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VMware Reports Third Quarter 2013 Results

Year-Over-Year Revenue Growth of 14% to $1.29 Billion; Year-Over-Year Revenue Growth of 19% Excluding GoPivotal and Divestitures in 2013(1); GAAP Operating Margin of 22.4%; Non-GAAP Operating Margin of 33.9%; GAAP EPS of $0.60; Non-GAAP EPS of $0.84, an I

PALO ALTO, CA -- (Marketwired) -- 10/21/13 -- VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced financial results for the third quarter of 2013:

  • Revenues for the third quarter were $1.29 billion, an increase of 14% from the third quarter of 2012. Excluding revenues attributable to GoPivotal and all divestitures that occurred in 2013, revenues for the third quarter increased 19% from the third quarter of 2012.(1)

  • Operating income for the third quarter was $287 million, an increase of 51% from the third quarter of 2012. Non-GAAP operating income for the third quarter was $436 million, an increase of 19% from the third quarter of 2012.

  • Net income for the third quarter was $261 million, or $0.60 per diluted share, up 67% per diluted share compared to $157 million, or $0.36 per diluted share, for the third quarter of 2012. Non-GAAP net income for the quarter was $363 million, or $0.84 per diluted share, up 20% per diluted share compared to $303 million, or $0.70 per diluted share, for the third quarter of 2012.

  • Operating cash flows for the third quarter were $637 million, an increase of 46% from the third quarter of 2012. Free cash flows for the quarter were $543 million, an increase of 50% from the third quarter of 2012.

  • Cash, cash equivalents and short-term investments were $5.84 billion, and unearned revenues were $3.64 billion as of September 30, 2013.

"VMware continues to build momentum globally, because we are uniquely positioned to help our customers transform to the mobile-cloud era of computing," said Pat Gelsinger, chief executive officer, VMware. "Customers are making long-term commitments to VMware to help them liberate resources from their current environments and power their businesses into the future."

"We are very pleased with our third quarter performance, meeting or exceeding all of our key goals for the quarter," said Jonathan Chadwick, chief financial officer, VMware. "2013 continues to play out according to the plan we shared at the beginning of the year. We are seeing strong customer demand for new solutions such as the software-defined data center, and I'm excited about our prospects for the remainder of 2013 and beyond."

As indicated in the financial results news release for the second quarter of 2013, VMware will provide forward-looking guidance in connection with this quarterly earnings announcement on its quarterly earnings conference call.


Recent Highlights & Strategic Announcements

  • At VMworld® 2013, VMware announced a wave of new products and services designed to extend the power of virtualization to the entire data center, including networking, storage and management, through its software-defined data center architecture (SDDC). VMworld 2013 and VMworld 2013 Europe set a new record with a combined total of over 31,000 registered attendees enjoying demos of newly-introduced technology, including VMware NSX™, VMware Virtual SAN™, VMware vCloud® Suite 5.5, VMware vSphere® with Operations Management™ 5.5 and new cloud management solutions.

  • VMware announced the U.S. availability of the new VMware vCloud® Hybrid Service™ and added two additional U.S. data center locations, enabling customers to seamlessly extend their data center to the public cloud. VMware also announced that the service will be available in the U.K. in the first quarter of 2014, demonstrating VMware's commitment to expand its hybrid cloud service into Europe and provide customers with the fastest, most reliable, and most compatible path to the cloud. New capabilities make it easy for customers to bring existing and new cloud-native applications to the public cloud and to extend their existing management tools.

  • VMware acquired Desktone, Inc., a privately held company that pioneered Desktop as a Service (DaaS) with an advanced multi-tenant desktop virtualization platform for delivering Windows desktops and applications as a cloud service to any user, anywhere, on any device.

  • VMware continues to attract diverse and talented new leaders to the company, including three new executive appointments during its third quarter: Sanjay Poonen, executive vice president and general manager of VMware's End-User Computing business; Tony Scott, senior vice president and chief information officer; and Sanjay Mirchandani, senior vice president and general manager, VMware Asia Pacific & Japan. http://www.vmware.com/company/leadership/

The company will host a conference call today at 2:00 p.m. PT/ 5:00 p.m. ET to review financial results and business outlook. A live web broadcast of the event will be available on the VMware investor relations website at http://ir.vmware.com. Slides will accompany the web broadcast. The replay of the webcast and slides will be available on the website for two months. In addition, seven quarters of historical data for revenues and unearned revenues, excluding revenues generated each period by the products and services contributed to GoPivotal on April 1, 2013 and the products and services associated with the divestures that occurred in 2013, will also be made available at http://ir.vmware.com in conjunction with the conference call.

(1) Comparative growth percentages exclude revenues in each period attributable to the products and services contributed to GoPivotal, Inc. and the products and services associated with divestitures consummated by VMware in 2013.

About VMware

VMware is the leader in virtualization and cloud infrastructure solutions that enable businesses to thrive in the Cloud Era. Customers rely on VMware to help them transform the way they build, deliver and consume Information Technology resources in a manner that is evolutionary and based on their specific needs. With 2012 revenues of $4.61 billion, VMware has more than 500,000 customers and 55,000 partners. The company is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com.

Additional Information

VMware's website is located at www.vmware.com, and its investor relations website is located at http://ir.vmware.com. VMware's goal is to maintain the investor relations website as a portal through which investors can easily find or navigate to pertinent information about VMware, all of which is made available free of charge. The additional information includes materials that VMware files with the SEC; announcements of investor conferences and events at which its executives talk about its products, services and competitive strategies; webcasts of its quarterly earnings calls, investor conferences and events (archives of which are also available for a limited time); additional information on its financial metrics, including reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures; press releases on quarterly earnings, product and service announcements, legal developments and international news; corporate governance information; and other news, blogs and announcements that VMware may post from time to time that investors may find useful or interesting.

VMware, VMworld, NSX, VMware Virtual SAN, vCloud, vCloud Hybrid Service, vSphere, and vSphere with Operations Management are registered trademarks or trademarks of VMware, Inc. in the United States and other jurisdictions. All other marks and names mentioned herein may be trademarks of their respective organizations.

Use of Non-GAAP Financial Measures

Reconciliations of non-GAAP financial measures to VMware's financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "About Non-GAAP Financial Measures."

Forward-Looking Statements

This press release contains forward-looking statements including, among other things, statements regarding expectations for the transformation to a new era of computing, VMware's continuing momentum, VMware's prospects for the remainder of 2013 and beyond, the future availability of announced products and services and their benefits to customers, long-term customer commitments to VMware, and the planned expansion of the VMware vCloud Hybrid Service. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) adverse changes in general economic or market conditions; (ii) delays or reductions in consumer, government, and information technology spending, including any residual impact of the partial U.S. federal government shutdown in October 2013; (iii) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization market, and new product and marketing initiatives by VMware's competitors; (iv) factors that affect timing of license revenue recognition such as product announcements and promotions and beta programs; (v) customers' ability to develop, and to transition to, new products and computing strategies such as cloud computing, desktop virtualization and the software-defined data center; (vi) the uncertainty of customer acceptance of emerging technology; (vii) changes in the willingness of customers to enter into longer term licensing and support arrangements; (viii) rapid technological and market changes in virtualization software and platforms for cloud, end user, and mobile computing; (ix) changes to product development time lines; (x) VMware's relationship with EMC Corporation and EMC's ability to control matters requiring stockholder approval, including the election of VMware's board members; (xi) VMware's ability to protect its proprietary technology; (xii) VMware's ability to attract and retain highly qualified employees; (xiii) the successful integration of acquired companies and assets into VMware; and (xiv) fluctuating currency exchange rates. These forward-looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value, and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including VMware's most recent reports on Form 10-K and Form 10-Q and current reports on Form 8-K that we may file from time to time, which could cause actual results to vary from expectations. VMware assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.


                                VMware, Inc.

                     CONSOLIDATED STATEMENTS OF INCOME
                  (in millions, except per share amounts)
                                (unaudited)


                                        For the Three       For the Nine
                                        Months Ended        Months Ended
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2013      2012      2013      2012
                                     --------  --------  --------  --------

Revenues:
  License                            $    564  $    491  $  1,583  $  1,490
  Services                                725       643     2,141     1,822
                                     --------  --------  --------  --------
Total revenues                          1,289     1,134     3,724     3,312
Operating expenses (1):
  Cost of license revenues                 51        60       163       174
  Cost of services revenues               132       119       375       356
  Research and development                266       260       797       731
  Sales and marketing                     449       412     1,308     1,166
  General and administrative              103        93       298       266
  Realignment charges                       1         -        64         -
                                     --------  --------  --------  --------
Operating income                          287       190       719       619
Investment income                           7         8        21        20
Interest expense with EMC                  (1)       (1)       (3)       (4)
Other income (expense), net                15        (2)       29        (2)
                                     --------  --------  --------  --------
Income before income taxes                308       195       766       633
Income tax provision                       47        38        87        93
                                     --------  --------  --------  --------
Net income                           $    261  $    157  $    679  $    540
                                     ========  ========  ========  ========

Net income per weighted-average
 share, basic for Class A and Class
 B                                   $   0.61  $   0.37  $   1.58  $   1.26

Net income per weighted-average
 share, diluted for Class A and
 Class B                             $   0.60  $   0.36  $   1.57  $   1.24

Weighted-average shares, basic for
 Class A and Class B                      430       427       429       427
Weighted-average shares, diluted for
 Class A and Class B                      433       433       433       434
______
(1) Includes stock-based
 compensation as follows:
  Cost of license revenues           $      1  $      -  $      2  $      1
  Cost of services revenues                 7         8        21        21
  Research and development                 52        60       165       148
  Sales and marketing                      37        52       106       111
  General and administrative               16        12        42        34
  Realignment charges                       -         -         6         -


                                VMware, Inc.

                         CONSOLIDATED BALANCE SHEETS
                   (in millions, except per share amounts)
                                 (unaudited)


                                                 September 30,  December 31,
                                                      2013          2012
                                                 ------------- -------------

                     ASSETS
Current assets:
  Cash and cash equivalents                      $       2,263 $       1,609
  Short-term investments                                 3,574         3,022
  Accounts receivable, net of allowance for
   doubtful accounts of $2 and $4                          789         1,151
  Due from related parties, net                              -            68
  Deferred tax asset                                       183           179
  Other current assets                                     116            91
                                                 ------------- -------------
Total current assets                                     6,925         6,120
Property and equipment, net                                793           665
Other assets, net                                          113           128
Deferred tax asset                                          63           103
Intangible assets, net                                     602           732
Goodwill                                                 2,958         2,848
                                                 ------------- -------------
    Total assets                                 $      11,454 $      10,596
                                                 ============= =============

      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                               $          84 $          90
  Accrued expenses and other                               546           674
  Due to related parties, net                               16             -
  Unearned revenues                                      2,225         2,196
                                                 ------------- -------------
Total current liabilities                                2,871         2,960
Note payable to EMC                                        450           450
Unearned revenues                                        1,411         1,265
Other liabilities                                          195           181
                                                 ------------- -------------
    Total liabilities                                    4,927         4,856
Contingencies
Stockholders' equity:
  Class A common stock, par value $.01;
   authorized 2,500 shares; issued and
   outstanding 131 and 129 shares                            1             1
  Class B convertible common stock, par value
   $.01; authorized 1,000 shares; issued and
   outstanding 300 shares                                    3             3
  Additional paid-in capital                             3,545         3,432
  Accumulated other comprehensive income                     1             6
  Retained earnings                                      2,977         2,298
                                                 ------------- -------------
    Total stockholders' equity                           6,527         5,740
                                                 ------------- -------------
      Total liabilities and stockholders' equity $      11,454 $      10,596
                                                 ============= =============


                                VMware, Inc.

                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in millions)
                                (unaudited)


                                        For the Three       For the Nine
                                        Months Ended        Months Ended
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2013      2012      2013      2012
                                     --------  --------  --------  --------

Operating activities:
Net income                           $    261  $    157  $    679  $    540
Adjustments to reconcile net income
 to net cash provided by operating
 activities:
  Depreciation and amortization            82        86       261       262
  Stock-based compensation                113       119       332       302
  Excess tax benefits from stock-
   based compensation                     (12)      (25)      (60)     (111)
  Non-cash realignment charges              -         -        15         -
  Gain on disposition of certain
   lines of business and other, net       (12)        -       (31)        -
  Other                                     4        (1)        3        (1)
  Changes in assets and liabilities,
   net of acquisitions:
    Accounts receivable                   152        67       360       202
    Other assets                            4        (5)      (72)     (122)
    Due to/from related parties, net       49        15        84        28
    Accounts payable                       (2)       10        16        26
    Accrued expenses                      (90)      (64)     (112)      (63)
    Income taxes receivable from EMC        -         -        15         -
    Income taxes payable                   (2)       60        (4)      128
    Deferred income taxes, net             32       (34)       41       (70)
    Unearned revenues                      58        51       321       283
                                     --------  --------  --------  --------
Net cash provided by operating
 activities                               637       436     1,848     1,404
                                     --------  --------  --------  --------

Investing activities:
Additions to property and equipment       (94)      (75)     (247)     (153)
Purchases of available-for-sale
 securities                              (573)     (765)   (2,227)   (2,720)
Sales of available-for-sale
 securities                               253       882     1,072     1,653
Maturities of available-for-sale
 securities                               227       234       597       768
Proceeds from disposition of certain
 lines of business                          6         -        37         -
Business acquisitions, net of cash
 acquired                                   -    (1,242)     (184)   (1,344)
Other investing                            (8)       (8)      (11)      (12)
                                     --------  --------  --------  --------
Net cash used in investing
 activities                              (189)     (974)     (963)   (1,808)
                                     --------  --------  --------  --------

Financing activities:
Proceeds from issuance of common
 stock                                     70        70       185       214
Repurchase of common stock                (90)     (129)     (392)     (307)
Excess tax benefits from stock-based
 compensation                              12        25        60       111
Shares repurchased for tax
 withholdings on vesting of
 restricted stock                         (17)      (25)      (84)      (90)
                                     --------  --------  --------  --------
Net cash used in financing
 activities                               (25)      (59)     (231)      (72)
                                     --------  --------  --------  --------
Net increase (decrease) in cash and
 cash equivalents                         423      (597)      654      (476)
Cash and cash equivalents at
 beginning of the period                1,840     2,077     1,609     1,956
                                     --------  --------  --------  --------
Cash and cash equivalents at end of
 the period                          $  2,263  $  1,480  $  2,263  $  1,480
                                     ========  ========  ========  ========



                                VMware, Inc.

                       SUPPLEMENTAL REVENUES SCHEDULE
             (INCLUDES RECONCILIATION OF GAAP TO NON-GAAP DATA)
                               (in millions)
                                (unaudited)


                               For the Three Months Ended
                          -----------------------------------
                          September 30,   June 30,  March 31,
                               2013         2013       2013
                          -------------  ---------  ---------
Revenues as reported (1):
  License                 $         564  $     531  $     488
  Software maintenance              644        614        605
  Professional services              81         98         98
                          -------------  ---------  ---------
Total revenues            $       1,289  $   1,243  $   1,191
                          =============  =========  =========

Change (%) over prior
 year
  License                          14.8%       2.6%       1.3%
  Software maintenance             16.9%      18.3%      23.0%
  Professional services           -11.4%      13.4%      20.8%
                          -------------  ---------  ---------
Total revenues                     13.7%      10.7%      12.9%
                          =============  =========  =========

Revenues as reported,
 excluding GoPivotal (2)
  License                 $         564  $     531  $     485
  Software maintenance              644        614        601
  Professional services              81         98         84
                          -------------  ---------  ---------
Total revenues            $       1,289  $   1,243  $   1,170
                          =============  =========  =========

Change (%) over prior
 year
  License                          16.0%       4.4%       1.5%
  Software maintenance             17.8%      19.3%      23.0%
  Professional services            14.0%      45.1%      19.8%
                          -------------  ---------  ---------
Total revenues                     16.8%      14.0%      12.8%
                          =============  =========  =========

Revenues as reported,
 excluding GoPivotal and
 all dispositions (3)
  License                 $         562  $     526  $     476
  Software maintenance              642        611        590
  Professional services              81         98         83
                          -------------  ---------  ---------
Total revenues            $       1,285  $   1,235  $   1,149
                          =============  =========  =========

Change (%) over prior
 year
  License                          17.3%       5.3%       1.1%
  Software maintenance             20.0%      21.3%      23.4%
  Professional services            15.4%      45.6%      19.9%
                          -------------  ---------  ---------
Total revenues                     18.5%      15.4%      12.9%
                          =============  =========  =========

Reconciliation of
 "revenues as reported"
 to"revenues as reported,
 excluding GoPivotal and
 all dispositions":


Revenues as reported,
 excluding GoPivotal and
 all dispositions (3)     $       1,285  $   1,235  $   1,149
  GoPivotal                           -          -         22
  All dispositions                    4          8         20
                          -------------  ---------  ---------
Revenues as reported (1)  $       1,289  $   1,243  $   1,191
                          =============  =========  =========


table continued below


                                      For the Three Months Ended
                          -------------------------------------------------
                          December 31,  September 30,   June 30,  March 31,
                              2012           2012         2012       2012
                          ------------  -------------  ---------  ---------
Revenues as reported (1):
  License                 $        597  $         491  $     517  $     482
  Software maintenance             591            551        519        492
  Professional services            105             92         87         81
                          ------------  -------------  ---------  ---------
Total revenues            $      1,293  $       1,134  $   1,123  $   1,055
                          ============  =============  =========  =========

Change (%) over prior
 year
  License                         16.1%          10.7%      11.3%      15.0%
  Software maintenance            27.5%          29.0%      34.4%      35.3%
  Professional services           27.0%          28.6%      23.7%      33.0%
                          ------------  -------------  ---------  ---------
Total revenues                    22.0%          20.4%      21.9%      25.1%
                          ============  =============  =========  =========

Revenues as reported,
 excluding GoPivotal (2)
  License                 $        589  $         486  $     508  $     478
  Software maintenance             587            546        515        489
  Professional services             77             72         68         69
                          ------------  -------------  ---------  ---------
Total revenues            $      1,253  $       1,104  $   1,091  $   1,036
                          ============  =============  =========  =========

Change (%) over prior
 year
  License                         15.7%          11.2%       9.8%      15.1%
  Software maintenance            27.5%          28.9%      34.3%      35.0%
  Professional services            6.4%          12.3%       8.3%      24.3%
                          ------------  -------------  ---------  ---------
Total revenues                    20.3%          19.4%      20.0%      24.4%
                          ============  =============  =========  =========

Revenues as reported,
 excluding GoPivotal and
 all dispositions (3)
  License                 $        581  $         479  $     500  $     471
  Software maintenance             574            535        504        478
  Professional services             77             70         67         69
                          ------------  -------------  ---------  ---------
Total revenues            $      1,232  $       1,084  $   1,071  $   1,018
                          ============  =============  =========  =========

Change (%) over prior
 year
  License                         16.0%          11.8%       9.2%      14.5%
  Software maintenance            27.2%          28.5%      33.1%      33.7%
  Professional services            6.3%          11.3%       8.1%      24.3%
                          ------------  -------------  ---------  ---------
Total revenues                    20.3%          19.4%      19.2%      23.5%
                          ============  =============  =========  =========

Reconciliation of
 "revenues as reported"
 to"revenues as reported,
 excluding GoPivotal and
 all dispositions":


Revenues as reported,
 excluding GoPivotal and
 all dispositions (3)     $      1,232  $       1,084  $   1,071  $   1,018
  GoPivotal                         40             30         32         19
  All dispositions                  21             20         20         18
                          ------------  -------------  ---------  ---------
Revenues as reported (1)  $      1,293  $       1,134  $   1,123  $   1,055
                          ============  =============  =========  =========


(1) Represents revenues reported each quarter.

(2) Represents revenues reported each quarter less the revenues attributable
to products and services contributed by VMware to GoPivotal, Inc.
("GoPivotal") on April 1, 2013. All quarters have been adjusted to exclude
the related revenues.

(3) Represents revenues reported each quarter less a) the revenues
attributable to products and services contributed by VMware to GoPivotal on
April 1, 2013 and b) the revenues attributable to all lines of businesses
which were disposed of in 2013, including Zimbra which was disposed of in
July 2013. All quarters have been adjusted to exclude the related revenues.



                                VMware, Inc.

                   SUPPLEMENTAL UNEARNED REVENUES SCHEDULE
             (INCLUDES RECONCILIATION OF GAAP TO NON-GAAP DATA)
                                (in millions)
                                 (unaudited)


                           September 30,   June 30,  March 31,
                                2013         2013       2013
                           -------------  ---------  ---------
Unearned revenues as
 reported (1)
  License                  $         415  $     427  $     446
  Software maintenance             2,937      2,903      2,797
  Professional services              284        266        247
                           -------------  ---------  ---------
Total unearned revenues    $       3,636  $   3,596  $   3,490
                           =============  =========  =========

Change (%) over prior year
  License                           13.3%      13.7%      19.6%
  Software maintenance              21.6%      23.2%      24.5%
  Professional services             34.3%      26.8%      30.6%
                           -------------  ---------  ---------
Total unearned revenues             21.5%      22.2%      24.3%
                           =============  =========  =========

Unearned revenues as
 reported, excluding
 GoPivotal and all
 dispositions (2)

  License                  $         414  $     427  $     407
  Software maintenance             2,933      2,903      2,736
  Professional services              285        266        246
                           -------------  ---------  ---------
Total unearned revenues    $       3,632  $   3,596  $   3,389
                           =============  =========  =========

Change (%) over prior year
  License                           26.4%      27.1%      15.7%
  Software maintenance              25.0%      26.8%      25.0%
  Professional services             35.7%      28.7%      31.7%
                           -------------  ---------  ---------
Total unearned revenues             26.0%      27.0%      24.3%
                           =============  =========  =========

Reconciliation of
 "unearned revenues as
 reported" to "unearned
 revenues as reported,
 excluding GoPivotal and
 all dispositions":

Unearned revenues as
 reported, excluding
 GoPivotal and all
 dispositions (2)          $       3,632  $   3,596  $   3,389
  GoPivotal and all
   dispositions                        4          -        101
                           -------------  ---------  ---------
Unearned revenues as
 reported (1)              $       3,636  $   3,596  $   3,490
                           =============  =========  =========


table continued below



                          December 31,  September 30,   June 30,  March 31,
                              2012           2012         2012       2012
                          ------------  -------------  ---------  ---------
Unearned revenues as
 reported (1)
  License                 $        463  $         366  $     376  $     373
  Software maintenance           2,755          2,415      2,357      2,246
  Professional services            243            212        209        189
                          ------------  -------------  ---------  ---------
Total unearned revenues   $      3,461  $       2,993  $   2,942  $   2,808
                          ============  =============  =========  =========

Change (%) over prior year
  License                         18.9%          35.8%      56.5%      48.4%
  Software maintenance            29.1%          33.8%      39.8%      41.3%
  Professional services           30.8%          32.5%      37.9%      37.3%
                          ------------  -------------  ---------  ---------
Total unearned revenues           27.8%          34.0%      41.6%      41.9%
                          ============  =============  =========  =========

Unearned revenues as
 reported, excluding
 GoPivotal and all
 dispositions (2)

  License                 $        414  $         327  $     336  $     352
  Software maintenance           2,671          2,346      2,289      2,189
  Professional services            241            210        207        186
                          ------------  -------------  ---------  ---------
Total unearned revenues   $      3,326  $       2,883  $   2,832  $   2,727
                          ============  =============  =========  =========

Change (%) over prior year
  License                         11.6%          25.9%      49.4%      45.4%
  Software maintenance            28.5%          33.3%      38.7%      40.4%
  Professional services           30.8%          31.9%      36.2%      36.0%
                          ------------  -------------  ---------  ---------
Total unearned revenues           26.3%          32.3%      39.7%      40.7%
                          ============  =============  =========  =========

Reconciliation of
 "unearned revenues as
 reported" to "unearned
 revenues as reported,
 excluding GoPivotal and
 all dispositions":

Unearned revenues as
 reported, excluding
 GoPivotal and all
 dispositions (2)         $      3,326  $       2,883  $   2,832  $   2,727
  GoPivotal and all
   dispositions                    135            110        110         81
                          ------------  -------------  ---------  ---------
Unearned revenues as
 reported (1)             $      3,461  $       2,993  $   2,942  $   2,808
                          ============  =============  =========  =========


(1) Represents unearned revenues reported each quarter.

(2) Represents unearned revenues reported each quarter less a) the unearned
revenues attributable to products and services contributed by VMware to
GoPivotal on April 1, 2013 and b) the unearned revenues attributable to all
lines of businesses which were disposed of in 2013, including Zimbra which
was disposed of in July 2013. All quarters have been adjusted to exclude the
related unearned revenues.



                                VMware, Inc.

                   RECONCILIATION OF GAAP TO NON-GAAP DATA
                For the Three Months Ended September 30, 2013
                   (in millions, except per share amounts)
                                 (unaudited)


                                        Employer
                                        Payroll
                                         Taxes
                                      on Employee
                         Stock-Based     Stock      Intangible  Realignment
                  GAAP  Compensation Transactions  Amortization   Charges
                 ------  -----------  -----------  -----------  ----------

Operating
 expenses:
 Cost of license
  revenues       $   51           (1)           -          (22)          -
 Cost of
  services
  revenues       $  132           (7)           -            -           -
 Research and
  development    $  266          (52)          (1)          (1)          -
 Sales and
  marketing      $  449          (37)          (1)          (1)          -
 General and
  administrative $  103          (16)           -            -           -
 Realignment
  charges        $    1            -            -            -          (1)

Operating income $  287          113            2           24           1
Operating margin   22.4%         8.7%         0.2%         1.9%          -

Other income
 (expense), net  $   15            -            -            -           -

Income before
 income taxes    $  308          113            2           24           1

Income tax
 provision       $   47
Tax rate           15.3%

Net income       $  261          113            2           24           1

Net income per
 weighted-
 average share,
 basic for Class
 A and Class B
 (3)             $ 0.61  $      0.26  $      0.01  $      0.06  $        -

Net income per
 weighted-
 average share,
 diluted for
 Class A and
 Class B (4)     $ 0.60  $      0.26  $      0.01  $      0.06  $        -



table continued below




                                          Gain on
                                        Disposition
                Acquisition Capitalized  of Certain
                 and Other   Software     Lines of       Tax      Non-GAAP,
                  Related   Development  Business &   Adjustment      as
                   Items     Costs (1)   Other, Net      (2)       adjusted
                ----------  ----------  -----------  -----------  ---------

Operating
 expenses:
 Cost of license
  revenues               -          (8)           -            -  $      20
 Cost of
  services
  revenues               -           -            -            -  $     125
 Research and
  development            -           -            -            -  $     212
 Sales and
  marketing              -           -            -            -  $     410
 General and
  administrative        (1)          -            -            -  $      86
 Realignment
  charges                -           -            -            -  $       -

Operating income         1           8            -            -  $     436
Operating margin       0.1%        0.6%           -            -       33.9%

Other income
 (expense), net          -           -          (12)           -  $       3

Income before
 income taxes            1           8          (12)           -  $     445

Income tax
 provision                                                    35  $      82
Tax rate                                                               18.5%

Net income               1           8          (12)         (35) $     363

Net income per
 weighted-
 average share,
 basic for Class
 A and Class B
 (3)            $        -  $     0.02  $     (0.03) $     (0.08) $    0.85

Net income per
 weighted-
 average share,
 diluted for
 Class A and
 Class B (4)    $        -  $     0.02  $     (0.03) $     (0.08) $    0.84


(1)  For the third quarter of 2013, no costs were capitalized for the
development of software products. Amortization expense from previously
capitalized amounts was $8.

(2) 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. 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
revenues 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.

(3) Calculated based upon 430 basic weighted-average shares for Class A and
Class B.

(4) Calculated based upon 433 diluted weighted-average shares for Class A
and Class B.



                                VMware, Inc.

                   RECONCILIATION OF GAAP TO NON-GAAP DATA
                For the Three Months Ended September 30, 2012
                   (in millions, except per share amounts)
                                 (unaudited)


                                                  Employer
                                                   Payroll
                                                    Taxes
                                                 on Employee
                                   Stock-Based      Stock      Intangible
                           GAAP   Compensation  Transactions  Amortization
                          ------  ------------  ------------  ------------

Operating expenses:
  Cost of license
   revenues               $   60             -             -           (19)
  Cost of services
   revenues               $  119            (8)            -            (1)
  Research and
   development            $  260           (60)           (1)           (1)
  Sales and marketing     $  412           (52)            -            (4)
  General and
   administrative         $   93           (12)            -             -

Operating income          $  190           132             1            25
Operating margin            16.8%         11.7%          0.1%          2.2%

Income before income
 taxes                    $  195           132             1            25

Income tax provision      $   38
Tax rate                    19.7%

Net income                $  157           132             1            25

Net income per weighted-
 average share, basic for
 Class A and Class B (3)  $ 0.37  $       0.31  $          -  $       0.06

Net income per weighted-
 average share, diluted
 for Class A and Class B
 (4)                      $ 0.36  $       0.30  $          -  $       0.06



table continued below




                                      Capitalized
                         Acquisition    Software      Tax      Non-GAAP,
                           Related    Development  Adjustment      as
                            Items      Costs (1)       (2)      adjusted
                         -----------  -----------  ----------  ---------

Operating expenses:
  Cost of license
   revenues                        -          (15)          -  $      26
  Cost of services
   revenues                        -            -           -  $     110
  Research and
   development                     -            -           -  $     198
  Sales and marketing              -            -           -  $     356
  General and
   administrative                 (2)           -           -  $      79

Operating income                   2           15           -  $     365
Operating margin                 0.1%         1.3%          -       32.2%

Income before income
 taxes                             2           15           -  $     370

Income tax provision                                       29  $      67
Tax rate                                                            18.0%

Net income                         2           15         (29) $     303

Net income per weighted-
 average share, basic for
 Class A and Class B (3) $         -  $      0.03  $    (0.06) $    0.71

Net income per weighted-
 average share, diluted
 for Class A and Class B
 (4)                     $         -  $      0.04  $    (0.06) $    0.70


(1)  For the third quarter of 2012, no costs were capitalized for the
development of software products. Amortization expense from previously
capitalized amounts was $15.

(2) 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. 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
revenues 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.

(3) Calculated based upon 427 basic weighted-average shares for Class A and
Class B.

(4) Calculated based upon 433 diluted weighted-average shares for Class A
and Class B.


                                VMware, Inc.

                   RECONCILIATION OF GAAP TO NON-GAAP DATA
                For the Nine Months Ended September 30, 2013
                   (in millions, except per share amounts)
                                 (unaudited)


                                        Employer
                                        Payroll
                                         Taxes
                                      on Employee
                         Stock-Based     Stock      Intangible  Realignment
                  GAAP  Compensation Transactions  Amortization   Charges
                 ------  -----------  -----------  -----------  ----------

Operating
 expenses:
  Cost of
   license
   revenues      $  163           (2)           -          (67)          -
  Cost of
   services
   revenues      $  375          (21)          (2)          (2)          -
  Research and
   development   $  797         (165)          (3)          (2)          -
  Sales and
   marketing     $1,308         (106)          (3)          (6)          -
  General and
  administrative $  298          (42)          (2)           -           -
  Realignment
   charges       $   64            -            -            -         (64)

Operating income $  719          336           10           77          64
Operating margin   19.3%         9.0%         0.2%         2.1%        1.7%

Other income
 (expense), net  $   29            -            -            -           -

Income before
 income taxes    $  766          336           10           77          64

Income tax
 provision       $   87
Tax rate           11.4%

Net income       $  679          336           10           77          64

Net income per
 weighted-
 average share,
 basic for Class
 A and Class B
 (3)             $ 1.58  $      0.78  $      0.02  $      0.18  $     0.15

Net income per
 weighted-
 average share,
 diluted for
 Class A and
 Class B (4)     $ 1.57  $      0.78  $      0.02  $      0.18  $     0.15



table continued below




                                          Gain on
                                        Disposition
                Acquisition Capitalized  of Certain
                 and Other   Software    Lines of       Tax       Non-GAAP,
                  Related   Development  Business &  Adjustment      as
                   Items     Costs (1)   Other, Net     (2)       adjusted
                ----------  ----------  -----------  -----------  ---------

Operating
 expenses:
  Cost of
   license
   revenues              -         (34)           -            -  $      60
  Cost of
   services
   revenues              -           -            -            -  $     350
  Research and
   development           -           -            -            -  $     627
  Sales and
   marketing             -           -            -            -  $   1,193
  General and
  administrative        (3)          -            -            -  $     251
  Realignment
   charges               -           -            -            -  $       -

Operating income         3          34            -            -  $   1,243
Operating margin       0.1%        0.9%           -            -       33.3%

Other income
 (expense), net          -           -          (31)           -  $      (2)

Income before
 income taxes            3          34          (31)           -  $   1,259

Income tax
 provision                                                   146  $     233
Tax rate                                                               18.5%

Net income               3          34          (31)        (146) $   1,026

Net income per
 weighted-
 average share,
 basic for Class
 A and Class B
 (3)            $     0.01  $     0.08  $     (0.07) $     (0.34) $    2.39

Net income per
 weighted-
 average share,
 diluted for
 Class A and
 Class B (4)    $        -  $     0.08  $     (0.07) $     (0.34) $    2.37


(1)  For the first nine months of 2013, no costs were capitalized for the
development of software products. Amortization expense from previously
capitalized amounts was $34.

(2) 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. 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
revenues 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.

(3) Calculated based upon 429 basic weighted-average shares for Class A and
Class B.

(4) Calculated based upon 433 diluted weighted-average shares for Class A
and Class B.



                                VMware, Inc.

                   RECONCILIATION OF GAAP TO NON-GAAP DATA
                For the Nine Months Ended September 30, 2012
                   (in millions, except per share amounts)
                                 (unaudited)


                                                  Employer
                                                   Payroll
                                                    Taxes
                                                 on Employee
                                   Stock-Based      Stock      Intangible
                           GAAP   Compensation  Transactions  Amortization
                         -------  ------------  ------------  ------------

Operating expenses:
  Cost of license
   revenues              $   174            (1)            -           (46)
  Cost of services
   revenues              $   356           (21)           (1)           (3)
  Research and
   development           $   731          (148)           (5)           (3)
  Sales and marketing    $ 1,166          (111)           (4)           (9)
  General and
   administrative        $   266           (34)           (1)            -

Operating income         $   619           315            11            61
Operating margin            18.7%          9.5%          0.3%          1.9%

Income before income
 taxes                   $   633           315            11            61

Income tax provision     $    93
Tax rate                    14.7%

Net income               $   540           315            11            61

Net income per weighted-
 average share, basic
 for Class A and Class B
 (3)                     $  1.26  $       0.74  $       0.03  $       0.14

Net income per weighted-
 average share, diluted
 for Class A and Class B
 (4)                     $  1.24  $       0.72  $       0.02  $       0.14



table continued below



                                     Capitalized
                        Acquisition    Software      Tax      Non-GAAP,
                          Related    Development  Adjustment      as
                           Items      Costs (1)       (2)      adjusted
                        -----------  -----------  ----------  ---------

Operating expenses:
  Cost of license
   revenues                       -          (58)          -  $      69
  Cost of services
   revenues                       -            -           -  $     331
  Research and
   development                    -            -           -  $     575
  Sales and marketing             -            -           -  $   1,042
  General and
   administrative                (3)           -           -  $     228

Operating income                  3           58           -  $   1,067
Operating margin                0.1%         1.7%          -       32.2%

Income before income
 taxes                            3           58           -  $   1,081

Income tax provision                                     102  $     195
Tax rate                                                           18.0%

Net income                        3           58        (102) $     886

Net income per weighted-
 average share, basic
 for Class A and Class B
 (3)                    $      0.01  $      0.14  $    (0.24) $    2.08

Net income per weighted-
 average share, diluted
 for Class A and Class B
 (4)                    $      0.01  $      0.14  $    (0.23) $    2.04


(1)  For the first nine months of 2012, no costs were capitalized for the
development of software products. Amortization expense from previously
capitalized amounts was $58.

(2) 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. 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
revenues 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.

(3) Calculated based upon 427 basic weighted-average shares for Class A and
Class B.


(4) Calculated based upon 434 diluted weighted-average shares for Class A
and Class B.


                                VMware, Inc.

                              REVENUES BY TYPE
                               (in millions)
                                (unaudited)


                                        For the Three       For the Nine
                                        Months Ended        Months Ended
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2013      2012      2013      2012
                                     --------  --------  --------  --------

Revenues:
  License                            $    564  $    491  $  1,583  $  1,490
  Services:
    Software maintenance                  644       551     1,864     1,562
    Professional services                  81        92       277       260
                                     --------  --------  --------  --------
  Total services                          725       643     2,141     1,822
                                     --------  --------  --------  --------
Total revenues                       $  1,289  $  1,134  $  3,724  $  3,312
                                     ========  ========  ========  ========


Percentage of revenues:
  License                                43.7%     43.3%     42.5%     45.0%
  Services:
    Software maintenance                 49.9%     48.6%     50.0%     47.2%
    Professional services                 6.4%      8.1%      7.5%      7.8%
                                     --------  --------  --------  --------
  Total services                         56.3%     56.7%     57.5%     55.0%
                                     --------  --------  --------  --------
Total revenues                          100.0%    100.0%    100.0%    100.0%
                                     ========  ========  ========  ========


                                VMware, Inc.

                           REVENUES BY GEOGRAPHY
                               (in millions)
                                (unaudited)


                                        For the Three       For the Nine
                                        Months Ended        Months Ended
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2013      2012      2013      2012
                                     --------  --------  --------  --------

Revenues:
  United States                      $    614  $    554  $  1,773  $  1,589
  International                           675       580     1,951     1,723
                                     --------  --------  --------  --------
Total revenues                       $  1,289  $  1,134  $  3,724  $  3,312
                                     ========  ========  ========  ========


Percentage of revenues:
  United States                          47.6%     48.8%     47.6%     48.0%
  International                          52.4%     51.2%     52.4%     52.0%
                                     --------  --------  --------  --------
Total revenues                          100.0%    100.0%    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)


                                                 For the Three Months Ended
                                                        September 30,
                                                 --------------------------
                                                     2013          2012
                                                 ------------  ------------

GAAP cash flows from operating activities        $        637  $        436
Capital expenditures                                      (94)          (75)
                                                 ------------  ------------
Free cash flows                                  $        543  $        361
                                                 ============  ============


About Non-GAAP Financial Measures

To provide investors and others with additional information regarding VMware's results, we have disclosed in this press release the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP income per diluted share, and free cash flows. VMware has provided a reconciliation of each non-GAAP financial measure used in this earnings release to the most directly comparable GAAP financial measure. These non-GAAP financial measures, other than free cash flows, differ from GAAP in that they exclude stock-based compensation, employer payroll tax on employee stock transactions, amortization of acquired intangible assets, realignment charges, acquisition and other-related items and the net effect of the amortization and capitalization of software development costs and gain on disposition of certain lines of business and other net, each as discussed below. Free cash flows differ from GAAP cash flows from operating activities in its treatment of capital expenditures.

We have also presented in this press release additional six quarters of historical data for revenue and unearned revenue, excluding revenue generated each period by the products and services contributed to GoPivotal, Inc. on April 1, 2013 and the products and services associated with the divestures consummated by us in 2013, We believe these measures are useful to investors because they allow investors to make meaningful comparisons of our revenues and unearned revenues across periods.

VMware's management uses these non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, for short- and long-term operating plans, to calculate bonus payments and to evaluate VMware's financial performance, the performance of its individual functional groups and the ability of operations to generate cash. Management believes these non-GAAP financial measures reflect VMware's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in VMware's business, as they exclude expenses and gains that are not reflective of ongoing operating results. Management also believes that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating VMware's operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. Additionally, management believes information regarding free cash flows provides investors and others with an important perspective on the cash available to make strategic acquisitions and investments, to repurchase shares, to fund ongoing operations and to fund other capital expenditures.

Management believes these non-GAAP financial measures are useful to investors and others in assessing VMware's operating performance due to the following factors:

  • 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 our employees and executives, the expense for the fair value of the stock-based instruments we utilize may bear little resemblance to the actual value realized upon the vesting or future exercise of the related stock-based awards. Furthermore, unlike cash compensation, the value of stock options is determined using a complex formula that incorporates factors, such as market volatility, that are beyond our control. Additionally, in order to establish the fair value of performance-based stock awards, which are also an element of our ongoing stock-based compensation, we are required to apply judgment to estimate the probability of the extent to which performance objectives will be achieved. Management believes it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business and to facilitate comparison of our 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 beyond our 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 and losses on asset disposals. We believe it is useful to exclude these items, when significant, as they are not reflective of our ongoing business and operating results.

  • Acquisition and other-related items. Acquisition and other-related items include direct costs of acquisitions and dispositions, such as transaction and advisory fees, which vary significantly and are unique to each transaction. Additionally, VMware does not acquire or dispose of businesses on a predictable cycle.

  • Capitalized software development costs. Capitalized software development costs encompass capitalization of development costs and the subsequent amortization of the capitalized costs over the useful life of the product. Amortization and capitalization of software development costs can vary significantly depending upon the timing of products reaching technological feasibility and being made generally available. We did not capitalize software development costs related to product offerings in either the first nine months of 2013 or fiscal year 2012 given our current go-to-market strategy. In future periods, we expect our amortization expense to steadily decline as previously capitalized software development costs become fully amortized.

  • Gain on disposition of certain lines of business and other, net. In the third quarter of 2013 we recognized a gain of $12 million as a result of exiting a certain line of business. In the first nine months of 2013, we recognized a gain as a result of exiting certain lines of business under our business realignment plan, which was partially offset by a charge recognized for a non-recoverable strategic investment. These transactions resulted in a net gain of $31 million. To the extent that significant gains or losses are realized on such dispositions and strategic investments, they do not occur on a predictable cycle, and such gains and losses are not reflective of our ongoing business and operating results.

  • Tax adjustment. 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 our non-GAAP income. 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 revenues 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.

Additionally, we believe that the non-GAAP financial measure free cash flows is meaningful to investors because we review cash flows generated from operations after taking into consideration capital expenditures due to the fact that these expenditures are considered to be a necessary component of ongoing operations.

The use of non-GAAP financial measures has certain limitations because they do not reflect all items of income and expense that affect VMware's operations. Specifically, in the case of stock-based compensation, if VMware did not pay out a portion of its compensation in the form of stock-based compensation and related employer payroll taxes, the cash salary expense included in operating expenses would be higher, which would affect VMware's cash position. VMware compensates for these limitations by reconciling the non-GAAP financial measures to the most comparable GAAP financial measures. These non-GAAP financial measures should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP and should not be considered measures of VMware's liquidity. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore comparability may be limited. Management encourages investors and others to review VMware's financial information in its entirety and not rely on a single financial measure.

Contacts:

Paul Ziots
VMware Investor Relations
pziots@vmware.com
650-427-3267

Joan Stone
VMware Global Communications
joanstone@vmware.com
650-427-4436

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