VMware 2015 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2015 VMware annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 106

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106

TableofContents
• Pursuanttoanongoingdistributionagreement,weactasthesellingagentforcertainproductsandservicesofPivotalSoftware,Inc.(“Pivotal”),a
subsidiaryofEMC,inexchangeforanagencyfee.Underthisagreement,cashiscollectedfromtheenduserbyusandremittedtoPivotal,netofthe
contractualagencyfee.
• WeprovidevariousservicestoPivotal.Supportcostsincurredbyusarereimbursedtousandarerecordedasareductiontothecostsincurredbyus.
InformationaboutourrevenuesandreceiptsfromsucharrangementswithEMCduringtheyearsendedDecember31,2015,2014and2013andunearned
revenuesasofDecember31,2015and2014consistedofthefollowing(tableinmillions):
Revenues and Receipts from EMC
Unearned Revenues from
EMC
For the Year Ended December 31,
December 31,
2015
2014
2013
2015
2014
Resellerrevenues $ 301
$ 205
$ 141
$ 292
$ 290
Internal-userevenues 17
21
32
11
18
Professionalservicesrevenues 100
85
72
3
9
Collaborativetechnologyprojectreceipts —
—
7
n/a
n/a
Agencyfeerevenues 6
5
5
—
—
ReimbursementforservicestoPivotal 4
2
12
n/a
n/a
WeandEMCengagedinthefollowingongoingintercompanytransactions,whichresultedincoststous:
• WepurchaseandleaseproductsandpurchaseservicesfromEMC.
• Fromtimetotime,weandEMCenterintoagreementstocollaborateontechnologyprojects,andwepayEMCforservicesprovidedtousbyEMC
relatedtosuchprojects.
• Incertaingeographicregionswherewedonothaveanestablishedlegalentity,wecontractwithEMCsubsidiariesforsupportservicesandEMC
personnelwhoaremanagedbyus.ThecostsincurredbyEMConourbehalfrelatedtotheseemployeesarechargedtouswithamark-upintendedto
approximatecoststhatwouldhavebeenincurredhadwecontractedforsuchserviceswithanunrelatedthirdparty.Thesecostsareincludedasexpenses
onourconsolidatedstatementsofincomeandprimarilyincludesalaries,benefits,travelandrentexpenses.EMCalsoincurscertainadministrativecosts
onourbehalfintheU.S.thatarerecordedasexpensesonourconsolidatedstatementsofincome.
• Fromtimetotime,weinvoiceendusersonbehalfofEMCforcertainservicesrenderedbyEMC.Cashrelatedtotheseservicesiscollectedfromtheend
userbyusandremittedtoEMC.
InformationaboutourcostsfromsucharrangementswithEMCfortheyearsendedDecember31,2015,2014and2013consistedofthefollowing(tablein
millions):
For the Year Ended December 31,
2015
2014
2013
Purchasesandleasesofproductsandpurchasesofservices $ 63
$ 71
$ 63
Collaborativetechnologyprojectcosts 5
12
13
EMCsubsidiarysupportandadministrativecosts 100
137
128
WealsopurchaseEMCproductsthroughEMC'schannelpartners.PurchasesofEMCproductsthroughEMC'schannelpartnerswere$36million,$25million
and$6millionduringtheyearsendedDecember31,2015,2014and2013,respectively.
Inthefourthquarterof2013,weandEMCmodifiedanexistingtechnologylicensingarrangement.Pursuanttothemodifiedarrangement,wereceivedcertain
rightstodevelopedtechnologyforalump-sumpaymentof$26million,whichwasincludedinamountsduetorelatedparties,netontheconsolidatedbalance
sheetsasofDecember31,2013.Thelicenseoftechnologywasaccountedforasatransactionbyentitiesundercommoncontrol.Accordingly,anintangibleasset
of$2millionwasrecognizedandwasderivedbyallocatingthevalueascribedtothelicensedtechnologybasedupontherelativefairmarketvaluesofthe
technologytoeachparty.ThedifferencebetweentheassetrecordedandtheconsiderationduewasprimarilyrecognizedasareductionincapitalfromEMConthe
statementsofstockholders’equity.Inadditiontothelicenseofthetechnology,wewillpayEMCforsupportandfordevelopmentcollaboration.Theseamounts
areincludedincollaborativetechnologyprojectcostsinthetableabove.
41