VMware Reports Fiscal 2018 First Quarter Results
Date : June 1, 2017- Revenue for the first quarter was
$1.74 billion , an increase of 9% from the first quarter of 2016. - License revenue for the first quarter was
$610 million , an increase of 7% from the first quarter of 2016. - GAAP net income for the first quarter was
$232 million , or$0.56 per diluted share, up 48% per diluted share compared to$161 million , or$0.38 per diluted share, for the first quarter of 2016. Non-GAAP net income for the quarter was$412 million , or$0.99 per diluted share, up 15% per diluted share compared to$366 million , or$0.86 per diluted share, for the first quarter of 2016. - GAAP operating income for the first quarter was
$238 million , an increase of 24% from the first quarter of 2016. Non-GAAP operating income for the first quarter was$495 million , an increase of 11% from the first quarter of 2016. - Operating cash flows for the first quarter were
$775 million . Free cash flows for the quarter were$726 million . - Cash, cash equivalents and short-term investments were
$8.6 billion , and unearned revenue was$5.2 billion as ofMay 5, 2017 . - Total revenue plus sequential change in total unearned revenue grew 10% year-over-year. Excluding the impact on unearned revenue from the sale of vCloud Air, total revenue plus sequential change in total unearned revenue grew 12% year-over-year.
- License revenue plus sequential change in unearned license revenue grew 7% year-over-year. Excluding the impact on unearned revenue from the sale of vCloud Air, license revenue plus sequential change in unearned license revenue grew 10% year-over-year.
"We are very pleased with our strong Q1 results. Our strategy is resonating across the regions and driving increased customer interest for our SDDC and cloud portfolio as well as our digital workspace offerings," said
Recent Highlights & Strategic Announcements
- In April,
VMware introduced a new release ofVMware vSAN™, featuring industry-first native hyper-converged infrastructure (HCI) security, lower total cost of ownership (TCO) and significantly higher all-flash performance. These combined benefits will help customers accelerate their data center modernization efforts. - At
Mobile World Congress ,Pat Gelsinger took part in a keynote withPatrick Adiba , Group Executive Vice President atAtos . The keynote highlighted how mobile technology enabled byVMware can play a pivotal role in today's event experience. In addition,VMware unveiledVMware vCloud® NFV™ 2.0, which is designed to modernize and transform network architectures and operations for global communications service providers (CSPs) as they evolve their networks to support 5G and theInternet of Things. OVH Group , a global hyper-scale cloud provider and vCloud Air Network partner, completed the acquisition of vCloud Air, including data center and customer operations, customers and an enterprise-ready support team. OVH will continue operations of the acquired service as "vCloud Air powered by OVH" and will leverageVMware's hybrid cloud technology. In addition, OVH will continue to partner withVMware on go-to-market and customer support.- Throughout the quarter, a number of alliances were expanded that enable
VMware's End-User Computing platforms to manage more devices, applications and endpoints:VMware announced it will deliver VMware Horizon Cloud on Microsoft Azure. The integration helps customers accelerate the move to Windows 10 and bringsVMware virtual desktops to Azure in the enterprise.VMware and Oracle announced a new relationship to simplify management and enable advanced security features for Oracle's suite of mobile business applications and Oracle Mobile Cloud Service (OMCS) for mobile devices.VMware and Google announced plans to accelerate the adoption of Chromebooks.VMware announced a partnership expansion with Samsung to unify the mobile and desktop experiences for the benefit of business users with the Galaxy S8 and Workspace ONE.
- At
Dell EMC World 2017,VMware unveiled an extended strategic alliance with Pivotal to deliver new "Developer-Ready Infrastructure," with the integration ofVMware's Software-Defined Data Center and Pivotal Cloud Foundry. The first example of this integration is with NSX. VMware unveiled VMware Pulse IoT Center, a secure, enterprise gradeInternet of Things (IoT) infrastructure management solution that will help customers more efficiently manage, operate, scale and protect their IoT projects from the edge to the cloud.- For the third year in a row,
VMware was named one of the 2017 Fortune 100 Best Companies to Work For, according to global research and consulting firmGreat Place to Work and Fortune.
The company will host a conference call today at
Revised Fiscal Calendar - Year-over-Year Comparisons of Quarterly Results and Sequential Change in Unearned Revenue Balances
Year-over-year comparisons of quarterly financial results included in this press release and the attached financial tables compare results for
About
Additional Information
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding the expected benefits to customers of new product releases, including
VMware, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(amounts in millions, except per share amounts, and shares in thousands)
(unaudited)
Three Months Ended
--------------------------
May 5, March 31,
2017 2016
------------ ------------
Revenue:
License $ 610 $ 572
Services 1,126 1,017
------------ ------------
Total revenue 1,736 1,589
Operating expenses(1):
Cost of license revenue 39 40
Cost of services revenue 250 211
Research and development 421 356
Sales and marketing 586 565
General and administrative 151 172
Realignment and loss on disposition 51 53
------------ ------------
Operating income 238 192
Investment income 23 16
Interest expense with Dell (7) (7)
Other income (expense), net 4 (1)
------------ ------------
Income before income tax 258 200
Income tax provision 26 39
------------ ------------
Net income $ 232 $ 161
============ ============
Net income per weighted-average share, basic for
Class A and Class B $ 0.57 $ 0.38
Net income per weighted-average share, diluted
for Class A and Class B $ 0.56 $ 0.38
Weighted-average shares, basic for Class A and
Class B 408,431 423,230
Weighted-average shares, diluted for Class A and
Class B 414,018 424,180
______
(1) Includes stock-based compensation as
follows:
Cost of license revenue $ 1 $ 1
Cost of services revenue 14 12
Research and development 82 70
Sales and marketing 48 49
General and administrative 18 18
VMware, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(amounts in millions, except per share amounts, and shares in thousands)
(unaudited)
May 5, December 31,
2017 2016
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,864 $ 2,790
Short-term investments 4,748 5,195
Accounts receivable, net of allowance for
doubtful accounts of $2 and $2 867 1,856
Due from related parties, net 127 132
Other current assets 172 362
------------- ------------
Total current assets 9,778 10,335
Property and equipment, net 993 1,049
Other assets 240 248
Deferred tax assets 724 462
Intangible assets, net 474 517
Goodwill 4,032 4,032
------------- ------------
Total assets $ 16,241 $ 16,643
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 116 $ 125
Accrued expenses and other 897 898
Note payable to Dell 680 -
Unearned revenue 3,317 3,531
------------- ------------
Total current liabilities 5,010 4,554
Notes payable to Dell 820 1,500
Unearned revenue 1,918 2,093
Other liabilities 425 399
------------- ------------
Total liabilities 8,173 8,546
Contingencies
Stockholders' equity:
Class A common stock, par value $.01 ;
authorized 2,500,000 shares; issued and
outstanding 108,409 and 108,351 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 1,448 1,721
Accumulated other comprehensive income (loss) 11 (9)
Retained earnings 6,605 6,381
------------- ------------
Total stockholders' equity 8,068 8,097
------------- ------------
Total liabilities and stockholders' equity $ 16,241 $ 16,643
============= ============
VMware, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Three Months Ended
--------------------------
May 5, March 31,
2017 2016
------------ ------------
Operating activities:
Net income $ 232 $ 161
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 85 88
Stock-based compensation 163 150
Deferred income taxes, net (8) (18)
Loss on disposition 49 -
Loss on Dell share repurchase 2 -
Impairment of strategic investments 2 5
Other 1 1
Changes in assets and liabilities, net of
acquisitions:
Accounts receivable 325 544
Other assets (12) (5)
Due to/from related parties, net (34) 63
Accounts payable 59 (28)
Accrued expenses (34) (118)
Income taxes payable 15 (23)
Unearned revenue (70) (100)
------------ ------------
Net cash provided by operating activities 775 720
------------ ------------
Investing activities:
Additions to property and equipment (49) (41)
Purchases of available-for-sale securities (506) (1,124)
Sales of available-for-sale securities 548 420
Maturities of available-for-sale securities 418 286
Proceeds from disposal of assets - 3
Purchases of strategic investments (6) (2)
Decrease in restricted cash 2 2
------------ ------------
Net cash provided by (used in) investing
activities 407 (456)
------------ ------------
Financing activities:
Proceeds from issuance of common stock 7 52
Repurchase of common stock (425) -
Shares repurchased for tax withholdings on
vesting of restricted stock (120) (24)
------------ ------------
Net cash provided by (used in) financing
activities (538) 28
------------ ------------
Net increase in cash and cash equivalents 644 292
Cash and cash equivalents at beginning of the
period 3,220 2,493
------------ ------------
Cash and cash equivalents at end of the period $ 3,864 $ 2,785
============ ============
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 9 $ 7
Cash paid for taxes, net 27 63
Non-cash items:
Changes in capital additions, accrued but not
paid $ 5 $ (3)
VMware, Inc.
GROWTH IN REVENUE PLUS SEQUENTIAL CHANGE IN UNEARNED REVENUE
(in millions)
(unaudited)
Growth in Total Revenue Plus Sequential Change in Unearned Revenue
----------------------------------------------------------------------------
Three Months Ended
---------------------------
May 5, March 31,
2017 2016
------------- -------------
Total revenue, as reported $ 1,736 $ 1,589
Sequential change in unearned revenue(1) (2) (105) (100)
------------- -------------
Total revenue plus sequential change in unearned
revenue $ 1,631 $ 1,489
============= =============
-------------
Change (%) over prior year, as reported 10%
-------------
Reduction of unearned revenue due to vCloud
Air(2) $ 35 $ -
------------- -------------
Total revenue plus sequential change in unearned
revenue, excluding impact of vCloud Air $ 1,666 $ 1,489
============= =============
-------------
Change (%) over prior year, excluding impact of
vCloud Air 12%
-------------
Growth in License Revenue Plus Sequential Change in Unearned License
Revenue
----------------------------------------------------------------------------
Three Months Ended
---------------------------
May 5, March 31,
2017 2016
------------- -------------
Total license revenue, as reported $ 610 $ 572
Sequential change in unearned license
revenue(2)(3) (12) (13)
------------- -------------
Total license revenue plus sequential change in
unearned license revenue $ 598 $ 559
============= =============
-------------
Change (%) over prior year, as reported 7%
-------------
Reduction of unearned license revenue due to
vCloud Air(2) $ 18 $ -
------------- -------------
Total revenue plus sequential change in unearned
license revenue, excluding impact of vCloud Air $ 616 $ 559
============= =============
-------------
Change (%) over prior year, excluding impact of
vCloud Air 10%
-------------
(1) Sequential change in unearned revenue compares total unearned revenue as
of May 5, 2017 to total unearned revenue as of February 3, 2017 . As of
February 3, 2017 , total unearned revenue was $5,340 million .
(2) In conjunction with the disposition of the vCloud Air offering,
approximately $35 million of unearned revenue was reclassified to
accrued expenses and other on the condensed consolidated balance sheet
as of May 5, 2017 . Included in the $35 million of total unearned revenue
was approximately $18 million of unearned license revenue. The amounts
shown in the table above are inclusive of these reclassifications.
(3) Sequential change in unearned license revenue compares unearned license
revenue as of May 5, 2017 to unearned license revenue as of February 3,
2017 . As of February 3, 2017 , unearned license revenue was $484 million .
VMware, Inc.
SUPPLEMENTAL UNEARNED REVENUE SCHEDULE
(in millions)
(unaudited)
December September June March December
May 5, 31, 30, 30, 31, 31,
2017 2016 2016 2016 2016 2015
------ ---------- ---------- ------ ------ --------
Unearned
revenue as
reported:
License $ 472 $ 503 $ 425 $ 455 $ 415 $ 428
Software
maintenance 4,323 4,628 4,201 4,189 4,105 4,174
Professional
services 440 493 468 478 456 474
------ ---------- ---------- ------ ------ --------
Total unearned
revenue $5,235 $ 5,624 $ 5,094 $5,122 $4,976 $ 5,076
====== ========== ========== ====== ====== ========
Change (%) over
prior year:
License 13.8% 17.4% 5.1% (5.5)% (11.0)% (12.2)%
Software
maintenance 5.3% 10.9% 9.1% 7.6% 6.7% 6.9%
Professional
services (3.7)% 3.9% 8.6% 9.2% 6.0% 7.9%
------ ---------- ---------- ------ ------ --------
Total unearned
revenue 5.2% 10.8% 8.7% 6.4% 4.9% 5.0%
====== ========== ========== ====== ====== ========
VMware, Inc.
RECONCILIATION OF GAAP TO NON-GAAP DATA
For the Three Months Ended May 5, 2017
(amounts in millions, except per share amounts, and shares in thousands)
(unaudited)
Employer
Payroll
Taxes on
Employee
Stock-Based Stock Intangible
GAAP Compensation Transactions Amortization
------- ------------ ------------ ------------
Operating expenses:
Cost of license
revenue $ 39 (1) - (26)
Cost of services
revenue $ 250 (14) (1) (1)
Research and
development $ 421 (82) - -
Sales and marketing $ 586 (48) (2) (4)
General and
administrative $ 151 (18) - -
Realignment and loss
on disposition $ 51 - - -
Operating income $ 238 163 3 31
Operating margin(2) 13.7% 9.4% 0.2% 1.8%
Other income (expense),
net $ 4 - - -
Income before income tax $ 258 163 3 31
Income tax provision $ 26
Tax rate(2) 10.1%
Net income $ 232 163 3 31
Net income per weighted-
average share, diluted
for Class A and Class
B(2) (3) $ 0.56 $ 0.39 $ 0.01 $ 0.08
table continued below
Acquisition,
Disposition Non-GAAP,
and Other Loss on Tax as
Related Share Adjustment adjusted
Items Repurchase (1) (2)
------------ ---------- ------------ ----------
Operating expenses:
Cost of license
revenue - - - $ 12
Cost of services
revenue (1) - - $ 233
Research and
development (3) - - $ 337
Sales and marketing - - - $ 531
General and
administrative (5) - - $ 128
Realignment and loss
on disposition (51) - - $ -
Operating income 60 - - $ 495
Operating margin(2) 3.5% - - 28.5%
Other income (expense),
net 1 2 - $ 7
Income before income tax 61 2 - $ 518
Income tax provision 80 $ 106
Tax rate(2) 20.5%
Net income 61 2 (80) $ 412
Net income per weighted-
average share, diluted
for Class A and Class
B(2) (3) $ 0.15 $ - $ (0.19) $ 0.99
(1) Non-GAAP financial information for the quarter is adjusted for a tax
rate equal to our annual estimated tax rate on non-GAAP income. This
rate is based on our estimated annual GAAP income tax rate forecast,
adjusted to account for items excluded from GAAP income in calculating
the non-GAAP financial measures presented above as well as significant
tax adjustments. Our estimated tax rate on non-GAAP income is determined
annually and may be adjusted during the year to take into account events
or trends that we believe materially impact the estimated annual rate
including, but not limited to, significant changes resulting from tax
legislation, material changes in the geographic mix of revenue and
expenses and other significant events. Due to the differences in the tax
treatment of items excluded from non-GAAP earnings, as well as the
methodology applied to our estimated annual tax rates as described
above, our estimated tax rate on non-GAAP income may differ from our
GAAP tax rate and from our actual tax liabilities.
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net
income per weighted average share information are calculated based upon
the respective underlying, non-rounded data.
(3) Calculated based upon 414,018 diluted weighted-average shares for Class
A and Class B.
VMware, Inc.
RECONCILIATION OF GAAP TO NON-GAAP DATA
For the Three Months Ended March 31, 2016
(amounts in millions, except per share amounts, and shares in thousands)
(unaudited)
Employer
Payroll
Taxes on
Employee
Stock-Based Stock Intangible
GAAP Compensation Transactions Amortization
-------- ------------ ------------ ------------
Operating expenses:
Cost of license
revenue $ 40 (1) - (25)
Cost of services
revenue $ 211 (12) - (1)
Research and
development $ 356 (70) - -
Sales and marketing $ 565 (49) (3) (6)
General and
administrative $ 172 (18) - -
Realignment $ 53 - - -
Operating income $ 192 150 3 32
Operating margin(2) 12.1% 9.4% 0.2% 2.0%
Other income (expense),
net $ (1) - - -
Income before income
tax $ 200 150 3 32
Income tax provision $ 39
Tax rate(2) 19.5%
Net income $ 161 150 3 32
Net income per
weighted-average
share, diluted for
Class A and Class B(2)
(3) $ 0.38 $ 0.35 $ 0.01 $ 0.08
table continued below
Acquisition,
Disposition Non-GAAP,
and Other Tax as
Realignment Related Adjustment adjusted
Charges Items (1) (2)
------------ ------------ ---------- ---------
Operating expenses:
Cost of license
revenue - - - $ 15
Cost of services
revenue - - - $ 198
Research and
development - - - $ 286
Sales and marketing - - - $ 508
General and
administrative - (16) - $ 136
Realignment (53) - - $ -
Operating income 53 16 - $ 446
Operating margin(2) 3.3% 1.0% - 28.1%
Other income (expense),
net - 3 - $ 2
Income before income
tax 53 19 - $ 457
Income tax provision 53 $ 91
Tax rate(2) 20.0%
Net income 53 19 (53) $ 366
Net income per
weighted-average
share, diluted for
Class A and Class B(2)
(3) $ 0.13 $ 0.05 $ (0.12) $ 0.86
(1) Non-GAAP financial information for the quarter is adjusted for a tax
rate equal to our annual estimated tax rate on non-GAAP income. This
rate is based on our estimated annual GAAP income tax rate forecast,
adjusted to account for items excluded from GAAP income in calculating
the non-GAAP financial measures presented above as well as significant
tax adjustments. Our estimated tax rate on non-GAAP income is determined
annually and may be adjusted during the year to take into account events
or trends that we believe materially impact the estimated annual rate
including, but not limited to, significant changes resulting from tax
legislation, material changes in the geographic mix of revenue and
expenses and other significant events. Due to the differences in the tax
treatment of items excluded from non-GAAP earnings, as well as the
methodology applied to our estimated annual tax rates as described
above, our estimated tax rate on non-GAAP income may differ from our
GAAP tax rate and from our actual tax liabilities.
(2) Totals may not sum, due to rounding. Operating margin, tax rate and net
income per weighted average share information are calculated based upon
the respective underlying, non-rounded data.
(3) Calculated based upon 424,180 diluted weighted-average shares for Class
A and Class B.
VMware, Inc.
REVENUE BY TYPE
(in millions)
(unaudited)
Three Months Ended
--------------------------
May 5, March 31,
2017 2016
------------ ------------
Revenue:
License $ 610 $ 572
Services:
Software maintenance 974 891
Professional services 152 126
------------ ------------
Total services 1,126 1,017
------------ ------------
Total revenue $ 1,736 $ 1,589
============ ============
Percentage of revenue:
License 35.1% 36.0%
Services:
Software maintenance 56.1% 56.1%
Professional services 8.8% 7.9%
------------ ------------
Total services 64.9% 64.0%
------------ ------------
Total revenue 100.0% 100.0%
============ ============
VMware, Inc.
REVENUE BY GEOGRAPHY
(in millions)
(unaudited)
Three Months Ended
--------------------------
May 5, March 31,
2017 2016
------------ ------------
Revenue:
United States $ 860 $ 800
International 876 789
------------ ------------
Total revenue $ 1,736 $ 1,589
============ ============
Percentage of revenue:
United States 49.5% 50.4%
International 50.5% 49.6%
------------ ------------
Total revenue 100.0% 100.0%
============ ============
VMware, Inc.
RECONCILIATION OF GAAP CASH FLOWS FROM OPERATING ACTIVITIES
TO FREE CASH FLOWS
(A NON-GAAP FINANCIAL MEASURE)
(in millions)
(unaudited)
Three Months Ended
--------------------------
May 5, March 31,
2017 2016
------------ ------------
GAAP cash flows from operating activities $ 775 $ 720
Capital expenditures (49) (41)
------------ ------------
Free cash flows $ 726 $ 679
============ ============
About Non-GAAP Financial Measures
To provide investors and others with additional information regarding
Management believes these non-GAAP financial measures are useful to investors and others in assessing
- Stock-based compensation. Stock-based compensation is generally fixed at the time the stock-based instrument is granted and amortized over a period of several years. Although stock-based compensation is an important aspect of the compensation of
VMware's employees and executives, the expense for the fair value of the stock-based instrumentsVMware utilizes may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance ofVMware's core business and to facilitate comparison of its results to those of peer companies. - Employer payroll tax on employee stock transactions. The amount of employer payroll taxes on stock-based compensation is dependent on
VMware's stock price and other factors that are beyondVMware's control and do not correlate to the operation of the business. - Amortization of acquired intangible assets. A portion of the purchase price of
VMware's acquisitions is generally allocated to intangible assets, such as intellectual property, and is subject to amortization. However,VMware does not acquire businesses on a predictable cycle. Additionally, the amount of an acquisition's purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition. Therefore,VMware believes that the presentation of non-GAAP financial measures that adjust for the amortization of intangible assets provides investors and others with a consistent basis for comparison across accounting periods. - Realignment charges. Realignment charges include workforce reductions, asset impairments, losses on asset disposals and costs to exit facilities.
VMware's management believes it is useful to exclude these items, when significant, as they are not reflective ofVMware's ongoing business and operating results. - Acquisition, disposition and other-related items. As
VMware does not acquire or dispose of businesses on a predictable cycle and the terms of each transaction can vary significantly and are unique to each transaction,VMware believes it is useful to exclude acquisition, disposition and other-related items when looking for a consistent basis for comparison across accounting periods. These items include:- Direct costs of acquisitions and dispositions, such as transaction and advisory fees.
- Accruals for the portion of merger consideration payable in installments that may be paid in cash or
VMware stock, at the option ofVMware . - Charges recognized for non-recoverable strategic investments or gains recognized on the disposition of strategic investments are included as other-related items.
- Gains or losses on sale or disposal of distinct lines of business or product offerings, or transactions with features similar to discontinued operations, including recoveries or charges recognized to adjust the fair value of assets that qualify as "held for sale."
- Certain costs incurred related to
Dell's acquisition ofVMware's parent company, EMC Corporation.
- Gain on share repurchase. In
December 2016 ,VMware entered into a stock purchase agreement withDell andDell's wholly-owned subsidiary,EMC Equity Assets LLC , pursuant to whichVMware agreed to purchase$500 million of VMware Class A common stock. ThroughDecember 31, 2016 ,VMware had purchased 4.8 million shares for$375 million , as well as recognized a derivative asset related to its obligation to repurchase$125 million of additional shares. The derivative asset was measured at fair value on a recurring basis and resulted in the recognition of gains and losses, which were recorded to other income (expense), net on the condensed consolidated statements of income. OnFebruary 15, 2017 , the stock purchase agreement withDell was completed.VMware's management believes it is useful to exclude the mark-to-market adjustment on the derivative asset, as it is not reflective ofVMware's ongoing business and operating results. - Certain litigation and other contingencies.
VMware , from time to time, may incur charges or benefits that are outside of the ordinary course ofVMware's business related to litigation and other contingencies.VMware believes it is useful to exclude such charges or benefits because it does not consider such amounts to be part of the ongoing operation ofVMware's business and because of the singular nature of the claims underlying such matters. - Tax adjustment. Non-GAAP financial information for the quarter is adjusted for a tax rate equal to
VMware's annual estimated tax rate on non-GAAP income. This rate is based onVMware's estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculatingVMware's non-GAAP income as well as significant tax adjustments.VMware's estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends thatVMware management believes materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Due to the differences in the tax treatment of items excluded from non-GAAP earnings, as well as the methodology applied toVMware's estimated annual tax rates as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and fromVMware's actual tax liabilities.
Additionally,
The use of non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense that affect
Management encourages investors and others to review
Contacts:Paul Ziots VMware Investor Relationspziots@vmware.com650-427-3267Michael ThackerVMware Global PRmthacker@vmware.com 650-427-4454
Source: