XML 104 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
Joint Ventures
12 Months Ended
Dec. 31, 2011
Joint Ventures

J.       Joint Ventures

 

       VCE Company LLC

 

In 2009, Cisco and EMC formed VCE Company LLC (“VCE”). VMware and Intel are also investors in VCE. 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 December 31, 2011, we have contributed $432.0 million in funding and $9.0 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 year ended December 31, 2011, and was 58.0% for both years ended December 31, 2010 and 2009. As of December 31, 2011, we have recorded net accumulated losses from VCE of $253.8 million since inception, of which $209.2 million, $43.0 million and $1.6 million were recorded in 2011, 2010 and 2009, respectively.

 

We recognized $133.9 million in revenue from sales of product and services to VCE during the year ended December 31, 2011. We did not recognize any revenue related to VCE in 2010 or 2009. 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 of $27.0 million and $19.9 million as of December 31, 2011 and 2010, respectively, which is included in other current assets in the consolidated balance sheets.