Vmware (VMW) 8-K VMware Reports Second-Quarter 2008 Results

Exhibit 99.1

VMware Reports Second-Quarter 2008 Results

PALO ALTO, Calif., July 22, 2008 — VMware, Inc. (NYSE: VMW), the global leader in virtualization solutions from the desktop to the datacenter, today reported financial results for the second quarter of 2008:

• Revenues for the second quarter were $456 million, an increase of 54% from the second quarter of 2007.

• GAAP operating income for the second quarter was $61 million, compared to $47 million for the same period last year.

• Non-GAAP operating income was $112 million, an increase of 52% from the second quarter of 2007.

• GAAP net income for the quarter was $52 million, or $0.13 per diluted share, compared to $34 million, or $0.10 per diluted share, for the second quarter of 2007.

• Non-GAAP net income for the quarter was $92 million, or $0.23 per diluted share, compared to $52 million, or $0.16 per diluted share, for the second quarter of 2007.

• Cash exceeded $1.5 billion and deferred revenue was $721 million as of June 30, 2008.

Second quarter U.S. revenues grew 43% to $240 million from the second quarter of 2007. International revenues grew 68% to $216 million from the second quarter of 2007 driven by strength in Europe and Australia.

Software license revenue grew 39% to $284 million from second quarter of 2007. Service revenues, which include support, subscription and professional services, were $172 million, an increase of 85% from the second quarter of 2007.

“VMware had another solid quarter, proving that the quality of our products and the immediate return on investment that they yield is delivering high value to customers,” said Paul Maritz, president and chief executive officer of VMware. “I am personally excited to become part of a company that has the potential to become one of the truly important and enduring companies in the software industry.”

“Our mission is to help customers run datacenters that use powerful, cost-effective, modern hardware to deliver dramatically higher levels of flexibility, manageability and efficiency. Today, much of our growth comes from customers expanding from basic server consolidation, yet increasingly more customers are seeking to virtualize their entire datacenter and desktop environments with VMware Infrastructure. We are also on the threshold of a major new opportunity – as customers begin to leverage VMware as both the on-ramp to the Cloud and for key elements of the Cloud itself. We are well-positioned to become a truly strategic platform for businesses of all sizes.”

Second Quarter Highlights

During the second quarter, VMware made several strategic announcements:

• Announced general availability of a bundle of application and infrastructure management products for the datacenter. VMware Lifecycle Manager, VMware Lab Manager and VMware Stage Manager provide a more cost-effective and powerful way to manage the entire software lifecycle. In particular, they enable end user self-provisioning of virtual machines, give IT departments complete control of virtual machine environments and provide application owners with application release management capabilities.

• Announced general availability of VMware Site Recovery Manager, a pioneering new product for disaster recovery management and automation that simplifies business continuity planning and testing, and reduces the risk and complexity associated with executing disaster recovery.

• Announced the acquisition of B-hive Networks, a privately-held application performance management software company. With this acquisition, which closed on July 1, VMware enhances the VMware portfolio of application and infrastructure management products by offering proactive performance management and service level reporting for applications running within virtual machines. B-hive’s R&D facility and team also forms the core of VMware’s new development center in Israel.

• Announced general availability of VMware ThinApp 4, an application virtualization solution that lets customers run multiple versions of virtually any application on any Windows operating system without conflict. This product is the result of our first quarter acquisition of Thinstall.

• Announced the VMware Alliance Affiliate Initiative (Channel Affiliate Program) – CA, Dell (Equal Logic), EMC, McAfee, NetApp, Riverbed, and Vizioncore (a subsidiary of Quest Software) have created VMware-oriented virtualization training and tools for channel partners as well as financial incentives on the sale of their products combined with VMware solutions.

• Announced new Original Equipment Manufacturer agreements with key Chinese vendors Lenovo and Inspur to distribute and support VMware Infrastructure 3 on their systems. These agreements will help to further accelerate the adoption of VMware virtualization technologies in China.

• Dell delivered a broad line of server systems embedded with VMware ESXi hypervisor including Dell PowerEdge 2950, R900, 1950, 2900, M600 blade and M605 blade systems. Other major vendors embedding VMware ESXi in their systems include HP, IBM, Fujitsu Siemens, Hitachi, HP and NEC.

Financial Outlook

The following forward-looking statements are based on current expectations and are subject to uncertainties and risks discussed below and in documents filed by VMware with the United States Securities and Exchange Commission. Actual results may differ materially.

• 2008 revenues are targeted to grow approximately 42% to 45% compared to 2007.

• Third quarter 2008 revenues are targeted to be within a range of approximately $462 to $468 million.

• Third quarter GAAP operating margin is targeted to be between 11% and 13%. This guidance includes stock-based compensation, employer payroll tax on employee stock transactions, amortization of intangible assets and capitalized software development costs which are targeted at 9% of projected revenue.

VMware plans to host a conference call today to review its second-quarter results and discuss its financial outlook. The call is scheduled to begin at 2:00 p.m. PT/ 5:00 p.m. ET and can be accessed via the Web athttp://ir.vmware.com. The Internet will be available live, and a replay will be available following completion of the live broadcast for approximately 30 days.

About VMware

VMware (NYSE: VMW) is the global leader in virtualization solutions from the desktop to the datacenter. Customers of all sizes rely on VMware to reduce capital and operating expenses, ensure business continuity, strengthen security and go green. With 2007 revenues of $1.3 billion, more than 120,000 customers and nearly 18,000 partners, VMware is one of the fastest growing public software companies. Headquartered in Palo Alto, California, VMware is majority-owned by EMC Corporation (NYSE: EMC) and on the web atwww.vmware.com.

VMware is a registered trademark of VMware, Inc. in the United States and/or other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective companies.

Use of Non-GAAP Financial Measures

VMware has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. These non-GAAP financial measures, which are used as measures of VMware’s performance, should be considered in addition to, not as a substitute for or in isolation from, measures of VMware’s financial performance prepared in accordance with GAAP. These measures differ from GAAP in that they exclude stock-based compensation, amortization of intangible assets, the write-off of in-process research and development, employer payroll tax on employee stock transactions, and the net effect of the amortization and capitalization of software under Statement of Financial Accounting Standards No. 86 (“FAS86”), VMware’s bases for these adjustments are described below.

VMware’s management uses the non-GAAP financial measures referenced in this release and shown in the accompanying schedules to gain an understanding of VMware’s comparative operating results (when comparing such results with previous periods or forecasts) and its future prospects and excludes the above-listed items (stock-based compensation, amortization of intangible assets, write-off of in-process research and development, employer payroll tax on employee stock transactions, and the net effect of the amortization and capitalization of software under FAS86) from its internal operating plans and measurement of financial performance, including budgeting, calculating bonus payments, and forecasting future periods. These non-GAAP financial measures are used by VMware’s management in their financial and operating decision-making because management believes they reflect VMware’s ongoing business in a manner that allows meaningful period-to-period comparisons. As the non-GAAP financial measures exclude expenses that VMware believes are not reflective of ongoing operating results, management believes the non-GAAP financial measures enable management to better analyze trends in its business. VMware’s management also believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and evaluating VMware’s current operating results and future prospects in the same manner as management does, if they so choose, and (b) in comparing in a consistent manner VMware’s current financial results with VMware’s past financial results.

In addition to the foregoing, management believes that these non-GAAP measures are useful to investors and others in assessing VMware’s operating performance due to the following factors:

• Although stock-based compensation is an important aspect of the compensation of VMware’s employees and executives, determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the future exercise or termination of the related stock-based awards. VMware does not believe these non-cash expenses are reflective of ongoing operating results.

• The amount of employer payroll taxes on stock-based compensation is dependent on VMware’s stock price and the timing and size of exercise by employees of their stock options and of vesting in restricted stock, over which management has limited to no control, and as such does not correlate to VMware’s operation of the business.

• VMware’s amortization of intangible assets includes the effects of EMC’s acquisition of VMware in January 2004. Also, VMware does not acquire businesses on a predictable cycle. VMware therefore believes that the presentation of non-GAAP measures that adjust for the amortization of intangible assets and the write-off of in-process research and development, provide investors and others with a consistent basis for comparison across accounting periods and, therefore, are useful to investors and others in helping them to better understand VMware’s operating results and underlying operational trends.

• The amortization and capitalization of software under FAS86 can vary significantly depending upon the timing of products reaching technological feasibility. VMware does not believe that the variance in operating results caused by the net effect of applying FAS86 properly reflect underlying operational trends.

VMware’s non-GAAP financial measures may be defined differently than similar terms used by other companies and, accordingly, may not be comparable to similarly-titled non-GAAP financial measures used by other companies. There are significant limitations associated with the use of non-GAAP financial measures. Specifically, the non-GAAP financial measures that exclude stock-based compensation, intangible amortization, in-process research and development, and the net effect of the amortization and capitalization of software under FAS86, do not include all items of income and expense that affect VMware’s operations. More specifically, in the case of stock-based compensation, if VMware did not pay out a portion of its compensation in the form of stock-based compensation and related employer payroll taxes, the cash salary expense included in costs of revenues and operating expenses would be higher. Payment of employer payroll taxes on stock-based compensation is also a cash expense for VMware and impacts the Company’s cash position. In the case of intangible amortization, while not directly affecting VMware’s cash position, it represents the loss of value of intangible assets over time. As a result, non-GAAP net income and non-GAAP net income per share, which exclude this expense, do not reflect the full economic loss in value of those intangible assets. Management compensates for these limitations by reconciling the non-GAAP financial measures to VMware’s financial results as determined in accordance with GAAP, which reconciliations are set forth in the accompanying schedules to this release, in the current report on Form 8-K furnished to the SEC on the date hereof and on http://ir.vmware.com.

Forward-Looking Statements

Statements made in this press release which are not statements of historical fact are forward-looking statements and are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate, but are not limited, to our financial outlook for revenue growth and operating margin during the third quarter of 2008 and revenue growth throughout 2008, continuing customer adoption and deployment of our products and architecture, levels of demand for our products including market size and leadership, ongoing development and delivery of innovative new products and applications of our product. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in consumer or information technology spending; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization market, and new product and marketing initiatives by our competitors; (iv) factors that affect timing of license revenue recognition such as product announcements and beta programs; (v) our customers’ ability to develop, and to transition to, new products, (vi) the uncertainty of customer acceptance of emerging technology; (viii) rapid technological and market changes in virtualization software; (ix) changes to product development timelines; (x) VMware’s relationship with EMC Corporation, and EMC’s ability to control matters requiring stockholder approval, including the election of VMware’s board members; (xi) our ability to protect our proprietary technology; (xii) our ability to attract and retain highly qualified employees; and (xiii) fluctuating currency exchange rates. These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including the report on Form 10-Q for the quarter ended June 30, 2008, which could cause actual results to vary from expectations. VMware disclaims any obligation to update any such forward-looking statements after the date of this release.

Contacts:

Michael Haase

VMware Investor Relations

mhaase@vmware.com

650-427-2875

Gloria Lee

VMware Investor Relations

glee@vmware.com

650-427-3267

Mary Ann Gallo

VMware Public Relations

magallo@vmwrare.com

650-427-3271

VMware, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)

(unaudited)

	June 30, 2008		December 31, 2007
ASSETS
Current assets:
Cash and cash equivalents	$	1,540,260	$	1,231,168
Accounts receivable, less allowance for doubtful accounts of $1,160 and $1,603		309,719		283,824
Deferred tax asset, current portion		31,470		54,386
Income taxes receivable from EMC, net		99,649		—
Other current assets		46,741		33,956
Total current assets		2,027,839		1,603,334
Property and equipment, net		349,851		276,983
Other assets, net		62,909		71,695
Deferred tax asset, net of current portion		48,261		72,249
Intangible assets, net		33,783		32,073
Goodwill		684,338		639,366
Total assets	$	3,206,981	$	2,695,700
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	66,986	$	61,503
Accrued expenses		171,283		173,610
Due to EMC, net		33,345		2,759
Income taxes payable to EMC, current portion		—		68,823
Deferred revenue, current portion		450,326		363,317
Total current liabilities		721,940		670,012
Note payable to EMC		450,000		450,000
Deferred revenue, net of current portion		270,962		189,479
Deferred tax liability		25,613		27,327
Income taxes payable to EMC, net of current portion		25,471		18,265
Commitments and contingencies
Stockholders’ equity:
Class A common stock, par value $.01; authorized 2,500,000 shares; issued and outstanding 87,959 and 82,924 shares		880		829
Class B convertible common stock, par value $.01; authorized 1,000,000 shares; issued and outstanding 300,000 shares		3,000		3,000
Additional paid-in capital		1,668,847		1,352,788
Retained earnings (accumulated deficit)		40,268		(16,000	)
Total stockholders’ equity		1,712,995		1,340,617
Total liabilities and stockholders’ equity	$	3,206,981	$	2,695,700

VMware, Inc.

CONSOLIDATED INCOME STATEMENTS

(in thousands, except per share amounts)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2008			2007			2008			2007
Revenues:
License	$	284,233		$	204,048		$	578,213		$	373,605
Services		171,895			92,777			316,090			181,915
		456,128			296,825			894,303			555,520
Operating expenses:
Cost of license revenues		21,639			20,832			44,498			41,388
Cost of services revenues		58,892			27,985			113,203			51,453
Research and development		114,128			71,581			233,383			126,539
Sales and marketing		158,307			98,989			307,564			185,696
General and administrative		42,162			30,703			86,264			57,327
Operating income		61,000			46,735			109,391			93,117
Investment income		6,310			2,714			14,314			4,419
Interest expense with EMC, net		(3,579	)		(7,791	)		(9,398	)		(6,519	)
Other income (expense), net		370			(146	)		824			(87	)
Income before taxes		64,101			41,512			115,131			90,930
Income tax provision		11,765			7,288			19,740			15,626
Net income	$	52,336		$	34,224		$	95,391		$	75,304
Net income per weighted average share, basic for Class A and Class B	$	0.14		$	0.10		$	0.25		$	0.23
Net income per weighted average share, diluted for Class A and Class B	$	0.13		$	0.10		$	0.24		$	0.23
Weighted average shares, basic for Class A and Class B		382,931			332,500			381,976			332,500
Weighted average shares, diluted for Class A and Class B		398,979			332,501			398,258			332,501

VMware, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2008			2007			2008			2007
Cash flows from operating activities:
Net income	$	52,336		$	34,224		$	95,391		$	75,304
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		39,459			23,622			76,893			44,819
Stock-based compensation, excluding amounts capitalized		42,072			15,973			84,233			27,617
Excess tax benefits from stock-based compensation		(56,735	)		—			(79,427	)		—
Other adjustments		(278	)		(429	)		1,058			134
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		(25,132	)		(52,451	)		(24,286	)		(6,090	)
Other assets		(4,687	)		(8,054	)		(13,281	)		(8,660	)
Due to/from EMC, net		23,040			(33,902	)		40,286			(90,080	)
Accounts payable		(18,602	)		14,349			(11,130	)		12,381
Accrued expenses		11,349			10,508			(3,956	)		11,468
Income taxes payable to/receivable from EMC		(75,412	)		22,813			(97,008	)		37,509
Deferred income taxes, net		83,063			(16,037	)		46,719			(22,628	)
Deferred revenue		80,161			75,015			168,322			108,755
Net cash provided by operating activities		150,634			85,631			283,814			190,529
Cash flows from investing activities:
Additions to property and equipment		(51,899	)		(32,335	)		(100,921	)		(48,919	)
Capitalized software development costs		(11,770	)		(3,872	)		(15,934	)		(10,544	)
Purchase of long-term investment		(1,750	)		—			(1,750	)		—
Business acquisitions, net of cash acquired		—			(21,414	)		(33,289	)		(21,410	)
Decrease (increase) in restricted cash		—			(6,382	)		896			(5,694	)
Net cash used in investing activities		(65,419	)		(64,003	)		(150,998	)		(86,567	)
Cash flows from financing activities:
Proceeds from issuance of common stock		109,658			—			133,327			—
Excess tax benefits from stock-based compensation		56,735			—			79,427			—
Shares repurchased for tax withholdings on vesting of restricted stock		(17,359	)		—			(36,478	)		—
Net cash provided by financing activities		149,034			—			176,276			—
Net increase in cash and cash equivalents		234,249			21,628			309,092			103,962
Cash and cash equivalents at beginning of the period		1,306,011			258,468			1,231,168			176,134
Cash and cash equivalents at end of the period	$	1,540,260		$	280,096		$	1,540,260		$	280,096

VMware, Inc.

RECONCILIATION OF GAAP TO NON-GAAP DATA

For the Three Months Ended June 30, 2008

(in thousands, except per share amounts)

(unaudited)

	GAAP			Stock-Based Compensation			Employer Payroll Tax on Employee Stock Transactions			Intangible Amortization			Capitalized Software Development Costs (1)			Stock-based Compensation Included in Capitalized Software Development Costs			Non-GAAP, as adjusted
Operating expenses:
Cost of license revenues	$	21,639			(276	)		(23	)		(2,294	)		(14,269	)		—		$	4,777
Cost of services revenues	$	58,892			(3,795	)		(154	)		—			—			—		$	54,943
Research and development	$	114,128			(19,479	)		(1,642	)		—			14,817			(3,046	)	$	104,778
Sales and marketing	$	158,307			(11,699	)		(856	)		(897	)		—			—		$	144,855
General and administrative	$	42,162			(6,823	)		(320	)		(647	)		—			—		$	34,372
Operating income	$	61,000			42,072			2,995			3,838			(548	)		3,046		$	112,403
Income before taxes	$	64,101			42,072			2,995			3,838			(548	)		3,046		$	115,504
Income tax provision	$	11,765			9,913			811			1,292			(1,291	)		682		$	23,172
Quarterly tax rate		18.35	%																	20.06	%
Net income	$	52,336			32,159			2,184			2,546			743			2,364		$	92,332
Net income per weighted average share, basic for Class A and Class B	$	0.14		$	0.08		$	0.01		$	0.01		$	0.00		$	0.01		$	0.24
Net income per weighted average share, diluted for Class A and Class B	$	0.13		$	0.08		$	0.01		$	0.01		$	0.00		$	0.01		$	0.23
Weighted average shares, basic for Class A and Class B		382,931			382,931			382,931			382,931			382,931			382,931			382,931
Weighted average shares, diluted for Class A and Class B		398,979			398,979			398,979			398,979			398,979			398,979			398,979

(1) For the second quarter of 2008, VMware capitalized $14.8 million (including $3.0 million of stock-based compensation) of costs incurred for the development of software products. Amortization expense from previously capitalized amounts was $14.3 million for the second quarter of 2008.

VMware, Inc.

RECONCILIATION OF GAAP TO NON-GAAP DATA

For the Three Months Ended June 30, 2007

(in thousands, except per share amounts)

(unaudited)

	GAAP			Stock-Based Compensation			Intangible Amortization			Capitalized Software Development Costs (1)			Stock-based Compensation Included in Capitalized Software Development Costs			Non-GAAP, as adjusted
Operating expenses:
Cost of license revenues	$	20,832			(74	)		(5,215	)		(8,730	)		—		$	6,813
Cost of services revenues	$	27,985			(919	)		—			—			—		$	27,066
Research and development	$	71,581			(8,252	)		—			4,402			(530	)	$	67,201
Sales and marketing	$	98,989			(4,240	)		(581	)		—			—		$	94,168
General and administrative	$	30,703			(2,488	)		(492	)		—			—		$	27,723
Operating income	$	46,735			15,973			6,288			4,328			530		$	73,854
Income before taxes	$	41,512			15,973			6,288			4,328			530		$	68,631
Income tax provision	$	7,288			5,059			2,327			1,601			196		$	16,471
Quarterly tax rate		17.6	%														24.0	%
Net income	$	34,224			10,914			3,961			2,727			334		$	52,160
Net income per weighted average share, basic for Class A and Class B	$	0.10		$	0.03		$	0.01		$	0.01		$	0.00		$	0.16
Net income per weighted average share, diluted for Class A and Class B	$	0.10		$	0.03		$	0.01		$	0.01		$	0.00		$	0.16
Weighted average shares, basic for Class A and Class B		332,500			332,500			332,500			332,500			332,500			332,500
Weighted average shares, diluted for Class A and Class B		332,501			332,501			332,501			332,501			332,501			332,501

(1) For the second quarter of 2007, VMware capitalized $4.4 million (including $0.5 million of stock-based compensation), of costs incurred for the development of software products. Amortization expense from previously capitalized amounts was $8.7 million for the second quarter of 2007.

VMware, Inc.

RECONCILIATION OF GAAP TO NON-GAAP DATA

For the Six Months Ended June 30, 2008

(in thousands, except per share amounts)

(unaudited)

	GAAP			Stock-Based Compensation			Employer Payroll Tax on Employee Stock Transactions			Intangible Amortization			Capitalized Software Development Costs (1)			Stock-based Compensation Included in Capitalized Software Development Costs			Non-GAAP, as adjusted
Operating expenses:
Cost of license revenues	$	44,498			(539	)		(25	)		(4,604	)		(29,139	)		—		$	10,191
Cost of services revenues	$	113,203			(7,056	)		(191	)		—			—			—		$	105,956
Research and development	$	233,383			(40,576	)		(2,439	)		—			19,853			(3,919	)	$	206,302
Sales and marketing	$	307,564			(23,000	)		(1,144	)		(1,791	)		—			—		$	281,629
General and administrative	$	86,264			(13,062	)		(477	)		(1,294	)		—			—		$	71,431
Operating income	$	109,391			84,233			4,276			7,689			9,286			3,919		$	218,794
Income before taxes	$	115,131			84,233			4,276			7,689			9,286			3,919		$	224,534
Income tax provision	$	19,740			18,413			1,139			2,703			891			857		$	43,743
Quarterly tax rate		17.1	%																	19.5	%
Net income	$	95,391			65,820			3,137			4,986			8,395			3,062		$	180,791
Net income per weighted average share, basic for Class A and Class B	$	0.25		$	0.17		$	0.01		$	0.01		$	0.02		$	0.01		$	0.47
Net income per weighted average share, diluted for Class A and Class B	$	0.24		$	0.17		$	0.01		$	0.01		$	0.02		$	0.01		$	0.45
Weighted average shares, basic for Class A and Class B		381,976			381,976			381,976			381,976			381,976			381,976			381,976
Weighted average shares, diluted for Class A and Class B		398,258			398,258			398,258			398,258			398,258			398,258			398,258

(1) For the first six months of 2008, VMware capitalized $19.9 million (including $3.9 million of stock-based compensation) of costs incurred for the development of software products. Amortization expense from previously capitalized amounts was $29.1 million for the first six months of 2008.

VMware, Inc.

RECONCILIATION OF GAAP TO NON-GAAP DATA

For the Six Months Ended June 30, 2007

(in thousands, except per share amounts)

(unaudited)

	GAAP			Stock-Based Compensation			Intangible Amortization			Capitalized Software Development Costs (1)			Stock-based Compensation Included in Capitalized Software Development Costs			Non-GAAP, as adjusted
Operating expenses:
Cost of license revenues	$	41,388			(110	)		(10,430	)		(16,717	)		—		$	14,131
Cost of services revenues	$	51,453			(1,413	)		—			—			—		$	50,040
Research and development	$	126,539			(14,644	)		—			12,001			(1,457	)	$	122,439
Sales and marketing	$	185,696			(7,184	)		(1,158	)		—			—		$	177,354
General and administrative	$	57,327			(4,266	)		(985	)		—			—		$	52,076
Operating income	$	93,117			27,617			12,573			4,716			1,457		$	139,480
Income before taxes	$	90,930			27,617			12,573			4,716			1,457		$	137,293
Income tax provision	$	15,626			7,734			4,652			1,745			539		$	30,296
Quarterly tax rate		17.2	%														22.1	%
Net income	$	75,304			19,883			7,921			2,971			918		$	106,997
Net income per weighted average share, basic for Class A and Class B	$	0.23		$	0.06		$	0.02		$	0.01		$	0.00		$	0.32
Net income per weighted average share, diluted for Class A and Class B	$	0.23		$	0.06		$	0.02		$	0.01		$	0.00		$	0.32
Weighted average shares, basic for Class A and Class B		332,500			332,500			332,500			332,500			332,500			332,500
Weighted average shares, diluted for Class A and Class B		332,501			332,501			332,501			332,501			332,501			332,501

(1) For the first six months of 2007, VMware capitalized $12.0 million (including $1.5 million of stock-based compensation) of costs incurred for the development of software products. Amortization expense from previously capitalized amounts was $16.7 million for the first six months of 2007.