GAAP EPS

Sections


	EMC Core
	2015			2016			2017			2018			2019			2020
Capitalized software amortization		502			537			589			648			683			650
Depreciation		870			888			921			964			1,019			1,082
Adjusted EBITDA	$	4,528		$	4,893		$	5,403		$	5,860		$	6,405		$	6,817

GAAP EPS		0.52			0.88			1.06			1.18			1.34			1.46
R&D tax credit		0.02			0.02			0.02			0.02			0.02			0.02
VMware GSA settlement, litigation and other contingencies, special tax items and other non-recurring expenses		0.01			—			—			—			—			—
Acquisition and other related charges		0.01			0.01			—			—			—			—
Restructuring charges		0.30			0.02			0.02			0.02			0.02			0.02
Intangible asset amortization		0.09			0.08			0.08			0.08			0.07			0.06
Stock-based compensation expense		0.23			0.24			0.25			0.26			0.27			0.29
Non-GAAP EPS	$	1.17		$	1.25		$	1.42		$	1.55		$	1.71		$	1.85

Operating Cash Flow	$	3,790		$	3,516		$	4,352		$	4,732		$	5,211		$	5,542
Capital expenditures		(650	)		(663	)		(688	)		(720	)		(762	)		(808	)
Capitalized software development costs		(515	)		(562	)		(616	)		(675	)		(650	)		(600	)
Free Cash Flow	$	2,625		$	2,290		$	3,048		$	3,337		$	3,799		$	4,135

	VMware
	2015			2016			2017			2018			2019			2020
GAAP Revenue	$	6,533		$	7,270		$	7,924		$	8,637		$	9,501		$	10,451
VMware GSA settlement		76			—			—			—			—			—
Non-GAAP Revenue	$	6,609		$	7,270		$	7,924		$	8,637		$	9,501		$	10,451

GAAP Gross Profit	$	5,445		$	5,995		$	6,526		$	7,206		$	7,999		$	8,897
VMware GSA settlement, litigation and other contingencies, special tax items and other non-recurring expenses		76			—			—			—			—			—
Intangible asset amortization		110			99			92			82			65			26
Stock-based compensation expense		56			61			67			73			80			88
Non-GAAP Gross Profit	$	5,686		$	6,155		$	6,685		$	7,361		$	8,145		$	9,011

GAAP Operating Income	$	1,166		$	1,554		$	1,764		$	1,985		$	2,258		$	2,589
VMware GSA settlement, litigation and other contingencies, special tax items and other non-recurring expenses		80			—			—			—			—			—
Acquisition and other related charges		150			14			—			—			—			—
Restructuring charges		21			50			50			50			50			50
Intangible asset amortization		141			124			118			105			84			33
Stock-based compensation expense		526			579			631			687			756			832
Non-GAAP Operating Income	$	2,084		$	2,321		$	2,562		$	2,827		$	3,148		$	3,504

GAAP Net Income attributable to EMC	$	795		$	1,021		$	1,171		$	1,323		$	1,505		$	1,725
R&D tax credit		22			22			22			22			22			22
VMware GSA settlement, litigation and other contingencies, special tax items and other non-recurring expenses		47			—			—			—			—			—
Acquisition and other related charges		77			7			—			—			—			—
Restructuring charges		15			37			32			32			32			32
Intangible asset amortization		87			76			72			64			51			20
Stock-based compensation expense		338			370			403			439			483			532
Non-GAAP Net Income attributable to EMC	$	1,380		$	1,533		$	1,701		$	1,880		$	2,094		$	2,331

GAAP Net Income attributable to EMC	$	795		$	1,021		$	1,171		$	1,323		$	1,505		$	1,725
Minority interest		184			240			275			310			353			405
GAAP Net Income	$	979		$	1,261		$	1,446		$	1,633		$	1,859		$	2,130
Income tax provision		232			343			387			434			491			562
Non-operating expense		46			50			69			82			92			102

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	VMware
	2015			2016			2017			2018			2019			2020
VMware GSA settlement, litigation and other contingencies, special tax items and other non-recurring expenses		80			—			—			—			—			—
Acquisition and other related charges		150			14			—			—			—			—
Restructuring charges		21			50			50			50			50			50
Intangible asset amortization		141			124			118			105			84			33
Stock-based compensation expense		526			579			631			687			756			832
Capitalized software amortization		—			—			—			—			—			—
Depreciation		235			258			282			307			338			372
Adjusted EBITDA	$	2,319		$	2,580		$	2,844		$	3,134		$	3,486		$	3,876

Operating Cash Flow	$	1,725		$	2,403		$	2,548		$	2,807		$	3,159		$	3,505
Capital expenditures		(350	)		(440	)		(480	)		(523	)		(575	)		(633	)
Capitalized software development costs		—			—			—			—			—			—
Free Cash Flow	$	1,376		$	1,963		$	2,069		$	2,284		$	2,584		$	2,872

Note: Schedules may not add or recalculate due to rounding.

Adjusted July Case

The following tables summarize certain of the July Case financial projections as adjusted by Morgan Stanley, based on management guidance, to reflect an incremental interest expense based on $2.5 billion of incremental EMC debt from 2018 onwards, referred to as the Adjusted July Case and described in “Opinions of EMC’s Financial Advisors—Opinion of Morgan Stanley—Summary of Financial Analyses.” The figures for non-GAAP revenue, non-GAAP gross profit, Adjusted EBITDA, non-GAAP operating income and free cash flow included in the Adjusted July Case were unchanged from the July Case for Consolidated EMC and EMC Core. With respect to VMware, the July Case financial projections were not affected by the difference in assumptions contemplated by the July Case and the Adjusted July Case.

The following table summarizes the Adjusted July Case figures with respect to Consolidated EMC, with non-GAAP net income and non-GAAP EPS including, with respect to VMware, only amounts attributable to EMC’s controlling interest in VMware:

(Amounts in millions, except per share numbers)


	Fiscal Year
	2015		2016		2017		2018		2019		2020
Non-GAAP Net Income (1)	$	3,661	$	3,932	$	4,436	$	4,872	$	5,413	$	5,928
Non-GAAP EPS	$	1.87	$	2.03	$	2.29	$	2.51	$	2.77	$	3.02

The following table summarizes the Adjusted July Case figures with respect to EMC Core:

(Amounts in millions, except per share numbers)


	Fiscal Year
	2015		2016		2017		2018		2019		2020
Non-GAAP Net Income (1)	$	2,291	$	2,407	$	2,743	$	3,001	$	3,330	$	3,609
Non-GAAP EPS	$	1.17	$	1.25	$	1.42	$	1.54	$	1.70	$	1.84

(1)	Non-GAAP net income figures for Adjusted July Case include a reduction of $10, $8, $9, $9, $10 and $11 million for years 2015-2020, respectively, reflecting the impact of VMware’s dilutive securities on the

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amount of income attributable to EMC, calculated by multiplying the difference between VMware’s basic and diluted earnings per share by the number of VMware shares owned by EMC. Such Non-GAAP net income figures were provided to the EMC board of directors for informational purposes only and were not relevant for or used by Morgan Stanley in connection with any of the financial analyses performed in connection with providing its opinion to the EMC board of directors on October 11, 2015.

Street Forecast

The following table summarizes the Street Forecast financial projections as described above with respect to Consolidated EMC, with non-GAAP net income and non-GAAP EPS including, with respect to VMware, only amounts attributable to EMC’s controlling interest in VMware:

(Amounts in millions, except per share numbers)


	Fiscal Year
	2015		2016		2017		2018		2019		2020
Non-GAAP Revenue	$	25,288	$	26,467	$	27,936	$	29,405	$	30,874	$	32,344
Non-GAAP Gross Profit	$	15,728	$	16,569	$	17,432	$	18,452	$	19,472	$	20,492
Adjusted EBITDA	$	6,763	$	7,395	$	8,128	$	8,708	$	9,288	$	9,869
Non-GAAP Operating Income	$	5,218	$	5,680	$	6,174	$	6,668	$	7,162	$	7,657
Non-GAAP Net Income	$	3,650	$	3,955	$	4,143	$	4,485	$	4,844	$	5,204
Non-GAAP EPS	$	1.86	$	2.05	$	2.14	$	2.31	$	2.48	$	2.65
Free Cash Flow	$	3,581	$	4,766	$	5,021	$	5,585	$	6,037	$	6,493

The following table summarizes the Street Forecast financial projections as described above with respect to EMC Core:

(Amounts in millions, except per share numbers)


	Fiscal Year
	2015		2016		2017		2018		2019		2020
Non-GAAP Revenue	$	18,647	$	19,078	$	19,823	$	20,569	$	21,314	$	22,059
Non-GAAP Gross Profit	$	9,950	$	10,134	$	10,370	$	10,760	$	11,150	$	11,540
Adjusted EBITDA	$	4,472	$	4,821	$	5,209	$	5,439	$	5,670	$	5,901
Non-GAAP Operating Income	$	3,132	$	3,327	$	3,493	$	3,659	$	3,825	$	3,992
Non-GAAP Net Income	$	2,271	$	2,402	$	2,385	$	2,503	$	2,635	$	2,765
Non-GAAP EPS	$	1.16	$	1.24	$	1.23	$	1.29	$	1.35	$	1.41
Free Cash Flow	$	1,965	$	2,853	$	2,857	$	3,001	$	3,160	$	3,318

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The following table summarizes the Street Forecast financial projections with respect to VMware as described above, with non-GAAP net income representing only that amount attributable to EMC’s controlling interest in VMware:

(Amounts in millions)


	Fiscal Year
	2015		2016		2017		2018		2019		2020
Non-GAAP Revenue	$	6,641	$	7,389	$	8,113	$	8,837	$	9,561	$	10,285
Non-GAAP Gross Profit	$	5,778	$	6,435	$	7,062	$	7,692	$	8,322	$	8,953
Adjusted EBITDA	$	2,291	$	2,574	$	2,919	$	3,269	$	3,618	$	3,968
Non-GAAP Operating Income	$	2,086	$	2,353	$	2,681	$	3,009	$	3,337	$	3,665
Non-GAAP Net Income	$	1,379	$	1,552	$	1,758	$	1,983	$	2,210	$	2,439
Free Cash Flow	$	1,617	$	1,913	$	2,165	$	2,584	$	2,877	$	3,175

2.x Plan

The following tables summarize certain of the July Case financial projections as adjusted by Evercore, at management’s direction, to reflect $5.0 billion of additional borrowing at a 5.0% interest rate used to refinance $2.0 billion of EMC’s short-term debt and to repurchase $3.0 billion of EMC common stock at the end of 2015 at a 5% premium to the unaffected share price of EMC common stock, which adjusted July Case we refer to as the “2.x Plan” and as described in “Opinions of EMC’s Financial Advisors—Opinion of Evercore—Summary of Financial Analyses.” EMC management’s 2.x Plan also contemplated the issuance of tracking stock representing a 40% economic interest in VMware, which did not affect the projections used by Evercore. The figures for non-GAAP revenue, non-GAAP gross profit, Adjusted EBITDA and non-GAAP operating income included in the 2.x Plan were unchanged from the July Case. With respect to VMware, the July Case financial projections were not affected by the difference in assumptions contemplated by the July Case and the 2.x Plan.

The following table summarizes the 2.x Plan figures with respect to Consolidated EMC, with non-GAAP net income and non-GAAP EPS including, with respect to VMware, only amounts attributable to EMC’s controlling interest in VMware:

(Amounts in millions, except per share numbers)


	Fiscal Year
	2015		2016		2017		2018		2019		2020
Non-GAAP Net Income	$	3,671	$	3,787	$	4,291	$	4,736	$	5,287	$	5,803
Non-GAAP EPS	$	1.87	$	2.07	$	2.34	$	2.58	$	2.86	$	3.12

The following table summarizes the 2.x Plan figures with respect to EMC Core:

(Amounts in millions, except per share numbers)


	Fiscal Year
	2015		2016		2017		2018		2019		2020
Non-GAAP Net Income (1)	$	—	$	2,255	$	—	$	—	$	—	$	—
Non-GAAP EPS (2)	$	1.17	$	1.24	$	1.42	$	1.56	$	1.73	$	1.87

(1)

Non-GAAP net income figures for EMC Core under the 2.x Plan for fiscal year 2015 and fiscal years 2017-2020 were not provided to the EMC board of directors, and were not relevant for or used by Evercore in any of the financial analyses performed in connection with providing its opinion to the EMC board of directors on October 11, 2015.

(2)

Non-GAAP EPS figures for EMC Core under the 2.x Plan were provided to the EMC board of directors for informational purposes only, and were not relevant for or used by Evercore in any of the financial analyses performed in connection with providing its opinion to the EMC board of directors on October 11, 2015.

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Unlevered Free Cash Flows

Additionally, at the direction of EMC management, each of Morgan Stanley and Evercore calculated, based on the financial projections provided by EMC management (and, with respect to the Street Forecast prepared by Morgan Stanley, based on publicly available consensus estimates), unlevered free cash flows for fiscal years 2015 through 2020 for use by the respective financial advisor in connection with its financial analysis of EMC. The unlevered free cash flow amounts were not provided by EMC management to Denali.

The following is a summary of the unlevered free cash flows, which were prepared as described above and used by Morgan Stanley for the purposes of its financial analyses, and which are defined as net cash provided by operating activities and certain one-off non-operating activities, plus after-tax net interest expense less additions to property, plant and equipment, spending on acquisitions and strategic investments, capitalized software development costs, and after-tax stock based compensation expense.

(Amounts in millions)


	Unlevered Free Cash Flow (Morgan Stanley)
	Fiscal Year
	2015		2016		2017		2018		2019		2020
Street Case
Consolidated EMC(1)	$	1,535	$	3,961	$	4,330	$	4,776	$	5,140	$	5,507
EMC Core	$	361	$	2,588	$	2,692	$	2,779	$	2,913	$	3,046
VMware	$	1,164	$	1,356	$	1,619	$	1,978	$	2,207	$	2,440
Adjusted July Case, without M&A spend
Consolidated EMC(1)	$	1,812	$	3,468	$	4,239	$	4,671	$	5,353	$	5,878
EMC Core	$	886	$	1,995	$	2,716	$	2,987	$	3,429	$	3,733
VMware	$	920	$	1,461	$	1,510	$	1,670	$	1,907	$	2,127
Adjusted July Case, with M&A spend
Consolidated EMC(1)	$	1,812	$	2,468	$	3,239	$	3,672	$	4,353	$	4,879
EMC Core	$	886	$	995	$	1,716	$	1,987	$	2,429	$	2,733
VMware	$	920	$	1,461	$	1,510	$	1,670	$	1,907	$	2,127

(1)	Difference between Consolidated EMC figures and sum of EMC Core and VMware figures is due to tax rate assumptions provided by EMC management.

The following is a summary of the unlevered free cash flows for EMC Core and VMware, which were prepared as described above and used by Evercore for the purposes of its financial analyses, and which are defined as Adjusted EBITDA, less stock-based compensation (solely in the case where Evercore calculated unlevered free cash flows based on the assumption that stock based compensation is treated as an expense), applicable taxes, capital expenditures and acquisitions, and adjusted for changes in working capital and certain other items, in each case, based on guidance from EMC management. The unlevered free cash flows prepared by Evercore for EMC Core were the same under the July Case and the 2.x Plan.

(Amounts in millions)


	Unlevered Free Cash Flows (Evercore)
	Fiscal Year
	2015		2016		2017		2018		2019		2020
Expensing stock based compensation
EMC Core		886		1,995		2,717		2,978		3,412		3,717
VMware		928		1,471		1,520		1,680		1,917		2,137
Not expensing stock based compensation
EMC Core		1,329		2,447		3,186		3,469		3,932		4,267
VMware		1,348		1,933		2,024		2,229		2,520		2,801

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Important Information About the Unaudited Financial Projections

While the unaudited financial projections summarized above were prepared in good faith and based on information available at the time of preparation, no assurance can be made regarding future events. The estimates and assumptions underlying the unaudited financial projections involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described under “Risk Factors” and “Cautionary Information Regarding Forward-Looking Statements”, respectively, all of which are difficult to predict and many of which are beyond the control of EMC. These forecasts assume realization of the savings in EMC’s previously disclosed cost transformation program. There can be no assurance that the underlying assumptions will prove to be accurate or that the projected results will be realized, and actual results will likely differ, and may differ materially, from those reflected in the unaudited financial projections, whether or not the transaction is completed. As a result, the unaudited financial projections cannot be considered a reliable predictor of future operating results, and this information should not be relied on as such.

The unaudited financial projections, including the amounts attributable to VMware, were created solely for internal use by EMC and not with a view toward public disclosure or with a view toward complying with the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial data, published guidelines of the SEC regarding forward-looking statements and the use of non-GAAP measures or GAAP. In the view of EMC management, the forecasts prepared by them were prepared on a reasonable basis based on the best information available to EMC management at the time of their preparation. The unaudited financial projections, however, are not fact and should not be relied upon as being necessarily indicative of future results of EMC or VMware, and readers of this proxy statement/prospectus are cautioned not to place undue reliance on this information. The inclusion of the unaudited financial projections in this proxy statement/prospectus shall not be deemed an admission or representation by EMC that such information is material. None of the unaudited financial projections reflect any impact of the transaction.

No independent registered public accounting firm has examined, compiled or otherwise performed any procedures with respect to the prospective financial information contained in these financial forecasts and, accordingly, no independent registered public accounting firm has expressed any opinion or given any other form of assurance with respect thereto and no independent registered public accounting firm assumes any responsibility for the prospective financial information. The report of the independent registered public accounting firm incorporated by reference into this proxy statement/prospectus with respect to EMC relates solely to the historical financial information of EMC and does not extend to the unaudited financial projections and should not be read to do so.

By including in this proxy statement/prospectus a summary of certain of the unaudited financial projections regarding the operating results of EMC (including the amounts attributable to VMware), none of EMC, VMware nor any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of EMC or VMware compared to the information contained in the financial projections. The unaudited financial projections cover multiple years and such information by its nature becomes less predictive with each succeeding year. EMC does not undertake any obligation, except as required by law, to update or otherwise revise the unaudited financial projections contained in this proxy statement/prospectus to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events or to reflect changes in general economic or industry conditions, even in the event that any or all of the underlying assumptions are shown to be in error. VMware has no obligation to update projections used by EMC and its financial advisors regarding the amounts attributable to VMware.

The summary of the unaudited financial projections are not included in this proxy statement/prospectus in order to induce any EMC shareholder to vote in favor of the proposal to approve the merger agreement or any of the other proposals to be voted on at the EMC special meeting of shareholders.

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Denali’s Reasons for the Merger

The Denali board of directors’ reasons for entering into the merger agreement include:

•

Denali’s belief that the combined company is expected to be a leader in numerous high-growth areas of the $2 trillion information technology market, with a complementary portfolio, sales team and R&D organization across four globally recognized technology franchises – servers, storage, virtualization and PCs – and is expected to bring together strong capabilities in the fast growing areas of the technology industry, including converged infrastructure, digital transformation, software-defined data center, hybrid cloud, mobile and security;

•

Denali’s belief that the combination of Denali and EMC will enable the combined company to address more of its customers’ needs, specifically as relates to the complementary nature of Dell’s server business and EMC’s strength in both legacy and emerging storage solutions as well as capitalizing on EMC’s leadership in research and development and innovation and Dell’s world-class supply chain operations;

•

Denali’s belief that the transaction will strengthen the position of both Dell and EMC in an increasingly competitive global marketplace;

•

Denali’s belief that the transaction will unite Dell’s strength with small business and mid-market customers with EMC’s strength with large enterprises creating revenue synergies that would not exist if the companies remained separate;

•

the ability to take advantage of Denali’s privately controlled ownership structure (and the flexibility and agility associated with private ownership) to focus on customers and invest and innovate for long-term results, and the ability to incubate high-growth businesses in promising markets;

•

the possibility of Denali reducing its indebtedness within 18-24 months after the completion of the merger given the strong cash flow generation capacity of the combined company and achieving an investment grade corporate debt rating, which would provide more dependable and economical access to capital markets and enhance financial flexibility;

•

Denali’s belief that the VMware business is currently an attractive long-term investment opportunity;

•

Denali’s belief that the transaction is expected to accelerate VMware’s growth across all of its businesses through increased opportunities for integration with Dell’s solutions and go-to-market channels; and

•

the significant cost opportunities derived from global scale in purchasing and operations as well as the opportunity to realize operating efficiencies and other synergies following the completion of the merger.

The Denali board of directors also considered a number of potentially negative factors in its deliberations concerning the merger, including:

•

the difficulties and management challenges inherent in completing the merger and integrating the businesses, operations and workforce of EMC with those of Denali;

•

the risk that failure to retain key EMC personnel may make integration of such businesses challenging;

•

uncertainty about the effect of the proposed merger on Denali’s and EMC’s customers, suppliers and other partners, which could cause customers, suppliers and other partners to seek to change existing business relationships with Denali or EMC;

•

the possibility of encountering difficulties in achieving expected growth, synergies and cost savings;

•

the risk that EMC’s financial performance may not meet Denali’s expectations;

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•

the risk that all conditions to the obligations of the parties to complete the merger might not be satisfied or that the merger might not otherwise be completed, or that completion may be unduly delayed, including the effect of the pendency of the merger and the effect such failure to be completed may have on:

•

Denali’s operating results, particularly in light of the costs incurred in connection with the merger; and

•

Denali’s ability to attract and retain key personnel, suppliers and customers; and

•

the fact that, under the merger agreement, Denali may be required to pay to EMC a termination fee of $4 billion (or $6 billion if Denali fails to make available the amount of cash on hand required to be made available by Denali under the merger agreement), and that such fee may be payable under certain circumstances following the termination of the merger agreement, as more fully described under “The Merger Agreement—Termination Fees.”

In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the Denali board of directors did not find it useful and did not attempt to assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the merger and the merger agreement. In addition, individual members of the Denali board of directors may have given differing weights to different factors. The Denali board of directors conducted an overall analysis of the factors described above, including through discussions with, and inquiry of, Denali’s management and outside legal and financial advisors regarding certain of the matters described above. See the section entitled “Cautionary Information Regarding Forward-Looking Statements.”

Financing of the Merger

Denali, Denali Intermediate and Dell have obtained a commitment letter, such commitment letter, as amended and restated on November 25, 2015, February 12, 2016 and May 27, 2016, and as otherwise amended from time to time in accordance with the merger agreement, being referred to as the debt commitment letter, from, among others, Credit Suisse AG, Cayman Islands Branch, Credit Suisse Securities (USA) LLC, JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets Inc., Citibank, N.A., Citicorp USA, Inc., Citicorp North America, Goldman Sachs Bank USA, Goldman Sachs Lending Partners LLC, Deutsche Bank AG New York Branch, Deutsche Bank AG Cayman Islands Branch, Deutsche Bank Securities Inc., Royal Bank of Canada and RBC Capital Markets, collectively referred to as the lenders, to provide, severally but not jointly, upon the terms and subject to the conditions set forth in the debt commitment letter, in the aggregate up to $49.5 billion in debt financing (not all of which is expected to be drawn at the closing of the merger), consisting of the following:

•

$5.0 billion senior secured term loan B facility;

•

$3.7 billion senior secured term loan A-1 facility;

•

$3.925 billion senior secured term loan A-2 facility;

•

$2.5 billion senior secured term cash flow facility;

•

$1.8 billion senior secured term loan A-3 facility;

•

$3.15 billion senior secured revolving facility;

•

$20.0 billion senior secured bridge facility (which Denali does not expect to utilize as subsidiaries of Dell International have issued and sold $20.0 billion in aggregate principal amount of senior secured notes in lieu thereof, as described below);

•

$3.25 billion senior unsecured bridge facility (which would be utilized in the event that Dell International or one or more of its subsidiaries does not issue and sell the full amount of the senior unsecured notes referred to below at or prior to the closing of the merger);

•

$2.2 billion senior unsecured asset sale bridge facility;

•

$2.5 billion margin bridge facility; and

•

$1.5 billion VMware note bridge facility.

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It is also expected that, at or prior to the closing of the merger, up to $23.25 billion in aggregate principal amount of senior secured notes and senior unsecured notes, referred to as the notes, will be issued by Dell International or one or more of its subsidiaries in one or more offerings conducted under Rule 144A of the Securities Act and in reliance on Regulation S under the Securities Act. In particular, on June 1, 2016, two wholly-owned subsidiaries of Dell International, referred to as the Fincos, co-issued $20.0 billion in aggregate principal amount of senior secured notes in an offering conducted pursuant to Rule 144A under the Securities Act and in reliance on Regulation S under the Securities Act. The net proceeds of the offering of the senior secured notes were deposited into an escrow account. Upon the completion of the merger, Dell International and EMC will assume the obligations of the Fincos under the senior secured notes and become the co-issuers thereof and the notes will be guaranteed, subject to certain exceptions, on a joint and several basis by Denali, Denali Intermediate, Dell and Denali Intermediate’s direct and indirect wholly-owned material domestic subsidiaries that will guarantee the credit facilities. The notes will be secured, on a pari passu basis with the credit facilities, on a first-priority basis by substantially all of the tangible and intangible assets of the issuers and guarantors that secure obligations under the credit facilities, including pledges of all capital stock of the issuers, of Dell and of certain wholly-owned material subsidiaries of the issuers and the guarantors (but limited to 65% of the voting stock of any foreign subsidiary), subject to certain exceptions. The senior secured notes contain investment grade covenants restricting the issuers’ and the guarantors’ ability to enter into asset sales with respect to the collateral, to incur secured debt and to enter into sale and lease-back transactions, subject to certain exceptions. The senior unsecured notes, if and when issued, are expected to contain customary covenants for non-investment grade issuers.

This proxy statement/prospectus is not an offer to sell or a solicitation of an offer to purchase the notes, nor shall there be any offer or sale of the notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful.

It is also contemplated that, at, prior to or after the closing of the merger, (1) a margin loan facility in an aggregate principal amount of up to $2.5 billion may be entered into by a special purpose vehicle in lieu of the margin bridge facility and (2) a permanent financing solely secured by the VMware intercompany notes in an aggregate principal amount of up to $1.5 billion may be entered into by the Company in lieu of the VMware note bridge facility.

We refer to the financing described above collectively as the debt financing, the facilities referred to in the first through fifth bullet points as the term loan facilities, the facilities referred to in the first through sixth bullet points as the credit facilities and the bridge facilities referred to in the seventh and eighth bullet points as the corporate bridge facilities. The aggregate principal amount of the term loan facilities and the corporate bridge facilities (or the notes, as the case may be) may be increased to fund certain original issue discount or upfront fees in connection with the debt financing. The proceeds of the debt financing will be used (1) to finance, in part, the payment of the amounts payable under the merger agreement, the refinancing of certain of Dell International’s and EMC’s indebtedness outstanding as of the closing of the merger and the payment of related fees and expenses, (2) to provide ongoing working capital and (3) for other general corporate purposes of Dell and its subsidiaries, including EMC.

Denali has also obtained committed equity financing for up to $4.25 billion in the aggregate from the common stock investors. The terms and conditions of the equity financing are described under “The Merger Agreement—Common Stock Purchase Agreements.”

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. See “The Merger Agreement—Denali Cash on Hand” and “The Merger Agreement—Liquidation of Investments; Cash Transfers.”

The commitments under the credit facilities may be increased in an aggregate amount not to exceed (1) the greater of (i) $10.0 billion and (ii) 100% of consolidated EBITDA (as defined in the debt commitment letter) for

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the last four fiscal quarters of Dell for which financial statements have been delivered, plus (2) an amount equal to all voluntary prepayments of the credit facilities (with respect to the senior secured revolving facility, to the extent the revolving commitments thereunder are permanently reduced) that are not funded with the proceeds of long-term debt and (3) an additional amount (without giving effect to amounts incurred simultaneously under (1) and (2)) such that the net first lien leverage ratio would not exceed 3.25:1.00 on a pro forma basis, subject to certain exceptions and the satisfaction of certain conditions.

The debt financing contemplated by the debt commitment letter is conditioned on the completion of the merger in accordance with the merger agreement, as well as other customary conditions, including, but not limited to:

•

the execution and delivery by the borrowers and guarantors of definitive documentation, consistent with the debt commitment letter on or prior to December 16, 2016;

•

the consummation of the common stock investors’ equity financing substantially concurrently with the initial borrowing under the term loan facilities;

•

subject to certain limitations, the absence of an EMC material adverse effect since October 12, 2015;

•

payment of all applicable fees and expenses;

•

delivery of certain audited, unaudited and pro forma financial statements;

•

as a condition to the availability of the unsecured bridge facility, the lead arrangers and the related investment banks having been afforded a marketing period of at least 15 consecutive business days (subject to certain blackout dates) following receipt of portions of a customary offering memorandum and certain financial statements and data;

•

receipt by the lead arrangers of documentation and other information about the borrower and guarantors required under applicable “know your customer” and anti-money laundering rules and regulations (including the PATRIOT Act);

•

(other than with respect to the unsecured bridge facility) subject to certain limitations, the execution and delivery of guarantees by the guarantors and the taking of certain actions necessary to establish and perfect a security interest in specified items of collateral;

•

the repayment of certain outstanding debt of Dell International and EMC; and

•

the accuracy in all material respects of certain representations and warranties in the merger agreement and specified representations and warranties in the loan documents.

If any portion of the debt financing becomes unavailable on the terms and conditions contemplated by the debt commitment letter, Dell is required to promptly notify EMC and use its reasonable best efforts to obtain alternative financing (in an amount sufficient to enable the transaction contemplated by the merger agreement to be completed) from the same or other sources on terms and conditions no less favorable in the aggregate to Dell than such unavailable debt financing (including the “flex” provisions contained in the fee letter referenced in the debt commitment letter). As of June 5, 2016, the last practicable date before the printing of this proxy statement, no alternative financing arrangements or alternative financing plans have been made in the event the debt financing is not available as anticipated. Except as described herein, there is no current plan or arrangement regarding the refinancing or repayment of the debt financing.

The documentation governing debt financing contemplated by the debt commitment letter has not been finalized and, accordingly, the actual terms of the debt financing may differ from those described in this proxy statement. In particular, certain terms of the various credit facilities and the corporate bridge facilities are subject to “flex” provisions.

The lenders may invite other banks, financial institutions and institutional lenders to participate in the debt financing contemplated by the debt commitment letter and to undertake a portion of the commitments to provide

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such debt financing.

Credit Facilities

Obligors and Security

The borrower under the credit facilities will be Dell International and, after the closing of the merger, EMC will become a co-borrower under the credit facilities. The credit facilities will be guaranteed, subject to certain agreed upon exceptions, on a joint and several basis by Denali Intermediate and each direct and indirect wholly owned U.S. restricted subsidiary of Denali Intermediate, including Dell (other than the co-borrowers). The credit facilities will be secured, subject to certain agreed upon exceptions, by (1) a first priority security interest in substantially all the tangible and intangible assets of Dell International and the guarantors, including Denali Intermediate and Dell, and, after the merger, EMC and each of its subsidiaries that is a guarantor, and (2) a first-priority pledge of 100% of the capital stock of Dell, Dell International and each direct, wholly owned material restricted subsidiary of Denali Intermediate, Dell, Dell International and each other guarantor, including after the merger, EMC and its subsidiaries that are guarantors (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of such non-U.S. subsidiary), in each case subject to certain exceptions.

Interest Rates, Fees and Amortization

Interest under the senior secured term loan B facility, the senior secured term loan A-1 facility, the senior secured term loan A-2 facility, the senior secured term loan A-3 facility and the senior secured term cash flow facility will be payable, at the option of the borrower, either at a base rate or a LIBOR-based rate plus a margin to be agreed.

The borrower may elect interest periods under the credit facilities of one, two, three or six months (or twelve months or less than one month if agreed to by all lenders) with respect to loans bearing interest based on LIBOR. Interest will be payable, in the case of loans bearing interest based on LIBOR, at the end of each interest period (but at least every three months) and, in the case of loans bearing interest based on the base rate, quarterly in arrears. In addition, the borrower is required to pay a commitment fee on any unutilized commitments under the senior secured revolving facility. The initial commitment fee rate is 0.375% per annum and after the date of closing of the merger, will vary based upon a corporate ratings-based pricing grid. The borrower is also required to pay customary letter of credit fees.

The senior secured term loan B facility will mature seven years from the date of closing of the merger and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount. The senior secured term loan A-1 facility will mature on December 31, 2018 and will have no amortization. The senior secured term loan A-2 facility will mature five years from the date of closing of the merger and will amortize in equal quarterly installments in aggregate annual amounts equal to 5.0% of the original principal amount in each of the first two years after the date of closing of the merger, 10% of the original principal amount in each of the third and fourth years after the date of closing of the merger and 70% of the original principal amount in the fifth year after the date of closing of the merger. The senior secured term loan A-3 facility will mature on December 31, 2018 and will have no amortization. The senior secured revolving facility will mature five years from the date of closing of the merger and will have no amortization. The senior secured term cash flow facility will mature 364 days after the date of closing of the merger and will have no amortization.

Prepayments

The term loan facilities require the borrower to prepay outstanding term loans, subject to certain exceptions, with:

•

50% (which percentage will be reduced to 25% and 0% upon achievement of certain first lien leverage ratios) of Dell’s annual excess cash flow;

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•

100% (which percentage will be reduced to 50% and 0% upon achievement of certain first lien leverage ratios) of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property by Dell and its restricted subsidiaries (including insurance and condemnation proceeds, subject to de minimis thresholds), (1) if such net cash proceeds are not reinvested in assets to be used in the business within 450 days of the receipt of such net cash proceeds or (2) if such net cash proceeds are committed to be reinvested within 450 days of the receipt thereof and such reinvestment is completed within 180 days thereafter; and

•

subject to the mandatory prepayment provisions under the senior secured bridge facility with respect to net cash proceeds of debt issuances as described below under “—Corporate Bridge Facilities—Prepayments,” 100% of the net cash proceeds of any issuance or incurrence of debt by Dell or any of its restricted subsidiaries, other than debt permitted under the term loan facilities;

except that (1) the borrower shall not have any reinvestment rights referred to in the second bullet point above until after the receipt by Dell and its restricted subsidiaries of net cash proceeds received from asset sales and dispositions of property of at least $7,700 million (calculated starting from the date of the debt commitment letter) and (2) any prepayments pursuant to such second bullet point will (starting from the date of the debt commitment letter) first reduce the commitments in respect of the unsecured asset sale bridge facility, then the senior secured term loan A-1 facility and thereafter, the senior secured term loan A-3 facility, in that order, and thereafter, as elected by the borrower.

The borrower may voluntarily repay outstanding loans under the credit facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans and subject to a 1% prepayment premium with respect to the senior secured term loan B facilities in the event of certain voluntary prepayments or refinancings thereof occurs prior to the six month anniversary of the date of closing of the merger and reduces the effective yield of the senior secured term loan B facility.

Certain Covenants and Events of Default

The credit facilities will contain customary affirmative covenants including, among other things, delivery of annual audited and quarterly unaudited financial statements, notices of defaults, material litigation and material ERISA events, submission to certain inspections, maintenance of property and customary insurance, payment of taxes and compliance with laws and regulations. The credit facilities will also contain customary negative covenants that, subject to certain exceptions, qualifications and “baskets,” generally will limit the borrower’s and its restricted subsidiaries’ ability to incur debt, create liens, make fundamental changes, enter into asset sales and sale-and-lease back transactions, make certain investments and acquisitions, pay dividends or distribute or redeem certain equity, prepay or redeem certain debt and enter into certain transactions with affiliates. The senior secured term loan A-1 facility, the senior secured term loan A-2 facility, the senior secured term loan A-3 facility and senior secured revolving facility will be subject to a first lien net leverage ratio maintenance covenant that will be tested at the end of each fiscal quarter of Dell.

The credit facilities will also contain certain customary events of default (including upon a change of control).

Corporate Bridge Facilities

Obligors and Security

The borrower under the corporate bridge facilities will be Dell International and, after the closing of the merger, EMC will become a co-borrower under the corporate bridge facilities. The corporate bridge facilities will be guaranteed by the same entities that guarantee the credit facilities.

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The senior secured bridge facility will be secured by the same assets (on an equal priority basis) that secure the credit facilities. The senior unsecured bridge facility will not be secured by any assets.

Interest Rates, Fees and Amortization

Interest under the senior unsecured bridge facility will initially be payable at a LIBOR-based rate plus an escalating margin to be agreed up to a cap. Interest will be payable at the end of each interest period (but at least every three months).

Interest under the senior secured bridge facility will initially be payable, at the option of the borrower, at a either at a base rate or a LIBOR-based rate plus an escalating margin to be agreed.

The borrower may elect interest periods under the senior secured bridge facility of one, two, three or six months (or twelve months or less than one month if agreed to by all lenders) with respect to loans bearing interest based on LIBOR. Interest on the senior secured bridge facility will be payable, in the case of loans bearing interest based on LIBOR, at the end of each interest period (but at least every three months) and, in the case of loans bearing interest based on the base rate, quarterly in arrears.

The borrower is required to pay duration fees which are payable for each 90 day period that the senior secured bridge facility is outstanding.

Any loans under the senior unsecured bridge facility that are not paid in full on or before the first anniversary of the closing date of the merger will automatically be converted into senior unsecured term loans maturing seven years after the closing date of the merger. After such a conversion, the holders of outstanding senior unsecured term loans may choose, subject to certain limitations, to exchange their loans for senior unsecured exchange notes that mature seven years after the closing date of the merger.

Any loans under the senior secured bridge facility that are not paid in full on or before 364 days after the closing of the merger may, at the option of Dell and so long as no payment or bankruptcy event of default has occurred and is continuing, be extended for an additional 364 days after payment by Dell of an extension fee. The senior secured bridge facility will have no amortization.

Prepayments

The senior unsecured bridge facility requires the borrower to prepay outstanding bridge loans, subject to certain exceptions:

•

with 100% of the net cash proceeds from the issuance of any unsecured high-yield securities;

•

with the net cash proceeds from the issuance of any debt incurred to refinance the senior unsecured bridge facility;

•

with 100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property by Dell and its restricted subsidiaries (including insurance and condemnation proceeds, subject to de minimis thresholds) in excess of amounts either reinvested or required to be paid to the lenders under the credit facilities and secured bridge facility or holders of certain other indebtedness; and

•

following a change of control.

The senior secured bridge facility requires the borrower to prepay outstanding senior secured bridge loans, subject to certain exceptions, with:

•

subject to the waterfall described above under “—Prepayments” with respect to the credit facilities, 100% of the net cash proceeds of all non-ordinary course asset sales or other dispositions of property by Dell and its restricted subsidiaries (including insurance and condemnation proceeds, subject to de minimis

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thresholds), subject to reinvestment rights expected to be substantially similar to those for the credit facilities, except that the borrower shall not have any reinvestment rights until after the receipt by Dell and its restricted subsidiaries of net cash proceeds received from asset sales and dispositions of property of at least $7.7 billion (calculated starting from the date of the debt commitment letter);

•

subject to the senior unsecured bridge facility debt sweep, 100% of the net cash proceeds of any issuance or incurrence of debt by Dell or any of its restricted subsidiaries, other than certain excluded debt and debt issuances of up to $500 million in the aggregate; and

•

100% of the net cash proceeds of issuances of equity securities or equity-linked securities, subject to certain exceptions.

The borrower may voluntarily repay outstanding loans under the corporate bridge facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans.

Certain Covenants and Events of Default

The corporate bridge facilities will contain customary affirmative covenants substantially consistent with those contained in the credit facilities. The senior secured bridge facility will contain negative covenants substantially consistent with those contained in the credit facilities. The senior unsecured bridge facility is expected to contain incurrence-based negative covenants as are customary for bridge loan financings of this type and consistent with Rule 144A “for life” high yield indentures of comparable issuers. Such negative covenants will, subject to certain exceptions, qualifications and “baskets,” restrict, among other things, the borrower’s and its restricted subsidiaries’ ability to incur debt, create liens, enter into asset sales, make certain investments and acquisitions, pay dividends or distribute or redeem certain equity, prepay or redeem certain debt and enter into transactions with affiliates.

The corporate bridge facilities will not include financial maintenance covenants. The corporate bridge facilities will contain certain customary events of default (including upon a change of control).

Margin Bridge Facility

Obligors and Security

The borrower under the margin bridge facility will be Merger Sub prior to the closing of the merger and, after the closing of the merger, will be EMC. The margin bridge facility will not be guaranteed by any of the subsidiaries of the borrower or Denali.

The margin bridge facility will be secured solely by 77,033,442 shares of Class B common stock of VMware. The funding of the margin bridge facility is not contingent on the value of the collateral or the trading price of shares of VMware Class A common stock.

Interest Rates and Amortization

Interest under the margin bridge facility will be payable, at the option of the borrower, either at a base rate or a LIBOR-based rate plus a margin to be agreed. Interest will be payable, in the case of loans bearing interest based on LIBOR, at the end of each interest period (but at least every three months) and, in the case of loans bearing interest based on the base rate, quarterly in arrears. The margin bridge facility will mature 364 days after the date of closing of the merger and will have no amortization.

Prepayments

The margin bridge facility requires the borrower to prepay outstanding margin bridge loans with 100% of the net cash proceeds of any asset sale or other disposition of the pledged VMware shares. The borrower may voluntarily repay outstanding loans under the margin bridge facility at any time without premium or penalty, other than customary “breakage” costs.

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Certain Covenants and Events of Default

The margin bridge facility will not include any affirmative or negative covenants, other than an asset sale covenant solely with respect to the pledged VMware shares which will require that 100% of the consideration for the sale of such shares consist of cash or cash equivalents and require that all such proceeds be used to repay the margin bridge facility. The margin bridge facility will also contain events of default substantially consistent with the credit facilities, as modified to reflect the nature of the margin bridge facility.

VMware Intercompany Note Bridge Facility

Obligors and Security

The borrower under the VMware note bridge facility will be Merger Sub prior to the closing of the merger and, after the closing of the merger, will be EMC. The VMware note bridge facility will not be guaranteed by any of the subsidiaries of the borrower or Denali.

The VMware note bridge facility will be secured by the VMware intercompany notes, which are payable to EMC.

Interest Rates and Amortization

Interest under the VMware note bridge facility will be payable, at the option of the borrower, either at a base rate or a LIBOR-based rate plus a margin to be agreed. Interest will be payable, in the case of loans bearing interest based on LIBOR, at the end of each interest period (but at least every three months) and, in the case of loans bearing interest based on the base rate, quarterly in arrears. The VMware note bridge facility will mature 364 days after the date of closing of the merger and will have no amortization.

Prepayments

The VMware note bridge facility requires the borrower to prepay outstanding VMware note bridge loans with 100% of the net cash proceeds of any asset sale or other disposition of the pledged VMware promissory notes. The borrower may voluntarily repay outstanding loans under the VMware note bridge facility at any time without premium or penalty, other than customary “breakage” costs.

Certain Covenants and Events of Default

The VMware note bridge facility will not include any affirmative or negative covenants, other than an asset sale covenant solely with respect to the pledged VMware promissory notes which will require that 100% of the consideration for the sale of such promissory notes consist of cash or cash equivalents and require that all such proceeds be used to repay the VMware note bridge facility. The VMware note bridge facility will also contain events of default substantially consistent with the credit facilities, as modified to reflect the nature of the VMware note bridge facility.

Unsecured Asset Sale Bridge Facility

Obligors and Security

The borrowers under the unsecured asset sale bridge facility shall be the same as the borrowers under the credit facilities.

The unsecured asset sale bridge facility will be guaranteed by the same entities as the credit facilities and shall be unsecured.

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Interest Rates and Amortization

Interest under the unsecured asset sale bridge facility is expected to be payable at a fixed rate per annum until the date that is 90 days after the date of the completion of the merger and, thereafter, at a LIBOR-based rate, subject to 50 basis point increases every three months thereafter and subject to a total cap. Interest will be payable, at the end of each interest period (but at least every three months), in arrears. The unsecured asset sale bridge facility will mature one year after the date of closing of the merger and will have no amortization.

Prepayments

The unsecured asset sale bridge facility requires the borrower to prepay outstanding borrowings under the unsecured asset sale bridge facility with 100% of the net cash proceeds of any non-ordinary course asset sales or dispositions. The borrower may voluntarily repay outstanding loans under the unsecured asset sale bridge facility at any time without premium or penalty, other than customary “breakage” costs.

Refinancing of Certain Indebtedness

Dell expects that the aggregate amounts of principal, interest and premium necessary to redeem in full the outstanding $1.4 billion in aggregate principal amount of 5.625% Senior First Lien Notes due 2020 co-issued by Dell International and Denali Finance Corp. will be deposited with the trustee for such notes, and that such notes will thereby be satisfied and discharged, substantially concurrently with the effective time of the merger. Dell further expects that all of Dell’s and EMC’s other outstanding senior notes and senior debentures will remain outstanding after the effective time of the merger in accordance with their respective terms. All principal, accrued but unpaid interest, fees and other amounts (other than certain contingent obligations) outstanding at the effective time of the merger under (1) EMC’s unsecured revolving credit facility will be repaid in full substantially concurrently with the closing and all commitments to lend and guarantees in connection therewith will be terminated and/or released, (2) EMC’s outstanding commercial paper will be refinanced, (3) Dell International’s asset based revolving credit facility will be repaid in full substantially concurrently with the closing and all commitments to lend and guarantees and security interests in connection therewith will be terminated and/or released and (4) Dell International’s term facilities will be repaid in full substantially concurrently with the closing and all commitments to lend and guarantees and security interests in connection therewith will be terminated and/or released.

GAAP EPS

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