Business Combinations, Intangibles and Goodwill

6 Months Ended

Jun. 30, 2012

Business Combination, Goodwill and Intangible Assets Disclosure [Abstract]

Business Combinations, Intangibles and Goodwill

Business Combinations, Intangibles and Goodwill

During the six months ended June 30, 2012, we acquired five companies. We acquired all of the outstanding capital stock of Likewise Software, a provider of technology for managing cross-platform access to data files and software for managing unstructured data; Pivotal Labs, a provider of services and technology to build Big Data applications; XtremIO, a provider of Flash enterprise storage systems; and Watch4Net, a provider of enterprise and carrier-class performance management software. These acquisitions complement and expand our Information Storage segment. We also acquired all of the outstanding capital stock of Syncplicity, a provider of cloud-based synch and share file management which complements and expands our Information Intelligence Group segment. In connection with our acquisitions, we had adjustments to the fair value of previously held interests in XtremIO of $31.6 million which were recognized in other income. Additionally, during the six months ended June 30, 2012, VMware acquired three companies. The aggregate consideration for these eight acquisitions was $629.0 million which consisted of $624.5 million of cash consideration, net of cash acquired and $4.5 million for the fair value of our stock options granted in exchange for the acquirees’ stock options.

The consideration paid was allocated to the fair value of the assets acquired and liabilities assumed based on estimated fair values as of the respective acquisition dates. The aggregate allocation to goodwill, intangibles and net liabilities was approximately $508.2 million, $133.0 million and $12.2 million, respectively. The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. The results of these acquisitions have been included in the consolidated financial statements from the date of purchase. Pro forma results of operations have not been presented as the results of the acquired companies were not material, individually or in the aggregate, to our consolidated results of operations for the three or six months ended June 30, 2012 or 2011.

Intangible Assets

Intangible assets, excluding goodwill, as of June 30, 2012 and December 31, 2011 consist of (tables in thousands):

	June 30, 2012
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	1,789,523	$	(1,104,879	)	$	684,644
Patents	225,146		(79,516		)	145,630
Software licenses	93,145		(86,279		)	6,866
Trademarks and tradenames	174,791		(102,920		)	71,871
Customer relationships and customer lists	1,352,865		(665,439		)	687,426
In-process research and development	19,000		—			19,000
Leasehold interest	146,757		(4,688		)	142,069
Other	25,822		(25,196		)	626
Total intangible assets, excluding goodwill	$	3,827,049	$	(2,068,917	)	$	1,758,132

	December 31, 2011
	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	$	1,620,977	$	(1,020,356	)	$	600,621
Patents	225,146		(72,078		)	153,068
Software licenses	90,093		(83,999		)	6,094
Trademarks and tradenames	172,851		(93,636		)	79,215
Customer relationships and customer lists	1,329,775		(597,117		)	732,658
In-process research and development	43,900		—			43,900
Leasehold interest	146,757		(2,524		)	144,233
Other	30,149		(23,823		)	6,326
Total intangible assets, excluding goodwill	$	3,659,648	$	(1,893,533	)	$	1,766,115

Goodwill

Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment, for the six months ended June 30, 2012 and the year ended December 31, 2011 consist of (tables in thousands):

	Six Months Ended June 30, 2012
	Information Storage			Information Intelligence Group		RSA Information Security			VMware Virtual Infrastructure			Total
Balance, beginning of the period	$	7,033,965		$	1,469,216	$	1,849,116		$	1,802,673		$	12,154,970
Goodwill resulting from acquisitions	422,941			14,462		—			70,798			508,201
Finalization of purchase price allocations	(406		)	—		(5,128		)	(2,810		)	(8,344		)
Balance, end of the period	$	7,456,500		$	1,483,678	$	1,843,988		$	1,870,661		$	12,654,827

	Year Ended December 31, 2011
	Information Storage			Information Intelligence Group			RSA Information Security			VMware Virtual Infrastructure		Total
Balance, beginning of the year	$	7,029,341		$	1,467,903		$	1,663,213		$	1,612,193	$	11,772,650
Goodwill resulting from acquisitions	—			—			187,445			188,395		375,840
Tax deduction from exercise of stock options	(73		)	(852		)	(95		)	—		(1,020		)
Finalization of purchase price allocations	4,697			2,165			(1,447		)	2,085		7,500
Balance, end of the year	$	7,033,965		$	1,469,216		$	1,849,116		$	1,802,673	$	12,154,970