, VMware provided transition services of $2 million that are reimbursable by Pivotal and which were recorded as a reduction to the costs VMware incurred. Additionally, VMware purchased an immaterial amount of products and services for internal use from Pivotal in the three months ended March 31, 2014. | ||||||||||||||||
Tax Sharing Agreement with EMC | ||||||||||||||||
Pursuant to a tax sharing agreement between VMware and EMC, VMware has made payments to EMC and EMC has made payments to VMware. The following table summarizes these payments made between VMware and EMC during the three months ended March 31, 2014 and 2013 (table in millions): | ||||||||||||||||
For the Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Payments from VMware to EMC | $ | 20 | $ | — | ||||||||||||
Payments between VMware and EMC under the tax sharing agreement relate to VMware's portion of federal income taxes on EMC's consolidated tax return as well as the state payments for combined states. Payments from EMC to VMware relate to periods where VMware had a stand-alone loss for U.S. federal and state income tax purposes or where VMware had federal tax credits in excess of federal tax liabilities. Payments from VMware to EMC are for estimated tax payments primarily for U.S. federal income tax purposes. The amounts that VMware either pays to or receives from EMC for its portion of federal income taxes on EMC’s consolidated tax return differ from the amounts VMware would owe on a separate return basis and the difference is presented as a component of stockholders’ equity. In the three months ended March 31, 2014 and 2013, the difference between the amount of tax calculated on a stand-alone basis and the amount of tax calculated per the tax sharing agreement was not material. | ||||||||||||||||
Due To/From Related Parties, Net | ||||||||||||||||
As a result of the related-party transactions with EMC and Pivotal described above, amounts due to and from related parties, net as of March 31, 2014 consisted of the following (table in millions): | ||||||||||||||||
As of March 31, 2014 | ||||||||||||||||
Due to EMC | $ | (70 | ) | |||||||||||||
Due from EMC | 53 | |||||||||||||||
Due to Pivotal | (11 | ) | ||||||||||||||
Due from Pivotal | 2 | |||||||||||||||
Due (to) from related parties, net | $ | (26 | ) | |||||||||||||
Income tax payable due to EMC | $ | (30 | ) | |||||||||||||
Balances due to or from related parties, which are unrelated to tax obligations, are generally settled in cash within 60 days of each quarter-end. The timing of the tax payments due to and from EMC is governed by the tax sharing agreement with EMC. | ||||||||||||||||
Note Payable to EMC | ||||||||||||||||
In connection with VMware's acquisition of AirWatch, VMware and EMC entered into a note exchange agreement on January 21, 2014 providing for the issuance of three promissory notes in the aggregate principal amount of $1,500 million. The total debt of $1,500 million also included $450 million that was exchanged for the $450 million promissory note issued to EMC in April 2007, as amended and restated in June 2011. | ||||||||||||||||
The three notes issued may be prepaid without penalty or premium, and outstanding principal is due on the following dates: $680 million due May 1, 2018, $550 million due May 1, 2020 and $270 million due December 1, 2022. The notes bear interest, payable quarterly in arrears, at the annual rate of 1.75%. For the three months ended March 31, 2014 and 2013, $5 million and $1 million, respectively, of interest expense were recorded related to the notes payable. No additional repayments of principal were made during the first three months of 2014. |
Segment_Information
Segment Information | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Segment Reporting [Abstract] | ' | |||||||
Segment Information | ' | |||||||
Segment Information | ||||||||
VMware operates in one reportable operating segment, thus all required financial segment information can be found in the condensed consolidated financial statements. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. VMware’s chief operating decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level. | ||||||||
Revenues by geographic area for the three months ended March 31, 2014 and 2013 were as follows (table in millions): | ||||||||
For the Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 649 | $ | 568 | ||||
International | 711 | 623 | ||||||
Total | $ | 1,360 | $ | 1,191 | ||||
It is not practicable for VMware to determine revenues by country other than the United States for the three months ended March 31, 2014 and 2013. | ||||||||
Long-lived assets by geographic area, which primarily include property and equipment, net, as of March 31, 2014 and December 31, 2013 were as follows (table in millions): | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
United States | $ | 776 | $ | 741 | ||||
International | 60 | 58 | ||||||
Total | $ | 836 | $ | 799 | ||||
No individual country other than the United States accounted for 10% or more of these assets as of March 31, 2014 and December 31, 2013, respectively. |
Overview_and_Basis_of_Presenta1
Overview and Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Basis of Presentation | ' |
Unaudited Interim Financial Information | |
These accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, these unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments and accruals, for a fair statement of VMware’s condensed consolidated results of operations, financial position and cash flows for the periods presented. Results of operations are not necessarily indicative of the results that may be expected for the full year 2014. Certain information and footnote disclosures typically included in annual consolidated financial statements have been condensed or omitted. Accordingly, these unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in VMware’s 2013 Annual Report on Form 10-K. | |
As of March 31, 2014, EMC held approximately 79.6% of VMware’s outstanding common stock and 97.2% of the combined voting power of VMware’s outstanding common stock, including 43 million shares of VMware’s Class A common stock and all of VMware’s Class B common stock. VMware is a majority-owned and controlled subsidiary of EMC, and its results of operations and financial position are consolidated with EMC’s financial statements. | |
Management believes the assumptions underlying the condensed consolidated financial statements are reasonable. However, the amounts recorded for VMware’s intercompany transactions with EMC and Pivotal Software, Inc. (“Pivotal”, previously known as “GoPivotal, Inc.”) may not be considered arm’s length with an unrelated third party. Therefore, the financial statements included herein may not necessarily reflect the financial position, results of operations and cash flows had VMware engaged in such transactions with an unrelated third party during all periods presented. Accordingly, VMware’s historical financial information is not necessarily indicative of what the Company’s financial position, results of operations and cash flows will be in the future if and when VMware contracts at arm’s length with unrelated third parties for the services the Company receives from and provides to EMC and Pivotal. | |
Principles of Consolidation | ' |
Principles of Consolidation | |
The condensed consolidated financial statements include the accounts of VMware and its subsidiaries after elimination of intercompany transactions and account balances between VMware and its subsidiaries. All intercompany transactions with EMC and Pivotal in the condensed consolidated statements of cash flows will be settled in cash, and changes in the current intercompany balances are presented as a component of cash flows from operating, investing and financing activities. | |
Use of Accounting Estimates | ' |
Use of Accounting Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the reported amounts of revenues and expenses during the reporting periods, and the disclosure of contingent liabilities at the date of the financial statements. Estimates are used for, but not limited to trade receivable valuation, marketing rebates, useful lives assigned to fixed assets and intangible assets, valuation of goodwill and definite-lived intangibles, income taxes, stock-based compensation and contingencies. Actual results could differ from those estimates. |
Business_Combinations_Goodwill1
Business Combinations, Goodwill and Intangible Assets, Net (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Business Acquisition [Line Items] | ' | |||||||
Schedule Of Goodwill | ' | |||||||
The following table summarizes the changes in the carrying amount of goodwill for the three months ended March 31, 2014 (table in millions): | ||||||||
Balance, January 1, 2014 | $ | 3,027 | ||||||
Increase in goodwill related to business combination | 879 | |||||||
Balance, March 31, 2014 | $ | 3,906 | ||||||
AirWatch Holding [Member] | ' | |||||||
Business Acquisition [Line Items] | ' | |||||||
Schedule of Recognized Assets Acquired and Liabilities Assumed | ' | |||||||
The following table summarizes the preliminary allocation of the consideration to the fair value of the assets acquired and liabilities assumed (table in millions): | ||||||||
Cash | $ | 36 | ||||||
Other current assets | 60 | |||||||
Intangible assets | 250 | |||||||
Goodwill | 879 | |||||||
Other acquired assets | 17 | |||||||
Total assets acquired | 1,242 | |||||||
Unearned revenues | (45 | ) | ||||||
Other assumed liabilities | (69 | ) | ||||||
Total liabilities assumed | (114 | ) | ||||||
Fair value of assets acquired and liabilities assumed | $ | 1,128 | ||||||
Schedule Of Finite-Lived And Indefinite-Lived Intangible Assets Acquired As Part Of Business Combination | ' | |||||||
The following table summarizes the components of the intangible assets acquired and their estimated useful lives by VMware in conjunction with the acquisitions of AirWatch (amounts in table in millions): | ||||||||
Useful Lives | Weighted-Average | Fair Value | ||||||
(in years) | Useful Lives | Amount | ||||||
(in years) | ||||||||
Purchased technology | 6-Feb | 5.9 | $ | 118 | ||||
Customer relationships and customer lists | 8-Feb | 7.9 | 78 | |||||
Trademarks and tradenames | 8 | 8 | 40 | |||||
Other | 8-Feb | 3.2 | 14 | |||||
Total intangible assets, net, excluding goodwill | $ | 250 | ||||||
Business Acquisition, Pro Forma Information | ' | |||||||
Supplemental information on an unaudited pro forma basis, as if AirWatch had been acquired on January 1, 2013, is presented as follows (table in millions): | ||||||||
For the Three Months | ||||||||
Ended March 31, | ||||||||
2014 | 2013 | |||||||
Pro forma adjusted net income | $ | 162 | $ | 114 | ||||
Earnings_per_Share_Tables
Earnings per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Earnings Per Share [Abstract] | ' | |||||||
Computations of Basic and Diluted Net Income per Share | ' | |||||||
The following table sets forth the computations of basic and diluted net income per share for the three months ended March 31, 2014 and 2013 (table in millions, except per share data): | ||||||||
For the Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Net income | $ | 199 | $ | 173 | ||||
Weighted-average shares, basic for Class A and Class B | 431 | 428 | ||||||
Effect of dilutive securities | 4 | 5 | ||||||
Weighted-average shares, diluted for Class A and Class B | 435 | 433 | ||||||
Net income per weighted-average share, basic for Class A and Class B | $ | 0.46 | $ | 0.41 | ||||
Net income per weighted-average share, diluted for Class A and Class B | $ | 0.46 | $ | 0.4 | ||||
Investments_Tables
Investments (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||||||||||
Investing in Fixed Income Securities | ' | |||||||||||||||
Investments as of March 31, 2014 and December 31, 2013 consisted of the following (tables in millions): | ||||||||||||||||
March 31, 2014 | ||||||||||||||||
Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate | |||||||||||||
Fair Value | ||||||||||||||||
U.S. Government and agency obligations | $ | 558 | $ | — | $ | — | $ | 558 | ||||||||
U.S. and foreign corporate debt securities | 2,314 | 6 | (1 | ) | 2,319 | |||||||||||
Foreign governments and multi-national agency obligations | 44 | — | — | 44 | ||||||||||||
Municipal obligations | 768 | 3 | — | 771 | ||||||||||||
Mortgage-backed securities | 137 | — | (1 | ) | 136 | |||||||||||
Total investments | $ | 3,821 | $ | 9 | $ | (2 | ) | $ | 3,828 | |||||||
December 31, 2013 | ||||||||||||||||
Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate | |||||||||||||
Fair Value | ||||||||||||||||
U.S. Government and agency obligations | $ | 537 | $ | — | $ | — | $ | 537 | ||||||||
U.S. and foreign corporate debt securities | 2,351 | 6 | (3 | ) | 2,354 | |||||||||||
Foreign governments and multi-national agency obligations | 37 | — | — | 37 | ||||||||||||
Municipal obligations | 811 | 3 | — | 814 | ||||||||||||
Mortgage-backed securities | 129 | — | (1 | ) | 128 | |||||||||||
Total investments | $ | 3,865 | $ | 9 | $ | (4 | ) | $ | 3,870 | |||||||
Unrealized Losses On Investments | ' | |||||||||||||||
Unrealized losses on investments as of March 31, 2014 and December 31, 2013, which have been in a net loss position for less than twelve months, were classified by investment category as follows (table in millions): | ||||||||||||||||
March 31, 2014 | December 31, 2013 | |||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||
U.S. and foreign corporate debt securities | $ | 536 | $ | (1 | ) | $ | 750 | $ | (3 | ) | ||||||
Mortgage-backed securities | 42 | — | 91 | (1 | ) | |||||||||||
Total | $ | 578 | $ | (1 | ) | $ | 841 | $ | (4 | ) | ||||||
Contractual Maturities Of Investments | ' | |||||||||||||||
The contractual maturities of investments held at March 31, 2014 consisted of the following (table in millions): | ||||||||||||||||
Amortized | Aggregate | |||||||||||||||
Cost Basis | Fair Value | |||||||||||||||
Due within one year | $ | 956 | $ | 956 | ||||||||||||
Due after 1 year through 5 years | 2,674 | 2,681 | ||||||||||||||
Due after 5 years | 191 | 191 | ||||||||||||||
Total investments | $ | 3,821 | $ | 3,828 | ||||||||||||
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
Fair Value Disclosures [Abstract] | ' | |||||||||||
Fair Value Of Money Market Funds And Available-For-Sale Securities | ' | |||||||||||
The following tables set forth the fair value hierarchy of VMware’s money market funds and available-for-sale securities, including those securities classified within cash and cash equivalents on the condensed consolidated balance sheets, that were required to be measured at fair value as of March 31, 2014 and December 31, 2013 (tables in millions): | ||||||||||||
March 31, 2014 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Money-market funds | $ | 2,255 | $ | — | $ | 2,255 | ||||||
U.S. Government and agency obligations | 411 | 147 | 558 | |||||||||
U.S. and foreign corporate debt securities | — | 2,329 | 2,329 | |||||||||
Foreign governments and multi-national agency obligations | — | 44 | 44 | |||||||||
Municipal obligations | — | 771 | 771 | |||||||||
Mortgage-backed securities | — | 136 | 136 | |||||||||
Total | $ | 2,666 | $ | 3,427 | $ | 6,093 | ||||||
December 31, 2013 | ||||||||||||
Level 1 | Level 2 | Total | ||||||||||
Money-market funds | $ | 1,808 | $ | — | $ | 1,808 | ||||||
U.S. Government and agency obligations | 385 | 152 | 537 | |||||||||
U.S. and foreign corporate debt securities | — | 2,366 | 2,366 | |||||||||
Foreign governments and multi-national agency obligations | — | 37 | 37 | |||||||||
Municipal obligations | — | 816 | 816 | |||||||||
Mortgage-backed securities | — | 128 | 128 | |||||||||
Total | $ | 2,193 | $ | 3,499 | $ | 5,692 | ||||||
Unearned_Revenues_Tables
Unearned Revenues (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Deferred Revenue Disclosure [Abstract] | ' | |||||||
Unearned Revenues, by Arrangement | ' | |||||||
Unearned revenues as of March 31, 2014 and December 31, 2013 consisted of the following (table in millions): | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
Unearned license revenues | $ | 459 | $ | 465 | ||||
Unearned software maintenance revenues | 3,378 | 3,304 | ||||||
Unearned professional services revenues | 335 | 323 | ||||||
Total unearned revenues | $ | 4,172 | $ | 4,092 | ||||
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Stockholders' Equity Note [Abstract] | ' | |||||||
Stock Repurchase Programs | ' | |||||||
The following table summarizes stock repurchase activity in the three months ended March 31, 2014 and 2013 (table in millions, except per share amounts): | ||||||||
For the Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
Aggregate purchase price | $ | 169 | $ | 182 | ||||
Class A common shares repurchased | 2 | 2 | ||||||
Weighted-average price per share | $ | 95.56 | $ | 77.05 | ||||
The following table summarizes stock repurchase authorizations that remain open as of March 31, 2014 (amounts in table in millions): | ||||||||
Authorization Date | Amount Authorized | Expiration Date | Status | |||||
Aug-13 | $700 | End of 2015 | Open | |||||
Stock Options, Activity | ' | |||||||
The following table summarizes option activity since January 1, 2014 (shares in millions): | ||||||||
Number of | Weighted- | |||||||
Shares | Average | |||||||
Exercise Price | ||||||||
(per share) | ||||||||
Outstanding, January 1, 2014 | 6 | $ | 44.12 | |||||
Granted | 1 | 14.64 | ||||||
Exercised | (1 | ) | 39.13 | |||||
Outstanding, March 31, 2014 | 6 | 38.12 | ||||||
Summary Of Restricted Stock Activity | ' | |||||||
The following table summarizes restricted stock activity since January 1, 2014 (units in millions): | ||||||||
Number of Units | Weighted- | |||||||
Average Grant | ||||||||
Date Fair | ||||||||
Value | ||||||||
(per unit) | ||||||||
Outstanding, January 1, 2014 | 13 | $ | 85.85 | |||||
Granted | 1 | 97.6 | ||||||
Vested | (1 | ) | 92.76 | |||||
Outstanding, March 31, 2014 | 13 | 86.15 | ||||||
Schedule of Accumulated Other Comprehensive Income | ' | |||||||
The changes in components of accumulated other comprehensive income in the three months ended March 31, 2014 were as follows (table in millions): | ||||||||
Unrealized Gains on | Total | |||||||
Available-for-Sale Securities | ||||||||
Balance, January 1, 2014 | $ | 4 | $ | 4 | ||||
Other comprehensive gain before reclassifications, net of taxes of $1 | 1 | 1 | ||||||
Other comprehensive income, net | 1 | 1 | ||||||
Balance, March 31, 2014 | $ | 5 | $ | 5 | ||||
Related_Parties_Tables
Related Parties (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2014 | ||||||||||||||||
Related Party Transactions [Abstract] | ' | |||||||||||||||
Schedule of Related Party Transactions | ' | |||||||||||||||
Information about VMware's costs from such arrangements with EMC for the three months ended March 31, 2014 and 2013 consisted of the following (table in millions): | ||||||||||||||||
For the Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Purchases of products and services | $ | 21 | $ | 13 | ||||||||||||
Collaborative technology project costs | 3 | 1 | ||||||||||||||
EMC subsidiary support and administrative costs | 41 | 36 | ||||||||||||||
Interest expense on note payable | 5 | 1 | ||||||||||||||
Information about VMware's revenues and receipts and unearned revenues from such arrangements with EMC for the three months ended March 31, 2014 and 2013 consisted of the following (table in millions): | ||||||||||||||||
Revenues and Receipts from | Unearned Revenues from | |||||||||||||||
EMC | EMC | |||||||||||||||
For the Three Months Ended | As of | As of December 31, | ||||||||||||||
March 31, | March 31, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Reseller revenues | $ | 46 | $ | 36 | $ | 173 | $ | 188 | ||||||||
Professional services revenues | 23 | 15 | 13 | 12 | ||||||||||||
Internal-use revenues | 7 | 3 | 14 | 20 | ||||||||||||
Collaborative technology project receipts | — | 2 | n/a | n/a | ||||||||||||
Schedule of Payments to the Income Tax Sharing Agreement | ' | |||||||||||||||
The following table summarizes these payments made between VMware and EMC during the three months ended March 31, 2014 and 2013 (table in millions): | ||||||||||||||||
For the Three Months Ended | ||||||||||||||||
March 31, | ||||||||||||||||
2014 | 2013 | |||||||||||||||
Payments from VMware to EMC | $ | 20 | $ | — | ||||||||||||
Schedule of Due from (to) Related Party | ' | |||||||||||||||
As a result of the related-party transactions with EMC and Pivotal described above, amounts due to and from related parties, net as of March 31, 2014 consisted of the following (table in millions): | ||||||||||||||||
As of March 31, 2014 | ||||||||||||||||
Due to EMC | $ | (70 | ) | |||||||||||||
Due from EMC | 53 | |||||||||||||||
Due to Pivotal | (11 | ) | ||||||||||||||
Due from Pivotal | 2 | |||||||||||||||
Due (to) from related parties, net | $ | (26 | ) | |||||||||||||
Income tax payable due to EMC | $ | (30 | ) |
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | |||||||
Mar. 31, 2014 | ||||||||
Segment Reporting [Abstract] | ' | |||||||
Schedule Of Revenues By Geographic Area | ' | |||||||
Revenues by geographic area for the three months ended March 31, 2014 and 2013 were as follows (table in millions): | ||||||||
For the Three Months Ended | ||||||||
March 31, | ||||||||
2014 | 2013 | |||||||
United States | $ | 649 | $ | 568 | ||||
International | 711 | 623 | ||||||
Total | $ | 1,360 | $ | 1,191 | ||||
Schedule Of Long-Lived Assets By Geographic Area | ' | |||||||
Long-lived assets by geographic area, which primarily include property and equipment, net, as of March 31, 2014 and December 31, 2013 were as follows (table in millions): | ||||||||
March 31, 2014 | December 31, 2013 | |||||||
United States | $ | 776 | $ | 741 | ||||
International | 60 | 58 | ||||||
Total | $ | 836 | $ | 799 | ||||
Overview_and_Basis_of_Presenta2
Overview and Basis of Presentation (Basis of Presentation) (Details) (EMC) | Mar. 31, 2014 |
In Millions, unless otherwise specified | |
Overview and Basis of Presentation [Line Items] | ' |
Shareholders' interest, outstanding ownership percentage of VMware by EMC | 79.60% |
Combined voting power of VMware's outstanding common stock | 97.20% |
Class A Common Stock | ' |
Overview and Basis of Presentation [Line Items] | ' |
VMware's outstanding common stock held by EMC (shares) | 43 |
Class B Convertible Common Stock | ' |
Overview and Basis of Presentation [Line Items] | ' |
VMware's outstanding common stock held by EMC (shares) | 300 |
Business_Combinations_And_Good
(Business Combinations And Goodwill) (Details) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Feb. 24, 2014 | Feb. 24, 2014 | Mar. 31, 2014 | Feb. 24, 2014 | Feb. 24, 2014 |
AirWatch Holding [Member] | Amount In Escrow [Member] | Expense In Period [Member] | Equity Attributed to Pre-Combination Services [Member] | Equity Attributed to Post-Combination Services [Member] | |||
AirWatch Holding [Member] | AirWatch Holding [Member] | AirWatch Holding [Member] | AirWatch Holding [Member] | ||||
Business Acquisition [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Business Combination, Consideration Transferred | ' | ' | $1,128 | ' | ' | ' | ' |
Payments to Acquire Businesses, Net of Cash Acquired | 1,068 | 184 | ' | ' | ' | ' | ' |
Payments to acquire business | ' | ' | 1,104 | ' | ' | ' | ' |
Contingent Compensation | ' | ' | 300 | 75 | 19 | ' | ' |
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable | ' | ' | $134 | ' | ' | $24 | $110 |
Share-based Compensation Arrangement by Share-based Payment Award, Award Conversion Ratio | ' | ' | 0.4 | ' | ' | ' | ' |
Business_Combinations_Goodwill2
Business Combinations, Goodwill and Intangible Assets, Net (Purchase Price Allocation) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Business Acquisition [Line Items] | ' | ' |
Goodwill | $3,906 | $3,027 |
AirWatch Holding [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Cash | 36 | ' |
Other current assets | 60 | ' |
Intangible assets | 250 | ' |
Goodwill | 879 | ' |
Other acquired assets | 17 | ' |
Total assets acquired | 1,242 | ' |
Unearned revenue | -45 | ' |
Other assumed liabilities | -69 | ' |
Total liabilities assumed | -114 | ' |
Fair value of assets acquired and liabilities assumed | $1,128 | ' |
Business_Combinations_Goodwill3
Business Combinations, Goodwill and Intangible Assets, Net (Summary of Intangible Assets Acquired) (Details) (AirWatch Holding [Member], USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Acquired Intangible Assets [Line Items] | ' |
Total intangible assets acquired, net, excluding goodwill | $250 |
Purchased technology | ' |
Acquired Intangible Assets [Line Items] | ' |
Weighted-average useful lives of acquired intangible assets | '5 years 10 months 8 days |
Finite-lived Intangible Assets Acquired | 118 |
Customer relationships and customer lists | ' |
Acquired Intangible Assets [Line Items] | ' |
Weighted-average useful lives of acquired intangible assets | '7 years 10 months 8 days |
Finite-lived Intangible Assets Acquired | 78 |
Trademarks and Trade Names [Member] | ' |
Acquired Intangible Assets [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years |
Weighted-average useful lives of acquired intangible assets | '8 years |
Finite-lived Intangible Assets Acquired | 40 |
Other | ' |
Acquired Intangible Assets [Line Items] | ' |
Weighted-average useful lives of acquired intangible assets | '3 years 2 months 4 days |
Finite-lived Intangible Assets Acquired | $14 |
Minimum | Purchased technology | ' |
Acquired Intangible Assets [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '2 years |
Minimum | Customer relationships and customer lists | ' |
Acquired Intangible Assets [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '2 years |
Minimum | Other | ' |
Acquired Intangible Assets [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '2 years |
Maximum | Purchased technology | ' |
Acquired Intangible Assets [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '6 years |
Maximum | Customer relationships and customer lists | ' |
Acquired Intangible Assets [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years |
Maximum | Other | ' |
Acquired Intangible Assets [Line Items] | ' |
Finite-Lived Intangible Asset, Useful Life | '8 years |
Business_Combinations_Goodwill4
Business Combinations, Goodwill and Intangible Assets, Net (Pro Forma) (Details) (AirWatch Holding [Member], USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
AirWatch Holding [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Pro forma adjusted net income | $162 | $114 |
Business_Combinations_Goodwill5
Business Combinations, Goodwill and Intangible Assets, Net (Changes In Carrying Amount Of Goodwill) (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Goodwill [Roll Forward] | ' |
Balance, January 1, 2014 | $3,027 |
Increase in goodwill related to business combination | 879 |
Balance, March 31, 2014 | $3,906 |
Realignment_Charges_Details
Realignment Charges (Details) (USD $) | 3 Months Ended | |||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | ||
Position | ||||
Realignment Cost and Reserve [Line Items] | ' | ' | ||
Number of positions eliminated | 710 | ' | ||
Realignment Charges | $0 | [1] | $63 | [1] |
[1] | Includes stock-based compensation as follows: Cost of license revenues $1 $1 , Cost of services revenues $9 $7 , Research and development $60 $62 , Sales and marketing $41 $36 , General and administrative $17 $14 , Realignment charges $0 $5 |
Earnings_per_Share_Computation
Earnings per Share (Computations Of Basic And Diluted Net Income Per Share) (Details) (USD $) | 3 Months Ended | |
In Millions, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Earnings Per Share [Abstract] | ' | ' |
Net income | $199 | $173 |
Weighted-average shares, basic for Class A and Class B | 430,546,000 | 428,005,000 |
Effect of dilutive securities (shares) | 4,000,000 | 5,000,000 |
Weighted-average shares, diluted for Class A and Class B | 434,729,000 | 432,631,000 |
Net income per weighted-average share, basic for Class A and Class B | $0.46 | $0.41 |
Net income per weighted-average share, diluted for Class A and Class B | $0.46 | $0.40 |
Earnings_per_Share_Details
Earnings per Share (Details) (Class A Common Stock) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Stock Options | ' | ' |
Anti-dilutive shares excluded from computation of earnings per share | 1 | 1 |
Restricted Stock | ' | ' |
Anti-dilutive shares excluded from computation of earnings per share | ' | 2 |
Investments_Investing_In_Fixed
Investments (Investing In Fixed Income Securities) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule of Investments [Line Items] | ' | ' |
Cost or Amortized Cost | $3,821 | $3,865 |
Unrealized Gains | 9 | 9 |
Unrealized Losses | -2 | -4 |
Aggregate Fair Value | 3,828 | 3,870 |
U.S. Government and agency obligations | ' | ' |
Schedule of Investments [Line Items] | ' | ' |
Cost or Amortized Cost | 558 | 537 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Aggregate Fair Value | 558 | 537 |
U.S. and foreign corporate debt securities | ' | ' |
Schedule of Investments [Line Items] | ' | ' |
Cost or Amortized Cost | 2,314 | 2,351 |
Unrealized Gains | 6 | 6 |
Unrealized Losses | -1 | -3 |
Aggregate Fair Value | 2,319 | 2,354 |
Foreign governments and multi-national agency obligations | ' | ' |
Schedule of Investments [Line Items] | ' | ' |
Cost or Amortized Cost | 44 | 37 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | 0 | 0 |
Aggregate Fair Value | 44 | 37 |
Municipal obligations | ' | ' |
Schedule of Investments [Line Items] | ' | ' |
Cost or Amortized Cost | 768 | 811 |
Unrealized Gains | 3 | 3 |
Unrealized Losses | 0 | 0 |
Aggregate Fair Value | 771 | 814 |
Mortgage-backed securities | ' | ' |
Schedule of Investments [Line Items] | ' | ' |
Cost or Amortized Cost | 137 | 129 |
Unrealized Gains | 0 | 0 |
Unrealized Losses | -1 | -1 |
Aggregate Fair Value | $136 | $128 |
Investments_Unrealized_Losses_
Investments (Unrealized Losses On Investments) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule of Investments [Line Items] | ' | ' |
Fair Value | $578 | $841 |
Unrealized Losses | -1 | -4 |
U.S. and foreign corporate debt securities | ' | ' |
Schedule of Investments [Line Items] | ' | ' |
Fair Value | 536 | 750 |
Unrealized Losses | -1 | -3 |
Mortgage-backed securities | ' | ' |
Schedule of Investments [Line Items] | ' | ' |
Fair Value | 42 | 91 |
Unrealized Losses | $0 | ($1) |
Investments_Contractual_Maturi
Investments (Contractual Maturity Of Investments) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Amortized Cost Basis | ' | ' |
Due within one year | $956 | ' |
Due after 1 year through 5 years | 2,674 | ' |
Due after 5 years | 191 | ' |
Total investments | 3,821 | ' |
Aggregate Fair Value | ' | ' |
Due within one year | 956 | ' |
Due after 1 year through 5 years | 2,681 | ' |
Due after 5 years | 191 | ' |
Total investments | $3,828 | $3,870 |
Fair_Value_Measurements_Fair_V
Fair Value Measurements (Fair Value Hierarchy) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | $3,828 | $3,870 |
U.S. Government and agency obligations | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 558 | 537 |
U.S. and foreign corporate debt securities | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 2,319 | 2,354 |
Foreign governments and multi-national agency obligations | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 44 | 37 |
Municipal obligations | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 771 | 814 |
Mortgage-backed securities | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 136 | 128 |
Fair Value, Measurements, Recurring | Level 1 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Money-market funds | 2,255 | 1,808 |
Total | 2,666 | 2,193 |
Fair Value, Measurements, Recurring | Level 2 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Money-market funds | 0 | 0 |
Total | 3,427 | 3,499 |
Fair Value, Measurements, Recurring | Total | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Money-market funds | 2,255 | 1,808 |
Total | 6,093 | 5,692 |
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 1 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 411 | 385 |
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 2 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 147 | 152 |
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Total | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 558 | 537 |
Fair Value, Measurements, Recurring | U.S. and foreign corporate debt securities | Level 1 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | U.S. and foreign corporate debt securities | Level 2 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 2,329 | 2,366 |
Fair Value, Measurements, Recurring | U.S. and foreign corporate debt securities | Total | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 2,329 | 2,366 |
Fair Value, Measurements, Recurring | Foreign governments and multi-national agency obligations | Level 1 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Foreign governments and multi-national agency obligations | Level 2 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 44 | 37 |
Fair Value, Measurements, Recurring | Foreign governments and multi-national agency obligations | Total | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 44 | 37 |
Fair Value, Measurements, Recurring | Municipal obligations | Level 1 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Municipal obligations | Level 2 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 771 | 816 |
Fair Value, Measurements, Recurring | Municipal obligations | Total | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 771 | 816 |
Fair Value, Measurements, Recurring | Mortgage-backed securities | Level 1 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 0 | 0 |
Fair Value, Measurements, Recurring | Mortgage-backed securities | Level 2 | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | 136 | 128 |
Fair Value, Measurements, Recurring | Mortgage-backed securities | Total | ' | ' |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ' | ' |
Available-for-sale securities | $136 | $128 |
Derivatives_and_Hedging_Activi1
Derivatives and Hedging Activity (Details) (USD $) | 3 Months Ended | |||||
In Millions, unless otherwise specified | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 |
Designated As Hedging Instrument | Not Designated As Hedging Instrument | Not Designated As Hedging Instrument | Cash Flow Hedging | Cash Flow Hedging | ||
Foreign Exchange Forward | Foreign Exchange Forward | Foreign Exchange Forward | Designated As Hedging Instrument | Designated As Hedging Instrument | ||
Foreign Exchange Forward | Foreign Exchange Forward | |||||
Derivatives, Fair Value [Line Items] | ' | ' | ' | ' | ' | ' |
Maximum maturity period in price risk cash flow hedge | ' | '6 months | ' | ' | ' | ' |
Notional amount of foreign currency derivatives | ' | ' | $399 | $498 | $41 | $82 |
Maturity of derivatives | ' | ' | '1 month | ' | ' | ' |
Gain (loss) on foreign currency derivative instruments not designated as hedging instruments | $11 | ' | ' | ' | ' | ' |
Unearned_Revenues_Summary_of_U
Unearned Revenues (Summary of Unearned Revenues) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2014 |
In Millions, unless otherwise specified | Unearned license revenues | Unearned license revenues | Unearned software maintenance revenues | Unearned software maintenance revenues | Professional services revenues | Professional services revenues | Minimum | Maximum | ||
Unearned software maintenance revenues | Unearned software maintenance revenues | |||||||||
Unearned Revenue Arrangement [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unearned revenues | $4,172 | $4,092 | $459 | $465 | $3,378 | $3,304 | $335 | $323 | ' | ' |
Revenue recognition term | ' | ' | ' | ' | ' | ' | ' | ' | '1 year | '5 years |
Stockholders_Equity_Details
Stockholders' Equity (Details) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Class B Convertible Common Stock | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Common stock, shares authorized (shares) | 1,000,000 | 1,000,000 |
Class A Common Stock | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Common stock, shares authorized (shares) | 2,500,000 | 2,500,000 |
Stockholders_Equity_Stock_Repu
Stockholders' Equity (Stock Repurchase Program) (Details) (USD $) | 3 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
August 2013 Stock Repurchase Program | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Authorized repurchase amount under stock repurchase program | $700 | ' |
Class A Common Stock | VMware Repurchase Program | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' |
Aggregate purchase price | 169 | 182 |
Class A common shares repurchased (shares) | 2 | 2 |
Weighted-average price per share (US$ per share) | $95.56 | $77.05 |
Authorized amount remaining for repurchase | $491 | ' |
Stockholders_Equity_Summary_of
Stockholders' Equity (Summary of Stock Option Activity) (Details) (Class A Common Stock, USD $) | 3 Months Ended |
In Millions, except Per Share data, unless otherwise specified | Mar. 31, 2014 |
Class A Common Stock | ' |
Number of Shares | ' |
Outstanding, Beginning balance | 6 |
Granted | 1 |
Exercised | -1 |
Outstanding, Ending balance | 6 |
Weighted-Average Exercise Price | ' |
Outstanding, Beginning balance (per share) | $44.12 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price | $14.64 |
Exercised (per share) | $39.13 |
Outstanding, Ending balance (per share) | $38.12 |
Recovered_Sheet1
Stockholders' Equity (Summary Of Restricted Stock Activity) (Details) (USD $) | 3 Months Ended |
In Millions, except Share data, unless otherwise specified | Mar. 31, 2014 |
Class A Common Stock | ' |
Number of Units | ' |
Outstanding, number of shares | 13,000,000 |
Granted, number of shares | 1,000,000 |
Vested, number of shares | -1,000,000 |
Outstanding, number of shares | 13,000,000 |
Weighted-Average Grant Date Fair Value | ' |
Outstanding, weighted-average grant date fair value (per share) | $85.85 |
Granted, weighted-average grant date fair value (per share) | $97.60 |
Vested, weighted-average grant date fair value (per share) | $92.76 |
Outstanding, weighted-average grant date fair falue (per share) | $86.15 |
Aggregate intrinsic value | $1,349 |
Restricted Stock Units (RSUs) | Class A Common Stock | ' |
Number of Units | ' |
Outstanding, number of shares | 12,000,000 |
Performance Stock Units (PSUs) | Class A Common Stock | ' |
Number of Units | ' |
Outstanding, number of shares | 1,000,000 |
Restricted Stock | ' |
Weighted-Average Grant Date Fair Value | ' |
Fair value of restricted stock-based awards, vested | $72 |
Minimum | Performance Stock Units (PSUs) | Class A Common Stock | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Performance stock units to Class A common stock, conversion ratio | 0.5 |
Maximum | Performance Stock Units (PSUs) | Class A Common Stock | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' |
Performance stock units to Class A common stock, conversion ratio | 3 |
Stockholders_Equity_Accumulate
Stockholders' Equity (Accumulated Other Comprehensive Income) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Accumulated Other Comprehensive Income [Roll Forward] | ' | ' |
Balance, January 1, 2014 | $4 | ' |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax [Abstract] | ' | ' |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 1 | ' |
Total other comprehensive income | 1 | 0 |
Balance, March 31, 2014 | 5 | ' |
Unrealized Gains On Available-For-Sale Securities [Member] | ' | ' |
Accumulated Other Comprehensive Income [Roll Forward] | ' | ' |
Balance, January 1, 2014 | 4 | ' |
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax [Abstract] | ' | ' |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 1 | ' |
Total other comprehensive income | 1 | ' |
Balance, March 31, 2014 | $5 | ' |
Stockholders_Equity_Accumulate1
Stockholders' Equity (Accumulated Other Comprehensive Income (Loss)) (Parenthetical) (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Accumulated Other Comprehensive Income [Line Items] | ' |
Tax effect on amounts reclassified from accumulated other comprehensive income | $1 |
Unrealized Gains On Available-For-Sale Securities [Member] | ' |
Accumulated Other Comprehensive Income [Line Items] | ' |
Tax effect on amounts reclassified from accumulated other comprehensive income | $1 |
Related_Parties_Details
Related Parties (Details) (USD $) | 3 Months Ended | ||
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Related Party Transaction [Line Items] | ' | ' | ' |
Related party transaction, other than tax obligation due to or from related party, cash settlement period | '60 days | ' | ' |
Note payable to EMC | $1,500 | ' | $450 |
Interest Expense, Related Party | 5 | 1 | ' |
EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Due from related party | 53 | ' | ' |
Note payable to EMC | 450 | ' | ' |
Pivotal | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Revenue from related party | 2 | ' | ' |
Related party transaction, amounts of transaction | 2 | ' | ' |
Ownership percentage in Pivotal | 28.00% | ' | ' |
Reseller revenues | EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Revenue from related party | 46 | 36 | ' |
Unearned revenues | 173 | ' | 188 |
Professional services revenues | EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Revenue from related party | 23 | 15 | ' |
Unearned revenues | 13 | ' | 12 |
Internal-Use Product and Services Revenues [Member] | EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Revenue from related party | 7 | 3 | ' |
Unearned revenues | 14 | ' | 20 |
Collaborative Technology Project Receipts [Member] | EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Revenue from related party | 0 | 2 | ' |
Purchases of Products and Services [Member] | EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Related party costs | 21 | 13 | ' |
Collaborative technology project costs | EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Related party costs | 3 | 1 | ' |
EMC Subsidiary Support and Administrative Costs [Member] | EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Related party costs | 41 | 36 | ' |
Interest expense on note payable | EMC | ' | ' | ' |
Related Party Transaction [Line Items] | ' | ' | ' |
Related party costs | $5 | $1 | ' |
Related_Parties_Tax_Sharing_Ag
Related Parties Tax Sharing Agreement (Details) (Tax Sharing Agreement, EMC, USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Tax Sharing Agreement | EMC | ' | ' |
Schedule Of Income Taxes [Line Items] | ' | ' |
Payments from VMware to EMC | $20 | $0 |
Related_Parties_Due_ToFrom_Rel
Related Parties (Due To/From Related Parties) (Details) (USD $) | 3 Months Ended |
In Millions, unless otherwise specified | Mar. 31, 2014 |
Related Party Transaction [Line Items] | ' |
Due (to) from related parties, net | ($26) |
EMC | ' |
Related Party Transaction [Line Items] | ' |
Due to related party | -70 |
Due from related party | 53 |
Income tax payable due to EMC | -30 |
Pivotal | ' |
Related Party Transaction [Line Items] | ' |
Due to related party | -11 |
Due from related party | $2 |
Related_Parties_Notes_Payable_
Related Parties Notes Payable with EMC (Details) (Notes payable, EMC, USD $) | Jan. 21, 2014 |
In Millions, unless otherwise specified | |
Related Party Transaction [Line Items] | ' |
Principal amount | $1,500 |
Interest rate | 1.75% |
Note, May 2018 | ' |
Related Party Transaction [Line Items] | ' |
Principal amount | 680 |
Note, May 2020 | ' |
Related Party Transaction [Line Items] | ' |
Principal amount | 550 |
Note, December 2022 | ' |
Related Party Transaction [Line Items] | ' |
Principal amount | $270 |
Segment_Information_Schedule_O
Segment Information (Schedule Of Revenues By Geographic Area) (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
segment | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ' | ' |
Number of reportable segments | 1 | ' |
Revenues | $1,360 | $1,191 |
United States | ' | ' |
Revenues From External Customers And Long-Lived Assets [Line Items] | ' | ' |
Revenues | 649 | 568 |
International | ' | ' |
Revenues From External Customers And Long-Lived Assets [Line Items] | ' | ' |
Revenues | $711 | $623 |
Segment_Information_Schedule_O1
Segment Information (Schedule Of Long-Lived Assets By Geographic Area) (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ' | ' |
Long-lived assets by geographic area | $836 | $799 |
United States | ' | ' |
Revenues From External Customers And Long-Lived Assets [Line Items] | ' | ' |
Long-lived assets by geographic area | 776 | 741 |
International | ' | ' |
Revenues From External Customers And Long-Lived Assets [Line Items] | ' | ' |
Long-lived assets by geographic area | $60 | $58 |