(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification Number)

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Revenue:

License

Services

Total revenue

Operating expenses⁽²⁾:

Cost of license revenue

Cost of services revenue

Research and development

Sales and marketing

General and administrative

Realignment and loss on disposition

Operating income

Investment income

Interest expense

Other income (expense), net

Income before income tax

Income tax provision

Net income

Net income per weighted-average share, basic for Classes A and B

Net income per weighted-average share, diluted for Classes A and B

Weighted-average shares, basic for Classes A and B

Weighted-average shares, diluted for Classes A and B

Cost of license revenue

Cost of services revenue

Research and development

Sales and marketing

General and administrative

Current assets:

Cash and cash equivalents

Short-term investments

Accounts receivable, net of allowance for doubtful accounts of $2 and $2

Due from related parties, net

Other current assets

Total current assets

Property and equipment, net

Other assets

Deferred tax assets

Intangible assets, net

Goodwill

Total assets

Current liabilities:

Accounts payable

Accrued expenses and other

Unearned revenue

Total current liabilities

Notes payable to Dell

Long-term debt

Unearned revenue

Income tax payable

Other liabilities

Total liabilities

Contingencies

Stockholders’ equity:

Class A common stock, par value $.01; authorized 2,500,000 shares; issued and outstanding 107,919 and 103,776

Class B convertible common stock, par value $.01; authorized 1,000,000 shares; issued and outstanding 300,000 shares

Additional paid-in capital

Accumulated other comprehensive loss

Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

⁽¹⁾  Adjusted to reflect the adoption of ASC 606.

Operating activities:

Net income

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Stock-based compensation

Deferred income taxes, net

Unrealized (gain) loss on equity securities, net

Loss on disposition

(Gain) loss on disposition of assets, revaluation and impairment, net

Loss on Dell stock purchase

Other

Changes in assets and liabilities, net of acquisitions:

Accounts receivable

Other current assets and other assets

Due to/from related parties, net

Accounts payable

Accrued expenses and other liabilities

Income taxes payable

Unearned revenue

Net cash provided by operating activities

Investing activities:

Additions to property and equipment

Purchases of available-for-sale securities

Sales of available-for-sale securities

Maturities of available-for-sale securities

Purchases of strategic investments

Proceeds from disposition of assets

Business combinations, net of cash acquired, and purchases
of intangible assets

Net cash paid on disposition of a business

Net cash provided by (used in) investing activities

Financing activities:

Proceeds from issuance of common stock

Repurchase of common stock

Shares repurchased for tax withholdings on vesting of restricted stock

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents and restricted  cash

Cash, cash equivalents and restricted cash at beginning of the period

Cash, cash equivalents and restricted cash at end of the period

Supplemental disclosures of cash flow information:

Cash paid for interest

Cash paid for taxes, net

Non-cash items:

Changes in capital additions, accrued but not paid

Adjusted to reflect the adoption of ASC 606 and Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. Net cash provided by operating activities increased by $1 million and $3 million for the three and six months ended August 4, 2017, respectively, when compared to the previously reported amounts due to the adoption of ASU 2016-18.

Total revenue, as reported

Sequential change in unearned revenue⁽²⁾

Total revenue plus sequential change in unearned revenue

Change (%) over prior year, as reported

Total license revenue, as reported

Sequential change in unearned license revenue⁽³⁾

Total license revenue plus sequential change in unearned license revenue

Change (%) over prior year, as reported

Adjusted to reflect the adoption of ASC 606.

Sequential change in unearned revenue consists of the change in total unearned revenue from the preceding quarter. Total unearned revenue consists of current and non-current unearned revenue amounts presented in the condensed consolidated balance sheets.

Unearned license revenue primarily consists of the allocated portion of VMware’s SaaS offerings.

Unearned revenue as reported:

License

Software maintenance

Professional services

Total unearned revenue

Adjusted to reflect the adoption of ASC 606.

Operating expenses:

Cost of license revenue

Cost of services revenue

Research and development

Sales and marketing

General and administrative

Realignment and loss on disposition

Operating income

Operating margin⁽²⁾

Other income (expense), net⁽³⁾

Income before income tax

Income tax provision

Tax rate⁽²⁾

Net income

Net income per weighted-average share,
diluted for Classes A and B^{(2) (4)}

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, such as adjustments resulting from the U.S. Tax Cuts and Jobs Act enacted on December 22, 2017 (the “2017 Tax Act”). 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.

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.

Non-GAAP adjustment to other income (expense), net includes gains or losses on equity investments, whether realized or unrealized. During the three months ended August 3, 2018, this adjustment primarily included a gain of $231 million, which related to VMware’s investment in Pivotal to adjust it to its fair value.

Calculated based upon 413,286 diluted weighted-average shares for Classes A and B.

Operating expenses:

Cost of license revenue

Cost of services revenue

Research and development

Sales and marketing

General and administrative

Realignment and loss on disposition

Operating income

Operating margin⁽³⁾

Other income (expense), net

Income before income tax

Income tax provision

Tax rate⁽³⁾

Net income

Net income per weighted-average share,
diluted for Classes A and B^{(3) (4)}

Adjusted to reflect the adoption of ASC 606.

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.

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.

Calculated based upon 412,768 diluted weighted-average shares for Classes A and B.

Operating expenses:

Cost of license revenue

Cost of services revenue

Research and development

Sales and marketing

General and administrative

Realignment and loss on disposition

Operating income

Operating margin⁽²⁾

Other income (expense), net⁽³⁾

Income before income tax

Income tax provision

Tax rate⁽²⁾

Net income

Net income per weighted-average share,
diluted for Classes A and B^{(2) (4)}

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, such as adjustments resulting from the 2017 Tax Act. 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.

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.

Non-GAAP adjustment to other income (expense), net includes gains or losses on equity investments, whether realized or unrealized. During the six months ended August 3, 2018, this adjustment primarily included a gain of $1,012 million, which related to VMware’s investment in Pivotal to adjust it to its fair value.

Calculated based upon 412,389 diluted weighted-average shares for Classes A and B.

Operating expenses:

Cost of license revenue

Cost of services revenue

Research and development

Sales and marketing

General and administrative

Realignment and loss on disposition

Operating income

Operating margin⁽³⁾

Other income (expense), net

Income before income tax

Income tax provision

Tax rate⁽³⁾

Net income

Net income per weighted-average share,
diluted for Classes A and B^{(3) (4)}

Adjusted to reflect the adoption of ASC 606.

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.

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.

Calculated based upon 413,920 diluted weighted-average shares for Classes A and B.

Revenue:

License

Services:

Software maintenance

Professional services

Total services

Total revenue

Percentage of revenue:

License

Services:

Software maintenance

Professional services

Total services

Total revenue

Adjusted to reflect the adoption of ASC 606.

Revenue:

United States

International

Total revenue

Percentage of revenue:

United States

International

Total revenue

Adjusted to reflect the adoption of ASC 606.

GAAP cash flows from operating activities

Capital expenditures

Free cash flows

Adjusted to reflect the adoption of ASU 2016-18. GAAP cash flows from operating activities increased by $1 million and $3 million for the three and six months ended August 4, 2017, respectively, when compared to the previously reported amounts due to the adoption of ASU 2016-18.

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 instruments VMware 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 of VMware’s core business.

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 VMware’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 of VMware’s core 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 of VMware.

Gains or losses on equity investments, whether realized or unrealized, including, gains of $231 million and $1,012 million during the three and six months ended August 3, 2018, respectively, which related to VMware’s investment in Pivotal to adjust it to its fair value.

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 of VMware’s parent company, EMC Corporation.

Gain or loss on share repurchase. In December 2016, VMware entered into a stock purchase agreement with Dell and Dell’s wholly-owned subsidiary, EMC Equity Assets LLC, pursuant to which VMware agreed to purchase $500 million of VMware Class A common stock. Through December 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. On February 15, 2017, the stock purchase agreement with Dell 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 of VMware’s core 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 of VMware’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 of VMware’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 on VMware’s estimated annual GAAP income tax rate forecast, adjusted to account for items excluded from GAAP income in calculating VMware’s non-GAAP income as well as discrete items, such as the estimated net tax expense recognized in the fourth quarter of fiscal 2018 in connection with the enactment of the Tax Cuts and Jobs Act on December 22, 2017. 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 that VMware 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 to VMware’s estimated annual tax rates as described above, the estimated tax rate on non-GAAP income may differ from the GAAP tax rate and from VMware’s actual tax liabilities.