x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 94-3292913 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
3401 Hillview Avenue Palo Alto, CA | 94304 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | o | |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | o |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 6. | ||
ITEM 1. | FINANCIAL STATEMENTS |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Revenues: | |||||||
License | $ | 572 | $ | 576 | |||
Services | 1,017 | 935 | |||||
Total revenues | 1,589 | 1,511 | |||||
Operating expenses (1): | |||||||
Cost of license revenues | 40 | 50 | |||||
Cost of services revenues | 211 | 193 | |||||
Research and development | 356 | 305 | |||||
Sales and marketing | 565 | 536 | |||||
General and administrative | 172 | 187 | |||||
Realignment charges | 53 | 22 | |||||
Operating income | 192 | 218 | |||||
Investment income | 16 | 12 | |||||
Interest expense with EMC | (7 | ) | (6 | ) | |||
Other income (expense), net | (1 | ) | (2 | ) | |||
Income before income taxes | 200 | 222 | |||||
Income tax provision | 39 | 26 | |||||
Net income | $ | 161 | $ | 196 | |||
Net income per weighted-average share, basic for Class A and Class B | $ | 0.38 | $ | 0.46 | |||
Net income per weighted-average share, diluted for Class A and Class B | $ | 0.38 | $ | 0.45 | |||
Weighted-average shares, basic for Class A and Class B | 423,230 | 427,962 | |||||
Weighted-average shares, diluted for Class A and Class B | 424,180 | 430,496 | |||||
__________ | |||||||
(1) Includes stock-based compensation as follows: | |||||||
Cost of license revenues | $ | 1 | $ | 1 | |||
Cost of services revenues | 12 | 11 | |||||
Research and development | 70 | 54 | |||||
Sales and marketing | 49 | 39 | |||||
General and administrative | 18 | 14 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net income | $ | 161 | $ | 196 | |||
Other comprehensive income (loss): | |||||||
Changes in market value of available-for-sale securities: | |||||||
Unrealized gains (losses), net of taxes of $11 and $4 | 18 | 6 | |||||
Changes in market value of effective foreign currency forward contracts: | |||||||
Unrealized gains (losses), net of taxes of $0 for all periods | 2 | (5 | ) | ||||
Total other comprehensive income (loss) | 20 | 1 | |||||
Total comprehensive income (loss), net of taxes | $ | 181 | $ | 197 |
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,785 | $ | 2,493 | |||
Short-term investments | 5,461 | 5,016 | |||||
Accounts receivable, net of allowance for doubtful accounts of $2 and $2 | 1,089 | 1,633 | |||||
Due from related parties, net | 12 | 74 | |||||
Other current assets | 147 | 144 | |||||
Total current assets | 9,494 | 9,360 | |||||
Property and equipment, net | 1,108 | 1,128 | |||||
Other assets | 195 | 193 | |||||
Deferred tax assets | 464 | 456 | |||||
Intangible assets, net | 582 | 616 | |||||
Goodwill | 3,993 | 3,993 | |||||
Total assets | $ | 15,836 | $ | 15,746 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 106 | $ | 138 | |||
Accrued expenses and other | 622 | 746 | |||||
Unearned revenues | 3,181 | 3,245 | |||||
Total current liabilities | 3,909 | 4,129 | |||||
Notes payable to EMC | 1,500 | 1,500 | |||||
Unearned revenues | 1,795 | 1,831 | |||||
Other liabilities | 361 | 363 | |||||
Total liabilities | 7,565 | 7,823 | |||||
Contingencies (refer to Note I) | |||||||
Stockholders’ equity: | |||||||
Class A common stock, par value $.01; authorized 2,500,000 shares; issued and outstanding 124,086 and 121,947 shares | 1 | 1 | |||||
Class B convertible common stock, par value $.01; authorized 1,000,000 shares; issued and outstanding 300,000 shares | 3 | 3 | |||||
Additional paid-in capital | 2,897 | 2,728 | |||||
Accumulated other comprehensive income (loss) | 12 | (8 | ) | ||||
Retained earnings | 5,356 | 5,195 | |||||
Total VMware, Inc.’s stockholders’ equity | 8,269 | 7,919 | |||||
Non-controlling interests | 2 | 4 | |||||
Total stockholders’ equity | 8,271 | 7,923 | |||||
Total liabilities and stockholders’ equity | $ | 15,836 | $ | 15,746 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Operating activities: | |||||||
Net income | $ | 161 | $ | 196 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 88 | 76 | |||||
Stock-based compensation | 150 | 119 | |||||
Excess tax benefits from stock-based compensation | — | (2 | ) | ||||
Deferred income taxes, net | (18 | ) | (15 | ) | |||
Impairment of strategic investments | 5 | — | |||||
Other | 1 | — | |||||
Changes in assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | 544 | 531 | |||||
Other assets | (5 | ) | — | ||||
Due to/from related parties, net | 63 | 52 | |||||
Accounts payable | (28 | ) | (49 | ) | |||
Accrued expenses | (118 | ) | (102 | ) | |||
Income taxes payable | (23 | ) | (32 | ) | |||
Unearned revenues | (100 | ) | (91 | ) | |||
Net cash provided by operating activities | 720 | 683 | |||||
Investing activities: | |||||||
Additions to property and equipment | (41 | ) | (106 | ) | |||
Purchases of available-for-sale securities | (1,124 | ) | (1,027 | ) | |||
Sales of available-for-sale securities | 420 | 501 | |||||
Maturities of available-for-sale securities | 286 | 255 | |||||
Proceeds from disposal of assets | 3 | — | |||||
Purchases of strategic investments | (2 | ) | — | ||||
Business acquisitions, net of cash acquired | — | (21 | ) | ||||
Decrease in restricted cash | 2 | 1 | |||||
Net cash used in investing activities | (456 | ) | (397 | ) | |||
Financing activities: | |||||||
Proceeds from issuance of common stock | 52 | 54 | |||||
Repurchase of common stock | — | (438 | ) | ||||
Excess tax benefits from stock-based compensation | — | 2 | |||||
Shares repurchased for tax withholdings on vesting of restricted stock | (24 | ) | (34 | ) | |||
Net cash provided by (used in) financing activities | 28 | (416 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 292 | (130 | ) | ||||
Cash and cash equivalents at beginning of the period | 2,493 | 2,071 | |||||
Cash and cash equivalents at end of the period | $ | 2,785 | $ | 1,941 | |||
Supplemental disclosures of cash flow information: | |||||||
Cash paid for interest | $ | 7 | $ | 7 | |||
Cash paid for taxes, net | 63 | 74 | |||||
Non-cash items: | |||||||
Changes in capital additions, accrued but not paid | $ | (3 | ) | $ | (42 | ) |
March 31, 2016 | |||||||||||||
Weighted-Average Useful Lives (in years) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
Purchased technology | 6.6 | $ | 646 | $ | (320 | ) | $ | 326 | |||||
Leasehold interest | 34.9 | 149 | (21 | ) | 128 | ||||||||
Customer relationships and customer lists | 8.3 | 134 | (52 | ) | 82 | ||||||||
Trademarks and tradenames | 8.6 | 61 | (18 | ) | 43 | ||||||||
Other | 5.5 | 5 | (2 | ) | 3 | ||||||||
Total definite-lived intangible assets | $ | 995 | $ | (413 | ) | $ | 582 |
December 31, 2015 | |||||||||||||
Weighted-Average Useful Lives (in years) | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||
Purchased technology | 6.6 | $ | 648 | $ | (298 | ) | $ | 350 | |||||
Leasehold interest | 34.9 | 149 | (20 | ) | 129 | ||||||||
Customer relationships and customer lists | 8.4 | 148 | (62 | ) | 86 | ||||||||
Trademarks and tradenames | 8.6 | 61 | (16 | ) | 45 | ||||||||
Other | 2.9 | 20 | (14 | ) | 6 | ||||||||
Total definite-lived intangible assets | $ | 1,026 | $ | (410 | ) | $ | 616 |
Remainder of 2016 | $ | 95 | |
2017 | 122 | ||
2018 | 109 | ||
2019 | 88 | ||
2020 | 38 | ||
Thereafter | 130 | ||
Total | $ | 582 |
For the Three Months Ended March 31, 2016 | |||||||||||||||
Balance as of January 1, 2016 | Realignment Charges | Utilization | Balance as of March 31, 2016 | ||||||||||||
Severance-related costs | $ | 3 | $ | 50 | $ | (26 | ) | $ | 27 | ||||||
Costs to exit facilities | — | 3 | — | 3 | |||||||||||
Total | $ | 3 | $ | 53 | $ | (26 | ) | $ | 30 |
For the Three Months Ended March 31, 2015 | |||||||||||||||
Balance as of January 1, 2015 | Realignment Charges | Utilization | Balance as of March 31, 2015 | ||||||||||||
Severance-related costs | $ | 8 | $ | 22 | $ | (14 | ) | $ | 16 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net income | $ | 161 | $ | 196 | |||
Weighted-average shares, basic for Class A and Class B | 423,230 | 427,962 | |||||
Effect of dilutive securities | 950 | 2,534 | |||||
Weighted-average shares, diluted for Class A and Class B | 424,180 | 430,496 | |||||
Net income per weighted-average share, basic for Class A and Class B | $ | 0.38 | $ | 0.46 | |||
Net income per weighted-average share, diluted for Class A and Class B | $ | 0.38 | $ | 0.45 |
Three Months Ended | |||||
March 31, | |||||
2016 | 2015 | ||||
Anti-dilutive securities: | |||||
Employee stock options | 2,352 | 2,503 | |||
Restricted stock units | 15,491 | 223 | |||
Total | 17,843 | 2,726 |
March 31, 2016 | |||||||||||||||
Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate Fair Value | ||||||||||||
Cash | $ | 716 | $ | — | $ | — | $ | 716 | |||||||
Cash equivalents: | |||||||||||||||
Money-market funds | $ | 2,033 | $ | — | $ | — | $ | 2,033 | |||||||
Time deposits | 14 | — | — | 14 | |||||||||||
Municipal obligations | 22 | — | — | 22 | |||||||||||
Total cash equivalents | $ | 2,069 | $ | — | $ | — | $ | 2,069 | |||||||
Short-term investments: | |||||||||||||||
U.S. Government and agency obligations | $ | 813 | $ | 2 | $ | — | $ | 815 | |||||||
U.S. and foreign corporate debt securities | 3,747 | 14 | (3 | ) | 3,758 | ||||||||||
Foreign governments and multi-national agency obligations | 35 | — | — | 35 | |||||||||||
Municipal obligations | 618 | 1 | — | 619 | |||||||||||
Asset-backed securities | 13 | — | — | 13 | |||||||||||
Mortgage-backed securities | 221 | — | — | 221 | |||||||||||
Total short-term investments | $ | 5,447 | $ | 17 | $ | (3 | ) | $ | 5,461 | ||||||
Other assets: | |||||||||||||||
Marketable available-for-sale equity securities | $ | 15 | $ | 2 | $ | — | $ | 17 |
December 31, 2015 | |||||||||||||||
Cost or Amortized Cost | Unrealized Gains | Unrealized Losses | Aggregate Fair Value | ||||||||||||
Cash | $ | 725 | $ | — | $ | — | $ | 725 | |||||||
Cash equivalents: | |||||||||||||||
Money-market funds | $ | 1,763 | $ | — | $ | — | $ | 1,763 | |||||||
Time deposits | 5 | — | — | 5 | |||||||||||
Total cash equivalents | $ | 1,768 | $ | — | $ | — | $ | 1,768 | |||||||
Short-term investments: | |||||||||||||||
Time deposits | $ | 12 | $ | — | $ | — | $ | 12 | |||||||
U.S. Government and agency obligations | 753 | — | (3 | ) | 750 | ||||||||||
U.S. and foreign corporate debt securities | 3,263 | 1 | (12 | ) | 3,252 | ||||||||||
Foreign governments and multi-national agency obligations | 35 | — | — | 35 | |||||||||||
Municipal obligations | 705 | 1 | — | 706 | |||||||||||
Asset-backed securities | 20 | — | — | 20 | |||||||||||
Mortgage-backed securities | 243 | — | (2 | ) | 241 | ||||||||||
Total short-term investments | $ | 5,031 | $ | 2 | $ | (17 | ) | $ | 5,016 | ||||||
Other assets: | |||||||||||||||
Marketable available-for-sale equity securities | $ | 15 | $ | 3 | $ | — | $ | 18 |
March 31, 2016 | December 31, 2015 | ||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||
U.S. Government and agency obligations | $ | 106 | $ | — | $ | 657 | $ | (3 | ) | ||||||
U.S. and foreign corporate debt securities | 926 | (2 | ) | 2,564 | (11 | ) | |||||||||
Mortgage-backed securities | 77 | — | 171 | (1 | ) | ||||||||||
Total | $ | 1,109 | $ | (2 | ) | $ | 3,392 | $ | (15 | ) |
Amortized Cost Basis | Aggregate Fair Value | ||||||
Due within one year | $ | 1,741 | $ | 1,742 | |||
Due after 1 year through 5 years | 3,422 | 3,434 | |||||
Due after 5 years through 10 years | 113 | 114 | |||||
Due after 10 years | 171 | 171 | |||||
Total short-term investments | $ | 5,447 | $ | 5,461 |
• | Level 1 - Quoted prices in active markets for identical assets or liabilities |
• | Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are noted active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities |
• | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities |
March 31, 2016 | |||||||||||
Level 1 | Level 2 | Total | |||||||||
Cash equivalents: | |||||||||||
Money-market funds | $ | 2,033 | $ | — | $ | 2,033 | |||||
Time deposits | — | 14 | 14 | ||||||||
Municipal obligations | — | 22 | 22 | ||||||||
Total cash equivalents | $ | 2,033 | $ | 36 | $ | 2,069 | |||||
Short-term investments: | |||||||||||
U.S. Government and agency obligations | $ | 564 | $ | 251 | $ | 815 | |||||
U.S. and foreign corporate debt securities | — | 3,758 | 3,758 | ||||||||
Foreign governments and multi-national agency obligations | — | 35 | 35 | ||||||||
Municipal obligations | — | 619 | 619 | ||||||||
Asset-backed securities | — | 13 | 13 | ||||||||
Mortgage-backed securities | — | 221 | 221 | ||||||||
Total short-term investments | $ | 564 | $ | 4,897 | $ | 5,461 | |||||
Other assets: | |||||||||||
Marketable available-for-sale equity securities | $ | 17 | $ | — | $ | 17 | |||||
Other current assets: | |||||||||||
Forward contracts | $ | — | $ | 4 | $ | 4 |
December 31, 2015 | |||||||||||
Level 1 | Level 2 | Total | |||||||||
Cash equivalents: | |||||||||||
Money-market funds | $ | 1,763 | $ | — | $ | 1,763 | |||||
Time deposits | — | 5 | 5 | ||||||||
Total cash equivalents | $ | 1,763 | $ | 5 | $ | 1,768 | |||||
Short-term investments: | |||||||||||
Time deposits | $ | — | $ | 12 | $ | 12 | |||||
U.S. Government and agency obligations | 543 | 207 | 750 | ||||||||
U.S. and foreign corporate debt securities | — | 3,252 | 3,252 | ||||||||
Foreign governments and multi-national agency obligations | — | 35 | 35 | ||||||||
Municipal obligations | — | 706 | 706 | ||||||||
Asset-backed securities | — | 20 | 20 | ||||||||
Mortgage-backed securities | — | 241 | 241 | ||||||||
Total short-term investments | $ | 543 | $ | 4,473 | $ | 5,016 | |||||
Other assets: | |||||||||||
Marketable available-for-sale equity securities | $ | 18 | $ | — | $ | 18 | |||||
Accrued expenses and other: | |||||||||||
Forward contracts | $ | — | $ | (1 | ) | $ | (1 | ) |
March 31, 2016 | December 31, 2015 | ||||||
Unearned license revenues | $ | 415 | $ | 428 | |||
Unearned software maintenance revenues | 4,105 | 4,174 | |||||
Unearned professional services revenues | 456 | 474 | |||||
Total unearned revenues | $ | 4,976 | $ | 5,076 |
Three Months Ended | |||
March 31, 2015 | |||
Aggregate purchase price | $ | 438 | |
Class A common shares repurchased | 5,366 | ||
Weighted-average price per share | $ | 81.65 |
Number of Units | Weighted- Average Grant Date Fair Value (per unit) | |||||
Outstanding, January 1, 2016 | 18,693 | $ | 77.29 | |||
Granted | 1,690 | 51.38 | ||||
Vested | (1,220 | ) | 76.88 | |||
Forfeited | (1,085 | ) | 81.33 | |||
Outstanding, March 31, 2016 | 18,078 | 74.65 |
Unrealized Gain (Loss) on Available-for-Sale Securities | Unrealized Gain (Loss) on Forward Contracts | Total | |||||||||
Balance, January 1, 2016 | $ | (7 | ) | $ | (1 | ) | $ | (8 | ) | ||
Unrealized gain (loss), net of taxes of $11, $0 and $11 | 18 | 2 | 20 | ||||||||
Balance, March 31, 2016 | $ | 11 | $ | 1 | $ | 12 |
Unrealized Gain (Loss) on Available-for-Sale Securities | Unrealized Gain (Loss) on Forward Contracts | Total | |||||||||
Balance, January 1, 2015 | $ | — | $ | (1 | ) | $ | (1 | ) | |||
Unrealized gain (loss), net of taxes of $4, $0, and $4 | 6 | (5 | ) | 1 | |||||||
Balance, March 31, 2015 | $ | 6 | $ | (6 | ) | $ | — |
• | 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 provides professional services to end users based upon contractual agreements with EMC. |
• | Pursuant to an ongoing distribution agreement, VMware acts as the selling agent for certain products and services of Pivotal Software, Inc. ("Pivotal"), a subsidiary of EMC, in exchange for an agency fee. Under this agreement, cash is collected from the end user by VMware and remitted to Pivotal, net of the contractual agency fee. |
• | VMware provides various services to Pivotal. Support costs incurred by VMware are reimbursed to VMware and are recorded as a reduction to the costs incurred by VMware. |
Revenues and Receipts | Unearned Revenues | ||||||||||||||
Three Months Ended | As of | As of | |||||||||||||
March 31, | March 31, | December 31, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Reseller revenues | $ | 79 | $ | 61 | $ | 276 | $ | 292 | |||||||
Internal-use revenues | 5 | 3 | 6 | 11 | |||||||||||
Professional services revenues | 25 | 23 | — | 3 | |||||||||||
Agency fee revenues | 1 | 1 | — | — | |||||||||||
Reimbursement for services to Pivotal | 1 | 1 | n/a | n/a |
• | VMware purchases and leases products and purchases services 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 charged to VMware with a mark-up intended to approximate costs that would have been incurred had VMware contracted for such services with an unrelated third party. These costs are included as expenses on VMware’s condensed consolidated statements of income and primarily include salaries, benefits, travel and rent expenses. EMC also incurs certain administrative costs on VMware’s behalf in the U.S. that are recorded as expenses on VMware’s condensed consolidated statements of income. |
• | From time to time, VMware invoices end users on behalf of EMC for certain services rendered by EMC. Cash related to these services is collected from the end user by VMware and remitted to EMC. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Purchases and leases of products and purchases of services | $ | 17 | $ | 19 | |||
Collaborative technology project costs | — | 1 | |||||
EMC subsidiary support and administrative costs | 23 | 28 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Payments from VMware to EMC | $ | 40 | $ | 49 |
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
Due (to) related parties | $ | (51 | ) | $ | (68 | ) | |
Due from related parties | 63 | 142 | |||||
Due (to) from related parties, net | $ | 12 | $ | 74 | |||
Income tax due (to) from related parties | $ | (2 | ) | $ | (18 | ) |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
United States | $ | 800 | $ | 762 | |||
International | 789 | 749 | |||||
Total | $ | 1,589 | $ | 1,511 |
March 31, 2016 | December 31, 2015 | ||||||
United States | $ | 817 | $ | 831 | |||
International | 144 | 148 | |||||
Total | $ | 961 | $ | 979 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | SDDC or Software-Defined Data Center |
• | Hybrid Cloud Computing |
• | End-User Computing |
Three Months Ended | |||||||||||||||||
March 31, | $ Change | % Change | |||||||||||||||
2016 | 2015 | Actual | Actual | Constant Currency | |||||||||||||
Revenues: | |||||||||||||||||
License | $ | 572 | $ | 576 | $ | (4 | ) | (1 | )% | 1 | % | ||||||
Services: | |||||||||||||||||
Software maintenance | 891 | 813 | 79 | 10 | |||||||||||||
Professional services | 126 | 122 | 3 | 3 | |||||||||||||
Total services | 1,017 | 935 | 82 | 9 | |||||||||||||
Total revenues | $ | 1,589 | $ | 1,511 | $ | 78 | 5 | 6 | |||||||||
Revenues: | |||||||||||||||||
United States | $ | 800 | $ | 762 | $ | 39 | 5 | % | |||||||||
International | 789 | 749 | 40 | 5 | |||||||||||||
Total revenues | $ | 1,589 | $ | 1,511 | $ | 78 | 5 | 6 |
March 31, 2016 | December 31, 2015 | ||||||
Unearned license revenues | $ | 415 | $ | 428 | |||
Unearned software maintenance revenues | 4,105 | 4,174 | |||||
Unearned professional services revenues | 456 | 474 | |||||
Total unearned revenues | $ | 4,976 | $ | 5,076 |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2016 | 2015 | $ Change | % Change | |||||||||||
Cost of license revenues | $ | 39 | $ | 49 | $ | (10 | ) | (20 | )% | |||||
Stock-based compensation | 1 | 1 | — | 7 | ||||||||||
Total expenses | $ | 40 | $ | 50 | $ | (10 | ) | (20 | ) | |||||
% of License revenues | 7 | % | 9 | % |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2016 | 2015 | $ Change | % Change | |||||||||||
Cost of services revenues | $ | 199 | $ | 182 | $ | 16 | 9 | % | ||||||
Stock-based compensation | 12 | 11 | 1 | 10 | ||||||||||
Total expenses | $ | 211 | $ | 193 | $ | 18 | 9 | |||||||
% of Services revenues | 21 | % | 21 | % |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2016 | 2015 | $ Change | % Change | |||||||||||
Research and development | $ | 286 | $ | 251 | $ | 36 | 14 | % | ||||||
Stock-based compensation | 70 | 54 | 16 | 30 | ||||||||||
Total expenses | $ | 356 | $ | 305 | $ | 52 | 17 | |||||||
% of Total revenues | 22 | % | 20 | % |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2016 | 2015 | $ Change | % Change | |||||||||||
Sales and marketing | $ | 516 | $ | 497 | $ | 20 | 4 | % | ||||||
Stock-based compensation | 49 | 39 | 9 | 22 | ||||||||||
Total expenses | $ | 565 | $ | 536 | $ | 29 | 5 | |||||||
% of Total revenues | 35 | % | 35 | % |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2016 | 2015 | $ Change | % Change | |||||||||||
General and administrative | $ | 154 | $ | 173 | $ | (19 | ) | (11 | )% | |||||
Stock-based compensation | 18 | 14 | 4 | 32 | ||||||||||
Total expenses | $ | 172 | $ | 187 | $ | (15 | ) | (8 | ) | |||||
% of Total revenues | 11 | % | 12 | % |
Three Months Ended | ||||||||||||||
March 31, | ||||||||||||||
2016 | 2015 | $ Change | % Change | |||||||||||
Realignment charges | $ | 53 | $ | 22 | $ | 31 | 137 | % | ||||||
% of Total revenues | 3 | % | 1 | % |
• | Pursuant to an ongoing reseller arrangement with EMC, EMC bundles our products and services with EMC’s products and sells them to end users. |
• | EMC purchases products and services from us for internal use. |
• | We provide professional services to end users based upon contractual agreements with EMC. |
• | Pursuant to an ongoing distribution agreement, we act as the selling agent for certain products and services of Pivotal Software, Inc. ("Pivotal"), a subsidiary of EMC, in exchange for an agency fee. Under this agreement, cash is collected from the end user by us and remitted to Pivotal, net of the contractual agency fee. |
• | We provide various services to Pivotal. Support costs incurred by us are reimbursed to us and are recorded as a reduction to the costs incurred by us. |
Revenues and Receipts | Unearned Revenues | ||||||||||||||
Three Months Ended | As of | As of | |||||||||||||
March 31, | March 31, | December 31, | |||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Reseller revenues | $ | 79 | $ | 61 | $ | 276 | $ | 292 | |||||||
Internal-use revenues | 5 | 3 | 6 | 11 | |||||||||||
Professional services revenues | 25 | 23 | — | 3 | |||||||||||
Agency fee revenues | 1 | 1 | — | — | |||||||||||
Reimbursement for services to Pivotal | 1 | 1 | n/a | n/a |
• | We purchase and lease products and purchase services from EMC. |
• | From time to time, we and EMC enter into agreements to collaborate on technology projects, and we pay EMC for services provided to us by EMC related to such projects. |
• | In certain geographic regions where we do not have an established legal entity, we contract with EMC subsidiaries for support services and EMC personnel who are managed by us. The costs incurred by EMC on our behalf related to these employees are charged to us with a mark-up intended to approximate costs that would have been incurred had we contracted for such services with an unrelated third party. These costs are included as expenses on our condensed consolidated statements of income and primarily include salaries, benefits, travel and rent expenses. EMC also incurs certain administrative costs on our behalf in the U.S. that are recorded as expenses on our condensed consolidated statements of income. |
• | From time to time, we invoice end users on behalf of EMC for certain services rendered by EMC. Cash related to these services is collected from the end user by us and remitted to EMC. |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Purchases and leases of products and purchases of services | $ | 17 | $ | 19 | |||
Collaborative technology project costs | — | 1 | |||||
EMC subsidiary support and administrative costs | 23 | 28 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Payments from us to EMC | $ | 40 | $ | 49 |
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
Due (to) related parties | $ | (51 | ) | $ | (68 | ) | |
Due from related parties | 63 | 142 | |||||
Due (to) from related parties, net | $ | 12 | $ | 74 | |||
Income tax due (to) from related parties | $ | (2 | ) | $ | (18 | ) |
March 31, | |||||||
2016 | 2015 | ||||||
Cash and cash equivalents | $ | 2,785 | $ | 1,941 | |||
Short-term investments | 5,461 | 5,285 | |||||
Total cash, cash equivalents and short-term investments | $ | 8,246 | $ | 7,226 |
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
Net cash provided by (used in): | |||||||
Operating activities | $ | 720 | $ | 683 | |||
Investing activities | (456 | ) | (397 | ) | |||
Financing activities | 28 | (416 | ) | ||||
Net increase (decrease) in cash and cash equivalents | $ | 292 | $ | (130 | ) |
• | our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission ("SEC"); |
• | announcements of investor conferences, speeches and events at which our executives talk about our products, services and competitive strategies; |
• | webcasts of our quarterly earnings calls and links to webcasts of investor conferences at which our executives appear (archives of these events are also available for a limited time); |
• | additional information on financial metrics, including reconciliations of non-GAAP financial measures discussed in our presentations to the nearest comparable GAAP measure; |
• | press releases on quarterly earnings, product and service announcements, legal developments and international news; |
• | corporate governance information including our certificate of incorporation, bylaws, corporate governance guidelines, board committee charters, business conduct guidelines (which constitutes our code of business conduct and ethics) and other governance-related policies; |
• | other news, blogs and announcements that we may post from time to time that investors might find useful or interesting; and |
• | opportunities to sign up for email alerts and RSS feeds to have information pushed in real time. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
• | fluctuations in demand, adoption rates, sales cycles (which have been increasing in length) and pricing levels for our products and services; |
• | changes in customers’ budgets for information technology purchases and in the timing of their purchasing decisions; |
• | the timing of recognizing revenues in any given quarter, which can be affected by a number of factors, including product announcements, beta programs and product promotions that can cause revenue recognition of certain orders to be deferred until future products to which customers are entitled become available; |
• | the timing of announcements or releases of new or upgraded products and services by us or by our competitors; |
• | the timing and size of business realignment plans and restructuring charges; |
• | our ability to maintain scalable internal systems for reporting, order processing, license fulfillment, product delivery, purchasing, billing and general accounting, among other functions; |
• | our ability to control costs, including our operating expenses; |
• | credit risks of our distributors, who account for a significant portion of product revenues and accounts receivable; |
• | our ability to process sales at the end of quarter; |
• | seasonal factors such as the end of fiscal period budget expenditures by our customers and the timing of holiday and vacation periods; |
• | renewal rates and the amounts of the renewals for EAs as original EA terms expire; |
• | the timing and amount of internally developed software development costs that may be capitalized; |
• | unplanned events that could affect market perception of the quality or cost-effectiveness of our products and solutions; and |
• | our ability to accurately predict the degree to which customers will elect to purchase our subscription-based offerings in place of licenses to our on-premises offerings. |
• | sensitive data regarding our business, including intellectual property and other proprietary data, could be stolen; |
• | our electronic communications systems, including email and other methods, could be disrupted, and our ability to conduct our business operations could be seriously damaged until such systems can be restored and secured; |
• | our ability to process customer orders and electronically deliver products and services could be degraded, and our distribution channels could be disrupted, resulting in delays in revenue recognition; |
• | defects and security vulnerabilities could be exploited or introduced into our software products or our hybrid cloud and SaaS offerings, thereby damaging the reputation and perceived reliability and security of our products and services and potentially making the data systems of our customers vulnerable to further data loss and cyber incidents; and |
• | personally identifiable or confidential data of our customers, employees and business partners could be stolen or lost. |
• | difficulties in enforcing contracts and collecting accounts receivable and longer payment cycles, especially in emerging markets; |
• | difficulties in delivering support, training and documentation in certain foreign markets; |
• | tariffs and trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products and services in certain foreign markets; |
• | economic or political instability and security concerns in countries that are important to our international sales and operations; |
• | difficulties in transferring funds from certain countries; |
• | increased compliance risks, particularly in emerging markets; and |
• | difficulties in maintaining appropriate controls relating to revenue recognition practices. |
• | pay significant damages; |
• | stop distributing our products that contain the open source software; |
• | revise or modify our product code to remove alleged infringing code; |
• | release the source code of our proprietary software; or |
• | take other steps to avoid or remedy an alleged infringement. |
• | disrupting our ongoing operations, diverting management from day-to-day responsibilities, increasing our expenses, and adversely impacting our business, financial condition and operating results; |
• | failure of an acquired business to further our business strategy; |
• | uncertainties in achieving the expected benefits of an acquisition or disposition, including enhanced revenues, technology, human resources, cost savings, operating efficiencies and other synergies; |
• | reducing cash available for operations, stock repurchase programs and other uses and resulting in potentially dilutive issuances of equity securities or the incurrence of debt; |
• | incurring amortization expense related to identifiable intangible assets acquired that could impact our operating results; |
• | difficulty integrating the operations, systems, technologies, products and personnel of acquired businesses effectively; |
• | the need to provide transition services in connection with a disposition, which may result in the diversion of resources and focus; |
• | difficulty achieving expected business results due to a lack of experience in new markets, products or technologies or the initial dependence on unfamiliar distribution partners or vendors; |
• | retaining and motivating key personnel from acquired companies; |
• | declining employee morale and retention issues affecting employees of businesses that we acquire or dispose of, which may result from changes in compensation, or changes in management, reporting relationships, future prospects or the direction of the acquired or disposed business; |
• | assuming the liabilities of an acquired business, including acquired litigation-related liabilities and regulatory compliance issues, and potential litigation or regulatory action arising from a proposed or completed acquisition; |
• | lawsuits resulting from an acquisition or disposition; |
• | maintaining good relationships with customers or business partners of an acquired business or our own customers as a result of any integration of operations; |
• | unidentified issues not discovered during the diligence process, including issues with the acquired business’s intellectual property, product quality, security, privacy practices, accounting practices, regulatory compliance or legal contingencies; |
• | maintaining or establishing acceptable standards, controls, procedures or policies with respect to an acquired business; |
• | risks relating to the challenges and costs of closing a transaction; and |
• | the need to later divest acquired assets at a loss if an acquisition does not meet our expectations. |
• | If the Dell Acquisition is completed, Denali will be able to control matters requiring our stockholders’ approval, including the election of a majority of our directors and the other matters over which EMC currently has control, as described in the risk factors below. |
• | Following the closing of the acquisition, Denali could implement changes to our business, including changing our commercial relationship with EMC or taking other corporate actions that our other stockholders may not view as beneficial. |
• | We have arrangements with a number of companies that compete with Dell, and the pendency or completion of the Dell Acquisition could adversely affect our relationship with these companies or other customers, suppliers and partners. |
• | During the pendency of the Dell Acquisition, Denali has a right of consent to matters requiring EMC’s approval under our certificate of incorporation, including acquisitions or investments in excess of $100 million, and Denali may choose not to consent to matters that our board of directors and EMC believe are in the best interests of VMware. |
• | We anticipate certain synergies and benefits from the Dell Acquisition that may not be realized. |
• | The Class V common stock to be issued by Denali, while not a VMware issued security, would increase the supply of publicly traded securities that track VMware's economic performance and could create the perception that the Class V common stock dilutes the holdings of our public stockholders, both of which could put downward pressure on our stock price. |
• | Following the closing of the Dell Acquisition, Denali will be highly leveraged and may be required to commit a substantial portion of its cash flows to servicing its indebtedness. While Denali has publicly stated that it plans to leave VMware free to use its cash to invest in the VMware business, Denali’s significant debt could create the perception that Denali may exercise its control over us to limit our growth in favor of its other businesses or cause us to transfer cash to Denali. In addition, if Denali defaults, or appears in danger of defaulting, on its indebtedness, the trading price of the Class V common stock issued by Denali would be adversely affected, which could negatively impact the price of our Class A common stock, and uncertainty as to the impact of such a default on VMware could disrupt our business. |
• | Some of our products compete directly with products sold or distributed by Dell, which could result in reduced sales during the pendency or following the closing of the Dell Acquisition. |
• | The pendency of the Dell Acquisition creates uncertainty for our employees, which could make it difficult to attract and retain employees. |
• | The pendency of the Dell Acquisition could distract management’s focus from executing on other strategic initiatives. |
• | With respect to our stock repurchase program, we are currently subject to a number of legal and regulatory constraints resulting from the proposed Dell Acquisition, which impacts the timing and ability to execute repurchases of our shares and may continue to curtail our ability to repurchase our shares throughout the pendency of the Dell Acquisition. |
• | The Dell Acquisition creates potential litigation risk. Various lawsuits have been filed against EMC and others in connection with the Dell Acquisition, including one in which the Company and our directors are named as defendants. It is possible that we or our Company's directors may be named in other lawsuits. |
• | the division of our board of directors into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at any annual meeting; |
• | the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors; |
• | following a 355 Distribution of Class B common stock by EMC to its stockholders, the restriction that a beneficial owner of 10% or more of our Class B common stock may not vote in any election of directors unless such person or group also owns at least an equivalent percentage of Class A common stock or obtains approval of our board of directors prior to acquiring beneficial ownership of at least 5% of Class B common stock; |
• | the prohibition of cumulative voting in the election of directors or any other matters, which would otherwise allow less than a majority of stockholders to elect director candidates; |
• | the requirement for advance notice for nominations for election to the board of directors or for proposing matters that can be acted upon at a stockholders’ meeting; |
• | the ability of the board of directors to issue, without stockholder approval, up to 100,000,000 shares of preferred stock with terms set by the board of directors, which rights could be senior to those of common stock; and |
• | in the event that EMC or its successor-in-interest (including Denali, if the Dell Acquisition is completed) no longer owns shares of our common stock representing at least a majority of the votes entitled to be cast in the election of directors, stockholders may not act by written consent and may not call special meetings of the stockholders. |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 6. | EXHIBITS |
VMWARE, INC. | |||
Dated: | May 5, 2016 | By: | /s/ Kevan Krysler |
Kevan Krysler Senior Vice President, Chief Accounting Officer (Principal Accounting Officer) |
Incorporated by Reference | |||||||||
Exhibit Number | Exhibit Description | Filed Herewith | Form/ File No. | Date | |||||
3.1 | Amended and Restated Certificate of Incorporation | S-1/A-2 | 7/9/2007 | ||||||
3.2 | Amended and Restated Bylaws | 8-K | 3/8/2011 | ||||||
10.27+ | Letter Agreement between VMware, Inc. and Zane Rowe dated January 26, 2016 | X | |||||||
31.1 | Certification of Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | |||||||
31.2 | Certification of Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | |||||||
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | |||||||
32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | |||||||
101.INS | XBRL Instance Document | X | |||||||
101.SCH | XBRL Taxonomy Extension Schema | X | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | X | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | X | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | X | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase | X |
1. | I have reviewed this quarterly report on Form 10-Q of VMware, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 5, 2016 | By: | /s/ Patrick Gelsinger | |
Patrick Gelsinger Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of VMware, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: | May 5, 2016 | By: | /s/ Zane Rowe | |
Zane Rowe Chief Financial Officer and Executive Vice President (Principal Financial Officer) |
Date: | May 5, 2016 | By: | /s/ Patrick Gelsinger | |
Patrick Gelsinger Chief Executive Officer (Principal Executive Officer) |
Date: | May 5, 2016 | By: | /s/ Zane Rowe | |
Zane Rowe Chief Financial Officer and Executive Vice President (Principal Financial Officer) |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Apr. 30, 2016 |
|
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 | Mar. 31, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 124,272,592 | |
Class B Convertible Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 300,000,000 |
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 161 | $ 196 |
Changes in market value of available-for-sale securities: | ||
Unrealized gains (losses), net of taxes of $11 and $4 | 18 | 6 |
Changes in market value of effective foreign currency forward contracts: | ||
Unrealized gains (losses), net of taxes of $0 for all periods | 2 | (5) |
Total other comprehensive income (loss) | 20 | 1 |
Total comprehensive income (loss), net of taxes | $ 181 | $ 197 |
Condensed Consolidated Statements Of Comprehensive Income (Parentheticals) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||
Tax effect on unrealized gains (losses) on available-for-sale securities | $ 11 | $ 4 |
Tax effect on unrealized gains (losses) on effective foreign currency forward contracts | $ 0 | $ 0 |
Condensed Consolidated Balance Sheets - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Current assets: | ||
Cash and cash equivalents | $ 2,785 | $ 2,493 |
Short-term investments | 5,461 | 5,016 |
Accounts receivable, net of allowance for doubtful accounts of $2 and $2 | 1,089 | 1,633 |
Due from related parties, net | 12 | 74 |
Other current assets | 147 | 144 |
Total current assets | 9,494 | 9,360 |
Property and equipment, net | 1,108 | 1,128 |
Other assets | 195 | 193 |
Deferred tax assets | 464 | 456 |
Intangible assets, net | 582 | 616 |
Goodwill | 3,993 | 3,993 |
Total assets | 15,836 | 15,746 |
Current liabilities: | ||
Accounts payable | 106 | 138 |
Accrued expenses and other | 622 | 746 |
Unearned revenues | 3,181 | 3,245 |
Total current liabilities | 3,909 | 4,129 |
Notes payable to EMC | 1,500 | 1,500 |
Unearned revenues | 1,795 | 1,831 |
Other liabilities | 361 | 363 |
Total liabilities | $ 7,565 | $ 7,823 |
Contingencies | ||
Stockholders’ equity: | ||
Additional paid-in capital | $ 2,897 | $ 2,728 |
Accumulated other comprehensive income (loss) | 12 | (8) |
Retained earnings | 5,356 | 5,195 |
Total VMware, Inc.’s stockholders’ equity | 8,269 | 7,919 |
Non-controlling interests | 2 | 4 |
Total stockholders’ equity | 8,271 | 7,923 |
Total liabilities and stockholders’ equity | 15,836 | 15,746 |
Class A common stock | ||
Stockholders’ equity: | ||
Common stock | 1 | 1 |
Class B Convertible Common Stock | ||
Stockholders’ equity: | ||
Common stock | $ 3 | $ 3 |
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
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) | 2,500,000,000 | 2,500,000,000 |
Common stock, shares issued (shares) | 124,086,000 | 121,947,000 |
Common stock, shares outstanding (shares) | 124,086,000 | 121,947,000 |
Class B Convertible Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (shares) | 300,000,000 | 300,000,000 |
Common stock, shares outstanding (shares) | 300,000,000 | 300,000,000 |
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Operating activities: | ||
Net income | $ 161 | $ 196 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 88 | 76 |
Stock-based compensation | 150 | 119 |
Excess tax benefits from stock-based compensation | 0 | (2) |
Deferred income taxes, net | (18) | (15) |
Impairment of strategic investments | 5 | 0 |
Other | 1 | 0 |
Changes in assets and liabilities, net of acquisitions: | ||
Accounts receivable | 544 | 531 |
Other assets | (5) | 0 |
Due to/from related parties, net | 63 | 52 |
Accounts payable | (28) | (49) |
Accrued expenses | (118) | (102) |
Income taxes payable | (23) | (32) |
Unearned revenues | (100) | (91) |
Net cash provided by operating activities | 720 | 683 |
Investing activities: | ||
Additions to property and equipment | (41) | (106) |
Purchases of available-for-sale securities | (1,124) | (1,027) |
Sales of available-for-sale securities | 420 | 501 |
Maturities of available-for-sale securities | 286 | 255 |
Proceeds from disposal of assets | 3 | 0 |
Purchases of strategic investments | (2) | 0 |
Business acquisitions, net of cash acquired | 0 | (21) |
Decrease in restricted cash | 2 | 1 |
Net cash used in investing activities | (456) | (397) |
Financing activities: | ||
Proceeds from issuance of common stock | 52 | 54 |
Repurchase of common stock | 0 | (438) |
Excess tax benefits from stock-based compensation | 0 | 2 |
Shares repurchased for tax withholdings on vesting of restricted stock | (24) | (34) |
Net cash provided by (used in) financing activities | 28 | (416) |
Net increase (decrease) in cash and cash equivalents | 292 | (130) |
Cash and cash equivalents at beginning of the period | 2,493 | 2,071 |
Cash and cash equivalents at end of the period | 2,785 | 1,941 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 7 | 7 |
Cash paid for taxes, net | 63 | 74 |
Non-cash items: | ||
Changes in capital additions, accrued but not paid | $ (3) | $ (42) |
Overview and Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2016 | |
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 a leader in virtualization and cloud infrastructure solutions that enable businesses to transform the way they build, deliver and consume information technology ("IT") resources in a manner that is based on their specific needs. VMware’s virtualization infrastructure solutions, which include a suite of products and services designed to deliver a software-defined data center, run on industry-standard desktop computers, servers and mobile devices 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 The 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 2016. 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 2015 Annual Report on Form 10-K. As of March 31, 2016, EMC held 80.9% of VMware’s outstanding common stock and 97.4% 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. On October 12, 2015, Dell Inc. ("Dell"), Denali Holding Inc. ("Denali") and EMC entered into a definitive merger agreement under which Denali has agreed to acquire EMC (the "Dell Acquisition"). Management believes the assumptions underlying the condensed consolidated financial statements are reasonable. However, the amounts recorded for VMware’s intercompany transactions with EMC may not be considered arm’s length with an unrelated third party. Therefore, the financial statements included herein may not necessarily reflect the results of operations, financial position 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 results of operations, financial position 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. Principles of Consolidation The condensed consolidated financial statements include the accounts of VMware and subsidiaries in which VMware has a controlling financial interest. Non-controlling interests are presented as a separate component within total stockholders’ equity and represent the equity and cumulative pro-rata share of the results of operations attributable to the non-controlling interests. The portion of results of operations attributable to the non-controlling interests is eliminated in other income (expense), net on the condensed consolidated statements of income and is not presented separately as the amount was not material for the periods presented. All intercompany transactions and account balances between VMware and its subsidiaries have been eliminated in consolidation. Transactions with EMC and its subsidiaries are generally settled in cash and are classified on the condensed consolidated statements of cash flows based upon the nature of the underlying transaction. 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 development funds and 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. New Accounting Pronouncements During March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation—Stock Compensation (Topic 718), which impacts the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The updated standard is effective for interim and annual periods beginning after December 15, 2016 and permits early adoption in any interim or annual period. The Company is currently evaluating the effect that ASU 2016-09 will have on its consolidated financial statements and related disclosures. During February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires a lessee to recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. This ASU also requires additional disclosure regarding leasing arrangements. The updated lease standard is effective for interim and annual periods beginning after December 15, 2018 and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures, and expects that most of its lease commitments will be subject to the updated standard and recognized as lease liabilities and right-of-use assets upon adoption of ASU 2016-02. During May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The updated revenue standard establishes principles for recognizing revenue and develops a common revenue standard for all industries. In 2016, the FASB issued ASU 2016-08 and ASU 2016-10, which provide interpretive clarifications on the new guidance in Topic 606. The updates are effective for the Company in the first quarter of 2018 and permit the use of either the retrospective or cumulative effect transition method. Early adoption is permitted, but not earlier than the first quarter of 2017. The Company has not selected a transition method and is currently evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. |
Definite-Lived Intangible Assets, Net |
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Definite-Lived Intangible Assets, Net | Definite-Lived Intangible Assets, Net Definite-Lived Intangible Assets, Net As of March 31, 2016 and December 31, 2015, definite-lived intangible assets consisted of the following (amounts in tables in millions):
Amortization expense on definite-lived intangible assets was $34 million and $37 million during the three months ended March 31, 2016 and 2015, respectively. Based on intangible assets recorded as of March 31, 2016 and assuming no subsequent additions or impairment of underlying assets, the remaining estimated annual amortization expense is expected to be as follows (table in millions):
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Realignment Charges |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realignment Charges | Realignment Charges On January 22, 2016, VMware approved a plan to streamline its operations, with plans to reinvest the associated savings in field, technical and support resources associated with growth products. As a result of these actions, approximately 800 positions were eliminated during the three months ended March 31, 2016. VMware recognized $50 million of severance-related realignment charges during the three months ended March 31, 2016 on the condensed consolidated statements of income. Additionally, VMware is in the process of consolidating certain facilities as part of this plan, which resulted in the recognition of $3 million of related charges during the three months ended March 31, 2016 on the condensed consolidated statements of income. As of March 31, 2016, $30 million remained in accrued expenses and other on the condensed consolidated balance sheets, which is generally expected to be paid during 2016. Actions associated with the plan are expected to be completed by June 30, 2016. Additional charges to be incurred in future quarters associated with this plan are not expected to be material. During the three months ended March 31, 2015, VMware eliminated approximately 350 positions across all major functional groups and geographies to streamline its operations. As a result of these actions, $22 million of severance-related realignment charges were recognized during the three months ended March 31, 2015 on the condensed consolidated statements of income. The following table summarizes the activity for the accrued realignment charges for the three months ended March 31, 2016 and 2015 (tables in millions):
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Net Income per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income per Share | Net Income 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, including performance stock units, and stock options, including 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 net income 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 during the three months ended March 31, 2016 and 2015 (net income in millions, shares in thousands):
The following table sets forth the weighted-average common share equivalents of Class A common stock that were excluded from the diluted net income per share calculations during the three months ended March 31, 2016 and 2015, because their effect would have been anti-dilutive (shares in thousands):
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Cash, Cash Equivalents and Investments |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments Cash, cash equivalents and investments as of March 31, 2016 and December 31, 2015 consisted of the following (tables in millions):
Refer to Note F for further information regarding the fair value of VMware’s cash equivalents and investments. VMware evaluated its fixed income investments as of March 31, 2016 and December 31, 2015 to determine whether or not any security had experienced an other-than-temporary decline in fair value. As of March 31, 2016 and December 31, 2015, VMware did not consider any of its fixed income investments to be other-than-temporarily impaired. The realized gains and losses on investments during the three months ended March 31, 2016 and 2015 were not material. Unrealized losses on cash equivalents and available-for-sale investments as of March 31, 2016 and December 31, 2015, which have been in a net loss position for less than twelve months, were classified by asset class as follows (table in millions):
Unrealized losses on cash equivalents and available-for-sale investments, which have been in a net loss position for twelve months or greater, were not material as of March 31, 2016 and December 31, 2015. Contractual Maturities The contractual maturities of short-term investments held at March 31, 2016 consisted of the following (table in millions):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis Certain financial assets and liabilities are measured at fair value on a recurring basis. VMware determines fair value using the following hierarchy:
VMware’s fixed income securities are primarily classified as Level 2, with the exception of some of the U.S. Government and agency obligations which are classified as Level 1. Additionally, VMware’s Level 2 classification includes forward contracts and notes payable to EMC. At March 31, 2016 and December 31, 2015, VMware’s Level 2 securities were generally priced using 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 did not have any material assets or liabilities that fell into Level 3 of the fair value hierarchy as of March 31, 2016 and December 31, 2015, and there have been no transfers between fair value measurement levels during the three months ended March 31, 2016 and 2015. The following tables set forth the fair value hierarchy of VMware’s cash equivalents, available-for-sale securities, and forward contracts, that were required to be measured at fair value as of March 31, 2016 and December 31, 2015 (tables in millions):
VMware has elected not to record its notes payable to EMC at fair value, but has measured the notes at fair value for disclosure purposes. As of March 31, 2016 and December 31, 2015, the fair value of the notes payable to EMC was approximately $1,487 million and $1,474 million, respectively. Fair value was estimated based on observable market interest rates (Level 2 inputs). VMware offers a deferred compensation plan for eligible employees that allows participants to defer payment for part or all of their compensation. The net impact to the condensed consolidated statements of income is not material since changes in the fair value of the assets substantially offset changes in the fair value of the liabilities. As such, assets and liabilities associated with this plan have not been included in the above tables. Assets and liabilities associated with this plan were both approximately $25 million and $20 million as of March 31, 2016 and December 31, 2015, respectively, and are included in other assets and other liabilities on the condensed consolidated balance sheets. Assets Measured and Recorded at Fair Value on a Non-Recurring Basis VMware has strategic investments in its portfolio accounted for under the cost method, which are periodically assessed for other-than-temporary impairment. VMware evaluates these investments 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. If VMware determines that an other-than-temporary impairment has occurred, VMware writes down the investments to their fair value. During the three months ended March 31, 2016, VMware recognized charges of approximately $5 million as a result of determining that certain strategic investments were considered to be other-than-temporarily impaired. There was no impairment charge during the three months ended March 31, 2015. All other realized gains and losses on investments during the three months ended March 31, 2016 and 2015 were not material. Strategic investments are included in other assets on the condensed consolidated balance sheets. The carrying value of VMware’s strategic investments accounted for under the cost method was $100 million and $103 million as of March 31, 2016 and December 31, 2015, respectively. |
Derivatives and Hedging Activities |
3 Months Ended |
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Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging Activities | Derivatives and Hedging Activities VMware conducts business on a global basis in multiple foreign currencies, subjecting the Company to foreign currency risk. To mitigate this risk, VMware utilizes hedging contracts as described below, which potentially expose the Company to credit risk to the extent that the counterparties may be unable to meet the terms of the agreement. VMware manages counterparty risk by seeking counterparties of high credit quality, by monitoring credit ratings and credit spreads of, and other relevant public information about its counterparties. VMware does not, and does not intend to, use derivative instruments for trading or speculative purposes. Cash Flow Hedges To mitigate its exposure to foreign currency fluctuations resulting from operating expenses denominated in certain foreign currencies, VMware enters into forward contracts. The Company designates these forward contracts as cash flow hedging instruments as the accounting criteria for such designation have 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 (loss) on the condensed consolidated balance sheets and is subsequently reclassified to the related operating expense line item on the condensed consolidated statements of income in the same period that the underlying expenses are incurred. During the three months ended March 31, 2016 and 2015 the effective portion of gains or losses reclassified to the condensed consolidated statements of income was 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 on the condensed consolidated statements of income as incurred. VMware enters into forward contracts annually, which have maturities of twelve months or less. As of March 31, 2016 and December 31, 2015, VMware had forward contracts designated as cash flow hedges with a total notional value of $161 million and $213 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. During the three months ended March 31, 2016 and 2015, all cash flow hedges were considered effective. Forward Contracts Not Designated as Hedges VMware has established a program that utilizes forward contracts to offset the foreign currency risk associated with net outstanding monetary asset and liability positions. 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 on the condensed consolidated statements of income. VMware enters into forward contracts on a monthly basis, which typically have a contractual term of one month. As of March 31, 2016 and December 31, 2015, VMware had outstanding forward contracts with a total notional value of $693 million and $721 million, respectively. The notional value represents the gross amount of foreign currency that will be bought or sold upon maturity of the forward contract. During the three months ended March 31, 2016 and 2015, VMware recognized a loss of $23 million and a gain of $40 million, respectively, relating to the settlement of forward contracts. Gains and losses are recorded in other income (expense), net on the condensed consolidated statements of income. The combined gains and losses derived from the settlement of forward contracts and the underlying foreign currency denominated assets and liabilities resulted in a net loss of $2 million and $6 million, respectively, during the three months ended March 31, 2016 and 2015. Net gains and losses are recorded in other income (expense), net on the condensed consolidated statements of income. |
Unearned Revenues |
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Unearned Revenues | Unearned Revenues Unearned revenues as of March 31, 2016 and December 31, 2015 consisted of the following (table in millions):
Unearned license revenues are generally recognized upon delivery of existing or future products or services, or are otherwise recognized ratably over the term of the arrangement. Future products include, in some cases, emerging products that are offered as part of product promotions where the purchaser of an existing product is entitled to receive the future product at no additional charge. To the extent the future product has not been delivered and vendor-specific objective evidence ("VSOE") of fair value cannot be established, the revenue for the entire order is deferred until such time as all product delivery obligations have been fulfilled. In the event the arrangement does not include professional services, unearned license revenues may also be recognized ratably, if the customer is granted the right to receive unspecified future products or VSOE of fair value on the software maintenance element of the arrangement does not exist. Unearned software maintenance revenues are attributable to VMware’s maintenance contracts and are generally recognized ratably over the contract period. The weighted-average remaining term at March 31, 2016 was approximately two years. Unearned professional services revenues result primarily from prepaid professional services, including training, and are generally recognized as the services are delivered. Unearned license and software maintenance revenues will fluctuate based upon a variety of factors including sales volume, the timing of both product promotion offers and delivery of the future products offered, and the amount of arrangements sold with ratable revenue recognition. Additionally, the amount of unearned revenues derived from transactions denominated in a foreign currency is impacted by fluctuations in the foreign currencies in which VMware invoices. |
Contingencies |
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Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Litigation On March 27, 2015, Phoenix Technologies ("Phoenix") filed a complaint against VMware in the U.S. District Court for the Northern District of California asserting claims for copyright infringement and breach of contract relating to a version of Phoenix’s BIOS software that VMware licensed from Phoenix. In the lawsuit, Phoenix is seeking injunctive relief and monetary damages. Trial is currently scheduled for November 2016. VMware believes that it has meritorious defenses in connection with this lawsuit, and currently a reasonably possible loss or range of loss cannot be estimated. On March 4, 2015, Christoph Hellwig, a software developer who alleges that software code he wrote is used in a component of the Company's vSphere product, filed a lawsuit against VMware in the Hamburg Regional Court in Germany alleging copyright infringement for failing to comply with the terms of an open source General Public License v.2 ("GPL v.2") and seeking an order requiring VMware to comply with the GPL v.2 or cease distribution of any affected code within Germany. VMware believes that it has meritorious defenses in connection with this lawsuit, and currently a reasonably possible loss or range of loss cannot be estimated. VMware believes that it has valid defenses against each of the above legal matters. However, given the unpredictable nature of legal proceedings, an unfavorable resolution of one or more legal proceedings, claims, or investigations could have a material adverse effect on VMware’s condensed consolidated financial statements. On November 17, 2015, Francis M. Ford, a VMware Class A stockholder, filed an action in the Delaware Chancery Court against certain current and former VMware directors, among others, alleging that the directors breached their fiduciary duties in connection with the Dell Acquisition, and the proposed issuance of tracking stock that is intended to track the performance of VMware. The plaintiff does not assert claims directly against VMware, but purports to bring class claims on behalf of other VMware Class A stockholders and derivative claims on behalf of VMware. In addition, on November 10, 2015, David Jacobs, also a VMware stockholder, filed an action in Massachusetts Superior Court against, among others, EMC and four directors who serve on both the EMC board and the VMware Board, setting forth similar allegations to those in the Ford matter. While VMware does not believe that the cases represent material adverse exposures, no assurances can be given that the litigation will not have any adverse consequences for the company or the directors named in the suits. VMware accrues for a liability when a determination has been made that a loss is both probable and the amount of the loss can be reasonably estimated. If only a range can be estimated and no amount within the range is a better estimate than any other amount, an accrual is recorded for the minimum amount in the range. Significant judgment is required in both the determination that the occurrence of a loss is probable and is reasonably estimable. In making such judgments, VMware considers the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular matter. Legal costs are generally recognized as expense when incurred. VMware is also subject to other legal, administrative and regulatory proceedings, claims, demands and investigations in the ordinary course of business or in connection with business mergers and acquisitions, including claims with respect to commercial, contracting and sales practices, product liability, intellectual property, employment, corporate and securities law, class action, whistleblower and other matters. From time to time, VMware also receives inquiries from and has discussions with government entities and stockholders on various matters. As of March 31, 2016, amounts accrued relating to these other matters arising as part of the ordinary course of business were not considered material. VMware does not believe that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would have a material adverse effect on its condensed consolidated financial statements. |
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Stockholders' Equity | Stockholders’ Equity VMware Stock Repurchases During April 2016, VMware's board of directors authorized the repurchase of up to an aggregate of $1,200 million of VMware's Class A common stock through the end of 2016. The aggregate authorized stock repurchase amount of $1,200 million includes the amount remaining from VMware's previous stock repurchase authorization announced on January 27, 2015, which was $835 million as of March 31, 2016. Stock will be purchased from time to time, in the open market or through private transactions, subject to market conditions. 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, legal and regulatory requirements and other market and economic conditions. VMware is not obligated to purchase any shares under its stock repurchase programs. Purchases can be discontinued at any time VMware believes additional purchases are not warranted. All shares repurchased under VMware’s stock repurchase programs are retired. During the three months ended March 31, 2016, VMware did not repurchase any shares of its Class A common stock as the Company is currently subject to a number of legal and regulatory constraints resulting from the proposed Dell Acquisition, which impacts the timing and ability to execute repurchases of VMware's shares. The following table summarizes stock repurchase activity during the three months ended March 31, 2015 (aggregate purchase price in millions, shares in thousands):
The aggregate purchase price of repurchased shares includes commissions and is classified as a reduction to additional paid-in capital. VMware Stock Options Stock option activity was not material during three months ended March 31, 2016. As of March 31, 2016, there were 2.9 million stock options outstanding. The stock options outstanding as of March 31, 2016 had an aggregate intrinsic value of $35 million based on VMware’s closing stock price as of March 31, 2016. VMware Restricted Stock VMware's restricted stock primarily consists of restricted stock unit ("RSU") awards granted to employees. RSUs are valued based on VMware's stock price on the date of grant. The shares underlying the RSU awards are not issued until the RSUs vest. Upon vesting, each RSU converts into one share of VMware Class A common stock. VMware's 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 2.0 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, 2016 (units in thousands):
The total fair value of VMware restricted stock that vested during the three months ended March 31, 2016 was $61 million. As of March 31, 2016, restricted stock representing 18.1 million shares of VMware’s Class A common stock were outstanding, with an aggregate intrinsic value of $946 million based on VMware’s closing stock price as of March 31, 2016. As of March 31, 2016, the total unrecognized compensation cost for stock options and restricted stock was $1,029 million and will be recognized through 2020 with a weighted-average remaining period of 1.4 years. Accumulated Other Comprehensive Income (Loss) The changes in components of accumulated other comprehensive income (loss) during the three months ended March 31, 2016 and 2015 were as follows (tables in millions):
Unrealized gains on VMware’s available-for-sale securities are reclassified to investment income on the condensed consolidated statements of income in the period that such gains 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 statements of income in the same period that the underlying expenses are incurred. The amounts recorded to their related operating expense functional line items on the condensed consolidated statements of income during the three months ended March 31, 2016 and 2015 were not material to the individual functional line items. |
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Stockholders' Equity | Stockholders’ Equity VMware Stock Repurchases During April 2016, VMware's board of directors authorized the repurchase of up to an aggregate of $1,200 million of VMware's Class A common stock through the end of 2016. The aggregate authorized stock repurchase amount of $1,200 million includes the amount remaining from VMware's previous stock repurchase authorization announced on January 27, 2015, which was $835 million as of March 31, 2016. Stock will be purchased from time to time, in the open market or through private transactions, subject to market conditions. 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, legal and regulatory requirements and other market and economic conditions. VMware is not obligated to purchase any shares under its stock repurchase programs. Purchases can be discontinued at any time VMware believes additional purchases are not warranted. All shares repurchased under VMware’s stock repurchase programs are retired. During the three months ended March 31, 2016, VMware did not repurchase any shares of its Class A common stock as the Company is currently subject to a number of legal and regulatory constraints resulting from the proposed Dell Acquisition, which impacts the timing and ability to execute repurchases of VMware's shares. The following table summarizes stock repurchase activity during the three months ended March 31, 2015 (aggregate purchase price in millions, shares in thousands):
The aggregate purchase price of repurchased shares includes commissions and is classified as a reduction to additional paid-in capital. VMware Stock Options Stock option activity was not material during three months ended March 31, 2016. As of March 31, 2016, there were 2.9 million stock options outstanding. The stock options outstanding as of March 31, 2016 had an aggregate intrinsic value of $35 million based on VMware’s closing stock price as of March 31, 2016. VMware Restricted Stock VMware's restricted stock primarily consists of restricted stock unit ("RSU") awards granted to employees. RSUs are valued based on VMware's stock price on the date of grant. The shares underlying the RSU awards are not issued until the RSUs vest. Upon vesting, each RSU converts into one share of VMware Class A common stock. VMware's 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 2.0 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, 2016 (units in thousands):
The total fair value of VMware restricted stock that vested during the three months ended March 31, 2016 was $61 million. As of March 31, 2016, restricted stock representing 18.1 million shares of VMware’s Class A common stock were outstanding, with an aggregate intrinsic value of $946 million based on VMware’s closing stock price as of March 31, 2016. As of March 31, 2016, the total unrecognized compensation cost for stock options and restricted stock was $1,029 million and will be recognized through 2020 with a weighted-average remaining period of 1.4 years. Accumulated Other Comprehensive Income (Loss) The changes in components of accumulated other comprehensive income (loss) during the three months ended March 31, 2016 and 2015 were as follows (tables in millions):
Unrealized gains on VMware’s available-for-sale securities are reclassified to investment income on the condensed consolidated statements of income in the period that such gains 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 statements of income in the same period that the underlying expenses are incurred. The amounts recorded to their related operating expense functional line items on the condensed consolidated statements of income during the three months ended March 31, 2016 and 2015 were not material to the individual functional line items. |
Related Parties |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Parties | Related Parties The information provided below includes a summary of the transactions entered into with EMC and EMC’s consolidated subsidiaries (collectively "EMC"). Transactions with EMC VMware and EMC engaged in the following ongoing intercompany transactions, which resulted in revenues and receipts and unearned revenues for VMware:
Information about VMware’s revenues and receipts from such arrangements during the three months ended March 31, 2016 and 2015 and unearned revenues from such arrangements as of March 31, 2016 and December 31, 2015 consisted of the following (table in millions):
VMware and EMC engaged in the following ongoing intercompany transactions, which resulted in costs to VMware:
Information about VMware’s costs from such arrangements for the three months ended March 31, 2016 and 2015 consisted of the following (table in millions):
VMware also purchases EMC products through EMC's channel partners. There were no purchases of EMC products through EMC's channel partners during the three months ended March 31, 2016. Purchases of EMC products through EMC's channel partners were $8 million during the three months ended March 31, 2015. Tax Sharing Agreement with EMC VMware has made payments to EMC pursuant to a tax sharing agreement. The following table summarizes the payments made during the three months ended March 31, 2016 and 2015 (table in millions):
Payments from VMware to 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. The amounts that VMware pays to 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. During the three months ended March 31, 2016 and 2015, the difference between the amount of tax calculated on a separate return 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 described above, amounts due to and from related parties, net as of March 31, 2016 and December 31, 2015 consisted of the following (table in millions):
Balances due to and 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 related parties is governed by the tax sharing agreement with EMC. Notes Payable to EMC 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 includes $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%. During the three months ended March 31, 2016 and 2015, $7 million and $6 million, respectively, of interest expense was recognized. |
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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, 2016 and 2015 were as follows (table in millions):
Revenues by geographic area are based on the ship-to addresses of VMware’s customers. No individual country other than the United States accounted for 10% or more of revenues for the three months ended March 31, 2016 and 2015. Long-lived assets by geographic area, which primarily include property and equipment, net, as of March 31, 2016 and December 31, 2015 were as follows (table in millions):
No individual country other than the United States accounted for 10% or more of these assets as of March 31, 2016 and December 31, 2015, respectively. |
Overview and Basis of Presentation (Policies) |
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Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Unaudited Interim Financial Information The 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 2016. 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 2015 Annual Report on Form 10-K. As of March 31, 2016, EMC held 80.9% of VMware’s outstanding common stock and 97.4% 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. On October 12, 2015, Dell Inc. ("Dell"), Denali Holding Inc. ("Denali") and EMC entered into a definitive merger agreement under which Denali has agreed to acquire EMC (the "Dell Acquisition"). Management believes the assumptions underlying the condensed consolidated financial statements are reasonable. However, the amounts recorded for VMware’s intercompany transactions with EMC may not be considered arm’s length with an unrelated third party. Therefore, the financial statements included herein may not necessarily reflect the results of operations, financial position 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 results of operations, financial position 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. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of VMware and subsidiaries in which VMware has a controlling financial interest. Non-controlling interests are presented as a separate component within total stockholders’ equity and represent the equity and cumulative pro-rata share of the results of operations attributable to the non-controlling interests. The portion of results of operations attributable to the non-controlling interests is eliminated in other income (expense), net on the condensed consolidated statements of income and is not presented separately as the amount was not material for the periods presented. All intercompany transactions and account balances between VMware and its subsidiaries have been eliminated in consolidation. Transactions with EMC and its subsidiaries are generally settled in cash and are classified on the condensed consolidated statements of cash flows based upon the nature of the underlying transaction. |
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 development funds and 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. |
New Accounting Pronouncements | New Accounting Pronouncements During March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, Compensation—Stock Compensation (Topic 718), which impacts the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The updated standard is effective for interim and annual periods beginning after December 15, 2016 and permits early adoption in any interim or annual period. The Company is currently evaluating the effect that ASU 2016-09 will have on its consolidated financial statements and related disclosures. During February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires a lessee to recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. This ASU also requires additional disclosure regarding leasing arrangements. The updated lease standard is effective for interim and annual periods beginning after December 15, 2018 and requires a modified retrospective adoption, with early adoption permitted. The Company is currently evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures, and expects that most of its lease commitments will be subject to the updated standard and recognized as lease liabilities and right-of-use assets upon adoption of ASU 2016-02. During May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The updated revenue standard establishes principles for recognizing revenue and develops a common revenue standard for all industries. In 2016, the FASB issued ASU 2016-08 and ASU 2016-10, which provide interpretive clarifications on the new guidance in Topic 606. The updates are effective for the Company in the first quarter of 2018 and permit the use of either the retrospective or cumulative effect transition method. Early adoption is permitted, but not earlier than the first quarter of 2017. The Company has not selected a transition method and is currently evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. |
Definite-Lived Intangible Assets, Net (Tables) |
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Finite-Lived Intangible Assets, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Definite-Lived Intangible Assets | As of March 31, 2016 and December 31, 2015, definite-lived intangible assets consisted of the following (amounts in tables in millions):
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Schedule of Future Amortization Expense | Based on intangible assets recorded as of March 31, 2016 and assuming no subsequent additions or impairment of underlying assets, the remaining estimated annual amortization expense is expected to be as follows (table in millions):
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Realignment Charges (Tables) |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Costs | The following table summarizes the activity for the accrued realignment charges for the three months ended March 31, 2016 and 2015 (tables in millions):
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Net Income per Share (Tables) |
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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 during the three months ended March 31, 2016 and 2015 (net income in millions, shares in thousands):
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Antidilutive Securities Excluded from Computation of Net Income per Share | The following table sets forth the weighted-average common share equivalents of Class A common stock that were excluded from the diluted net income per share calculations during the three months ended March 31, 2016 and 2015, because their effect would have been anti-dilutive (shares in thousands):
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Cash, Cash Equivalents and Investments (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash, Cash Equivalents and Investments | Cash, cash equivalents and investments as of March 31, 2016 and December 31, 2015 consisted of the following (tables in millions):
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Unrealized Losses on Cash Equivalents and Investments | Unrealized losses on cash equivalents and available-for-sale investments as of March 31, 2016 and December 31, 2015, which have been in a net loss position for less than twelve months, were classified by asset class as follows (table in millions):
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Contractual Maturities of Investments | The contractual maturities of short-term investments held at March 31, 2016 consisted of the following (table in millions):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Of Money Market Funds, Available-For-Sale Securities, and Foreign Currency Forward Contracts | The following tables set forth the fair value hierarchy of VMware’s cash equivalents, available-for-sale securities, and forward contracts, that were required to be measured at fair value as of March 31, 2016 and December 31, 2015 (tables in millions):
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Unearned Revenues (Tables) |
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Deferred Revenue Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unearned Revenues, by Arrangement | Unearned revenues as of March 31, 2016 and December 31, 2015 consisted of the following (table in millions):
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Stockholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Repurchase Programs | The following table summarizes stock repurchase activity during the three months ended March 31, 2015 (aggregate purchase price in millions, shares in thousands):
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Summary of Restricted Stock Activity | The following table summarizes restricted stock activity since January 1, 2016 (units in thousands):
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Schedule of Accumulated Other Comprehensive Income (Loss) | The changes in components of accumulated other comprehensive income (loss) during the three months ended March 31, 2016 and 2015 were as follows (tables in millions):
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Related Parties (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Related Party Transactions | As a result of the related party transactions with EMC described above, amounts due to and from related parties, net as of March 31, 2016 and December 31, 2015 consisted of the following (table in millions):
Information about VMware’s revenues and receipts from such arrangements during the three months ended March 31, 2016 and 2015 and unearned revenues from such arrangements as of March 31, 2016 and December 31, 2015 consisted of the following (table in millions):
Information about VMware’s costs from such arrangements for the three months ended March 31, 2016 and 2015 consisted of the following (table in millions):
VMware has made payments to EMC pursuant to a tax sharing agreement. The following table summarizes the payments made during the three months ended March 31, 2016 and 2015 (table in millions):
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenues by Geographic Area | Revenues by geographic area for the three months ended March 31, 2016 and 2015 were as follows (table in millions):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2016 and December 31, 2015 were as follows (table in millions):
|
Overview and Basis of Presentation (Basis of Presentation) (Details) - EMC shares in Millions |
Mar. 31, 2016
shares
|
---|---|
Related Party Transaction [Line Items] | |
Shareholders' interest, outstanding ownership percentage of VMware by EMC | 80.90% |
Combined voting power of VMware's outstanding common stock | 97.40% |
Class A common stock | |
Related Party Transaction [Line Items] | |
VMware's outstanding common stock held by EMC (shares) | 43 |
Definite-Lived Intangible Assets, Net (Intangible Assets Detail) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 995 | $ 1,026 | |
Accumulated Amortization | (413) | (410) | |
Net Book Value | 582 | $ 616 | |
Amortization Expense | $ 34 | $ 37 | |
Purchased technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-Average Useful Lives (in years) | 6 years 7 months 6 days | 6 years 7 months 6 days | |
Gross Carrying Amount | $ 646 | $ 648 | |
Accumulated Amortization | (320) | (298) | |
Net Book Value | $ 326 | $ 350 | |
Leasehold interest | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-Average Useful Lives (in years) | 34 years 10 months 24 days | 34 years 10 months 24 days | |
Gross Carrying Amount | $ 149 | $ 149 | |
Accumulated Amortization | (21) | (20) | |
Net Book Value | $ 128 | $ 129 | |
Customer relationships and customer lists | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-Average Useful Lives (in years) | 8 years 3 months 18 days | 8 years 4 months 24 days | |
Gross Carrying Amount | $ 134 | $ 148 | |
Accumulated Amortization | (52) | (62) | |
Net Book Value | $ 82 | $ 86 | |
Trademarks and tradenames | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-Average Useful Lives (in years) | 8 years 7 months 6 days | 8 years 7 months 6 days | |
Gross Carrying Amount | $ 61 | $ 61 | |
Accumulated Amortization | (18) | (16) | |
Net Book Value | $ 43 | $ 45 | |
Other | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-Average Useful Lives (in years) | 5 years 6 months | 2 years 10 months 24 days | |
Gross Carrying Amount | $ 5 | $ 20 | |
Accumulated Amortization | (2) | (14) | |
Net Book Value | $ 3 | $ 6 |
Definite-Lived Intangible Assets, Net (Amortization of Intangible Assets) (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Business Combinations [Abstract] | ||
Remainder of 2016 | $ 95 | |
2017 | 122 | |
2018 | 109 | |
2019 | 88 | |
2020 | 38 | |
Thereafter | 130 | |
Net Book Value | $ 582 | $ 616 |
Realignment Charges (Narrative) (Details) $ in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2016
USD ($)
Position
|
Mar. 31, 2015
USD ($)
Position
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|||
Restructuring Cost and Reserve [Line Items] | ||||||
Number of positions eliminated | Position | 800 | 350 | ||||
Realignment Charges | [1] | $ 53 | $ 22 | |||
Restructuring Reserve | 30 | $ 3 | ||||
Severance-related costs | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Realignment Charges | 50 | 22 | ||||
Restructuring Reserve | 27 | $ 16 | 3 | $ 8 | ||
Costs to exit facilities | ||||||
Restructuring Cost and Reserve [Line Items] | ||||||
Realignment Charges | 3 | |||||
Restructuring Reserve | $ 3 | $ 0 | ||||
|
Realignment Charges (Schedule of Restructuring Reserve) (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|||
Restructuring Reserve [Roll Forward] | ||||
Restructuring Reserve, Beginning of Period | $ 3 | |||
Realignment Charges | [1] | 53 | $ 22 | |
Utilization | (26) | |||
Restructuring Reserve, End of Period | 30 | |||
Severance-related costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring Reserve, Beginning of Period | 3 | 8 | ||
Realignment Charges | 50 | 22 | ||
Utilization | (26) | (14) | ||
Restructuring Reserve, End of Period | 27 | $ 16 | ||
Costs to exit facilities | ||||
Restructuring Reserve [Roll Forward] | ||||
Restructuring Reserve, Beginning of Period | 0 | |||
Realignment Charges | 3 | |||
Utilization | 0 | |||
Restructuring Reserve, End of Period | $ 3 | |||
|
Net Income per Share (Computations Of Basic And Diluted Net Income Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Earnings Per Share [Abstract] | ||
Net income | $ 161 | $ 196 |
Weighted-average shares, basic for Class A and Class B | 423,230 | 427,962 |
Effect of dilutive securities | 950 | 2,534 |
Weighted-average shares, diluted for Class A and Class B | 424,180 | 430,496 |
Net income per weighted-average share, basic for Class A and Class B (USD per share) | $ 0.38 | $ 0.46 |
Net income per weighted-average share, diluted for Class A and Class B (USD per share) | $ 0.38 | $ 0.45 |
Net Income per Share (Anti-Dilutive Shares Excluded From Net Income) (Details) - Class A common stock - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 17,843 | 2,726 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,352 | 2,503 |
Restricted Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 15,491 | 223 |
Cash, Cash Equivalents and Investments (Cash, Cash Equivalents and Investments) (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|---|
Schedule of Investments [Line Items] | ||||
Cash and Cash Equivalents, cost or amortized cost | $ 2,785 | $ 2,493 | $ 1,941 | $ 2,071 |
Short-term investments, cost or amortized cost | 5,447 | 5,031 | ||
Short-term investments, unrealized gains | 17 | 2 | ||
Short-term investments, unrealized losses | (3) | (17) | ||
Short-term investments, aggregate fair value | 5,461 | 5,016 | ||
Other Assets | ||||
Schedule of Investments [Line Items] | ||||
Marketable available-for-sale equity securities, amortized cost | 15 | 15 | ||
Marketable available-for-sale equity securities, unrealized gains | 2 | 3 | ||
Marketable available-for-sale equity securities, unrealized losses | 0 | 0 | ||
Marketable available-for-sale equity securities, aggregate fair value | 17 | 18 | ||
Time deposits | ||||
Schedule of Investments [Line Items] | ||||
Short-term investments, cost or amortized cost | 12 | |||
Short-term investments, unrealized gains | 0 | |||
Short-term investments, unrealized losses | 0 | |||
Short-term investments, aggregate fair value | 12 | |||
U.S. Government and agency obligations | ||||
Schedule of Investments [Line Items] | ||||
Short-term investments, cost or amortized cost | 813 | 753 | ||
Short-term investments, unrealized gains | 2 | 0 | ||
Short-term investments, unrealized losses | 0 | (3) | ||
Short-term investments, aggregate fair value | 815 | 750 | ||
U.S. and foreign corporate debt securities | ||||
Schedule of Investments [Line Items] | ||||
Short-term investments, cost or amortized cost | 3,747 | 3,263 | ||
Short-term investments, unrealized gains | 14 | 1 | ||
Short-term investments, unrealized losses | (3) | (12) | ||
Short-term investments, aggregate fair value | 3,758 | 3,252 | ||
Foreign governments and multi-national agency obligations | ||||
Schedule of Investments [Line Items] | ||||
Short-term investments, cost or amortized cost | 35 | 35 | ||
Short-term investments, unrealized gains | 0 | 0 | ||
Short-term investments, unrealized losses | 0 | 0 | ||
Short-term investments, aggregate fair value | 35 | 35 | ||
Municipal obligations | ||||
Schedule of Investments [Line Items] | ||||
Short-term investments, cost or amortized cost | 618 | 705 | ||
Short-term investments, unrealized gains | 1 | 1 | ||
Short-term investments, unrealized losses | 0 | 0 | ||
Short-term investments, aggregate fair value | 619 | 706 | ||
Asset-backed securities | ||||
Schedule of Investments [Line Items] | ||||
Short-term investments, cost or amortized cost | 13 | 20 | ||
Short-term investments, unrealized gains | 0 | 0 | ||
Short-term investments, unrealized losses | 0 | 0 | ||
Short-term investments, aggregate fair value | 13 | 20 | ||
Mortgage-backed securities | ||||
Schedule of Investments [Line Items] | ||||
Short-term investments, cost or amortized cost | 221 | 243 | ||
Short-term investments, unrealized gains | 0 | 0 | ||
Short-term investments, unrealized losses | 0 | (2) | ||
Short-term investments, aggregate fair value | 221 | 241 | ||
Cash | ||||
Schedule of Investments [Line Items] | ||||
Cash and Cash Equivalents, cost or amortized cost | 716 | 725 | ||
Cash and cash equivalents, unrealized gains | 0 | 0 | ||
Cash and cash equivalents, unrealized losses | 0 | 0 | ||
Cash and cash equivalents, aggregate fair value | 716 | 725 | ||
Money-market funds | ||||
Schedule of Investments [Line Items] | ||||
Cash and Cash Equivalents, cost or amortized cost | 2,033 | 1,763 | ||
Cash and cash equivalents, unrealized gains | 0 | 0 | ||
Cash and cash equivalents, unrealized losses | 0 | 0 | ||
Cash and cash equivalents, aggregate fair value | 2,033 | 1,763 | ||
Time deposits | ||||
Schedule of Investments [Line Items] | ||||
Cash and Cash Equivalents, cost or amortized cost | 14 | 5 | ||
Cash and cash equivalents, unrealized gains | 0 | 0 | ||
Cash and cash equivalents, unrealized losses | 0 | 0 | ||
Cash and cash equivalents, aggregate fair value | 14 | 5 | ||
Municipal obligations | ||||
Schedule of Investments [Line Items] | ||||
Cash and Cash Equivalents, cost or amortized cost | 22 | |||
Cash and cash equivalents, unrealized gains | 0 | |||
Cash and cash equivalents, unrealized losses | 0 | |||
Cash and cash equivalents, aggregate fair value | 22 | |||
Total cash equivalents | ||||
Schedule of Investments [Line Items] | ||||
Cash and Cash Equivalents, cost or amortized cost | 2,069 | 1,768 | ||
Cash and cash equivalents, unrealized gains | 0 | 0 | ||
Cash and cash equivalents, unrealized losses | 0 | 0 | ||
Cash and cash equivalents, aggregate fair value | $ 2,069 | $ 1,768 |
Cash, Cash Equivalents and Investments (Unrealized Losses On Cash Equivalents and Investments) (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Schedule of Investments [Line Items] | ||
Fair Value | $ 1,109 | $ 3,392 |
Unrealized Losses | (2) | (15) |
U.S. Government and agency obligations | ||
Schedule of Investments [Line Items] | ||
Fair Value | 106 | 657 |
Unrealized Losses | 0 | (3) |
U.S. and foreign corporate debt securities | ||
Schedule of Investments [Line Items] | ||
Fair Value | 926 | 2,564 |
Unrealized Losses | (2) | (11) |
Mortgage-backed securities | ||
Schedule of Investments [Line Items] | ||
Fair Value | 77 | 171 |
Unrealized Losses | $ 0 | $ (1) |
Cash, Cash Equivalents and Investments (Contractual Maturities) (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Amortized Cost Basis | ||
Due within one year | $ 1,741 | |
Due after 1 year through 5 years | 3,422 | |
Due after 5 years through 10 years | 113 | |
Due after 10 years | 171 | |
Short-term investments, cost or amortized cost | 5,447 | $ 5,031 |
Aggregate Fair Value | ||
Due within one year | 1,742 | |
Due after 1 year through 5 years | 3,434 | |
Due after 5 years through 10 years | 114 | |
Due after 10 years | 171 | |
Short-term investments, aggregate fair value | $ 5,461 | $ 5,016 |
Fair Value Measurements (Fair Value Hierarchy) (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | $ 5,461 | $ 5,016 |
Other Assets | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Marketable available-for-sale equity securities | 17 | 18 |
Deferred compensation plan assets | 25 | 20 |
Notes payable to EMC | Notes payable | EMC | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt Instrument | 1,487 | 1,474 |
Other Liabilities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Deferred compensation plan liabilities | 25 | 20 |
Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 12 | |
U.S. Government and agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 815 | 750 |
U.S. and foreign corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 3,758 | 3,252 |
Foreign governments and multi-national agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 35 | 35 |
Municipal obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 619 | 706 |
Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 13 | 20 |
Mortgage-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 221 | 241 |
Municipal obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 22 | |
Money-market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 2,033 | 1,763 |
Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 14 | 5 |
Total cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 2,069 | 1,768 |
Fair Value, Measurements, Recurring | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 5,461 | 5,016 |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 564 | 543 |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 4,897 | 4,473 |
Fair Value, Measurements, Recurring | Other Assets | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Marketable available-for-sale equity securities | 17 | 18 |
Fair Value, Measurements, Recurring | Other Assets | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Marketable available-for-sale equity securities | 17 | 18 |
Fair Value, Measurements, Recurring | Other Assets | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Marketable available-for-sale equity securities | 0 | 0 |
Fair Value, Measurements, Recurring | Accrued expense and other | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Forward contracts, liability | (1) | |
Fair Value, Measurements, Recurring | Accrued expense and other | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Forward contracts, liability | 0 | |
Fair Value, Measurements, Recurring | Accrued expense and other | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Forward contracts, liability | (1) | |
Fair Value, Measurements, Recurring | Other current assets | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Forward contracts, asset | 4 | |
Fair Value, Measurements, Recurring | Other current assets | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Forward contracts, asset | 0 | |
Fair Value, Measurements, Recurring | Other current assets | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Forward contracts, asset | 4 | |
Fair Value, Measurements, Recurring | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 12 | |
Fair Value, Measurements, Recurring | Time deposits | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 0 | |
Fair Value, Measurements, Recurring | Time deposits | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 12 | |
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 815 | 750 |
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 564 | 543 |
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 251 | 207 |
Fair Value, Measurements, Recurring | U.S. and foreign corporate debt securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 3,758 | 3,252 |
Fair Value, Measurements, Recurring | U.S. and foreign corporate debt securities | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 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] | ||
Short-term investments: | 3,758 | 3,252 |
Fair Value, Measurements, Recurring | Foreign governments and multi-national agency obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 35 | 35 |
Fair Value, Measurements, Recurring | Foreign governments and multi-national agency obligations | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 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] | ||
Short-term investments: | 35 | 35 |
Fair Value, Measurements, Recurring | Municipal obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 619 | 706 |
Fair Value, Measurements, Recurring | Municipal obligations | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 0 | 0 |
Fair Value, Measurements, Recurring | Municipal obligations | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 619 | 706 |
Fair Value, Measurements, Recurring | Asset-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 13 | 20 |
Fair Value, Measurements, Recurring | Asset-backed securities | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 0 | 0 |
Fair Value, Measurements, Recurring | Asset-backed securities | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 13 | 20 |
Fair Value, Measurements, Recurring | Mortgage-backed securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 221 | 241 |
Fair Value, Measurements, Recurring | Mortgage-backed securities | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 0 | 0 |
Fair Value, Measurements, Recurring | Mortgage-backed securities | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Short-term investments: | 221 | 241 |
Fair Value, Measurements, Recurring | Municipal obligations | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 22 | |
Fair Value, Measurements, Recurring | Municipal obligations | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 0 | |
Fair Value, Measurements, Recurring | Municipal obligations | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 22 | |
Fair Value, Measurements, Recurring | Money-market funds | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 2,033 | 1,763 |
Fair Value, Measurements, Recurring | Money-market funds | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 2,033 | 1,763 |
Fair Value, Measurements, Recurring | Money-market funds | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 0 | 0 |
Fair Value, Measurements, Recurring | Time deposits | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 14 | 5 |
Fair Value, Measurements, Recurring | Time deposits | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 0 | 0 |
Fair Value, Measurements, Recurring | Time deposits | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 14 | 5 |
Fair Value, Measurements, Recurring | Total cash equivalents | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 2,069 | 1,768 |
Fair Value, Measurements, Recurring | Total cash equivalents | Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | 2,033 | 1,763 |
Fair Value, Measurements, Recurring | Total cash equivalents | Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash equivalents: | $ 36 | $ 5 |
Fair Value Measurements (Assets Measured and Recorded at Fair Value on a Non-Recurring Basis) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Impairment of strategic investments | $ 5 | $ 0 | |
Other Assets | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Strategic Investments | $ 100 | $ 103 |
Derivatives and Hedging Activities (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Derivatives, Fair Value [Line Items] | |||
Net loss on forward contracts and underlying foreign currency denominated assets and liabilities | $ 2 | $ 6 | |
Foreign Exchange Forward | |||
Derivatives, Fair Value [Line Items] | |||
Gain (loss) on forward contracts not designated as hedging instruments | $ (23) | $ 40 | |
Not Designated As Hedging Instrument | Foreign Exchange Forward | |||
Derivatives, Fair Value [Line Items] | |||
Maximum maturity of forward contracts | 1 month | ||
Notional amount of forward contracts | $ 693 | $ 721 | |
Cash Flow Hedging | Designated As Hedging Instrument | Foreign Exchange Forward | |||
Derivatives, Fair Value [Line Items] | |||
Maximum maturity of forward contracts | 12 months | ||
Notional amount of forward contracts | $ 161 | $ 213 |
Unearned Revenues (Summary of Unearned Revenues) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Unearned Revenue Arrangement [Line Items] | ||
Unearned revenues | $ 4,976 | $ 5,076 |
Unearned license revenues | ||
Unearned Revenue Arrangement [Line Items] | ||
Unearned revenues | 415 | 428 |
Unearned software maintenance revenues | ||
Unearned Revenue Arrangement [Line Items] | ||
Unearned revenues | $ 4,105 | 4,174 |
Unearned software maintenance revenues | Weighted Average | ||
Unearned Revenue Arrangement [Line Items] | ||
Revenue recognition term | 2 years | |
Unearned professional services revenues | ||
Unearned Revenue Arrangement [Line Items] | ||
Unearned revenues | $ 456 | $ 474 |
Stockholders' Equity (Stock Repurchase Program) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2015 |
Apr. 17, 2016 |
Mar. 31, 2016 |
|
Class A common stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Authorized amount remaining for repurchase | $ 835 | ||
Class A common stock | VMware Share Repurchase Programs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Aggregate purchase price | $ 438 | ||
Class A common shares repurchased (shares) | 5,366 | ||
Weighted-average price per share | $ 81.65 | ||
Subsequent Event [Member] | April 2016 Stock Repurchase Program [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Authorized repurchase amount under stock repurchase program | $ 1,200 |
Stockholders' Equity (Summary of Stock Option Activity) (Details) - Class A common stock shares in Millions, $ in Millions |
Mar. 31, 2016
USD ($)
shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Options, intrinsic value | $ | $ 35 |
VMware 2007 Equity and Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Outstanding, Ending balance (shares) | shares | 2.9 |
Stockholders' Equity (Share-Based Compensation) (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |
Unrecognized compensation cost for stock options and restricted stock | $ 1,029 |
Weighted-average remaining recognition period | 1 year 4 months 17 days |
Stockholders' Equity (Summary of Restricted Stock Activity) (Details) - Class A common stock $ / shares in Units, shares in Thousands, $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
$ / shares
shares
| |
Restricted Stock | |
Number of Units | |
Outstanding, number of shares (in shares) | shares | 18,693 |
Granted, number of shares (in shares) | shares | 1,690 |
Vested, number of shares (in shares) | shares | (1,220) |
Forfeited, number of shares (in shares) | shares | (1,085) |
Outstanding, number of shares (in shares) | shares | 18,078 |
Weighted-Average Grant Date Fair Value | |
Outstanding, weighted-average grant date fair value (USD per share) | $ / shares | $ 77.29 |
Granted, weighted-average grant date fair value (USD per share) | $ / shares | 51.38 |
Vested, weighted-average grant date fair value (USD per share) | $ / shares | 76.88 |
Forfeited, weighted-average grant date fair value (USD per share) | $ / shares | 81.33 |
Outstanding, weighted-average grant date fair value (USD per share) | $ / shares | $ 74.65 |
Fair value of restricted stock-based awards, vested | $ | $ 61 |
Aggregate intrinsic value | $ | $ 946 |
Minimum | Performance Stock Units (PSUs) | |
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) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance stock units to Class A common stock, conversion ratio | 2.0 |
Stockholders' Equity (Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance | $ 7,923 | |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 20 | $ 1 |
Balance | 8,271 | |
Other Comprehensive Income (Loss) before Reclassifications, Tax [Abstract] | ||
Tax effect on unrealized gains (losses) on available-for-sale securities | 11 | 4 |
Tax effect on unrealized gains (losses) on effective foreign currency forward contracts | 0 | 0 |
Tax effect on unrealized gains (losses) | 11 | 4 |
Unrealized Gain (Loss) on Available-for-Sale Securities | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance | (7) | 0 |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 18 | 6 |
Balance | 11 | 6 |
Unrealized Gain (Loss) on Forward Contracts | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance | (1) | (1) |
Other Comprehensive Income (Loss), before Reclassifications, Net of Tax | 2 | (5) |
Balance | 1 | (6) |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||
Balance | (8) | (1) |
Balance | $ 12 | $ 0 |
Related Parties (Schedule of Related Party Transactions) (Details) - EMC - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
|
Reseller revenues | |||
Related Party Transaction [Line Items] | |||
Revenues | $ 79 | $ 61 | |
Unearned revenues | 276 | $ 292 | |
Internal-use revenues | |||
Related Party Transaction [Line Items] | |||
Revenues | 5 | 3 | |
Unearned revenues | 6 | 11 | |
Professional services revenues | |||
Related Party Transaction [Line Items] | |||
Revenues | 25 | 23 | |
Unearned revenues | 0 | 3 | |
Agency fee revenues | |||
Related Party Transaction [Line Items] | |||
Revenues | 1 | 1 | |
Unearned revenues | 0 | $ 0 | |
Reimbursement for services to Pivotal | |||
Related Party Transaction [Line Items] | |||
Revenues | 1 | 1 | |
Purchases and leases of products and purchases of services | |||
Related Party Transaction [Line Items] | |||
Related party costs | 17 | 19 | |
Collaborative technology project costs | |||
Related Party Transaction [Line Items] | |||
Related party costs | 0 | 1 | |
EMC subsidiary support and administrative costs | |||
Related Party Transaction [Line Items] | |||
Related party costs | 23 | 28 | |
Purchases of products through channel | |||
Related Party Transaction [Line Items] | |||
Related party costs | $ 0 | $ 8 |
Related Parties (Tax Sharing Agreement) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Related Party Transaction [Line Items] | ||
Cash paid for taxes, net | $ 63 | $ 74 |
EMC | Tax Sharing Agreement [Member] | ||
Related Party Transaction [Line Items] | ||
Cash paid for taxes, net | $ 40 | $ 49 |
Related Parties (Due To/From Related Parties) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2016 |
Dec. 31, 2015 |
|
Related Party Transaction [Line Items] | ||
Related party transaction, other than tax obligation due to or from related party, cash settlement period | 60 days | |
EMC | ||
Related Party Transaction [Line Items] | ||
Due (to) related parties | $ (51) | $ (68) |
Due from related parties | 63 | 142 |
Due (to) from related parties, net | 12 | 74 |
Income tax due (to) from related parties | $ (2) | $ (18) |
Related Parties (Note Payable to EMC) (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
Dec. 31, 2015 |
Jan. 21, 2014 |
|
Related Party Transaction [Line Items] | ||||
Notes payable to EMC | $ 1,500 | $ 1,500 | ||
Interest Expense, Related Party | $ 7 | $ 6 | ||
EMC | ||||
Related Party Transaction [Line Items] | ||||
Notes payable to EMC | $ 450 | |||
Notes payable | EMC | ||||
Related Party Transaction [Line Items] | ||||
Principal amount | 1,500 | |||
Note, May 2018 | Notes payable | EMC | ||||
Related Party Transaction [Line Items] | ||||
Principal amount | $ 680 | |||
Interest rate | 1.75% | |||
Note, May 2020 | Notes payable | EMC | ||||
Related Party Transaction [Line Items] | ||||
Principal amount | $ 550 | |||
Interest rate | 1.75% | |||
Note, December 2022 | Notes payable | EMC | ||||
Related Party Transaction [Line Items] | ||||
Principal amount | $ 270 | |||
Interest rate | 1.75% |
Segment Information (Schedule Of Revenues By Geographic Area) (Details) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2016
USD ($)
segment
|
Mar. 31, 2015
USD ($)
|
|
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Number of reportable segments | segment | 1 | |
Revenues | $ 1,589 | $ 1,511 |
United States | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Revenues | 800 | 762 |
International | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Revenues | $ 789 | $ 749 |
Segment Information (Schedule Of Long-Lived Assets By Geographic Area) (Details) - USD ($) $ in Millions |
Mar. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | $ 961 | $ 979 |
United States | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | 817 | 831 |
International | ||
Revenues From External Customers And Long-Lived Assets [Line Items] | ||
Long-lived assets by geographic area | $ 144 | $ 148 |
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