VMware 2013 Annual Report Download - page 57
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Table of Contents
points and 100 basis points would have changed the fair value of our fixed income investment portfolio as of December 31, 2013 by $28 million and $57
million , respectively. This sensitivity analysis assumes a parallel shift of all interest rates; however, interest rates do not always move in such a manner and
actual results may differ materially. We monitor our interest rate and credit risk, including our credit exposures to specific rating categories and to individual
issuers. These instruments are not leveraged and we do not enter into speculative securities for trading purposes. See Notes E and F to the consolidated
financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.
Note Payable to EMC
As of December 31, 2013 , $450 million was outstanding on our consolidated balance sheet for the note payable to EMC. The interest rate on the note
payable was 0.80% as of December 31, 2013 , 0.91% as of December 31, 2012 and 0.92% as of December 31, 2011 . In 2013 , 2012 and 2011 , $4 million ,
$5 million and $4 million , respectively, of interest expense was recorded related to the note payable.
The note may be repaid, without penalty, at any time. In the second quarter of 2011, we and EMC amended and restated the note to extend the maturity
date of the note to April 16, 2015 and to modify the principal amount of the note to reflect the outstanding balance of $450 million . The amended agreement
continues to bear an interest rate of the 90 -day LIBOR plus 55 basis points, with interest payable quarterly in arrears. The interest rate on the note resets
quarterly and is determined on the two business days prior to the first day of each fiscal quarter. If the interest rate on the note payable were to change 100
basis points from the December 31, 2013 rate, and assuming no additional repayments on the principal were made, our annual interest expense would change
by $5 million.
On January 21, 2014 , in connection with our agreement to acquire AirWatch Holding, the sole member and equity holder of AirWatch, we and EMC
entered into a note exchange agreement providing for the issuance of three promissory notes in the aggregate principal amount of $1,500 . See Note R to the
consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.
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