Property And Equipment, Net

6 Months Ended

Jun. 30, 2012

Property, Plant and Equipment [Abstract]

H. Property and Equipment, Net

Property and equipment, net, as of June 30, 2012 and December 31, 2011 consisted of the following (table in thousands):



	June 30, 2012			December 31, 2011
Equipment and software	$	563,494		$	512,754
Buildings and improvements	371,985			340,596
Furniture and fixtures	63,802			61,023
Construction in progress	75,670			68,707
Total property and equipment	1,074,951			983,080
Accumulated depreciation	(521,827		)	(457,590		)
Total property and equipment, net	$	553,124		$	525,490

Depreciation expense was $32.9 million and $31.3 million in the three months ended June 30, 2012 and 2011, respectively, and $65.7 million and $62.0 million in the six months ended June 30, 2012 and 2011, respectively.

In the three months ended June 30, 2011, VMware closed an agreement to purchase the right, title and interest in a ground lease covering the property and improvements located adjacent to VMware’s existing Palo Alto, California campus for a total cost of $225.0 million. VMware paid the seller $45.0 million in the three months ended March 31, 2011 as a good faith deposit and in the three months ended June 30, 2011, VMware paid the remaining $180.0 million. Based upon the preliminary respective fair values, $51.9 million of the purchase price was recorded to property and equipment, net on the consolidated balance sheet for the estimated fair value of the buildings and site improvements. The remaining $173.1 million of the purchase price was attributed to the fair value of the ground lease and was recorded to intangible assets, net on the consolidated balance

sheet. These amounts are reflected on the consolidated statements of cash flows for the three and six months ended June 30, 2011.

In the three months ended September 30, 2011, the gross amount classified to property and equipment, net was increased by $22.0 million to $73.9 million to reflect the final assumptions regarding VMware’s intended use of the existing structures. As a result of this adjustment, the gross amount of the value recorded to intangible assets, net on the consolidated balance sheet was decreased by the same amount.

As of June 30, 2012 and December 31, 2011, construction in progress primarily represented buildings and site improvements related to VMware’s Palo Alto campus expansion that had not yet been placed into service.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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