VMware 2012 Annual Report Download - page 64
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Table of Contents
impairment charges on our cash equivalents and fixed income securities during 2012 . These instruments are not leveraged and we do not enter
into speculative securities for trading purposes. See Notes D and E to the consolidated financial statements for further information.
Note Payable to EMC
As of December 31, 2012 , $450.0 million was outstanding on our consolidated balance sheet for the note payable to EMC. The interest rate
on the note payable was 0.91% as of December 31, 2012 , 0.92% as of December 31, 2011 and 0.84% as of December 31, 2010 . In 2012 , 2011
and 2010 , $4.7 million , $3.9 million and $4.1 million , respectively, of interest expense was recorded related to the note payable.
The note may be repaid, without penalty, at any time. In the second quarter of 2011, we and EMC amended and restated the note to extend
the maturity date of the note to April 16, 2015 and to modify the principal amount of the note to reflect the outstanding balance of $450.0
million . The amended agreement continues to bear an interest rate of the 90 -day LIBOR plus 55 basis points, with interest payable quarterly in
arrears. The interest rate on the note resets quarterly and is determined on the two business days prior to the first day of each fiscal quarter. If the
interest rate on the note payable were to change 100 basis points from the December 31, 2012 rate, and assuming no additional repayments on
the principal were made, our annual interest expense would change by $4.5 million.
Equity Price Risk
During 2011, we sold our investment in Terremark Worldwide, Inc., which was acquired by Verizon. As a result of the sale of our
investment, we no longer have investments in equity securities that expose us to market risk associated with publicly traded equity securities.
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