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Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Transactions with EMC
VMware and EMC engaged in the following ongoing intercompany transactions, which resulted in revenues and receipts and unearned
revenues for VMware:
Information about VMware’s revenues and receipts and unearned revenues from such arrangements with EMC for the years ended
December 31, 2014 , 2013 and 2012 consisted of the following (table in millions):
VMware and EMC engaged in the following ongoing intercompany transactions, which resulted in costs to VMware:
95
• Pursuant to an ongoing reseller arrangement with EMC, EMC bundles VMware’s products and services with EMC’s products and sells
them to end users.
•
EMC purchases products and services from VMware for internal use.
•
VMware recognizes revenues for professional services based upon such contractual agreements with EMC.
•
From time to time, VMware and EMC enter into agreements to collaborate on technology projects, and EMC pays VMware for services
that VMware provides to EMC in connection with such projects.
• Pursuant to an ongoing distribution agreement, VMware acts as the selling agent for certain products and services in exchange for a
customary agency fee.
• VMware recognizes revenues for various transition services provided to Pivotal. Support costs incurred by VMware are reimbursed to
VMware and are recorded as a reduction to the costs incurred by VMware.
Revenues and Receipts from EMC
Unearned Revenues from EMC
For the Year Ended December 31,
As of December 31,
2014
2013
2012
2014
2013
Reseller revenues
$
205
$
141
$
141
$
290
$
188
Professional services revenues
85
72
82
9
12
Internal-use revenues
21
32
9
18
20
Collaborative technology project receipts
—
7
7
n/a
n/a
Agency fee revenues
5
5
—
—
—
Reimbursement for transition services
2
12
—
n/a
n/a
•
VMware purchases and leases products and purchases services for internal use from EMC.
•
From time to time, VMware and EMC enter into agreements to collaborate on technology projects, and VMware pays EMC for services
provided to VMware by EMC related to such projects.
• In certain geographic regions where VMware does not have an established legal entity, VMware contracts with EMC subsidiaries for
support services and EMC personnel who are managed by VMware. The costs incurred by EMC on VMware’s behalf related to these
employees are passed on to VMware and VMware is charged a mark-up intended to approximate costs that would have been charged
had VMware contracted for such services with an unrelated third party. These costs are included as expenses in VMware’
s consolidated
statements of income and primarily include salaries, benefits, travel and rent. EMC also incurs certain administrative costs on
VMware’s behalf in the U.S. that are recorded as expenses in VMware’s consolidated statements of income.
•
VMware incurs interest expense on its notes payable with EMC.