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Joint Ventures
9 Months Ended
Sep. 30, 2012
Equity Method Investments and Joint Ventures [Abstract]  
Joint Ventures
Joint Ventures
VCE Company LLC

In 2009, Cisco and EMC formed VCE Company LLC (“VCE”), with investments from VMware and Intel. VCE, through Vblock infrastructure platforms, delivers an integrated IT offering that combines network, computing, storage, management, security and virtualization technologies for converged infrastructures and cloud based computing models. As of September 30, 2012, we have contributed $667.2 million in funding and $13.2 million in stock-based compensation to VCE since inception and own approximately 58% of VCE’s outstanding equity.
  
We consider VCE a variable interest entity. Authoritative guidance related to variable interest entities states that the primary beneficiary of a variable interest entity must have both of the following characteristics: (a) the power to direct the activities of a variable interest entity that most significantly will impact the entity’s economic performance; and (b) the obligation to absorb losses that could be potentially significant to the variable interest entity or the right to receive benefits from the entity that could potentially be significant to the variable interest entity. Since the power to direct the activities of VCE which most significantly impact its economic performance are determined by its board of directors, which is comprised of equal representation of EMC and Cisco, and all significant decisions require the approval of the minority shareholders, we have determined we are not the primary beneficiary, and as such we account for the investment under the equity method.

Our portion of VCE’s gains and losses is recognized in other income (expense), net, in the consolidated income statements. Our consolidated share of VCE’s losses, based upon our portion of the overall funding, was approximately 63.2% for the three and nine months ended September 30, 2012 and 2011. As of September 30, 2012, we have recorded net accumulated losses from VCE of $430.2 million since inception, of which $61.9 million and $176.9 million were recorded in the three and nine months ended September 30, 2012, respectively, and $50.2 million and $138.7 million were recorded in the three and nine months ended September 30, 2011, respectively.

We recognized $65.3 million and $41.9 million in revenue from sales of product and services to VCE during the three months ended September 30, 2012 and 2011, respectively, and $210.8 million and $86.4 million for the nine months ended September 30, 2012 and 2011, respectively. We perform certain administrative services, pursuant to an administrative services agreement, on behalf of VCE and we pay certain operating expenses on behalf of VCE. Accordingly, we have a receivable from VCE related to the administrative services agreement of $28.8 million and $27.0 million as of September 30, 2012 and December 31, 2011, respectively, which is included in other current assets in the consolidated balance sheets.