VMware 2014 Annual Report Download - page 54

Table of Contents
our consolidated statements of income over the awards’ remaining requisite service periods. Effective since September 1, 2012, stock-based
compensation costs related to Paul Maritz’s VMware awards have been charged to EMC and have not been recognized by us.
Due To/From Related Parties, Net
As a result of the related-party transactions with EMC described above, amounts due to and from related parties, net as of December 31,
2014 and December 31, 2013 consisted of the following:
Balances due to or from related parties, 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. Refer to Note K to the
consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for further information.
Notes Payable to EMC
In connection with our acquisition of AirWatch, we and EMC entered into a note exchange agreement on January 21, 2014 providing for the
issuance of three promissory notes in the aggregate principal amount of $1,500 . The total debt of $1,500 includes $450 that was exchanged for
the $450 promissory note issued to EMC in April 2007, as amended and restated in June 2011.
The three notes issued may be prepaid without penalty or premium, and outstanding principal is due on the following dates: $680 due May
1, 2018 , $550 due May 1, 2020 and $270 due December 1, 2022 . The notes bear interest, payable quarterly in arrears, at the annual rate of
1.75% . During the years ended December 31, 2014 , 2013 and 2012 , $24 , $4 and $5 , respectively, of interest expense was recognized.
Pivotal
During 2013, we transferred certain assets and liabilities to Pivotal. We 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, we transferred approximately 415 of our employees to Pivotal. In addition, we
and Pivotal entered into an agreement pursuant to which we will act as the selling agent for products and services we contributed to Pivotal in
exchange for a fee. We also agreed to provide various transition services to Pivotal. As of December 31, 2014 , our ownership interest in Pivotal
was 28% , however, the investment carried by us had a cost basis of zero.
Liquidity and Capital Resources
At December 31, 2014 and 2013 , we held cash, cash equivalents and short-term investments as follows:
As of December 31, 2014 , we held a diversified portfolio of money market funds and fixed income securities totaling $5,004 . Our fixed
income securities are denominated in U.S. dollars and consisted of highly liquid debt instruments of the U.S. government and its agencies,
municipal obligations, and U.S. and foreign corporate debt securities. We limit the amount of our domestic and international investments with
any single issuer and any single financial institution, and also monitor the diversity of the portfolio, thereby diversifying the credit risk. As of
December 31, 2014 , our total cash, cash equivalents and short-term investments were $7,075 , of which $4,968 was held outside the U.S. If
these overseas funds were needed for our operations in
51
As of December 31,
2014
2013
Due to EMC
$
(76
)
$
(114
)
Due from EMC
125
96
Due (to) from related parties, net
$
49
$
(18
)
Income tax payable due to EMC
$
(40
)
$
(22
)
December 31,
2014
2013
Cash and cash equivalents
$
2,071
$
2,305
Short-term investments
5,004
3,870
Total cash, cash equivalents and short-term investments
$
7,075
$
6,175