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Table of Contents
VMWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
payable to EMC and included in interest expense with EMC, net, recorded on the consolidated statements of income. VMware’s interest income
and expenses as a separate, stand-alone company may be higher or lower than the amounts reflected in the consolidated financial statements.
In 2008, VMware resolved with EMC certain acquisition-related intercompany liabilities due to EMC. As a result, intercompany liabilities
due to EMC of $9.7 million were recorded as a capital contribution from EMC in additional paid-in capital without the issuance of additional
equity by VMware or remittance of any cash.
Prior to March 2008, VMware employees participated in the EMC Corporation 401(k) Savings Plan (the “EMC Plan”). EMC cross-
charged VMware for the costs associated with VMware employees who participated in the EMC Plan. In March 2008, VMware employees
began participating in VMware’s 401(k) Savings Plan and ceased participation in the EMC Plan.
As of December 31, 2009, VMware had $47.1 million due from EMC, which was partially offset by $20.7 million due to EMC. As of
December 31, 2008, VMware had $38.4 million due to EMC, which was partially offset by $5.0 million due from EMC. The net amount due
from EMC as of December 31, 2009 was $26.4 million and resulted from the related party transactions described above. The net amount due to
EMC as of December 31, 2008 was $33.4 million and resulted from the related party transactions described above. As of December 31, 2009,
VMware had $3.0 million of income taxes receivable due from EMC and $10.5 million of income taxes payable due to EMC. As of
December 31, 2008, VMware had $111.1 million of income taxes receivable due from EMC and $3.6 million of income taxes payable due to
EMC. Balances due to or from EMC which are unrelated to tax obligations are generally settled in cash within 60 days of each quarter-end. The
timing of the tax payments due to and from EMC is governed by the tax sharing agreement with EMC.
Transactions with Other Related Parties
In the fourth quarter of 2009, VMware, entered into a definitive agreement to invest and participate in the management of Acadia
Enterprises, LLC (“Acadia”). Acadia is a joint venture between EMC and Cisco focused on accelerating customer build-outs of private cloud
infrastructures through end-to-end enablement of service providers and large enterprise customers. Acadia’s unique “build, operate, transfer”
model for delivering the Vblock architecture and addressing people, process and technology, will offer customers further choice, flexibility and
cost advantages as they seek to virtualize their IT infrastructures and evolve to private cloud environments. In addition to Cisco and EMC as the
lead investors, the build-out of Acadia’s expanded capabilities in 2010 has also been capitalized by investments from VMware and Intel.
VMware and Intel each have a minority ownership interest in the joint venture. VMware’s participation in the joint venture is accounted for
under the equity method and did not have a material impact on the Company’s consolidated financial statements as of and for the year ended
December 31, 2009.
In connection with Intel Capital’s purchase in 2007 of 9.5 million shares of VMware’s Class A common stock, the Company agreed to the
appointment of an Intel executive acceptable to VMware’s Board of Directors. In connection with Cisco’
s purchase in 2007 of 6.0 million shares
from EMC, the Company agreed to consider the appointment of a Cisco executive to the Board of Directors. In September 2007 an Intel
executive, and in November 2007 a Cisco executive, were appointed to VMware’s Board. In October 2008, Intel sold 0.5 million shares of
VMware’s Class A common stock to EMC and an additional 0.5 million shares to Cisco in separate transactions, increasing EMC’s Class A
common stock holdings to 27.0 million shares and Cisco’s holdings to 6.5 million shares. On October 22, 2009, Intel filed an amendment to its
Schedule 13D with the SEC disclosing that it had sold additional shares of VMware Class A common stock and was no longer a 5% shareholder
of the Company’s Class A common stock.
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