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Table of Contents VMware, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
interest, payable quarterly in arrears, at the annual rate of 1.75% . During the years ended December 31, 2014 , 2013 and 2012 , $24 million , $4
million and $5 million , respectively, of interest expense was recognized.
Pivotal
During 2013, VMware transferred certain assets and liabilities to Pivotal. VMware contributed certain assets, including intellectual property,
to Pivotal, and Pivotal assumed substantially all liabilities related to certain VMware Cloud Application Platform products and services,
including VMware’s Cloud Foundry, VMware vFabric (including Spring and GemFire) and Cetas organizations, except for certain tangible
assets related to Cloud Foundry. During the year ended December 31, 2013, VMware transferred approximately 415 VMware employees to
Pivotal.
VMware received preferred equity interests in Pivotal equal to approximately 31% of Pivotal’s outstanding shares in exchange for its
contributions. The book value of all contributed assets and the liabilities assumed by Pivotal, with the exception of intangible assets and
goodwill, was based on the book values of those assets and liabilities specific to those particular products and services. For intangible assets and
goodwill, the book value contributed was based on the relative fair value of the contributed assets applicable to Pivotal.
The following table summarizes the assets VMware contributed to Pivotal and the liabilities Pivotal assumed from VMware (table in
millions):
Of the $71 million in unearned revenues assumed by Pivotal on April 1, 2013, $32 million related to unearned license revenues and $39
million related to unearned services revenues.
As Pivotal assumed a net liability from VMware, the investment carried by VMware has a cost basis of zero
. Thus the net liability assumed
by Pivotal of $17 million as of December 31, 2013 was classified to additional paid-in capital on VMware’s consolidated balance sheets.
As of December 31, 2014 and 2013 , VMware’s ownership interest in Pivotal was 28% as a result of investments made by a third-party
strategic investor during the year ended December 31, 2013 .
O. Segment Information
VMware operates in one reportable operating segment, thus all required financial segment information can be found in the consolidated
financial statements. Operating segments are defined as components of an enterprise about which separate financial information is evaluated
regularly by the chief operating decision maker in deciding how to allocate resources and assessing performance. VMware’s chief operating
decision maker allocates resources and assesses performance based upon discrete financial information at the consolidated level.
Revenues by geographic area for the years ended December 31, 2014 , 2013 and 2012 were as follows (table in millions):
Revenues by geographic area are based on the ship-to-addresses of VMware’
s customers. No individual country other than the United States
accounted for 10% or more of revenues for the year ended December 31, 2014 . It is not practicable for VMware to determine revenues by
country other than the United States for the years ended December 31, 2013 and 2012 .
97
Accounts receivable
$
4
Property and equipment, net
1
Intangible assets
28
Goodwill
28
Total assets
61
Accounts payable, accrued liabilities and other, net
(7
)
Unearned revenues
(71
)
Total liabilities
(78
)
Total liabilities, net assumed by Pivotal
$
(17
)
For the Year Ended December 31,
2014
2013
2012
United States
$
2,912
$
2,485
$
2,229
International
3,123
2,722
2,376
Total
$
6,035
$
5,207
$
4,605