Record Date for $11.5B conditional special
dividend is October 29, 2021
VMware Inc. (NYSE:VMW) (“VMware”), a leading innovator in
enterprise software, today announced that October 29, 2021 has been
set as the record date (the “Record Date”) for VMware’s $11.5
billion, conditional special dividend payable pro-rata to all
VMware stockholders (the “Special Dividend”). The Special Dividend
is payable in connection with the closing of the transactions
contemplated by that Separation and Distribution Agreement, both
originally announced on April 14, 2021, pursuant to which VMware
will be spun-off (the “Spin-off”) from Dell Technologies Inc.
(“Dell”). Payment of the Special Dividend remains subject to the
Dividend Payment Conditions, as defined in the Separation and
Distribution Agreement and described in VMware’s Current Reports on
Form 8-K filed with the Securities and Exchange Commission on April
14, 2021 and October 7, 2021.
The Special Dividend will be payable pro-rata to all VMware
stockholders of record as of the close of business on the Record
Date. VMware will announce the per share dividend amount following
the end of trading on the New York Stock Exchange on the Record
Date.
Shareholders of record of Dell common stock that are entitled to
receive the distribution of VMware Class A common stock as part of
the Spin-off will not be entitled to the cash dividend.
The payment date for the Special Dividend will be November 1,
2021 (the “Payment Date”), subject to satisfaction of the closing
conditions.
Shares of VMware Class A common stock will trade with due bills
from October 28, 2021, through and including the Payment Date of
November 1, 2021. The ex-dividend date will be November 2, 2021
(the first trading day following the Payment Date).
U.S. Federal Tax Treatment of the Special Dividend
VMware currently estimates that, for federal tax purposes,
39.49% of the Special Dividend will be treated as a taxable
dividend, with the other 60.51% of the Special Dividend being first
treated as a return on capital to stockholders to the extent of
their basis in VMware common stock, and thereafter as capital
gain.
The tax treatment of the Special Dividend will be based on
VMware’s current and accumulated earnings and profits through
VMware’s fiscal year ending January 28, 2022 (“FY22”). The process
of determining current and accumulated earnings and profits
requires a final determination of VMware’s financial results for
FY22 and a review of certain other factors. The determination will
be based in part on factors that are outside of the control of
VMware and which cannot be ascertained at this time. VMware does
not expect the calculation of the portion that will be treated as a
taxable dividend for federal tax purposes to be finalized until
after the completion of FY22. Accordingly, the portion of the
Special Dividend estimated to be a taxable dividend provided in
this release is based upon currently available information and is
subject to change.
The taxable dividend may be eligible for treatment as a
qualified dividend for federal tax purposes depending on the
holding period of the underlying stock and other personal tax
matters. The precise tax impact of the Special Dividend to specific
stockholders depends upon the stockholder’s individual tax
situation.
The Internal Revenue Service (“IRS”) Form 1099-DIV, issued no
later than January 31 of each tax year (or as allowed by IRS
procedures), will reflect the amount of the Special Divided to be
treated as a taxable dividend and the amount of the distribution
first treated as a return on capital to stockholders to the extent
of their basis in VMware common stock, and thereafter as capital
gain.
Since the tax treatment of the Special Dividend cannot be
finalized until after the close of FY22 this may result in
stockholders receiving an amended IRS Form 1099-DIV or other
required reporting after the initial IRS Form 1099-DIV forms are
distributed on January 31, 2022. The decision to issue an amended
IRS Form 1099-DIV to stockholders will be made by individual
brokerage firms.
Stockholders are urged to consult with a tax advisor to
determine the tax consequences of the Special Dividend received,
including any state, local or foreign tax considerations.
The current estimated return of capital percentages relating to
the Special Dividend will also be reported on IRS Form 8937
pursuant to U.S. tax basis reporting required under Internal
Revenue Code Section 6045B. The IRS Form 8937 will be posted on the
Payment Date to VMware’s investor relations website
http://ir.vmware.com and may be updated once the return of capital
percentages on the Special Dividend are finalized.
About VMware
VMware is a leading provider of multi-cloud services for all
apps, enabling digital innovation with enterprise control. As a
trusted foundation to accelerate innovation, VMware software gives
businesses the flexibility and choice they need to build the
future. Headquartered in Palo Alto, California, VMware is committed
to building a better future through the company’s 2030 Agenda. For
more information, please visit www.vmware.com/company.
Forward-Looking Statements
This press release contains forward-looking statements that are
based on VMware’s current expectations, including, among other
things, statements regarding the transactions contemplated by the
Separation and Distribution Agreement, including the Special
Dividend, expected satisfaction of the Dividend Payment Conditions
and timing of the related Record Date, Payment Date, per share
dividend amount announcement, trading with due bills, the
ex-dividend date, the tax treatment of the Special Dividend and the
specific percentage of the Special Dividend that will be treated as
a return on capital or capital gain. 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: (1) satisfaction of conditions related to and VMware’s
ability to pay the Special Dividend; (2) the occurrence of any
event, change or other circumstances that could give rise to delay
in the consummation of or failure to satisfy conditions precedent
to transactions contemplated by, or result in the termination of,
the Separation and Distribution Agreement; (3) adverse changes in
general economic, capital markets or other market conditions; (4)
competitive factors, including but not limited to pricing
pressures, industry consolidation, entry of new competitors into
and rapid technological changes in the industries in which we
compete, and new product and marketing initiatives by VMware’s
competitors; (5) VMware’s relationship with Dell and Dell’s ability
to control matters requiring stockholder approval; (6) disruptions
resulting from key management changes and VMware’s ability to
retain and hire key personnel; (7) the impact of the COVID-19
pandemic on VMware’s operations, financial condition, customers,
the business environment and global and regional economies; (8) the
ability to successfully integrate into VMware acquired companies
and assets and smoothly transition services related to divested
assets from VMware; (9) VMware’s customers’ ability to transition
to the new products, platforms, services, solutions and computing
strategies that we offer, and the uncertainty of their acceptance
of emerging technologies; (10) VMware’s ability to enter into,
maintain and extend strategically effective partnerships,
collaborations and alliances; (11) the continued risk of litigation
and regulatory actions; (12) VMware’s ability to protect its
proprietary technology; (13) risks associated with cyber-attacks,
information security and data privacy; (14) risks associated with
international sales such as fluctuating currency exchange rates and
increased trade barriers and tariffs; (15) changes in VMware’s
financial condition; (16) determination of VMware’s financial
results for FY22; and (17) other factors relating to the final
calculation of the portion of the Special Dividend taxable as a
dividend, a return of capital or capital gain. These
forward-looking statements are made as of the date of this press
release, 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 VMware has filed and 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 press
release.
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version on businesswire.com: https://www.businesswire.com/news/home/20211019005287/en/
Paul Ziots VMware Investor Relations pziots@vmware.com
650-427-3267
Michael Thacker VMware Global PR mthacker@vmware.com
650-427-4454
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