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Certain Stock-Based Compensation
EffectiveSeptember1,2012,PatGelsingerwasappointedChiefExecutiveOfficerofVMware.PriortojoiningVMware,Mr.GelsingerwasthePresidentand
ChiefOperatingOfficerofEMCInformationInfrastructureProducts.Mr.GelsingerretainscertainofhisEMCequityawardsthatwereheldasofSeptember1,
2012andhecontinuestovestinsuchawards.Stock-basedcompensationrelatedtoMr.Gelsinger’sEMCawardsarebeingrecognizedonourconsolidated
statementsofincomeovertheawards’remainingrequisiteserviceperiods.
Due To/From Related Parties, Net
AsaresultoftherelatedpartytransactionswithEMCdescribedabove,amountsduetoandfromrelatedparties,netasofDecember31,2015and2014
consistedofthefollowing(tableinmillions):
As of December 31,
2015
2014
Duetorelatedparties $ (68)
$ (76)
Duefromrelatedparties 142
125
Due(to)fromrelatedparties,net $ 74
$ 49
Incometaxdue(to)fromrelatedparties $ (18)
$ (40)
Balancesduetoorfromrelatedparties,whichareunrelatedtotaxobligations,aregenerallysettledincashwithin60daysofeachquarter-end.Thetimingof
thetaxpaymentsduetoandfromrelatedpartiesisgovernedbythetaxsharingagreementwithEMC.
Notes Payable to EMC
WeandEMCenteredintoanoteexchangeagreementonJanuary21,2014providingfortheissuanceofthreepromissorynotesintheaggregateprincipal
amountof$1,500million.Thetotaldebtof$1,500millionincludes$450millionthatwasexchangedforthe$450millionpromissorynoteissuedtoEMCinApril
2007,asamendedandrestatedinJune2011.
Thethreenotesissuedmaybeprepaidwithoutpenaltyorpremium,andoutstandingprincipalisdueonthefollowingdates:$680milliondueMay1,2018,
$550milliondueMay1,2020and$270milliondueDecember1,2022.Thenotesbearinterest,payablequarterlyinarrears,attheannualrateof1.75%.During
theyearsendedDecember31,2015,2014and2013,$26million,$24millionand$4million,respectively,ofinterestexpensewasrecognized.
Liquidity and Capital Resources
AtDecember31,2015and2014,weheldcash,cashequivalentsandshort-terminvestmentsasfollows(tableinmillions):
December 31,
2015
2014
Cashandcashequivalents $ 2,493
$ 2,071
Short-terminvestments 5,016
5,004
Totalcash,cashequivalentsandshort-terminvestments $ 7,509
$ 7,075
AsofDecember31,2015,weheldadiversifiedportfolioofmoneymarketfunds,timedepositsandfixedincomesecuritiestotaling$6,784million.Our
fixedincomesecuritiesaredenominatedinU.S.dollarsandprimarilyconsistofhighlyliquiddebtinstrumentsoftheU.S.Governmentanditsagencies,municipal
obligations,mortgage-backedsecuritiesandU.S.andforeigncorporatedebtsecurities.Welimittheamountofourdomesticandinternationalinvestmentswithany
singleissuerandmonitorthediversityoftheportfolioandtheamountofinvestmentsheldatanysinglefinancialinstitution,therebydiversifyingourcreditrisk.As
ofDecember31,2015,ourtotalcash,cashequivalentsandshort-terminvestmentswere$7,509million,ofwhich$5,810millionwasheldoutsidetheU.S.If
theseoverseasfundswereneededforouroperationsintheU.S.,wewouldberequiredtoaccrueandpayU.S.taxesonsubstantiallyalloftheundistributed
earningstorepatriatethesefunds.However,ourintentistoindefinitelyreinvestournon-U.S.earningsinourforeignoperationsandourcurrentplansdonot
demonstrateaneedtorepatriatethemtofundourU.S.operations.
Weexpectthatcashgeneratedbyoperationswillbeourprimarysourceofliquidity.Wealsobelievethatexistingcashandcashequivalents,togetherwithany
cashgeneratedfromoperationswillbesufficienttomeetnormaloperatingrequirementsforatleastthenexttwelvemonths.Whilewebelieveourexistingcash
andcashequivalentsandcashtobegeneratedbyoperationswillbesufficienttomeetournormaloperatingrequirements,ouroveralllevelofcashneedsmaybe
impactedbythenumber
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