Denali Unaudited Pro Forma Condensed Combined Financial Statements

DENALI UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The unaudited pro forma condensed combined statement of loss for the year ended January 29, 2016 combines the historical consolidated statements of income (loss) of Denali and EMC, giving effect to the merger and related financing transactions as if they had occurred on January 31, 2015, the first day of the fiscal year ended January 29, 2016. The unaudited pro forma condensed combined statement of loss for the year ended January 29, 2016 and the unaudited pro forma condensed statements of loss for the year ended January 30, 2015, the successor period from October 29, 2013 through January 31, 2014, and the predecessor period from February 2, 2013 through October 28, 2013 additionally reflect the anticipated disposition of Dell Services, which will be accounted for as discontinued operations, as if it had occurred on February 2, 2013, the first day of the earliest fiscal period presented. The unaudited pro forma condensed combined statement of financial position as of January 29, 2016 combines the historical consolidated statements of financial position of Denali and EMC, giving effect to the merger, related financing transactions, and anticipated disposition of Dell Services as if they had occurred on January 29, 2016. The historical consolidated financial information has been adjusted in the unaudited pro forma condensed combined financial statements to give effect to pro forma events that are (i) directly attributable to the merger or anticipated disposition, (ii) factually supportable, and (iii) with respect to the statements of income, expected to have a continuing impact on the combined company’s results. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial information was based on, and should be read in conjunction with, the following historical consolidated financial statements and accompanying notes, which are included elsewhere or incorporated by reference in this proxy statement/prospectus:

•

separate historical consolidated financial statements of Denali as of, and for the year ended, January 29, 2016, and the related notes; and

•

separate historical consolidated financial statements of EMC as of, and for the year ended, December 31, 2015, and the related notes included in EMC’s Annual Report on Form 10-K for the year ended December 31, 2015.

The unaudited pro forma adjustments are based upon available information and certain assumptions that Denali believes are reasonable under the circumstances. The unaudited pro forma condensed combined financial information has, as it relates to the EMC acquisition, been prepared by Denali using the acquisition method of accounting in accordance with GAAP. Denali has been treated as the acquirer in the merger for accounting purposes. The acquisition accounting is dependent upon certain valuation and other studies that have yet to commence or progress to a stage where there is sufficient information for a definitive measurement. Under the HSR Act and other relevant laws and regulations, before the completion of the merger, there are significant limitations regarding what Denali can learn about EMC. Accordingly, the assets and liabilities of EMC have been measured based on various preliminary estimates using assumptions that Denali believes are reasonable based on information that is currently available to it. Differences between these preliminary estimates and the final acquisition accounting will occur, and those differences could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and the combined company’s future results of operations and financial position. The unaudited pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial statements prepared in accordance with the rules and regulations of the SEC.

The unaudited pro forma condensed combined financial information is presented for informational purposes only. The unaudited pro forma condensed combined financial information does not purport to represent what the combined company’s results of operations or financial condition would have been had the merger or anticipated disposition of Dell Services actually occurred on the dates indicated, and does not purport to project the combined company’s results of operations or financial condition for any future period or as of any future date.

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The unaudited pro forma condensed combined financial information does not reflect adjustments for any possible tax liabilities resulting from the repatriation of cash currently held in foreign jurisdictions likely to be required to close the transaction. While no final plan for repatriation of cash has been developed as it relates to this transaction, Denali does not expect that the taxes and other costs that Denali will incur on a combined basis as a result of any such repatriation will be material to the pro forma results of the combined company. Further, EMC expects that any taxes ultimately payable by EMC as a result of such cash repatriation will only be incurred immediately before the completion of the merger and will not be material to EMC on a standalone basis.

The unaudited pro forma condensed combined financial information does not reflect all potential divestitures that may occur prior to, or subsequent to, the completion of the merger (including to obtain required regulatory approvals), the projected realization of revenue synergies, cost savings that may be realized as a result of the merger, or any potential changes in compensation plans.

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DENALI UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF LOSS

		Pro Forma Year Ended January 29, 2016
(in millions, except per share amounts)		Denali Fiscal year ended January 29, 2016				EMC Fiscal year ended December 31, 2015				Discontinued operations				Pro forma adjustments								Pro forma combined
Net revenue:
Products		$	43,317			$	13,514			$	—			$	(351	)			(c	)		$	56,480
Services, including software related			11,569				11,190				(2,804	)			(2,476	)			(a	)			17,479
Total net revenue			54,886				24,704				(2,804	)			(2,827	)							73,959
Cost of net revenue:
Products			37,923				5,826				—				3,038				(b	)			45,933
															(351	)			(c	)
															(503	)			(d	)
Services, including software related			7,131				4,001				(2,256	)			—								8,876
Total cost of net revenue			45,054				9,827				(2,256	)			2,184								54,809
Gross margin			9,832				14,877				(548	)			(5,011	)							19,150
Operating expenses:
Selling, general, and administrative			8,900				8,765				(406	)			293				(b	)			17,498
															(54	)			(g	)
Research, development, and engineering			1,315				3,271				(3	)			(6	)			(b	)			4,577
Total operating expenses			10,215				12,036				(409	)			233								22,075
Operating income (loss)			(383	)			2,841				(139	)			(5,244	)							(2,925	)
Interest and other, net			(792	)			41				—				(1,910	)			(e	)			(2,704	)
															(43	)			(f	)
Income (loss) from continuing operations before income taxes			(1,175	)			2,882				(139	)			(7,197	)							(5,629	)
Income tax provision (benefit)			(71	)			710				(45	)			(2,519	)			(i	)			(1,925	)
Net income (loss) from continuing operations			(1,104	)			2,172				(94	)			(4,678	)							(3,704	)
Net (income) loss attributable to non-controlling interests			—				(182	)			—				313				(j	)			131
Net income (loss) from continuing operations attributable to common shareholders		$	(1,104	)		$	1,990			$	(94	)		$	(4,365	)						$	(3,573	)
DHI Group common stock:
Loss per share from continuing operations, basic		$	(2.73	)																		$	(7.32	)
Loss per share from continuing operations, diluted		$	(2.73	)																		$	(7.32	)
Weighted average shares outstanding, basic			405												155				(h	)			560
Weighted average shares outstanding, diluted			405												155				(h	)			560
Net loss from continuing operations attributable to DHI Group common stock			n/a											$	(4,097	)			(h	)		$	(4,097	)
Class V Common Stock:
Earnings per share from continuing operations, basic			n/a																			$	2.35
Earnings per share from continuing operations, diluted			n/a																			$	2.34
Weighted average shares outstanding, basic			n/a												223				(h	)			223
Weighted average shares outstanding, diluted			n/a												223				(h	)			223
Net income from continuing operations attributable to Class V Common Stock			n/a											$	524				(h	)		$	524

See accompanying notes to Denali Unaudited Pro Forma Condensed Combined Financial Statements.

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DENALI UNAUDITED PRO FORMA CONDENSED STATEMENT OF LOSS

		Pro Forma Year Ended January 30, 2015
(in millions, except per share amounts)		Denali Fiscal year ended January 30, 2015				Discontinued operations				Pro forma
Net revenue:
Products		$	46,690			$	—			$	46,690
Services, including software related			11,429				(2,819	)			8,610
Total net revenue			58,119				(2,819	)			55,300
Cost of net revenue:
Products			40,415				—				40,415
Services, including software related			7,496				(2,433	)			5,063
Total cost of net revenue			47,911				(2,433	)			45,478
Gross margin			10,208				(386	)			9,822
Operating expenses:
Selling, general, and administrative			9,428				(397	)			9,031
Research, development, and engineering			1,202				(3	)			1,199
Total operating expenses			10,630				(400	)			10,230
Operating income (loss)			(422	)			14				(408	)
Interest and other, net			(924	)			—				(924	)
Loss from continuing operations before income taxes			(1,346	)			14				(1,332	)
Income tax provision (benefit)			(125	)			14				(111	)
Net loss from continuing operations		$	(1,221	)		$	—			$	(1,221	)
Loss per share from continuing operations, basic		$	(3.02	)						$	(3.02	)
Loss per share from continuing operations, diluted		$	(3.02	)						$	(3.02	)
Weighted average shares outstanding, basic			404								404
Weighted average shares outstanding, diluted			404								404

See accompanying notes to Denali Unaudited Pro Forma Condensed Combined Financial Statements.

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DENALI UNAUDITED PRO FORMA CONDENSED STATEMENT OF LOSS

		Period October 29, 2013 through January 31, 2014																Period February 2, 2013 through October 28, 2013
		Successor																Predecessor
(in millions, except per share amounts)		Denali				Discontinued operations				Pro forma								Dell, Inc.				Discontinued operations				Pro forma
Net revenue:
Products		$	11,253			$	—			$	11,253							$	32,786			$	—			$	32,786
Services, including software related			2,822				(687	)			2,135								9,516				(2,176	)			7,340
Total net revenue			14,075				(687	)			13,388								42,302				(2,176	)			40,126
Cost of net revenue:
Products			10,695				—				10,695								28,150				—				28,150
Services, including software related			1,987				(646	)			1,341								6,161				(1,998	)			4,163
Total cost of net revenue			12,682				(646	)			12,036								34,311				(1,998	)			32,313
Gross margin			1,393				(41	)			1,352								7,991				(178	)			7,813
Operating expenses:
Selling, general, and administrative			2,863				(111	)			2,752								6,528				(277	)			6,251
Research, development, and engineering			328				(1	)			327								945				(5	)			940
Total operating expenses			3,191				(112	)			3,079								7,473				(282	)			7,191
Operating income (loss)			(1,798	)			71				(1,727	)							518				104				622
Interest and other, net			(204	)			—				(204	)							(198	)			—				(198	)
Income (loss) from continuing operations before income taxes			(2,002	)			71				(1,931	)							320				104				424
Income tax provision (benefit)			(390	)			29				(361	)							413				41				454
Net loss from continuing operations		$	(1,612	)		$	42			$	(1,570	)						$	(93	)		$	63			$	(30	)
Loss per share from continuing operations, basic		$	(4.06	)						$	(3.95	)						$	(0.05	)						$	(0.02	)
Loss per share from continuing operations, diluted		$	(4.06	)						$	(3.95	)						$	(0.05	)						$	(0.02	)
Weighted average shares outstanding, basic			397								397								1,755								1,755
Weighted average shares outstanding, diluted			397								397								1,755								1,755

See accompanying notes to Denali Unaudited Pro Forma Condensed Combined Financial Statements.

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DENALI UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION

		As of January 29, 2016
(in millions)		Denali As of January 29, 2016				EMC As of December 31, 2015				Assets held for sale				Pro forma adjustments								Pro forma combined
Current assets:
Cash and cash equivalents		$	6,576			$	6,549			$	—			$	(6,088	)			(a	)		$	7,037
Short-term investments			—				2,726				—				(1,110	)			(e	)			1,616
Accounts receivable, net			5,535				3,977				(443	)			1,902				(d	)			10,971
Short-term financing receivables, net			2,915				—				—				—								2,915
Inventories, net			1,643				1,245				—				653				(c	)			3,541
Other current assets			3,615				566				(73	)			(30	)			(b	)			4,078
Assets held for sale			—				—				1,721				(1,721	)			(a	)			—
Total current assets			20,284				15,063				1,205				(6,394	)							30,158
Property, plant, and equipment, net			2,270				3,850				(515	)			—								5,605
Long-term investments			114				5,508				—				(2,108	)			(e	)			3,514
Long-term financing receivable, net			2,177				—				—				—								2,177
Goodwill			10,049				17,090				(252	)			19,525				(g	)			46,412
Purchased intangible assets, net			9,578				2,149				(388	)			32,841				(h	)			44,180
Other non-current assets			778				2,952				(50	)			(123	)			(j	)			3,557
Total assets		$	45,250			$	46,612			$	—			$	43,741							$	135,603
Current liabilities:
Short-term debt		$	2,984			$	1,299			$	—			$	(1,490	)			(f	)		$	2,793
Accounts payable			12,934				1,644				(173	)			—								14,405
Accrued and other			4,556				3,732				(180	)			(862	)			(l	)			7,246
Short-term deferred revenue			4,339				6,210				(82	)			(1,155	)			(k	)			9,312
Liabilities held for sale			—				—				614				(614	)			(a	)			—
Total current liabilities			24,813				12,885				179				(4,121	)							33,756
Long-term debt			10,775				5,475				—				35,155				(i	)			51,405
Long-term deferred revenue			4,475				4,592				(53	)			(1,076	)			(k	)			7,938
Other non-current liabilities			3,615				941				(126	)			12,919				(m	)			17,349
Total liabilities		$	43,678			$	23,893			$	—			$	42,877							$	110,448
Redeemable shares			106				—				—				—								106
Stockholders’ equity
Preferred stock			—				—				—				—								—
Common stock and additional paid-in capital			5,727				19				—				17,734				(n	)			23,480
Retained earnings (deficit)			(3,937	)			21,700				—				(20,847	)			(o	)			(3,084	)
Accumulated other comprehensive income (loss)			(324	)			(579	)			—				579				(p	)			(324	)
Total stockholders’ equity			1,466				21,140				—				(2,534	)							20,072
Non-controlling interests			—				1,579				—				3,398				(q	)			4,977
Total liabilities and equity		$	45,250			$	46,612			$	—			$	43,741							$	135,603

See accompanying notes to Denali Unaudited Pro Forma Condensed Combined Financial Statements.

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NOTES TO DENALI UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1.	Description of Merger Transaction

Denali and EMC are parties to the merger agreement, pursuant to which, subject to the terms and conditions set forth therein, Merger Sub will merge with and into EMC and EMC will become a wholly owned subsidiary of Denali and will no longer be a publicly held corporation. If the merger is completed, each share of EMC common stock (other than shares owned by Denali, Merger Sub, EMC or any of its wholly-owned subsidiaries, and other than shares with respect to which appraisal rights may be properly exercised and not withdrawn) automatically will be converted into the right to receive the merger consideration, consisting of (1) $24.05 in cash, without interest, and (2) a number of shares of validly issued, fully paid and non-assessable Class V Common Stock equal to the quotient obtained by dividing (A) 222,966,450 by (B) the aggregate number of shares of EMC common stock issued and outstanding immediately prior to the effective time of the merger, plus cash in lieu of any fractional shares. In order to complete the merger, among other conditions, EMC shareholders must approve the merger agreement. The aggregate number of shares of Class V Common Stock expected to be issued following the completion of the merger and the other transactions described in this proxy statement/prospectus is intended to track and reflect the economic performance of approximately 65% of EMC’s economic interest in the approximately 81% of the outstanding shares of VMware common stock currently owned by EMC, reflecting approximately 53% of the total economic interest in the outstanding shares of VMware common stock.

The merger will be financed with a combination of equity and debt financing and cash on hand. Denali has obtained committed equity financing for up to $4.25 billion in the aggregate (from Michael S. Dell and a separate property trust for the benefit of Mr. Dell’s wife, MSDC Denali Investors, L.P., MSDC Denali EIV, LLC, funds affiliated with Silver Lake Partners, and Temasek) and debt financing commitments for up to $49.5 billion in the aggregate from, among others, Credit Suisse, J.P. Morgan, Barclays, BofA Merrill Lynch, Citi, Goldman Sachs, Deutsche Bank, and RBC Capital Markets, for the purpose of financing the merger and refinancing certain existing indebtedness of Denali and EMC. The obligations of the lenders under Denali’s debt financing commitments are subject to a number of customary conditions. Denali’s debt financing commitments will terminate upon the earliest of (1) the termination of the merger agreement in accordance with its terms, (2) the completion of the merger without the funding of such commitments and (3) December 16, 2016. In addition, each of Denali and EMC has agreed to make available a certain amount of cash on hand (at least $2.95 billion, in the case of Denali, and $4.75 billion in the case of EMC) at the closing of the merger for the purpose of financing the transactions contemplated by the merger agreement.

2.	Basis of Presentation

The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting for the merger and are based on the historical consolidated financial statements of Denali and EMC. The assets and liabilities of Dell Services have been removed from the pro forma condensed combined statement of financial position to reflect the divestiture, and the financial results of Dell Services have been removed from the pro forma combined statement of loss as discontinued operations; the amounts related to this business have been derived from Denali’s historical consolidated financial statements. Denali’s fiscal year end is the 52 or 53 week period ending on the Friday nearest January 31 while EMC’s fiscal year end is December 31. Denali’s fiscal year ended January 29, 2016 included 52 weeks. The unaudited pro forma condensed combined statement of loss for the year ended January 29, 2016 combines Denali’s consolidated statement of loss for the fiscal year ended January 29, 2016 with EMC’s consolidated income statement for the fiscal year ended December 31, 2015. The unaudited pro forma condensed combined statement of financial position as of January 29, 2016 combines Denali’s consolidated statement of financial position as of January 29, 2016 with EMC’s consolidated balance sheet as of December 31, 2015. In addition, EMC’s historical “restructuring and acquisition-related expenses” have been reclassified to conform with Denali’s presentation as shown below:

(in millions)		Year Ended January 29, 2016
Products, cost of net revenue		$	17
Services, cost of net revenue			97
Research, development, and engineering			104
Selling, general, and administrative			232
Net adjustment		$	450

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The acquisition method of accounting is based on ASC 805, and uses the fair value concepts defined in ASC 820, Fair Value Measurements. ASC 805 requires, among other things, that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.

Under ASC 805, acquisition-related transaction costs are not included as a component of consideration transferred but are accounted for as expenses in the periods in which such costs are incurred, or if related to the issuance of debt, capitalized as debt issuance costs. Acquisition-related transaction costs expected to be incurred by Denali include estimated fees related to the issuance of long-term debt, as well as financial advisory, legal and accounting fees. Total acquisition-related transaction costs expected to be incurred by Denali and EMC are estimated to be approximately $1.8 billion, which includes an estimated $1.0 billion of debt issuance costs and discounts. During the year ended January 29, 2016, Denali incurred $39 million of acquisition-related costs and EMC incurred $15 million of acquisition-related costs.

The unaudited pro forma condensed combined statement of financial position as of January 29, 2016 is required to include adjustments which give effect to events that are directly attributable to the merger regardless of whether they are expected to have a continuing impact on the combined results or are non-recurring. Therefore, acquisition-related transaction costs expected to be incurred by Denali and EMC subsequent to January 29, 2016 of approximately $1.7 billion are reflected as a pro forma adjustment to the unaudited pro forma condensed combined statement of financial position as of January 29, 2016 as follows:

•

a decrease to cash of $1.7 billion;

•

an increase to other non-current assets of $885 million for capitalized debt costs;

•

a decrease to long-term debt of $112 million for debt discounts;

•

a decrease in other current liabilities of $184 million for the assumed tax benefit of transaction costs expensed; and

•

a decrease to retained earnings of $567 million, net of related tax benefits.

ASC 820 defines the term “fair value,” sets forth the valuation requirements for any asset or liability measured at fair value, expands related disclosure requirements and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined in ASC 820 as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” This is an exit price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset assume the highest and best use by these market participants. As a result of these standards, Denali may be required to record the fair value of assets which are not intended to be used or sold and/or to value assets at fair value measures that do not reflect Denali’s intended use of those assets. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts.

On March 27, 2016, Dell entered into a definitive agreement with NTT Data International L.L.C. to sell Dell Services for cash consideration of approximately $3.1 billion. Denali has reflected the assets and liabilities to be divested in the “assets held for sale” column, and has removed those same assets and liabilities from the “pro forma adjustments” column to reflect the divestiture in the unaudited pro forma condensed combined statement of financial position as of January 29, 2016. Further, the financial results of the business held-for-sale have been removed for all three years presented in Denali’s unaudited pro forma condensed statements of loss to present only pro forma loss from continuing operations. These adjustments represent Denali’s current best estimate of the historical operations, effective tax rate, assets, and liabilities of the business to be disposed. As the terms of the sale are finalized, these estimates may change and any such changes may be material. Total cash consideration, which may vary due to working capital adjustments included in the transaction agreement, is expected to be

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between $2.9 billion and $3.1 billion, which would result in a pre-tax gain on sale of approximately $1.7 billion to $2.0 billion, respectively. Denali anticipates that the transaction will close in the third quarter of fiscal year 2017, subject to satisfaction of customary closing conditions, including approvals from regulatory authorities.

If the divestiture of Dell Services is consummated prior to or substantially concurrently with the consummation of the merger, the net consideration received from the divestiture will be used to finance the merger. The net impact of the disposition of Dell Services to the unaudited pro forma condensed combined statement of financial position as of January 29, 2016 consists of the following pro forma adjustments:

•

An increase in cash of $2.7 billion ($3.1 billion of total consideration net of an estimated cash taxes paid of $0.4 billion);

•

The removal of $1.7 billion of assets and $0.6 billion of liabilities to effectuate the sale; and

•

An increase in retained earnings of $1.6 billion, representing the estimated net gain on the disposition.

The unaudited pro forma condensed combined financial statements do not reflect all potential divestitures that may occur prior to, or subsequent to, the completion of the merger (including in order to obtain required regulatory approvals), the projected realization of revenue synergies and cost savings following the completion of the merger, or any potential changes in compensation plans. Although Denali projects that revenue synergies and cost savings will result from the merger, there can be no assurance that these will be achieved. Management currently estimates that the annual cost savings will be approximately $3.4 billion resulting from increased efficiencies in the operations of the combined company, as well as initiatives to reduce costs for Denali and EMC on a standalone basis.

3.	Accounting Policies

Based on Denali’s preliminary review of EMC’s accounting policies, Denali has identified a difference between Denali’s and EMC’s policies in the presentation of accounts receivable. In certain circumstances, EMC presents these balances net of related deferred revenue, while Denali primarily presents these receivables and the related deferred revenue on a gross basis. For the presentation of the unaudited pro forma condensed combined statement of financial position, EMC’s presentation has been conformed to Denali’s presentation, resulting in an increase in accounts receivable and deferred revenue of $1.9 billion prior to purchase accounting adjustments. Upon the completion of the merger, Denali will perform a further review of EMC’s accounting policies. As a result of that review, Denali may identify differences between the accounting policies of the two companies that, when conformed, could have a material impact on the combined financial statements.

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4.	Estimate of Consideration Transferred and Assets to be Acquired and Liabilities to be Assumed

The following is a preliminary estimate of the consideration expected to be transferred, assets to be acquired, and liabilities to be assumed by Denali in the merger, reconciled to the estimate of total consideration expected to be transferred:

		(in millions)
Consideration Transferred
Cash		$	48,614
Class V Common Stock (1)			13,503
Total consideration transferred			62,117
Rollover equity (2)			4,977
Total value to allocate		$	67,094
Purchase Price Allocation:
Current assets:
Cash and cash equivalents		$	6,549
Short-term investments			2,726
Accounts receivable, net			5,879
Inventories, net			1,898
Other current assets			566
Total current assets			17,618
Property, plant, and equipment, net			3,850
Long-term investments			5,508
Goodwill (3)			36,615
Purchased intangibles, net (4)			34,990
Other non-current assets			2,035
Total assets		$	100,616
Current liabilities:
Short-term debt		$	1,299
Accounts payable			1,644
Accrued and other			3,147
Short-term deferred revenue			5,055
Total current liabilities			11,145
Long-term debt			5,001
Long-term deferred revenue			3,516
Other non-current liabilities			13,860
Total liabilities		$	33,522
Total net assets		$	67,094

(1)

The fair value of the Class V Common Stock is based on the assumed issuance of approximately 223 million shares with a per-share fair value of $60.56 (the closing share price of VMware common stock as of May 31, 2016), which shares are intended to track and reflect the economic performance of approximately 65% of EMC’s economic interest in the VMware business. While the VMware Class A common stock and the Class V Common Stock have different characteristics, which Denali expects may affect their respective market prices in distinct ways, Denali believes that changes in the market value of VMware common stock prior to the completion of the merger may impact the market value of the Class V Common Stock at the time the merger is completed. The actual fair values at the time of the merger may differ, and the difference may be material. A 10% change in the fair value of the Class V Common Stock would change the value of goodwill by approximately $1.4 billion.

(2)

Rollover equity is comprised of non-controlling interests of $5.0 billion. The fair value of the non-controlling interest relating to VMware was calculated by multiplying outstanding shares of VMware common stock that were not owned by EMC by $60.56 (the closing price of VMware common stock as of May 31, 2016). A 10% change in the fair value of VMware’s share price would change the value of

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goodwill by approximately $488 million. For the purposes of these unaudited pro forma condensed combined financial statements, it was assumed that the fair value of the non-controlling interest in Pivotal is equal to book value as this amount is not material.

(3)

Goodwill is calculated as the difference between the acquisition date fair value of the total consideration expected to be transferred and the aggregate values assigned to the assets acquired and liabilities assumed. Goodwill is not amortized. The consideration transferred assumes that the vesting of EMC’s outstanding stock options and restricted stock units will be accelerated prior to the effective time of the merger. Pursuant to the guidelines of ASC 805, a portion of the consideration related to these equity awards will be recorded as day one post-acquisition stock compensation expense with a corresponding decrease in the amount of the purchase price that is allocated to goodwill. For the purposes of the unaudited pro forma condensed combined statement of financial position, we have not made any adjustment for the expected day one post-acquisition stock compensation expense as it is not factually supportable, however, based on current estimates we expect the day one post-acquisition stock compensation expense and related goodwill impact to be approximately $0.8 billion to $1.0 billion.

(4)

As of the completion of the merger, identifiable intangible assets are required to be measured at fair value, and these acquired assets could include assets that are not intended to be used or sold or that are intended to be used in a manner other than their highest and best use. For purposes of these unaudited pro forma condensed combined financial statements and consistent with the ASC 820 requirements for fair value measurements, it is assumed that all assets will be used, and that all acquired assets will be used in a manner that represents the highest and best use of those acquired assets.

The fair value of identifiable intangible assets is determined primarily using variations of the “income approach,” which is based on the present value of the future after-tax cash flows attributable to each identifiable intangible asset. Other valuation methods, including the market approach and cost approach, were also considered in estimating the fair value.

As of the date of this proxy statement/prospectus, Denali does not have sufficient information as to the amount, timing, and risk of the cash flows from all of EMC’s identifiable intangible assets to definitively determine their fair value. Under the HSR Act and other relevant laws and regulations, there are significant limitations on Denali’s ability to obtain specific information about EMC’s intangible assets prior to the completion of the merger. Some of the more significant assumptions inherent in the development of intangible asset values, from the perspective of a market participant, include, but are not limited to: the amount and timing of projected future cash flows (including revenue and profitability); the discount rate selected to measure the risks inherent in the future cash flows; the assessment of the asset’s life cycle; and the competitive trends impacting the asset. However, for purposes of these unaudited pro forma condensed combined financial statements and using publicly available information, such as historical revenues, EMC’s cost structure, industry information for comparable intangible assets and certain other high-level assumptions, the fair value of EMC’s identifiable intangible assets, and their weighted-average useful lives have been preliminarily estimated as follows:

		Estimated life (years)				Estimated fair value (in millions)
Developed technology			7			$	22,990
Customer relationships			10				4,400
In-process research and development			Indefinite				2,740
Trade names			Indefinite				4,860
Total identifiable intangible assets						$	34,990

These preliminary estimates of fair value and weighted-average useful life will likely be different from the amounts included in the final acquisition accounting, and the difference could have a material impact on the accompanying unaudited pro forma condensed combined financial statements. Once Denali has full access to information about EMC’s intangible assets, additional insight will be gained that could impact (i) the

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estimated total value assigned to identifiable intangible assets, (ii) the estimated allocation of value between finite-lived and indefinite-lived intangible assets (as applicable) and/or (iii) the estimated weighted-average useful life of each category of intangible assets. The estimated intangible asset values and their useful lives could be impacted by a variety of factors that may become known to Denali only upon access to additional information and/or by changes in such factors that may occur prior to the completion of the merger. These factors include, but are not limited to, changes in the regulatory, legislative, legal, technological, and/or competitive environments. Increased knowledge about these and/or other elements could result in a change to the estimated fair value of the identifiable EMC intangible assets and/or to the estimated weighted-average useful lives from what Denali has assumed in these unaudited pro forma condensed combined financial statements. The combined effect of any such changes could then also result in a significant increase or decrease to Denali’s estimate of associated amortization expense.

As of the completion of the merger, various other assets and liabilities are required to be measured at fair value, including, but not limited to: receivables, property, plant, and equipment, leases, and legal contingencies. As of the date of this proxy statement/prospectus, Denali does not have sufficient information to make a reasonable preliminary estimate of the fair value of these assets and liabilities. Accordingly, for the purposes of these unaudited pro forma condensed combined financial statements, Denali has assumed that the historical EMC book values represent the best estimate of fair value.

5.	Sources and Uses of Cash

The following is a preliminary estimate of the sources and uses of cash for the merger:

				(in millions)
Cash from historical balance sheet		(1)		$	6,088
Anticipated net proceeds from disposition of Dell Services		(2)			2,700
Liquidation of investments		(3)			3,218
Debt incurred		(4)			43,150
Issuance of equity		(5)			4,250
Total Sources				$	59,406
Cash consideration to EMC’s shareholders		(6)		$	48,614
Refinance existing EMC debt		(7)			1,299
Refinance existing Denali debt		(8)			7,745
Transaction costs		(9)			1,748
Total Uses				$	59,406

(1)	Represents the amount of existing Denali and EMC cash that is expected to be used to finance the merger.

(2)	Represents an estimated $2.7 billion of cash consideration from the disposition of Dell Services. This represents $3.1 billion of total cash consideration net of estimated cash taxes of $0.4 billion.

(3)	Represents the sale of investments to raise cash as a financing source for the merger.

(4)

Upon the closing of the merger, Denali will incur approximately $43.2 billion of debt consisting of a revolving loan, term loans, senior notes, a margin loan, and other permanent financing. Denali has debt financing commitments for up to $49.5 billion in the aggregate. Net proceeds of the Dell Services disposition are expected to be used to effectuate the merger. However, if the disposition is not consummated before the completion of the merger, Denali intends to enter into a $2.2 billion one-year senior unsecured asset sale bridge facility and increase borrowings under the term loan facilities by $0.5 billion.

(5)	Upon the closing of the merger, Denali expects to issue approximately 155 million shares of DHI Group common stock at a price of $27.50 per share in a private placement.

(6)	Represents cash payments to EMC’s shareholders consisting of $24.05 per share based on an estimated 2 billion shares outstanding, including the assumed vesting of outstanding stock options and restricted stock units.

(7)	Represents the repayment of $1.3 billion of EMC’s short-term debt.

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(8)	Represents the repayment of $7.7 billion of Denali’s notes and term loans, including accrued interest and prepayment penalties.

(9)	Represents estimated transaction costs relating primarily to debt issuance costs, as well as financial advisory, legal, and accounting costs.

6.	Pro Forma Adjustments

Pro Forma Adjustments to the Statement of Loss:

(a)

To record the decrease in revenue related to the decrease in fair value of EMC’s deferred revenue based on the purchase price allocation. As a portion of EMC’s deferred revenue relates to three-year maintenance contracts, it is expected that EMC’s revenue will be impacted by the fair value adjustment recorded in acquisition accounting for up to three years.

(b)	To record the change in intangible asset amortization based on the purchase price allocation as follows:

(in millions)		Year Ended January 29, 2016
Historical intangible amortization:
Products, cost of net revenue		$	246
Research, development, and engineering			6
Selling, general, and administrative			147
Total historical intangible amortization		$	399
Pro forma amortization:
Products, cost of net revenue			3,284
Selling, general, and administrative			440
Total pro forma amortization		$	3,724
Amortization adjustment:
Products, cost of net revenue			3,038
Research, development, and engineering			(6	)
Selling, general, and administrative			293
Net pro forma adjustment		$	3,325

(c)	To record the elimination of sales activity between Denali and EMC as such sales would represent intercompany transactions if the merger had occurred on January 31, 2015.

(d)	To eliminate historical amortization of capitalized software as its fair value is recorded in developed technology in the preliminary purchase price allocation.

(e)

To record the increase in interest expense due to the incurrence of $43.2 billion of debt to finance the merger, the decrease in interest expense related to the debt of Denali and EMC that is to be repaid as part of the merger, and the recording of the debt at fair value based on the preliminary purchase price allocation as follows:

(in millions)		Year Ended January 29, 2016
Interest expense and amortization of debt issuance costs on new debt		$	2,200
Less: interest expense and amortization of debt issuance costs on Denali’s refinanced debt			(388	)
Less: interest expense on EMC’s refinanced debt			(3	)
Plus: amortization of change in fair value of acquired debt			101
Total interest expense adjustment		$	1,910

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The weighted-average interest rate of new debt incurred is assumed to be 4.58%. A change in the assumed weighted average interest rate of 0.125% would cause a corresponding increase or decrease in the annual interest expense by $54 million.

(f)	To eliminate historical investment income relating to investments that will be liquidated as a financing source for the merger.

(g)	To eliminate non-recurring transaction costs included in Denali and EMC’s historical results, which are directly attributable to the proposed merger.

(h)

To record the issuance of 155 million shares of DHI Group common stock and 223 million shares of Class V Common Stock in conjunction with the acquisition and calculate earnings per share under the two-class method due to the issuance of Class V Common Stock. Income allocable to Class V and DHI Group shareholders is calculated as follows:

(in millions)		Year Ended January 29, 2016
Pro forma Class V Group income from continuing operations attributable to Denali		$	806
Class V tracking share percentage of Denali’s economic interest in VMware			65	%
Pro forma net income from continuing operations attributable to Class V shareholders (1)		$	524
Pro forma net loss from continuing operations attributable to common shareholders		$	(3,573	)
Less: Pro forma net income from continuing operations attributable to Class V shareholders			524
Pro forma net loss from continuing operations attributable to DHI Group shareholders		$	(4,097	)

(1)

For the purposes of calculating diluted EPS, pro forma net income attributable to Class V shareholders has been adjusted by $3 million for the year ended January 29, 2016 to reflect 65% of the incremental dilution of VMware’s dilutive securities as reflected in EMC’s financial statements incorporated by reference within this proxy statement/prospectus.

(i)	To record the income tax expense impact of the pro forma adjustments at the statutory rate of 35%. Denali and EMC operate in multiple jurisdictions, and therefore, the statutory rate may not be reflective of the actual impact of the tax effects of the adjustments.

(j)	To record the impact of the pro forma adjustments above to non-controlling interests as follows:

(in millions)		Year Ended January 29, 2016
Non-controlling interest impact of change in amortization expense		$	159
Non-controlling interest impact of deferred revenue haircut			154
Total non-controlling interest adjustment		$	313

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Pro Forma Adjustments to the Statement of Financial Position:

(a)	To record the adjustment to the cash balance to effectuate the merger and to eliminate the assets and liabilities held for sale, as follows:

		(in millions)
Cash received from debt incurred		$	43,150
Cash received from equity issuance			4,250
Cash received from liquidation of investments			3,218
Net cash received from disposition of Dell Services			2,700
Cash consideration for EMC’s shareholders			(48,614	)
Repayment of EMC’s existing short-term debt			(1,299	)
Repayment of Denali’s existing short- and long-term debt, including accrued interest and prepayment penalties			(7,745	)
Transaction costs			(1,748	)
Total cash adjustment		$	(6,088	)

The Dell Services’ assets held for sale consisting of $1.7 billion in assets and $0.6 billion in liabilities are expected to be sold for an estimated $2.7 billion ($3.1 billion cash consideration net of estimated cash taxes of $0.4 billion). The net cash of $2.7 billion expected to be received from the anticipated disposition of Dell Services has been included within the cash adjustment as these proceeds will be utilized to effectuate the merger. No pro forma adjustment has been made for any possible tax liabilities resulting from the repatriation of cash currently held in foreign jurisdictions.

(b)	To write off the short-term portion of historical debt issuance costs related to Denali debt to be repaid in conjunction with the merger.

(c)	To record the write-up of inventory to fair value based on the preliminary purchase price allocation.

(d)	To record the adjustment to EMC’s accounts receivable to conform with Denali’s accounting policy. See note (k) below for the related adjustment to deferred revenue.

(e)	To record the sale of investments used to raise cash as a financing source for the merger.

(f)	To eliminate the short-term debt that is being repaid in conjunction with the merger and record the short-term portion of long-term debt to be incurred as follows:

		(in millions)
Historical short-term Denali and EMC debt repaid		$	(1,736	)
Short-term portion of debt incurred in conjunction with the merger			246
Total short-term debt adjustment		$	(1,490	)

(g)	To record the adjustment to goodwill based on the preliminary purchase price allocation, as follows:

		(in millions)
Elimination of EMC’s historical goodwill		$	(17,090	)
Goodwill from preliminary purchase price allocation			36,615
Total goodwill adjustment		$	19,525

(h)	To record the adjustment to intangible assets based on the preliminary purchase price allocation, as follows:

		(in millions)
Elimination of EMC’s historical intangible assets		$	(2,149	)
Intangible assets from preliminary purchase price allocation			34,990
Total intangible asset adjustment		$	32,841

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(i)	To record the adjustment to the long-term debt balance, as follows:

		(in millions)
Long-term debt incurred in conjunction with the merger		$	42,904
Discount on new debt			(112	)
Historical long-term Denali debt repaid, including accrued interest			(7,209	)
Write-off of historical Denali debt discount			46
Fair value adjustment for purchase price allocation			(474	)
Total long-term debt adjustment		$	35,155

Denali will incur debt in the form of a revolving loan, term loans, senior notes, a margin loan and other permanent financing with interest rates ranging from 2% to up to 9% and maturities ranging from 1-30 years.

(j)	To adjust other non-current assets for the write-off of historical capitalized software and Denali debt issuance costs and to record debt issuance costs on the new debt as follows:

		(in millions)
Elimination of EMC’s historical capitalized software		$	(917	)
Elimination of Denali’s historical debt issuance costs			(91	)
Record debt issuance costs on new debt			885
Total other non-current assets adjustment		$	(123	)

(k)	To record the adjustment to conform EMC’s accounting policy and the estimated fair value of EMC’s deferred revenue as follows:

		(in millions)
Adjustment to conform with Denali’s accounting policy		$	1,320
Fair value adjustment to short-term deferred revenue			(2,475	)
Total short-term deferred revenue adjustment		$	(1,155	)
		(in millions)
Adjustment to conform with Denali’s accounting policy		$	582
Fair value adjustment to long-term deferred revenue			(1,658	)
Total long-term deferred revenue adjustment		$	(1,076	)

(l)	To record the adjustment of income tax payable as follows:

		(in millions)
Reduction in tax payable associated with EMC’s outstanding equity awards		$	(585	)
Reduction in tax payable for deferred financing cost deduction			(59	)
Reduction in tax payable for transaction expenses			(184	)
Reduction in tax payable for Denali debt prepayment penalty			(34	)
Total income tax payable adjustment		$	(862	)

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(m)	To record the adjustment of deferred tax liabilities (assets) as follows:

		(in millions)
Elimination of EMC’s historical DTL on capitalized software		$	(358	)
Elimination of EMC’s historical DTL for hedging loss			(55	)
Elimination of EMC’s historical DTL for prior intercompany gain transactions			(138	)
Elimination of EMC’s historical deferred charge related to intercompany transfers			94
Elimination of EMC’s historical DTA on outstanding equity awards			144
Elimination of EMC’s historical DTA for unrecognized losses on investment securities			62
Record DTL for fair value adjustment increasing book basis in inventory			229
Record DTL for fair value adjustment increasing book basis in identifiable intangibles			11,494
Record DTL for fair value adjustment to deferred revenue			1,447
Total deferred tax adjustment		$	12,919

(n)	To eliminate EMC’s historical common stock and record the issuance of common stock to finance the merger as follows:

		(in millions)
Elimination of EMC’s common stock		$	(19	)
Issuance of DHI Group common stock			4,250
Issuance of Class V Common Stock			13,503
Total common stock adjustment		$	17,734

(o)

To eliminate EMC’s historical retained earnings, to estimate the net gain on disposition of Dell Services based on $2.7 billion of after-tax cash consideration and $1.1 billion of net assets, to estimate the non-capitalizable after-tax portion of the acquisition-related transaction costs to be incurred after January 29, 2016, and to record the after-tax write-off of debt issuance costs and debt prepayment penalties as follows:

		(in millions)
Elimination of EMC’s retained earnings		$	(21,700	)
Net gain on disposition of Dell Services			1,593
Transaction costs			(567	)
Denali’s historical debt issuance costs, debt discount, and prepayment penalties			(173	)
Total retained earnings (deficit) adjustment		$	(20,847	)

(p)	To eliminate EMC’s historical accumulated other comprehensive loss of $579 million.

(q)	To adjust the non-controlling interest balance to estimated fair value.

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