Important Notice

IMPORTANT NOTICE

THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE EITHER (1) QUALIFIED INSTITUTIONAL BUYERS (“QIBs”) UNDER RULE 144A OR (2) NON-U.S. PERSONS OUTSIDE OF THE U.S. (AND, IF INVESTORS ARE RESIDENT IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA, A QUALIFIED INVESTOR)

IMPORTANT: You must read the following before continuing. The following applies to the Preliminary Offering Memorandum following this page, and you are therefore advised to read this carefully before reading, accessing or making any other use of the Preliminary Offering Memorandum. In accessing the Preliminary Offering Memorandum, you agree to be bound by the following terms and conditions, including any modifications to them any time you receive any information from us as a result of such access.

NOTHING IN THIS ELECTRONIC TRANSMISSION CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE U.S. OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD WITHIN THE U.S. OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT), EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE LAWS OF OTHER JURISDICTIONS.

THE FOLLOWING PRELIMINARY OFFERING MEMORANDUM MAY NOT BE FORWARDED OR DISTRIBUTED TO ANY OTHER PERSON AND MAY NOT BE REPRODUCED IN ANY MANNER WHATSOEVER. ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORIZED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.

Confirmation of your Representation: In order to be eligible to view this Preliminary Offering Memorandum or make an investment decision with respect to the securities, investors must be either (1) Qualified Institutional Buyers (“QIBs”) (within the meaning of Rule 144A under the Securities Act) or (2) non-U.S. persons (within the meaning of Regulation S under the Securities Act) outside the U.S.; provided that investors resident in a Member State of the European Economic Area must be a qualified investor (within the meaning of Article 2(1)(e) of Directive 2003/71/EC and any relevant implementing measure in each Member State of the European Economic Area). This Preliminary Offering Memorandum is being sent at your request and by accepting the e-mail and accessing this Preliminary Offering Memorandum, you shall be deemed to have represented to us that (1) you and any customers you represent are either (a) QIBs or (b) not a U.S. person and that the electronic mail address that you gave us and to which this Preliminary Offering Memorandum has been delivered is not located in the U.S. (and if you are resident in a Member State of the European Economic Area, you are a qualified investor) and (2) that you consent to delivery of such Preliminary Offering Memorandum by electronic transmission.

You are reminded that this Preliminary Offering Memorandum has been delivered to you on the basis that you are a person into whose possession this Preliminary Offering Memorandum may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorized to, deliver this Preliminary Offering Memorandum to any other person.

The materials relating to the offering do not constitute, and may not be used in connection with, an offer or solicitation in any place where offers or solicitations are not permitted by law. If a jurisdiction requires that the offering be made by a licensed broker or dealer and the initial purchasers or any affiliate of the initial purchasers is a licensed broker or dealer in that jurisdiction, the offering shall be deemed to be made by the initial purchasers or such affiliate on behalf of the Issuer in such jurisdiction.

This Preliminary Offering Memorandum has been sent to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither J.P. Morgan Securities LLC (“JPMorgan”) nor any person who controls it nor any director, officer, employee nor agent of it or affiliate of any such person accepts any liability or responsibility whatsoever in respect of any difference between the Preliminary Offering Memorandum distributed to you in electronic format and the hard copy version available to you on request from JPMorgan.

The information in this offering memorandum is not complete and may be changed. This offering memorandum is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. etceBn euiisRCCptlMarkets Capital RBC Morgan J.P. Co. & Sachs Goldman, Suisse Credit Suisse Citigroup Credit Barclays Securities Bank Deutsche Lynch Merrill BofA defined (as Transactions EMC the which on date the after years five within terms identical consummated. substantially are having herein) notes tradable publicly for notes of the Notes—Escrow of three of price than “Description issue later See initial no Date. the hereby merger Redemption of offered Dell-EMC Redemption.” Mandatory 101% notes the in Mandatory Special to the that credit Notes—Special a the equal of event of of (or including, price all the letters “Description issued not redemption redeem In and and be but a to notes. funds Conditions” to to, at required of The Escrow credit interest Date”) be series notes. Proceeds; of unpaid Redemption will respective the letters and Mandatory Fincos the on such accrued “Special the of accrue cause plus (the 2016, holders would will notes, to date 16, the that we prior such December of interest (y) agreement, following to benefit monthly or escrow days prior the the the cash the business or of for to such of on release security equal deposited) terms consummated to as amount be the not conditions pledged an in to to is the be but in case, cause pursuant that will to case, each (or redeemed date account up each in deposit be the escrow notes in (y)), will to Until such the (y)), and Fincos required notes. on and (x) the otherwise the accrue (x) of (x) ABL are of would combination of existing month, notes offering that combination a our each the the interest (or under of or of all notes lenders day satisfied consummation and the issuing last are the below of the the account after described holders cause escrow month price the will the one redemption and we in is mandatory agent (y) property that special escrow or date the the cash the pay of in including to benefit deposited) not sufficient the be is for to that credit cause amount of (or an letters deposit (“Dell”). issue also corporation to will Delaware facility Fincos a credit the Inc., wholly-owned (x) related Dell be either other and will and and under Intermediate”), EMC offering merger obligations (“Denali and Dell-EMC 2’s the corporation International the Finco merger, Delaware Dell fund and Dell-EMC a herein), to 1’s the Inc., defined incurred Finco with Intermediate (as financings of together Denali Transactions debt all mergers, “Fincos”), Denali, EMC other “assumption”) (such the of the certain (the notes 1, subsidiaries of and assume the Finco consummation notes will of with the the EMC co-issuer together Following governing and a and, transactions. indenture International and 2” the Dell entity (“Finco surviving and mergers, surviving corporation the notes the the Delaware as the of as a International result EMC Corporation, Dell a with Finance with will As EMC, 2 International”), 1”), “mergers”). into Diamond (“Dell (“Finco and and company corporation of with notes, liability Delaware subsidiary merge the limited a wholly-owned will of Delaware Corporation, a co-issuer a Finance as a L.L.C., 1 surviving and International Diamond EMC entity Dell merger, with into Dell-EMC merger”), certain and the “Dell-EMC on with of (the based merge consummation EMC adjustment the into to following and subject Promptly with be Denali. merge will will notes (“Denali”), the corporation on Delaware rate interest The “notes”). the Events.” notes, Rating Certain on Based Notes (“EMC”). the of the Adjustment and Rate notes Notes—Interest of “Description See events. rating the with together and notes”, a erligo h xmto rmtepoiin fScin5o h euiisAtpoie yRl 4A o ecito fcertain of description Distribution.” a of For “Plan 144A. and Rule notes Restrictions” by the “Transfer provided of see Act sellers notes, Securities that the the notified to of of hereby sold transfers 5 are and qualified on Section You offered to restrictions of Act. and except and provisions Securities Act persons, offerees the the Securities States eligible from under the United about exemption S under to information the Regulation 144A or on on Rule States relying reliance by United be in provided the may transactions registration within offshore from sold in exemption be persons the not certain on may reliance notes in The buyers jurisdiction. institutional other any of law securities about or on is inNtsde(h oe” n grgt rnia muto laigRt is inNtsde(h fotn rate “floating (the due Notes Lien First Rate Floating of amount principal aggregate $ and notes”) “ (the due Notes Lien First % ehv gedt ieargsrto ttmn ihteScrte n xhneCmiso te“E” eaigt nofrt xhnethe exchange to offer an to relating “SEC”) (the notes. Commission the Exchange for and market Securities public the no with is statement there registration currently a and file exchange, to stock agreed any have on We listed be not will notes The this of proceeds gross the to equal amount an account escrow an into deposit will Fincos the notes, the of offering the of consummation Upon of amount principal aggregate a Inc., Holding Denali of subsidiary $ wholly-owned notes”), a corporation and Massachusetts corporation a Delaware Corporation, a “ EMC Co., (the of Acquisition acquisition Universal proposed acquisition, the the upon, with conditioned connection not In is but for, due financing Notes the Lien of First part % is offering This of amount principal aggregate $ offering are We h oe n h oegaate aentbe eitrdudrteScrte c f13,a mne te“euiisAt) rthe or Act”), “Securities (the amended as 1933, of Act Securities Company, the Trust under Depository registered The been of not facilities have the guarantees through note form the book-entry and in notes only The investors to notes the deliver to expect purchasers initial The imn iac oprto n imn iac Corporation Finance 2 Diamond and Corporation Finance 1 Diamond 2016. , netn ntentsivle ik.Se“ikFcos einn npg 39. page on beginning Factors” “Risk See risks. involves notes the in Investing rc o h laigrt oe:% lsacuditrs,i n from any if interest, accrued plus %, notes: rate floating the for Price rc o h oe:% lsacuditrs,i n from any if interest, accrued plus %, notes: the for Price rc o h oe:% lsacuditrs,i n from any if interest, accrued plus %, notes: the for Price elItrainlLLC n M Corporation EMC and L.L.C. International Dell RLMNR OFDNILOFRN MEMORANDUM OFFERING CONFIDENTIAL PRELIMINARY h aeo hscnieta feigmmrnu s,2016. , is memorandum offering confidential this of date The laigRt is inNtsdue Notes Lien First Rate Floating $ Sbett opein ae a 1 2016) 11, May dated completion, to (Subject is inNtsdue Notes Lien First due % Notes Lien First % $ $ i lhbtclodr ihnec row) each within order, alphabetical (in lblFnnigCoordinators Financing Global on okRnigManagers Book-Running Joint ob sue by assumed be to i lhbtclorder) alphabetical (in sCo-Issuers as Co-Issuers as $ 2016 , 2016 , 2016 , cvrpg continued) page (cover ..Morgan J.P. The notes will mature on , the notes will mature on and the floating rate notes will mature on . We will pay interest on the notes semi-annually in arrears on and of each year, commencing on , 2016, we will pay interest on the notes semi-annually in arrears on and of each year, commencing on , 2016 and we will pay interest on the floating rate notes quarterly in arrears at a floating rate equal to plus % on , , and of each year, commencing on , 2016. We may redeem some or all of the notes at any time prior to , 20 (the date months prior to the maturity date of the notes) and the notes at any time prior to , 20 (the date months prior to the maturity date of the notes), in each case, at a price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest and special interest (as described under “Exchange Offer; Registration Rights”), if any, to, but not including, the redemption date, plus a “make-whole” premium, as described in this offering memorandum. On or after , 20 (the date months prior to the maturity date of the notes), in the case of the notes, and , 20 (the date months prior to the maturity date of the notes), in the case of the notes, we may redeem some or all of such notes at a redemption price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest and special interest (as described under “Exchange Offer; Registration Rights”), if any, to, but not including, the redemption date. See “Description of Notes—Optional Redemption of Fixed Rate Notes.” The floating rate notes are not subject to redemption prior to their stated maturity. Upon the occurrence of a Change of Control Triggering Event (as described herein), we may be required to offer to repurchase all of the notes then outstanding at 101% of the principal amount, plus any accrued and unpaid interest to, but not including, the repurchase date. See “Description of Notes—Change of Control Triggering Event.” Upon consummation of the EMC Transactions, the notes will rank equal in right of payment with all of the issuers’ existing and future senior indebtedness, including our new senior secured credit facilities and any senior unsecured debt expected to be incurred as part of the EMC Transactions and (only with respect to EMC) the existing EMC unsecured notes, and senior in right of payment to all of our existing and future subordinated indebtedness. Prior to the consummation of the mergers and the assumption, the notes will not be guaranteed. Upon the consummation of the mergers and the assumption, the notes will be guaranteed on a joint and several basis by Denali, Denali Intermediate, Dell and each of Denali Intermediate’s wholly-owned domestic subsidiaries (including each of EMC’s wholly-owned domestic subsidiaries) that guarantees obligations under the new senior secured credit facilities. Such note guarantees will rank equal in right of payment with all existing and future senior indebtedness, including our new senior secured credit facilities and any senior unsecured debt expected to be incurred as part of the EMC Transactions, and senior in right of payment to all future subordinated indebtedness of such guarantors. The notes and the note guarantees will be structurally subordinated to all of the existing and future indebtedness and other liabilities of any existing and future subsidiaries that do not guarantee the notes, including our non-wholly-owned subsidiaries, foreign subsidiaries, receivables subsidiaries and subsidiaries designated as unrestricted subsidiaries under the new senior secured credit facilities. The notes and the note guarantees will be structurally senior to the existing Dell unsecured notes and (except with respect to EMC) the existing EMC unsecured notes. To the extent lenders under the new senior secured credit facilities release any guarantor from its obligations, such guarantor will also be released from its obligations under its note guarantees. See “Description of Notes—Note Guarantees.” Upon consummation of the offering of the notes and the funding of the proceeds of the notes into escrow, the notes will be secured by an exclusive first-priority lien on the funds and letters of credit held in the escrow account until the release of the funds and letters of credit from escrow. From and after the release of the funds and letters of credit and the consummation of the mergers and the assumption, the notes and the note guarantees will be secured, on a pari passu basis with the new senior secured 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 new senior secured credit facilities. As a result, the notes and the note guarantees will be effectively senior to any unsecured debt expected to be incurred as part of the EMC Transactions to the extent of the value of the collateral securing the notes. The notes and the note guarantees will be effectively subordinated to certain of our indebtedness that is secured by assets or properties not constituting collateral securing the notes, including indebtedness in respect of the margin bridge facility and the VMware note bridge facility, to the extent of the value of such assets and properties. For a more detailed discussion, see “Description of Notes—Security for the Notes.” TABLE OF CONTENTS

Page Page

SUMMARY ...... 1 MANAGEMENT ...... 231 RISK FACTORS ...... 39 PRINCIPAL STOCKHOLDERS ...... 240 USE OF PROCEEDS ...... 86 CERTAIN RELATIONSHIPS AND RELATED CAPITALIZATION ...... 89 PARTY TRANSACTIONS ...... 241 THE TRANSACTIONS ...... 92 DESCRIPTION OF OTHER INDEBTEDNESS ..... 247 DENALI UNAUDITED PRO FORMA CONDENSED DESCRIPTION OF NOTES ...... 263 COMBINED FINANCIAL STATEMENTS ...... 98 EXCHANGE OFFER;REGISTRATION RIGHTS ... 333 SELECTED HISTORICAL CONSOLIDATED BOOK ENTRY;DELIVERY AND FORM ...... 335 FINANCIAL DATA OF DENALI ...... 115 TRANSFER RESTRICTIONS ...... 340 SELECTED HISTORICAL CONSOLIDATED CERTAIN UNITED STATES FEDERAL INCOME FINANCIAL DATA OF EMC...... 116 AND ESTATE TAX CONSEQUENCES ...... 342 MANAGEMENT’S DISCUSSION AND ANALYSIS CERTAIN ERISA CONSIDERATIONS ...... 347 OF FINANCIAL CONDITION AND RESULTS OF PLAN OF DISTRIBUTION ...... 349 OPERATIONS OF DENALI ...... 118 LEGAL MATTERS ...... 354 MANAGEMENT’S DISCUSSION AND ANALYSIS INDEPENDENT REGISTERED PUBLIC OF FINANCIAL CONDITION AND RESULTS OF ACCOUNTING FIRMS ...... 354 OPERATIONS OF EMC...... 159 INDEX TO CONSOLIDATED FINANCIAL OUR BUSINESS ...... 201 STATEMENTS ...... F-1 BUSINESS OF EMC...... 216

In making your investment decision, you should rely only on the information contained in this offering memorandum. We and the initial purchasers have not authorized anyone to provide you with any other information. If you receive any other information, you should not rely on it.

We and the initial purchasers are offering to sell the notes only in places where offers and sales are permitted.

You should not assume that the information contained in this offering memorandum is accurate as of any date other than the date on the front cover of this offering memorandum. Neither the delivery of this offering memorandum nor any sale made hereunder shall under any circumstances imply that the information herein is correct as of any date subsequent to the date on the cover of this offering memorandum.

This offering memorandum is a confidential document that we are providing only to prospective purchasers of the notes. You should read this offering memorandum before making a decision whether to purchase any notes. You must not: • use this offering memorandum for any other purpose; • make copies of any part of this offering memorandum or give a copy of it to any other person; or • disclose any information in this offering memorandum to any other person.

We have prepared this offering memorandum and we are solely responsible for its contents. You are responsible for making your own examination of us and your own assessment of the merits and risks of investing in the notes. You may contact us if you need any additional information. By purchasing any notes, you will be deemed to have acknowledged that: • you have reviewed this offering memorandum; • you have had an opportunity to request and to review, and you have received, any additional information that you need from us;

i • you have not relied upon the initial purchasers or any person affiliated with the initial purchasers in connection with your investigation of the accuracy of such information or your investment decision; • this offering memorandum relates to an offering that is exempt from registration under the Securities Act and may not comply in important respects with the rules of the SEC that would apply to an offering document relating to a public offering of securities; and • no person has been authorized to give information or to make any representation concerning us, this offering or the notes, other than as contained in this offering memorandum in connection with your examination of us and the terms of this offering.

We are not providing you with any legal, business, tax or other advice in this offering memorandum. You should consult your own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in the notes. You should contact the initial purchasers with any questions about this offering.

You must comply with all laws and regulations that apply to you in any place in which you buy, offer or sell any notes or possess or distribute this offering memorandum. You must also obtain any consents, permission or approvals that you need in order to purchase, offer or sell any notes under the laws and regulations in force in any jurisdiction to which you are subject or in which you make such purchases, offers or sales. We and the initial purchasers are not responsible for your compliance with these legal requirements. We are not making any representation to you regarding the legality of your investment in the notes under any legal investment or similar law or regulation.

We are offering the notes in reliance on exemptions from the registration requirements of the Securities Act. These exemptions apply to offers and sales of securities that do not involve a public offering. By purchasing any notes, you will be deemed to have made certain acknowledgments, representations and agreements as described in the “Transfer Restrictions” section of this offering memorandum. You may be required to bear the financial risks of investing in the notes for an indefinite period of time.

The notes have not been recommended by any federal, state or foreign securities authorities, nor have any such authorities determined that this offering memorandum is accurate or complete. Any representation to the contrary is a criminal offense.

The notes are subject to restrictions on resale and transfer and may not be transferred or resold except as permitted under the Securities Act and applicable state securities laws pursuant to registration or exemption therefrom. Please refer to the sections in this offering memorandum entitled “Transfer Restrictions” and “Plan of Distribution.”

The initial purchasers make no representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this offering memorandum. Nothing contained in this offering memorandum is, or shall be relied upon as, a promise or representation by the initial purchasers as to the past or future. The initial purchasers assume no responsibility for the accuracy or completeness of any such information.

It is expected that delivery of the notes will be made against payment therefor on or about , 2016, which is the tenth business day following the date hereof (such settlement cycle being referred to as “T+10”). Under Rule 15c6-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), trades in the secondary market generally are required to settle in three business days unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the notes on the date of pricing or the next six succeeding business days will be required, by virtue of the fact that the notes initially will settle in T+10, to specify an alternative settlement cycle at the time of any such trade to prevent failed settlement. Purchasers of the notes who wish to trade the notes on the date of pricing and the next six succeeding business days should consult their own advisors.

ii INDUSTRY AND MARKET DATA

This offering memorandum includes information with respect to market share and other industry-related and statistical information, which are based on information from independent industry organizations and other third- party sources, including IDC Research, Inc. Some industry and market information are also from our internal analysis based upon data available from such independent and third-party sources and our internal research. We believe such information to be accurate as of the date of this offering memorandum. However, this information may prove to be inaccurate because this information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. In addition, our internal research is based upon our understanding of industry conditions, and such information has not been verified by any independent sources. Neither we nor the initial purchasers can guarantee the accuracy or completeness of any such information contained in this offering memorandum. Such information also involves risks and uncertainties and is subject to change based on various factors, including those discussed under the heading “Forward-Looking Statements.”

In this offering memorandum, references to “share” and “market share,” unless otherwise indicated, with respect to (i) our Client Solutions business are to market share based on number of units sold and (ii) our other businesses, including our Enterprise Solutions business, VMware, SecureWorks and our Emerging Cloud Solutions businesses, are to market share based on revenue.

USE OF NON-GAAP FINANCIAL INFORMATION

We believe that the financial statements and the other financial data included in this offering memorandum have been prepared in a manner that complies, in all material respects, with generally accepted accounting principles in the United States (“GAAP”) and the regulations published by the SEC, and are consistent with current practice with the exception of certain financial measures we identify as “non-GAAP financial measures,” the presentation of our results of operations for the period from February 2 through October 28, 2013 and October 29, 2013 through January 31, 2014 on a combined basis, and as adjusted for certain pro forma items associated with the going-private transaction (including the impact of related purchase accounting adjustments), and the omission of certain financial information regarding the guarantor and non-guarantor subsidiaries.

EBITDA, Adjusted EBITDA, Adjusted EBITDA, including cost synergies, Unlevered Free Cash Flow, non- GAAP product net revenue, non-GAAP services net revenue, non-GAAP net revenue (which we also refer to as adjusted net revenue), non-GAAP product gross margin, non-GAAP product gross margin percentage, non-GAAP services gross margin, non-GAAP services gross margin percentage, non-GAAP gross margin, non- GAAP gross margin percentage, non-GAAP operating expenses, non-GAAP operating income, non-GAAP cost of goods sold, non-GAAP tax expense and non-GAAP net income, as presented in this offering memorandum, are supplemental measures of the performance of Denali or EMC, as applicable, that are not required by, and are not presented in accordance with, GAAP. We believe these non-GAAP financial measures are measures commonly used by financial analysts in evaluating a company’s performance and/or ability to service and/or incur indebtedness. Accordingly, we believe that such non-GAAP financial measures may be useful for potential purchasers of the notes in assessing our operating performance and our ability to meet our debt service requirements. These non-GAAP financial measures, as used herein, are not necessarily comparable to similarly titled measures of other companies. The items excluded from such non-GAAP financial measures are significant in assessing our operating results and liquidity.

These non-GAAP financial measures have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: • they do not reflect costs or cash outlays for capital expenditures or contractual commitments; • they do not reflect changes in, or cash requirements for, our working capital needs;

iii • EBITDA, Adjusted EBITDA, Adjusted EBITDA, including cost synergies, Unlevered Free Cash Flow and non-GAAP net income, in particular, do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; • EBITDA, Adjusted EBITDA, Adjusted EBITDA, including cost synergies, Unlevered Free Cash Flow and non-GAAP net income, in particular, do not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes; • they do not reflect certain impairments and adjustments for purchase accounting; • they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and these non-GAAP financial measures do not reflect cash requirements for such replacements; and • other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, these non-GAAP financial measures and the related ratios should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.

For more information, see the financial statements and related notes included elsewhere in this offering memorandum. The SEC has adopted rules to regulate the use of non-GAAP financial measures. These rules require, among other things: • a presentation with equal or greater prominence of the most comparable financial measure or measures calculated and presented in accordance with GAAP; and • a statement disclosing the purposes for which the issuer’s management uses the non-GAAP financial measure.

The rules prohibit, among other things: • exclusion of charges or liabilities that require cash settlement or would have required cash settlement absent an ability to settle in another manner, from non-GAAP liquidity measures; • adjustment of a non-GAAP performance measure to eliminate or smooth items identified as nonrecurring, infrequent or unusual, when the nature of the charge or gain is such that it is reasonably likely to recur; and • presentation of non-GAAP financial measures on the face of the GAAP financial statements (or notes thereto) or on the face of any required pro forma financial information.

The non-GAAP financial measures presented in this offering memorandum may not comply with these rules. For a reconciliation of EBITDA, Adjusted EBITDA, Adjusted EBITDA, including cost synergies, and Unlevered Free Cash Flow to net income (loss) and a reconciliation of adjusted net revenue to net revenue, see “Summary—Summary Historical and Pro Forma Financial and Other Data of Denali.” For a reconciliation of the other non-GAAP financial measures to the most comparable financial measure calculated and presented in accordance with GAAP, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali—Components of our Results of Operations—Non-GAAP Financial Measures” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of EMC— Liquidity—Use of Non-GAAP Financial Measures and Reconciliations to GAAP Results.”

iv SEC REVIEW

We have agreed to, within five years after the date on which the EMC Transactions are consummated, (1) complete an SEC-registered offer to exchange the notes for new exchange notes having terms substantially identical in all material respects to the notes (except that the new exchange notes will not contain terms with respect to additional interest or transfer restrictions) or (2) if necessary, have an effective shelf registration statement with respect to resales of the notes. See “Exchange Offer; Registration Rights.” In addition, we expect to become a public reporting company in connection with the EMC Transactions. We believe that, other than as set forth in “Use of Non-GAAP Financial Information” and in the succeeding sentence, the financial data included in this offering memorandum have been prepared in a manner that complies, in all material respect with GAAP and published SEC regulations and are consistent with current practice. However, if the SEC reviews the registration statement or our Exchange Act reports, comments by the SEC on our financial or other data in the registration statement or Exchange Act reports may require modification or reformulation of this data. In particular, we have not included in this offering memorandum the financial statements that would be required under Rule 3-16 of Regulation S-X or the consolidating footnote to the financial statements that would be required under Rule 3-10 of Regulation S-X if the notes were registered as of the date of this offering memorandum.

FORWARD-LOOKING STATEMENTS

This offering memorandum contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans or intentions. All statements made relating to the closing of the transactions described in this offering memorandum (including, without limitation, the mergers and the assumption) or to our expectations concerning our market position, future operations, earnings, margins, profitability, costs, expenditures, cash flows, growth rates, financial results and other financial and operating information are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those we expect and that are expressed or implied in the forward-looking statements. Factors or events that could cause our actual results to differ may emerge from time to time, and it is difficult to predict the impact of known factors and impossible to anticipate all factors that could affect our actual results.

Some of the important factors that could cause actual results to differ materially from our expectations include, but are not limited to: • competitive pressures; • our reliance on vendors for products and components and our ability to achieve favorable pricing from vendors; • adverse global economic conditions and instability in financial markets; • execution of our growth, business and acquisition strategies; • the success of our cost efficiency measures; • our ability to manage solutions and products and services transitions in an effective manner; • our ability to deliver high-quality products and services; • our foreign operations and ability to generate non-U.S. net revenue; • product, customer and geographic sales mix and seasonal sales trends; • the performance of channel participants;

v • access to capital markets by us or our customers; • additional regulation; • the loss of any services contracts with our customers, including government contracts, and our ability to perform such contracts at our estimated costs; • the development and protection of our proprietary intellectual property; • cyber-attacks or other data security breaches; • our ability to realize the anticipated synergies from the Dell-EMC merger; • the outcome of lawsuits that have been filed, or other lawsuits that may be filed against us or EMC, including those challenging the Dell-EMC merger; • any demands by holders of shares of EMC’s common stock for appraisal of their shares (to the extent that appraisal rights are determined to exist) under Massachusetts law; • our level of indebtedness and our ability to achieve our objective of reducing our indebtedness; and • other factors discussed under “Risk Factors” and elsewhere in this offering memorandum, including, without limitation, in conjunction with the forward-looking statements included in this offering memorandum.

Any forward-looking statement made by us in this offering memorandum speaks only as of the date of this offering memorandum. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments and other strategic transactions we may make. While we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our estimates change, and investors should not rely on those forward-looking statements as representing our views as of any date subsequent to the date of this offering memorandum.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

TRADEMARKS AND OTHER INTELLECTUAL PROPERTY RIGHTS

We own or have rights to trademarks, service marks or trade names that we use in connection with the operation of our business. Certain trademarks and/or trade names are subject to registrations or applications to register with the United States Patent and Trademark Office or the equivalent in certain foreign jurisdictions, while others are not subject to registration but protected by common law rights. These registered and unregistered marks include our corporate names, logos and website names used herein. Each trademark, trade name or service mark by any other company appearing in this offering memorandum belongs to its owner. Solely for convenience, trademarks, service marks and trade names referred to in this offering memorandum may appear without the ®, TM or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensors to these trademarks, service marks or trade names. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, those other parties.

BASIS OF PRESENTATION

Unless the context otherwise requires, references in this offering memorandum to: • “ABS facilities” refers, collectively, to the term/commercial receivables facility, the revolving/ consumer receivables facility, the EMEA facility and the Canadian Facility, described in “Description of Other Indebtedness—ABS Facilities” in this offering memorandum;

vi • “asset sale bridge facility” refers to the senior unsecured bridge facility expected to be entered into by Dell International in connection with the EMC Transactions in the event the Dell Services Transaction is not consummated substantially concurrently with or prior to the consummation of the Dell-EMC merger, described in “Description of Other Indebtedness—Asset Sale Bridge Facility” in this offering memorandum; • “assumption” has the meaning set forth in “Summary—The Transactions” in this offering memorandum; • “Boomi” refers to Boomi, Inc., a wholly-owned subsidiary of Denali; • “Canadian Facility” refers to the Canadian revolving/commercial receivables facility described in “Description of Other Indebtedness—ABS Facilities—Canadian Revolving/Commercial Receivables Facility” in this offering memorandum; • “cash equity investors” refers, collectively, to the SLP Existing Stockholders, Michael S. Dell, the Susan Lieberman Dell Separate Property Trust, MSDC Denali Investors, L.P., MSDC Denali EIV, LLC and the Temasek Investor; • “Class A Common Stock” refers to the series of Denali common stock, with a par value $0.01 per share, designated as Class A Common Stock; • “Class B Common Stock” refers to the series of Denali common stock, with a par value $0.01 per share, designated as Class B Common Stock; • “Class C Common Stock” refers to the series of Denali common stock, with a par value $0.01 per share, designated as Class C Common Stock; • “Class V Common Stock” refers to the series of Denali common stock, with a par value $0.01 per share, designated as Class V Common Stock; • “Company,” “we,” “us” and “our” refer to, unless otherwise indicated, (i) Denali and all of its consolidated subsidiaries prior to the consummation of the mergers and the assumption (excluding, for the avoidance of doubt, EMC and its subsidiaries) and (ii) Denali and all of its consolidated subsidiaries (including EMC and its subsidiaries) after the consummation of the mergers and the assumption; • “Dell” refers to Dell Inc., a Delaware corporation, and its consolidated subsidiaries; • “Dell-EMC merger” refers to the merger of Merger Sub with and into EMC, as a result of which the separate corporate existence of Merger Sub will cease, and EMC will continue as a wholly-owned subsidiary of Denali; • “Dell International” refers to Dell International L.L.C., a Delaware limited liability company and wholly-owned subsidiary of Dell; • “Dell Services Transaction” refers to the sale of the Dell Services divested businesses as described in “Summary—Recent Developments—Dell Services Divestiture” in this offering memorandum; • “Denali” refers to Denali Holding Inc., a Delaware corporation; • “Denali Intermediate” refers to Denali Intermediate, Inc., a Delaware corporation; • “DHI Group common stock” refers, collectively, to the Class A Common Stock, the Class B Common Stock, the Class C Common Stock and the Class D Common Stock; • “EMC” refers to EMC Corporation, a Massachusetts corporation; • “EMC Transactions” has the meaning set forth in “Summary—The Transactions” in this offering memorandum; • “existing ABL credit facility” refers to the revolving credit facility entered into by Dell International in connection with the going-private transaction;

vii • “existing Dell and EMC unsecured notes” refers, collectively, to (1) the 5.65% senior notes due 2018, 5.875% senior notes due 2019, 4.625% senior notes due 2021, 6.50% senior notes due 2038, 5.40% senior notes due 2040, 7.10% senior debentures due 2028, in each case issued by Dell and (2) the 1.875% senior notes due 2018, 2.650% senior notes due 2020 and 3.375% senior notes due 2023, in each case issued by EMC; • “existing first lien notes” refers to the 5.625% Senior First Lien Notes due 2020 co-issued by Dell International and Denali Finance Corp. in connection with the going-private transaction; • “existing term loan facilities” refers to the term loan facilities entered into by Dell International in connection with the going-private transaction; • “Finco 1” refers to Diamond 1 Finance Corporation, a Delaware corporation; • “Finco 2” refers to Diamond 2 Finance Corporation, a Delaware corporation; • “Fincos” refers, collectively, to Finco 1 and Finco 2; • “going-private transaction” refers to the acquisition of Dell by Denali on October 29, 2013, in which the public stockholders of Dell received cash for their shares of Dell common stock; • “initial purchasers” refers to the firms, the marketing names of which are listed on the cover of this offering memorandum; • “issuers” refers to the co-issuers of the notes offered hereby, which are, prior to the consummation of the mergers and the assumption, the Fincos, and from and after the consummation of the mergers and the assumption, Dell International and EMC; • “margin bridge facility” refers to the new margin bridge facility to be entered into by Merger Sub in connection with the EMC Transactions, described in “Description of Other Indebtedness—Margin Bridge Facility” in this offering memorandum; • “MD Investors” refers, collectively, to Michael S. Dell and the Susan Lieberman Dell Separate Property Trust and any person to whom any of them would be permitted to transfer any equity securities of Denali under the certificate of incorporation of Denali, as amended and restated; • “mergers” refers, collectively, to the Dell-EMC merger, the merger of Finco 1 with and into Dell International, and the merger of Finco 2 with and into EMC; • “merger agreement” refers to the Agreement and Plan of Merger, dated as of October 12, 2015, as it may be amended from time to time, among Denali, Dell, Merger Sub and EMC; • “Merger Sub” refers to Universal Acquisition Co., a Delaware corporation and wholly-owned subsidiary of Denali; • “Microsoft note” refers to the 7.25% subordinated note due 2023 issued by Denali to Microsoft Global Finance, a subsidiary of Microsoft Corporation, in connection with the going-private transaction, of which $26 million remains outstanding; • “MSD Partners Investors” refers, collectively, to MSDC Denali Investors, L.P. and MSDC Denali EIV, LLC and any person to whom any of them would be permitted to transfer any equity securities of Denali under the certificate of incorporation of Denali, as amended and restated; • “notes” refers, collectively, to the $ aggregate principal amount of % first lien notes due offered hereby, the $ aggregate principal amount of % first lien notes due offered hereby and the $ aggregate principal amount of floating rate first lien notes due offered hereby; • “Pivotal” refers to Pivotal Software, Inc., a majority-owned consolidated subsidiary of EMC; • “pro forma” refers to information after giving pro forma effect to the Transactions, unless otherwise specified;

viii • “revolving facility” refers to the new revolving credit facility to be entered into by Dell International in connection with the EMC Transactions, described in “Description of Other Indebtedness—Senior Secured Credit Facilities” in this offering memorandum; • “SecureWorks” refers to SecureWorks Corp., a majority-owned consolidated subsidiary of Denali; • “senior secured credit facilities” refers, collectively, to the revolving facility and the term loan facilities; • “SLP Existing Stockholders” refers to Silver Lake Partners III, L.P. and Silver Lake Partners IV, L.P.; • “SLP Investors” refers to Silver Lake Partners III, L.P., Silver Lake Technology Investors III, L.P., Silver Lake Partners IV, L.P., Silver Lake Technology Investors IV, L.P. and SLP Denali Co-Invest, L.P. and any person to whom any of them would be permitted to transfer any equity securities of Denali under the certificate of incorporation of Denali, as amended and restated; • “Temasek Investor” refers to an affiliate of Temasek Holdings (Private) Limited; • “term loan facilities” refers to the new term loan facilities to be entered into by Dell International in connection with the EMC Transactions, described in “Description of Other Indebtedness—Senior Secured Credit Facilities” in this offering memorandum; • “Transactions” refers, collectively, to the EMC Transactions and the Dell Services Transaction; • “unsecured notes” refers to the $3,250 million aggregate principal amount of one or more series of unsecured notes expected to be offered as part of the EMC Transactions; • “Virtustream” refers to Virtustream Group Holdings, Inc., a wholly-owned subsidiary of EMC; • “VMware” refers to VMware, Inc., a Delaware corporation, a majority-owned consolidated subsidiary of EMC; • “VMware intercompany notes” refers, collectively, to (1) the $680.0 million Promissory Note due May 1, 2018, issued by VMware in favor of EMC, (2) the $550.0 million Promissory Note due May 1, 2020, issued by VMware in favor of EMC and (3) the $270.0 million Promissory Note due December 1, 2022, issued by VMware in favor of EMC; and • “VMware note bridge facility” refers to the new VMware note bridge facility to be entered into by Merger Sub in connection with the EMC Transactions, described in “Description of Other Indebtedness—VMware Note Bridge Facility” in this offering memorandum.

Denali is the indirect holding company of Dell International, a co-issuer of the notes following the consummation of the mergers and the assumption, and will also be the ultimate indirect holding company of EMC, a co-issuer of the notes following the consummation of the mergers and the assumption. Other than the equity interests of Denali Intermediate, Denali has no material assets or liabilities and has no material independent operations. This offering memorandum contains the historical financial statements and other financial data of Denali.

No separate financial information has been provided in this offering memorandum for Finco 1 or Finco 2 because (1) neither Finco 1 nor Finco 2 conducts any material operations; (2) neither Finco 1 nor Finco 2 has or will have material assets (other than the escrowed proceeds, the proceeds of any other indebtedness incurred to finance the EMC Transactions and any cash or cash equivalents or letters of credit to fund expected interest payments from the date of incurrence of such indebtedness to the closing date of the Dell-EMC merger and any redemption premiums payable upon redemption of such indebtedness if the Dell-EMC merger is not consummated) and (3) promptly following the consummation of the Dell-EMC merger, Finco 1 will merge with and into Dell International and Finco 2 will merge with and into EMC and as a result, Dell International and EMC will assume all of Finco 1’s and Finco 2’s obligations under the notes, respectively. The indenture governing the notes offered hereby will significantly restrict the activities of the Fincos.

ix Denali’s fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. As used throughout this offering memorandum, “Fiscal 2017” means Denali’s fiscal year ended February 3, 2017, “Fiscal 2016” means Denali’s fiscal year ended January 29, 2016, “Fiscal 2015” means Denali’s fiscal year ended January 30, 2015 and “Fiscal 2014” means the period from October 29, 2013 to January 31, 2014 and the period from February 2, 2013 to October 28, 2013. Each of these fiscal years includes 52 weeks.

EMC’s fiscal year ends on December 31.

The going-private transaction On October 29, 2013, Denali acquired Dell in the going-private transaction. For the purposes of the consolidated financial data included in this offering memorandum for Denali, periods prior to October 29, 2013 reflect the financial position, results of operations and changes in financial position of Dell and its consolidated subsidiaries prior to the going-private transaction, referred to as the Predecessor, and periods beginning on or after October 29, 2013 reflect the financial position, results of operations and changes in financial information of Denali and its consolidated subsidiaries as a result of the going-private transaction, referred to as the Successor. For more information on the Predecessor and Successor periods, see note 1 of the notes to the audited consolidated financial statements of Denali included in this offering memorandum. The Predecessor financial statements do not reflect the effects of the accounting for, or the financing of, the going-private transaction. In order to facilitate a discussion of certain results of operations across periods, we have presented the results for the fiscal year ended January 31, 2014 on a combined basis, which is comprised of the results for the period from October 29, 2013 to January 31, 2014 and the period from February 2, 2013 to October 28, 2013 (“Combined Fiscal 2014”) and include results of a new basis of accounting for the post-going-private transaction period. In addition, we have also presented our Combined Fiscal 2014 financial results, as adjusted for pro forma items directly associated with the going-private transaction to give effect to that transaction as if it had occurred on the first day of Fiscal 2014 (“Pro Forma Fiscal 2014”) as we believe the presentation of a twelve-month period on a pro forma basis to reflect the going-private transaction for Fiscal 2014 is meaningful to the reader and more useful for comparative purposes across periods.

The Dell Services Transaction On March 27, 2016, we entered into a definitive agreement with NTT Data International L.L.C. to sell substantially all of the Dell Services business, including the Dell Services Federal Government business but excluding the global support, deployment and professional services business (the “Dell Services divested businesses”), for cash consideration of approximately $3.1 billion. Accordingly, we have reflected the assets and liabilities relating to the Dell Services divested businesses in the “assets held for sale” column of our pro forma condensed combined statement of financial position and have removed such assets and liabilities in the “pro forma adjustments” column of our pro forma condensed combined statement of financial position to reflect the divestiture in our unaudited pro forma financial statements included elsewhere in this offering memorandum and the results of the Dell Services divested businesses will be reclassified to discontinued operations beginning with the first quarter of Fiscal 2017. We anticipate the Dell Services Transaction will close in the third quarter of Fiscal 2017. To the extent that the Dell Services Transaction closes substantially concurrently with or prior to the consummation of the Dell-EMC merger, we expect to apply the estimated $2.7 billion of net proceeds from such transaction to fund the EMC Transactions. See “Summary—The Transactions.” We expect that we may divest certain other business lines, assets, equity interests or properties of us and EMC, as yet to be determined. Such divestitures may be material to each company’s financial condition and results of operations. As of the date of this offering memorandum, there is no commitment or probable transaction related to these potential divestitures, and the manner in which any potential divestitures might be effected has not been determined. Accordingly, the pro forma financial information included elsewhere in this offering memorandum only gives effect to the Dell Services Transaction (unless otherwise specified) and does not reflect any adjustments relating to other divestitures. See “Our Business—Divestitures.”

x Unless otherwise stated herein, pro forma financial information gives effect to the Transactions, as described under “Denali Unaudited Pro Forma Condensed Combined Financial Statements.” Numerical figures included in this offering memorandum have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

xi SUMMARY

This summary highlights selected information about this offering and our business. It does not contain all of the information that you should consider before investing in the notes. You should carefully read this entire offering memorandum, including the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of EMC” and the consolidated financial statements and the related notes thereto, which are included elsewhere in this offering memorandum, before making an investment decision.

As used in this summary, references to “Company,” “we,” “us” and “our” refer to the combined company after giving effect to the consummation of the Dell-EMC merger.

Overview The Dell-EMC merger will create the largest privately-controlled technology company in the United States, branded as Dell Technologies, delivering leading integrated transformational IT solutions across customer segments. We believe that Dell’s and EMC’s highly complementary businesses will provide customers with an expansive portfolio of integrated IT solutions empowering them to address their rapidly changing IT needs. The combination will create a family of complementary and strategically aligned businesses with independent operations but coordinated strategies and portfolios, providing our customers with a broad range of innovative IT solutions that addresses the transformational shifts occurring in the IT industry. We believe that our combined platform will enable us to maintain and extend our current leadership positions in servers, storage, virtualization and PCs within the $2.3 trillion overall IT market. We will also be well-positioned to extend our leadership to next-generation IT solutions, such as converged and hyper-converged infrastructure, cloud platforms, software- defined data centers and security solutions, which incorporate the best technologies and products that Dell and EMC (including VMware) currently offer independently. We believe that uniting Dell’s leadership position in the mid-market with EMC’s strength with large enterprises will create a powerful go-to-market platform enabling us to sell more products and solutions to an expanded market. As a privately-controlled company, we will have the ability and flexibility to make long-term R&D investments. For Fiscal 2016, on a pro forma basis after giving effect to the Transactions, we would have had net revenues of $74.0 billion, adjusted net revenue of $76.9 billion, operating loss of $2.9 billion and Adjusted EBITDA, including cost synergies, of $12.8 billion. See notes 6 and 7 under “—Summary Historical and Pro Forma Financial and Other Data of Denali” for a reconciliation of adjusted net revenue and Adjusted EBITDA, including cost synergies, to the most directly comparable measure presented in accordance with GAAP.

1 technologies has also caused a shift in customer demand from building and assembling IT platforms to purchasing cloud-ready scalable integrated IT solutions, such as converged and hyper-converged infrastructure, as customers seek to accelerate their digital transformation and enable modern IT environments. • The exponential growth of data. The growth in digital data continues to challenge IT departments as businesses seek to store, manage and use such data. Organizations seek to gain a competitive advantage through real-time analysis of significant amounts of data to obtain deeper insights into consumer behavior and market trends. The retention, processing and analysis of such vast quantities of digital data necessitate new computing, networking, storage and security resources, which creates significant demand for innovative data center infrastructure products, services and applications. • Connecting people anytime, anywhere. IT consumers across customer segments seek to enable and connect an increasingly mobile workforce from anywhere in the world at any time. This focus on mobility puts significant strain on our customers’ data center infrastructure. Technologies, such as cloud clients, desktop virtualization, enterprise mobile device management tools and thinner and lighter PCs with enhanced security features, aim to enable a highly mobile and interconnected workforce. • Protecting against evolving security threats. The transformation of traditional data center infrastructure and applications to hybrid cloud and software-based solutions, the exponential growth of digital data and the emphasis on accessibility and connectivity, including on mobile platforms, as well as the pervasiveness and increasing sophistication of cyber attacks drive the growing demand for IT security and the need for protection across modern data center infrastructure, networks and endpoints.

2 Our Enterprise Solutions business will also include Virtustream and RSA. Virtustream’s cloud software and infrastructure-as-a-service solutions enable customers to migrate, run and manage mission-critical applications in cloud-based IT environments and represents a critical element of our strategy to help customers move their applications to a cloud-based IT infrastructure. RSA provides cybersecurity capabilities to help manage an organization’s security and risk profile by providing more effective detection and response through enhanced visibility and analytics. • Client Solutions. Our Client Solutions business will consist of Dell’s Client Solutions Group, which will retain the Dell brand. Our Client Solutions offerings include branded hardware, such as desktop PCs, notebooks and tablets, and branded peripherals, such as monitors, printers and projectors, as well as third-party software and peripherals. Our computing devices are designed with our commercial and consumer customers’ needs in mind, and we seek to optimize performance, reliability, manageability, design and security. In addition to our traditional PC business, we have a portfolio of end-to-end thin client offerings that is well-positioned to benefit from the growth trends in cloud computing. Similar to our Enterprise Solutions business, we also offer attached software, peripherals and services, including support and deployment, configuration and extended warranty services as well as financing options and services offered by Dell Financial Services. Dell has grown its global market share in PCs from 12% in 2010 to 15% in the first quarter of 2016, and has gained share in the global PC market year over year in 12 consecutive quarters following the announcement of the going-private transaction in February 2013. In addition, in the first quarter of 2016, Dell was also the #1 provider of PCs in the United States with a 26% market share. In 2015, Dell was the #1 global provider of PC monitors with a 17% market share. In addition to our Enterprise Solutions offerings, our Client Solutions offerings are an important element of the combined company’s strategy, generating strong cash flow and providing significant opportunities for cross-selling complementary solutions. • VMware. VMware (NYSE: VMW) is a leader in virtualization, which enables organizations to efficiently manage IT resources across complex multi-cloud, multi-device environments. VMware has expanded beyond its core business of compute virtualization to offer a broad portfolio of virtualization technologies by leveraging synergies across three main product groups: software-defined data center, hybrid cloud computing and end-user computing. VMware’s software-defined data center includes the fundamental compute layer for the data center (vSphere), storage and availability to offer cost-effective holistic data storage and protection options (virtual SAN), network and security (VMware NSX) as well as management and automation (vRealize) products. VMware provides offerings, such as VMware vCloud Air, that enable its customers to utilize off-premise vSphere-based hybrid cloud computing capacity. VMware’s end-user computer offerings (such as AirWatch mobile solutions and Horizon application and desktop virtualization solutions) enables IT organizations to efficiently deliver more secure access to applications, data and devices for their end users by leveraging VMware’s software-defined data center solutions to extend virtualization from data centers to devices. In 2014, VMware was the #1 provider of server virtualization software with 87% global market share. We believe that VMware has significant growth opportunities in storage, networking and security virtualization, as well as management and automated products for multi-cloud, multi-device environments. VMware is a strategically aligned business and we will own approximately 81% of VMware. • SecureWorks. SecureWorks (NASDAQ: SCWX) is a leading global provider of intelligence-driven information security solutions focused on protecting customers from cyber-attacks to small and mid- sized businesses, large enterprises and U.S. state and local government agencies. SecureWorks’ solutions enable organizations to strengthen their cyber defenses to prevent security breaches by detecting malicious activity in real time, prioritizing and responding rapidly to security breaches and predicting emerging threats. With over 16 years of operations, SecureWorks has developed proprietary technologies, processes and extensive expertise in the information security industry. SecureWorks is a strategically aligned business and we will own approximately 87% of SecureWorks.

3 • Emerging Cloud Solutions. Our next-generation cloud platforms include Pivotal and Boomi, which are strategically aligned businesses. Pivotal is a leading provider of application and data infrastructure software and application development services. Following the completion of Pivotal’s previously announced Series C Financing, we will own (including our indirect interest through VMware) approximately 81% of Pivotal, while General Electric, Ford and Microsoft, as well as Pivotal employees, will own the remaining interests. Boomi provides a cloud integration platform enabling customers to move, manage and govern data between cloud and on-premises applications. As a leading integration platform-as-a-service provider, Boomi helps customers achieve significant cost savings by eliminating the need for traditional middleware, appliances or custom code. We will own 100% of Boomi. • Dell Software. Our software business offers systems management, security software and information management.

The categories of businesses described above are largely representative of the current expected financial reportable segments of the combined company. However, we are still in the process of evaluating the organization of the combined company and our future reportable segments may ultimately differ after a final determination has been made.

Our businesses will be supported by Dell Financial Services, which offers private label credit financing programs to qualified commercial and consumer customers, leases and fixed-term financing primarily to commercial customers, in each case, who are located in the United States, Canada, Europe and Mexico. Dell Financial Services also originates, collects and services customer receivables primarily related to the purchase of our products. Dell Financial Services provided $3.7 billion of financing to customers for equipment and related software and services, including third-party originations, during Fiscal 2016 and had $5.1 billion of financing receivables, net as of January 29, 2016.

Our Strengths We believe the following competitive strengths have been instrumental to Dell’s and EMC’s performance and position the combined company for future success:

Market Leader in Large and Attractive Technology End Markets. The combined company will be a global leader in our four large core end markets of servers, storage, virtualization and PCs with a combined market size of $411 billion in 2015. The combined company’s leadership positions within the $2.3 trillion overall IT market will include:

Market Market Share Rank Period External storage solutions ...... 36%(global) #1 2015 x86 servers ...... 21%(global) #2 2015 Server virtualization software ...... 87%(global) #1 2014 PCs...... 15%(global) and 26% (U.S.) #3; #1 Q1 2016

Over the last five years, the combined global market share of the top three PC providers (which includes Dell) has increased from 41% to 54%. Since the announcement of the going-private transaction in February 2013, Dell has consistently grown share in the global PC market year over year in 12 consecutive quarters. We believe our market leading position will allow us to continue to benefit from this general consolidation trend within the PC market. In addition, we believe the combined company will benefit from the continued market shift from traditional to next-generation storage solutions, in which EMC has a market-leading position.

4 The combined company is also well-positioned within the high-growth areas of our four core end markets. In the fourth quarter of 2015, the combined company would have had a leading 19% global market share of the cloud IT infrastructure market, which is anticipated to grow from $28 billion in 2015 to $48 billion in 2019, representing a CAGR of 14%. In addition, sales of converged and hyper-converged solutions, which are a meaningful part of IT infrastructure sales, are expected to double from $7 billion in 2015 to $14 billion in 2019. We were the leading global provider of converged and hyper-converged solutions in 2015, with 45% global market share. Further, in 2015, our high-growth businesses in virtualization and security solutions outperformed their respective markets, with our network virtualization and security platform for the software-defined data center growing over 100% year- over-year and SecureWorks achieving approximately 25% year-over-year growth in revenue (as adjusted for the impact of purchase accounting). We believe that our market-leading positions in our core end markets and our strong positions in high-growth markets will continue to drive our growth.

Differentiated Business Model Focused on Generating Attractive Pull-Through Opportunities. Our businesses generate attractive pull-through revenue from software, peripherals and services that attach to our offerings. These attached software, peripherals and services are typically high-margin and often generate up-front and recurring payments, which have provided us with high revenue visibility and predictability. For example, within our Enterprise Solutions business, at the time of the direct sale of a server to a commercial customer, we also offer attached software, peripherals and services, including support and deployment, configuration and extended warranty services. In addition, we also offer financing options and services through Dell Financial Services. These attached products and services create significant added value to customers by streamlining the set-up process and guaranteeing component compatibility and performance, as well as by providing financing assistance. Dell has a consistently high attach rate, as evidenced by its provision of attached services in approximately 56% and 64% of its server unit sales in the first quarter of 2015 and 2016, respectively, and approximately 46% and 45% of its commercial client unit sales in the first quarter of 2015 and 2016, respectively. The combined company’s comprehensive range of core and attached IT software, peripherals and services will provide a competitive advantage and financial benefit as customers increasingly seek to consolidate their vendor base.

Recurring and Diversified Revenue Streams Driving Strong Cash Flow Generation. We have historically generated strong and stable free cash flows due to our recurring and diversified revenue streams, low capital expenditure requirements, global supply chain capabilities and efficient cash conversion cycle. During the year ended January 29, 2016, the combined company would have generated over $7.6 billion of Unlevered Free Cash Flow (as defined in note 8 under “—Summary Historical and Pro Forma Financial and Other Data of Denali”) after giving pro forma effect to the Transactions. Both Dell and EMC generate high-margin revenue streams through the sale of attached software, peripherals and services, such as Dell’s deferred hardware and software maintenance services that attach to Client Solutions and Enterprise Solutions offerings, Dell’s financing services through Dell Financial Services, as well as deferred software maintenance and license fees driven by the sale of EMC offerings and other support services provided by EMC. These attached services also have provided predictable revenue streams as the average term of an attached services contract is approximately two years and the fees for such services are often paid up-front. In Fiscal 2016, Dell’s deferred revenue increased 10% as compared to Fiscal 2015, and Dell’s Client Solutions Group and Enterprise Solutions Group had gross margins associated with deferred revenue of approximately 67% and 64%, respectively. In addition, the combined company’s businesses in high- growth areas such as security solutions and cloud platforms generally utilize a subscription model, providing recurring revenue streams and high levels of revenue visibility. The combined company’s revenue base will also be highly diversified, as evidenced by a broad client portfolio that will include U.S. State governments, G20 governments and Fortune 500 companies. As a result, the combined company will not be dependent on any one customer, product or service, which increases the stability of cash flows. In addition, Dell and EMC both have proven track records of increasing cash flow generation by reducing operating costs and realizing operating efficiencies in their businesses. The combined company’s strong operating cash flows, together with its strong working capital management, will position it to reduce debt while enabling it to invest in operations and R&D and pursue attractive growth opportunities.

5 Proven Track Record of Developing and Commercializing Innovative Technologies. The combined company will unite EMC’s and Dell’s strong track records of driving innovation. The combined company will collectively own over 20,000 patents and patent applications. Dell’s direct distribution business model, which emphasizes direct communication with customers, provides real-time feedback and allows us to refine and further develop our R&D initiatives to focus on products and solutions that are responsive to customer needs. EMC’s strong relationships with its enterprise customers through its direct enterprise sales force and high-touch dedicated account executives with product specialists also provide EMC with insight that has helped to optimize its R&D investments. In addition to organic R&D investments, the combined company will build on both companies’ proven history of nurturing technology acquisitions into profitable and growing businesses that offer innovative IT solutions. For example, VMware grew rapidly from revenues of $74 million in 2003 to revenues of over $1 billion in just five years. More recently, EMC successfully grew XtremIO from a business with minimal revenues at the time of its acquisition to revenues of over $1 billion in less than four years. We believe that the combined company’s continued commitment to both organic and inorganic R&D investments, together with the agility and flexibility to make long-term R&D investments afforded by its privately-controlled corporate governance structure, will allow it to better develop and commercialize innovative technologies and leading IT solutions.

Experienced Management Team. The combined company will be led by a deep, committed and highly experienced management team with significant industry expertise and operating experience in a variety of economic and technology cycles. Upon completion of the Transactions, Michael Dell, Dell’s founder and Chief Executive Officer, will lead the combined company as chairman and Chief Executive Officer. In addition, key executives on Michael Dell’s team will include Tom Sweet, our Chief Financial Officer, Marius Haas, our President and Chief Commercial Officer, Rory Read, our Chief Integration Officer, Howard Elias, our President, Global Services and IT, Jeff Clarke, the President of our Client Solutions business, David Goulden, the President of our Enterprise Solutions business, and Rodney Rogers, the Chief Executive Officer of Virtustream. In addition, key executives of our strategically aligned business include Pat Gelsinger, the Chief Executive Officer of VMware, Rob Mee, the Chief Executive Officer of Pivotal, and Mike Cote, the Chief Executive Officer of SecureWorks. The senior management team of the combined company will consist of accomplished industry veterans with an average of more than 30 years of industry experience who have a deep understanding of changing market trends, consumer needs and innovative technologies and have proven track records of executing upon strategies in a dynamic marketplace to achieve profitable growth. We believe this will give us the ability to capitalize on the opportunities resulting from market changes, bolstered by a culture and spirit of entrepreneurship within our family of complementary and strategically aligned businesses.

Our Strategy We intend to maintain and extend our leading market positions and increase our revenue and profitability by pursuing the following strategies:

6 • Offering Complementary Premium and Value Offerings. We will offer a complementary portfolio of products and solutions that meet the diverse needs of our customers across different market segments. Dell’s high-quality and scalable products and services designed for the midmarket delivers value at compelling price points, which complements EMC’s premium offerings of next-generation IT technologies and solutions and its high-touch services tailored for large enterprises. • Developing Transformative IT Solutions. We will offer new and transformative IT solutions that utilize the best technologies and products from both Dell and EMC to capture a greater share of the growing customer IT spend. We will leverage Dell’s compute capabilities, EMC’s leading storage franchise, Virtustream’s next-generation cloud technology and VMware’s virtualization expertise to develop innovative IT solutions (such as converged and hyper-converged infrastructure) that transform and modernize traditional data center infrastructure to optimize our customers’ IT performance and address their rapidly evolving needs. • Expanding Our Global Market Share. We are focused on strategically expanding our presence in emerging markets such as China and India. Dell and EMC both have strong brand recognition in many emerging markets and we aim to continue to expand our sales coverage with respect to both Dell and EMC offerings and invest in localized R&D to capitalize on regional growth trends.

Expand our Go-To-Market Strengths and Cross-Selling Opportunities. We will combine and leverage Dell’s and EMC’s go-to-market strengths to drive incremental revenue. Dell’s direct generalist sales force primarily targets small businesses and the mid-market while EMC’s high-touch and dedicated account executives and product specialists have long-standing relationships with large enterprises. We have identified thousands of EMC customer accounts with minimal Dell presence as well as thousands of Dell customer accounts where EMC has a limited presence, which represent significant revenue opportunities. We also intend to upsell Dell’s PCs and servers to EMC’s customer base and cross-sell EMC’s enterprise storage products and solutions and VMware’s virtualization solutions through Dell’s direct distribution channels and to Dell’s mid-market customers. The Dell sales force has a proven track record of reselling EMC products. Prior to the termination of the reselling arrangement as a result of the acquisition by Dell of a similar product, in 2007, Dell had contributed up to 14% of EMC’s annual revenue, with a run-rate of more than $2.0 billion. We intend to build on this historical success and effectively execute these cross-selling opportunities to drive revenue growth.

Leverage the Combined Company’s Enhanced Economies of Scale. We intend to capitalize on our combined scale to drive profitable growth by leveraging our: • Aggregated Purchasing Power and Procurement Capabilities. We intend to leverage our global supply chain of local, regional and international suppliers and capitalize on our significant procurement scale to achieve significant cost savings, which will enable us to continue to offer high-quality products with attractive margins at competitive prices. In 2015, Dell and EMC together spent approximately $44 billion on raw materials and manufacturing. • Global Logistics Platform and Expanded Manufacturing and Distribution Footprint. We intend to leverage our multi-mode logistics platform and expansive manufacturing and distribution network for the cost- and time-efficient manufacture and delivery of products and parts to our customers located across the world. We will have 25 manufacturing locations, more than 40 distribution and configuration centers and approximately 910 parts distribution centers globally. • Expansive Sales Force and Customer Service Capabilities. We will leverage our combined sales force of over 40,000 sales professionals to increase our go-to-market opportunities. In addition, our over 30,000 full-time customer service and support employees who speak more than 40 languages will provide on-the-ground customer service across the world. We will also have over 1,800 service centers supported by more than 10 repair facilities globally.

7 We believe these factors will enable us to profitably deliver high-quality products at lower costs with customer- centric and compelling value proposition.

Focus on De-Leveraging and Achieving a Corporate Investment Grade Rating. One of our objectives is to reduce indebtedness in the first 18-24 months after the completion of the Dell-EMC merger to achieve and maintain a corporate investment grade credit rating. The cash necessary to achieve this objective is expected to come from cash flows from operations, cash generated by reductions in working capital requirements and divestitures of non- core businesses, such as the Dell Services Transaction. In addition, Dell and EMC have identified $550 million and $800 million, respectively, of net structural standalone annual cost savings opportunities on a run-rate basis, including workforce optimization, pricing optimization and reduction in procurement costs, which are in the advanced implementation stages. Further, we have identified approximately $2 billion in cost synergies opportunities from the Dell-EMC merger. In addition, EMC has averaged approximately $3.5 billion of stock repurchases and dividends as a public company annually over the last three years, which will no longer be required to be made as a result of the Dell-EMC merger. Dell has demonstrated its focus on, and ability to, de-leverage, as evidenced by the pay down as of April 29, 2016 of $5.1 billion of outstanding debt since its going-private transaction in October 2013. As a result, Dell successfully obtained a two-notch corporate rating upgrade from Standard & Poor’s and a one-notch corporate rating upgrade from Moody’s and Fitch. We believe that our strong operating cash flows, together with the cash from cost-saving initiatives, realization of synergies from the Dell- EMC merger and divestitures of non-core businesses, will enable us to de-leverage and achieve a corporate investment grade rating in the near- to medium-term.

Selectively Pursue Opportunities for Strategic Acquisitions and Alliances. We have demonstrated our ability to execute complementary acquisitions that have expanded our core capabilities and platform and accelerated development of new and innovative technologies. In addition, we have also made venture investments that align with our strategic priorities through our corporate venturing team. We intend to continue to augment our organic growth by executing on our disciplined investment strategy to acquire and integrate businesses, technologies and products that strengthen our market-leading positions, enhance our product and services portfolio and/or leverage our scale. We may also enter into joint ventures and alliances with selected partners to jointly develop and market new products and solutions. Given our market-leading positions, we believe we are well-positioned to benefit from consolidation trends within the IT market to leverage our core competencies and infrastructure.

Recent Developments

SecureWorks On April 27, 2016, SecureWorks completed a registered initial public offering of its Class A common stock. Denali previously owned all of the equity interests in SecureWorks prior to SecureWorks’ initial public offering and, following the completion of such initial public offering, now owns approximately 87% of the Class A common stock, all of the Class B common stock and approximately 99% of the combined voting interests of SecureWorks.

Repayment of Dell 2016 Senior Notes On April 1, 2016, the $400 million in aggregate principal amount of Dell’s 3.100% Senior Notes due 2016 matured and we repaid such notes in full in accordance with the terms thereof.

8 excluding the global support, deployment and professional services business, for cash consideration of approximately $3.1 billion. Accordingly, we have reflected the assets and liabilities relating to the Dell Services divested businesses in the “assets held for sale” column of our pro forma condensed combined statement of financial position and have removed such assets and liabilities in the “pro forma adjustments” column of our pro forma condensed combined statement of financial position to reflect the divestiture in our unaudited pro forma financial statements included elsewhere in this offering memorandum and the results of the Dell Services divested businesses will be reclassified to discontinued operations beginning with the first quarter of Fiscal 2017. We anticipate the Dell Services Transaction will close in the third quarter of Fiscal 2017. See “Our Business— Divestitures.” To the extent that the Dell Services Transaction closes substantially concurrently with or prior to the consummation of the Dell-EMC merger, we expect to apply the estimated $2.7 billion of net proceeds from such transaction to fund the EMC Transactions. See “—The Transactions.”

Pivotal Funding On May 5, 2016, Pivotal announced that it expects to close a round of financing pursuant to which new investors, Ford Motor Company and Microsoft, and existing investors, VMware and General Electric, will provide a $253 million cash investment and EMC will convert $400 million of debt originally held by it into equity interests in Pivotal. The financing is expected to close in May 2016, subject to customary conditions, including the receipt of regulatory approvals.

The Transactions

The Dell-EMC Merger On October 12, 2015, EMC, Denali, Dell and Merger Sub entered into a merger agreement pursuant to which Merger Sub will be merged with and into EMC, with EMC surviving as an indirect wholly-owned subsidiary of Denali.

Subject to the terms and conditions of the merger agreement, at the effective time of the Dell-EMC merger, each share of EMC common stock issued and outstanding immediately prior to the effective time of the Dell-EMC merger (other than shares owned by Denali, Merger Sub, EMC or any of EMC’s wholly-owned subsidiaries, and other than shares with respect to which EMC’s shareholders are entitled and properly exercise appraisal rights (if any)) 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 validly issued, fully paid and non-assessable shares of Class V Common Stock equal to the quotient (rounded to the nearest five decimal points) 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 Dell-EMC merger, plus cash in lieu of any fractional shares. The Class V Common Stock is a type of common stock that is commonly referred to as a tracking stock and is intended to track the performance of a portion of Denali’s economic interest in the VMware business following the completion of the Dell-EMC merger. The approximately 223 million shares of Class V Common Stock issuable in the Dell-EMC merger (assuming EMC shareholders either are not entitled to or do not properly exercise appraisal rights) are intended to represent approximately 65% of EMC’s economic interest in the approximately 81% of the outstanding shares of VMware common stock currently owned by EMC. However, holders of Class V Common Stock will not have a direct claim to, or any special legal rights related to, specific assets attributed to such shares of VMware common stock currently owned by EMC and the Class V Common Stock will not limit our legal responsibility, or that of our subsidiaries, for our or their respective debts and liabilities. See “The Transactions—The Class V Common Stock” for more information regarding the Class V Common Stock.

9 consideration with respect to the number of shares of EMC common stock issuable upon the exercise of such stock options on a net exercise basis, such that shares of EMC common stock with a value equal to the aggregate exercise price and applicable tax withholding reduce the number of shares of EMC common stock otherwise issuable. The merger agreement also provides that as of the effective time of the Dell-EMC merger each currently outstanding EMC restricted stock unit and share of EMC restricted stock will fully vest (with performance vesting units vesting at the target level of performance) and the holder will become entitled to receive the merger consideration with respect to the shares of EMC common stock subject to the award (which will be calculated net of the number of shares withheld in respect of taxes upon the vesting of the award).

The obligations of EMC, Denali and Merger Sub to consummate the Dell-EMC merger are subject to a number of other conditions, including the approval by EMC shareholders to adopt the merger agreement, the absence of any material adverse effect on EMC and its subsidiaries and certain regulatory approvals, including antitrust approvals and the approval for listing by the New York Stock Exchange of the Class V Common Stock.

Appraisal Rights of EMC Shareholders Holders of shares of EMC’s common stock who dissent from the Dell-EMC merger may attempt to seek the fair value of their shares in a judicial appraisal proceeding. We will, and we will cause EMC as our wholly- owned subsidiary following the completion of the Dell-EMC merger to, assert in any appraisal proceeding that an exception to appraisal rights is applicable to the Dell-EMC merger. In this regard, the Massachusetts Business Corporation Act (the “MBCA”) generally provides that shareholders are not entitled to appraisal rights in a merger in which shareholders already holding marketable securities receive cash and/or marketable securities of the surviving corporation in the merger and no director, officer or controlling shareholder has an extraordinary financial interest in the transaction. Such provision has not been the subject of judicial interpretation as to whether this exception applies where, such as in the Dell-EMC merger, shareholders will receive marketable securities of the parent of the surviving corporation in a merger. If dissenting EMC shareholders are entitled to appraisal rights under the MBCA, and the shareholder certifies that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, under the MBCA, EMC would be required to pay its estimate of fair value in respect of shares for which appraisal rights have been properly demanded (plus interest) within 100 days of the closing date of the Dell-EMC merger. With respect to shares of EMC for which appraisal rights have been properly demanded and are held by a shareholder who does not certify that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, instead of payment within 100 days of the closing date of the Dell-EMC merger, EMC must instead offer to make such payment that is conditioned on the shareholder’s agreement to accept such payment in full satisfaction of his claim. If such offer is not accepted, such shareholder may demand an appraisal of its shares through judicial proceedings, but will only be entitled to receive payment for such shares upon completion of such proceedings. Any payment made to EMC shareholders who have properly exercised their appraisal rights would be required to be paid in cash (including in lieu of the Class V Common Stock originally offered). The appraised value of each share of EMC common stock could be more than, the same as, or less than the merger consideration that has been offered to each holder of shares of EMC’s common stock.

We expect that, to the extent that appraisal rights are determined to exist, and to the extent that any cash amount is required to be paid to EMC shareholders in respect of shares for which appraisal rights have been properly demanded and such amount exceeds the original cash consideration offered by us, such amount will be funded by cash on hand, the proceeds of additional indebtedness or a combination thereof. Any such excess amount may be significant. See “Risk Factors—Risks Related to the Combined Company and the Transactions— Holders of a substantial number of EMC’s shares may deliver written demands for the appraisal of their shares under Massachusetts law. If these shareholders are entitled to appraisal rights and properly demand appraisal of their shares, the combined company may be required to seek additional financing to fund payments in cash in respect of such appraised shares.”

10 Financing for the Dell-EMC Merger In connection with the Dell-EMC merger, we expect to: • repay in full EMC’s existing unsecured revolving credit facility; • refinance EMC’s existing commercial paper; • repay in full Dell International’s existing ABL credit facility; • repay in full Dell International’s existing term loan facilities; and • repay in full the existing first lien notes co-issued by Dell International and Denali Finance Corp.

We expect that all of the existing Dell and EMC unsecured notes and the Microsoft note will remain outstanding after the closing of the Dell-EMC merger in accordance with their respective terms. See “Capitalization” and “—Ownership and Corporate Structure.”

Denali expects to finance the cash consideration for the Dell-EMC merger, the refinancing of EMC’s existing unsecured revolving credit facility and commercial paper, Dell International’s existing ABL credit facility and term loan facilities and existing first lien notes and the payment of related fees and expenses with: • up to $49.5 billion, in the aggregate, in debt financings, including the notes offered hereby (not all of the debt financings are expected to be drawn at the closing of the Dell-EMC merger); • an aggregate cash equity investment by the cash equity investors of up to $4.25 billion; and • cash on hand at Denali, Dell and EMC (pursuant to the merger agreement, Denali and Dell, on one hand, and EMC, on the other, have agreed to make available at least $2.95 billion and $4.75 billion of cash on hand, respectively, less certain permitted reductions (including reductions to the extent of any repayment or redemption of Denali’s or EMC’s debt before the closing date of the Dell-EMC merger that would otherwise be required to be repaid on such closing date)).

For more information, see “The Transactions—Financing for the Dell-EMC Merger,” “—Sources and Uses of Cash” and “Description of Notes.”

The offering of the notes offered hereby and the initial borrowings pursuant to the other new debt financings (including the senior secured credit facilities, the asset sale bridge facility, the margin bridge facility, the VMware note bridge facility, the unsecured notes and the issuance of any additional series of debt) incurred to fund the Dell-EMC merger and the use of proceeds therefrom, the cash equity investments by the cash equity investors and the use of proceeds therefrom, the Dell-EMC merger (including the payment of consideration in connection therewith to holders of EMC’s outstanding shares, restricted stock units, restricted stock and stock options), the issuance by Denali of the Class V Common Stock, the redemption and satisfaction and discharge of the existing first lien notes, the repayment of Dell International’s existing ABL credit facility and term loan facilities, the repayment of EMC’s existing unsecured revolving credit facility and refinancing of commercial paper, the mergers of Finco 1 and Finco 2 with and into Dell International and EMC, respectively, promptly following the consummation of the Dell-EMC merger, the assumption of all the obligations of Finco 1 and Finco 2, respectively, under the notes and the indenture governing the notes and certain other debt financings incurred to fund the Dell-EMC merger and other related transactions, the guarantee by Denali, Denali Intermediate, Dell and EMC and certain of their respective wholly-owned subsidiaries of the notes offered hereby, the unsecured notes and certain other debt financings incurred to finance the Dell-EMC merger and the other related transactions are collectively referred to in this offering memorandum as the “EMC Transactions.” See “— The Investors” for information regarding the cash equity investors.

The EMC Transactions and the Dell Services Transaction and the use of proceeds therefrom are collectively referred to in this offering memorandum as the “Transactions.”

11 The notes offered hereby are being issued prior to the completion of the other financing transactions we expect to enter into in order to fund the EMC Transactions. There are no assurances that Denali will be able to raise the funds required to consummate the Dell-EMC merger, or at what terms such funds may be available. The financing transactions described herein with respect to the senior secured credit facilities, the unsecured notes, the asset sale bridge facility, the margin bridge facility and the VMware note bridge facility are subject to change and a number of factors and conditions, including, with respect to certain of the indebtedness, the consummation of the Transactions (including the timing of the closing of the Dell Services Transaction). This offering memorandum is not an offer to sell or a solicitation of an offer to purchase the unsecured notes, nor shall there be any offer or sale of the unsecured notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful. To the extent that any of the conditions with respect to such indebtedness are not satisfied, such indebtedness may not be available on the terms described herein or at all. See “Risk Factors—Risks Related to the Notes and this Offering—We may be unable to obtain the debt financing to fund the Dell-EMC merger on the terms described in this offering memorandum or at all.”

12 Sources and Uses of Cash

The estimated sources and uses of the cash funds for the Transactions are shown in the table below, assuming the Transactions occurred on January 29, 2016. Actual amounts at the closing of the Transactions will vary from estimated amounts due to various factors, including, without limitation, differences at closing in the amount of outstanding EMC shares, unvested restricted stock units, restricted stock and stock options, the amount of outstanding debt of Denali and EMC and accrued and unpaid interest, the amount of debt incurred by us in connection with funding the Dell-EMC merger, timing of consummation of asset dispositions, our estimate of transaction-related fees and expenses, the amount of cash and cash equivalents outstanding, the foreign exchange rates and changes made to the sources of the contemplated financings. The estimated sources and uses table below reflects only the sources and uses of cash for the Transactions, and therefore does not reflect the issuance of Denali’s Class V Common Stock, which represents non-cash consideration for the Dell-EMC merger. In addition, the estimated cash sources and uses table below assumes that all of EMC’s outstanding shares, restricted stock units, restricted stock and stock options will receive the merger consideration and we have not made any adjustments for any potential liabilities resulting from any appraisal rights proceedings (including any adjustments in cash required to be paid in lieu of the Class V Common Stock originally offered to EMC shareholders who have properly exercised their appraisal rights to the extent that appraisal rights are determined to exist). See “Risk Factors—Risks Related to the Combined Company and the Transactions—Holders of a substantial number of EMC’s shares may deliver written demands for the appraisal of their shares under Massachusetts law. If these shareholders are entitled to appraisal rights and properly demand appraisal of their shares, the combined company may be required to seek additional financing to fund payments in cash in respect of such appraised shares.” See “Risk Factors—Risks Related to the Notes and this Offering—We may be unable to obtain the debt financing to fund the Dell-EMC merger on the terms described in this offering memorandum or at all.”

Upon consummation of the offering of the notes, the proceeds of the notes will be funded into escrow and upon release of the funds from escrow, the proceeds of the notes will be used to fund a portion of the Transactions as set forth below.

For more information, see “Use of Proceeds,” “The Transactions,” “Denali Unaudited Pro Forma Condensed Combined Financial Statements” and the related notes and “Description of Other Indebtedness” included elsewhere in this offering memorandum.

Sources Amount Uses Amount (in millions) Cash and cash equivalents(1)(2)(3) ...... $ 9,306 Cash consideration(3)(13) ...... $48,614 Net proceeds from the Dell Services Transaction(4)(5)(6) ...... 2,700 Redemption of existing first lien notes(2)(14) ...... 1,521 Senior secured debt(3): Repayment of existing Dell credit facilities(2)(15) ...... 6,224 Revolving facility(2)(7) ...... 1,975 Refinancing of existing EMC commercial paper(2)(16) .... 699 Repayment of existing EMC revolving credit Term loan facilities(4)(5) facility(2)(17) ...... 600 Term loan A facilities ...... 9,925 Estimated fees and expenses(18) ...... 1,748 Term loan B facilities ...... 8,000 Senior secured notes(8) ...... 16,000 Senior unsecured debt(3): Unsecured notes(9) ...... 3,250 Asset sale bridge facility(4)(6) ...... — Margin bridge facility(10) ...... 2,500 VMware note bridge facility(11) ...... 1,500 Cash equity financing(12) ...... 4,250

Total sources ...... $59,406 Total uses ...... $59,406

13 (1) Includes (i) $6,088 million of aggregate cash on hand from Dell and EMC and (ii) $3,218 million of net proceeds from the liquidation of certain of EMC investments. As of January 29, 2016, we had an aggregate of $6,576 million in cash and cash equivalents and $114 million of long-term investments generally consisting of equity investments. As of December 31, 2015, EMC had an aggregate of (a) $6,549 million in cash and cash equivalents and (b) $2,726 million of short-term investments and $5,508 million of long-term investments, consisting primarily of liquid securities. Such amounts held by EMC include $7,509 million in cash, cash equivalents and similar investments held by VMware and its subsidiaries, which are not expected to be used to fund the EMC Transactions. As of March 31, 2016, EMC had (a) an aggregate of $7,224 million in cash and cash equivalents and (b) $2,577 million of short-term investments and $5,169 million of long-term investments (including $8,246 million in cash, cash equivalents and similar investments held by VMware and its subsidiaries, which are not expected to be used to fund the EMC Transactions). We and EMC have agreed to make available at least $2,950 million and $4,750 million, respectively, of cash on hand, less certain permitted reductions (including reductions to the extent of any repayment or redemption of Denali’s or EMC’s debt before the closing date of the Dell-EMC merger that would otherwise be required to be repaid on such closing date), at the closing of the Dell-EMC merger for the purposes of financing the EMC Transactions. An increase or decrease in cash and cash equivalents at the closing of the EMC Transactions, as compared to January 29, 2016, will result in corresponding increases or decreases, as the case may be, in cash and cash equivalents retained on the balance sheet after giving effect to the EMC Transactions. (2) An increase or decrease at the closing of the EMC Transactions in the aggregate principal amount of indebtedness that is expected to be repaid in connection with the EMC Transactions, as compared to January 29, 2016, will result in corresponding decreases or increases, respectively, in cash and cash equivalents and/or corresponding increases or decreases, respectively, in the outstanding amount of borrowings under the revolving facility, after giving effect to the EMC Transactions. (3) We expect that, to the extent that appraisal rights are determined to exist, and to the extent that any cash amount is required to be paid to EMC shareholders in respect of shares for which appraisal rights have been properly demanded (including in lieu of the Class V Common Stock) and such amount exceeds the original cash consideration offered by us, such amount will be funded by cash on hand, the proceeds of additional indebtedness or a combination thereof. Any such excess amount may be significant. (4) To the extent we consummate any transaction to dispose of Denali’s or EMC’s assets (in addition to the Dell Services Transaction) substantially concurrently with or prior to the consummation of the Dell-EMC merger, we expect to reduce, on a dollar-for-dollar basis, the borrowings under the senior secured term loan A-1 facility, the revolving facility (up to $1,000 million thereunder) and the senior secured term loan A-3 facility, in that order, and thereafter at our option. If the Dell Services Transaction is not consummated substantially concurrently with or prior to the consummation of the Dell- EMC merger, we expect to borrow $1,500 million under the asset sale bridge facility and an additional $1,200 million under the term loan A-1 facility in order to fund the EMC Transactions. We may elect to increase the asset sale bridge facility and reduce one or more of the tranches of term loan facilities on a dollar-for-dollar basis. (5) In connection with the EMC Transactions, we will enter into new term loan facilities, which we expect will consist of a (i) $8,000 million seven-year senior secured term loan B facility, (ii) $2,500 million three-year senior secured term loan A-1 facility (or $3,700 million if the Dell Services Transaction is not consummated substantially concurrently with or prior to the closing of the Dell-EMC merger), (iii) $3,925 million five-year senior secured term loan A-2 facility and (iv) a $3,500 million three-year senior secured term loan A-3 facility. We have also received commitments for up to $2,500 million of borrowings under a senior secured one-year cash flow term loan facility, but do not currently expect to draw on such facility. In addition, the amount shown excludes any original issue discount (any original issue discount will be amortized and included as interest expense in our statements of operations over the life of the term loans). See “Description of Other Indebtedness—Senior Secured Credit Facilities.” (6) To the extent the Dell Services Transaction is not consummated prior to the closing of the Dell-EMC merger, we expect to enter into a $1,500 million one-year senior unsecured asset sale bridge facility. We may elect to increase the asset sale bridge facility and reduce one or more of the tranches of term loan facilities on a dollar-for-dollar basis. (7) In connection with the EMC Transactions, we expect to enter into a new $3,150 million five-year revolving credit facility. We expect to borrow $1,975 million at closing under this new revolving facility in connection with the EMC Transactions. On the closing date of the EMC Transactions, we may increase or decrease borrowings under this new revolving facility based on the timing of funds being repatriated from certain of our foreign subsidiaries. See “Description of Other Indebtedness—Senior Secured Credit Facilities.” (8) Includes the aggregate principal amount of the notes offered hereby. (9) In connection with the EMC Transactions, we expect to issue $3,250 million aggregate principal amount of unsecured notes. See “Description of Other Indebtedness—Unsecured Notes.”

14 (10) In connection with the EMC Transactions, we expect to enter into a $2,500 million 364-day margin bridge facility, which will be secured by 77,033,442 shares of Class B common stock of VMware. See “Description of Other Indebtedness— Margin Bridge Facility.” (11) In connection with the EMC Transactions, we expect to enter into a $1,500 million 364-day bridge facility, which will be secured by the VMware intercompany notes. See “Description of Other Indebtedness—VMware Note Bridge Facility.” (12) Represents the $4,250 million aggregate cash equity investment by the cash equity investors pursuant to common stock purchase agreements providing for the purchase by (i) the SLP Investors of up to 37,797,228 shares of Class B Common Stock, (ii) the MD Investors of up to 109,748,740 shares of Class A Common Stock, (iii) the MSD Partners Investors of up to 6,999,487 shares of Class A Common Stock and (iv) the Temasek Investor of 18,181,818 shares of Class C Common Stock, in each case, at a per-share purchase price of $27.50. The common stock purchase agreements entered into by the SLP Investors, the MD Investors and the MSD Partners Investors contain provisions pursuant to which the number of shares to be purchased, and the aggregate purchase price to be paid by such investors for their respective shares of common stock, may be reduced under certain circumstances. To the extent that the purchase by the Temasek Investor of its shares of Class C Common Stock is consummated, the number of shares to be purchased by each of the other cash equity investors under the applicable common stock purchase agreement and the aggregate purchase price to be paid by such investors will be reduced on a pro rata basis based on each such investor’s commitment such that the aggregate cash equity investment by all the cash equity investors will not exceed $4,250 million. (13) 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, restricted stock units and restricted stock. (14) Represents the aggregate principal amount of the existing first lien notes, plus a redemption premium of approximately $99 million and accrued and unpaid interest of approximately $22 million. Assuming the EMC Transactions occur on July 1, 2016 instead, we expect that the aggregate total consideration payable in respect of the existing first lien notes pursuant to the redemption thereof, including a redemption premium of approximately $74 million and accrued and unpaid interest of approximately $17 million, will be approximately $1,491 million. (15) Represents the $4,329 million outstanding under Dell International’s existing term loan B facility, the $1,003 million outstanding under Dell International’s existing term loan C facility and the $891 million outstanding under Dell International’s term loan euro facility, plus approximately $1 million of accrued and unpaid interest on all such credit facilities. As of January 29, 2016, there were no borrowings outstanding under Dell International’s existing ABL credit facility. All such credit facilities will be terminated in connection with the EMC Transactions. (16) Represents the outstanding amount of EMC’s existing commercial paper at December 31, 2015 to be refinanced in connection with the EMC Transactions. As of May 5, 2016, EMC had $1,285 million of commercial paper outstanding. (17) Represents the repayment of the $600 million outstanding amount under EMC’s existing unsecured revolving credit facility, including $1 million of accrued and unpaid interest to be repaid in connection with the EMC Transactions. Such credit facility will be terminated in connection with the EMC Transactions. As of March 31, 2016, there were no borrowings outstanding under the EMC existing revolving credit facility. (18) Represents our estimate of fees and expenses associated with the EMC Transactions, including placement and other financing fees, original issue discounts, legal, advisory and professional fees and other transaction costs, such as printing and rating agency fees, but excluding approximately $54 million of such fees and expenses paid as of January 29, 2016. To the extent any financing fees, original issue discounts and other fees and expenses exceed the estimated amounts, we expect to fund such amounts by increasing the aggregate principal amounts to be borrowed under the senior secured credit facilities and/or with cash and cash equivalents.

15 Ownership and Corporate Structure

The following chart illustrates the ownership and corporate structure of Denali, Denali Intermediate, Dell, EMC and their respective subsidiaries and the outstanding debt of such entities immediately after giving effect to the Transactions, assuming the Transactions were consummated on January 29, 2016:

Holders of Class V Denali Investors Common Stock(1)

$4,250 million new equity financing(2) $11,650 million existing equity investment(3) Denali Holding Inc.* $26 million existing debt(4)

Denali Intermediate Inc.*

$5,500 million existing notes(10) $1,500 million VMware note bridge facility(11) $2,853 million existing debt(5) Dell Inc.* $2,500 million margin bridge facility(12)

$9,925 million term loan A facilities, $8,000 term loan B facilities and $1,975 million revolving facility borrowings(6) Dell International L.L.C.** $16,000 million senior secured notes EMC Corporation** (including the notes offered hereby)(7) $3,250 million unsecured notes(8) $0 asset sale bridge facility(9)

Domestic Domestic Non- Domestic Domestic Non- VMware*** Dell Financial Guarantor International Subsidiary Guarantor International Subsidiary Services L.L.C.* Subsidiaries*** Subsidiaries*** (81% economic Guarantors* Subsidiaries*** Guarantors* Subsidiaries*** interest) (16) (16)

$1,814 million ABS facilities(14) $1,500 million Receivables VMware Subsidiaries*** intercompany $1,597 million of asset-backed notes owed to debt securities(15) EMC(13)

Represents an obligor of the notes Represents a non-obligor of the notes

Note: Amounts set forth represent the aggregate outstanding principal amount of debt as of January 29, 2016 pro forma for the Transactions.

* Guarantor of the revolving facility, the term loan facilities, the unsecured notes and the notes offered hereby (except that we expect that Denali will only guarantee the unsecured notes and the notes offered hereby). ** Upon the consummation of the mergers and the assumption, Dell International and EMC will become co- issuers of the notes offered hereby and the unsecured notes and co-borrowers under the revolving facility and the term loan facilities. *** None of our non-wholly-owned subsidiaries, foreign subsidiaries, receivables subsidiaries and subsidiaries designated as unrestricted subsidiaries under the senior secured credit facilities will guarantee the revolving facility, the term loan facilities, the unsecured notes and the notes offered hereby. See “Summary—The Offering—Note Guarantees.” (1) We estimate that the fair value of the Class V Common Stock is $12.9 billion, based on the assumed issuance of approximately 223 million shares with a per-share fair value of $57.69 (the closing share price of VMware common stock as of April 26, 2016), which shares are intended to track and reflect the economic performance of approximately 65% of EMC’s economic interest in the VMware business. The actual fair values at the time of the Dell-EMC 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 $1.3 billion.

16 (2) Represents the committed new equity financing of up to $4,250 million in the aggregate from the cash equity investors. (3) Represents the existing equity investment of the SLP Investors, the MD Investors and the MSD Partners Investors, based on the fully-diluted value of $27.50 per share, the per-share purchase price of the new equity financing. (4) Represents the aggregate principal amount of the Microsoft note, which will remain outstanding after the consummation of the Transactions in accordance with its terms. Such subordinated note is expected to be repaid in accordance with its contractual maturity. (5) Represents the aggregate principal amount of certain existing indebtedness of Dell, consisting of unsecured senior notes and debentures, which will remain outstanding after the consummation of the Transactions in accordance with their respective terms. Does not reflect the repayment in full on April 1, 2016 of $400 million in aggregate principal amount of Dell’s 3.100% Senior Notes due 2016 in accordance with its terms. All such rollover indebtedness is expected be repaid in accordance with their respective contractual maturities. The existing Dell unsecured notes and debentures that will remain outstanding are not and will not be guaranteed. Does not include Dell’s unsecured guarantee of the obligations under the Canadian Facility, of which $132 million was outstanding as of January 29, 2016. See “Description of Other Indebtedness—Existing Senior Notes and Senior Debentures of Dell” and “Description of Other Indebtedness—ABS Facilities—Canadian Revolving/Commercial Receivables Facility.” (6) We expect that the initial borrower(s) under the term loan facilities and revolving facility will be Dell International and Merger Sub. Upon the consummation of the mergers and the assumption, Dell International and EMC will become co-borrowers under the term loan facilities and revolving facility and will be liable for all the obligations under the term loan facilities and revolving facility on a joint and several basis. The term loan facilities and revolving facility will be guaranteed, subject to certain exceptions, on a joint and several basis, by Denali Intermediate, Dell and certain of Denali Intermediate’s direct and indirect wholly-owned material domestic subsidiaries. We expect to borrow $1,975 million under the new $3,150 million revolving facility in connection with the EMC Transactions. If the Dell Services Transaction is not consummated substantially concurrently with or prior to the consummation of the Dell-EMC merger, we expect to borrow an additional $1,200 million aggregate principal amount under the term loan facilities in order to fund the EMC Transactions. We have also received commitments for up to $2,500 million of borrowings under a senior secured one-year cash flow term loan facility, which we do not currently expect to draw on. See “Description of Other Indebtedness—Senior Secured Credit Facilities.” (7) The Fincos will be the co-issuers of the notes offered hereby and upon the consummation of the mergers and the assumption, Dell International and EMC will become co-issuers of the notes and become liable for all the obligations of the Fincos under the notes and the indenture governing the notes on a joint and several basis. Upon the consummation of the mergers and the assumption, the notes offered hereby 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 senior secured credit facilities. See “Description of Notes.” (8) Represents the $3,250 million in aggregate principal amount of unsecured notes that we expect to issue as part of the EMC Transactions. We expect that the Fincos will be the co-issuers of the unsecured notes and upon the consummation of the mergers and the assumption, Dell International and EMC will become co- issuers of the unsecured notes and become liable for all the obligations of the Fincos under the unsecured notes and the indenture that will govern the unsecured notes on a joint and several basis. We expect that the unsecured 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 senior secured credit facilities. See “Description of Other Indebtedness— Unsecured Notes.” (9) To the extent that the Dell Services Transaction is not consummated substantially concurrently with or prior to the consummation of the Dell-EMC merger, we expect to enter into a $1,500 million one-year asset sale bridge facility. We expect that the initial borrower under the asset sale bridge facility will be Dell

17 International and, upon the consummation of the mergers and the assumption, Dell International and EMC will become co-borrowers under the asset sale bridge facility and will be liable for all the obligations under the asset sale bridge facility on a joint and several basis. The asset sale bridge facility will be guaranteed, subject to certain exceptions, on a joint and several basis, by Denali Intermediate, Dell and certain of Denali Intermediate’s direct and indirect wholly-owned material domestic subsidiaries. See “Description of Other Indebtedness—Asset Sale Bridge Facility.” (10) Represents the principal amount of certain existing indebtedness of EMC, consisting of unsecured senior notes, which will remain outstanding after the consummation of the Transactions in accordance with their respective terms. The existing EMC notes are not and will not be guaranteed. All such rollover indebtedness is expected be repaid in accordance with their respective contractual maturities. See “Description of Other Indebtedness—Existing Senior Notes of EMC.” (11) Represents the $1,500 million 364-day bridge facility, which will be secured by the VMware intercompany notes. See “Description of Other Indebtedness—VMware Note Bridge Facility.” (12) Represents the $2,500 million 364-day margin bridge facility, which will be secured by 77,033,442 shares of Class B common stock of VMware. See “Description of Other Indebtedness—Margin Bridge Facility.” (13) Represents the aggregate principal amount of existing VMware intercompany notes. (14) Represents the outstanding borrowings under the existing ABS facilities as of January 29, 2016. The ABS facilities consist of a $1,500 million term/commercial receivables facility, a $640 million revolving/ consumer receivables facility, a $653 million EMEA facility and a $135 million Canadian Facility. Dell provides an unsecured guarantee of the obligations under the Canadian Facility. See “Description of Other Indebtedness—ABS Facilities.” (15) Represents the $1,597 million aggregate principal amount of asset-backed debt securities issued by certain special purpose bankruptcy-remote indirect subsidiaries of Dell. See “Description of Other Indebtedness— Asset-Backed Debt Securities.” (16) We expect that certain of our and EMC’s domestic subsidiaries will not guarantee the notes, including SecureWorks, Boomi, Virtustream, Pivotal and VMware, and their respective subsidiaries.

The Investors

MD Investors Michael S. Dell. Mr. Dell is the Chairman of the Board of Directors and Chief Executive Officer of Dell. He has held the title of Chairman of the Board since he founded the company in 1984. Mr. Dell also served as Chief Executive Officer of the company from 1984 until July 2004 and resumed that role in January 2007. He is an honorary member of the Foundation Board of the World Economic Forum and is an executive committee member of the International Business Council. He also serves as chairman of the Technology CEO Council and is a member of the U.S. Business Council and the Business Roundtable. He also serves on the governing board of the Indian School of Business in Hyderabad, India, and is a board member of Catalyst, Inc.

Susan Lieberman Dell Separate Property Trust. The Susan Lieberman Dell Separate Property Trust (the “Separate Property Trust”) is a revocable trust that was created by Susan L. Dell (formerly Susan Lynn Lieberman) pursuant to a trust agreement entered into on October 26, 1989 between Susan Lynn Lieberman, as Settlor, and Susan Lynn Lieberman, as trustee. The name of the trust was changed from the Susan Lynn Lieberman Separate Property Trust to the Susan Lieberman Dell Separate Property Trust upon Mrs. Dell’s marriage to Mr. Dell. The principal business of the Separate Property Trust is to manage the assets of the Separate Property Trust for the beneficiaries thereof. Susan L. Dell is currently the sole beneficiary of the Separate Property Trust. Susan L. Dell is the trustee of the Separate Property Trust. Mrs. Dell is co-founder of the Michael & Susan Dell Foundation and serves as Board Chair of that organization. Mrs. Dell also serves as a life trustee of the Children’s Medical Center Foundation of Central Texas and is a member of the Board of Trustees of The Cooper Institute in Dallas.

18 MSD Partners Investors MSDC Denali Investors, L.P. and MSDC Denali EIV, LLC are investment funds managed by MSD Partners, L.P. MSD Partners, L.P., an SEC-registered investment adviser, was formed in 2009 by the principals of MSD Capital, L.P. to enable a select group of investors to invest in strategies that were developed by MSD Capital. MSD Capital was established in 1998 to exclusively manage the capital of Michael Dell and his family. MSD Partners utilizes a multi-disciplinary investment strategy focused on maximizing long-term capital appreciation by making investments across the globe in the equities of public and private companies, credit, real estate and other asset classes and securities. MSD Partners’ team operates from the firm’s offices in New York and London.

SLP Investors Silver Lake is a global leader in private investments in technology and technology-enabled industries. Silver Lake invests with the strategic and operational insights of an experienced industry participant. The firm has over 110 investment professionals and value creation specialists located in New York, Silicon Valley, London, Hong Kong and Tokyo and manages approximately $24 billion. The Silver Lake portfolio includes or has included technology industry leaders such as Alibaba, Avaya, Broadcom, Cast & Crew, Dell, Fanatics, Flextronics, Gartner, Global Blue, GoDaddy, Intelsat, Interactive Data Corporation, Mercury Payment Systems, Motorola Solutions, MultiPlan, the NASDAQ OMX Group, Red Ventures, Sabre, Seagate Technology, Skype, SolarWinds, SunGard Data Systems, Symantec, UGS, Vantage Data Centers, Virtu Financial and William Morris Endeavor.

Corporate Information

Denali and Denali Intermediate were incorporated in the State of Delaware in 2013 in connection with the going-private transaction in October 2013. Our global corporate headquarters is located at One Dell Way, Round Rock, Texas 78682. Our telephone number is (512) 728-7800. We maintain a website at http://www.dell.com. Information contained or linked on our website is not incorporated by reference into this offering memorandum and is not a part of this offering memorandum.

EMC was incorporated in Massachusetts in 1979. EMC’s corporate headquarters are located at 176 South Street, Hopkinton, Massachusetts. EMC’s telephone number is (508) 435-1000. EMC maintains a website at http://www.emc.com. Information contained or linked on EMC’s website is not incorporated by reference into this offering memorandum and is not a part of this offering memorandum.

19 The Offering

The summary below describes the principal terms of the notes. Certain of the terms and conditions described below are subject to important limitations and exceptions. The “Description of Notes” section of this offering memorandum contains a more detailed description of the terms and conditions of the notes.

Issuers ...... Thenotes will be co-issued by Finco 1 and Finco 2. Upon the consummation of the mergers and the assumption, Dell International L.L.C. and EMC Corporation will become the co-issuers of the notes and be liable for all of the obligations of Finco 1 and Finco 2 under the notes on a joint and several basis.

Securities Offered ...... $ aggregate principal amount of % first lien notes due .

$ aggregate principal amount of % first lien notes due .

$ aggregate principal amount of floating rate first lien notes due .

Maturity Date ...... The notes will mature on , .

The notes will mature on , .

The floating rate notes will mature on , .

Interest ...... Interest on the notes will accrue at a rate of % per annum and will be payable in cash in arrears on and of each year, commencing on , 2016.

Interest on the notes will accrue at a rate of % per annum and will be payable in cash in arrears on and of each year, commencing on , 2016.

Interest on the floating rate notes will accrue at a floating rate equal to plus % per annum and will be payable in cash in arrears on , , and of each year, commencing on , 2016.

Interest will accrue from the issue date of the notes.

The interest rate on the notes will be subject to adjustment based on certain rating events. See “Description of Notes—Interest Rate Adjustment of the Notes Based on Certain Rating Events.”

Escrow of Proceeds; Special Mandatory Redemption ...... Upon consummation of the offering of the notes, the Fincos will deposit into an escrow account an amount equal to the gross proceeds of this offering and either (x) the Fincos will also deposit (or cause to be deposited) in cash or (y) we will cause the issuing lenders under our existing ABL credit facility to issue letters of credit for the benefit of the escrow agent and the holders of the notes (or a combination of (x) and (y)), in each case, in an amount that is sufficient to pay the special mandatory price described below and all interest that would accrue on the notes up to but not including the date that is one month

20 after the consummation of the offering of the notes. Until the date that the conditions to release of the property in the escrow account are satisfied or the notes are otherwise required to be redeemed pursuant to the terms of the escrow agreement, prior to the last day of each month, (x) the Fincos will deposit (or cause to be deposited) such cash or (y) we will cause such letters of credit to be issued (or a combination of (x) and (y)), in each case, in an amount equal to the monthly interest that would accrue on the notes. The funds and letters of credit in such escrow account will be pledged as security for the benefit of the trustee and the holders of the respective series of notes. In the event that the Dell-EMC merger is not consummated on or prior to December 16, 2016, the Fincos will be required to redeem all of the notes offered hereby on the Special Mandatory Redemption Date in accordance with the terms of the indenture for the notes at a redemption price equal to 101% of the initial issue price of the notes, plus accrued and unpaid interest to, but not including, the Special Mandatory Redemption Date. See “Description of Notes—Escrow of Proceeds; Escrow Conditions” and “Description of Notes—Special Mandatory Redemption.”

Ranking ...... Thenotes will be the issuers’ senior secured obligations and will: • rank senior in right of payment to any future subordinated indebtedness of the issuers; • rank equally in right of payment with all existing and future senior indebtedness of the issuers, including obligations under the senior secured credit facilities, any senior unsecured debt expected to be incurred as part of the EMC Transactions and (only with respect to EMC) the existing EMC unsecured notes; • be secured on a first-priority basis by substantially all of the tangible and intangible assets of the issuers that secure obligations under the senior secured credit facilities; • be effectively senior to all existing and future unsecured indebtedness of the issuers, including any series of unsecured notes, and any future second lien obligations, in each case, to the extent of the value of the collateral securing the notes; • be effectively subordinated to all existing and future indebtedness of the issuers that is secured by assets or properties not constituting collateral securing the notes, including indebtedness in respect of the margin bridge facility and the VMware note bridge facility, to the extent of the value of such assets and properties; • be structurally senior to the existing Dell unsecured notes and (except with respect to EMC) the existing EMC unsecured notes; and • be structurally subordinated to all existing and future indebtedness and other liabilities of their respective non-guarantor subsidiaries (other than indebtedness and liabilities owed to one of the issuers or guarantors), including indebtedness in respect of the ABS facilities and the asset-backed debt securities.

21 Note Guarantees ...... Prior to the consummation of the mergers and the assumption, the notes will not be guaranteed. Upon the consummation of the mergers and the assumption, the notes will be fully and unconditionally guaranteed, jointly and severally, by Denali, Denali Intermediate, Dell and Denali Intermediate’s existing and future direct or indirect wholly-owned material domestic subsidiaries (including each of EMC’s existing and future direct or indirect wholly-owned domestic subsidiaries) that guarantee obligations under the senior secured credit facilities.

Not all of Denali Intermediate’s domestic subsidiaries will guarantee the notes. None of Denali Intermediate’s non-wholly-owned subsidiaries, foreign subsidiaries, receivables subsidiaries or subsidiaries that have been designated as unrestricted subsidiaries under the senior secured credit facilities will guarantee the notes. In particular, SecureWorks, Boomi, Virtustream, Pivotal and VMware will be designated as unrestricted subsidiaries under the senior secured credit facilities and therefore will not guarantee the notes or any other debt expected to be incurred in connection with the EMC Transactions. In addition, Denali Intermediate’s future subsidiaries may not be required to guarantee the notes, and note guarantees may be released under certain circumstances as described under “Description of Notes—Note Guarantees—Release of Note Guarantees.”

Each note guarantee of a guarantor will be a senior secured obligation of such guarantor and will: • rank senior in right of payment to all existing and future subordinated indebtedness of such guarantor; • rank equally in right of payment with all existing and future senior indebtedness of such guarantor, including guarantees of obligations under the senior secured credit facilities and any senior unsecured debt expected to be incurred as part of the EMC Transactions; • be secured on a first-priority basis by substantially all of the tangible and intangible assets of the guarantors that secure obligations under the senior secured credit facilities; • be effectively senior to all existing and future unsecured indebtedness of the guarantors, including guarantees of any series of unsecured notes, and any future second lien obligations of such guarantor, in each case, to the extent of the value of the collateral securing the notes; • be effectively subordinated to any future indebtedness of such guarantor that is secured by assets or properties not constituting collateral securing the notes to the extent of the value of such assets and properties; • be structurally senior to the existing Dell unsecured notes and the existing EMC unsecured notes; and

22 • be structurally subordinated to all existing and future indebtedness and other liabilities of its non-guarantor subsidiaries (other than indebtedness and liabilities owed to one of the issuers or guarantors), including indebtedness in respect of the ABS facilities and the asset-backed debt securities.

Subject to a “spring-back” provision (as described below), the note guarantees of the guarantors will be released if (1) the issuers have obtained a rating or, to the extent any rating agency will not provide a rating, an advisory or prospective rating from any two of Standard & Poor’s (“S&P”), Moody’s Investors Service, Inc. (“Moody’s”) and Fitch Inc. (“Fitch”) that reflect an investment grade rating (i) for the corporate rating of the issuers (or any parent guarantor) and (ii) with respect to each outstanding series of notes after giving effect to the proposed release of all the guarantees and collateral securing the notes and (2) no event of default with respect to any series of notes has occurred and is continuing (an “Investment Grade Event”).

The “spring-back” provision will provide that, after all collateral securing the notes is permitted to be released in accordance with the terms of the indenture and the security documents (a “Release Event”), if the aggregate principal amount of debt for borrowed money of non-guarantor wholly-owned domestic subsidiaries of Denali Intermediate (other than permitted receivables financings and any debt of any subsidiary designated as an unrestricted subsidiary under the senior secured credit facilities or any receivables subsidiary) that is incurred or issued and outstanding exceeds in the aggregate the greater of (x) $2.0 billion and (y) 15% of Consolidated Net Tangible Assets (the “Guarantee Threshold”), then Denali Intermediate will cause such of its non-guarantor subsidiaries to, within 90 days, provide a note guarantee such that the aggregate principal amount of such indebtedness does not exceed the Guarantee Threshold. See “Description of Notes—Certain Covenants— Additional Note Guarantees.”

As of January 29, 2016, on a pro forma basis after giving effect to the Transactions: • the issuers and the guarantors would have had $39,926 million (or $41,126 million as adjusted for the EMC Transactions only) of secured indebtedness (of which $35,926 million (or $37,126 million as adjusted for the EMC Transactions only) (including the obligations under the senior secured credit facilities and the notes) were secured on a first-priority basis by the collateral securing the notes and $4,000 million (including the obligations under the margin bridge facility and the VMware note bridge facility) were secured by assets or properties not constituting collateral securing the notes), and $11,603 million (or $13,103 million as adjusted for the EMC Transactions only) of unsecured senior indebtedness. In addition, the issuers would have had approximately $1,175 million

23 for future borrowing under the revolving facility (without giving effect to letters of credit outstanding); and • the non-guarantor subsidiaries (excluding the issuers) would have had $3,452 million of indebtedness and other liabilities (including indebtedness in respect of the ABS facilities and the asset-backed debt securities and excluding intercompany liabilities), all of which would have been structurally senior to the notes and the note guarantees. Dell provides an unsecured guarantee of the obligations under the Canadian Facility. In addition, there would have been approximately $1,118 million for future borrowing under the ABS facilities (including approximately $3 million for future borrowing under the Canadian Facility, which is guaranteed by Dell), all of which would be structurally senior to the notes and the note guarantees.

As adjusted for the EMC Transactions, the non-guarantor subsidiaries (excluding the issuers) would have accounted for approximately $42,502 million, or 55%, of our total net revenue, and approximately $4,505 million of operating income, in each case for Fiscal 2016. Excluding the effect of intercompany balances as well as intercompany transactions, as adjusted for the EMC Transactions, the non-guarantor subsidiaries (excluding the issuers) would have accounted for approximately $44,984 million, or 33%, of our total assets, and approximately $31,494 million, or 28%, of our total liabilities, in each case as of January 29, 2016.

Collateral ...... Upon consummation of the offering of the notes and the funding of the proceeds of the notes into escrow, the notes will be secured by an exclusive first-priority lien on the funds and letters of credit held in the escrow account until the release of the funds and letters of credit from escrow. From and after the release of the funds and letters of credit from escrow and the consummation of the mergers and the assumption, the notes and the note guarantees will be secured, on a pari passu basis with the new senior secured 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 new senior secured 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 thresholds, exceptions and permitted liens.

The collateral will not include (i) a pledge of the assets or equity interests of certain subsidiaries, including SecureWorks, Boomi, Virtustream, Pivotal and VMware and their respective subsidiaries, (ii) any fee-owned real property with a book value of less than $150 million or (iii) any “principal property” as defined in the indentures governing the existing Dell and EMC unsecured notes and capital stock of any subsidiary holding “principal property” as defined in the indentures governing the existing Dell unsecured notes.

24 In addition, upon registration of the notes, the collateral will not include any capital stock or other securities of any affiliate of the issuers to the extent the pledge of such capital stock or other securities in respect of any series of the notes then outstanding or any other series of SEC- registered secured debt securities issued by us or our affiliates results in the requirement to file separate financial statements of such affiliate with the SEC. We expect that, upon registration of the notes, certain capital stock and other securities of our affiliates will be excluded from the collateral securing the notes and the note guarantees as a result of the foregoing limitation. However, the collateral securing the senior secured credit facilities will not be subject to such limitation and, as a result, the notes and note guarantees will be effectively subordinated to the obligations under the senior secured credit facilities to the extent of the value of capital stock and other assets excluded from the collateral securing the notes and the note guarantees as a result of such limitation. See “Risk Factors—Risks Related to the Collateral for the Notes—The pledge of the capital stock and other securities of our affiliates that will secure the notes will be limited to the extent such capital stock and securities can secure each series of notes and each other series of SEC- registered secured debt without requiring the filing of separate financial statements with the SEC for that affiliate.”

The collateral securing the notes will automatically be released upon, among other things, (a) the release of the corresponding collateral under the senior secured credit facilities (other than in connection with the payment in full of the senior secured credit facilities) or (b) the occurrence of an Investment Grade Event.

See “Description of Notes—Security for the Notes.”

Intercreditor Agreement ...... Ontheclosing date of the EMC Transactions, the collateral agent for the notes and the collateral agent for the senior secured credit facilities will enter into an intercreditor agreement as to the relative priorities of their respective security interests in the collateral and certain other matters relating to the administration of such security interests. See “Description of Notes—Security for the Notes.”

Optional Redemption ...... Wemayredeem some or all of the notes at any time prior to , 20 (the date months prior to the maturity date of the notes) at a price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest and special interest (as described under “Exchange Offer; Registration Rights”), if any, to, but not including, the redemption date, plus a “make- whole” premium, as described in this offering memorandum. On or after , 20 (the date months prior to the maturity date of the notes), we may redeem some or all of the notes at a redemption price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest and special interest (as described under “Exchange Offer; Registration Rights”), if any, to, but not including, the redemption date.

25 We may redeem some or all of the notes at any time prior to , 20 (the date months prior to the maturity date of the notes) at a price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest and special interest (as described under “Exchange Offer; Registration Rights”), if any, to, but not including, the redemption date, plus a “make-whole” premium, as described in this offering memorandum. On or after , 20 (the date months prior to the maturity date of the notes), we may redeem some or all of the notes at a redemption price equal to 100% of the principal amount of the notes redeemed, plus accrued and unpaid interest and special interest (as described under “Exchange Offer; Registration Rights”), if any, to, but not including, the redemption date.

The floating rate notes are not subject to redemption prior to their stated maturity.

Change of Control Triggering Event; Mandatory Offer to Repurchase ..... IfaChange of Control Triggering Event (as defined in “Description of Notes”) occurs, we must offer to repurchase the notes at a redemption price equal to 101% of the principal amount thereof plus any accrued and unpaid interest to, but not including, the repurchase date. See “Description of Notes—Change of Control Triggering Event.” See “Risk Factors—Risks Related to the Notes and this Offering—We may not be able to finance a change of control offer as required by the indenture governing the notes offered hereby.”

Certain Covenants ...... Theindenture governing the notes will contain covenants that, after the consummation of the mergers and the assumption, limit Denali Intermediate’s ability and the ability of certain of Denali Intermediate’s subsidiaries to: • prior to the occurrence of a Release Event, sell or transfer certain assets; • create liens on certain assets to secure debt; • consolidate, merge, sell or otherwise dispose of all or substantially all of their respective assets; and • following the occurrence of a Release Event, enter into sale and leaseback transactions.

In addition, the indenture governing the notes offered hereby will significantly restrict the activities of the Fincos.

These covenants are subject to important exceptions and qualifications as described under “Description of Notes—Certain Covenants.”

26 Exchange Offer; Registration Rights . . . The Fincos and the initial purchasers and, upon the consummation of the mergers and the assumption, Dell International, EMC and the guarantors, will enter into an agreement obligating the issuers to file a registration statement with the SEC so that holders of the notes can: • exchange the notes for registered notes having substantially the same terms as the notes and evidencing the same indebtedness as the notes (referred to in this offering memorandum as the “exchange notes”); and • exchange the related note guarantees for registered guarantees having substantially the same terms as the original note guarantees.

The issuers and the guarantors will use their reasonable best efforts to cause the exchange to be completed within five years after the date on which the EMC Transactions are consummated. The issuers have agreed and, upon the consummation of the mergers and the assumption, Dell International, EMC and the guarantors will agree to file a shelf registration statement for the resale of the notes and note guarantees if they cannot effect the exchange offer within the time period listed above and in other circumstances described under the section “Exchange Offer; Registration Rights.”

Holders of the notes will be entitled to the payment of additional interest if the issuers and the guarantors do not comply with these obligations within that time period.

Transfer Restrictions ...... Wehave not registered the notes or the note guarantees under the Securities Act or any state or other securities laws. The notes are subject to restrictions on transfer and may only be offered or sold in transactions exempt from or not subject to the registration requirements of the Securities Act. We do not intend to list the notes or the note guarantees, or, if issued, the exchange notes, on any securities exchange. See “Transfer Restrictions” and “Risk Factors— Risks Related to the Notes and this Offering—There are restrictions on your ability to transfer or resell the notes. We are only required to register the notes within five years of the date on which the EMC Transactions are consummated and prior to such time, the indenture governing the notes will not be qualified by the Trust Indenture Act.”

No Prior Market ...... Thenotes will be new securities for which there is currently no market. If issued, the exchange notes generally will be freely transferable but will also be new securities for which there will not initially be a market. Although the initial purchasers have informed us that they intend to make a market in the notes and, if issued, the exchange notes, they are not obligated to do so, and they may discontinue market making activities at any time without notice. Accordingly, we cannot assure you that a liquid market for the notes or the exchange notes will develop or, if such a market develops, that it will be maintained.

27 Use of Proceeds ...... Upon consummation of the offering of the notes, the proceeds of the notes will be funded into escrow and upon the release of the funds from escrow, we will use the net proceeds from the notes offered hereby, together with the proceeds from other debt and equity financings and cash on hand, to consummate the Transactions or otherwise in accordance with the terms of the escrow agreement. See “Use of Proceeds” and “Description of Notes—Escrow of Proceeds; Escrow Conditions” and “Description of Notes—Special Mandatory Redemption.”

Risk Factors ...... Youshould consider carefully the information set forth in the section entitled “Risk Factors” and all other information contained in this offering memorandum before deciding to invest in the notes.

28 Summary Historical and Pro Forma Financial and Other Data of Denali

The following table sets forth the summary historical consolidated financial data and summary unaudited pro forma condensed combined financial data for Denali as of the dates and for the periods indicated. The summary historical financial data as of January 30, 2015 and January 29, 2016, and for each of the fiscal years ended January 30, 2015 and January 29, 2016 have been derived from Denali’s audited historical consolidated financial statements and related notes included elsewhere in this offering memorandum. In order to facilitate a discussion of certain results of operations across periods, we have presented the results for the fiscal year ended January 31, 2014 on a combined basis, which is comprised of the results for the periods from October 29, 2013 to January 31, 2014 and from February 2, 2013 to October 28, 2013 (which have been derived from Denali’s audited historical consolidated financial statements and related notes included elsewhere in this offering memorandum) and include results of a new basis of accounting for the post-going-private transaction period. The summary historical financial data as of January 31, 2014 have been derived from Denali’s audited historical consolidated financial statements that are not included herein.

The summary unaudited pro forma condensed combined financial data as of and for the fiscal year ended January 29, 2016 have been prepared to give effect to the Transactions in the manner described under “Denali Unaudited Pro Forma Condensed Combined Financial Statements” as if the Transactions had occurred on January 31, 2015, in the case of summary unaudited pro forma condensed combined statements of income (loss) data, and on January 29, 2016, in the case of summary unaudited pro forma condensed combined statement of financial position data. In addition, the summary unaudited pro forma condensed combined financial data for the fiscal year ended January 29, 2016 reflects the anticipated disposition of the Dell Services divested businesses, which will be accounted for as discontinued operations, as if it had occurred on February 2, 2013. The pro forma adjustments are based upon available information and certain assumptions that we believe are reasonable under the circumstances. The summary unaudited pro forma condensed combined financial information is presented for informational purposes only and does not purport to represent what our results of operations or financial condition would have been had the Transactions or the disposition of the Dell Services divested businesses occurred on the dates indicated, nor does it purport to project our results of operations or financial condition for any future period or as of any future date.

The summary historical consolidated financial data and summary unaudited pro forma condensed combined financial data set forth below should be read in conjunction with “Denali Unaudited Pro Forma Condensed Combined Financial Statements,” “Selected Historical Consolidated Financial Data of Denali,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali” and the audited consolidated financial statements of Denali and related notes thereto appearing elsewhere in this offering memorandum.

Historical As Adjusted Pro Forma Successor Combined for the EMC for the Year Year Year Transactions Transactions Ended Ended Ended Year Ended Year Ended January 29, January 30, January 31, January 29, January 29, 2016 2015 2014 2016(1) 2016(2) (dollars in millions) Statement of Loss Data: Net revenue: Products ...... $43,317 $46,690 $44,039 $56,480 $56,480 Services, including software related ...... 11,569 11,429 12,338 20,283 17,479 Total net revenue ...... 54,886 58,119 56,377 76,763 73,959

29 Historical As Adjusted Pro Forma Successor Combined for the EMC for the Year Year Year Transactions Transactions Ended Ended Ended Year Ended Year Ended January 29, January 30, January 31, January 29, January 29, 2016 2015 2014 2016(1) 2016(2) Costs of net revenue: Products ...... 37,923 40,415 38,845 45,933 45,933 Services, including software related ...... 7,131 7,496 8,148 11,132 8,876 Total cost of net revenue ...... 45,054 47,911 46,993 57,065 54,809 Gross margin ...... 9,832 10,208 9,384 19,698 19,150 Operating expenses: Selling, general and administrative ...... 8,900 9,428 9,391 17,904 17,498 Research, development and engineering .... 1,315 1,202 1,273 4,580 4,577 Total operating expenses ...... 10,215 10,630 10,664 22,484 22,075 Operating income (loss) ...... (383) (422) (1,280) (2,786) (2,925) Interest and other, net ...... (792) (924) (402) (2,665) (2,635) Income (loss) before income taxes ...... (1,175) (1,346) (1,682) (5,451) (5,560) Income tax provision (benefit) ...... (71) (125) 23 (1,866) (1,901) Net loss ...... $(1,104) $ (1,221) $ (1,705) $ (3,585) $ (3,659) Net income attributable to non-controlling interests ...... 131 131 Net loss from continuing operations attributable to common shareholders ...... $ (3,454) $ (3,528) Statement of Cash Flows Data: Change in cash from operating activities ...... $ 2,162 $ 2,551 $ 2,686 Change in cash from investing activities ...... $ (321) $ (355) $ (6,989) Change in cash from financing activities ...... $ (496) $ (3,094) $ 9,330 Statement of Financial Position Data (at period end): Cash and cash equivalents ...... $ 6,576 $ 5,398 $ 6,449 $ 7,037 $ 7,037 Cash, cash equivalents and investments(3) ...... $ 6,690 $ 5,493 $ 6,552 $ 12,167 $ 12,167 Total assets ...... $45,250 $48,192 $51,153 $136,471 $134,750 Total debt(4) ...... $13,759 $14,155 $17,415 $ 57,707 $ 55,007 Total stockholders’ equity ...... $ 1,466 $ 2,904 $ 4,014 $ 17,862 $ 19,455 Other Financial Data: Non-GAAP gross margin(5) ...... $10,850 $11,747 $11,213 Non-GAAP operating expenses(5) ...... $ 8,211 $ 8,554 $ 8,905 Non-GAAP operating income(5) ...... $ 2,639 $ 3,193 $ 2,308 Non-GAAP net income(5) ...... $ 1,354 $ 1,670 $ 1,301 EBITDA(6) ...... $ 2,489 $ 2,555 $ 472 $ 4,815 $ 4,463 Adjusted EBITDA(6) ...... $ 3,200 $ 3,766 $ 3,090 $ 9,757 $ 9,416 Adjusted EBITDA, including cost synergies(6) . . $ 13,107 $ 12,766 Adjusted net revenue(7) ...... $55,392 $59,095 $56,801 $ 79,745 $ 76,922 Capital expenditures(8) ...... $ 482 $ 478 $ 532 $ 1,951 $ 1,860 Unlevered free cash flow(9) ...... $ 2,718 $ 3,288 $ 2,558 $ 7,806 $ 7,556 Total cash interest expense(10) ...... $ 2,399 $ 2,253 Pari secured debt(11) ...... $ 37,100 $ 35,900 Adjusted total debt(12) ...... $ 54,296 $ 51,596 Net total debt(13) ...... $ 45,540 $ 42,840

30 Historical As Adjusted Pro Forma Successor Combined for the EMC for the Year Year Year Transactions Transactions Ended Ended Ended Year Ended Year Ended January 29, January 30, January 31, January 29, January 29, 2016 2015 2014 2016(1) 2016(2) Selected Credit Statistics: Ratio of pari secured debt to Adjusted EBITDA, including cost synergies(6)(11)(14) ...... 2.8x 2.8x Ratio of adjusted total debt to Adjusted EBITDA, including cost synergies(6)(12)(15) ...... 4.1x 4.0x Ratio of net total debt to Adjusted EBITDA, including cost synergies(6)(12)(16) . . 3.5x 3.4x Ratio of Adjusted EBITDA, including cost synergies, to total cash interest expense(6)(10)(17) ...... 5.5x 5.7x (1) As adjusted to give effect to the EMC Transactions (which does not include the Dell Services Transaction). (2) As adjusted to give pro forma effect to the Transactions (including the Dell Services Transaction). (3) Investments include short-term and long-term investments, consisting primarily of liquid securities. (4) For Fiscal 2016, Fiscal 2015 and Fiscal 2014, reflects the carrying value of total debt. As of January 29, 2016 as adjusted for the EMC Transactions and pro forma for the Transactions, reflects the aggregate principal amount of total debt, which, in each case, does not reflect fair market value and other accounting adjustments of $830 million. (5) Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP net income are not measurements of financial performance prepared in accordance with GAAP. See “Use of Non-GAAP Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali—Components of our Results of Operations—Non-GAAP Financial Measures” for further discussion of adjustments made and information on the reasons why our management considers it useful to exclude certain items from our GAAP results, as well as limitations to the use of the non-GAAP financial measures presented in this offering memorandum. (6) EBITDA, Adjusted EBITDA and Adjusted EBITDA, including cost synergies, are not measurements of financial performance prepared in accordance with GAAP. See “Use of Non-GAAP Financial Information” for further discussion of the adjustments and information on the reasons why our management considers it useful to exclude certain items from our GAAP results, as well as limitations to the use of the non-GAAP financial measures presented in this offering memorandum. The following table presents a reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA, including cost synergies, to net loss for the periods indicated:

Historical As Adjusted Pro Forma Successor Combined for the EMC for the Year Year Year Transactions Transactions Ended Ended Ended Year Ended Year Ended January 29, January 30, January 31, January 29, January 29, 2016 2015 2014 2016 2016 (in millions) Net loss ...... $(1,104) $(1,221) $(1,705) $(3,585)(a) $(3,659)(b) Adjustments: Interest and other, net(c) ...... 792 924 402 2,665 2,635 Income tax provision (benefit) ...... (71) (125) 23 (1,866) (1,901) Depreciation and amortization ...... 2,872 2,977 1,752 7,601 7,388 EBITDA ...... $2,489 $ 2,555 $ 472 $ 4,815 $ 4,463

31 Historical As Adjusted Pro Forma Successor Combined for the EMC for the Year Year Year Transactions Transactions Ended Ended Ended Year Ended Year Ended January 29, January 30, January 31, January 29, January 29, 2016 2015 2014 2016 2016 (in millions) Adjustments: Stock-based compensation expense ...... $ 72 $ 72 $ 199 $ 72 $ 66 Impact of purchase accounting(d) ...... 494 1,011 1,296 2,970 3,000 Other corporate expenses(e) ...... 145 128 1,123 105 92 EMC adjustments(f) ...... — — — 1,809 1,809 Dell-EMC merger-related costs(g) ...... — — — (14) (14) Adjusted EBITDA ...... $3,200 $3,766 $3,090 $ 9,757 $ 9,416 Cost Synergies Adjustments: Dell standalone run-rate cost savings(h) ...... $ 550 $ 550 EMC standalone run-rate cost savings(i) ...... 800 800 Dell-EMC merger run-rate cost savings(j) ...... 2,000 2,000 Adjusted EBITDA, including cost synergies ...... $13,107 $12,766

(a) Net loss for the year ended January 29, 2016 as adjusted for the EMC Transactions represents pro forma net loss from continuing operations prior to the consideration of non-controlling interests adjusted further to exclude the Dell Services Transaction. The net income attributable to non- controlling interests for the year ended January 29, 2016 was $131 million. (b) Net loss for the year ended January 29, 2016 pro forma for the Transactions represents pro forma net loss from continuing operations prior to the consideration of non-controlling interests, including the Dell Services Transaction. The net income attributable to non-controlling interests for the year ended January 29, 2016 was $131 million. (c) See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali—Fiscal 2016 Compared to Fiscal 2015—Consolidated Results—Interest and Other, Net” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali— Fiscal 2015 Compared to Pro Forma Fiscal 2014—Consolidated Results—Interest and Other, Net” for more information on the components of interest and other, net. (d) For Fiscal 2016, Fiscal 2015, the period from February 2, 2013 through October 28, 2013 and the period from October 29, 2013 through January 31, 2014, this amount includes the non-cash purchase accounting adjustments related to the going-private transaction. Purchase accounting adjustments primarily include fair value adjustments made to deferred revenue, inventory and property, plant and equipment which are recorded over time. For Fiscal 2014, purchase accounting adjustments also include a provision charge on customer receivables recorded on October 29, 2013, amortization of fair value adjustments on customer shipments in transit, and compensation costs related to cash settlement of employee stock options, triggered by the going-private transaction. See notes 1 and 3 of the notes to our audited consolidated financial statements included in this offering memorandum for more information on the going-private transaction. For Fiscal 2013, purchase accounting adjustments reflect the elimination of the non-cash purchase accounting impact on deferred revenue related to Dell’s Fiscal 2013 acquisitions of SonicWALL and Quest Software. We believe that due to the non-cash impact of the purchase accounting entries, it is appropriate to exclude these adjustments as they do not reflect our true operating performance. (e) Consists of (i) severance and facility action costs primarily related to severance and benefits for employees terminated pursuant to cost savings initiatives, totaling $25 million, $52 million and $629 million for Fiscal 2016, Fiscal 2015 and Fiscal 2014, respectively, (ii) acquisition-related charges which are expensed as incurred and consist primarily of retention payments, integration costs, and

32 other costs (including costs related to the mergers), totaling $97 million, $56 million and $119 million for Fiscal 2016, Fiscal 2015 and Fiscal 2014, respectively, and (iii) costs related to the going-private transaction, totaling $23 million, $20 million and $375 million for Fiscal 2016, Fiscal 2015 and Fiscal 2014, respectively. Includes acquisition-related charges which are expensed as incurred and consist primarily of retention payments, integration costs, and other costs (including costs related to the mergers), of $6 million and $(2) million for Fiscal 2016 and Fiscal 2015, respectively, and excludes stock-based compensation expense associated with equity awards, aggregating $72 million for each of Fiscal 2016 and Fiscal 2015, in each case, which are reflected in “Interest and other, net.” (f) Represents the adjustments included in calculating EMC’s Adjusted EBITDA. See footnote (4) to “Summary Historical Financial and Other Data of EMC.” (g) Represents costs incurred by EMC in relation to the Dell-EMC merger, which are already adjusted in net loss for the year ended January 29, 2016 as adjusted for the EMC Transactions and pro forma for the Transactions, respectively. (h) Represents management’s estimates of the unrealized net structural standalone annual cost saving opportunities on a run-rate basis identified by Dell. These opportunities include business optimization, geographical optimization, vendor management, increased efficiencies in our supply chain and improved sales operations tools. Such initiatives are in different stages of implementation and are expected to be fully actioned this year. These assumptions and estimates are inherently uncertain and subject to significant business, operational, economic and competitive uncertainties and contingencies. We cannot assure you that any or all of these cost synergies will be achieved in the anticipated amounts or within the anticipated timeframes or at all. See “Risk Factors—Risks Related to our Business—If our cost efficiency measures are not successful, we may become less competitive.” (i) Represents EMC’s management’s estimates of the unrealized net structural standalone annual cost saving opportunities on a run-rate basis identified by EMC in various major areas, including direct materials procurement, facilities and manufacturing optimization and SKU simplification. Such initiatives are in advanced stages of implementation and are expected to be fully actioned this year. These assumptions and estimates are inherently uncertain and subject to significant business, operational, economic and competitive uncertainties and contingencies. We cannot assure you that any or all of these cost synergies will be achieved in the anticipated amounts or within the anticipated timeframes or at all. See “Risk Factors—Risks Related to the Business of EMC—If EMC’s cost efficiency measures are not successful, EMC may become less competitive.” (j) Represents management’s estimates of the annual cost synergies from the Dell-EMC merger on a run- rate basis arising from increased efficiencies in the combined company’s supply chain, manufacturing optimization, improvements in inventory management, consolidation of IT systems and data centers, and elimination of other general and administrative overlap. These cost savings initiatives are being actively planned by joint integration teams co-led by both Dell and EMC, and we expect to implement all of these initiatives within 18 months of the closing of the Dell-EMC merger. These assumptions and estimates are inherently uncertain and subject to significant business, operational, economic and competitive uncertainties and contingencies. We cannot assure you that any or all of these cost synergies will be achieved in the anticipated amounts or within the anticipated timeframes or at all. See “Risk Factors—Risks Related to the Combined Company and the Transactions—We may not realize the anticipated synergies from the Dell-EMC merger.” (7) Adjusted net revenue (also referred to as “non-GAAP net revenue” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali—Components of our Results of Operations—Non-GAAP Financial Measures”) is not a measurement of financial performance prepared in accordance with GAAP. See “Use of Non-GAAP Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali—Components of our Results of Operations—Non-GAAP Financial Measures” for further discussion of the adjustments and information on the reasons why our management considers it useful to exclude certain items from our GAAP results, as well as limitations to the use of the non-GAAP financial measures presented in this offering memorandum.

33 The following table presents a reconciliation of adjusted net revenue to net revenue for the periods indicated:

Historical As Adjusted Pro Forma Successor Combined for the EMC for the Year Year Year Transactions Transactions Ended Ended Ended Year Ended Year Ended January 29, January 30, January 31, January 29, January 29, 2016 2015 2014 2016 2016 (in millions) Net revenue ...... $54,886 $58,119 $56,377 $76,763 $73,959 Adjustment: Impact of purchase accounting(a) ...... 506 976 424 2,982 2,963 Adjusted net revenue ...... $55,392 $59,095 $56,801 $79,745 $76,922

(a) The impact of purchase accounting for Fiscal 2016, Fiscal 2015, Combined Fiscal 2014 and the year ended January 29, 2016 as adjusted for the EMC Transactions and pro forma for the Transactions includes purchase accounting adjustments recorded under the acquisition method of accounting, related to the going-private transaction. These purchase accounting adjustments primarily include fair value adjustments made to deferred revenue, inventory and property, plant, and equipment which are recorded over time. During Fiscal 2014, purchase accounting adjustments also include a provision charge on customer receivables recorded on October 29, 2013, amortization of fair value adjustments on customer shipments in transit, and compensation costs related to cash settlement of employee stock options, triggered by the going-private transaction. See notes 1 and 3 of the notes to our audited consolidated financial statements included in this offering memorandum for more information on the going-private transaction. For the year ended January 29, 2016 as adjusted for the EMC Transactions and pro forma for the Transactions, the impact of purchase accounting also includes purchase accounting adjustments recorded under the acquisition method of accounting related to the EMC Transactions and the Transactions, respectively. These purchase accounting adjustments primarily include the fair value adjustments made to deferred revenue of EMC for the year ended December 31, 2015. We believe that due to the non-cash impact of the purchase accounting entries, it is appropriate to exclude these adjustments as they do not reflect our true operating performance. (8) Includes both capital expenditures for property, plant and equipment and capitalized software development costs. (9) Unlevered free cash flow of Denali for Fiscal 2016, Fiscal 2015, Combined Fiscal 2014 and the year ended January 29, 2016 as adjusted for the EMC Transactions and pro forma for the Transactions means Adjusted EBITDA less capital expenditures. In contrast, free cash flow of EMC is presented on a historical basis as cash flow from operations less additions to property, plant and equipment less capitalized software development costs. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of EMC—Use of Non-GAAP Financial Measures and Reconciliations to GAAP Results.” (10) Total cash interest expense for the year ended January 29, 2016 as adjusted for the EMC Transactions is calculated using assumed interest rates on the notes offered hereby, on the $3,250 million aggregate principal amount of unsecured notes expected to be offered as part of the EMC Transactions and on the approximately $26.6 billion in borrowings expected to be made under the senior secured credit facilities, the asset sale bridge facility, the margin bridge facility and the VMware note bridge facility as of the closing of the EMC Transactions. Total cash interest expense for the year ended January 29, 2016 after giving pro forma effect to the Transactions is calculated using assumed interest rates on the notes offered hereby, on the $3,250 million aggregate principal amount of unsecured notes expected to be offered as part of the EMC Transactions and on the approximately $23.9 billion in borrowings expected to be made under the senior secured credit facilities, the margin bridge facility and the VMware note bridge facility as of the closing of the Transactions. Estimated interest rates are based on assumptions of the rates to be effective upon the closing of the EMC Transactions or the Transactions, as the case may be. See “Denali Unaudited Pro Forma Condensed Combined Financial

34 Statements.” Total cash interest expense excludes any interest expense relating to potential liabilities resulting from any appraisal rights proceedings and other non-cash interest. (11) Pari secured debt represents debt under the senior secured credit facilities and the senior secured notes (including the notes offered hereby). (12) Adjusted total debt represents total debt less structured financing debt (consisting of debt under the ABS facilities and the asset-backed debt securities). The ABS facilities includes the $132 million Canadian Facility, which is guaranteed by Dell. (13) Net total debt represents total debt less cash, cash equivalents and investments. (14) The ratio of pari secured debt to Adjusted EBITDA, including cost synergies, is determined by dividing pari secured debt by Adjusted EBITDA, including cost synergies. (15) The ratio of adjusted total debt to Adjusted EBITDA, including cost synergies, is determined by dividing adjusted total debt by Adjusted EBITDA, including cost synergies. (16) The ratio of net total debt to Adjusted EBITDA, including cost synergies, is determined by dividing net total debt by Adjusted EBITDA, including cost synergies. (17) The ratio of Adjusted EBITDA, including cost synergies, to total cash interest expense is determined by dividing Adjusted EBITDA, including cost synergies, by total cash interest expense.

35 Summary Historical Financial and Other Data of EMC

The following table sets forth the summary historical consolidated financial data for EMC as of the dates and for the periods indicated. The summary historical financial data as of December 31, 2014 and 2015, and for the years ended December 31, 2013, 2014 and 2015 have been derived from EMC’s audited historical consolidated financial statements and related notes included elsewhere in this offering memorandum. The summary historical financial data as of December 31, 2013 have been derived from EMC’s historical consolidated financial statements that are not included herein. The summary historical financial data as of March 31, 2016 and for the three months ended March 31, 2015 and 2016 have been derived from EMC’s unaudited historical condensed consolidated financial statements included elsewhere in this offering memorandum. The summary historical financial data as of March 31, 2015 have been derived from EMC’s unaudited condensed consolidated financial statements that are not included herein. The unaudited financial data presented have been prepared on a basis consistent with EMC’s audited consolidated financial statements. In the opinion of management of EMC, such unaudited financial data reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the results for those periods. The results of operations for the interim periods are not necessarily indicative of results to be expected for the full year or any future period.

The summary historical consolidated financial data set forth below should be read in conjunction with “Selected Historical Consolidated Financial Data of EMC,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of EMC” and the audited and unaudited consolidated financial statements of EMC and related notes thereto appearing elsewhere in this offering memorandum.

Three Months Ended Year Ended March 31, March 31, December 31, December 31, December 31, 2016 2015 2015 2014 2013 (in millions) Income Statement Data: Net revenue: Product sales ...... $ 2,682 $ 2,905 $13,514 $14,051 $13,690 Services ...... 2,793 2,708 11,190 10,389 9,532 Total net revenue ...... 5,475 5,613 24,704 24,440 23,222 Costs and expenses: Cost of product sales ...... 1,251 1,329 5,809 5,738 5,650 Cost of services ...... 964 945 3,904 3,453 3,099 Research and development ...... 814 788 3,167 2,991 2,761 Selling, general and administrative ...... 1,987 2,037 8,533 7,982 7,338 Restructuring and acquisition-related charges ...... 49 135 450 239 224 Operating Income ...... 410 379 2,841 4,037 4,150 Net-operating income (expense): Investment income ...... 13 24 94 123 128 Interest expense ...... (41) (40) (164) (147) (156) Other income (expense), net ...... 4 10 111 (251) (257) Total non-operating income (expense) ...... (24) (6) 41 (275) (285) Income before provision for income taxes . . 386 373 2,882 3,762 3,865 Income tax provision ...... 89 82 710 868 772 Net income ...... 297 291 2,172 2,894 3,093 Less: Net income attributable to the non- controlling interest in VMware, Inc...... (29) (39) (182) (180) (204) Net income attributable to EMC Corporation .... $ 268 $ 252 $ 1,990 $ 2,714 $ 2,889

36 Three Months Ended Year Ended March 31, March 31, December 31, December 31, December 31, 2016 2015 2015 2014 2013 (in millions) Statement of Cash Flows Data: Net cash provided by operating activities ...... $ 932 $ 1,080 $ 5,386 $ 6,523 $ 6,923 Net cash provided by (used in) investing activities ...... $ 156 $ (1,111) $ (2,754) $ (2,551) $ (5,760) Net cash (used in) provided by financing activities ...... $ (444) $ (1,821) $ (2,292) $ (5,437) $ 2,076 Balance Sheet Data (at period end): Cash and cash equivalents ...... $ 7,224 $ 4,388 $ 6,549 $ 6,343 $ 7,891 Total assets(1) ...... $45,703 $42,998 $46,612 $45,585 $45,396 Total debt(2) ...... $ 6,402 $ 5,471 $ 6,774 $ 5,469 $ 7,127 Total stockholders’ equity ...... $23,250 $22,004 $22,719 $23,525 $23,786 Other Financial Data: Non-GAAP gross margin(3) ...... $ 3,360 $ 3,438 $15,469 $15,642 $14,863 Non-GAAP operating income(3) ...... $ 879 $ 918 $ 5,045 $ 5,882 $ 5,732 Non-GAAP net income(3) ...... $ 603 $ 623 $ 3,572 $ 3,919 $ 3,894 EBITDA(4) ...... $ 893 $ 849 $ 4,748 $ 5,901 $ 5,815 Adjusted EBITDA(4) ...... $ 1,272 $ 1,287 $ 6,557 $ 7,344 $ 7,008 (1) During 2015, EMC retrospectively adopted the accounting guidance related to the balance sheet classification of deferred taxes which requires that all deferred taxes be presented as non-current. The adoption is reflected in all periods in the table above. (2) During 2015, EMC retrospectively adopted the accounting guidance requiring the presentation of debt issuance costs to be presented in the balance sheet as a direct reduction from the carrying amount of the related debt liability rather than as an asset. The adoption is reflected in all relevant periods in the table above. (3) Non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP net income are not measurements of financial performance prepared in accordance with GAAP. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of EMC— Liquidity—Use of Non-GAAP Financial Measures and Reconciliations to GAAP Results” for further discussion of adjustments made and information on the reasons why our management considers it useful to exclude certain items from our GAAP results, as well as limitations to the use of the non-GAAP financial measures presented in this offering memorandum. (4) EBITDA and Adjusted EBITDA are not measurements of financial performance prepared in accordance with GAAP. See “Use of Non-GAAP Financial Information” for further discussion of the adjustments and information on the reasons why it is useful to exclude certain items from GAAP results, as well as limitations to the use of the non-GAAP financial measures presented in this offering memorandum. The following table presents a reconciliation of EBITDA and Adjusted EBITDA to net income for the periods indicated:

Three Months Ended Year Ended March 31, March 31, December 31, December 31, December 31, 2016 2015 2015 2014 2013 (in millions) Net income(a) ...... $ 297 $ 291 $2,172 $2,894 $ 3,093 Adjustments: Other income (expense), net ...... 24 6 (41) 275 285 Income tax provision ...... 89 82 710 868 772 Depreciation and amortization ...... 483 470 1,907 1,864 1,665 EBITDA ...... $ 893 $ 849 $4,748 $5,901 $ 5,815

37 Three Months Ended Year Ended March 31, March 31, December 31, December 31, December 31, 2016 2015 2015 2014 2013 (in millions) Adjustments: Stock-based compensation expense(b) .... 304 244 1,093 1,020 935 Restructuring charges ...... 48 133 443 226 212 Amortization of VMware’s capitalized software from prior periods ...... —— — — 34 Acquisition and other related charges(c) . . . 20 50 178 186 12 VMware litigation and other contingencies ...... — — 11 11 — VMware General Services Administration (“GSA”) settlement ...... —1170— — Merger-related costs(d) ...... 7 — 14 — — EMC adjustments ...... $ 379 $ 438 $1,809 $1,443 $ 1,193 Adjusted EBITDA ...... $1,272 $1,287 $6,557 $7,344 $ 7,008

(a) Represents net income and does not exclude net income attributable to the non-controlling interest in VMware, Inc. (b) Stock-based compensation expense includes expense related to EMC’s stock options, stock appreciation rights, restricted stock, and restricted stock units. (c) Acquisition and other related charges primarily include employee bonuses and other expenses associated with completed acquisitions. (d) Represents costs incurred in connection with the Dell-EMC merger.

38 RISK FACTORS

You should carefully consider the risk factors set forth below as well as the other information contained in this offering memorandum before purchasing the notes. This offering memorandum contains forward-looking statements that involve risks and uncertainties. If any of the events or developments described in the risk factors below actually occur, our and EMC’s business, financial condition or results of operations could be materially and adversely impacted. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our and EMC’s business, financial condition or results of operations. In such a case, you may lose all or part of your original investment.

Risks Related to Our Business Competitive pressures may adversely affect our industry unit share position, revenue and profitability. We operate in an industry in which there are rapid technological advances in hardware, software and service offerings. As a result, we face aggressive product and price competition from both branded and generic competitors. We compete based on our ability to offer to our customers competitive integrated solutions that provide the most current and desired product and services features. There is a risk that our competitors may provide products that are less costly, perform better or include additional features that are not available with our products. There also is a risk that our product portfolios may quickly become outdated or that our market share may quickly erode. Further, efforts to balance the mix of products and services in order to optimize profitability, liquidity and growth may put pressure on our industry position.

As the technology industry continues to expand globally, there may be new and increased competition in different geographic regions. The generally low barriers to entry in the technology industry increase the potential for challenges from new industry competitors. There also may be increased competition from new types of products as the options for mobile and cloud computing solutions increase. In addition, companies with which we have strategic alliances may become competitors in other product areas or current competitors may enter into new strategic relationships with new or existing competitors, all of which may further increase the competitive pressures we face.

Reliance on vendors for products and components, many of whom are single-source or limited-source suppliers, could harm our business by adversely affecting product availability, delivery, reliability and cost. We maintain several single-source or limited-source supplier relationships, including relationships with third-party software providers, either because multiple sources are not readily available or because the relationships are advantageous due to performance, quality, support, delivery, capacity or price considerations. A delay in the supply of a critical single- or limited-source product or component may prevent the timely shipment of the related product in desired quantities or configurations. In addition, we may not be able to replace the functionality provided by third-party software currently offered with our products if that software becomes obsolete, defective or incompatible with future product versions or is not adequately maintained or updated. Even where multiple sources of supply are available, qualification of the alternative suppliers and establishment of reliable supplies could result in delays and a possible loss of sales, which could harm our operating results.

We obtain many of our products and all of our components from third-party vendors, many of which are located outside of the United States. In addition, significant portions of our products are assembled by contract manufacturers, primarily in various locations in Asia. A significant concentration of such outsourced manufacturing is currently performed by only a few of our contract manufacturers, often in single locations. We sell components to these contract manufacturers and generate large non-trade accounts receivables, an arrangement that would present a risk of uncollectibility if the financial condition of a contract manufacturer should deteriorate.

39 Although these relationships generate cost efficiencies, they limit our direct control over production. The increasing reliance on vendors subjects us to a greater risk of shortages and reduced control over delivery schedules of components and products, as well as a greater risk of increases in product and component costs. Because we maintain minimal levels of component and product inventories, a disruption in component or product availability could harm our ability to satisfy customer needs. In addition, defective parts and products from these vendors could reduce product reliability and harm our reputation.

If we fail to achieve favorable pricing from vendors, our profitability could be adversely affected. Our profitability is affected by our ability to achieve favorable pricing from vendors and contract manufacturers, including through negotiations for vendor rebates, marketing funds and other vendor funding received in the normal course of business. Because these supplier negotiations are continuous and reflect the evolving competitive environment, the variability in timing and amount of incremental vendor discounts and rebates can affect our profitability. The vendor programs may change periodically, potentially resulting in adverse profitability trends if we cannot adjust pricing or variable costs. An inability to establish a cost and product advantage, or determine alternative means to deliver value to customers, may adversely affect our revenue and profitability.

Adverse global economic conditions and instability in financial markets may harm our business and result in reduced net revenue and profitability. As a global company with customers operating in a broad range of businesses and industries, our performance is affected by global economic conditions. Adverse economic conditions may negatively affect customer demand for our products and services. Such economic conditions could result in postponed or decreased spending amid customer concerns over unemployment, reduced asset values, volatile energy costs, geopolitical issues, the availability and cost of credit and the stability and solvency of financial institutions, financial markets, businesses, local and state governments and sovereign nations. Weak global economic conditions also could harm our business by contributing to product shortages or delays, insolvency of key suppliers, customer and counterparty insolvencies and increased challenges in managing our treasury operations. Any such effects could have a negative impact on our net revenue and profitability.

Our results of operations may be adversely affected if we fail to successfully execute our growth strategy. Our growth strategy involves reaching more customers through new distribution channels, expanding relationships with resellers and augmenting select business areas through targeted acquisitions and other commercial arrangements. As more customers are reached through new distribution channels and expanded reseller relationships, we may fail to manage effectively the increasingly difficult tasks of inventory management and demand forecasting. The ability to implement this growth strategy depends on a successful transitioning of sales capabilities, the successful addition to the breadth of our solutions capabilities through selective acquisitions of other businesses and the effective management of the consequences of these strategic initiatives. If we are unable to meet these challenges, our results of operations could be adversely affected.

We face risks and challenges in connection with our transformation to a scalable end-to-end technology solutions provider and our business strategy. We expect our strategic transformation to a scalable end-to-end technology solutions provider to take more time and investment, and the investments we must make are likely to result in lower gross margins and raise our operating expenses and capital expenditures.

For Fiscal 2016, our Client Solutions business generated 65% of our net revenue, and largely relied on PC sales. Moreover, revenue from Client Solutions absorbs our significant overhead costs and allows for scaled procurement. As a result, Client Solutions remains an important component in our broad transformation strategy.

40 While we continue to rely on Client Solutions as a critical element of our business, we also anticipate an increasingly challenging demand environment in Client Solutions and intensifying market competition. Current challenges in Client Solutions stem from fundamental changes in the PC market, including a decline in worldwide revenues for desktop and laptop PCs and lower shipment forecasts for PC products due to a general lengthening of the replacement cycle for PC products and increasing interest in alternative mobile solutions. PC shipments worldwide declined 10.6% year-to-year during calendar 2015 and 11.4% year over year for the first quarter of calendar year 2016, and further deterioration in the PC market may occur. Other challenges include declining margins as demand for PC products shifts from higher-margin premium products to lower-cost and lower-margin products, particularly in emerging markets, and significant and increasing competition from efficient and low-cost manufacturers and from manufacturers of innovative and higher-margin PC products. For example, the built-to-order model that we have historically used is losing competitiveness in an environment where profit pools are moving toward lower-margin segments primarily based on a build-to-stock model, and we also lack a strong offering in tablets.

The challenges we face in our transformation include low operating margin for ESG and, although Client Solutions drives pull-through revenue and cross-selling of ESG solutions, the potential for further margin erosion remains due to intense competition, including emerging competitive pressure from cloud services. Improving integration of our product and service offerings as well as our ability to cross-sell remain a work in progress, as we are in the early stages of integrating our products into solutions and thus far have limited overlap in the base of large customers for the Client Solutions business and the ESG and Dell Services businesses. In addition, returns from our prior acquisitions have been mixed and will require additional investments to reposition the business for growth, while cross-selling synergies have not been achieved as anticipated. As a result of the foregoing challenges, our business, financial condition and results of operations may be adversely affected.

We may not successfully implement our acquisition strategy, which could result in unforeseen operating difficulties and increased costs. We make strategic acquisitions of other companies as part of our growth strategy. We could experience unforeseen operating difficulties in assimilating or integrating the businesses, technologies, services, products, personnel or operations of acquired companies, especially if we are unable to retain the key personnel of an acquired company. Further, future acquisitions may result in a delay or reduction of client sales for both us and the acquired company because of client uncertainty about the continuity and effectiveness of solutions offered by either company and may disrupt our existing business by diverting resources and significant management attention that otherwise would be focused on development of the existing business. Acquisitions may also negatively affect our relationships with strategic partners if the acquisitions are seen as bringing us into competition with such partners.

To complete an acquisition, we may be required to use substantial amounts of cash, engage in equity or debt financings or enter into credit agreements to secure additional funds. Such debt financings could involve restrictive covenants that could limit our capital-raising activities and operating flexibility. In addition, an acquisition may negatively affect our results of operations because it may expose us to unexpected liabilities, require the incurrence of charges and substantial indebtedness or other liabilities, have adverse tax consequences, result in acquired in-process research and development expenses, or in the future require the amortization, write- down or impairment of amounts related to deferred compensation, goodwill and other intangible assets, or fail to generate a financial return sufficient to offset acquisition costs.

If our cost efficiency measures are not successful, we may become less competitive. We continue to focus on minimizing operating expenses through cost improvements and simplification of our structure. Certain factors may prevent the achievement of these goals, which may negatively affect our competitive position. For example, we may experience delays or unanticipated costs in implementing our cost efficiency plans, which could prevent the timely or full achievement of expected cost efficiencies.

41 Our inability to manage solutions and product and services transitions in an effective manner could reduce the demand for our solutions, products and services and the profitability of our operations. Continuing improvements in technology result in the frequent introduction of new solutions, products and services, improvements in product performance characteristics and short product life cycles. If we fail to effectively manage transitions to new solutions and offerings, the products and services associated with such offerings and customer demand for our solutions, products and services could diminish and our profitability could suffer.

We are increasingly sourcing new products and transitioning existing products through our contract manufacturers and manufacturing outsourcing relationships in order to generate cost efficiencies and better serve our customers. The success of product transitions depends on a number of factors, including the availability of sufficient quantities of components at attractive costs. Product transitions also present execution challenges and risks, including the risk that new or upgraded products may have quality issues or other defects.

Failure to deliver high-quality products and services could lead to loss of customers and diminished profitability. We must identify and address quality issues associated with our products and services, many of which include third-party components. Although quality testing is performed regularly to detect quality problems and implement required solutions, failure to identify and correct significant product quality issues before the sale of such products to customers could result in lower sales, increased warranty or replacement expenses and reduced customer confidence, which could harm our operating results.

Our ability to generate substantial non-U.S. net revenue is subject to additional risks and uncertainties. Sales outside the United States accounted for approximately 50% of our consolidated net revenue for Fiscal 2016. Our future growth rates and success are substantially dependent on the continued growth of our business outside the United States. Our international operations face many risks and uncertainties, including varied local economic and labor conditions, political instability, changes in the U.S. and international regulatory environments, and the impacts of trade protection measures, tax laws (including U.S. taxes on foreign operations), copyright levies and foreign currency exchange rates. Any of these factors could negatively affect our international business results and prospects for growth.

Our profitability may be adversely affected by product, customer and geographic sales mix and seasonal sales trends. Our overall profitability for any period may be adversely affected by changes in the mix of products, customers and geographic markets reflected in sales for that period and by seasonal trends. Profit margins vary among products, services, customers and geographic markets. For instance, services offerings generally have a higher profit margin than consumer products. In addition, parts of our business are subject to seasonal sales trends. Among the trends with the most significant impact on our operating results, sales to government customers (particularly the U.S. federal government) are typically stronger in our third fiscal quarter, sales in Europe, the Middle East and Africa are often weaker in our third fiscal quarter, and consumer sales are typically strongest during our third and fourth fiscal quarters.

We may lose revenue opportunities and experience gross margin pressure if sales channel participants fail to perform as expected. We rely on third-party distributors, retailers, systems integrators, value-added resellers and other sales channels to complement our direct sales organization in order to reach more end-users globally. Future operating results increasingly will depend on the performance of sales channel participants and on our success in

42 maintaining and developing these relationships. Revenue and gross margins could be negatively affected if the financial condition or operations of channel participants weaken as a result of adverse economic conditions or other business challenges, or if uncertainty regarding the demand for our products causes channel participants to reduce their orders for our products. Further, some channel participants may consider the expansion of our direct sales initiatives to conflict with their business interests as distributors or resellers of our products, which could lead them to reduce their investment in the distribution and sale of our products, or to cease all sales of our products.

Our financial performance could suffer from reduced access to the capital markets by us or some of our customers. We may access debt and capital sources to provide financing for customers and to obtain funds for general corporate purposes, including working capital, acquisitions, capital expenditures and funding of customer receivables. In addition, we maintain customer financing relationships with some companies that rely on access to the debt and capital markets to meet significant funding needs. Any inability of these companies to access such markets could compel us to self-fund transactions with such companies or to forgo customer financing opportunities, which could harm our financial performance. The debt and capital markets may experience extreme volatility and disruption from time to time in the future, which could result in higher credit spreads in such markets and higher funding costs for us. Deterioration in our business performance, a credit rating downgrade, volatility in the securitization markets, changes in financial services regulation or adverse changes in the economy could lead to reductions in the availability of debt financing. In addition, these events could limit our ability to continue asset securitizations or other forms of financing from debt or capital sources, reduce the amount of financing receivables that we originate or negatively affect the costs or terms on which we may be able to obtain capital. Any of these developments could adversely affect our net revenue, profitability and cash flows.

Weak economic conditions and additional regulation could harm our financial services activities. Our financial services activities are negatively affected by adverse economic conditions that contribute to loan delinquencies and defaults. An increase in loan delinquencies and defaults would result in greater net credit losses, which may require us to increase our reserves for customer receivables. In addition, the implementation of new financial services regulation, or the application of existing financial services regulation in new countries where we expand our financial services and related supporting activities, could unfavorably impact the profitability and cash flows of our consumer financing activities.

We are subject to counterparty default risks. We have numerous arrangements with financial institutions that include cash and investment deposits, interest rate swap contracts, foreign currency option contracts and forward contracts. As a result, we are subject to the risk that the counterparty to one or more of these arrangements will default, either voluntarily or involuntarily, on its performance under the terms of the arrangement. In times of market distress, a counterparty may default rapidly and without notice, and we may be unable to take action to cover our exposure, either because of lack of contractual ability to do so or because market conditions make it difficult to take effective action. If one of our counterparties becomes insolvent or files for bankruptcy, our ability eventually to recover any losses suffered as a result of that counterparty’s default may be limited by the liquidity of the counterparty or the applicable legal regime governing the bankruptcy proceeding. In the event of such default, we could incur significant losses, which could harm our business and adversely affect our results of operations and financial condition.

The exercise by customers of certain rights under their services contracts with us, or our failure to perform as we anticipate at the time we enter into services contracts, could adversely affect our revenue and profitability. Many of our services contracts allow customers to take actions that may adversely affect our revenue and profitability. These actions include terminating a contract if our performance does not meet specified service

43 levels, requesting rate reductions or contract termination, reducing the use of our services or terminating a contract early upon payment of agreed fees. In addition, we estimate the costs of delivering the services at the outset of the contract. If we fail to estimate such costs accurately and actual costs significantly exceed estimates, we may incur losses on the services contracts.

Loss of government contracts could harm our business. Contracts with the U.S. federal, state and local governments and foreign governments are subject to future funding that may affect the extension or termination of programs and to the right of such governments to terminate contracts for convenience or non-appropriation. There is pressure on governments, both domestically and internationally, to reduce spending. Funding reductions or delays could adversely affect public sector demand for our products and services. In addition, if we violate legal or regulatory requirements, the applicable government could suspend or disbar us as a contractor, which would unfavorably affect our net revenue and profitability.

Our business could suffer if we do not develop and protect our proprietary intellectual property or obtain or protect licenses to intellectual property developed by others on commercially reasonable and competitive terms. If we or our suppliers are unable to develop or protect desirable technology, we may be prevented from marketing products, may have to market products without desirable features or may incur substantial costs to redesign products. We also may have to defend or initiate legal actions and pay damages if we are found to have violated the intellectual property of other parties. Although our suppliers might be contractually obligated to indemnify us against certain related expenses, those suppliers could be unable to meet their obligations or we might not have a specific indemnity. Although we invest in research and development and obtain additional intellectual property through acquisitions, those activities do not guarantee that we will develop or obtain intellectual property necessary for profitable operations. Costs involved in developing and protecting rights in intellectual property may have a negative impact on our business. In addition, our operating costs could increase because of copyright levies or similar fees by rights holders and collection agencies in Europe and other countries.

Infrastructure disruptions could harm our business. We depend on our information technology and manufacturing infrastructure to achieve our business objectives. Natural disasters, manufacturing failures, telecommunications system failures or defective or improperly installed new or upgraded business management systems could lead to disruptions in this infrastructure. Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work. Such disruptions may prevent our ability to receive or process orders, manufacture and ship products in a timely manner or otherwise conduct business in the normal course. Further, portions of our services business involve the processing, storage and transmission of data, which would also be negatively affected by such an event. Disruptions in our infrastructure could lead to loss of customers and revenue, particularly during a period of heavy demand for our products and services. We also could incur significant expense in repairing system damage and taking other remedial measures.

Cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us, our customers or other third parties could disrupt our business, harm our reputation, cause us to lose clients and expose us to costly litigation. We manage and store various proprietary information and sensitive or confidential data relating to our operations, business and customers. In addition, our outsourcing services and cloud computing businesses routinely process, store and transmit large amounts of data for our customers, including sensitive and personally identifiable information. We may be subject to breaches of the information technology systems we use for these

44 purposes. Experienced computer programmers and hackers may be able to penetrate or obtain access to our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Further, sophisticated hardware and operating system software and applications that we produce or procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of such systems.

The costs to eliminate or address the foregoing security problems and security vulnerabilities before or after a cyber incident could be significant. Remediation efforts may not be successful and could result in interruptions, delays or cessation of service and loss of existing or potential customers that may impede our sales, manufacturing, distribution or other critical functions. We could lose existing or potential customers for outsourcing services or other information technology solutions in connection with any actual or perceived security vulnerabilities in our products. In addition, breaches of our security measures and the unapproved dissemination of proprietary information or sensitive or confidential data about us or our customers or other third parties could expose us, our customers or other third parties affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. Further, we rely in certain limited capacities on third-party data management providers whose possible security problems and security vulnerabilities may have similar effects on us.

We are subject to laws, rules and regulations in the United States and other countries relating to the collection, use and security of user data. Our ability to execute transactions and to possess and use personal information and data in conducting our business subjects us to legislative, industry, contractual and regulatory burdens that may require us to notify customers or employees of a data security breach. We have incurred, and will continue to incur, significant expenses to comply with mandatory privacy and security standards and protocols imposed by law, regulation, industry standards or contractual obligations.

Failure to hedge effectively our exposure to fluctuations in foreign currency exchange rates and interest rates could adversely affect our financial condition and results of operations. We utilize derivative instruments to hedge our exposure to fluctuations in foreign currency exchange rates and interest rates. Some of these instruments and contracts may involve elements of market and credit risk in excess of the amounts recognized in our financial statements. If we are not successful in monitoring our foreign exchange exposures and conducting an effective hedging program, our foreign currency hedging activities may not offset the impact of fluctuations in currency exchange rates on our future results of operations and financial position.

The expiration of tax holidays or favorable tax rate structures, unfavorable outcomes in tax audits and other tax compliance matters, or adverse legislative or regulatory tax changes could result in an increase in our tax expense or our effective income tax rate. Portions of our operations are subject to a reduced tax rate or are free of tax under various tax holidays that expire in whole or in part from time to time. Many of these holidays may be extended when certain conditions are met, or may be terminated if certain conditions are not met. If the tax holidays are not extended, or if we fail to satisfy the conditions of the reduced tax rate, then our effective tax rate would increase in the future. Our effective tax rate also could increase if our geographic sales mix changes. In addition, any actions by us to repatriate non-U.S. earnings for which we have not previously provided for U.S. taxes may impact the effective tax rate.

The application of tax laws to our operations and past transactions involves some inherent uncertainty. We are continually under audit in various tax jurisdictions. Although we believe our tax positions are appropriate, we may not be successful in resolving potential tax claims that arise from these audits. An unfavorable outcome in certain of these matters could result in a substantial increase in our tax expense. In addition, our provision for income taxes could be affected by changes in the valuation of deferred tax assets.

45 Further, changes in tax laws (including laws relating to U.S. taxes on foreign operations) could adversely affect our operations and profitability. In recent years, numerous legislative, judicial and administrative changes have been made to tax laws applicable to us and companies similar to us. Additional changes to tax laws are likely to occur, and such changes may adversely affect our tax liability.

Our profitability could suffer from any impairment of our portfolio investments. We invest a significant portion of our available funds in a portfolio consisting primarily of debt securities of various types and maturities pending the deployment of these funds in our business. Our earnings performance could suffer from any impairment of our investments. Our portfolio securities generally are classified as available-for-sale and are recorded in our financial statements at fair value. If any such investments experience declines in market price and it is determined that such declines are other than temporary, we may have to recognize in earnings the decline in the fair market value of such investments below their cost or carrying value.

Unfavorable results of legal proceedings could harm our business and result in substantial costs. We are involved in various claims, suits, investigations and legal proceedings that arise from time to time in the ordinary course of business, as well as in connection with the going-private transaction and the Dell-EMC merger, including those described elsewhere in this offering memorandum. Additional legal claims or regulatory matters may arise in the future and could involve stockholder, consumer, regulatory, compliance, intellectual property, antitrust, tax and other issues on a global basis. Litigation is inherently unpredictable. Regardless of the merits of the claims, litigation may be both time-consuming and disruptive to our business. We could incur judgments or enter into settlements of claims that could adversely affect our operating results or cash flows in a particular period. In addition, our business, operating results and financial condition could be adversely affected if any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a newly public company, and our management will be required to devote substantial time to new compliance matters, which could lower our profits or make it more difficult to run our business. As a result of the issuance of the Class V Common Stock to holders of EMC common stock on a registered basis as part of the EMC Transactions, we will become a public company subject to the reporting requirements under the Exchange Act. As a newly public company, we will incur significant legal, accounting and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We will also incur costs associated with the Sarbanes-Oxley Act of 2002 and related rules implemented by the SEC and the New York Stock Exchange (the “NYSE”). The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management will need to devote a substantial amount of time to ensure that we comply with all of these requirements. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to fines, sanctions and other regulatory action and potentially civil litigation.

46 As a public company, we will be obligated to develop and maintain proper and effective internal control over financial reporting and any failure to do so may adversely affect investor confidence in us and, as a result, the trading price of the notes. Following a transition period afforded to companies that were not previously SEC reporting companies, we will be required by Section 404 of the Sarbanes-Oxley Act of 2002 to furnish a report by management on, among other things, its assessment of the effectiveness of our internal control over financial reporting. The assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. We also will be required to disclose significant changes made in our internal control procedures on a quarterly basis. In addition, our independent registered public accounting firm is required to express an opinion as to the effectiveness of our internal control over financial reporting beginning with the second annual report on Form 10-K. The process of designing, implementing and testing internal controls over financial reporting is time consuming, costly and complicated.

During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We may experience material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to report accurately our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports, the trading price of the notes could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, also could restrict our future access to the capital markets.

Compliance requirements of current or future environmental and safety laws, or other regulatory laws, may increase costs, expose us to potential liability and otherwise harm our business. Our operations are subject to environmental and safety regulations in all areas in which we conduct business. Product design and procurement operations must comply with new and future requirements relating to climate change laws and regulations, materials composition, sourcing, energy efficiency and collection, recycling, treatment, transportation and disposal of electronics products, including restrictions on mercury, lead, cadmium, lithium metal, lithium ion and other substances. If we fail to comply with applicable rules and regulations regarding the transportation, source, use and sale of such regulated substances, we could be subject to liability. The costs and timing of costs under environmental and safety laws are difficult to predict, but could have an adverse impact on our business.

In addition, we are subject to various anti-corruption laws that prohibit improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business and are also subject to export controls, customs and economic sanctions laws and embargoes imposed by the U.S. government. Violations of the Foreign Corrupt Practices Act or other anti-corruption laws or export control, customs or economic sanctions laws may result in severe criminal or civil sanctions and penalties, and we may be subject to other liabilities which could have a material adverse effect on our business, results of operations and financial condition.

In addition, we will be subject to provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act intended to improve transparency and accountability concerning the supply of minerals originating from the conflict zones of the Democratic Republic of Congo or adjoining countries. We will incur costs to comply with the disclosure requirements of this law and may realize other costs relating to the sourcing and availability of minerals used in our products. Further, we may face reputational harm if our customers or our other stakeholders conclude that we are unable to sufficiently verify the origins of the minerals used in our products.

47 Armed hostilities, terrorism, natural disasters or public health issues could harm our business. Armed hostilities, terrorism, natural disasters or public health issues, whether in the United States or abroad, could cause damage or disruption to us or our suppliers and customers, or could create political or economic instability, any of which could harm our business. For example, the earthquake and tsunami in Japan and severe flooding in Thailand which occurred during Fiscal 2012 caused damage to infrastructure and factories that disrupted the supply chain for a variety of components used in our products. Any such future events could cause a decrease in demand for our products, make it difficult or impossible to deliver products or for suppliers to deliver components and could create delays and inefficiencies in our supply chain.

Risks Related to the Business of EMC EMC may be unable to keep pace with rapid industry, technological and market changes. The markets in which EMC competes are characterized by rapid technological change, frequent new product introductions, evolving industry standards and changing needs of customers. In addition, EMC’s industry is experiencing one of the most disruptive periods of transition in its history as EMC moves from IT solutions built for the client-server second platform into the next phase of IT growth and innovation, or the third platform. There can be no assurance that EMC’s existing products will be properly positioned in the third platform or that EMC will be able to introduce new or enhanced products into the market on a timely basis, or at all. EMC spends a considerable amount of money on research and development and introduce new products from time to time. There can be no assurance that enhancements to its existing products and solutions or new products and solutions will receive customer acceptance. As competition in the IT industry increases, it may become increasingly difficult for EMC to maintain a technological advantage and to leverage that advantage toward increased revenues and profits. In addition, there can be no assurance that EMC’s vision of enabling hybrid cloud computing, Big Data and trust through infrastructure and application transformation will be accepted or validated in the marketplace.

Risks associated with the development and introduction of new products include delays in development and changes in data storage, networking virtualization, infrastructure management, information security and operating system technologies which could require EMC to modify existing products. Risks inherent in the transition to new products include: • the difficulty in forecasting customer preferences or demand accurately; • the inability to expand production capacity to meet demand for new products; • the inability to successfully manage the interoperability and transition from older products; • the impact of customers’ demand for new products on the products being replaced, thereby causing a decline in sales of existing products and an excessive, obsolete supply of inventory; • delays in initial shipments of new products; and • delays in sales caused by the desire of customers to evaluate new products for extended periods of time.

Further risks inherent in new product introductions include the uncertainty of price-performance relative to products of competitors and competitors’ responses to such new product introductions. EMC’s failure to introduce new or enhanced products on a timely basis, keep pace with rapid industry, technological or market changes or effectively manage the transition to new products or new technologies could have a material adverse effect on EMC’s business, results of operations or financial condition.

The markets EMC serves are highly competitive, and EMC may be unable to compete effectively. EMC competes with many companies in the markets it serves. Some of EMC’s competitors offer a broad spectrum of IT products and services, and others offer specific information storage, protection, security,

48 management, virtualization and intelligence products or services. Some of EMC’s competitors (whether independently or by establishing alliances) may have substantially greater financial, marketing or technological resources, larger distribution capabilities, earlier access to customers or greater opportunity to address customers’ various IT requirements than EMC. In addition, through further consolidation in the IT industry, companies may improve their competitive position and ability to compete against EMC. EMC competes on the basis of its products’ features, performance and price as well as EMC’s services. EMC’s failure to compete on any of these bases could affect demand for its products or services, which could have a material adverse effect on EMC’s business, results of operations or financial condition.

Companies may develop new technologies or products in advance of EMC or establish business models or technologies disruptive to EMC. EMC’s business may be materially adversely affected by the announcement or introduction of new products, including hardware and software products, and new services offered by EMC’s competitors, and the implementation of effective marketing or sales strategies by EMC’s competitors. The material adverse effect to EMC’s business could include a decrease in demand for its products and services and an increase in the length of its sales cycle due to customers taking longer to compare products and services and to complete their purchases.

If EMC’s cost efficiency measures are not successful, EMC may become less competitive. EMC continues to focus on minimizing operating expenses through cost improvements and simplification of its structure. Certain factors may prevent the achievement of these goals, which may negatively affect EMC’s competitive position. For example, EMC may experience delays or unanticipated costs in implementing its cost efficiency plans, which could prevent the timely or full achievement of expected cost efficiencies.

EMC may have difficulty managing operations. EMC’s future operating results will depend on its overall ability to manage operations, which includes, among other things: • successfully communicating and executing on EMC’s unique federation strategy; • retaining and hiring the appropriate number of qualified employees; • managing, protecting and enhancing, as appropriate, EMC’s infrastructure, including but not limited to, EMC’s information systems (and EMC’s ability to protect confidential information residing on such systems) and internal controls; • accurately forecasting revenues; • training EMC’s sales force to sell effectively, given the breadth of EMC’s offerings; • successfully integrating new acquisitions; • managing inventory levels, including minimizing excess and obsolete inventory, while maintaining sufficient inventory to meet customer demands; • controlling expenses; • managing EMC’s manufacturing capacity, real estate facilities and other assets; • meeting EMC’s sustainability goals; and • executing on EMC’s plans.

An unexpected decline in revenues without a corresponding and timely reduction in expenses or a failure to manage other aspects of EMC’s operations could have a material adverse effect on EMC’s business, results of operations or financial condition.

49 EMC’s business could be materially adversely affected as a result of a lessening demand in the information technology market. EMC’s revenue and profitability depend on the overall demand for its products and services. Delays or reductions in IT spending could materially adversely affect demand for EMC’s products and services which could result in decreased revenues or earnings.

EMC’s customers operate in a variety of sectors and across many geographies. Any adverse effects to such markets could materially adversely affect demand for EMC’s products and services which could result in decreased revenues or earnings.

Pricing pressures, increases in component and product design costs, decreases in sales volume, or changes to the relative mixture of EMC’s revenues could materially adversely affect EMC’s revenues, gross margins or earnings. EMC’s gross margins are impacted by a variety of factors, including competitive pricing, component and product design costs, sales volume and the relative mixture of product and services revenue. Increased component costs, increased pricing pressures, the relative and varying rates of increases or decreases in component costs and product price, changes in EMC’s product and services revenue mixture, including the mixture of subscription based product revenue, or decreased sales volume could have a material adverse effect on EMC’s revenues, gross margins or earnings.

The costs of third-party components comprise a significant portion of EMC’s product costs. EMC may have difficulty managing its component and product design costs if supplies of certain components become limited or component prices increase. Any such limitation could result in an increase in EMC’s component costs. An increase in component or design costs relative to EMC’s product prices could have a material adverse effect on EMC’s gross margins and earnings. Moreover, certain competitors may have advantages with respect to component costs due to vertical integration of their supply chain, which may include disk drives, microprocessors, memory components and servers.

The markets in which EMC does business are highly competitive, and EMC may encounter aggressive price competition for all of its products and services from numerous companies globally. There also has been, and may continue to be, a willingness on the part of certain competitors to reduce prices or provide information infrastructure and virtual infrastructure products or services, together with other IT products or services, at minimal or no additional cost in order to preserve or gain market share. Such price competition may result in pressure on EMC’s product and services prices, and reductions in product and services prices may have a material adverse effect on EMC’s revenues, gross margins or earnings.

EMC’s financial performance is impacted by the financial performance of VMware. Because EMC consolidates VMware’s financial results in EMC’s results of operations, EMC’s financial performance is impacted by the financial performance of VMware. VMware’s financial performance may be affected by a number of factors, including, but not limited to: • fluctuations in demand, adoption rates, sales cycles (which have been increasing in length) and pricing levels for VMware’s products and services; • changes in customers’ budgets for information technology purchases and in the timing of their purchasing decisions; • the timing of recognizing revenues in any given quarter, which can be affected by a number of factors, including product announcements, beta programs and product promotions that can cause revenue recognition of certain orders to be deferred until future products to which customers are entitled become available;

50 • the timing of announcements or releases of new or upgraded products and services by VMware or by its competitors; • the timing and size of business realignment plans and restructuring charges; • VMware’s ability to maintain scalable internal systems for reporting, order processing, license fulfillment, product delivery, purchasing, billing and general accounting, among other functions; • VMware’s ability to control costs, including its operating expenses; • credit risks of VMware’s distributors, who account for a significant portion of product revenues and accounts receivable; • VMware’s ability to process sales at the end of the quarter; • seasonal factors such as the end of fiscal period budget expenditures by VMware’s customers and the timing of holiday and vacation periods; • renewal rates and the amounts of the renewals for enterprise agreements (“EAs”) as original EA terms expire; • the timing and amount of internally developed software development costs that may be capitalized; • unplanned events that could affect market perception of the quality or cost-effectiveness of VMware’s products and solutions; and • VMware’s ability to accurately predict the degree to which customers will elect to purchase its subscription-based offerings in place of licenses to its on-premises offerings.

EMC may become involved in litigation that may materially adversely affect it. EMC is involved in various legal proceedings in connection with the Dell-EMC merger. From time to time, EMC may also become involved in various legal proceedings relating to matters incidental to the ordinary course of its business, including patent, commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources and cause EMC to incur significant expenses. Furthermore, because litigation is inherently unpredictable, there can be no assurance that the results of any of these actions will not have a material adverse effect on EMC’s business, results of operations or financial condition.

Cybersecurity breaches could expose EMC to liability, damage EMC’s reputation, compromise EMC’s ability to conduct business, require EMC to incur significant costs or otherwise adversely affect EMC’s financial results. EMC retains sensitive data, including intellectual property, proprietary business information and personally identifiable information, in its secure data centers and on its networks. EMC faces a number of threats to its data centers and networks of unauthorized access, including security breaches and other system disruptions. It is critical to EMC’s business strategy that its infrastructure remains secure and is perceived by EMC’s customers and business partners to be secure. Despite EMC’s security measures, EMC’s infrastructure may be vulnerable to attacks by hackers or other disruptive problems, such as the sophisticated cyber-attack on its RSA division that EMC disclosed in March 2011. Any such security breach may compromise information stored on EMC’s networks and may result in significant data losses or theft of EMC’s, EMC’s customers’, EMC’s business partners’ or EMC’s employees’ intellectual property, proprietary business information or personally identifiable information, as well as subject EMC to potential liability and reputational harm. In addition, EMS has outsourced a number of its business functions to third party contractors, and any breach of their security systems could adversely affect EMC.

51 A cybersecurity breach could negatively affect EMC’s reputation as a trusted provider of information infrastructure by adversely affecting the market’s perception of the security or reliability of EMC’s products or services. In addition, a cyber-attack could result in other negative consequences, including remediation costs, disruption of internal operations, increased cybersecurity protection costs, lost revenues or litigation.

EMC’s quarterly revenues or earnings could be materially adversely affected by uneven sales patterns or changing purchasing behaviors. EMC’s quarterly sales have historically reflected an uneven pattern in which a disproportionate percentage of a quarter’s total sales occur in the last month and weeks and days of each quarter. This uneven sales pattern makes it difficult for EMC to accurately predict revenues, earnings and working capital for each financial period and increases the risk of unanticipated variations in EMC’s quarterly results and financial condition. EMC believes this uneven sales pattern is a result of many factors, including: • the relative dollar amount of EMC’s product and services offerings in relation to many of EMC’s customers’ budgets, resulting in long lead times for customers’ budgetary approval, which tends to be given late in a quarter; • the tendency of customers to wait until late in a quarter to commit to purchase in the hope of obtaining more favorable pricing from one or more competitors seeking their business; • the fourth-quarter influence of customers spending their remaining capital budget authorization prior to new budget constraints in the first nine months of the following year; and • seasonal influences.

EMC’s uneven sales pattern makes it extremely difficult to predict near-term demand and adjust manufacturing capacity or its supply chain accordingly. EMC’s backlog at any particular time is also not necessarily indicative of future sales levels. This is because: • EMC assembles its products on the basis of its forecast of near-term demand and maintains inventory in advance of receipt of firm orders from customers; • EMC generally ships products shortly after receipt of the order; and • customers may generally reschedule or cancel orders with little or no penalty.

If predicted demand is substantially greater than orders, EMC will have excess inventory. Alternatively, if orders substantially exceed predicted demand, EMC’s ability to assemble, test and ship orders received in the last weeks and days of each quarter may be limited. This could materially adversely affect quarterly revenues or earnings as EMC’s revenues in any quarter are substantially dependent on orders booked and shipped in that quarter.

Loss of infrastructure, due to factors such as an information systems failure, loss of public utilities, natural disasters or extreme weather conditions, could also impact EMC’s ability to book orders or ship products in a timely manner. Delays in product shipping or an unexpected decline in revenues without a corresponding and timely slowdown in expenses, could intensify the impact of these factors on EMC’s business, results of operations or financial condition.

In addition, unanticipated changes in EMC’s customers’ purchasing behaviors, such as customers taking longer to negotiate and complete their purchases or making smaller, incremental purchases based on their current needs, can also make it difficult for EMC to accurately predict revenues, earnings and working capital for each financial period and increase the risk of unanticipated variations in its quarterly results and financial condition.

52 EMC’s business could be materially adversely affected as a result of general global economic and market conditions. EMC is subject to the effects of general global economic and market conditions that are beyond EMC’s control. If these conditions remain challenging or worsen, EMC’s business, results of operations or financial condition could be materially adversely affected. Possible consequences of macroeconomic global challenges that could have a material adverse effect on EMC’s results of operations or financial condition include insolvency of key suppliers resulting in product delays, inability of customers to obtain credit to finance purchases of EMC’s products, customer insolvencies, increased risk that customers may delay payments, fail to pay or default on credit extended to them, and counterparty failures that negatively impact EMC’s treasury operations.

EMC’s business may suffer if it is unable to retain or attract key personnel. EMC’s business depends to a significant extent on the continued service of senior management and other key employees, the development of additional management personnel and the hiring of new qualified employees. There can be no assurance that EMC will be successful in retaining and developing existing personnel or recruiting new personnel. The loss of one or more key employees, EMC’s inability to attract or develop additional qualified employees or any delay in hiring key personnel could have a material adverse effect on EMC’s business, results of operations or financial condition.

Undetected problems in EMC’s products could directly impair EMC’s financial results. If flaws in design, production, assembly or testing of EMC’s products (by EMC or EMC’s suppliers) were to occur, EMC could experience a rate of failure in its products that would result in substantial delays in shipment, significant repair, replacement or service costs or potential damage to its reputation. Any of these results could have a material adverse effect on EMC’s business, results of operations or financial condition. Continued improvement in manufacturing capabilities, control of material and manufacturing quality and costs and product testing are critical factors in EMC’s future growth. However, there can be no assurance that EMC’s efforts to monitor, develop, modify and implement appropriate testing and manufacturing processes for its products will be sufficient to avoid a rate of failure in its products that could otherwise have a material adverse effect on its business, results of operations or financial condition.

Due to the global nature of EMC’s business, political, economic or regulatory changes or other factors in a specific country or region could impair EMC’s international operations, future revenue or financial condition. A substantial portion of EMC’s revenues is derived from sales outside the United States including, increasingly, in rapid growth markets such as Brazil, Russia, India and China. In addition, a substantial portion of EMC’s products are manufactured outside of the United States. Accordingly, EMC’s future results could be materially adversely affected by a variety of factors relating to EMC’s operations outside the United States, including, among others, the following: • changes in foreign currency exchange rates; • changes in a specific country’s or region’s economic conditions; • political or social unrest; • trade restrictions; • import or export licensing requirements; • the overlap of different tax structures or changes in international tax laws; • changes in regulatory requirements;

53 • difficulties in staffing and managing international operations; • stringent privacy policies in some foreign countries; • compliance with a variety of foreign laws and regulations; and • longer payment cycles in certain countries.

EMC’s foreign operations, particularly in those countries with developing economies, are also subject to laws prohibiting improper payments and bribery, including the U.S. Foreign Corrupt Practices Act and similar regulations in foreign jurisdictions. EMC’s employees, contractors and agents may take actions in violation of EMC’s policies that are designed to ensure compliance with these laws. Any such violations could subject EMC to civil or criminal penalties or otherwise have an adverse effect on its business and reputation.

In addition, EMC holds a significant portion of its cash and investments in its international subsidiaries. Potential regulations could impact EMC’s ability to transfer this cash and these investments to the United States. Although the international cash is permanently reinvested, should EMC be required to repatriate cash, EMC may incur a significant tax obligation.

EMC operates a Venezuelan sales subsidiary with a U.S. dollar functional currency. As a result, Bolivar- denominated transactions are subject to exchange gains and losses that may impact its earnings. During the first quarter of 2016, the Venezuelan government devalued its official exchange rate to a fixed rate of 10 bolivars per U.S. dollar. This rate was formerly called the CENCOEX and is now called the DIPRO and is available for essential imports and transactions. The Venezuelan government also changed its SIMADI exchange rate to the DICOM rate which is available for all other transactions and which fluctuates based on supply and demand. During the first quarter of 2016, we remeasured all balances based upon the DIPRO rate which EMC believes is most appropriate for these items to be settled. EMC is closely monitoring information concerning these rates in the event it becomes appropriate to adopt a rate other than DIPRO. Changing the rate used to re-measure EMC’s Bolivar-denominated transactions rates could have an adverse effect on its financial position, results of operations or cash flows.

If EMC’s suppliers are not able to meet EMC’s requirements, EMC could have decreased revenues and earnings. EMC purchases or licenses many sophisticated components and products from one or a limited number of qualified suppliers, including some of EMC’s competitors. These components and products include flash drives, disk drives, high density memory components, power supplies and software developed and maintained by third parties. EMC has experienced delivery delays from time to time because of high industry demand or the inability of some vendors to consistently meet EMC’s quality or delivery requirements. Natural disasters have also in the past impacted, and may continue to impact, EMC’s ability to procure certain components in a timely fashion, and an economic crisis could also negatively affect the solvency of EMC’s suppliers, resulting in product delays. Current or future social and environmental regulations or issues, such as those relating to the sourcing of conflict minerals from the Democratic Republic of the Congo or the elimination of environmentally sensitive materials from EMC’s products, could restrict the supply of resources used in production or increase EMC’s costs. If any of EMC’s suppliers were to cancel or materially change contracts or commitments with EMC or fail to meet the quality or delivery requirements needed to satisfy customer orders for EMC’s products, EMC could lose time- sensitive customer orders, be unable to develop or sell certain products cost-effectively or on a timely basis, if at all, and have significantly decreased quarterly revenues and earnings, which would have a material adverse effect on EMC’s business, results of operations or financial condition. Additionally, EMC periodically transitions its product line to incorporate new technologies. The importance of transitioning EMC’s customers smoothly to such new technologies, along with EMC’s historically uneven pattern of quarterly sales (as discussed in a prior risk factor), intensifies the risk that the failure of a supplier to meet EMC’s quality or delivery requirements will have a material adverse impact on its revenues and earnings.

54 EMC’s investment portfolio could experience a decline in market value which could adversely affect EMC’s financial results. EMC held $7.7 billion in short- and long-term investments as of March 31, 2016. These investments consist primarily of investment grade debt securities, and EMC limits the amount of investment with any one issuer. A further deterioration in the economy, including a tightening of credit markets, increased defaults by issuers, or significant volatility in interest rates, could cause these investments to decline in value or could otherwise impact the liquidity of EMC’s portfolio. If market conditions deteriorate significantly, EMC’s results of operations or financial condition could be materially adversely affected.

Risks associated with EMC’s distribution channels may materially adversely affect its financial results. In addition to EMC’s direct sales force, EMC has agreements in place with many distributors, systems integrators, resellers and original equipment manufacturers to market and sell its products and services. EMC derives a significant percentage of its revenues from such distribution channels. EMC’s financial results could be materially adversely affected if its contracts with channel partners were terminated, if its relationship with channel partners were to deteriorate, if the financial condition of its channel partners were to weaken, if its channel partners were not able to timely and effectively implement their planned actions or if the level of demand for its channel partners’ products and services were to decrease. In addition, as EMC’s market opportunities change, EMC may have an increased reliance on channel partners, which may negatively impact its gross margins. There can be no assurance that EMC will be successful in maintaining or expanding these channels. If EMC is not successful in maintaining or expanding these channels, EMC may lose sales opportunities, customers and market share. Furthermore, EMC’s partial reliance on channel partners may materially reduce its management’s visibility of potential customers and demand for products and services, thereby making it more difficult to accurately forecast such demand. In addition, there can be no assurance that EMC’s channel partners will not develop, market or sell products or services or acquire other companies that develop, market or sell products or services in competition with EMC in the future.

In addition, as EMC focuses on new market opportunities and additional customers through its various distribution channels, including small-to-medium sized businesses, it may be required to provide different levels of service and support than it typically has provided in the past. EMC may have difficulty managing directly or indirectly through its channels these different services and support requirements and may be required to incur substantial costs to provide such services, which may adversely affect its business, results of operations or financial condition.

EMC’s business could be materially adversely affected as a result of the risks associated with alliances. EMC has strategic alliances with leading information technology companies, some of whom may be its competitors in other areas, and EMC plans to continue its strategy of developing key alliances in order to expand its reach into existing and new markets. There can be no assurance that EMC will be successful in its ongoing strategic alliances or that EMC will be able to find further suitable business relationships as it develops new products and strategies. Any failure to continue or expand such relationships could have a material adverse effect on EMC’s business, results of operations or financial condition.

There can be no assurance that companies with which EMC has strategic alliances, certain of which have substantially greater financial, marketing or technological resources than EMC, will not develop or market products in competition with EMC in the future, discontinue their alliances with EMC or form alliances with EMC’s competitors.

EMC’s business may suffer if it cannot protect its intellectual property. EMC generally relies upon patent, copyright, trademark and trade secret laws and contract rights in the United States and in other countries to establish and maintain its proprietary rights in its technology and products. However, there can be no assurance that any of EMC’s proprietary rights will not be challenged, invalidated or

55 circumvented. In addition, the laws of certain countries do not protect EMC’s proprietary rights to the same extent as do the laws of the United States. Therefore, there can be no assurance that EMC will be able to adequately protect its proprietary technology against unauthorized third-party copying or use, which could adversely affect its competitive position. Further, there can be no assurance that EMC will be able to obtain licenses or rights to any technology that it may require to conduct its business or that, if obtainable, such technology can be licensed at a reasonable cost.

From time to time, EMC receives notices from third parties claiming infringement by EMC’s products of third-party patent or other intellectual property rights. Responding to any such claim, regardless of its merit, could be time-consuming, result in costly litigation, divert management’s attention and resources and cause EMC to incur significant expenses. In the event there is a temporary or permanent injunction entered prohibiting EMC from marketing or selling certain of its products or a successful claim of infringement against EMC requiring it to pay royalties to a third party, and EMC fails to develop or license a substitute technology, EMC’s business, results of operations or financial condition could be materially adversely affected.

In addition, although EMC believes it has adequate security measures, if its intellectual property or other sensitive data is misappropriated, EMC could suffer monetary and other losses and reputational harm, which could materially adversely affect EMC’s business, results of operations or financial condition.

Issues arising during the upgrade of EMC’s enterprise resource planning system could affect EMC’s operating results and ability to manage its business effectively. EMC is in the process of upgrading its enterprise resource planning computer system to enhance operating efficiencies and provide more effective management of its business operations. While one phase of the upgrade was implemented in the third quarter of 2012, EMC still has further planned phases to its upgrade. The upgrade could cause substantial business interruption that could adversely impact EMC’s operating results. EMC is investing significant financial and personnel resources into this project. However, there is no assurance that the system upgrade will meet EMC’s current or future business needs or that it will operate as designed. EMC is heavily dependent on such computer systems, and any significant failure or delay in the system upgrade could cause a substantial interruption to EMC’s business and additional expense, which could result in an adverse impact on its operating results, cash flows or financial condition.

EMC may have exposure to additional income tax liabilities. As a multinational corporation, EMC is subject to income taxes in both the United States and various foreign jurisdictions. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change, which might significantly impact EMC’s effective income tax rate in the future. EMC’s domestic and international tax liabilities are subject to the allocation of revenues and expenses in different jurisdictions and the timing of recognizing revenues and expenses. Additionally, the amount of income taxes paid is subject to EMC’s interpretation of applicable tax laws in the jurisdictions in which it files and changes to tax laws. From time to time, EMC is subject to income tax audits. While EMC believes it has complied with all applicable income tax laws, there can be no assurance that a governing tax authority will not have a different interpretation of the law and assess EMC with additional taxes. Should EMC be assessed with additional taxes, there could be a material adverse effect on EMC’s results of operations or financial condition.

As part of the current Administration’s ongoing negotiations, President Obama, House of Representatives and Senate Committees have called for a comprehensive tax reform, which might change certain U.S. tax rules for U.S. corporations doing business outside the United States. While the scope of future changes differs among various tax proposals and remains unclear, proposed changes might include limiting the ability of U.S. corporations to deduct certain expenses attributable to offshore earnings, modifying the foreign tax credit rules and taxing currently certain transfers of intangibles offshore. The enactment of some or all of these proposals could increase the Company’s effective tax rate and adversely affect its profitability.

56 Recent developments in 2014, including the Irish government’s announced changes to the taxation of certain existing non-resident Irish companies beginning in January 2021, and the Organisation for Economic Co- operation and Development’s project on Base Erosion and Profit Shifting, could ultimately impact EMC’s tax liabilities to foreign jurisdictions and treatment of EMC’s foreign earnings from a U.S. perspective, which may adversely impact its effective tax rate.

On December 28, 2015, the U.S. Tax Court issued a final decision in Altera Corp. v. Commissioner related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. The U.S. Department of the Treasury has not withdrawn the requirement from its regulations to include stock-based compensation. The I.R.S. has the right to appeal the U.S. Tax Court decision. EMC concluded that no adjustment to its consolidated financial statements is appropriate at this time due to the uncertainties with respect to the ultimate resolution of this case.

Changes in laws or regulations could materially adversely affect EMC. EMC’s business, results of operations or financial condition could be materially adversely affected if laws, regulations or standards relating to EMC or its products are newly implemented or changed. In addition, EMC’s compliance with existing regulations may have a material adverse impact on EMC. Under applicable federal securities laws, including the Sarbanes-Oxley Act of 2002, EMC is required to evaluate and determine the effectiveness of its internal control structure and procedures for financial reporting. Should EMC or its independent auditors determine that EMC has material weaknesses in its internal controls, its results of operations or financial condition may be materially adversely affected.

Changes in generally accepted accounting principles may materially adversely affect EMC. From time to time, the Financial Accounting Standards Board (“FASB”) promulgates new accounting principles that could have a material adverse impact on EMC’s results of operations or financial condition. The FASB is currently contemplating a number of new accounting pronouncements which, if approved, could materially change EMC’s reported results. Such changes could have a material adverse impact on EMC’s results of operations and financial position.

EMC’s business could be materially adversely affected as a result of the risks associated with acquisitions, investments and joint ventures. As part of EMC’s business strategy, it seeks to acquire businesses that offer complementary products, services or technologies. These acquisitions are accompanied by risks commonly encountered in an acquisition of a business, which may include, among other things: • the effect of the acquisition on EMC’s financial and strategic position and reputation; • the failure of an acquired business to further EMC’s strategic plans; • the failure of the acquisition to result in expected benefits, which may include benefits relating to enhanced revenues, technology, human resources, cost savings, operating efficiencies and other synergies; • the difficulty and cost of integrating the acquired business, including costs and delays in implementing common systems and procedures and costs and delays caused by communication difficulties or geographic distances between the two companies’ sites; • the assumption of known or unknown liabilities of the acquired business, including litigation-related liability; • the potential impairment of acquired assets; • the lack of experience in new markets, products or technologies or the initial dependence on unfamiliar supply or distribution partners;

57 • the diversion of EMC management’s attention from other business concerns; • the impairment of relationships with customers or suppliers of the acquired business or EMC’s customers or suppliers; • the recoverability of benefits from goodwill and intangible assets and the potential impairment of these assets; • the potential loss of key employees of the acquired company; and • the potential incompatibility of business cultures.

These factors could have a material adverse effect on EMC’s business, results of operations or financial condition. To the extent that EMC issues shares of its common stock or other rights to purchase its common stock in connection with any future acquisition, existing shareholders may experience dilution. Additionally, regardless of the form of consideration issued, acquisitions could negatively impact EMC’s net income.

In addition to the risks commonly encountered in the acquisition of a business as described above, EMC may also experience risks relating to the challenges and costs of closing a transaction or failing to close an announced transaction. Further, the risks described above may be exacerbated as a result of managing multiple acquisitions at the same time.

EMC also seeks to invest in businesses that offer complementary products, services or technologies and to, from time to time, create new joint ventures or alliances. These investments and ventures are accompanied by risks similar to those encountered in an acquisition of a business.

EMC’s pension plan assets are subject to market volatility. EMC has a noncontributory defined benefit pension plan assumed as part of EMC’s acquisition of Data General Corporation in 1999. The plan’s assets are invested in common stocks, bonds and cash. The expected long-term rate of return on the plan’s assets was 6.50%. This rate represents the average of the expected long- term rates of return weighted by the plan’s assets as of December 31, 2015. As market conditions permit, EMC expects to continue to shift the asset allocation to lower the percentage of investments in equities and increase the percentage of investments in long-duration fixed-income securities. The effect of such change could result in a reduction in the long-term rate of return on plan assets and an increase in future pension expense. As of December 31, 2015, the ten-year historical rate of return on plan assets was 6.45%, and the inception to date return on plan assets was 6.46%. In 2015, EMC experienced a 2.42% loss on plan assets. Should EMC not achieve the expected rate of return on the plan’s assets or if the plan experiences a decline in the fair value of its assets, EMC may be required to contribute assets to the plan which could materially adversely affect EMC’s results of operations or financial condition.

EMC’s business could be materially adversely affected by changes in regulations or standards regarding energy use of EMC’s products. EMC continually seeks ways to increase the energy efficiency of its products. Recent environmental analyses have focused on the estimated amount of global carbon emissions that are generated by information technology products. As a result, governmental and non-governmental organizations have turned their attention to the development of regulations and standards to drive technological improvements to reduce the amount of such carbon emissions. There is a risk that any regulations or standards developed by these organizations will not fully address the complexity of the products and technology developed by the IT industry or will favor certain technological approaches to reducing such carbon emissions. Depending on the regulations or standards that are ultimately adopted, compliance with such regulations or standards could materially adversely affect EMC’s business, results of operations or financial condition.

58 EMC’s business could be materially adversely affected as a result of war, acts of terrorism, natural disasters or climate change. Terrorist acts, acts of war, natural disasters, or the direct and indirect effects of climate change (such as a rise in sea level, increased storm severity, drought, flooding, wildfires, pandemics, and social unrest from resource depletion and rising food prices) may cause damage or disruption to EMC’s employees, facilities, customers, partners, suppliers, distributors and resellers, which could have a material adverse effect on EMC’s business, results of operations or financial condition. Such events may also cause damage or disruption to transportation and communication systems and to EMC’s ability to manage logistics in such an environment, including receipt of components and distribution of products.

Risks Related to the Combined Company and the Transactions After the completion of the Dell-EMC merger, the MD Investors, the MSD Partners Investors and the SLP Investors will have the ability to elect all of our directors and such stockholders’ interests may differ from the interests of the holders of the notes. After the completion of the Dell-EMC merger, by reason of their ownership of substantially all of our Class A Common Stock, the MD Investors and the MSD Partners Investors will have the ability to elect all of our Group I Directors, who will have an aggregate of 3 of the 13 total votes on our board of directors, and all of Denali’s Group II Directors, who will have an aggregate of 7 of the 13 total votes on our board of directors. By reason of their ownership of all of the Class B Common Stock, the SLP Investors will have the ability to elect all of our Group III Directors, who will have an aggregate of 3 of the 13 total votes on our board of directors. Immediately following the completion of the Dell-EMC merger, Michael S. Dell is expected to be the sole Group II Director and will therefore be entitled to cast a majority of the votes entitled to be cast by all of our directors and thereby approve any matter submitted to our board of directors other than any matter that also requires the separate approval of the capital stock committee or the audit committee. Immediately following the completion of the Dell-EMC merger, Egon Durban and Simon Patterson are expected to be the sole Group III Directors.

After the completion of the Dell-EMC merger, we will be controlled by the MD Investors, the MSD Partners Investors and the SLP Investors, whose interests as shareholders may differ from the interests of the holders of the notes. By reason of their ownership of Class A Common Stock possessing a majority of the aggregate votes entitled to be cast by holders of Class A Common Stock, Class B Common Stock, Class C Common Stock and Class V Common Stock, voting together as a single class, the MD Investors and the MSD Partners Investors will have the ability to approve any matter submitted to the vote of all of the outstanding shares of our common stock voting together as a single class.

Through their control of us, the MD Investors and the MSD Partners Investors will, subject to certain special voting rights of the Class V Common Stock related to actions that affect the Class V Common Stock and certain consent rights of the SLP Investors, be able to control actions to be taken by us, including the election of directors of our subsidiaries (including VMware and its subsidiaries), amendments to our organizational documents and the approval of significant corporate transactions, including mergers, sales of substantially all of our assets, distributions of our assets, the incurrence of indebtedness and any incurrence of liens on our assets.

After the completion of the Dell-EMC merger, our board of directors intends to form an executive committee of the board consisting entirely of directors designated by the MD Investors and the SLP Investors and expects that a substantial portion of the power and authority of our board of directors will be delegated to the executive committee. After the completion of the Dell-EMC merger, our board of directors intends to form an executive committee of the board consisting entirely of Group II Directors and Group III Directors (none of whom are expected to be independent directors) and expects that a substantial portion of the power and authority of our

59 board of directors will be delegated to the executive committee. It is expected that, among other things, the executive committee will be delegated the board’s full power and authority to review and approve, with respect to us and our subsidiaries, acquisitions and dispositions, the annual budget and business plan, the incurrence of indebtedness, entry into material commercial agreements, joint ventures and strategic alliances, and the commencement and settlement of material litigation. In addition, the executive committee is expected to act as the compensation committee of our board of directors. See “Management—Committees of the Board of Directors—Executive Committee.” The interests of the MD Investors and the SLP Investors may differ materially from the interests of the holders of the notes.

The MD Investors and the SLP Investors will be able to continue to strongly influence or effectively control decisions made by our board of directors even if they own less than 50% of our combined voting power. So long as the MD Investors and the SLP Investors continue to own a significant amount of our combined voting power, even if such amount is less than 50%, they will continue to be able to strongly influence or effectively control decisions made by our board of directors. For example, prior to an initial public offering of DHI Group common stock, so long as each of the MD Investors (as a group) and the SLP Investors (as a group) continue to beneficially own an aggregate number of shares of DHI Group common stock equal to 10% or more of 98,181,818 shares of DHI Group common stock (as adjusted for any stock split, stock dividend, reverse stock split or similar event occurring after the Dell-EMC merger) (the “Reference Number”), the MD Investors and SLP Investors will be jointly entitled to nominate for election as directors up to three Group I Directors. So long as the MD Investors continue to beneficially own an aggregate number of shares of DHI Group common stock equal to 10% or more of the Reference Number, the MD Investors will be entitled to nominate for election as directors up to three Group II Directors. So long as the SLP Investors continue to beneficially own an aggregate number of shares of DHI Group common stock equal to 10% or more of the Reference Number, the SLP Investors will be entitled to nominate for election as directors up to three Group III Directors. Following an initial public offering of DHI Group common stock, so long as the MD Investors or the SLP Investors beneficially own at least 5% of all outstanding shares of our stock entitled to vote generally in the election of directors, the MD Investors or the SLP Investors, as the case may be, will be entitled to nominate at least one individual for election to the board, with the MD Investors or the SLP Investors, as the case may be, having the right to nominate a number of directors equal to the percentage of the total voting power for the regular election of our directors beneficially owned by the MD Investors or by the SLP Investors, as the case may be, multiplied by the number of directors then on our board of directors. See “Certain Relationships and Related Party Transactions—Related Party Transactions of Denali—Denali Stockholders Agreement.”

The MD Investors, the MSD Partners Investors and the SLP Investors and their respective affiliates may have business interests that conflict with your interests or those of the combined company. In the ordinary course of their business activities, the MD Investors, the MSD Partners Investors and the SLP Investors and their respective affiliates may engage in activities where their interests conflict with your interests or those of the combined company. Our amended and restated certificate of incorporation will provide that none of the MD Investors, the MSD Partners Investors and the SLP Investors, any of their respective affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. The MD Investors, the MSD Partners Investors and the SLP Investors also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. In addition, such stockholders may have an interest in pursuing acquisitions, divestitures and other transactions that, in their judgment, could enhance the value of their investment in us, even though such transactions might involve risks to you as a noteholder.

60 Uncertainties associated with the Dell-EMC merger may cause a loss of our, EMC’s and VMware’s senior management personnel and other key employees, which could have an adverse effect on the results of operations, cash flows and financial position of us and EMC. We, EMC and our and EMC’s respective subsidiaries (including VMware) are dependent on the continued availability and service of senior management personnel. Our success after the Dell-EMC merger will depend in part upon our ability and the abilities of our subsidiaries to retain and hire executive officers, other key senior management personnel and other key employees. The employees of us and EMC and our and EMC’s respective subsidiaries (including VMware) may experience uncertainty about their roles within us or EMC following the Dell-EMC merger. This uncertainty may inhibit each company’s ability to retain those executive officers, other key senior management personnel and other key employees following the Dell-EMC merger. There can be no assurance that executive officers, other key senior management personnel and other key employees can be retained either prior to or following the closing of the Dell-EMC merger to the same extent that us and EMC and our and EMC’s respective subsidiaries (including VMware) have previously been able to attract and retain their own employees. Any loss of such employees could have an adverse effect on the results of operations, cash flows and financial position of us and EMC.

We are highly dependent on the services of Michael S. Dell, our Chief Executive Officer, and our success depends on the ability to attract, retain and motivate key employees. We are highly dependent on the services of Michael S. Dell, our Chief Executive Officer and largest stockholder. If we lose the services of Mr. Dell, we may not be able to locate a suitable or qualified replacement and we may incur additional expenses to recruit a replacement, which could severely disrupt our business and growth. Further, we rely on key personnel, including other members of our executive leadership team, to support our business and increasingly complex product and services offerings. We may not be able to attract, retain and motivate the key professional, technical, marketing and staff resources needed.

We expect to incur substantial expenses related to the completion of the Dell-EMC merger and the integration of us and EMC. We expect to incur substantial expenses in connection with the completion of the Dell-EMC merger and the integration of us and EMC. There is a large number of processes, policies, procedures, operations, technologies and systems that must be integrated, including purchasing, accounting and finance, sales, payroll, pricing, revenue management, marketing and benefits. In addition, our business and EMC’s business will continue to maintain a presence in Texas and Massachusetts, respectively. The substantial majority of these costs will be non-recurring expenses related to the Dell-EMC merger (including financing of the Dell-EMC merger), facilities and systems consolidation costs. We may incur additional costs to maintain employee morale and to retain key employees. We and EMC will also incur transaction fees and costs related to formulating integration plans for the combined business, and the execution of these plans may lead to additional unanticipated costs. Additionally, as a result of the Dell-EMC merger, rating agencies may take negative actions with regard to our credit ratings, which may increase our costs in connection with the financing of the Dell-EMC merger. These incremental transaction and merger-related costs may exceed the savings we expect to achieve from the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses, particularly in the near term and in the event there are material unanticipated costs. We cannot identify the timing, nature and amount of all such expenses as of the date of this offering memorandum. However, any such expenses could affect our results of operations and cash flows from operations in the period in which such charges are recorded.

We may not realize the anticipated synergies from the Dell-EMC merger. Although we expect to achieve synergies as a result of the Dell-EMC merger, including with respect to VMware, we may not succeed in doing so. Our ability to realize the anticipated synergies will depend on the successful integration of EMC’s business with our business. Even if we successfully integrate our business and EMC’s business, the integration may not result in the realization of the full benefits of the anticipated synergies

61 or the realization of these benefits within the expected periods. For example, the elimination of duplicative costs may not be possible or may take longer than anticipated, benefits from the Dell-EMC merger may be offset by costs incurred in integrating us and EMC, or regulatory authorities may impose adverse conditions on the combined company in connection with granting approval of the Dell-EMC merger.

Failure to integrate EMC’s technology, solutions, products and services with those of Denali in an effective manner could reduce our profitability and delay or prevent realization of many of the potential benefits of the Dell-EMC merger. To obtain the benefits of the Dell-EMC merger, we must integrate EMC’s technology, solutions, products and services with those of ours in an effective manner. We may not be able to accomplish this integration quickly and efficiently. We may be required to spend additional time and money on operating compatibility that otherwise would be spent on developing and selling solutions, products and services. Our business, financial condition and results of operations could be harmed if we do not integrate operations effectively or use too many resources on integration efforts.

The time and effort required to be dedicated to the integration of us and EMC could divert the attention of our and EMC’s management from other business concerns or otherwise harm our respective businesses. The integration process could divert the attention of our and EMC’s management from other business concerns, and could result in the disruption or interruption of, or the loss of momentum in, our or EMC’s business, or in inconsistencies in standards, controls, procedures and policies. Any of these impacts could adversely affect our and EMC’s ability to maintain relationships with our respective customers and employees or achieve the anticipated benefits of the Dell-EMC merger, or could reduce our or EMC’s earnings or otherwise adversely affect our respective business and financial results.

We may be unable to use some or all of EMC’s net operating losses following the Dell-EMC merger. Based on current tax law, as of December 31,2015, EMC had gross federal, state and foreign net operating losses (“NOLs”) of approximately $250 million, $250 million and $224 million, respectively. Until such NOLs expire, they can be used to reduce taxable income in future years. After the Dell-EMC merger, our ability to use these tax attributes to offset future taxable income will be subject to significant limitations under Sections 382 and 383 and other provisions of the Internal Revenue Code. For this reason, we may be unable to use EMC’s NOLs after the Dell-EMC merger in the amounts it projects or at all.

Our and our subsidiaries’ and EMC’s and its subsidiaries’ (including VMware) business relationships may be subject to disruption due to uncertainty associated with the Dell-EMC merger, which could have an adverse effect on the results of operations, cash flows and financial position of us and EMC. Parties with which we or EMC, or our and EMC’s respective subsidiaries (including VMware), do business may experience uncertainty associated with the Dell-EMC merger and related transactions, including with respect to current or future business relationships with us, EMC, and our and EMC’s respective subsidiaries (including VMware) or the combined company as a whole. The business relationships of us and EMC and our and EMC’s respective subsidiaries (including VMware) may be subject to disruption as customers, distributors, suppliers, vendors and others may attempt to negotiate changes in existing business relationships, delay or defer certain business decisions with us, EMC or our and EMC’s respective subsidiaries or consider entering into business relationships with parties other than us, EMC, our and EMC’s respective subsidiaries (including VMware) or the combined company as a whole. These disruptions could have an adverse effect on our results of operations, cash flows and financial position following the closing of the Dell-EMC merger, including an adverse effect on our ability to realize the expected synergies and other benefits of the Dell-EMC merger. The risk, and adverse effect, of any disruption could be exacerbated by a delay in the completion of the Dell-EMC merger or a termination of the merger agreement.

62 The completion of the Dell-EMC merger is subject to a number of conditions, which, if not fulfilled or not fulfilled in a timely manner, may result in termination of the merger agreement. If the Dell-EMC merger is not completed, the notes will be mandatorily redeemed. The merger agreement contains a number of conditions to the completion of the Dell-EMC merger, including, among others: • approval of the merger agreement by EMC shareholders; • the receipt of approval by the relevant antitrust regulatory authorities; • the approval for listing by the NYSE of the Class V Common Stock issuable to EMC shareholders; • the absence of any law, order, judgment or other legal restraint issued or imposed by a court or other governmental entity that makes illegal or prohibits the closing of the merger; • the accuracy of the representations and warranties made in the merger agreement by the other party, subject to certain qualifications; and • performance by the other party of the obligations required to be performed by it at or prior to the completion of the Dell-EMC merger, including with respect to the delivery of a certain amount of cash on hand required to be delivered at the closing of the Dell-EMC merger.

Many of the conditions to the closing of the Dell-EMC merger are not within either our or EMC’s control, and we cannot predict when or if these conditions will be satisfied. For example, we have not yet received all required antitrust approvals. In addition, we have applied to list the Class V Common Stock on the NYSE. The NYSE has recently proposed a new rule relating to the listing of tracking stock, such as the Class V Common Stock. Such proposed new rule is currently subject to an SEC review period. The NYSE has indicated that it intends to amend its initial proposal in the near future. Although we believe that this new listing standard will be approved in a form that allows for the listing of the Class V Common Stock, if such rules are not approved in a form that allows the listing of the Class V Common Stock, a condition to the completion of the merger will not have been satisfied. The merger agreement provides for an outside date of December 16, 2016 for the completion of the Dell-EMC merger, beyond which the merger agreement may be terminated by either party. Although Denali and EMC have agreed in the merger agreement to use their reasonable best efforts, subject to certain limitations, to complete the Dell-EMC merger as promptly as practicable, these and other conditions to the completion of the Dell-EMC merger may take longer, and could cost more, than we expect. Any delay in completing the Dell-EMC merger may adversely affect the synergies and other benefits that we expect to achieve if the Dell-EMC merger and the integration of the companies’ respective businesses are completed within the expected timeframe. If the Dell-EMC merger is not completed by the outside date or the merger agreement is earlier terminated, we will be required to redeem the notes at a price of 101% of the issue price plus accrued and unpaid interest to the redemption date.

The merger agreement subjects EMC to restrictions on its business activities. The merger agreement subjects EMC to restrictions on its business activities and obligates EMC generally to use commercially reasonable efforts to carry on its business in the ordinary course consistent with past practice. These restrictions could prevent EMC from pursuing attractive business opportunities that arise prior to the completion of the Dell-EMC merger, and could otherwise have an adverse effect on EMC’s (or, following the completion of the Dell-EMC merger, our) results of operations, cash flows and financial position. Such restrictions generally include restrictions on: • payment of dividends; • stock splits, issuances of stock or similar transactions; • repurchases or redemptions of stock or securities; • amendments or organizational documents;

63 • acquisitions and sales of assets, and merger and acquisition activity; • incurrences or repayments of indebtedness; • loans or advances by EMC; • capital expenditures; • settlements of claims or litigation matters; • amendments of material contracts; • certain actions with respect to benefit plans or hiring or compensation of employees; • recognition of labor organizations; • revaluation of assets or changes in accounting policies; • plant closings or mass layoffs; • actions in connection with the complete or partial liquidation of EMC or any of its subsidiaries; • changes in methods of tax accounting or tax elections, or settlements of tax audits or proceedings, or the filing of amendments to tax returns; • failure to acquire additional shares of VMware common stock if such failure would cause VMware to cease to be a member of the affiliated group of corporations filing a consolidated tax return with EMC; and • authorizing, committing, resolving or agreeing to do any of the foregoing.

These restrictions do not apply to actions taken by VMware or Pivotal, although the merger agreement includes restrictions on the taking of certain actions by EMC in its capacity as a stockholder of VMware and Pivotal.

Lawsuits have been filed, and other lawsuits may be filed, challenging the Dell-EMC merger. An adverse ruling in any such lawsuit may delay the Dell-EMC merger or prevent the Dell-EMC merger from being completed. Lawsuits have been filed against various combinations of EMC, its current and former directors, VMware, certain of VMware’s directors, Denali and Dell, among other defendants. Certain of the lawsuits have generally alleged, among other things, that the directors of EMC breached their fiduciary duties to EMC shareholders in connection with the Dell-EMC merger; that various combinations of defendants aided and abetted the EMC directors in the alleged breach of their fiduciary duties; that the proxy statement filed by EMC with the SEC in connection with the Dell-EMC merger contains material misstatements and omissions; that EMC, in its capacity as the majority shareholder of VMware, and individual defendants who are directors of EMC, VMware or both, breached their fiduciary duties to minority shareholders of VMware in connection with the Dell-EMC merger; and that certain defendants aided and abetted those alleged breaches of fiduciary duties. The lawsuits have sought, among other things, injunctive relief enjoining the Dell-EMC merger, rescission of the Dell-EMC merger if consummated, an award of fees and costs and/or an award of damages. Additional lawsuits arising out of or relating to the merger agreement or the Dell-EMC merger may be filed in the future. Lawsuits challenging the Dell-EMC merger could prevent the Dell-EMC merger from being completed, or could result in a material delay in, or the abandonment of, the Dell-EMC merger.

Holders of a substantial number of EMC’s shares may deliver written demands for the appraisal of their shares under Massachusetts law. If these shareholders are entitled to appraisal rights and properly demand appraisal of their shares, the combined company may be required to seek additional financing to fund payments in cash in respect of such appraised shares. Holders of shares of EMC’s common stock who dissent from the transaction may attempt to seek the fair value of their shares in a judicial appraisal proceeding. We will, and we will cause EMC as our wholly-owned subsidiary following the completion of the Dell-EMC merger to, assert in any appraisal proceeding that an

64 exception to appraisal rights is applicable to the Dell-EMC merger. In this regard, the MBCA generally provides that shareholders are not entitled to appraisal rights in a merger in which shareholders already holding marketable securities receive cash and/or marketable securities of the surviving corporation in the merger and no director, officer or controlling shareholder has an extraordinary financial interest in the transaction. Such provision has not been the subject of judicial interpretation as to whether this exception applies where, such as in the Dell-EMC merger, shareholders will receive marketable securities of the parent of the surviving corporation in a merger. If dissenting EMC shareholders are entitled to appraisal rights, and the shareholder certifies that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, under the MBCA, EMC would be required to pay its estimate of fair value in respect of shares for which appraisal rights have been properly demanded (plus interest) within 100 days of the closing date of the Dell-EMC merger. With respect to shares of EMC for which appraisal rights have been properly demanded and are held by a shareholder who does not certify that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, instead of payment within 100 days of the closing date of the Dell-EMC merger, EMC must instead offer to make such payment that is conditioned on the shareholder’s agreement to accept such payment in full satisfaction of his claim. If such offer is not accepted, such shareholder may demand an appraisal of its shares through judicial proceedings but will only be entitled to receive payment for such shares upon completion of such proceedings. Any payment made to EMC shareholders who have properly exercised their appraisal rights would be required to be paid in cash (including in lieu of the Class V Common Stock originally offered). The appraised value of each share of EMC common stock could be more than, the same as, or less than the merger consideration that has been offered to each holder of shares of EMC’s common stock.

We expect that, to the extent that appraisal rights are determined to exist, and to the extent that any cash amount is required to be paid to EMC shareholders in respect of shares for which appraisal rights have been properly demanded and such amount exceeds the original cash consideration offered by us, such amount will be funded by cash on hand, additional borrowings under the senior secured credit facilities or a combination thereof. Any such excess amount may be significant. However, we cannot assure you that, at the time such payments are required to be made, we will have sufficient cash on hand or availability under our revolving credit facility and we may have to sell assets or incur debt (which may not be available on commercially reasonable terms or at all) in order to have sufficient cash to satisfy EMC’s obligations in respect of appraisal rights.

To the extent that appraisal rights are determined to exist, and to the extent that a shareholder certifies that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, if such shareholder has been paid EMC’s estimate of fair value and is dissatisfied with the amount of the payment, then that shareholder must notify EMC in writing of his, her or its estimate of the fair value of his, her or its shares and demand payment of that estimate plus interest, less the payment already made. If such shareholder makes a demand for payment which remains unsettled, EMC must commence an equitable proceeding in Massachusetts Superior Court within 60 days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If EMC does not commence the proceeding within the 60-day period, it must pay to each such shareholder the amount such shareholder demanded, plus interest. EMC must make all shareholders whose demands remain unsettled parties to the proceeding as an action against their shares, and all parties must be served with a copy of the petition. Each shareholder made a party to the proceeding is entitled to judgment (1) for the amount, if any, by which the court finds the fair value of the shareholder’s shares, plus interest, exceeds the amount paid by EMC to the shareholder for such shares or (2) the fair value, plus interest, of the shareholder’s shares for which EMC elected to withhold payment. There is no assurance that the Middlesex Superior Court, Commonwealth of Massachusetts will not determine that the fair value of the shares is materially greater than the merger consideration. Any payment in respect of the shares subject to appraisal rights will be required to be paid in cash.

Appraisal proceedings may take several years from the closing date of the Dell-EMC merger to be concluded by a judgment, and there can be no assurance as to the actual timing of any such proceeding. In addition, the court could determine that the fair value of the appraised shares exceeds the fair value estimated and already paid by EMC, which would require us to make additional payments in cash in respect of such appraised

65 shares. At the time such payments are required to be made, the combined company may decide to sell its assets or otherwise raise money (including through incurrence of additional debt, which may not be available on commercially reasonable terms or at all) in order to have sufficient cash to satisfy EMC’s obligations in respect of appraisal rights.

Risks Related to the Notes and this Offering Our substantial level of indebtedness could adversely affect our financial condition. After completing the Transactions, we will have a substantial amount of indebtedness, which will require significant interest payments. On a pro forma basis, we and our subsidiaries would have had approximately $55,007 million aggregate principal amount of indebtedness outstanding as of January 29, 2016 after giving effect to the Transactions (or $57,707 million as adjusted for the EMC Transactions only), including the notes offered hereby, and estimated cash interest for Fiscal 2016 would have been approximately $2,253 million (or $2,399 million as adjusted for the EMC Transactions only). We would also have had an additional $1,175 million available for borrowing under our revolving facility on such date (without giving effect to letters of credit outstanding) and an additional approximately $1,118 million available for borrowings under the ABS facilities (including approximately $3 million for future borrowing under the Canadian Facility, which is guaranteed by Dell).

Our substantial level of indebtedness could have important consequences, including the following: • we must use a substantial portion of our cash flow from operations to pay interest and principal on the senior secured credit facilities, the notes and other indebtedness, which will reduce funds available to us for other purposes such as working capital, capital expenditures, other general corporate purposes and potential acquisitions; • our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; • we will be exposed to fluctuations in interest rates because the floating rate notes, our senior secured credit facilities, the asset sale bridge facility (if incurred), the margin bridge facility and the VMware note bridge facility will have, and our ABS facilities and certain of our asset-backed debt securities have, variable rates of interest; • our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions; • we may be more vulnerable to the current economic downturn and adverse developments in our business; and • we may be unable to comply with financial and other restrictive covenants in our senior secured credit facilities, the notes and other indebtedness that will limit our ability to incur additional debt, make investments and sell assets, which could result in an event of default that, if not cured or waived, would have an adverse effect on our business and prospects and could force us into bankruptcy or liquidation.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in our senior secured credit facilities, the indenture that will govern the unsecured notes, the indenture governing the notes offered hereby and the terms of other indebtedness we may incur in the future. If new indebtedness is added to our debt levels, the related risks that we now face could intensify. Our ability to access additional funding under our revolving facility and the ABS facilities will depend upon, among other things, the absence of a default under either such facility, including any default arising from a failure to comply with the related covenants. If we are unable to comply with our covenants under the senior secured credit facilities and the ABS facilities, our liquidity may be adversely affected. As of January 29, 2016, after giving effect to the Transactions and as adjusted for the EMC Transactions, respectively, on a pro forma basis,

66 approximately $23,900 million and $26,600 million of our debt (other than any floating rate notes offered hereby) would have been variable rate debt and the effect of a 0.125% increase in interest rates would have increased such total annual cash interest by approximately $21 million or $24 million, respectively.

Our ability to meet expenses, to remain in compliance with our covenants under our debt instruments and to make future principal and interest payments in respect of our debt depends on, among other things, our operating performance, competitive developments and financial market conditions, all of which are significantly affected by financial, business, economic and other factors. We are not able to control many of these factors. Given current industry and economic conditions, our cash flow may not be sufficient to allow us to pay principal and interest on our debt, including the notes, and meet our other obligations.

We may not be able to achieve our objective of reducing our indebtedness in the first 18-24 months after the completion of the Dell-EMC merger. We have an objective of reducing our indebtedness in the first 18-24 months after completion of the Dell- EMC merger and achieving an investment grade credit rating for such indebtedness. The cash necessary to achieve that objective is expected to come from divestitures of our non-core businesses, including EMC’s non- core businesses, cash flows from our operations and cash generated by reductions in our working capital requirements. We may not be able to generate the sale proceeds, operating cash flows and other cash necessary to accomplish this objective. Any failure by us to significantly reduce our indebtedness and achieve our objectives could result in a material reduction in our credit quality and adversely impact the trading price of the notes.

We may be able to incur more indebtedness, in which case the risks associated with our substantial leverage, including our ability to service our indebtedness, would increase. In addition, the value of the rights of holders of the notes to the collateral may be reduced by any increase in the indebtedness secured by the collateral. The indenture that will govern the unsecured notes and the senior secured credit facilities will permit, subject to specified conditions and limitations, the incurrence of a significant amount of additional indebtedness. The indenture governing the notes will not limit our ability to incur unsecured debt and will permit us to incur a significant amount of additional secured debt, subject to specified conditions and limitations. If we incur any additional secured indebtedness that ranks pari passu with the notes with respect to the collateral, subject to collateral arrangements and the intercreditor agreement, the holders of that debt will be entitled to share ratably with the holders of the notes in any proceeds distributed in connection with any exercise of remedies with respect to the collateral or insolvency, liquidation, reorganization, dissolution or other winding up of our company. This may have the effect of reducing the amount of proceeds paid to holders of the notes. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness, including obligations under lease arrangements that are currently recorded as operating leases even if operating leases were to be treated as debt under GAAP. As of January 29, 2016, after giving effect to the Transactions on a pro forma basis, we would have been able to incur an additional $1,175 million of indebtedness under our revolving facility (without giving effect to letters of credit outstanding) and an additional approximately $1,118 million of indebtedness under the ABS facilities (including approximately $3 million for future borrowing under the Canadian Facility, which is guaranteed by Dell). If we incur additional debt, the risks associated with this substantial leverage and the ability to service such debt would increase. See “Description of Other Indebtedness” and “Description of Notes.”

We may be unable to obtain the debt financing to fund the Dell-EMC merger on the terms described in this offering memorandum or at all. We expect to finance the cash consideration for the Dell-EMC merger, the refinancing of EMC’s existing unsecured revolving credit facility and commercial paper, Dell International’s existing ABL credit facility and term loan facilities and the existing first lien notes and the payment of related fees and expenses in part with up to $49.5 billion, in the aggregate, in debt financings (not all of which is expected to be drawn at the closing of the Dell-EMC merger). We expect such debt financings will consist of the senior secured credit facilities, senior

67 secured notes (including the notes offered hereby), one or more series of unsecured notes, the asset sale bridge facility, the margin bridge facility and the VMware bridge facility. The terms of the senior secured credit facilities, the asset sale bridge facility, the margin bridge facility and the VMware bridge facility are subject to change and a number of factors and conditions, including market conditions. Adequate financing may not be available or, if available, may not be available on terms satisfactory to us.

The notes will be structurally subordinated to the debt and other liabilities of our non-guarantor subsidiaries (other than the issuers), and your right to receive payments on the notes could be adversely affected if any of such non-guarantor subsidiaries declares bankruptcy, liquidates or reorganizes. Our obligations under the notes are structurally subordinated to the debt and other liabilities of our non- guarantor subsidiaries (other than the issuers), which include, among others, our non-wholly-owned subsidiaries, foreign subsidiaries, receivables subsidiaries and subsidiaries designated as unrestricted subsidiaries under the senior secured credit facilities. In particular, SecureWorks, Boomi, Virtustream, Pivotal and VMware and their respective subsidiaries will not guarantee the notes. Holders of the notes will not have any claim as a creditor against our non-guarantor subsidiaries (other than the issuers). In the event that any of such non-guarantor subsidiaries becomes insolvent, liquidates, reorganizes, dissolves or otherwise winds up, holders of their debt and their trade creditors will generally be entitled to payment on their claims from the assets of those subsidiaries before any of those assets are made available to us. Consequently, your claims in respect of the notes or note guarantees will be structurally subordinated to all of the liabilities of such non-guarantor subsidiaries including, without limitation, our subsidiaries that are borrowers under the ABS facilities and issuers of the asset-backed debt securities. Further, Dell provides an unsecured guarantee of the obligations under the Canadian Facility, of which $132 million was outstanding as of January 29, 2016. As adjusted for the EMC Transactions, the non- guarantor subsidiaries (excluding the issuers) would have accounted for approximately $42,502 million, or 55%, of our total net revenue, and approximately $4,505 million of operating income, in each case for Fiscal 2016. Excluding the effect of intercompany balances as well as intercompany transactions, as adjusted for the EMC Transactions, the non-guarantor subsidiaries (excluding the issuers) would have accounted for approximately $44,984 million, or 33%, of our total assets, and approximately $31,494 million, or 28%, of our total liabilities, in each case as of January 29, 2016. In addition, as of January 29, 2016, as adjusted for the EMC Transactions, there would have been approximately $1,118 million for future borrowing under the ABS facilities (including approximately $3 million for future borrowing under the Canadian Facility, which is guaranteed by Dell), all of which would be structurally senior to the notes.

In addition, any guarantee of the notes may be released upon the occurrence of certain events, including the following: • in the case of a subsidiary guarantor, any sale, exchange, transfer or other disposition of (i) capital stock of such guarantor, after which such guarantor is no longer a subsidiary, or (ii) all or substantially all of the assets of such guarantor; • the release or discharge of any guarantee or indebtedness of such guarantor with respect to the senior secured credit facilities (including as a result of such guarantor being designated an “unrestricted subsidiary” under the senior secured credit facilities) or the release or discharge of such other guarantee or indebtedness that resulted in the creation of the note guarantee by such guarantor; • the merger, amalgamation or consolidation of any guarantor with and into an issuer or another guarantor or upon the liquidation of a guarantor; or • upon the occurrence of an Investment Grade Event.

If any note guarantee is released, no holder of the notes will have a claim as a creditor against any entity that is no longer a guarantor of the notes, and the indebtedness and other liabilities, including trade payables and preferred stock, if any, whether secured or unsecured, of such entity will be effectively senior to the claim of any holders of the notes. See “Description of Notes—Note Guarantees—Release of Note Guarantees.”

68 The senior secured credit facilities and the indenture that will govern the unsecured notes are expected to impose significant operating and financial restrictions on us. The senior secured credit facilities and the indenture that will govern the unsecured notes are expected to contain covenants that, prior to the mergers and the assumption, limit the Fincos’ ability and, after the consummation of the mergers and the assumption, limit our ability and the ability of certain of our subsidiaries to: • incur additional debt or issue certain preferred shares; • pay dividends on or make other distributions in respect of its capital stock or make other restricted payments; • make certain investments; • sell or transfer certain assets; • create liens on certain assets to secure debt; • consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; • enter into certain transactions with its affiliates; and • allow to exist certain restrictions on the ability of its subsidiaries to pay dividends or make other payments to us.

In addition, as discussed under “Description of Other Indebtedness,” we expect that the term loan A facilities and revolving facility will require us to maintain a first lien leverage ratio that is no greater than 5.5:1.0 or a higher leverage ratio based on the consolidated EBITDA of Dell.

All of these covenants may adversely affect our ability to finance our operations, meet or otherwise address our capital needs, pursue business opportunities, react to market conditions or otherwise restrict activities or business plans. A breach of any of these covenants could result in a default in respect of the related indebtedness. If a default occurs, the relevant lenders could elect to declare the indebtedness, together with accrued interest and other fees, to be immediately due and payable and proceed against any collateral securing that indebtedness.

The indenture governing the notes will not contain financial covenants and will only provide limited protection against significant corporate events and other actions we may take that could adversely impact your investment in the notes. The indenture governing the notes contains limited protective covenants and may not be sufficient to protect your investment in the notes.

The indenture governing the notes does not: • require us to maintain any financial ratios or specific levels of net worth, revenues, income, cash flow or liquidity and, accordingly, does not protect holders of the notes in the event we experience significant adverse changes in our financial position, results of operations or cash flows; • restrict our ability to issue securities or otherwise incur indebtedness (subject to certain limitations on our ability to incur liens on assets securing the notes and the note guarantees prior to the occurrence of a Release Event and, following the occurrence of a Release Event, subject to certain limitations on our ability to incur indebtedness that is secured by Principal Property (as defined in “Description of Notes”)); • restrict our ability to repurchase or prepay any other of our securities or other indebtedness; • restrict our ability to make investments or to repurchase or pay dividends or make other payments in respect of our common stock or other securities ranking junior to the notes; or • restrict our ability to enter into highly leveraged transactions.

69 As a result of the foregoing, when evaluating the terms of the notes, you should be aware that the terms of the indenture governing the notes and the notes do not restrict our ability to engage in, or to otherwise be a party to, a variety of corporate transactions, circumstances and events that could have an adverse impact on your investment in the notes.

We may not have sufficient cash flows from operating activities to service our indebtedness and meet our other cash needs and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful. Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future. Our ability to generate cash will be subject to general economic, financial, competitive, legislative, regulatory and other factors, some of which are beyond our control. Our future cash flow, cash on hand or available borrowings may not be sufficient to meet our obligations and commitments. If we are unable to generate sufficient cash flow from operations in the future to service our indebtedness and to meet our other commitments, we will be required to adopt one or more alternatives, such as refinancing or restructuring our indebtedness (including the notes), selling material assets or operations or seeking to raise additional debt or equity capital. These actions may not be effected on a timely basis or on satisfactory terms or at all, or these actions may not enable us to continue to satisfy our capital requirements. In addition, our existing or future debt agreements contain and will contain restrictive covenants that may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all our debts. See “Description of Other Indebtedness” and “Description of Notes.”

In addition, we conduct substantially all of our operations through our subsidiaries, certain of which will not be issuers or guarantors of the notes or our other indebtedness. Accordingly, repayment of our indebtedness, including the notes, will be dependent in part on the generation of cash flow by our subsidiaries and their ability to make such cash available to us or the issuers, by dividend, debt repayment or otherwise. Unless they are guarantors of the notes or our other indebtedness, the subsidiaries will not have any obligation to pay amounts due on the notes or our other indebtedness, as applicable, or to make funds available for that purpose. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us or the issuers to make payments in respect of our indebtedness, including the notes. Each subsidiary is a distinct legal entity, and under certain circumstances legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. In particular, VMware does not currently pay a dividend and we do not expect SecureWorks to pay a dividend. Any decisions regarding dividends on the VMware or SecureWorks common stock would be a decision of the board of directors of such entity. The cash and cash equivalents at VMware and SecureWorks and any of our other subsidiaries that may be publicly traded may not be available or may be of limited assistance to our ability to make payments of principal and interest under the notes when due and to comply with our other obligations under the notes. While the indenture governing the notes and the agreements governing certain of our other indebtedness will limit the ability of certain of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations will be subject to certain qualifications and exceptions. In the event that we and the issuers do not receive distributions from our subsidiaries, we may be unable to make the required principal and interest payments on our indebtedness, including the notes.

If we cannot make scheduled payments on our debt, we will be in default, and as a result, holders of the notes and certain of our other indebtedness could declare all outstanding principal and interest to be due and payable, the lenders under the senior secured credit facilities could terminate their commitments to loan money and the lenders under such facilities could foreclose against the assets securing the borrowings under such agreements and we could be forced into bankruptcy or liquidation, which, in each case, could result in your losing all or a portion of your investment in the notes.

70 Denali and certain subsidiaries, including Denali’s non-wholly-owned subsidiaries, foreign subsidiaries, receivables subsidiaries and subsidiaries designated as unrestricted subsidiaries under the senior secured credit facilities, will not be subject to the restrictive covenants in the indenture governing the notes. Prior to a Release Event, only the issuers and the guarantors (other than Denali) will be subject to the restrictive covenants in the indenture governing the notes. After the occurrence of a Release Event, only the issuers and certain of its subsidiaries will be subject to the restrictive covenants in the indenture governing the notes. In addition, none of Denali or any of its non-wholly-owned subsidiaries, foreign subsidiaries, receivables subsidiaries and subsidiaries designated as unrestricted subsidiaries under the senior secured credit facilities (including SecureWorks, Boomi, Virtustream, Pivotal and VMware and their respective subsidiaries) will be subject to the restrictive covenants in the indenture governing the notes at any time. Denali and these subsidiaries will be able to engage in many of the activities that we and our subsidiaries subject to the restrictive covenants in the indenture governing the notes will be prohibited or limited from doing under the terms of the indenture. These actions could be detrimental to our ability to make payments of principal and interest under the notes when due and to comply with our other obligations under the notes and could reduce the amount of our assets that would be available to satisfy your claims should we default on the notes.

The lenders under the senior secured credit facilities will have the discretion to release guarantors under these facilities in a variety of circumstances, which will cause those guarantors to be released from their guarantees of the notes. So long as any obligations under the senior secured credit facilities remain outstanding, any guarantee of the notes may be released without action by, or consent of, any holder of notes or the trustee under the indenture governing the notes if, at the discretion of lenders under the senior secured credit facilities, such guarantor’s guarantee of the senior secured credit facilities is released. The lenders under the senior secured credit facilities will have the discretion to release the guarantees under the senior secured credit facilities in a variety of circumstances. Any guarantors of the notes that are released as guarantors under the senior secured credit facilities will automatically be released as guarantors of the notes. You will not have a claim as a creditor against any entity that is no longer a guarantor of the notes, and the indebtedness and other liabilities, including trade payables, whether secured or unsecured, of all released subsidiaries will effectively be senior to your claims as a holder of the notes.

The note guarantees and the liens securing the note guarantees may not be enforceable because of fraudulent conveyance laws and, as a result, you may be required to return payments received by you in respect of the note guarantees and the liens. The incurrence of the note guarantees and the grant of liens by our guarantors (including any future note guarantees and future liens) may be subject to review under U.S. federal bankruptcy law or relevant state fraudulent conveyance laws if a bankruptcy case or lawsuit is commenced by or on behalf of the guarantors or their unpaid creditors. Under these laws, if in such a case or lawsuit a court were to find that, at the time such guarantor incurred a guarantee of the notes or granted the lien, such guarantor: • incurred the guarantee of the notes or granted the lien with the intent of hindering, delaying or defrauding current or future creditors, • received less than reasonably equivalent value or fair consideration for incurring the note guarantee or granting the lien, • was insolvent or was rendered insolvent, • was engaged, or about to engage, in a business or transaction for which its remaining assets constituted unreasonably small capital to carry on its business, or • intended to incur, or believed that it would incur, debts and obligations beyond its ability to pay as such debts and obligations matured (as all of the foregoing terms are defined in or interpreted under the relevant fraudulent conveyance or transfer statutes),

71 then such court could avoid the note guarantee or lien of such guarantor or subordinate the amounts owing under such note guarantee or such lien to such guarantor’s presently existing or future debt, or take other actions detrimental to you.

A court would likely find that a guarantor did not receive reasonably equivalent value or fair consideration for its note guarantee or the related lien if the guarantor did not substantially benefit directly or indirectly from the issuance of the notes. Thus, it may be asserted (and a court may consequently determine) that the guarantors incurred their note guarantees for the issuers’ benefit and did not themselves receive a direct or indirect benefit from the issuance of the notes, such that they incurred the obligations under the note guarantees or granted the liens for less than reasonably equivalent value or fair consideration.

The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied in any proceeding. Generally, a company would be considered insolvent if, at the time it incurred the debt or issued the guarantee: • the sum of its debts (including contingent liabilities) is greater than its assets, at fair valuation; • the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured; or • it could not pay its debts as they became due.

In addition, any payment by any issuer pursuant to the notes or by a guarantor under a note guarantee made at a time such issuer or guarantor were found to be insolvent could be voided and required to be returned to such issuer or such guarantor or to a fund for the benefit of such issuer’s or such guarantor’s creditors if such payment is made to an insider within a one-year period prior to a bankruptcy filing or within 90 days for any outside party and such payment would give such insider or outsider party more than such party would have received in a distribution under the Bankruptcy Code in a hypothetical Chapter 7 case.

We cannot assure you as to what standard a court would apply in determining whether the issuers or the guarantors were solvent at the relevant time or that a court would agree with our conclusions in this regard, or, regardless of the standard that a court uses, that it would not determine that an issuer or a guarantor were indeed insolvent on that date; that any payments to the holders of the notes (including under the note guarantees) did not constitute preferences, fraudulent transfers or conveyances on other grounds; or that the issuance of the notes and the note guarantees would not be subordinated to any issuer’s or any guarantor’s other debt.

If a note guarantee or a lien is avoided as a fraudulent conveyance or found to be unenforceable for any reason, you will not have a claim against that obligor and will only be a creditor of the issuers or any guarantor to the extent the issuers’ or such guarantor’s obligation is not set aside or found to be unenforceable. Sufficient funds to repay the notes may not be available from these other sources, including the remaining obligors, if any; accordingly, in the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the notes. You may also be required to return payments you have received with respect to such note guarantees and liens.

Each note guarantee will contain a provision intended to limit the guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its note guarantee to be a fraudulent transfer. This provision may not be effective to protect the note guarantees from being avoided under applicable fraudulent transfer laws or may reduce the guarantor’s obligation to an amount that effectively makes the note guarantee worthless. In a Florida bankruptcy court decision (which was subsequently reinstated by the United States Court of Appeals for the Eleventh Circuit on different grounds), this kind of provision was found to be ineffective to protect the guarantees.

Finally, as a court of equity, a bankruptcy court may subordinate the claims in respect of the notes or note guarantees to other claims against the issuers or the guarantors, respectively, under the principle of equitable

72 subordination if the court determines that (a) the holder of notes engaged in some type of inequitable conduct, (b) the inequitable conduct resulted in injury to our other creditors or conferred an unfair advantage upon the holders of notes and (c) equitable subordination is not inconsistent with the provisions of the Bankruptcy Code.

We may not be able to finance a change of control offer as required by the indenture governing the notes offered hereby. Under the indenture governing the notes offered hereby, upon the occurrence of a Change of Control Triggering Event, we will be required to offer to repurchase all of the notes then outstanding at 101% of the principal amount, plus any accrued and unpaid interest to, but not including, the repurchase date. We may not be able to repurchase the notes upon a Change of Control Triggering Event because we may not have sufficient financial resources to purchase all of the notes that would be tendered upon a Change of Control Triggering Event. Our failure to repurchase the notes upon a Change of Control Triggering Event would cause a default under the indenture governing the notes offered hereby and a cross-default under our new senior secured credit facilities. Our senior secured credit facilities are also expected to provide that a change of control will be a default that permits lenders to accelerate the maturity of borrowings thereunder. Any of our future debt agreements, including the indenture that will govern the unsecured notes, may contain similar provisions. We cannot assure you that we will have the financial resources available or that we will be permitted by our debt instruments to fulfill these obligations upon the occurrence of a Change of Control Triggering Event in the future. We may require additional financing from third parties to fund any such purchases, and we may be unable to obtain financing on satisfactory terms or at all. Further, our ability to repurchase the notes may be limited by law. In order to avoid the obligations to repurchase the notes and events of default and potential breaches of the new senior secured credit facilities, we may have to avoid certain change of control transactions that would otherwise be beneficial to us.

In addition, certain important corporate events, such as leveraged recapitalizations, may not, under the indenture that will govern the notes, constitute a “change of control” that would require us to repurchase the notes, even though those corporate events could increase the level of our indebtedness or otherwise adversely affect our capital structure, credit ratings or the value of the notes. See “Description of Notes—Change of Control Triggering Event.”

Holders of the notes may not be able to determine when a change of control giving rise to their right to have the notes repurchased has occurred following a sale of “substantially all” of our assets. One of the circumstances under which a change of control may occur is upon the sale or disposition of “all or substantially all” of our assets. There is no precise established definition of the phrase “substantially all” under applicable law and the interpretation of that phrase will likely depend upon particular facts and circumstances. Accordingly, the ability of a holder of notes to require us to repurchase its notes as a result of a sale of less than all our assets to another person may be uncertain.

The amount of interest payable on the floating rate notes is set only once per period based on the three-month LIBOR rate on the interest determination date, which rate may fluctuate substantially. In the past, the level of the three-month LIBOR rate has experienced significant fluctuations. Historical levels, fluctuations and trends of the three-month LIBOR rate are not necessarily indicative of future levels. Any historical upward or downward trend in the three-month LIBOR rate is not an indication that the three-month LIBOR rate is more or less likely to increase or decrease, and the historical levels of the three-month LIBOR rate are not necessarily an indication of its future performance. In addition, although the actual three-month LIBOR rate on an interest payment date or at other times during an interest period may be higher than the three-month LIBOR rate on the applicable interest determination date, the only relevant date for purposes of determining the interest payable on the floating rate notes is the three-month LIBOR rate as of the respective interest determination date. Changes in the three-month LIBOR rates between interest determination dates will not affect the interest payable on the floating rate notes. As a result, changes in the three-month LIBOR rate may not result in a comparable change in the market value of the floating rate notes.

73 Uncertainty relating to the LIBOR calculation process may adversely affect the value of the floating rate notes. Regulators and law enforcement agencies in the United Kingdom and elsewhere are conducting civil and criminal investigations into whether the banks that contribute to the British Bankers’ Association (the “BBA”), in connection with the calculation of daily LIBOR may have been under-reporting or otherwise manipulating or attempting to manipulate LIBOR. A number of BBA member banks have entered into settlements with their regulators and law enforcement agencies with respect to alleged manipulation of LIBOR.

Actions by the BBA, regulators or law enforcement agencies may result in changes to the manner in which LIBOR is determined. At this time, it is not possible to predict the effect of any such changes or any other reforms to LIBOR that may be enacted in the United Kingdom or elsewhere. Uncertainty as to the nature of such potential changes may adversely affect the trading market for LIBOR-based securities, including the floating rate notes.

Ratings of the notes and other factors may affect the market price and marketability of the notes. We currently expect that, upon issuance, the notes will be rated by Moody’s and S&P. Such ratings will be limited in scope, and will not address all material risks relating to an investment in the notes, but rather will reflect only the view of each rating agency at the time it issues the rating. An explanation of the significance of such rating may be obtained from such rating agency. There is no assurance that such credit ratings will be issued or remain in effect for any given period of time or that such ratings will not be lowered, suspended or withdrawn entirely by the rating agencies, if, in each rating agency’s judgment, circumstances so warrant. It is also possible that such ratings may be lowered in connection with the application of the proceeds of this offering or in connection with future events, such as future acquisitions. Holders of the notes will have no recourse against us or any other parties in the event of a change in or suspension or withdrawal of such ratings. Any lowering, suspension or withdrawal of such ratings may have an adverse effect on the market price or marketability of the notes. In addition, the condition of the financial markets and other factors may affect the market price or marketability of the notes.

We cannot assure you that an active trading market will develop for the notes. Prior to this offering, there has been no public market for the notes, and there can be no assurance that any such market will develop. If issued in exchange for the notes pursuant to the registration rights agreement, the exchange notes will be new securities for which there will not initially be a market. We do not intend to list the notes or any exchange notes on any national securities exchange. We have been advised by the initial purchasers that following the completion of this offering, the initial purchasers currently intend to make a market in the notes and the exchange notes, if issued. However, the initial purchasers are not obligated to do so and, even if they do, they may discontinue market-making activities at any time. In addition, market-making activities with respect to the notes may be limited during the exchange offer or while the effectiveness of a shelf registration statement is pending. If no active trading market develops, you may not be able to resell your notes or exchange notes at their fair market value or at all. If a market were to develop, the notes or the exchange notes could trade at prices that are lower than the initial offering price depending on many factors, including prevailing interest rates, general economic conditions and our financial condition, performance and prospects.

There are restrictions on your ability to transfer or resell the notes. We are only required to register the notes within five years of the date on which the EMC Transactions are consummated and prior to such time, the indenture governing the notes will not be qualified by the Trust Indenture Act. The notes are being offered and sold in transactions exempt from, or not subject to, registration under the Securities Act and applicable state securities laws. Therefore, you may transfer or resell the notes in the United States only in a transaction registered under or exempt from the registration requirements of the Securities Act and applicable state securities laws. By purchasing the notes, you will be deemed to have made certain acknowledgements, representations and agreements as set forth under “Transfer Restrictions.”

74 Under the registration rights agreement in connection with the notes, we will agree to file the exchange offer registration statement with the SEC and to use our reasonable best efforts to cause the registration statement to become effective with respect to the exchange notes within five years after the date on which the EMC Transactions are consummated. Consequently, holders of notes may be required to bear the risk of their investment in the notes for up to five years from the date on which the EMC Transactions are consummated. Furthermore, the SEC has broad discretion to declare any registration statement effective and may delay, defer or suspend the effectiveness of any registration statement for a variety of reasons. If issued under an effective registration statement, the exchange notes generally may be resold or otherwise transferred by each holder of the exchange notes with no need for further registration. However, the exchange notes will constitute a new issue of securities with no established trading market. An active trading market for the exchange notes may not develop, or, in the case of non-exchanging holders of the notes, the trading market for the notes following the exchange offer may not continue. Until such time as the notes have been registered under the Securities Act, the notes will not be subject to Section 316(b) of the Trust Indenture Act and the amendment, supplement and waiver provisions in the indenture governing the notes will not conform to the express provisions in Section 316(b) of the Trust Indenture Act.

Certain of the covenants in the indenture governing the notes will not apply to us upon the occurrence of a Release Event. Upon the occurrence of a Release Event (including an Investment Grade Event), the covenant relating to the sale and transfer of certain assets with respect to the notes will cease to apply and the scope of the covenant relating to liens will be modified. Any such termination or modification of the covenants under the indenture governing the notes would allow us to engage in certain transactions that would not be permitted prior to such termination or modification. See “Description of Notes—Certain Covenants.”

In the event that the Dell-EMC merger is not consummated on or before December 16, 2016, the Fincos notify the escrow agent that we will not pursue the consummation of the Dell-EMC merger, other conditions to the release of the escrowed proceeds of this offering are not satisfied or the terms of the escrow agreement are not otherwise complied with, the notes will be subject to special mandatory redemption, and as a result, you may not obtain the return you expect on the notes. Upon consummation of the offering of the notes, the Fincos will enter into an escrow agreement, pursuant to which the Fincos will deposit into an escrow account an amount equal to the gross proceeds of this offering and either (x) the Fincos will also deposit (or cause to be deposited) in cash or (y) we will cause the issuing lenders under our existing ABL credit facility to issue letters of credit for the benefit of the escrow agent and the holders of the notes (or a combination of (x) and (y)), in each case, in an amount that is sufficient to pay the special mandatory redemption price described below and all interest that would accrue on the notes up to but not including the date that is one month after the consummation of the offering of the notes. Until the date that the conditions to release of the property in the escrow account are satisfied or the notes are otherwise required to be redeemed pursuant to the terms of the escrow agreement, prior to the last day of each month, (x) the Fincos will deposit (or cause to be deposited) such cash or (y) we will cause such letters of credit to be issued (or a combination of (x) and (y)), in each case, in an amount equal to the monthly interest that would accrue on the notes.

If, among other things, the Dell-EMC merger is not consummated by December 16, 2016, the Fincos will be required to redeem all of the notes offered hereby on the Special Mandatory Redemption Date in accordance with the terms of the indenture for the notes at a redemption price equal to 101% of the initial issue price of the notes, plus accrued and unpaid interest to, but not including, the Special Mandatory Redemption Date, which we refer to as the special mandatory redemption amount.

Upon such redemption, you may not be able to reinvest the proceeds from the redemption in an investment that yields comparable returns. Additionally, you may suffer a loss on your investment if you purchase the notes at a price greater than the issue price of the notes. See “Description of Notes—Escrow of Proceeds; Escrow

75 Conditions” and “Description of Notes—Special Mandatory Redemption.” Although the trustee, for the benefit of the holders of each of the respective series of notes, will be granted a first-priority lien on the funds in escrow, the ability of holders of the notes to realize upon such funds may be subject to certain bankruptcy law limitations in the event of a bankruptcy of the Fincos.

If a bankruptcy or reorganization case is commenced, bankruptcy laws may prevent the release of the escrowed funds. If the Fincos commence a bankruptcy or reorganization case, or one is commenced against the Fincos, while amounts remain in the escrow account described under “Description of Notes—Escrow of Proceeds; Escrow Conditions,” applicable bankruptcy laws may prevent the escrow agent from releasing the funds in the escrow accounts or applying those funds to effect a special mandatory redemption of the notes or otherwise applying those funds for the benefit of the holders of the notes. The court adjudicating that case might find that such escrow accounts are the property of the bankruptcy estate. Although the amounts in the respective escrow accounts will be pledged as collateral for payment, if required, of the special mandatory redemption price of the respective series of the notes, the automatic stay provisions of the federal bankruptcy laws generally prohibit secured creditors from foreclosing upon or disposing of a debtors’ property without bankruptcy court approval. As a result, holders of the respective series of the notes may not be able to have the funds in the respective escrow accounts applied at the time or in the manner contemplated by the indentures governing the notes and could suffer a loss as a result.

Prior to the consummation of the mergers and the assumption, the Fincos will have limited assets and Denali and its subsidiaries (other than the Fincos) will not guarantee the notes. Prior to the consummation of the mergers and the assumption, holders of the notes will not have any recourse to Denali or any of its subsidiaries (other than the Fincos) as the notes will be the obligations of the Fincos only, as co-issuers. Neither of the Fincos conduct any material operations or has any material assets (other than the escrowed proceeds and letters of credit, the proceeds of any other indebtedness incurred to finance the EMC Transactions and any cash, cash equivalents or letters of credit to fund expected interest payments from the date of incurrence of such indebtedness to the closing date of the Dell-EMC merger or any redemption premiums payable upon redemption of such indebtedness if the Dell-EMC merger is not consummated). In the event of a bankruptcy of the Fincos prior to the consummation of the mergers and the assumption, holders of the notes will have a secured claim as to the funds and letters of credit deposited into the escrow account and an unsecured claim to any other assets of the Fincos and will not have any recourse to any assets of Denali and its subsidiaries (other than the Fincos).

Risks Related to the Collateral for the Notes Security over the collateral will not be in place, and will not be perfected, on the date of issuance of the notes and not all security over the collateral will be in place on the closing of the Dell-EMC merger. Prior to the consummation of the mergers and the assumption, the notes will not be secured by any assets (other than amounts and letters of credit deposited into the escrow account). Therefore, the security interests (other than amounts and letters of credit deposited into the escrow account) in the collateral will not be in place and will not be perfected on the date of issuance of the notes. We expect that the security interests in the collateral will only be in place on the closing date of the Dell-EMC merger. In the event of a bankruptcy of the Fincos prior to the consummation of the mergers and the assumption, holders of the notes will only have an secured claim on the amounts and letters of credit in the escrow account with respect to the Fincos. In addition, while we will be required to use commercially reasonable efforts to have all security interests that are required to be perfected by the security documents to be in place within a specified period of time (which could be in excess of 90 days) after the closing of the Dell-EMC merger, we are not required to perfect any security interest that cannot be perfected with commercially reasonable efforts. Any issues that we are not able to resolve in connection with the delivery and recordation of such security interests may negatively impact the value of the

76 collateral. To the extent a security interest in certain collateral is not perfected on the date of the issuance of the notes, such security interest might be avoidable in bankruptcy, which could impact the value of the collateral. See “—Any future pledge of collateral or guarantee might be avoidable by a trustee in bankruptcy” below.

The value of the collateral securing the notes may not be sufficient to satisfy our obligations under the notes. Prior to the mergers and the assumption, the notes will not be secured by any assets (other than amounts and letters of credit deposited into the escrow account). Upon the consummation of the mergers and the assumption, obligations under the notes will be secured by a first-priority lien on certain tangible and intangible assets of the issuers and guarantors, subject to certain thresholds, exceptions and permitted liens. No appraisal of the value of the collateral has been made in connection with this offering, and the fair market value of the collateral will be subject to fluctuations based on factors that include, among others, changing economic conditions, competition and other future trends. By its nature, some or all of the collateral may be illiquid and may have no readily ascertainable market value. In the event of a foreclosure, liquidation, bankruptcy or similar proceeding, the lenders under the senior secured credit facilities will share the proceeds of the collateral ratably with the holders of the notes, thereby diluting the collateral coverage. In particular, the fair market value of the collateral may not be sufficient to repay the holders of the notes upon any foreclosure, liquidation, bankruptcy or similar proceeding. There also can be no assurance that the collateral will be saleable, and even if saleable, the timing of its liquidation would be uncertain. Accordingly, there may not be sufficient collateral to pay all or any of the amounts due on the notes. Any claim for the difference between the amount, if any, realized by holders of the notes from the sale of the collateral securing the notes and the obligations under the notes will rank equally in right of payment with all of our other unsecured unsubordinated indebtedness and other obligations, including trade payables. In addition, as discussed further below, the holders of the notes would not be entitled to receive post-petition interest or applicable fees, costs, expenses, or charges to the extent the amount of the obligations due under the notes exceeded the value of the collateral (after taking into account all other first-priority debt that was also secured by the collateral), or any “adequate protection” on account of any undersecured portion of the notes. See “—In the event of a bankruptcy of either of the issuers or any of our guarantors, holders of the notes may be deemed to have an unsecured claim to the extent that the issuers’ obligations in respect of the notes exceed the fair market value of the collateral that will secure the notes and the note guarantees.”

With respect to some of the collateral, the collateral agent’s security interest and ability to foreclose will also be limited by the need to meet certain requirements, such as obtaining third party consents and making additional filings. If we are unable to obtain these consents or make these filings, the security interests may be invalid and the holders will not be entitled to the collateral or any recovery with respect thereto. We cannot assure you that any such required consents can be obtained on a timely basis or at all. These requirements may limit the number of potential bidders for certain collateral in any foreclosure or other auction and may delay any sale, either of which events may have an adverse effect on the sale price of the collateral. Therefore, the practical value of realizing on the collateral may, without the appropriate consents and filings, be limited.

The indenture governing the notes will also permit the issuers and the guarantors to create additional liens on the collateral under specified circumstances, some of which liens may be pari passu with the liens securing the notes. Any obligations secured by such liens may further dilute the collateral and limit the recovery from the realization of the collateral available to satisfy holders of the notes. See “Description of Notes—Certain Covenants—Limitation on Liens.”

Sales of assets by the issuers and the guarantors could reduce the pool of assets that will secure the notes and the note guarantees. The security documents that will relate to the notes allow the issuers and the guarantors to remain in possession of, retain exclusive control over, freely operate and collect, invest and dispose of any income from, the collateral that will secure the notes. To the extent we sell any assets that constitute such collateral, the proceeds from such sale will be subject to the liens securing the notes and the note guarantees only to the extent

77 such proceeds would otherwise constitute “collateral” securing the notes and the note guarantees under the security documents. Such proceeds will also be subject to the security interests of certain creditors other than the holders of the notes, some of which may have a lien in those assets that is pari passu with the lien of the holders of the notes. For example, the holders of the notes and the lenders under the senior secured credit facilities will have a first-priority lien in the collateral that will secure the notes and the note guarantees. To the extent the proceeds from any sale of collateral do not constitute “collateral” under the security documents, the pool of assets that will secure the notes and the note guarantees would be reduced, and the notes and the note guarantees would not be secured by such proceeds.

The pledge of the capital stock and other securities of our affiliates that will secure the notes will be limited to the extent such capital stock and securities can secure each series of notes and each other series of SEC-registered secured debt without requiring the filing of separate financial statements with the SEC for that affiliate. The notes and the note guarantees will be secured by a pledge of the capital stock of some of our subsidiaries. Under the SEC regulations in effect as of the issue date of the notes, if the aggregate principal amount, par value, book value as carried by the registrant or market value (whichever is greatest) of the capital stock or other securities of an affiliate pledged as part of the collateral is greater than or equal to 20% of the aggregate principal amount of any series of the notes then outstanding or any other series of SEC-registered secured debt securities issued by us or our affiliates, such affiliate would be required to file separate financial statements of such affiliate with the SEC. Therefore, the indenture governing the notes and the security documents provide that, upon registration of the notes, any capital stock and other securities of any affiliate of the issuers will constitute collateral for the notes or any other series of SEC-registered secured debt securities issued by us or our affiliates only to the extent such capital stock and securities can secure each series of notes and each such other series of SEC-registered secured debt securities issued by us or our affiliates without resulting in the requirement to file separate financials of such affiliate under SEC regulations (or any other law, rule or regulation).

As a result, the capital stock and other securities to be pledged as collateral securing the notes may be limited. We expect that if the notes were registered as of the date of this offering memorandum, a substantial majority of the capital stock and other securities of affiliates of the issuers would be excluded from the collateral. The portion of the capital stock and other securities of our affiliates that constitute collateral that will secure the notes and the note guarantees may decrease or increase over time as the value of such capital stock and other securities, as well as the outstanding aggregate principal amount of the smallest tranche of outstanding SEC- registered debt securities issued by us or our affiliates, changes over time. Although the assets of an affiliate whose capital stock or other securities is excluded from the collateral may be pledged to secure the notes and the note guarantees, it may be more difficult, costly and time-consuming for holders of the notes to foreclose on and sell such assets than to foreclose on and sell such affiliate’s capital stock or other securities, so the proceeds realized upon any such foreclosure could be significantly less than those that would have been received upon any sale of such capital stock or other securities. See “Description of Notes—Security for the Notes—Certain Limitations on the Collateral.”

In addition, the collateral securing the senior secured credit facilities will not be subject to such limitation and, as a result, the notes and note guarantees will be effectively subordinated to the obligations under the senior secured credit facilities to the extent of the value of capital stock and other assets excluded from the collateral securing the notes and the note guarantees as a result of such limitation.

Certain property will be excluded from the collateral that will secure the notes and the note guarantees, and certain of such excluded property may secure debt other than the notes and the note guarantees. Certain categories of assets are excluded from the collateral that will secure the notes and the note guarantees, as discussed under “Description of Notes—Security for the Notes—Certain Limitations on the Collateral.” For example, the indenture governing the notes will permit liens in favor of third parties to secure

78 additional debt, including purchase money indebtedness and capital lease obligations, and any assets subject to liens securing purchase money indebtedness and capital lease obligations will be automatically excluded from the collateral that will secure the notes and the note guarantees to the extent the agreements governing such debt prohibit any other liens on such assets.

In addition, the collateral that will secure the notes will not include fee-owned real property with a book value of less than $150 million or any “principal property” as defined in the indentures governing Dell’s and EMC’s existing senior notes and debentures that will remain outstanding after the Dell-EMC merger and capital stock of any subsidiary holding “principal property,” as defined in the indentures governing Dell’s existing senior notes. We believe that, as of January 29, 2016, after giving effect to the Transactions on a pro forma basis, Dell (including EMC and its subsidiaries) would not have held any property qualifying as “principal property” under the indentures governing Dell’s existing senior notes that will remain outstanding after the Dell-EMC merger. We believe that, as of March 31, 2016, EMC held certain properties that constituted “principal property” under the indentures governing EMC’s existing senior notes that will remain outstanding after the Dell-EMC merger, of which the aggregate book value was approximately $838 million. “Principal property” under the indentures governing Dell’s existing senior notes refers to certain properties that have a net book value exceeding 1% of the “consolidated net tangible assets” (as defined therein) of Dell. To the extent consolidated net tangible assets decreases over time (including as a result of any deleveraging of Dell and its subsidiaries), this may result in additional properties constituting “principal property” under such indentures and therefore being excluded from the collateral that will secure the notes. In addition, the net book value of properties may change over time and constitute “principal property” under such indentures in the future. The collateral that will secure the notes will also not include any pledge of the assets or capital stock of subsidiaries that have been or will be designated as unrestricted subsidiaries under the senior secured credit facilities, including SecureWorks, Boomi, Virtustream, Pivotal and VMware and their respective subsidiaries. As of January 29, 2016, excluding the effect of intercompany balances as well as intercompany transactions, after giving effect to the Transactions on a pro forma basis, such unrestricted subsidiaries and their subsidiaries and the EMC subsidiaries that own “principal property,” as defined in the indentures governing EMC’s existing senior notes, would have accounted for approximately $19,471 million, or 25%, of our total net revenue, approximately $4,364 million of operating income, and approximately $32,660 million, or 24%, of our total assets. If an event of default occurs and the maturity of the notes is accelerated, the notes and the note guarantees will rank pari passu with the holders of other unsecured or senior indebtedness of the relevant obligor with respect to such excluded assets. As a result, if the value of the assets pledged as security for the notes is less than the value of the claims of the holders of the notes, those claims may not be satisfied in full before the claims of our unsecured creditors are paid.

Further, certain assets that are excluded from the collateral that will secure the notes and the note guarantees will be pledged to secure other indebtedness, including the margin bridge facility and the VMware note bridge facility. Consequently, our obligations under the notes and the note guarantees are effectively subordinated to other indebtedness that is secured by assets not constituting collateral that will secure the notes, including the margin bridge facility and the VMware note bridge facility, to the extent of the value of such assets. In addition, upon registration of the notes, the collateral will not include any capital stock or other securities of any affiliate of the issuers to the extent the pledge of such capital stock or other securities in respect of any series of the notes then outstanding or any other series of SEC-registered secured debt securities issued by us or our affiliates results in the requirement to file separate financial statements of such affiliate with the SEC. We expect that, upon registration of the notes, certain capital stock and other securities of our affiliates will be excluded from the collateral as a result of the foregoing limitation. See “Risk Factors—Risks Related to the Collateral for the Notes—The pledge of the capital stock and other securities of our affiliates that will secure the notes will be limited to the extent such capital stock and securities can secure each series of notes and each other series of SEC-registered secured debt without requiring the filing of separate financial statements with the SEC for that affiliate.”

79 Even though the holders of the notes will benefit from a first-priority lien on the collateral, the collateral agent under the senior secured credit facilities will initially control actions with respect to that collateral. The rights of the holders of the notes with respect to the collateral that will secure the notes on a first- priority basis will be subject to an intercreditor agreement among all holders of obligations secured by that collateral on a first-priority basis, including the obligations under the senior secured credit facilities. Under that intercreditor agreement, any actions that may be taken with respect to such collateral, including the ability to cause the commencement of enforcement proceedings against such collateral, to control such proceedings and to approve amendments to releases of such collateral from the lien of documents relating to such collateral, will be at the exclusive direction of the collateral agent under the senior secured credit facilities until the earlier of (1) the date on which our obligations under the senior secured credit facilities (or any refinancing indebtedness in respect thereof) are no longer secured or (2) 90 days after the occurrence of an event of default under any agreement governing first lien debt other than the senior secured credit facilities (including the indenture governing the notes) that is continuing, if the authorized representative of the holders of such debt represent the largest outstanding principal amount of indebtedness secured by a first-priority lien on the collateral (including the senior secured credit facilities) and such authorized representative has complied with the applicable notice provisions so long as the collateral agent under the senior secured credit facilities has not commenced the exercise of remedies with respect to collateral.

At any time that the collateral agent under the senior secured credit facilities does not have the right to direct the actions with respect to the collateral securing the notes pursuant to the intercreditor agreement, the right to direct such actions will pass to the authorized representative of holders of the then largest outstanding principal amount of indebtedness secured by a first lien on the collateral. If, in the future, we issue additional indebtedness that is equal in priority to the lien securing the notes in a greater principal amount than the aggregate principal amount of the notes, then the authorized representative for such additional indebtedness would be next in line to exercise rights under the intercreditor agreement, rather than the trustee as the collateral agent for such series of notes. Accordingly, the trustee for any series of notes may never have the right to control remedies and take other actions with respect to the collateral.

Also, under the intercreditor agreement, in the event that the holders of the notes obtain possession of any collateral or realize any proceeds or payment in respect of any such collateral at any time prior to the discharge of each of the other first-priority obligations, then such holders will be obligated to hold such collateral, proceeds, or payment in trust for the other holders of first-priority obligations and promptly transfer such collateral, proceeds, or payment, as the case may be, to the controlling collateral agent, to be distributed in accordance with the provisions of the intercreditor agreement among all the holders of first-priority obligations.

There are circumstances, other than the repayment or discharge of the notes, under which the collateral that will secure the notes and the note guarantees will be released, without the consent of holders of the notes or the consent of the collateral agent for the notes, and holders of the notes may not realize any payment upon the release of such collateral. Under various circumstances, the collateral securing the notes of a series and the related note guarantees will be released, including: • upon a sale, transfer or other disposal of such collateral in a transaction not prohibited under the indenture governing the notes; • with respect to collateral held by a guarantor, upon the release of such guarantor from its note guarantees with respect to the notes of such series; • with respect to collateral that is capital stock, upon (i) the dissolution or liquidation of the issuer of that capital stock that is not prohibited by the indenture governing the notes or (ii) the designation of the issuer of such capital stock as an “unrestricted subsidiary” under the senior secured credit facilities in compliance with the terms of the senior secured credit facilities;

80 • upon the occurrence of an Investment Grade Event; and • to the extent the liens on the collateral securing the senior secured credit facilities are released (other than any release by, or as a result of, payment of the obligations under the senior secured credit facilities), upon the release of such liens.

Such release of the collateral will not require the consent of holders of the notes or the consent of the collateral agent for the notes. The aggregate value of the collateral that will secure the notes will be reduced to the extent of the value of the released collateral. The value of any released collateral could be significant and there can be no assurance that the value of the remaining collateral (if any) would be sufficient to satisfy all obligations owed by us to holders of the notes and the holders of any additional secured indebtedness that ranks pari passu with the notes with respect to such remaining collateral, including the lenders under the senior secured credit facilities. Upon the occurrence of any Release Event described above, we expect that all of the collateral that will secure the notes will be released and as a result, holders of the notes will no longer have a secured claim on any of our assets (even if we are later required to cause certain non-guarantors to provide a guarantee pursuant to a spring-back provision).

Pledges of equity interests of certain of our foreign subsidiaries may not constitute collateral for the repayment of the notes because such pledges may not be perfected pursuant to foreign law pledge documents. Part of the security for the repayment of the notes may consist of a pledge of up to 65% of the voting capital stock of direct foreign subsidiaries owned by us or our subsidiary guarantors. Although such pledges of capital stock will be required to be granted under U.S. security documents, it may be necessary or desirable to perfect such pledges under foreign law pledge documents. We will not be required to provide such foreign law pledge documents. Unless and until such pledges of equity interests are properly perfected, they may not constitute collateral for the repayment of the notes.

Certain laws and regulations may impose restrictions or limitations on foreclosure. The issuers’ obligations under the notes and the guarantors’ obligations under the note guarantees will be secured only by the collateral described in this offering memorandum. The collateral agent’s ability to foreclose on the collateral on behalf of holders of the notes may be subject to perfection, priority issues, state law requirements, applicable bankruptcy law, and practical problems associated with the realization of the collateral agent’s security interest or lien in the collateral, including cure rights, foreclosing on the collateral within the time periods permitted by third parties or prescribed by laws, obtaining third party consents, making additional filings, statutory rights of redemption and the effect of the order of foreclosure. There can be no assurance that the consents of any third parties and approvals by governmental entities will be given when required to facilitate a foreclosure on such assets or that foreclosure on the collateral will be sufficient to make all payments on the notes.

State law may limit the ability of the collateral agent for the holders of the notes to foreclose on the real property and improvements included in the collateral. The notes will be secured by, among other things, liens on owned real property and improvements located in several states. The laws of these states may limit the ability of the trustee and the holders of the notes to foreclose on the improved real property collateral located in that state. Applicable state laws may impose procedural requirements for foreclosure different from and necessitating a longer time period for completion than the requirements for foreclosure of security interests in personal property. Debtors may have the right to reinstate defaulted debt (even it is has been accelerated) before the foreclosure date by paying the past due amounts and a right of redemption after foreclosure. Governing laws may also impose security first and one form of action rules which can affect the ability to foreclose or the timing of foreclosure on real and personal property collateral regardless of the location of the collateral and may limit the right to recover a deficiency following a foreclosure.

81 The holders of the notes and the trustee also may be limited in their ability to enforce a breach of the lien covenant. Some decisions of state courts have placed limits on a lender’s ability to accelerate debt secured by real property upon breach of covenants prohibiting the creation of certain junior liens or leasehold estates, and a lender may need to demonstrate that enforcement is reasonably necessary to protect against impairment of the lender’s security or to protect against an increased risk of default. Although the foregoing court decisions may have been preempted, at least in part, by certain federal laws, the scope of such preemption, if any, is uncertain. Accordingly, a court could prevent the trustee and the holders of the notes from declaring a default and accelerating the notes by reason of a breach of this covenant, which could have a material adverse effect on the ability of holders to enforce the covenant.

Mortgages on our owned real properties intended to constitute collateral, title insurance policies insuring the mortgage liens in favor of the noteholders and land surveys will not be in place at the time of the issuance of the notes or on the closing date of the Dell-EMC merger, which may impact the value of the collateral and increase the risk that the liens granted by those mortgages could be avoided. We do not expect that mortgages on the properties intended to secure the notes will be in place at the time of the issuance of the notes or on the closing date of the Dell-EMC merger. The properties constitute a significant portion of the value of the collateral intended to secure the notes and the note guarantees. In addition, mortgagee title insurance policies will not be in place at the time of the issuance of the notes or on the closing date of the Dell-EMC merger to insure, among other things, (i) loss resulting from the entity represented by us to be the fee owner thereof not holding valid fee title to the properties or such fee being encumbered by unpermitted liens and (ii) the validity and lien priority of the mortgage granted to the collateral agent for its benefit, and for the benefit of the trustee and the holders of the notes. There will be no independent assurance prior to issuance of the notes that all properties contemplated to be mortgaged as security for the notes will be mortgaged, that we hold the real property interests we represent we hold or that we may mortgage such interests, or that there will be no lien encumbering such real property interests other than those permitted by the indenture governing the notes.

Moreover, land surveys will not be completed at the time of the issuance of the notes or on the closing date of the Dell-EMC merger. As a result, there is no independent assurance that, among other things, no encroachments, adverse possession claims, zoning or other restricts exist with respect to the properties intended to be mortgaged which could result in a material adverse effect on the value or utility of such properties.

The title insurance process and surveys could reveal certain issues that we will not be able to resolve. If we are unable to resolve any issues raised by the surveys or that are otherwise raised in connection with obtaining the mortgages or title insurance policies, the mortgages and title insurance policies will be subject to such issues. Such issues could have a significant impact on the value of the collateral or any recovery under the title insurance policies. If we are unable to obtain any mortgage or title insurance policy on any of the real property intended to constitute collateral for the notes and the note guarantees, the value of the collateral securing the notes and the note guarantees will be significantly reduced.

We will be required to put such mortgages in place and to use commercially reasonable efforts to obtain title insurance on the properties within a specified period of time (which could be in excess of 90 days) following the closing of the Dell-EMC merger.

Any future pledge of collateral in favor of the collateral agent for the notes for its benefit and for the benefit of the trustee and the holders of the notes, including pursuant to the mortgages, which we are not required to deliver to the collateral agent for the notes until a specified period of time (which could be in excess of 90 days) following the closing of the Dell-EMC merger, and the other security documents delivered after the date of the indenture governing the notes, could be avoidable in bankruptcy. If we or any guarantor were to become subject to a bankruptcy proceeding after the issue date of the notes, any mortgage or security interest in other collateral delivered after the issue date of the notes would face a greater risk than security interests in place on the issue date of being avoided by the pledgor (as debtor in possession) or by its trustee in bankruptcy as a preference under bankruptcy law or otherwise if certain events or circumstances exist or occur, including if the pledgor is

82 insolvent at the time of the pledge, the pledge permits the holders of the notes to receive a greater recovery than if the pledge had not been given and a bankruptcy proceeding in respect of the pledgor is commenced within 90 days following the pledge, or, in certain circumstances, a longer period. To the extent that the grant of any such mortgage or other security interest is avoided as a preference, you would lose the benefit of such mortgage or security interest.

Rights of holders of the notes in the collateral may be adversely affected by bankruptcy proceedings. The right of the collateral agent for the notes to repossess and dispose of the collateral that will secure the notes and the note guarantees upon acceleration of the payment thereof is likely to be significantly impaired by, and at a minimum delayed by, federal bankruptcy law if bankruptcy proceedings are commenced by or against us or certain of our domestic subsidiaries that will provide security for the notes or note guarantees prior to, or possibly even after, any collateral agent has repossessed and disposed of the collateral. Under the U.S. Bankruptcy Code, a secured creditor, such as the collateral agent for the notes, is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security repossessed from a debtor, without prior bankruptcy court approval (which may not be given under the circumstances). Moreover, bankruptcy law permits the debtor to continue to retain and use collateral, and the proceeds, products, rents or profits of the collateral, even though the debtor is in default under the applicable debt instruments, provided that the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to the circumstances, but it is intended in general to protect the value of the secured creditor’s interest in the collateral and may include cash payments or the granting of additional or replacement security, if and at such time as the court in its discretion determines, for any diminution in the value of the collateral as a result of the stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. A bankruptcy court may determine that a secured creditor may not require compensation for a diminution in the value of its collateral if the value of the collateral exceeds the debt it secures. In view of both the lack of a precise definition of the term “adequate protection” under the U.S. Bankruptcy Code and the broad discretionary powers of a bankruptcy court, it is impossible to predict whether or when payments under the notes could be made following commencement of a bankruptcy case or the length of the delay in making any such payments, whether or when the collateral agent could or would repossess or dispose of the collateral, or whether or to what extent or in what form holders of the notes would be compensated for any delay in payment or loss of value of the collateral through the requirements of “adequate protection.”

Furthermore, any disposition of the collateral during a bankruptcy case outside of the ordinary course of our business would also require approval from the bankruptcy court (which also may not be given under the circumstances). In the event the bankruptcy court determines that the value of the collateral is not sufficient to repay all amounts due on the notes and our other first-priority obligations, the holders of the notes would have “undersecured claims” as to the difference. Federal bankruptcy laws do not permit the payment or accrual of interest, expenses, costs and attorneys’ fees for “undersecured claims” during the debtor’s bankruptcy case. As a result, bankruptcy laws may act to limit the ability of holders of the notes to realize upon the collateral and to limit their ability to receive post-bankruptcy interest, fees or expenses or “adequate protection” with respect to any unsecured portion of the notes.

In addition, the intercreditor agreement will impose certain limitations on the ability of the holders of the notes to object to a proposed debtor-in-possession financing unless the authorized agent for the lenders under the senior credit facilities opposes or objects thereto.

In the event of a bankruptcy of either of the issuers or any of our guarantors, holders of the notes may be deemed to have an unsecured claim to the extent that the issuers’ obligations in respect of the notes exceed the fair market value of the collateral that will secure the notes and the note guarantees. In any bankruptcy proceeding with respect to either of the issuers or any of our guarantors, it is possible that the bankruptcy trustee, the debtor-in-possession or competing creditors will assert that the fair market value of the collateral (if any) with respect to the notes on the date of the bankruptcy filing was less than the then-current

83 principal amount of the notes. Upon a finding by the bankruptcy court that the notes are under-collateralized, the claims in the bankruptcy proceeding with respect to the notes would be bifurcated between a secured claim and an unsecured claim, and the unsecured claim would not be entitled to the benefits of security in the collateral. In such event, the secured claims of the holders of the notes would be limited to the value of the collateral.

Other consequences of a finding of under-collateralization would be, among other things, a lack of entitlement on the part of the holders of the notes to receive post-petition interest, fees and expenses and a lack of entitlement on the part of the unsecured portion of the notes to receive other “adequate protection” under federal bankruptcy laws, as discussed above. In addition, if any payments of post-petition interest had been made at the time of such a finding of under-collateralization, those payments could be recharacterized by the bankruptcy court as a reduction of the principal amount of the secured claim with respect to the notes.

Any future pledge of collateral or guarantee might be avoidable by a trustee in bankruptcy. Any security interests or guarantees issued after the issue date of the notes may be treated under bankruptcy law as if they were delivered to secure or guarantee previously existing indebtedness. Accordingly, any future pledge of collateral or future issuance of a guarantee in favor of the holders of the notes, including pursuant to security documents or guarantees delivered in connection therewith after the date the notes are issued, may be avoidable as a preference or otherwise if, among other circumstances, (i) the pledgor or guarantor is insolvent at the time of the pledge or the issuance of the guarantee, (ii) the pledge or the issuance of the guarantee permits the holders of the notes to receive a greater recovery in a hypothetical Chapter 7 case than if the pledge or guarantee had not been given, and (iii) a bankruptcy case in respect of the pledgor or guarantor is commenced within 90 days following the pledge or the perfection thereof or the issuance of the guarantee (as applicable), or, in certain circumstances, a longer period. Accordingly, if the issuers or any guarantor were to file for bankruptcy protection after the issue date of the notes and (1) any liens not granted on the issue date of the notes had been perfected, or (2) any guarantees not issued on the issue date of the notes (as applicable) had been issued, less than 90 days before commencement of such bankruptcy case, such liens or guarantees are more likely to be avoided as a preference by the bankruptcy court than if delivered and promptly recorded on the issue date of the notes (even if the liens perfected or other guarantees issued on the issue date of the notes would no longer be subject to such risk). To the extent that the grant of any such mortgage or other security interest and/or guarantee is avoided as a preference or otherwise, holders of the notes would lose the benefit of the mortgage or security interest and/or guarantee (as applicable).

Rights of holders of the notes in the collateral may be adversely affected by the failure to perfect the security interests upon the consummation of the mergers and the assumption. The collateral securing the notes and the note guarantees will include substantially all of our and the guarantors’ tangible and intangible assets that secure our indebtedness under the senior secured credit facilities, whether now owned or acquired or arising in the future. Applicable law requires that a security interest in certain tangible and intangible assets can only be properly perfected and its priority retained through certain actions undertaken by the secured party. The liens on the collateral that will secure the notes may not be perfected if we or the collateral agent are not able to take the actions necessary to perfect any of these liens on or prior to the date of the consummation of the mergers and the assumption or thereafter. We will have limited obligations to perfect the security interest of the holders of the notes in specified collateral other than the filing of financing statements.

If certain additional domestic subsidiaries are formed or acquired and become guarantors under the indenture governing the notes, additional financing statements would be required to be filed to perfect the security interest in the assets of such guarantors. Depending on the type of the assets constituting after-acquired collateral, additional action may be required to be taken by the collateral agent for the notes or the collateral agent for the senior secured credit facilities, to perfect the security interest in such assets, such as the delivery of physical collateral, the execution of account control agreements or the execution and recordation of mortgages or deeds of trust. Applicable law requires that certain property and rights acquired after the grant of a general

84 security interest can be perfected only at the time such property and rights are acquired and identified. There can be no assurances that the trustee or the collateral agent for the notes will monitor, that we will inform the trustee or the collateral agent of, the future acquisition of property and rights that constitute collateral, or that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. The collateral agent for the notes and the collateral agent for the senior secured credit facilities will have no obligation to monitor the acquisition of additional property or rights that constitute collateral or the perfection of any security interests therein. Such inaction may result in the loss of the security interest in such collateral or the priority of the security interest in favor of the notes and the guarantees against third parties.

In addition, even if the collateral agent for the notes does properly perfect liens on collateral acquired in the future, such liens may (as described further herein) potentially be avoidable as a preference or otherwise in any bankruptcy case under certain circumstances. See “—Any future pledge of collateral or guarantee might be avoidable by a trustee in bankruptcy.”

The collateral is subject to casualty risks. We intend to maintain insurance or otherwise insure against hazards in a manner appropriate and customary for our business. There are, however, certain losses that may be either uninsurable or not economically insurable, in whole or in part. Insurance proceeds may not compensate us fully for our losses. If there is a complete or partial loss of any of the pledged collateral, the insurance proceeds may not be sufficient to satisfy all of the secured obligations, including the notes and the note guarantees.

Federal and state environmental laws may decrease the value of the collateral that will secure the notes and the note guarantees and may result in holders of the notes being liable for environmental cleanup costs at our facilities. The notes and the note guarantees will be secured by liens on real property that may be subject to both known and unforeseen environmental risks, and these risks may reduce or eliminate the value of the real property pledged as collateral for the notes or adversely affect our ability to repay the notes.

Moreover, under some federal and state environmental laws, a secured lender may in some situations become subject to its borrower’s environmental liabilities, including liabilities arising out of contamination at or from the borrower’s properties. Such liability can arise before foreclosure, if the secured lender becomes sufficiently involved in the management of the affected facility. Similarly, when a secured lender forecloses and takes title to a contaminated facility or property, the lender could in some circumstances become subject to such liabilities. Consequently, the collateral agent and the trustee for the notes may decline to foreclose on such collateral or exercise remedies available in respect thereof if they do not receive indemnification to their satisfaction from the holders of the notes. Cleanup costs could become a liability of the collateral agent and holders of the notes could be required to help repay those cleanup costs, which could be greater than the value of the underlying property and the principal amount of the notes. In addition, to the extent a holder of notes elects (where possible) to act directly to pursue a remedy rather than acting through the trustee, such holder could also become subject to the risks of the collateral agent and the trustee discussed above.

85 USE OF PROCEEDS

For more information, see “The Transactions,” “Denali Unaudited Pro Forma Condensed Combined Financial Statements” and the related notes and “Description of Other Indebtedness” included elsewhere in this offering memorandum.

Sources Amount Uses Amount (in millions) Cash and cash equivalents(1)(2)(3) ...... $ 9,306 Cash consideration(3)(13) ...... $48,614 Net proceeds from the Dell Services Transaction(4)(5)(6) ...... 2,700 Senior secured debt(3): Redemption of existing first lien notes(2)(14) ...... 1,521 Revolving facility(2)(7) ...... 1,975 Repayment of existing Dell credit facilities(2)(15) ...... 6,224 Term loan facilities(4)(5) Refinancing of existing EMC commercial paper(2)(16) . . . 699 Term loan A facilities ...... 9,925 Repayment of existing EMC revolving credit facility(2)(17) ...... 600 Term loan B facilities ...... 8,000 Estimated fees and expenses(18) ...... 1,748 Senior secured notes(8) ...... 16,000 Senior unsecured debt(3): Unsecured notes(9) ...... 3,250 Asset sale bridge facility(4)(6) ...... — Margin bridge facility(10) ...... 2,500 VMware note bridge facility(11) ...... 1,500 Cash equity financing(12) ...... 4,250 Total sources ...... $59,406 Total uses ...... $59,406

(1) Includes (i) $6,088 million of aggregate cash on hand from Dell and EMC and (ii) $3,218 million of net proceeds from the liquidation of certain of EMC investments. As of January 29, 2016, we had an aggregate of $6,576 million in cash and cash equivalents and $114 million of long-term investments generally consisting of equity investments. As of

86 December 31, 2015, EMC had an aggregate of (a) $6,549 million in cash and cash equivalents and (b) $2,726 million of short-term investments and $5,508 million of long-term investments, consisting primarily of liquid securities. Such amounts held by EMC include $7,509 million in cash, cash equivalents and similar investments held by VMware and its subsidiaries, which are not expected to be used to fund the EMC Transactions. As of March 31, 2016, EMC had (a) an aggregate of $7,224 million in cash and cash equivalents and (b) $2,577 million of short-term investments and $5,169 million of long-term investments (including $8,246 million in cash, cash equivalents and similar investments held by VMware and its subsidiaries, which are not expected to be used to fund the EMC Transactions). We and EMC have agreed to make available at least $2,950 million and $4,750 million, respectively, of cash on hand, less certain permitted reductions (including reductions to the extent of any repayment or redemption of Denali’s or EMC’s debt before the closing date of the Dell-EMC merger that would otherwise be required to be repaid on such closing date), at the closing of the Dell-EMC merger for the purposes of financing the EMC Transactions. An increase or decrease in cash and cash equivalents at the closing of the EMC Transactions, as compared to January 29, 2016, will result in corresponding increases or decreases, as the case may be, in cash and cash equivalents retained on the balance sheet after giving effect to the EMC Transactions. (2) An increase or decrease at the closing of the EMC Transactions in the aggregate principal amount of indebtedness that is expected to be repaid in connection with the EMC Transactions, as compared to January 29, 2016, will result in corresponding decreases or increases, respectively, in cash and cash equivalents and/or corresponding increases or decreases, respectively, in the outstanding amount of borrowings under the revolving facility, after giving effect to the EMC Transactions. (3) We expect that, to the extent that appraisal rights are determined to exist, and to the extent that any cash amount is required to be paid to EMC shareholders in respect of shares for which appraisal rights have been properly demanded (including in lieu of the Class V Common Stock) and such amount exceeds the original cash consideration offered by us, such amount will be funded by cash on hand, the proceeds of additional indebtedness or a combination thereof. Any such excess amount may be significant. (4) To the extent we consummate any transaction to dispose of Denali’s or EMC’s assets (in addition to the Dell Services Transaction) substantially concurrently with or prior to the consummation of the Dell-EMC merger, we expect to reduce, on a dollar-for-dollar basis, the borrowings under the senior secured term loan A-1 facility, the revolving facility (up to $1,000 million thereunder) and the senior secured term loan A-3 facility, in that order, and thereafter at our option. If the Dell Services Transaction is not consummated substantially concurrently with or prior to the consummation of the Dell- EMC merger, we expect to borrow $1,500 million under the asset sale bridge facility and an additional $1,200 million under the term loan A-1 facility in order to fund the EMC Transactions. We may elect to increase the asset sale bridge facility and reduce one or more of the tranches of term loan facilities on a dollar-for-dollar basis. (5) In connection with the EMC Transactions, we will enter into new term loan facilities, which we expect will consist of a (i) $8,000 million seven-year senior secured term loan B facility, (ii) $2,500 million three-year senior secured term loan A-1 facility (or $3,700 million if the Dell Services Transaction is not consummated substantially concurrently with or prior to the closing of the Dell-EMC merger), (iii) $3,925 million five-year senior secured term loan A-2 facility and (iv) a $3,500 million three-year senior secured term loan A-3 facility. We have also received commitments for up to $2,500 million of borrowings under a senior secured one-year cash flow term loan facility, but do not currently expect to draw on such facility. In addition, the amount shown excludes any original issue discount (any original issue discount will be amortized and included as interest expense in our statements of operations over the life of the term loans). See “Description of Other Indebtedness—Senior Secured Credit Facilities.” (6) To the extent the Dell Services Transaction is not consummated prior to the closing of the Dell-EMC merger, we expect to enter into a $1,500 million one-year senior unsecured asset sale bridge facility. We may elect to increase the asset sale bridge facility and reduce one or more of the tranches of term loan facilities on a dollar-for-dollar basis. (7) In connection with the EMC Transactions, we expect to enter into a new $3,150 million five-year revolving credit facility. We expect to borrow $1,975 million at closing under this new revolving facility in connection with the EMC Transactions. On the closing date of the EMC Transactions, we may increase or decrease borrowings under this new revolving facility based on the timing of funds being repatriated from certain of our foreign subsidiaries. See “Description of Other Indebtedness—Senior Secured Credit Facilities.” (8) Includes the aggregate principal amount of the notes offered hereby. (9) In connection with the EMC Transactions, we expect to issue $3,250 million aggregate principal amount of unsecured notes. See “Description of Other Indebtedness—Unsecured Notes.” (10) In connection with the EMC Transactions, we expect to enter into a $2,500 million 364-day margin bridge facility, which will be secured by 77,033,442 shares of Class B common stock of VMware. See “Description of Other Indebtedness— Margin Bridge Facility.” (11) In connection with the EMC Transactions, we expect to enter into a $1,500 million 364-day bridge facility, which will be secured by the VMware intercompany notes. See “Description of Other Indebtedness—VMware Note Bridge Facility.”

87 (12) Represents the $4,250 million aggregate cash equity investment by the cash equity investors pursuant to common stock purchase agreements providing for the purchase by (i) the SLP Investors of up to 37,797,228 shares of Class B Common Stock, (ii) the MD Investors of up to 109,748,740 shares of Class A Common Stock, (iii) the MSD Partners Investors of up to 6,999,487 shares of Class A Common Stock and (iv) the Temasek Investor of 18,181,818 shares of Class C Common Stock, in each case, at a per-share purchase price of $27.50. The common stock purchase agreements entered into by the SLP Investors, the MD Investors and the MSD Partners Investors contain provisions pursuant to which the number of shares to be purchased, and the aggregate purchase price to be paid by such investors for their respective shares of common stock, may be reduced under certain circumstances. To the extent that the purchase by the Temasek Investor of its shares of Class C Common Stock is consummated, the number of shares to be purchased by each of the other cash equity investors under the applicable common stock purchase agreement and the aggregate purchase price to be paid by such investors will be reduced on a pro rata basis based on each such investor’s commitment such that the aggregate cash equity investment by all the cash equity investors will not exceed $4,250 million. (13) 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, restricted stock units and restricted stock. (14) Represents the aggregate principal amount of the existing first lien notes, plus a redemption premium of approximately $99 million and accrued and unpaid interest of approximately $22 million. Assuming the EMC Transactions occur on July 1, 2016 instead, we expect that the aggregate total consideration payable in respect of the existing first lien notes pursuant to the redemption thereof, including a redemption premium of approximately $74 million and accrued and unpaid interest of approximately $17 million, will be approximately $1,491 million. (15) Represents the $4,329 million outstanding under Dell International’s existing term loan B facility, the $1,003 million outstanding under Dell International’s existing term loan C facility and the $891 million outstanding under Dell International’s term loan euro facility, plus approximately $1 million of accrued and unpaid interest on all such credit facilities. As of January 29, 2016, there were no borrowings outstanding under Dell International’s existing ABL credit facility. All such credit facilities will be terminated in connection with the EMC Transactions. (16) Represents the outstanding amount of EMC’s existing commercial paper at December 31, 2015 to be refinanced in connection with the EMC Transactions. As of May 5, 2016, EMC had $1,285 million of commercial paper outstanding. (17) Represents the repayment of the $600 million outstanding amount under EMC’s existing unsecured revolving credit facility, including $1 million of accrued and unpaid interest to be repaid in connection with the EMC Transactions. Such credit facility will be terminated in connection with the EMC Transactions. As of March 31, 2016, there were no borrowings outstanding under the EMC existing revolving credit facility. (18) Represents our estimate of fees and expenses associated with the EMC Transactions, including placement and other financing fees, original issue discounts, legal, advisory and professional fees and other transaction costs, such as printing and rating agency fees, but excluding approximately $54 million of such fees and expenses paid as of January 29, 2016. To the extent any financing fees, original issue discounts and other fees and expenses exceed the estimated amounts, we expect to fund such amounts by increasing the aggregate principal amounts to be borrowed under the senior secured credit facilities and/or with cash and cash equivalents.

88 CAPITALIZATION

The following table sets forth our cash and cash equivalents and total capitalization as of January 29, 2016: • on a historical basis; • as adjusted for the EMC Transactions; and • on a pro forma basis after giving effect to the Transactions.

The information in this table should be read in conjunction with “Use of Proceeds,” “The Transactions,” “Denali Unaudited Pro Forma Condensed Combined Financial Statements,” “Selected Historical Consolidated Financial Data of Denali,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali” and the financial statements included elsewhere in this offering memorandum.

As of January 29, 2016 Adjusted Pro Forma for the EMC for the Historical Transactions Transactions (in millions) Cash, cash equivalents and investments at Denali(1)(2)(3)(4)(6) ...... $ 6,690 $12,167(5) $12,167(5) Cash, cash equivalents and investments at EMC(7) ...... 14,783 — — Total debt: 5.625% senior first lien notes due 2020(8) ...... $ 1,400 $ — $ — 3.100% senior notes due 2016(5) ...... 400 400 400 5.65% senior notes due 2018 ...... 500 500 500 5.875% senior notes due 2019 ...... 600 600 600 4.625% senior notes due 2021 ...... 400 400 400 6.50% senior notes due 2038 ...... 388 388 388 5.40% senior notes due 2040 ...... 265 265 265 7.10% senior debentures due 2028 ...... 300 300 300 7.25% subordinated note due 2023 to Microsoft Global Finance . . . 26 26 26 EMC 1.875% senior notes due 2018(9) ...... 2,500 2,500 2,500 EMC 2.650% senior notes due 2020(9) ...... 2,000 2,000 2,000 EMC 3.375% senior notes due 2023(9) ...... 1,000 1,000 1,000 Structured financing debt(10) ...... 3,411 3,411 3,411 Existing term loan facilities(8) ...... 6,223 — — Existing ABL credit facility ...... — — — EMC existing unsecured revolving credit facility(9) ...... 600 — — EMC existing commercial paper(9) ...... 699 — — New term loan facilities(4)(11) ...... — 19,125 17,925 New revolving credit facility(4)(6) ...... — 1,975(3) 1,975(3) Senior secured notes(12) ...... — 16,000 16,000 Asset sale bridge facility ...... — 1,500(11) — Margin bridge facility ...... — 2,500 2,500 VMware note bridge facility ...... — 1,500 1,500 Unsecured notes(13) ...... — 3,250 3,250 Other ...... 67 67 67 Total debt, principal amount ...... 20,779 57,707 55,007 Fair market value and other accounting adjustments ...... (246) (830) (830) Total debt, carrying value ...... 20,533 56,877 54,177 Total stockholders’ equity ...... 22,606 17,862(14) 19,455(14) Total capitalization(6) ...... $43,139 $74,739 $73,632

89 (1) On a historical basis, includes $6,576 million of cash and cash equivalents and $114 million of long-term investments generally consisting of equity investments. As adjusted for the EMC Transactions and on a pro forma basis after giving effect to the Transactions, includes (a) $7,037 million of cash and cash equivalents and (b) $1,616 million of short-term investments and $3,514 million of long-term investments, consisting primarily of liquid securities. (2) An increase or decrease in cash, cash equivalents and investments at the closing of the EMC Transactions or the Transactions, as compared to January 29, 2016, will result in corresponding increases or decreases, as the case may be, in cash, cash equivalents and investments retained on the balance sheet after giving effect to the EMC Transactions or the Transactions, as applicable. (3) An increase or decrease at closing in the aggregate principal amount of indebtedness that is expected to be repaid in connection with the EMC Transactions or the Transactions, as compared to January 29, 2016, will result in corresponding decreases or increases, respectively, in cash, cash equivalents and investments and/ or corresponding increases or decreases, respectively, in the outstanding amount of borrowings under the revolving facility, after giving effect to the Transactions or the EMC Transactions, as applicable. (4) To the extent any financing fees, original issue discounts and other fees and expenses exceed our estimated fees and expenses, we expect to fund such excess amounts by increasing the aggregate principal amount to be borrowed under the senior secured credit facilities and/or with cash on our balance sheet. (5) Does not reflect the repayment in full on April 1, 2016 of $400 million in aggregate principal amount of Dell’s 3.100% Senior Notes due 2016 in accordance with its terms. As a result, cash, cash equivalents and investments as adjusted for the EMC Transactions and after giving pro forma effect to the Transactions will decrease by a corresponding amount. (6) Cash, cash equivalents and investments and borrowings under the new term loan facilities and the new revolving credit facility after giving effect to the EMC Transactions and after giving pro forma effect to the Transactions, as applicable, assumes that all of EMC’s outstanding shares, restricted stock units, restricted stock and stock options will receive the merger consideration and does not reflect any adjustments for any potential liabilities resulting from any appraisal rights proceedings. We expect that, to the extent that appraisal rights are determined to exist, and to the extent that any cash amount is required to be paid to EMC shareholders in respect of shares for which appraisal rights have been properly demanded (including in lieu of the Class V Common Stock) and such amount exceeds the original cash consideration offered by us, such amount will be funded by cash on hand, the proceeds of additional indebtedness or a combination thereof. Any such excess amount may be significant. See “Risk Factors—Risks Related to the Combined Company and the Transactions—Holders of a substantial number of EMC’s shares may deliver written demands for the appraisal of their shares under Massachusetts law. If these shareholders are entitled to appraisal rights and properly demand appraisal of their shares, the combined company may be required to seek additional financing to fund payments in cash in respect of such appraised shares.” (7) Represents cash, cash equivalents and investments as of December 31, 2015. Includes (a) $6,549 million of cash and cash equivalents and (b) $2,726 million of short-term investments and $5,508 million of long-term investments, consisting primarily of liquid securities (including $7,509 million in cash, cash equivalents and short-term investments held by VMware and its subsidiaries). At March 31, 2016, EMC had (a) cash and cash equivalents of $7,224 million and (b) $2,577 million of short-term investments and $5,169 million of long-term investments, which includes $8,246 million in cash, cash equivalents and short-term investments held by VMware and its subsidiaries. Amounts held by VMware and its subsidiaries are not expected to be used to fund the EMC Transactions. (8) Excludes (i) the redemption premium of approximately $99 million and accrued and unpaid interest of approximately $22 million in connection with the redemption of the 5.625% senior first lien notes due 2020 and (ii) the accrued and unpaid interest of approximately $1 million in connection with the repayment of the existing term loan facilities, in each case, in connection with the closing of the Transactions, assuming that the Transactions closed as of January 29, 2016. (9) Represents aggregate principal amounts outstanding at December 31, 2015 and, with respect to the EMC existing unsecured revolving credit facility, includes $1 million of accrued and unpaid interest to be repaid

90 in connection with the Transactions. As of May 5, 2016, EMC had $1,285 million of commercial paper outstanding and had no borrowings outstanding under the existing EMC revolving credit facility. (10) Represents the aggregate principal amount of borrowings outstanding under the ABS facilities and the aggregate principal amount of asset-backed debt securities issued by certain special purpose bankruptcy- remote indirect subsidiaries of Dell. (11) If the Dell Services Transaction is not consummated substantially concurrently with or prior to the consummation of the Dell-EMC merger, we expect to borrow $1,500 million under the asset sale bridge facility and an additional $1,200 million under the term loan A-1 facility in order to fund the EMC Transactions. We may elect to increase the asset sale bridge facility and reduce one or more of the tranches of term loan facilities on a dollar-for-dollar basis. (12) Includes $ aggregate principal amount of % first lien notes due offered hereby, the $ aggregate principal amount of % first lien notes due offered hereby and the $ aggregate principal amount of floating rate first lien notes due offered hereby. (13) Represents the aggregate principal amount of unsecured notes we expect to issue in connection with the EMC Transactions. (14) Total stockholders’ equity as adjusted for the EMC Transactions and after giving effect to the Transactions includes charges that will be expensed upon the completion of the Transactions or the EMC Transactions, as applicable. Such charges include acquisition- and refinancing-related fees totaling $483 million. Excluding these charges, total stockholders’ equity after giving effect to the Transactions would be $19.9 billion. See “Denali Unaudited Pro Forma Condensed Combined Financial Statements.”

91 THE TRANSACTIONS

Subject to the terms and conditions of the merger agreement, at the effective time of the Dell-EMC merger, each share of EMC common stock issued and outstanding immediately prior to the effective time of the Dell- EMC merger (other than shares owned by Denali, Merger Sub, EMC or any of EMC’s wholly-owned subsidiaries, and other than shares with respect to which EMC’s shareholders are entitled and properly exercise appraisal rights (if any)) 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 validly issued, fully paid and non- assessable shares of Class V Common Stock equal to the quotient (rounded to the nearest five decimal points) 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 Dell-EMC merger, plus cash in lieu of any fractional shares. The Class V Common Stock is a type of common stock that is commonly referred to as a tracking stock and is intended to track the performance of a portion of Denali’s economic interest in the VMware business following the completion of the Dell-EMC merger. The approximately 223 million shares of Class V Common Stock issuable in the Dell-EMC merger (assuming EMC shareholders either are not entitled to or do not properly exercise appraisal rights) are intended to represent approximately 65% of EMC’s economic interest in the approximately 81% of the outstanding shares of VMware common stock currently owned by EMC. However, holders of Class V Common Stock will not have a direct claim to, or any special legal rights related to, specific assets attributed to such shares of VMware common stock currently owned by EMC and the Class V Common Stock will not limit our legal responsibility, or that of our subsidiaries, for our or their respective debts and liabilities. See “—The Class V Common Stock” for more information regarding the Class V Common Stock.

The merger agreement provides that each currently outstanding EMC stock option will vest and become fully exercisable prior to the effective time of the Dell-EMC merger. As of the effective time of the Dell-EMC merger, each outstanding EMC stock option will be canceled and converted into the right to receive the merger consideration with respect to the number of shares of EMC common stock issuable upon the exercise of such stock options on a net exercise basis, such that shares of EMC common stock with a value equal to the aggregate exercise price and applicable tax withholding reduce the number of shares of EMC common stock otherwise issuable. The merger agreement also provides that as of the effective time of the Dell-EMC merger each currently outstanding EMC restricted stock unit and share of EMC restricted stock will fully vest (with performance vesting units vesting at the target level of performance) and the holder will become entitled to receive the merger consideration with respect to the shares of EMC common stock subject to the award (which will be calculated net of the number of shares withheld in respect of taxes upon the vesting of the award).

92 been the subject of judicial interpretation as to whether this exception applies where, such as in the Dell-EMC merger, shareholders will receive marketable securities of the parent of the surviving corporation in a merger. If dissenting EMC shareholders are entitled to appraisal rights under the MBCA, and the shareholder certifies that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, under the MBCA, EMC would be required to pay its estimate of fair value in respect of shares for which appraisal rights have been properly demanded (plus interest) within 100 days of the closing date of the Dell-EMC merger. With respect to shares of EMC for which appraisal rights have been properly demanded and are held by a shareholder who does not certify that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, instead of payment within 100 days of the closing date of the Dell-EMC merger, EMC must instead offer to make such payment that is conditioned on the shareholder’s agreement to accept such payment in full satisfaction of his claim. If such offer is not accepted, such shareholder may demand an appraisal of its shares through judicial proceedings, but will only be entitled to receive payment for such shares upon completion of such proceedings. Any payment made to EMC shareholders who have properly exercised their appraisal rights would be required to be paid in cash (including in lieu of the Class V Common Stock originally offered). The appraised value of each share of EMC common stock could be more than, the same as, or less than the merger consideration that has been offered to each holder of shares of EMC’s common stock.

Financing for the Dell-EMC Merger In connection with the Dell-EMC merger, we expect to: • repay in full EMC’s existing unsecured revolving credit facility; • refinance EMC’s existing commercial paper; • repay in full Dell International’s existing ABL credit facility; • repay in full Dell International’s existing term loan facilities; and • repay in full the existing first lien notes co-issued by Dell International and Denali Finance Corp.

Such repayment will include all principal, accrued but unpaid interest, fees and other amounts (other than certain contingent obligations) outstanding at the effective time of the Dell-EMC merger under EMC’s existing unsecured revolving credit facility and Dell International’s existing ABL credit facility and term loan facilities, and will occur substantially concurrently with the closing of the Dell-EMC merger. Upon such repayment in full, all commitments to lend and guarantees and security interests, as applicable, in connection therewith will be terminated and/or released. We expect that the aggregate amounts of principal, interest and premium necessary to redeem in full the outstanding $1.4 billion in aggregate principal amount of existing first lien notes as of January 29, 2016 will be deposited with the trustee for such notes, and that such notes will thereby be satisfied and discharged, substantially concurrently with the closing of the Dell-EMC merger. We also expect to refinance all of EMC’s commercial paper in connection with the EMC Transactions. We expect that all of the existing Dell and EMC unsecured notes and the Microsoft note will remain outstanding after the closing of the Dell-EMC merger in accordance with their respective terms. See “Capitalization” and “Summary—Ownership and Corporate Structure.”

93 Denali expects to finance the cash consideration for the Dell-EMC merger, the refinancing of EMC’s existing unsecured revolving credit facility and commercial paper, Dell International’s existing ABL credit facility and term loan facilities and existing first lien notes and the payment of related fees and expenses with: • up to $49.5 billion, in the aggregate, in debt financings (not all of the debt financings are expected to be drawn at the closing of the Dell-EMC merger), which we expect will consist of: • a $3.7 billion senior secured term loan A-1 facility; • a $3.925 billion senior secured term loan A-2 facility; • a $3.5 billion senior secured term loan A-3 facility; • a $8.0 billion senior secured term loan B facility; • a $2.5 billion senior secured cash flow term facility (which we do not currently expect to draw on); • a $3.15 billion senior secured revolving facility; • $16.0 billion in aggregate principal amount of senior secured notes (including the notes offered hereby); • $3.25 billion in aggregate principal amount of unsecured notes; • a $1.5 billion unsecured asset sale bridge facility; • a $2.5 billion margin bridge facility; and • a $1.5 billion VMware note bridge facility. • an aggregate cash equity investment by the cash equity investors of up to $4.25 billion pursuant to common stock purchase agreements; and • cash on hand at Denali, Dell and EMC (pursuant to the merger agreement, Denali and Dell, on one hand, and EMC, on the other, have agreed to make available at least $2.95 billion and $4.75 billion of cash on hand, respectively, less certain permitted reductions (including reductions to the extent of any repayment or redemption of Denali’s or EMC’s debt before the closing date of the Dell-EMC merger that would otherwise be required to be repaid on such closing date)).

To the extent that the sale of the Dell Services Transaction closes substantially concurrently with or prior to the consummation of the Dell-EMC merger, Denali expects to apply the expected $2.7 billion of net proceeds from such transaction to fund the EMC Transactions. As a result, to the extent the sale of the Dell Services Transaction closes substantially concurrently with or prior to the consummation of the Dell-EMC merger and the proceeds of such transaction are used to fund the EMC Transactions, Denali expects to reduce, on a dollar-for- dollar basis, the borrowings under the senior secured term loan A-1 facility, the revolving facility (up to $1,000 million thereunder) and the senior secured term loan A-3 facility, in that order, and thereafter at our option.

The notes offered hereby will initially be issued by Finco 1 and Finco 2, newly-formed Delaware corporations and wholly-owned subsidiaries of Dell International that were created solely to act as the initial co- issuers of the notes. Promptly following the consummation of the Dell-EMC merger, Finco 1 will merge with and into Dell International, with Dell International as the surviving entity and a co-issuer of the notes, and Finco 2 will merge with and into EMC, with EMC as the surviving entity and a co-issuer of the notes. As a result, Dell International and EMC will assume all of Finco 1’s and Finco 2’s obligations under the notes and the indenture governing the notes, respectively.

The notes offered hereby are being issued prior to the completion of the other financing transactions we expect to enter into in order to fund the EMC Transactions. There are no assurances that Denali will be able to raise the funds required to consummate the Dell-EMC merger, or at what terms such funds may be available. The financing transactions described herein with respect to the senior secured credit facilities, the unsecured notes, the asset sale bridge facility, the margin bridge facility and the VMware note bridge facility are subject to change

94 and a number of factors and conditions, including, with respect to certain of the indebtedness, the consummation of the Transactions (including the timing of the closing of the Dell Services Transaction). This offering memorandum is not an offer to sell or a solicitation of an offer to purchase the unsecured notes, nor shall there be any offer or sale of the unsecured notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful. To the extent that any of the conditions with respect to such indebtedness are not satisfied, such indebtedness may not be available on the terms described herein or at all. See “Risk Factors—Risks Related to the Notes and this Offering—We may be unable to obtain the debt financing to fund the Dell-EMC merger on the terms described in this offering memorandum or at all.”

Upon consummation of the offering of the notes, the Fincos will enter into an escrow agreement, pursuant to which the Fincos will deposit into an escrow account an amount equal to the gross proceeds of this offering and either (x) the Fincos will also deposit (or cause to be deposited) in cash or (y) we will cause the issuing lenders under our existing ABL credit facility to issue letters of credit for the benefit of the escrow agent and the holders of the notes (or a combination of (x) and (y)), in each case, in an amount that is sufficient to pay the special mandatory redemption price described below and all interest that would accrue on the notes up to but not including the date that is one month after the consummation of the offering of the notes. If, among other things, the Dell-EMC merger is not consummated on or prior to December 16, 2016, the Fincos will be required to redeem all of the notes offered hereby on the Special Mandatory Redemption Date in accordance with the terms of the indenture for the notes at a redemption price equal to 101% of the initial issue price of the notes, plus accrued and unpaid interest to, but not including, the Special Mandatory Redemption Date. See “Description of Notes—Escrow of Proceeds; Escrow Conditions” and “Description of Notes—Special Mandatory Redemption.”

The Class V Common Stock

The Class V Common Stock is a type of common stock that is commonly referred to as a tracking stock. A tracking stock is a separate class or series of a company’s common stock that is intended to reflect the economic performance of a defined set of assets and liabilities, usually consisting of a specific business or subsidiary.

The approximately 223 million shares of Class V Common Stock issuable in the Dell-EMC merger are intended to track the economic performance of approximately 65% of our economic interest in the Class V Group following the completion of the Dell-EMC merger. The Class V Group will initially consist of EMC’s economic interest in the VMware business, which currently consists of approximately 343 million shares of VMware common stock. Our remaining assets and liabilities, which are intended to be tracked by the DHI Group common stock (including a remaining approximately 35% economic interest in the Class V Group), are referred to as the DHI Group.

The Class V Common Stock is subject to our credit risk and is structurally subordinate to all of our indebtedness, including the Notes. Holders of DHI Group common stock and Class V Common Stock will be stockholders of a single company and subject to all risks associated with an investment in us and all of our businesses, assets and liabilities. The DHI Group common stock and the Class V Common Stock will not have ownership interests in either the DHI Group or the Class V Group and will not entitle their holders to any direct claim or special rights to receive specific assets of either group. The Class V Common Stock will not limit our legal responsibility, or that of our subsidiaries, for our or their respective debts and liabilities, including the Notes.

Liquidation

In the event of our dissolution or liquidation and winding-up, after payment or provision for payment of our debts and liabilities and payment or provision for payment of any preferential amounts due to the holders of any other class or series of stock, the holders of the DHI Group common stock and the Class V Common Stock will be entitled to receive a proportionate interest in all of our assets, if any, remaining for distribution to holders of common stock in proportion to their respective number of “liquidation units” per share, subject to the applicable provisions of our amended and restated certificate of incorporation.

95 Voting Rights

The Class V Common Stock is our common stock and the holders of Class V Common Stock will vote together with the DHI Group common stock as a single class except in certain limited circumstances under which the holders of Class V Common Stock will have the right to vote as a separate class and except in the election of our Group II Directors and Group III Directors. See “Management.”

Holders of Class V Common Stock will not have voting rights on matters brought before the shareholders of VMware.

Dividends

Subject to the limitations on dividends set forth in our amended and restated certificate of incorporation and to applicable law, the holders of Class V Common Stock will be entitled to receive dividends on their respective series of stock when, as and if our board of directors authorizes and declares such dividends.

We do not expect to pay any dividends on the Class V Common Stock before VMware pays dividends on its shares and/or the Class V Group includes other assets that generate positive cash flow. Thereafter, our board of directors will determine whether to pay dividends on the Class V Common Stock based primarily on the results of operations, financial condition and capital requirements of the Class V Group and of us as a whole, and other factors that the our board of directors considers relevant.

Provisions Relating to Unwinding of Tracking Stock Structure and Certain Corporate Transactions

The conversion, redemption and dividend provisions of the Class V Common Stock described below are triggered upon a decision by our board of directors to (1) unwind the tracking stock structure, in the case of the first provision described below, (2) redeem the Class V Common Stock, in the case of the second and third provisions described below, or (3) sell “substantially all” of the assets attributed to the Class V Group, in the case of the last provision described below.

Optional Conversion. At any time at which shares of Class C Common Stock are traded on a U.S. securities exchange, our board of directors may convert all, but not less than all, of the shares of the Class V Common Stock into a number of shares of Class C Common Stock based on the weighted average market value of both series of shares, The Class C Common Stock is not currently listed on a U.S. securities exchange and we do not currently have any plans to effect such a listing.

Redemption for VMware Common Stock. Subject to the applicable provisions of our amended and restated certificate of incorporation, at any time at which shares of common stock of VMware comprise all of the assets of the Class V Group, we may redeem all, but not less than all, of the outstanding shares of Class V Common Stock for a number of shares of common stock of VMware that is attributed to the Class V Group.

Redemption for Securities of Class V Group Subsidiary. Subject to the applicable provisions of our amended and restated certificate of incorporation, at any time at which shares of common stock of VMware do not comprise all of the assets of the Class V Group, we may redeem all, but not less than all, of the outstanding shares of Class V Common Stock for a number of shares of common stock of a Class V Group Subsidiary that is attributed to the Class V Group. A “Class V Group Subsidiary” is a wholly owned subsidiary of us that holds all of the assets and liabilities attributed to the Class V Group. Any shares of a Class V Group Subsidiary to be so issued must be registered under all applicable U.S. securities laws and listed for trading on a U.S. securities exchange.

96 Dividend, Redemption or Conversion in Case of Class V Group Disposition. Subject to the applicable provisions of our amended and restated certificate of incorporation, upon a disposition by us of all or “substantially all” of the assets attributed to the Class V Group (which means, for this purpose, assets representing at least 80% of the fair value of the total assets of the Class V Group), we will be required to:

• pay a dividend to the holders of the outstanding shares of Class V Common Stock with a fair value equal to the “net proceeds” (after taxes, transaction costs and liabilities) of such a disposition; • redeem a number of outstanding shares of the Class V Common Stock with an aggregate weighted average market value equal to the “net proceeds” of such a disposition for cash or publicly traded securities with a fair value equal to such “net proceeds,” except that if such a disposition involves all of the assets attributed to the Class V Group, then all of the outstanding shares of Class V Common Stock may be redeemed for cash or publicly traded securities with such fair value; • convert such number of outstanding shares of Class V Common Stock into a number of shares of Class C Common Stock (if such stock is publicly traded) based on the relative weighted average market values of both series of shares; or • effect any combination of such dividend, redemption or conversion.

97 DENALI UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following statements set forth selected unaudited pro forma condensed combined financial data for Denali as of and for the fiscal year ended January 29, 2016. 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 EMC Transactions and anticipated disposition of the Dell Services divested businesses as if they had occurred on January 29, 2016. The unaudited pro forma condensed combined statement of loss for the fiscal year ended January 29, 2016 combines the historical consolidated statements of income (loss) of Denali and EMC, giving effect to Transactions as if they had occurred on January 31, 2015, the first day of the fiscal year ended January 29, 2016. In addition, the unaudited pro forma condensed combined statement of loss for the fiscal year ended January 29, 2016 and the unaudited pro forma condensed statements of loss for the fiscal year ended January 30, 2015, the successor period ended January 31, 2014, and the predecessor period from February 2, 2013 through October 28, 2013 reflect the anticipated disposition of the Dell Services divested businesses, which will be accounted for as discontinued operations, as if it had occurred on February 2, 2013.

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 (1) directly attributable to the Transactions or the anticipated disposition of the Dell Services divested businesses, (2) factually supportable and (3) 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 information included under the headings “Risk Factors,” “The Transactions,” “Use of Proceeds,” “Capitalization,” “Selected Historical Consolidated Financial Data of Denali,” “Selected Historical Consolidated Financial Data of EMC,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of EMC” and Denali’s and EMC’s consolidated financial statements and related notes included elsewhere in this offering memorandum. All pro forma adjustments and their underlying assumptions are described more fully in the notes to Denali’s unaudited pro forma condensed combined financial statements.

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 Dell-EMC 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 Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other relevant laws and regulations, before completion of the Dell-EMC 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 condensed combined financial information is presented for informational purposes only. The unaudited pro forma condensed combined financial information does not purport to represent what Denali’s results of operations or financial condition would have been had the Dell-EMC merger or anticipated disposition of the Dell Services divested businesses actually occurred on the dates indicated, and does not purport to project Denali’s results of operations or financial condition for any future period or as of any future date.

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 it will incur material tax or other costs as a result of any such repatriation.

98 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 Dell-EMC merger (including to obtain required regulatory approvals), the projected realization of revenue synergies, cost savings that may be realized as a result of the Dell-EMC merger, or any potential changes in compensation plans.

99 DENALI UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL POSITION

As of January 29, 2016 EMC Denali As of Assets As of January 29, December 31, held Pro forma Pro forma (in millions) 2016 2015 for sale adjustments 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) 18,662(g) 45,549 Purchased intangible assets, net ...... 9,578 2,149 (388) 32,841(h) 44,180 Other non-current assets ...... 778 2,952 (50) (113)(j) 3,567 Total assets ...... $45,250 $46,612 $ — $ 42,888 $134,750 Current liabilities: Short-term debt ...... $ 2,984 $ 1,299 $ — $ (1,460)(f) $ 2,823 Accounts payable ...... 12,934 1,644 (173) — 14,405 Accrued and other ...... 4,556 3,732 (180) (846)(l) 7,262 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 (4,075) 33,802 Long-term debt ...... 10,775 5,475 — 35,104(i) 51,354 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 $ — $ 42,872 $110,443 Redeemable shares ...... 106 — — — 106 Stockholders’ equity Preferred stock ...... — — — — — Common stock and additional paid-in capital ..... 5,727 19 — 17,094(n) 22,840 Retained earnings (deficit) ...... (3,937) 21,700 — (20,824)(o) (3,061) Accumulated other comprehensive income (loss) ...... (324) (579) — 579(p) (324) Total stockholders’ equity ...... 1,466 21,140 — (3,151) 19,455 Non-controlling interests ...... — 1,579 — 3,167(q) 4,746 Total liabilities and equity ...... $45,250 $46,612 $ — $ 42,888 $134,750

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

100 DENALI UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF LOSS

Pro Forma Year Ended January 29, 2016 Denali EMC Fiscal year ended Fiscal year ended Discontinued Pro forma Pro forma (in millions) January 29, 2016 December 31, 2015 operations adjustments 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 — (1,841)(e) (2,635) (43)(f) Income (loss) from continuing operations before income taxes ...... (1,175) 2,882 (139) (7,128) (5,560) Income tax provision (benefit) ...... (71) 710 (45) (2,495)(h) (1,901) Net Income (loss) from continuing operations ...... (1,104) 2,172 (94) (4,633) (3,659) Net income (loss) attributable to non-controlling interests ...... — (182) — 313(i) 131 Net income (loss) from continuing operations attributable to common shareholders ...... $ (1,104) $ 1,990 $ (94) $(4,320) $ (3,528)

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

101 DENALI UNAUDITED PRO FORMA CONDENSED STATEMENT OF LOSS

Pro Forma Year Ended January 30, 2015 Denali Fiscal year ended Discontinued (in millions) January 30, 2015 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)

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

102 DENALI UNAUDITED PRO FORMA CONDENSED STATEMENT OF LOSS

Period October 29, 2013 through Period February 2, 2013 through January 31, 2014 October 28, 2013 Successor Predecessor Discontinued Pro Discontinued Pro (in millions) Denali operations forma Dell, Inc. operations 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)

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

103 NOTES TO DENALI UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. Description of 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 Dell-EMC 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 Dell-EMC merger, plus cash in lieu of any fractional shares. In order to complete the Dell-EMC 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 Dell-EMC merger and the other transactions described in this offering memorandum 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. For purposes of these unaudited pro forma condensed combined financial statements, we have assumed that all of the outstanding shares will receive the merger consideration and have not made any adjustments in connection with any possible appraisal rights. See “Risk Factors—Risks Related to the Combined Company and the Transactions—Holders of a substantial number of EMC’s shares may deliver written demands for the appraisal of their shares under Massachusetts law. If these shareholders are entitled to appraisal rights and properly demand appraisal of their shares, the combined company may be required to seek additional financing to fund payments in cash in respect of such appraised shares.”

The Dell-EMC 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 $4,250 million 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 Credit Suisse, J.P. Morgan, Barclays, BofA Merrill Lynch, Citi, Goldman, Sachs & Co., Deutsche Bank, and RBC Capital Markets, for the purpose of financing the Dell-EMC 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 Dell-EMC 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 $2,950 million, in the case of Denali, and $4,750 million in the case of EMC, in each case, minus certain permitted reductions) at the closing of the Dell-EMC 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 Transaction and are based on the historical consolidated financial statements of Denali and EMC. The assets and liabilities of the Dell Services divested businesses have been removed from the pro forma combined statement of financial position to reflect the disposition, and the financial results of the Dell Services divested businesses have been removed as discontinued operations from the pro forma combined statement of loss; these adjustments 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

104 forma condensed combined statement of income (loss) for the year ended January 29, 2016 combines Denali’s consolidated statement of income (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:

Year Ended (in millions) 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

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 fiscal year ended January 29, 2016, Denali incurred $39 million of acquisition-related costs and during the fiscal year ended December 31, 2015, 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 Dell-EMC 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 $895 million for capitalized debt costs; • a decrease to long-term debt of $133 million for debt discounts; • a decrease in other current liabilities of $176 million for the assumed tax benefit of transaction costs expensed; and • a decrease to retained earnings of $544 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

105 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, Denali entered into a definitive agreement with NTT Data International L.L.C. to sell substantially all of the Dell Services businesses, including the Dell Services Federal Government business but excluding the global support, deployment and professional services businesses, 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 of our pro forma condensed combined statement of financial position and have removed such assets and liabilities in the “pro forma adjustments” column of our pro forma condensed combined statement of financial position to reflect the disposition 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 periods 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 Dell Services divested businesses. 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 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 2017, subject to the satisfaction of certain customary closing conditions, including necessary approvals from regulatory authorities.

If the disposition of the Dell Services divested businesses is consummated prior to or substantially concurrently with the consummation of the Dell-EMC merger, the consideration received from the disposition will be used to finance the EMC Transactions. The net impact of the anticipated disposition of the Dell Services divested businesses to the unaudited pro forma 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 estimated cash taxes of $0.4 billion); • 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 Dell-EMC merger (including to obtain required regulatory approvals), the projected realization of revenue synergies and cost savings following completion of the Dell-EMC merger, or any potential changes in compensation plans. Although Denali projects that revenue synergies and cost savings will result from the Dell-EMC merger, there can be no assurance that these cost savings will be achieved. Management currently estimates that 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, resulting in an increase in accounts receivable and deferred revenue of $1.9 billion prior to purchase accounting adjustments. Upon the

106 completion of the Dell-EMC 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.

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 Dell-EMC merger, reconciled to the estimate of total consideration expected to be transferred:

(in millions) Consideration Transferred Cash ...... $48,614 Class V Common Stock(1) ...... 12,863 Total consideration transferred ...... 61,477 Rollover equity(2) ...... 4,746 Total value to allocate ...... $66,223 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) ...... 35,752 Purchased intangibles, net(4) ...... 34,990 Other non-current assets ...... 2,035 Total assets ...... $99,753 Current liabilities: Short-term debt ...... $ 1,299 Accounts payable ...... 1,644 Accrued and other ...... 3,155 Short-term deferred revenue ...... 5,055 Total current liabilities ...... 11,153 Long-term debt ...... 5,001 Long-term deferred revenue ...... 3,516 Other non-current liabilities ...... 13,860 Total liabilities ...... $33,530 Total net assets ...... $66,223 (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 $57.69 (the closing share price of VMware common stock as of April 26, 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

107 VMware common stock prior to the completion of the Dell-EMC merger may impact the market value of the Class V Common Stock at the time the Dell-EMC merger is completed. The actual fair values at the time of the Dell-EMC 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 $1.3 billion. (2) Rollover equity is comprised of non-controlling interests of $4.7 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 $57.69 (the closing price of VMware common stock as of April 26, 2016). A 10% change in the fair value of VMware’s share price would change the value of goodwill by approximately $465 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. Denali expects that a portion of the consideration transferred will be recorded as post-acquisition stock compensation expense. Based on current estimates, this would decrease the amount of goodwill recorded by approximately $0.8 billion to $1.0 billion. (4) As of completion of the Dell-EMC 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 offering memorandum, 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. 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 Estimated fair (years) 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 estimated total value assigned to identifiable intangible assets, (ii) the estimated allocation of value between

108 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 completion of the Dell-EMC 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 Dell-EMC 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 offering memorandum, 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 Dell-EMC merger:

(in millions) Cash from historical balance sheet ...... (1) $ 6,088 Anticipated net proceeds from the Dell Services Transaction ...... (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 net cash consideration from the disposition of the Dell Services divested businesses. This represents $3.1 billion of total cash consideration net of estimated cash taxes of $0.4 billion. (3) Represents the sale of EMC investments to raise cash as a financing source for the Dell-EMC merger. (4) Upon the closing of the Dell-EMC merger, Denali will incur approximately $43.2 billion of debt consisting of a revolving loan, term loans, senior notes (including the notes offered hereby), a margin bridge facility, and other permanent financing. Denali has debt financing commitments for up to $49.5 billion in the aggregate. Net proceeds of the Dell Services Transaction are expected to be used to fund the Dell-EMC merger. However, if the Dell Services Transaction is not consummated substantially concurrently with or prior to the consummation of the Dell-EMC merger, Denali intends to enter into a $1.5 billion one-year senior unsecured asset sale bridge facility and increase borrowings under the term loan facilities by $1.2 billion. (5) Upon the closing of the Dell-EMC merger, Denali expects to issue approximately 155 million shares of DHI Group common stock to the cash equity investors 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 of EMC shares outstanding, including the assumed vesting of outstanding stock options, restricted stock units and restricted stock.

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

Year Ended (in millions) 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 Amorization 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 Dell-EMC 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 Dell-EMC merger, the decrease in interest expense related to the debt of Denali and EMC that is to be repaid as part of the Dell-EMC merger, and the recording of the debt at fair value based on the preliminary purchase price allocation as follows:

Year Ended (in millions) January 29, 2016 Interest expense and amortization of debt issuance costs on new debt ...... $2,156 Less: interest expense and amortization of debt issuance costs on Denali’s refinanced debt ...... (413) Less: interest expense on EMC’s refinanced debt ...... (3) Plus: amortization of change in fair value of acquired debt ...... 101 Total interest expense adjustment ...... $1,841

110 The weighted-average interest rate of new debt incurred is assumed to be 4.47%. An increase or decrease 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 to provide financing for the Dell-EMC merger. (g) To eliminate non-recurring transaction costs included in Denali and EMC’s historical results that are directly attributable to the proposed merger. (h) 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. (i) To record the impact of the pro forma adjustments above to non-controlling interests as follows:

Year Ended (in millions) 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

Pro Forma Adjustments to the Statement of Financial Position: (a) To record the adjustment to the cash balance to effectuate the Dell-EMC 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 divestiture 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 divested businesses’ 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 the Dell Services divested businesses has been included within the cash adjustment as these proceeds will be utilized to effectuate the Dell-EMC 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 Dell-EMC 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) for the related impact to deferred revenue. (e) To record the sale of investments used to raise cash as a financing source for the Dell-EMC merger.

111 (f) To eliminate the short-term debt that is being repaid in conjunction with the Dell-EMC 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 ...... 276 Total short-term debt adjustment ...... $(1,460)

(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 ...... 35,752 Total goodwill adjustment ...... $ 18,662

(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

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

(in millions) Long-term debt incurred in conjunction with the merger ...... $42,874 Discount on new debt ...... (133) 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 ...... $35,104

Denali will incur debt in the form of a revolving loan, term loans, senior notes (including the notes offered hereby), a margin bridge facility, a bridge facility to be secured by the VMware intercompany notes and other permanent financing. Such debt is expected to have 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 ...... 895 Total other non-current assets adjustment ...... $(113)

112 (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 ...... $(577) Reduction in tax payable for deferred financing cost deduction ...... (59) Reduction in tax payable for transaction expenses ...... (176) Reduction in tax payable for Denali debt prepayment penalty ...... (34) Total income tax payable adjustment ...... $(846)

(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 Dell-EMC 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 ...... 12,863 Total common stock adjustment $17,094

113 (o) To eliminate EMC’s historical retained earnings, to estimate the net gain on the disposition of the Dell Services divested businesses 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 the Dell Services divested businesses ...... $ 1,593 Transaction costs ...... (544) Denali’s historical debt issuance costs, debt discount, and prepayment penalties ...... (173) Total retained earnings (deficit) adjustment ...... $(20,824)

(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.

114 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF DENALI

The following table sets forth the historical consolidated financial data for Denali as of the dates and for the periods indicated. The selected historical financial data as of January 30, 2015 and January 29, 2016, and for the period from February 2, 2013 through October 28, 2013, the period from October 29, 2013 through January 31, 2014, and for each of the years ended January 30, 2015 and January 29, 2016 have been derived from Denali’s audited historical consolidated financial statements and related notes included elsewhere in this offering memorandum. The selected audited historical financial data as of January 31, 2014 have been derived from Denali’s historical consolidated financial statements that are not included herein. In order to facilitate a discussion of certain results of operations across periods, we have presented the results for the fiscal year ended January 31, 2014 on a combined basis, which is comprised of the results for the periods form October 29, 2013 to January 31, 2014 and from February 2, 2013 to October 28, 2013, which are derived from Denali’s historical consolidated financial statements included herein.

The selected historical consolidated financial data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali” and the audited consolidated financial statements of Denali and related notes thereto appearing elsewhere in this offering memorandum.

Successor Combined Successor Predecessor October 29, February 2, Year Ended Year Ended Year Ended 2013 through 2013 through January 29, January 30, January 31, January 31, October 28, 2016 2015 2014 2014 2013 (in millions) Statement of Loss Data: Net revenue: Products ...... $43,317 $46,690 $44,039 $11,253 $32,786 Services, including software related . . . 11,569 11,429 12,338 2,822 9,516 Total net revenue ...... 54,886 58,119 56,377 14,075 42,302 Costs of net revenue: Products ...... 37,923 40,415 38,845 10,695 28,150 Services, including software related . . . 7,131 7,496 8,148 1,987 6,161 Total cost of net revenue ...... 45,054 47,911 46,993 12,682 34,311 Gross margin ...... 9,832 10,208 9,384 1,393 7,991 Operating expenses: Selling, general and administrative .... 8,900 9,428 9,391 2,863 6,528 Research, development and engineering ...... 1,315 1,202 1,273 328 945 Total operating expenses ...... 10,215 10,630 10,664 3,191 7,473 Operating income (loss) ...... (383) (422) (1,280) (1,798) 518 Interest and other, net ...... (792) (924) (402) (204) (198) Income (loss) before income taxes .... (1,175) (1,346) (1,682) (2,002) 320 Income tax provision (benefit) ...... (71) (125) 23 (390) 413 Net loss ...... $(1,104) $ (1,221) $ (1,705) $ (1,612) $ (93)

Statement of Cash Flows Data: Change in cash from operating activities . . . $ 2,162 $ 2,551 $ 2,686 $ 1,082 $ 1,604 Change in cash from investing activities .... $ (321) $ (355) $ (6,989) $ (8,553) $ 1,564 Change in cash from financing activities . . . $ (496) $ (3,094) $ 9,330 $13,960 $ (4,630) Statement of Financial Position Data (at period end): Cash and cash equivalents ...... $ 6,576 $ 5,398 $ 6,449 $ 6,449 Total assets ...... $45,250 $48,192 $51,153 $51,153 Total debt ...... $13,759 $14,155 $17,415 $17,415 Total stockholders’ equity ...... $ 1,466 $ 2,904 $ 4,014 $ 4,014

115 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF EMC

The following table sets forth the selected historical consolidated financial data for EMC as of the dates and for the periods indicated. The selected historical financial data as of December 31, 2014 and 2015, and for the years ended December 31, 2013, 2014 and 2015 have been derived from EMC’s audited historical consolidated financial statements and related notes included elsewhere in this offering memorandum. The selected historical financial data as of December 31, 2013 have been derived from EMC’s historical consolidated financial statements that are not included herein. The selected historical financial data as of March 31, 2016 and for the three months ended March 31, 2015 and 2016 have been derived from EMC’s unaudited historical condensed consolidated financial statements included elsewhere in this offering memorandum. The selected historical financial data as of March 31, 2015 have been derived from EMC’s unaudited condensed consolidated financial statements that are not included herein. The unaudited financial data presented have been prepared on a basis consistent with EMC’s audited consolidated financial statements. In the opinion of management of EMC, such unaudited financial data reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the results for those periods. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year or any future period.

The selected historical consolidated financial data set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of EMC” and the audited and unaudited consolidated financial statements of EMC and related notes thereto appearing elsewhere in this offering memorandum.

Three Months Ended Year Ended March 31, March 31, December 31, December 31, December 31, 2016 2015 2015 2014 2013 (in millions) Income Statement Data: Net revenue: Product sales ...... $ 2,682 $ 2,905 $13,514 $14,051 $13,690 Services ...... 2,793 2,708 11,190 10,389 9,532 Total net revenue ...... 5,475 5,613 24,704 24,440 23,222 Costs and expenses: Cost of product sales ...... 1,251 1,329 5,809 5,738 5,650 Cost of services ...... 964 945 3,904 3,453 3,099 Research and development ...... 814 788 3,167 2,991 2,761 Selling, general and administrative ...... 1,987 2,037 8,533 7,982 7,338 Restructuring and acquisition-related charges ...... 49 135 450 239 224 Operating Income ...... 410 379 2,841 4,037 4,150 Net-operating income (expense): Investment income ...... 13 24 94 123 128 Interest expense ...... (41) (40) (164) (147) (156) Other income (expense), net ...... 4 10 111 (251) (257) Total non-operating income (expense) ...... (24) (6) 41 (275) (285) Income before provision for income taxes ...... 386 373 2,882 3,762 3,865 Income tax provision ...... 89 82 710 868 772 Net income ...... 297 291 2,172 2,894 3,093 Less: Net income attributable to the non-controlling interest in VMware, Inc...... (29) (39) (182) (180) (204) Net income attributable to EMC Corporation ...... $ 268 $ 252 $ 1,990 $ 2,714 $ 2,889

Statement of Cash Flows Data: Net cash provided by operating activities ...... $ 932 $ 1,080 $ 5,386 $ 6,523 $ 6,923 Net cash provided by (used in) investing activities ...... $ 156 $(1,111) $ (2,754) $ (2,551) $ (5,760) Net cash (used in) provided by financing activities ...... $ (444) $ (1,821) $ (2,292) $ (5,437) $ 2,076 Balance Sheet Data (at period end): Cash and cash equivalents ...... $ 7,224 $ 4,388 $ 6,549 $ 6,343 $ 7,891 Total assets(1) ...... $45,703 $42,998 $46,612 $45,585 $45,396 Total debt(2) ...... $ 6,402 $ 5,471 $ 6,774 $ 5,469 $ 7,127 Total stockholders’ equity ...... $23,250 $22,004 $22,719 $23,525 $23,786

116 (1) During 2015, EMC retrospectively adopted the accounting guidance related to the balance sheet classification of deferred taxes which requires that all deferred taxes be presented as non-current. The adoption is reflected in all periods in the table above. (2) During 2015, EMC retrospectively adopted the accounting guidance requiring the presentation of debt issuance costs to be presented in the balance sheet as a direct reduction from the carrying amount of the related debt liability rather than as an asset. The adoption is reflected in all relevant periods in the table above.

117 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF DENALI

On October 29, 2013, Denali acquired Dell in the going-private transaction. For the purposes of the consolidated financial data included in this offering memorandum for Denali, periods prior to October 29, 2013 reflect the financial position, results of operations and changes in financial position of Dell and its consolidated subsidiaries prior to the going-private transaction, referred to as the Predecessor, and periods beginning on or after October 29, 2013 reflect the financial position, results of operations and changes in financial information of Denali and its consolidated subsidiaries as a result of the going-private transaction, referred to as the Successor. For more information on the Predecessor and Successor periods, see note 1 of the notes to our audited consolidated financial statements included in this offering memorandum. The Predecessor financial statements do not reflect the effects of the accounting for, or the financing of, the going-private transaction. Included in the results for the Successor periods is the impact of purchase accounting adjustments, primarily related to deferred revenue, and an increase in amortization expense for intangible assets. We have presented our Fiscal 2014 financial results on an unaudited pro forma basis, as if the going-private transaction had occurred on the first day of Fiscal 2014, which we refer to as “Pro Forma Fiscal 2014” as we believe the presentation of a twelve-month period on a pro forma basis for Fiscal 2014 is meaningful to the reader and more useful for comparative purposes across periods. This management’s discussion and analysis should be read in conjunction with the “Denali Unaudited Pro Forma Condensed Combined Financial Statements,” “Selected Historical Consolidated Financial Data of Denali” and the historical consolidated financial statements and related notes of Denali included elsewhere in this offering memorandum. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs, and that are subject to numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” section of this offering memorandum. Our actual results may differ materially from those expressed or implied in any forward-looking statements.

Unless otherwise indicated, all changes identified for the current-period results represent comparisons to results for the prior corresponding fiscal periods. Our fiscal year is the 52- or 53-week period ending on the Friday nearest January 31. As used throughout this offering memorandum, “Fiscal 2016” means our fiscal year ended January 29, 2016, “Fiscal 2015” means our fiscal year ended January 30, 2015 and “Fiscal 2014” means the period from October 29, 2013 to January 31, 2014 and the period from February 2, 2013 to October 28, 2013. Each of these fiscal years includes 52 weeks. Unless the context indicates otherwise, references in this management’s discussion and analysis to “we,” “us,” “our,” “Denali,” and “Denali Holding” mean Denali Holding Inc. and its consolidated subsidiaries and references to “Dell” mean Dell Inc. and Dell Inc.’s consolidated subsidiaries.

Overview of Denali’s Business We are a leading provider of scalable IT solutions enabling customers to be more efficient, mobile, informed and secure. We design, develop, manufacture, market, sell and support a wide range of products and services through our four reportable and operating business units: Client Solutions, Enterprise Solutions Group, Dell Software Group and Dell Services. • Client Solutions—Client Solutions includes sales to our commercial and consumer customers of desktops, notebooks, thin clients, and third-party software and peripherals and services closely tied to the sale of Client Solutions hardware. Client Solutions revenue represented 65%, 68% and 68% of our total net revenue for Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, respectively. Generally, over half of Client Solutions revenue is generated in the Americas, with the remaining portion derived from sales in Europe, the Middle East and Africa (“EMEA”) and Asia Pacific and Japan (“APJ”). • Enterprise Solutions Group—ESG includes servers, networking and storage, as well as services and third party software and peripherals that are closely tied to the sale of ESG hardware. ESG revenue represented 27%, 25% and 26% of our total net revenue for Fiscal 2016, Fiscal 2015 and Pro Forma

118 Fiscal 2014, respectively. Generally, over half of ESG revenue is generated in the Americas, with the remaining portion derived from sales in EMEA and APJ. • Dell Software Group—DSG includes systems management, security software solutions and information management software offerings. DSG revenue represented 2%, 3% and 2% of our total net revenue for Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, respectively. DSG revenue is primarily derived from sales in the Americas and EMEA. • Dell Services—Dell Services includes a broad range of IT and business services, including infrastructure, cloud, applications and business process services. Dell Services revenue represented 5%, 5% and 5% of our total net revenue for Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, respectively. Dell Services revenue is mostly generated in the Americas, primarily in the United States.

On March 27, 2016, we entered into a definitive agreement with NTT Data International L.L.C. to sell substantially all of the Dell Services business for cash consideration of approximately $3.1 billion. See “—Dell Services Divestiture” for more information regarding the divestiture.

We also offer or arrange private label credit financing programs to qualified commercial and consumer customers and leases and fixed-term financing primarily to commercial customers, in each case who are located in the United States, Canada, Europe and Mexico, through Dell Financial Services (“DFS”) and its affiliates. DFS services primarily include originating, collecting and servicing customer receivables primarily related to the purchase of Dell products. In some cases, we originate financing activities for our commercial customers related to the purchase of third-party technology products that complement our portfolio of products and services. The results of these operations are allocated to our business units based on the underlying product or service financed.

The Dell-EMC Merger On October 12, 2015, EMC, Denali, Dell and Merger Sub entered into the merger agreement pursuant to which Merger Sub will be merged with and into EMC, with EMC surviving as a wholly-owned subsidiary of Denali.

119 Also, in connection with the Dell-EMC merger, all principal, accrued but unpaid interest, fees and other amounts (other than certain contingent obligations) outstanding at the effective time of the Dell-EMC merger under EMC’s existing unsecured revolving credit facility, Dell International’s existing ABL credit facility and term loan facilities will be repaid in full substantially concurrently with the closing of the Dell-EMC merger and all commitments to lend and guarantees and security interests, as applicable, in connection therewith will be terminated and/or released. In connection with the Dell-EMC merger, 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 the existing first lien notes as of January 29, 2016 will be deposited with the trustee for such notes, and that such notes will thereby be satisfied and discharged, substantially concurrently with the closing of the Dell-EMC merger. We also expect to refinance all of EMC’s commercial paper in connection with the EMC Transactions. Dell further expects that all of Dell’s and EMC’s other outstanding senior notes and senior debentures will remain outstanding after the closing of the Dell-EMC merger in accordance with their respective terms.

Denali expects to finance the cash consideration for the Dell-EMC merger, the refinancing of EMC’s existing unsecured revolving credit facility and commercial paper, Dell International’s existing ABL credit facility and term loan facilities and the existing first lien notes and the payment of related fees and expenses with up to $49.5 billion from debt financings, including the notes offered hereby (not all of which is expected to be drawn at the closing of the Dell-EMC merger), up to $4.25 billion of committed equity financing and cash on hand at Denali and EMC. To the extent that the Dell Services Transaction closes prior to the consummation of the Dell-EMC merger, Denali expects to apply the net proceeds from such transaction to fund the Dell-EMC merger.

Upon consummation of the offering of the notes, the Fincos will enter into an escrow agreement, pursuant to which the Fincos will deposit into an escrow account an amount equal to the gross proceeds of this offering and either (x) the Fincos will also deposit (or cause to be deposited) in cash or (y) we will cause the issuing lenders under our existing ABL credit facility to issue letters of credit for the benefit of the escrow agent and the holders of the notes (or a combination of (x) and (y)), in each case, in an amount that is sufficient to pay the special redemption price described below and all interest that would accrue on the notes up to but not including the date that is one month after the consummation of the offering of the notes. If, among other things, the Dell-EMC merger is not consummated on or prior to December 16, 2016, the Fincos will be required to redeem all of the notes offered hereby on the Special Mandatory Redemption Date in accordance with the terms of the applicable indenture for the notes at a redemption price equal to 101% of the initial issue price of the notes, plus accrued and unpaid interest to, but not including, the Special Mandatory Redemption Date. See “Description of Notes— Escrow of Proceeds; Escrow Conditions” and “Description of Notes—Special Mandatory Redemption.”

Other than the recognition of certain expenses related to the pending Dell-EMC merger, there was no impact of the Dell-EMC merger on our audited consolidated financial statements.

The Going-Private Transaction On October 29, 2013, Dell was acquired by Denali in the going-private transaction pursuant to the merger agreement. Denali is a Delaware corporation owned by Michael S. Dell and a separate property trust for the benefit of Mr. Dell’s wife, investment funds affiliated with Silver Lake Partners, the MSD Partners Investors and certain members of Dell’s management. Mr. Dell serves as Chairman and Chief Executive Officer of Denali and Dell. See note 1 and note 3 of the notes to our audited consolidated financial statements included in this offering memorandum for more information about the going-private transaction.

120 SecureWorks On April 27, 2016, SecureWorks completed a registered initial public offering of its Class A common stock. Denali previously owned all of the equity interests in SecureWorks prior to SecureWorks’ initial public offering and, following the completion of such initial public offering, now owns approximately 87% of the Class A common stock, all of the Class B common stock and approximately 99% of the combined voting interests of SecureWorks. The results of the SecureWorks operations are recorded in Corporate.

Dell Services Divestiture On March 27, 2016, we entered into a definitive agreement with NTT Data International L.L.C. to sell substantially all of the Dell Services business, including the Dell Services Federal Government business but excluding the global support, deployment and professional services business, for cash consideration of approximately $3.1 billion. Accordingly, we have reflected the assets and liabilities relating to the Dell Services divested businesses in the “assets held for sale” column of our pro forma condensed combined statement of financial position and have removed such assets and liabilities in the “pro forma adjustments” column of our pro forma condensed combined statement of financial position to reflect the divestiture in our unaudited pro forma financial statements included elsewhere in this offering memorandum and the results of the Dell Services divested businesses will be reclassified to discontinued operations beginning with the first quarter of Fiscal 2017. We anticipate the transaction will close in the third quarter of Fiscal 2017. To the extent that the transaction closes substantially concurrently with or prior to the consummation of the Dell-EMC merger, we expect to apply the estimated $2.7 billion of net proceeds from such transaction to fund the EMC Transactions. See “The Transactions.”

Business Trends and Challenges We are seeing an unprecedented rate of change in the IT industry, but our strategy remains consistent. As a leading provider of scalable end-to-end technology solutions, we accelerate results for our customers by enabling them to be more efficient, mobile, informed and secure. We continue to invest in research and development (“R&D”), sales and other key areas of our business to deliver superior products and solution capabilities and to drive execution of long-term profitable growth. We believe that our results will improve over time in connection with the productivity initiatives directed at our salesforce and as a result of our differentiated products and solution capabilities, including our expanded portfolio of IT solutions resulting from the Dell-EMC merger.

In particular, while we expect Dell’s ESG business to continue to be impacted by declines in the traditional storage market, we believe that we will benefit from our combination with EMC which has market-leading positions in integrated storage and server solutions (such as converged and hyper-converged infrastructure) and software-defined data center offerings. Within Client Solutions, we have been able to leverage our traditional strength in the PC market to offer solutions and services that provide higher value recurring revenue streams. Although we anticipate an increasingly challenging demand environment, increased pricing pressures and intensifying market competition in Client Solutions as a result of the macroeconomic environment and PC demand trends, we believe that we will benefit from the general trend in the market towards consolidation. Our Client Solutions offerings remain an important element of our strategy, generating strong cash flow and opportunities for cross-selling of complementary solutions. As a result of the Dell-EMC merger, we will also benefit from the increasing demand for hybrid cloud solutions and virtualization capabilities.

See the “Risk Factors” section of this offering memorandum for a discussion of the risks that may affect our business, results of operations, financial conditions and cash flows.

121 Seasonality While the results of operations for our consolidated business and its business units generally are not affected by seasonal trends as a whole, certain regions and markets in which Dell operates are subject to seasonal sales trends. For example, sales to government customers (particularly the U.S. federal government) are typically stronger in our third fiscal quarter, sales in EMEA are often weaker in our third fiscal quarter, and consumer sales are typically strongest during our third and fourth fiscal quarters.

Components of our Results of Operations Net Revenue We enter into contracts to sell our products and services, and frequently enter into sales arrangements with customers that contain multiple elements or deliverables, such as hardware, services, software and peripherals. We use general revenue recognition accounting guidance for hardware, software bundled with hardware that is essential to the functionality of the hardware, peripherals and certain services. We recognize revenue for these products when it is realized or realizable and earned. Revenue is considered realized and earned when persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; our fee is fixed and determinable; and collection of the resulting receivable is reasonably assured. See “—Critical Accounting Policies—Revenue Recognition and Related Allowances” for more information regarding our revenue recognition policies.

We report our net revenue in the following categories: (i) product revenue and (ii) services revenue, including software related. • Product Revenue—We derive a majority of our net revenue from product revenue, which includes revenue from sales of our hardware products and Dell-owned software licenses, such as (i) revenues derived from sales to our commercial and consumer customers of desktops, thin clients, notebooks and tablets and peripherals within Client Solutions, (ii) revenues derived from sales of servers, networking, storage hardware and peripherals within ESG and (iii) revenues from sales of our systems management, security software solutions and information management software offerings within our DSG business unit. In Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, product revenue comprised 78.9%, 80.3% and 79.2%, respectively, of our total net revenue. • Services Revenue, including software related—Revenue from services, including software related, includes revenue from our services offerings, third-party software and support services related to Dell- owned software, such as (i) services closely tied to the sale of Client Solutions hardware, (ii) services closely tied to the sale of ESG hardware, (iii) third-party software within Client Solutions and ESG, (iv) services revenue from DSG and (v) substantially all of our revenues generated by our Dell Services business unit. In Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, revenue from services, including software related comprised 21.1%, 19.7% and 20.8%, respectively, of our total net revenue.

We sell our products and services directly to customers and through other sales distribution channels, such as retailers, third-party solutions providers, system integrators and third-party resellers. The majority of our net revenue and operating income are derived from commercial clients (large enterprises, small and medium-sized businesses and public sector customers).

We manage our business on a U.S. dollar basis. However, we have a large global presence with approximately 50% of revenue coming from customers outside of the United States during Fiscal 2016. Our revenues, therefore, can be impacted by fluctuations in foreign currency exchange rates. The strength of the U.S. dollar relative to most foreign currencies continued during Fiscal 2016, which contributed to a challenging pricing and demand environment. We utilize a comprehensive hedging strategy intended to mitigate the impact of foreign currency volatility over time, and we adjust pricing when possible to further minimize foreign currency impacts.

122 In the long-term, we expect our net revenues to increase as we develop and commercialize new and innovative IT solutions. We also expect to achieve significant revenue synergies from the merger with EMC.

Gross Margin Gross margin is our net revenue less cost of net revenue. Our cost of net revenue consists primarily of product costs, services costs, facilities and overhead expenses, including manufacturing and intangibles amortization. The majority of client products we sell under our brand are manufactured by third parties. We use contract manufacturers and manufacturing outsourcing relationships as part of our strategy to enhance our variable cost structure and to achieve our goals of generating cost efficiencies, delivering products faster, better serving our customers and building an efficient supply chain. Gross margin percentage measures our gross margin as a percentage of net revenues.

Our gross margin is affected by our ability to achieve competitive pricing with our vendors and contract manufacturers, including through our negotiation of a variety of vendor rebate programs to achieve lower net costs for the various components we include in our products. Under these programs, vendors provide us with rebates or other discounts from the list prices for the components, which are generally elements of their pricing strategy. We account for vendor rebates and other discounts as a reduction in cost of net revenue. We manage our costs on a total net cost basis, which includes supplier list prices reduced by vendor rebates and other discounts.

The terms and conditions of our vendor rebate programs are largely based on product volumes and are generally negotiated either at the beginning of the annual or quarterly period, depending on the program. The timing and amount of vendor rebates and other discounts we receive under the programs may vary from period to period, reflecting changes in the competitive environment. We monitor our component costs and seek to address the effects of any changes to terms that might arise under our vendor rebate programs. Our gross margins for Fiscal 2016 and Fiscal 2015 were not materially affected by any changes to the terms of our vendor rebate programs, as the amounts we received under these programs were generally stable relative to our total net cost. We are not aware of any significant programmatic changes to vendor pricing or rebate programs that are reasonably likely to impact our results in the near term.

In addition, we have pursued legal action against certain vendors and are currently involved in negotiations with other vendors regarding their past pricing practices. We have negotiated settlements with some of these vendors and may have additional settlements in future quarters. These settlements are allocated to our business units based on the relative amount of affected vendor products used by each business unit.

Operating Expenses Selling, General, and Administrative Our selling, general, and administrative expenses (“SG&A expenses”) primarily consist of items such as compensation and benefits, marketing and advertising costs, outside services and depreciation and amortization.

In the long-term, we expect our SG&A expenses to grow at a slower rate than our net revenue growth as we continue to focus on minimizing operating expenses through cost improvements and simplification of Dell’s structure through stand-alone cost savings initiatives, as well as realizing cost synergies from the combination of Dell’s and EMC’s businesses. However, in the near term, we expect to incur substantial SG&A expenses in connection with the completion of the Dell-EMC merger and the integration of EMC and our company.

Research, Development, and Engineering Our research, development, and engineering expenses (“RD&E expenses”) primarily consist of payroll and headcount-related costs, contractor fees, infrastructure costs and administrative expenses directly related to research and development support. We expense RD&E expenses as they are incurred. We manage our RD&E spending by targeting those innovations and products that we believe are most valuable to our customers and by relying on the capabilities of our strategic relationships.

123 Income and Other Taxes Our effective tax rate can fluctuate depending on the geographic distribution of our world-wide earnings, as our foreign earnings are generally taxed at lower rates than in the United States. In certain jurisdictions, our tax rate is significantly less than the applicable statutory rate as a result of tax holidays. The majority of our foreign income that is subject to these tax holidays and lower tax rates is attributable to Singapore, China and Malaysia. A significant portion of these income tax benefits is related to a tax holiday that will expire on January 31, 2017. We are currently seeking new terms for the affected subsidiary and it is uncertain whether any terms will be agreed upon. Our other tax holidays will expire in whole or in part during Fiscal 2019 through Fiscal 2023. Many of these tax holidays and reduced tax rates may be extended when certain conditions are met or may be terminated early if certain conditions are not met. The differences between our effective tax rate and the U.S. federal statutory rate of 35% typically principally results from the geographical distribution of taxable income and permanent differences between the book and tax treatment of certain items. We continue to assess our business model and its impact in various taxing jurisdictions.

For further discussion regarding tax matters, including the status of income tax audits, see note 12 of the notes to our audited consolidated financial statements included in this offering memorandum.

Non-GAAP Financial Measures In addition to our GAAP financial measures, we also use supplemental measures of our performance which are derived from our consolidated financial information but which are not presented in our consolidated financial statements prepared in accordance with GAAP. These non-GAAP financial measures include non-GAAP product net revenue, non-GAAP services net revenue, non-GAAP net revenue, non-GAAP product gross margin, non- GAAP services gross margin, non-GAAP gross margin, non-GAAP gross margin percentage, non-GAAP operating expenses, non-GAAP operating income, non-GAAP cost of goods sold, non-GAAP tax expense and non-GAAP net income (loss), which are discussed in “—Results of Operations” below. These non-GAAP financial measures should not be considered in isolation, and should be reviewed along with results as reported under GAAP. Non-GAAP financial measures have limitations as analytical tools. See “Use of Non-GAAP Financial Information” elsewhere in this offering memorandum.

124 The tables below presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for each of the periods presented:

Fiscal Year Ended Successor Successor Pro Forma January 29, % January 30, % January 31, 2016 Change 2015 Change 2014 (in millions, except percentages) Product net revenue ...... $43,317 (7)% $46,690 6% $44,004 Non-GAAP adjustments: Impact of purchase accounting(a) ...... 1 23 151 Non-GAAP product net revenue ...... $43,318 (7)% $46,713 6% $44,155 Services net revenue ...... $11,569 1% $11,429 (1)% $11,575 Non-GAAP adjustments: Impact of purchase accounting(a) ...... 505 953 1,071 Non-GAAP services net revenue ...... $12,074 (2)% $12,382 (2)% $12,646 Net revenue ...... $54,886 (6)% $58,119 5% $55,579 Non-GAAP adjustments: Impact of purchase accounting(a) ...... 506 976 1,222 Non-GAAP net revenue ...... $55,392 (6)% $59,095 4% $56,801 Product gross margin ...... $ 5,394 (14)% $ 6,275 22% $ 5,134 Non-GAAP adjustments: Impact of purchase accounting(a) ...... 59 119 866 Amortization of intangibles(b) ...... 483 466 459 Other corporate expenses(c) ...... 10 24 123 Non-GAAP product gross margin ...... $ 5,946 (14)% $ 6,884 5% $ 6,582 Services gross margin ...... $ 4,438 13% $ 3,933 11% $ 3,558 Non-GAAP adjustments: Impact of purchase accounting(a) ...... 453 906 1,097 Amortization of intangibles(b) ...... — — — Other corporate expenses(c) ...... 13 24 4 Non-GAAP services gross margin ...... $ 4,904 1% $ 4,863 4% $ 4,659 Gross margin ...... $ 9,832 (4)% $10,208 17% $ 8,692 Non-GAAP adjustments: Impact of purchase accounting(a) ...... 512 1,025 1,963 Amortization of intangibles(b) ...... 483 466 459 Other corporate expenses(c) ...... 23 48 127 Non-GAAP gross margin ...... $10,850 (8)% $11,747 5% $11,241 Operating expenses ...... $10,215 (4)% $10,630 (7)% $11,489 Non-GAAP adjustments: Impact of purchase accounting(a) ...... (104) (91) (157) Amortization of intangibles(b) ...... (1,706) (1,833) (1,874) Other corporate expenses(c) ...... (194) (152) (710) Non-GAAP operating expenses ...... $ 8,211 (4)% $ 8,554 (2)% $ 8,748

125 Fiscal Year Ended Successor Successor Pro Forma January 29, % January 30, % January 31, 2016 Change 2015 Change 2014 (in millions, except percentages) Operating income (loss) ...... $ (383) 9% $ (422) 85% $(2,797) Non-GAAP adjustments: Impact of purchase accounting(a) ...... 616 1,116 2,120 Amortization of intangibles(b) ...... 2,189 2,299 2,333 Other corporate expenses(c) ...... 217 200 837 Non-GAAP operating income ...... $2,639 (17)% $ 3,193 28% $ 2,493 Net loss ...... $(1,104) 10% $(1,221) 63% $(3,324) Non-GAAP adjustments: Impact of purchase accounting(a) ...... 616 1,122 2,088 Amortization of intangibles(b) ...... 2,189 2,299 2,333 Other corporate expenses(c) ...... 211 202 1,041 Aggregate adjustment for income taxes(d) ...... (558) (732) (1,075) Non-GAAP net income ...... $1,354 (19)% $ 1,670 57% $ 1,063

(a) The impact of purchase accounting includes purchase accounting adjustments recorded under the acquisition method of accounting, related to the going-private transaction. Purchase accounting adjustments primarily include fair value adjustments made to deferred revenue, inventory and property, plant, and equipment which are recorded over time. During Pro Forma Fiscal 2014, purchase accounting adjustments also include a provision charge on customer receivables recorded on October 29, 2013, amortization of fair value adjustments on customer shipments in transit, and compensation costs related to cash settlement of employee stock options, triggered by the going-private transaction. See notes 1 and 3 of the notes to our audited consolidated financial statements included in this offering memorandum for more information on the going-private transaction. We believe that due to the non-cash impact of the purchase accounting entries, it is appropriate to exclude these adjustments as they do not reflect our true operating performance. (b) Amortization of intangible assets consists of amortization of customer relationships, developed technology, and trade names. We incur charges related to the amortization of these intangibles, which are included in our consolidated financial statements. In connection with the going-private transaction, all of Denali’s tangible and intangible assets and liabilities were accounted for and recognized at fair value on the transaction date. Accordingly, for the Successor periods, amortization of intangible assets consists primarily of amortization associated with intangible assets recognized in connection with the going-private transaction. Amortization charges for purchased intangible assets are significantly impacted by the timing and magnitude of our acquisitions, and these charges may vary in amount from period to period. (c) The adjustment for other corporate expenses in net loss consists of the following items: (i) severance and facility action costs primarily related to severance and benefits for employees terminated pursuant to cost savings initiatives, totaling $25 million, $52 million and $629 million for Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, respectively, (ii) acquisition-related charges which are expensed as incurred and consist primarily of retention payments, integration costs, and other costs (including costs related to the mergers), totaling $91 million, $58 million and $140 million for Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, respectively, (iii) stock-based compensation expense associated with equity awards, totaling $72 million, $72 million and $68 million for Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, respectively, (iv) costs related to the going-private transaction, totaling $23 million, $20 million and $0 million for Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, respectively and (v) a $204 million valuation allowance on deferred tax assets for one of our foreign jurisdictions in Pro Forma Fiscal 2014. (d) The aggregate adjustment for income taxes is the estimated combined income tax effect for the adjustments mentioned above. The tax effects are determined based on the tax jurisdictions where the above items were incurred.

126 Key Performance Metrics Cash Conversion Cycle The following table presents the components of our cash conversion cycle for the periods presented: Fiscal Quarter Ended Successor January 29, January 30, January 31, 2016 2015 2014 Days of sales outstanding(a) ...... 40 43 43 Days of supply in inventory(b) ...... 14 13 14 Days in accounts payable(c) ...... (106) (103) (96) Cash conversion cycle(d) ...... (52) (47) (39)

(a) Days of sales outstanding (“DSO”) calculates the average collection period of our receivables. DSO is based on the ending net trade receivables and the most recent quarterly non-GAAP net revenue for each period. DSO also includes the effect of product costs related to customer shipments not yet recognized as revenue that are classified in other current assets. DSO is calculated by adding accounts receivable, net of allowance for doubtful accounts, and customer shipments in transit and dividing that sum by average non-GAAP net revenue per day for the current quarter (90 days for all fiscal quarters presented herein). At January 29, 2016, January 30, 2015 and January 31, 2014, DSO and days of customer shipments not yet recognized were 36 and 4 days, 38 and 5 days, and 39 and 4 days, respectively. (b) Days of supply in inventory (“DSI”) measures the average number of days from procurement to sale of our products. DSI is based on ending inventory and most recent quarterly non-GAAP cost of goods sold for each period. DSI is calculated by dividing ending inventory by average non-GAAP cost of goods sold per day for the current quarter (90 days for all fiscal quarters presented herein). (c) Days in accounts payable (“DPO”) calculates the average number of days our payables remain outstanding before payment. DPO is based on ending accounts payable and most recent quarterly non-GAAP cost of goods sold for each period. DPO is calculated by dividing accounts payable by average non-GAAP cost of goods sold per day for the current quarter (90 days for all fiscal quarters presented herein). (d) We calculate our cash conversion cycle using non-GAAP net revenue and non-GAAP cost of goods sold because we believe that excluding certain items from the GAAP results, including the large non-cash purchase accounting adjustments following the going-private transaction, facilitates management’s understanding of this key performance metric. The table below presents a reconciliation of net revenue to non-GAAP net revenue and of cost of goods sold to non-GAAP cost of goods sold: Fiscal Quarter Ended Successor January 29, January 30, January 31, 2016 2015 2014 (in millions) GAAP net revenue ...... $13,682 $14,261 $14,075 Non-GAAP adjustments: Impact of purchase accounting(a) ...... 100 192 424 Non-GAAP net revenue ...... $13,782 $14,453 $14,499 GAAP Cost of goods sold ...... $11,062 $11,905 $12,475 Non-GAAP adjustments: Impact of purchase accounting(a) ...... (3) (4) (535) Amortization of intangibles(b) ...... (120) (121) (114) Other corporate expenses(c) ...... (3) (5) (70) Non-GAAP cost of goods sold ...... $10,936 $11,775 $11,756

127 (a) See footnote (a) to the table presenting a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure under “—Non-GAAP Financial Measures” above. (b) See footnote (b) to the table presenting a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure under “—Non-GAAP Financial Measures” above. (c) See footnote (c) to the table presenting a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure under “—Non-GAAP Financial Measures” above.

We believe our business model allows us to maintain an efficient cash conversion cycle, which compares favorably with that of others in our industry.

Our cash conversion cycle for the fiscal quarter ended January 29, 2016 improved five days when compared to the fiscal quarter ended January 30, 2015, driven by a three day improvement in both DPO and DSO. The increase in DPO was primarily due to the timing of supplier purchases and payments. The decrease in DSO was primarily driven by improved collections performance.

Our cash conversion cycle for the fiscal quarter ended January 30, 2015 improved eight days when compared to the fiscal quarter ended January 31, 2014, driven by a seven day improvement in DPO. The improvement in DPO was primarily attributable to favorable changes in our payment terms for certain suppliers. For the fiscal quarter ended January 30, 2015, DSO and DSI were effectively unchanged when compared to the fiscal quarter ended January 31, 2014.

Results of Operations Fiscal 2016 Compared to Fiscal 2015 Consolidated Results The following table summarizes our consolidated results of operations for each of the fiscal years ended January 29, 2016 and January 30, 2015:

Fiscal Year Ended Successor Successor January 29, 2016 January 30, 2015 %of % %of Dollars Revenue Change Dollars Revenue (in millions, except percentages) Net revenue: Product ...... $43,317 78.9% (7)% $46,690 80.3% Services, including software related ...... 11,569 21.1% 1% 11,429 19.7% Total net revenue ...... $54,886 100.0% (6)% $58,119 100.0% Gross margin: Product ...... $ 5,394 12.5% (14)% $ 6,275 13.4% Services, including software related ...... 4,438 38.4% 13% 3,933 34.4% Total gross margin ...... $ 9,832 17.9% (4)% $10,208 17.6% Operating expenses ...... $10,215 18.6% (4)% $10,630 18.3% Operating income (loss) ...... $ (383) (0.7)% 9% $ (422) (0.7)% Net loss ...... $(1,104) (2.0)% 10% $ (1,221) (2.1)% Other Financial Information Non-GAAP net revenue ...... $55,392 N/A (6)% $59,095 N/A Non-GAAP gross margin ...... $10,850 19.6% (8)% $11,747 19.9% Non-GAAP operating expenses ...... $ 8,211 14.8% (4)% $ 8,554 14.5% Non-GAAP operating income ...... $ 2,639 4.8% (17)% $ 3,193 5.4% Non-GAAP net income ...... $ 1,354 2.4% (19)% $ 1,670 2.8%

128 Revenue During Fiscal 2016, our net revenue decreased 6% when compared to Fiscal 2015. Revenue for Fiscal 2016 and Fiscal 2015 includes the impact of $506 million and $976 million, respectively, in purchase accounting adjustments related to the going-private transaction. Our non-GAAP net revenue decreased 6% during Fiscal 2016 when compared to Fiscal 2015. These decreases in both revenue and non-GAAP net revenue were primarily attributable to lower revenue in our Client Solutions, DSG and Dell Services business units. Client Solutions contributed to most of the decrease in revenue during Fiscal 2016, driven by a global decline in demand for desktops and notebooks. In aggregate, revenue from our ESG, DSG and Dell Services business units remained relatively flat during Fiscal 2016. As a result the combined revenue from ESG, DSG and Dell Services represented 35% of total revenue for Fiscal 2016 compared to 33% of total revenue for Fiscal 2015. • Product Revenue—During Fiscal 2016, product revenue decreased 7% when compared to Fiscal 2015. Non-GAAP product revenue during Fiscal 2016 also decreased 7% when compared to Fiscal 2015. Overall, these decreases were primarily due to decreases in revenue from Client Solutions as we experienced an overall decline in demand for desktops and notebooks. Product revenue and non-GAAP product revenue for Fiscal 2016 did not benefit from the positive effects of the Windows XP refresh that contributed to product revenue in Fiscal 2015. • Services Revenue, including software related—During Fiscal 2016, revenue attributable to services, including software related increased 1% when compared to Fiscal 2015. This increase was primarily attributable to the diminishing negative impact of purchase accounting adjustments, which were $0.5 billion in Fiscal 2016, compared to $1.0 billion in Fiscal 2015. Non-GAAP revenue attributable to services, including software related during Fiscal 2016 decreased 2%, which was attributable to both a decrease in revenue from our Dell Services business unit and a decrease in sales of our third-party software offerings and post-contract customer support associated with those software offerings.

From a geographical perspective, net revenue decreased in all regions during Fiscal 2016, although we experienced revenue growth in certain emerging markets, including China and India.

Gross Margin During Fiscal 2016, our gross margin decreased 4% to $9.8 billion when compared to Fiscal 2015. Our non- GAAP gross margin during Fiscal 2016 decreased 8% to $10.9 billion when compared to Fiscal 2015. During Fiscal 2016, our gross margin percentage increased 30 basis points to 17.9% when compared to Fiscal 2015. Non-GAAP gross margin percentage decreased 30 basis points to 19.6% when compared to Fiscal 2015. Our gross margin for Fiscal 2016 includes the effects of $1.0 billion in purchase accounting adjustments and amortization of intangibles related to the going-private transaction. In comparison, our gross margin for Fiscal 2015 included $1.5 billion in purchase accounting adjustments and amortization of intangibles related to the going-private transaction. • Products—During Fiscal 2016, both product gross margin dollars and non-GAAP product gross margin dollars decreased 14% when compared to Fiscal 2015. Product gross margin percentage decreased 90 basis points to 12.5% when compared to Fiscal 2015. Non-GAAP product gross margin percentage decreased 100 basis points to 13.7% during Fiscal 2016 when compared to Fiscal 2015. The decrease in product gross margin and non-GAAP product gross margin in dollars and percentages was primarily attributable to the adverse impact on Client Solutions of an overall decline in demand that resulted in a decrease in desktop and notebook units sold, as well as challenging pricing dynamics. These pricing dynamics included the impacts of competitive pressure and foreign currency volatility. Our gross margins include benefits relating primarily to settlements from certain vendors regarding their past pricing practices. These benefits were $97 million and $109 million for Fiscal 2016 and Fiscal 2015, respectively. Vendor settlements are allocated to our business units based on the relative amount of affected vendor products sold by each business unit.

129 • Services, including software related—During Fiscal 2016, our gross margin dollars for services, including software related increased 13% when compared to Fiscal 2015. The increase in services gross margin dollars was primarily attributable to the diminishing negative impact of purchase accounting adjustments which were $0.5 billion in Fiscal 2016, compared to $0.9 billion in Fiscal 2015. During Fiscal 2016, our non-GAAP gross margin dollars for services, including software related increased 1% when compared to Fiscal 2015. Services gross margin percentage and non-GAAP services gross margin percentage increased 400 and 130 basis points during Fiscal 2016 to 38.4% and 40.6%, respectively. The increase in non-GAAP services gross margin in dollars and percentages was attributable to higher gross margin from Dell Services and a shift away from lower margin product offerings.

Operating Expenses The following table presents information regarding our operating expenses during each of the periods presented:

Fiscal Year Ended Successor Successor January 29, 2016 January 30, 2015 %of %of Dollars Revenue % Change Dollars Revenue (in millions, except percentages) Operating expenses: Selling, general, and administrative ...... $ 8,900 16.2% (6)% $ 9,428 16.2% Research, development, and engineering ...... 1,315 2.4% 9% 1,202 2.1% Total operating expenses ...... $10,215 18.6% (4)% $10,630 18.3%

Other Financial Information Non-GAAP operating expenses ...... $ 8,211 14.8% (4)% $ 8,554 14.5%

During Fiscal 2016, our operating expenses and non-GAAP operating expenses decreased 4% and 4%, respectively, when compared to Fiscal 2015. During Fiscal 2016 and Fiscal 2015, we recognized $1.8 billion and $1.9 billion, respectively, in amortization of intangible assets and purchase accounting adjustments related to the going-private transaction. • Selling, General, and Administrative—SG&A expenses decreased 6% when compared to Fiscal 2015. The decrease was driven by a reduction in compensation expense, primarily due to a decrease in performance-based compensation. We continue to actively manage our cost structure, which allows us to invest in strategic areas such as strengthening our sales force. • Research, Development, and Engineering—RD&E expenses were 2.4% of net revenue for Fiscal 2016, compared to 2.1% for Fiscal 2015. The increase in RD&E expenses was primarily related to personnel- related expenses as we continue to invest in product development.

Operating Income/Loss During Fiscal 2016, operating loss was $383 million, compared to $422 million during Fiscal 2015. The decrease in operating loss over the period was primarily attributable to the diminishing negative impact of purchase accounting adjustments. Operating loss includes amortization of intangible assets and purchase accounting adjustments associated with the going-private transaction of $2.8 billion for Fiscal 2016. In comparison, during Fiscal 2015, we recognized $3.4 billion in amortization of intangibles and purchase accounting adjustments associated with the going-private transaction. Excluding these costs as well as other corporate expenses, non-GAAP operating income decreased 17% during Fiscal 2016 to a non-GAAP operating income of $2.6 billion. These decreases were primarily attributable to lower gross margin primarily driven by Client Solutions, the effect of which was offset partially by a reduction in operating expenses.

130 Interest and Other, Net The following table provides a detailed presentation of interest and other, net for each of the periods presented:

Fiscal Year Ended Successor Successor January 29, January 30, 2016 2015 (in millions) Interest and other, net: Investment income, primarily interest ...... $ 39 $ 47 Gain (loss) on investments, net ...... (2) (29) Interest expense ...... (680) (807) Foreign exchange ...... (122) (96) Other ...... (27) (39) Total Interest and other, net ...... $(792) $(924)

During Fiscal 2016, changes in interest and other, net were favorable by $132 million, primarily due to a decrease in interest expense from lower debt balances over the period. The positive effect of lower interest expense was partially offset by an increase in foreign exchange losses. Foreign exchange losses increased due to revaluations of certain un-hedged foreign currencies, which were partially offset by lower trading costs.

Income and Other Taxes Our effective income tax rate was 6.0% and 9.3% on pre-tax losses of $1,175 million and $1,346 million for Fiscal 2016 and Fiscal 2015, respectively. The change in our effective income tax rate for Fiscal 2016 as compared to Fiscal 2015 was primarily attributable to a change in the mix of geographical income, as well as higher discrete tax expenses.

Net Income/Loss During Fiscal 2016, net loss decreased 10% to a net loss of $1.1 billion when compared to Fiscal 2015. Net loss for Fiscal 2016 and Fiscal 2015 includes amortization of intangible assets, purchase accounting adjustments, costs related to the going-private transaction and other corporate expenses. In aggregate these costs totaled $3.0 billion and $3.6 billion for Fiscal 2016 and Fiscal 2015, respectively. Excluding these costs, non-GAAP net income for Fiscal 2016 decreased 19% to $1.4 billion when compared to Fiscal 2015. The decrease in non-GAAP net income for Fiscal 2016 was primarily attributable to a decrease in non-GAAP operating income, which was partially offset by a decrease in non-GAAP tax expense.

Product and Services Business Unit Results In the first quarter of Fiscal 2016, we redefined the categories within Client Solutions and ESG to reflect the way we currently organize products and services within these business units. None of these changes impacted our consolidated or total business unit results. Prior period amounts have been reclassified to conform to the current year presentation. See note 15 of the notes to our audited consolidated financial statements included in this offering memorandum for a reconciliation of net revenue by reportable business unit to consolidated net revenue.

131 Client Solutions: The following table presents revenue and operating income attributable to Client Solutions for the respective periods:

Fiscal Year Ended Successor Successor January 29, 2016 % Change January 30, 2015 (in millions, except percentages) Net Revenue: Commercial ...... $21,297 (11)% $23,988 Consumer ...... 9,167 (7)% 9,886 Third-party software and after-point- of-sale peripherals ...... 5,413 (6)% 5,760 Total Client Solutions net revenue ...... $35,877 (9)% $39,634

Operating Income: Client Solutions operating income .... $ 1,410 (31)% $ 2,051 % of business unit net revenue ...... 3.9% 5.2%

Net Revenue During Fiscal 2016, Client Solutions experienced a 9% decrease in net revenue due to lower demand across all Client Solutions product categories coupled with competitive pricing pressure. The decline in commercial and consumer revenue reflected decreased demand for desktops and notebooks, which was magnified by our product mix. Product revenue for Fiscal 2016 did not benefit from the positive effects of the Windows XP refresh that contributed to product revenue in Fiscal 2015. From a geographical perspective, revenue attributable to Client Solutions decreased across all regions during Fiscal 2016, with revenue from the Americas and EMEA representing most of the decline.

Operating Income During Fiscal 2016, Client Solutions operating income as a percentage of Client Solutions revenue decreased 130 basis points to 3.9%. This decline was driven by both a decrease in our gross margin percentage, and an increase in our operating expense percentage. The decline in our gross margin percentage was a result of challenging economic conditions, competitive pressures and a strong U.S. dollar that all impacted our ability to adjust pricing accordingly. Despite this challenging environment, we are making investments in our sales force to enhance efficiency and drive growth in future periods. As a result of this investment and strategic R&D investments, operating expenses as a percentage of revenue increased over the period.

132 Enterprise Solutions Group: The following table presents revenue and operating income attributable to ESG for the respective periods:

Fiscal Year Ended Successor Successor January 29, January 30, 2016 % Change 2015 (in millions, except percentages) Net Revenue: Servers and networking ...... $12,761 3% $12,368 Storage ...... 2,217 (5)% 2,346 Total ESG net revenue ...... $14,978 2% $14,714 Operating Income: ESG operating income ...... $ 1,052 (14)% $ 1,230 % of business unit net revenue ...... 7.0% 8.4%

Net Revenue During Fiscal 2016, ESG net revenue increased 2% primarily due to a 3% increase in net revenue from servers and networking. PowerEdge server average selling prices increased due to a shift to products with richer configurations, while overall units remained relatively flat. The increase in net revenue from servers and networking was partially offset by a 5% decrease in storage revenue. From a geographical perspective, during Fiscal 2016, the overall increase in ESG net revenue was primarily due to increased revenue in APJ.

Operating Income During Fiscal 2016, ESG operating income as a percentage of revenue decreased 140 basis points to 7.0%. The decrease in our operating income percentage was driven by lower gross margin percentages. These declines were primarily driven by challenging pricing dynamics, including competitive pressures and the strong U.S. dollar. These challenging economic conditions affected our ability to raise prices sufficiently to offset the higher costs associated with the shift to products with richer configurations.

Dell Software Group: The following table presents revenue and operating loss attributable to DSG for the respective periods:

Fiscal Year Ended Successor Successor January 29, January 30, 2016 % Change 2015 (in millions, except percentages) Net Revenue: Dell Software Group net revenue .... $1,362 (9)% $1,493 Operating Loss: DSG operating loss ...... $ (1) 97% $ (30) % of business unit net revenue ...... (0.1)% (2.0)%

Net Revenue During Fiscal 2016, DSG revenue decreased 9%, driven by a decrease in systems management software sales, primarily due to disruption from a realignment of our sales organization. From a geographical perspective, DSG revenue decreased across all regions during Fiscal 2016.

133 Operating Loss During Fiscal 2016, DSG operating loss as a percentage of revenue improved 190 basis points to an operating loss percentage of 0.1%. This improvement was attributable to a decrease in our operating expense percentage, driven by a decrease in SG&A expenses, primarily as a result of headcount reduction. The positive impact of the decreases was partially offset by a decline in our gross margin percentage due to a shift to software solutions with lower margins.

Dell Services: The following table presents revenue and operating income attributable to Dell Services for the respective periods:

Fiscal Year Ended Successor Successor January 29, % January 30, 2016 Change 2015 (in millions, except percentages) Net Revenue: Infrastructure and cloud services ...... $1,679 (3)% $1,734 Applications and business process services ...... 1,163 (7)% 1,248 Total Dell Services net revenue ...... $2,842 (5)% $2,982 Operating Income: Dell Services operating income ...... $ 152 23% $ 124 % of business unit net revenue ...... 5.3% 4.2%

Net Revenue During Fiscal 2016, Dell Services experienced a 5% decrease in net revenue. The decrease was attributable to a decline in revenue across all Dell Services categories driven by revenue runoff from several large contracts in advance of the benefits to be recognized from new contract signings. At a regional level, Dell Services revenue is mostly generated in the Americas, primarily in the United States. Dell Services revenue generated in the Americas decreased 3% during Fiscal 2016.

Operating Income During Fiscal 2016, Dell Services operating income as a percentage of Dell Services revenue increased 110 basis points to 5.3%. This increase was driven by improved gross margin percentages, primarily attributable to our infrastructure and cloud offerings, as we continued to optimize our cost structure and automate our delivery process. This increase in gross margin percentages was partially offset by an increase in our operating expense percentage primarily due to an increase in outside services fees.

Services Backlog Estimated services backlog is primarily related to our outsourcing services business. Services backlog decreased 10% to $7.2 billion as of January 29, 2016, compared to $8.0 billion as of January 30, 2015. Our focus continues to be on building a sustainable pipeline and improving our cost structure to enable our growth in the market. The majority of services backlog represents signed contracts that are initially $2 million or more in total expected revenue with an initial contract term of at least 18 months. We provide information regarding services backlog because we believe it provides useful trend information regarding changes in the size of our services business over time. The terms of the signed services contracts included in our calculation of services backlog are subject to change and are affected by terminations, changes in the scope of services, and changes to other factors that could impact the value of the contract. For these and other reasons, it is not reasonably practicable to

134 estimate the portions of these backlog amounts that will ultimately be recognized as revenue when performance on the contracts is completed.

Fiscal 2015 Compared to Pro Forma Fiscal 2014 Dell’s Going-Private Transaction The going-private transaction was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations. This guidance prescribes that the purchase price be allocated to assets acquired and liabilities assumed based on the estimated fair value of such assets and liabilities on the date of the transaction. All of our assets and liabilities were accounted for and recognized at fair value as of the transaction date. Accordingly, periods prior to October 29, 2013 reflect the financial position, results of operations and changes in financial position of Dell and its consolidated subsidiaries prior to the going-private transaction, referred to as the Predecessor, and periods beginning on or after October 29, 2013 reflect the financial position, results of operations and changes in financial information of Denali and its consolidated subsidiaries as a result of the going-private transaction, referred to as the Successor. For more information on the Predecessor and Successor periods, see note 1 of the notes to our audited consolidated financial statements included in this offering memorandum. The Predecessor financial statements do not reflect the effects of the accounting for or the financing of the going-private transaction. Included in the results for the Successor periods is the impact of purchase accounting adjustments, primarily related to deferred revenue, and an increase in amortization expense for intangible assets.

The following tables provide unaudited pro forma results of operations for the fiscal year ended January 31, 2014 as if the going-private transaction had occurred at the beginning of the fiscal year ended January 31, 2014. The impact of the fair value adjustments related to deferred revenue and intangible assets and the impact of interest expense on borrowings are the primary items impacting comparability between the Fiscal 2014 predecessor and successor periods.

As Reported Successor Predecessor Combined Adjustments Pro Forma October 29, February 2, 2013 2013 Fiscal Year Fiscal Year through through Ended Going- Ended January 31, October 28, January 31, private January 31, 2014 2013 2014 transaction Notes 2014 (in millions) Net revenue: Products ...... $11,253 $32,786 $44,039 $ (35) (1)(2) $44,004 Services, including software related ...... 2,822 9,516 12,338 (763) (2) 11,575 Total net revenue ...... 14,075 42,302 56,377 (798) 55,579 Cost of net revenue: Products ...... 10,695 28,150 38,845 25 (1)(3)(4)(6) 38,870 Services, including software related ...... 1,987 6,161 8,148 (131) (3)(4)(5)(9) 8,017 Total cost of net revenue ...... 12,682 34,311 46,993 (106) 46,887 Gross margin ...... 1,393 7,991 9,384 (692) 8,692 Operating expenses: Selling, general, and administrative ...... 2,863 6,528 9,391 822 (3)(4)(6) 10,213 Research, development, and engineering .... 328 945 1,273 3 (3)(4) 1,276 Total operating expenses ...... 3,191 7,473 10,664 825 11,489 Operating income (loss) ...... (1,798) 518 (1,280) (1,517) (2,797) Interest and other, net ...... (204) (198) (402) (470) (7)(10) (872) Income (loss) before income taxes ...... (2,002) 320 (1,682) (1,987) (3,669) Income tax provision (benefit) ...... (390) 413 23 (368) (8) (345) Net loss ...... $(1,612) $ (93) $ (1,705) $(1,619) $ (3,324)

135 (1) Reflects the impact on the products net revenue and cost of net revenue as if the purchase accounting was applied to financing receivables as of the first day of the period. The adjustment reflects amortization of the financing receivables fair value adjustment over the three year weighted average useful life of the loan portfolio. (2) Reflects the decrease in products and services net revenue to illustrate the effects of the going-private transaction. The adjustment represents the amortization of the deferred revenue fair value adjustment over the estimated useful life of one to three years. (3) Reflects the impact on depreciation and amortization as if purchase accounting was applied to property, plant, and equipment and purchased intangible assets as of the first day in the period. (4) Reflects the impact to compensation expense related to replacement of share-based compensation awards. (5) Reflects the impact on services cost of net revenue as if purchase accounting was applied to extended warranty liability as of the first day in the period. The adjustment reflects amortization related to the fair value adjustment over the estimated useful life of 2.5 years. (6) Represents the transaction costs related to the going-private transaction, included in the historical results, as these expenses are non-recurring and are not expected to have a continuing impact. (7) Reflects interest expense and income resulting from our new capital structure, including acquisition-related debt upon closing the going-private transaction and extinguishment of existing debt. (8) Reflects the tax effect of the pro forma adjustments. The tax effect pro forma adjustments for the going- private transaction were calculated utilizing blended tax rates. We operate in multiple jurisdictions, and therefore the adjustments were tax-affected based on marginal tax rates of the related jurisdictions, which resulted in a higher tax rate for the pro forma adjustments compared to the historical rate. (9) Reflects the write-off of deferred cost of net revenue primarily related to the Dell Services business unit. (10) Reflects the impact of adjusting for the mark to market of post-going-private transaction de-designated cash flow hedges.

136 Summary of Pro Forma Adjustments for Results of Operations for Fiscal Year ended January 31, 2014

(in millions) Net revenue: Products ...... $ (35) (1) Amortization of financing receivables adjustment ..... (33) (2) Amortization of deferred revenue adjustment ...... (2) Services, including software related ...... (763) (2) Amortization of deferred revenue adjustment ...... (763) Cost of net revenue: Products ...... 25 (1) Amortization of financing receivables adjustment ..... 28 (3) Amortization of property, plant, and equipment and intangibles adjustments ...... 17 (4) Impact to compensation expense ...... (14) (6) Costs related to the going-private transaction ...... (6) Services, including software related ...... (131) (3) Amortization of property, plant, and equipment and intangibles adjustments ...... (86) (4) Impact to compensation expense ...... (3) (5) Amortization of warranty liability adjustment ...... (27) (9) Write-off of deferred cost of net revenue ...... (15) Operating expenses: Selling, general, and administrative ...... 822 (3) Amortization of property, plant, and equipment and intangibles adjustments ...... 1,296 (4) Impact to compensation expense ...... (105) (6) Costs related to the going-private transaction ...... (369) Research, development, and engineering ...... 3 (3) Amortization of property, plant, and equipment and intangibles adjustments ...... 11 (4) Impact to compensation expense ...... (8) Interest and other, net ...... (470) (7) Interest expense and income resulting from new capital structure ...... (464) (10) Mark to market adjustment of de-designated cash flow hedges ...... (6) Income tax provision / (benefit) ...... (368) (8) Cumulative tax effect of pro forma adjustments ...... (368)

137 Consolidated Results The following table summarizes our consolidated results of operations for each of the periods presented:

Fiscal Year Ended Successor Pro Forma January 30, 2015 January 31, 2014 %of % %of Dollars Revenue Change Dollars Revenue (in millions, except percentages) Net revenue: Product ...... $46,690 80.3% 6% $44,004 79.2% Services, including software related ...... 11,429 19.7% (1)% 11,575 20.8% Total net revenue ...... $58,119 100.0% 5% $55,579 100.0% Gross margin: Product ...... $ 6,275 13.4% 22% $ 5,134 11.7% Services, including software related ...... 3,933 34.4% 11% 3,558 30.7% Total gross margin ...... $10,208 17.6% 17% $ 8,692 15.6% Operating expenses ...... $10,630 18.3% (7)% $11,489 20.7% Operating income (loss) ...... $ (422) (0.7)% 85% $ (2,797) (5.0)% Net loss ...... $(1,221) (2.1)% 63% $ (3,324) (6.0)% Other Financial Information Non-GAAP net revenue ...... $59,095 N/A 4% $56,801 N/A Non-GAAP gross margin ...... $11,747 19.9% 5% $11,241 19.8% Non-GAAP operating expenses ...... $ 8,554 14.5% (2)% $ 8,748 15.4% Non-GAAP operating income ...... $ 3,193 5.4% 28% $ 2,493 4.4% Non-GAAP net income ...... $ 1,670 2.8% 57% $ 1,063 1.9%

Revenue During Fiscal 2015, our net revenue increased 5% when compared to Pro Forma Fiscal 2014. Revenue for Fiscal 2015 and Pro Forma Fiscal 2014 includes the impact of $976 million and $1,222 million, respectively, in purchase accounting adjustments related to the going-private transaction. Our non-GAAP net revenue increased 4% during Fiscal 2015 when compared to Pro Forma Fiscal 2014, attributable to revenue growth from all four of our business units. These increases in both revenue and non-GAAP net revenue were primarily attributable to favorable market conditions coupled with improved execution through strategic pricing and the leveraging of our direct sales force as well as our channel partners. Increases in Client Solutions revenue contributed to most of the increase in revenue for Fiscal 2015, although increases in ESG, DSG and Dell Services also contributed to the revenue increase to a lesser extent. In aggregate, the combined revenue from ESG, DSG and Dell Services represented 33.0% and 33.5% of total revenue for Fiscal 2015 and Pro Forma Fiscal 2014, respectively. This decline in revenue mix from ESG, DSG and Dell Services occurred as revenue from these business units increased at a slower rate than revenue from Client Solutions during Fiscal 2015. • Product Revenue—During Fiscal 2015, product revenue increased 6% when compared to Pro Forma Fiscal 2014. Non-GAAP net revenue attributable to products during Fiscal 2015 also increased 6% when compared to Pro Forma Fiscal 2014. Overall, these increases were primarily attributable to increases in revenue from Client Solutions due to favorable market conditions during Fiscal 2015 and also due to our improved execution through strategic pricing. • Services Revenue, including software related—During Fiscal 2015, revenue attributable to services, including software related decreased 1% when compared to Pro Forma Fiscal 2014. Non-GAAP net revenue attributable to services, including software related during Fiscal 2015 decreased 2% when compared to Pro Forma Fiscal 2014. The slight decline in revenue attributable to services, including software related for Fiscal 2015 was primarily attributable to decreases in revenue from third-party software, as we elected not to resell certain third-party software offerings during the period.

138 From a geographical perspective, revenue across all regions increased during Fiscal 2015 when compared to Pro Forma Fiscal 2014. Revenue from emerging countries increased 9% during Fiscal 2015, driven primarily by an increase in revenue from India and China.

Gross Margin During Fiscal 2015, our gross margin dollars increased 17% to $10.2 billion when compared to Pro Forma Fiscal 2014. Our non-GAAP gross margin dollars during Fiscal 2015 increased 5% to $11.7 billion when compared to Pro Forma Fiscal 2014. During Fiscal 2015, our gross margin percentage increased 200 basis points to 17.6% when compared to Pro Forma Fiscal 2014. Non-GAAP gross margin percentage increased 10 basis points to 19.9% when compared to Pro Forma Fiscal 2014. Our gross margin dollars for Fiscal 2015 includes the effects of $1.5 billion in purchase accounting adjustments and amortization of intangibles related to the going- private transaction. In comparison, our gross margin dollars for Pro Forma Fiscal 2014 included $2.4 billion in purchase accounting adjustments and amortization of intangibles related to the going-private transaction. • Products—During Fiscal 2015, product gross margin dollars increased 22% when compared to Pro Forma Fiscal 2014. Non-GAAP product gross margin dollars for Fiscal 2015 increased 5% when compared to Pro Forma Fiscal 2014. Product gross margin percentage increased 170 basis points to 13.4% when compared to Pro Forma Fiscal 2014. Non-GAAP product gross margin percentage remained relatively unchanged when compared to Pro Forma Fiscal 2014. The increase in product gross margin dollars was driven by higher gross margin from Client Solutions, resulting from favorable market conditions coupled with pricing discipline and continued focus on our cost structure. Benefits relating primarily to settlements from certain vendors regarding their past pricing practices, which are included in our gross margin dollars, were $109 million for Fiscal 2015 and immaterial for Pro Forma Fiscal 2014. • Services, including software related—During Fiscal 2015, our gross margin for services, including software related increased 11% when compared to Pro Forma Fiscal 2014. During Fiscal 2015, our non-GAAP gross margin for services, including software related increased 4% when compared to Pro Forma Fiscal 2014. Our gross margin percentage for services, including software related increased 370 basis points to 34.4% when compared to Pro Forma Fiscal 2014. Our non-GAAP gross margin percentage for services, including software related increased 250 basis points to 39.3% when compared to Pro Forma Fiscal 2014. The increase in non-GAAP gross margin for services, including software related in dollars and gross margin percentages was attributable to higher gross margin from Dell Services as well as higher gross margin for support services related to DSG offerings.

Operating Expenses The following table presents information regarding our operating expenses during each of the periods presented:

Fiscal Year Ended Successor Pro Forma January 30, 2015 January 31, 2014 %of %of Dollars Revenue % Change Dollars Revenue (in millions, except percentages) Operating expenses: Selling, general, and administrative ...... $ 9,428 16.2% (8)% $10,213 18.4% Research, development, and engineering ...... 1,202 2.1% (6)% 1,276 2.3% Total operating expenses ...... $10,630 18.3% (7)% $11,489 20.7%

Other Financial Information Non-GAAP operating expenses ...... $ 8,554 14.5% (2)% $ 8,748 15.4%

139 During Fiscal 2015, operating expenses decreased 7% to $10.6 billion when compared to Pro Forma Fiscal 2014. During Fiscal 2015 and Pro Forma Fiscal 2014, we recognized $1.9 billion and $2.0 billion, respectively, in amortization of intangible assets and purchase accounting adjustments related to the going-private transaction. Excluding these costs as well as other corporate expenses, non-GAAP operating expenses decreased 2% during Fiscal 2015 when compared to Pro Forma Fiscal 2014. • Selling, General, and Administrative—SG&A expenses declined 8% when compared to Pro Forma Fiscal 2014. The decrease was driven by a reduction in compensation expense, due to personnel-related productivity initiatives enacted primarily in the fourth quarter of Pro Forma Fiscal 2014. This decrease was partially offset by an increase in costs associated with our annual incentive plans, which is directly related to our stronger results for Fiscal 2015. • Research, Development, and Engineering—RD&E expenses were 2.1% of net revenue for Fiscal 2015. For Pro Forma Fiscal 2014, RD&E expenses were 2.3% of net revenue.

Operating Income/Loss During Fiscal 2015, operating loss decreased 85% to an operating loss of $422 million when compared to Pro Forma Fiscal 2014. Operating income for Fiscal 2015 included $3.4 billion in amortization of intangible assets and purchase accounting adjustments associated with the going-private transaction. In comparison, during Pro Forma Fiscal 2014, we recognized $4.5 billion in amortization of intangibles and purchase accounting adjustments associated with the going-private transaction. Excluding these costs as well as other corporate expenses, during Fiscal 2015, non- GAAP operating income increased 28% to $3.2 billion when compared to Pro Forma Fiscal 2014. These increases were primarily attributable to higher gross margin, coupled with a decrease in operating expenses.

Interest and Other, Net The following table provides a detailed presentation of interest and other, net for each of the periods presented:

Fiscal Year Ended Successor Pro Forma January 30, January 31, 2015 2014 (in millions) Interest and other, net: Investment income, primarily interest ...... $ 47 $ 42 Gain (loss) on investments, net ...... (29) 2 Interest expense ...... (807) (857) Foreign exchange ...... (96) (47) Other ...... (39) (12) Total Interest and other, net ...... $(924) $(872)

During Fiscal 2015, changes in interest and other, net were unfavorable by $52 million, when compared to Pro Forma Fiscal 2014. This change was primarily attributable to an increase in foreign exchange losses and a loss on investments, partially offset by a decrease in interest expense due to lower debt balances over the period. The increase in foreign exchange losses was due to higher costs associated with our hedging program and revaluations of certain un-hedged foreign currencies.

Income and Other Taxes Our effective income tax rate was 9.3% and 9.4% on pre-tax losses of $1,346 million and $3,669 million for Fiscal 2015 and Pro Forma Fiscal 2014, respectively. The change in our effective income tax rate for Fiscal 2015 as compared to Pro Forma Fiscal 2014 was primarily attributable to fewer charges related to the going-private

140 transaction which are generally deductible at higher tax rates, offset by a valuation allowance on deferred tax assets recorded in Pro Forma Fiscal 2014 for one of its foreign jurisdictions, and a change in the mix of geographic income to lower tax jurisdictions.

Net Income/Loss During Fiscal 2015, net loss decreased 63% to a net loss of $1.2 billion when compared to Pro Forma Fiscal 2014. Net loss for Fiscal 2015 and Pro Forma Fiscal 2014 includes amortization of intangible assets, purchase accounting adjustments, the costs related to the going-private transaction and other corporate expenses. In aggregate these costs totaled $3.6 billion and $5.5 billion for Fiscal 2015 and Pro Forma Fiscal 2014, respectively. Excluding these costs, non-GAAP net income for Fiscal 2015 increased 57% to $1.7 billion when compared to Pro Forma Fiscal 2014. The increase in non-GAAP net income for Fiscal 2015 was primarily attributable to an increase in operating income.

Product and Services Business Unit Results Recognition of Dell’s Going-Private Transaction for Product and Services Business Units The impact of purchase accounting and intangibles amortization associated with the going-private transaction are recorded at the corporate level and not recorded within the business units. As a result, the comparability of business unit results across the fiscal periods being analyzed in this management’s discussion and analysis are not affected by the going-private transaction and related accounting impacts.

Successor Predecessor Subtotal Adjustments Pro Forma October 29, February 2, 2013 2013 Fiscal Year Fiscal Year through through Ended Going- Ended January 31, October 28, January 31, Private January 31, 2014 2013 2014 Transaction 2014 (in millions) Consolidated net revenue: Client Solutions ...... $ 9,839 $28,101 $37,940 $ — $37,940 Enterprise Solutions Group ...... 3,500 10,875 14,375 — 14,375 Dell Software Group ...... 360 951 1,311 — 1,311 Dell Services ...... 739 2,219 2,958 — 2,958 Business unit net revenue ...... $14,438 $42,146 $56,584 $ — $56,584 Corporate(a) ...... 61 156 217 — 217 Impact of purchase accounting(b) ...... (424) — (424) (798) (1,222) Total ...... $14,075 $42,302 $56,377 $ (798) $55,579

Consolidated operating income (loss): Client Solutions ...... $ 289 $ 1,070 $ 1,359 $ — $ 1,359 Enterprise Solutions Group ...... 270 867 1,137 — 1,137 Dell Software Group ...... (52) (196) (248) — (248) Dell Services ...... 2 (44) (42) — (42) Business unit operating income ...... 509 1,697 2,206 — 2,206 Impact of purchase accounting(b) ...... (1,252) — (1,252) (868) (2,120) Amortization of intangible assets ...... (584) (594) (1,178) (1,155) (2,333) Corporate(a) ...... 102 — 102 185 287 Other(c) ...... (573) (585) (1,158) 321 (837) Total ...... $(1,798) $ 518 $ (1,280) $(1,517) $ (2,797)

(a) Corporate primarily consists of unallocated transactions and certain security offerings.

141 (b) Impact of purchase accounting in the successor periods represents the non-cash purchase accounting adjustments related to the going-private transaction. (c) Other costs include severance, facility, acquisition, and compensation expenses and costs related to the going-private transaction.

Client Solutions: The following table presents revenue and operating income attributable to Client Solutions for the respective periods:

Fiscal Year Ended Successor Pro Forma January 30, 2015 % Change January 31, 2014 (in millions, except percentages) Net Revenue: Commercial ...... $23,988 9% $21,954 Consumer ...... 9,886 — % 9,918 Third-party software and after-point- of-sale peripherals ...... 5,760 (5)% 6,068 Total Client Solutions net revenue ...... $39,634 4% $37,940

Operating Income: Client Solutions operating income .... $ 2,051 51% $ 1,359 % of business unit net revenue ...... 5.2% 3.6%

Net Revenue During Fiscal 2015, Client Solutions experienced a 4% increase in net revenue when compared to Pro Forma Fiscal 2014, as we saw growth in the commercial category driven by an increase in units sold. Client Solutions net revenue also benefited from favorable market conditions, driven by the Windows XP refresh cycle, which gradually weakened in the second half of the year. Consumer net revenue was effectively unchanged during Fiscal 2015. Throughout Fiscal 2015, we improved our execution through strategic pricing, leveraging our direct sales force as well as our channel partners. We also experienced a consolidation of the industry, which contributed to the improved results for Fiscal 2015. From a geographical perspective, revenue attributable to Client Solutions increased across all regions during Fiscal 2015, led by an increase in revenue from the Americas.

Operating Income During Fiscal 2015, Client Solutions operating income as a percentage of Client Solutions revenue increased 160 basis points to 5.2%. This increase was attributable to an improvement in our Client Solutions gross margin percentage, driven primarily by desktops and notebooks as we benefited from favorable market conditions. The increase in Client Solutions operating income was also due to a reduction in our Client Solutions operating expense percentage as we continue to optimize our cost structure.

142 Enterprise Solutions Group: The following table presents revenue and operating income attributable to ESG for the respective periods:

Fiscal Year Ended Successor Pro Forma January 30, 2015 % Change January 31, 2014 (in millions, except percentages) Net Revenue: Servers and networking ...... $12,368 4% $11,901 Storage ...... 2,346 (5)% 2,474 Total ESG net revenue ...... $14,714 2% $14,375 Operating Income: ESG operating income ...... $ 1,230 8% $ 1,137 % of business unit net revenue ...... 8.4% 7.9%

Net Revenue During Fiscal 2015, ESG experienced a 2% increase in net revenue, which was attributable to a 4% increase in revenue from our servers and networking products, driven by an increase in PowerEdge server units and average selling prices attributable to richer configurations. These increases were partially offset by a 5% decline in storage revenue. From a geographical perspective, ESG revenue increased during Fiscal 2015 driven by an increase in revenue from EMEA and, to a lesser extent, an increase in revenue from APJ, partially offset by a decline in revenue from the Americas.

Operating Income During Fiscal 2015, ESG operating income as a percentage of ESG revenue increased 50 basis points to 8.4%. This increase was primarily driven by a decline in our ESG operating expense percentage as we continue to optimize our cost structure, partially offset by a decline in our ESG gross margin percentage.

Dell Software Group: The following table presents revenue and operating loss attributable to DSG for the respective periods:

Fiscal Year Ended Successor Pro Forma January 30, January 31, 2015 % Change 2014 (in millions, except percentages) Net Revenue: DSG net revenue ...... $1,493 14% $1,311 Operating Loss: DSG operating loss ...... $ (30) 88% $ (248) % of business unit net revenue ...... (2.0)% (18.9)%

Net Revenue During Fiscal 2015, DSG revenue increased 14% as we experienced growth across our entire portfolio of software solutions.

143 Operating Loss During Fiscal 2015, DSG operating loss as a percentage of DSG revenue decreased to an operating loss percentage of 2.0%. Overall, the decrease in DSG operating loss percentage was primarily driven by a decrease in our DSG operating expense percentage.

Dell Services: The following table presents revenue and operating income attributable to Dell Services for the respective periods:

Fiscal Year Ended Successor Pro Forma January 30, % January 31, 2015 Change 2014 (in millions, except percentages) Net Revenue: Infrastructure and cloud services ...... $1,734 — % $1,735 Applications and business process services ..... 1,248 2% 1,223 Total Dell Services net revenue ...... $2,982 1% $2,958 Operating Income (Loss): Dell Services operating income (loss) ...... $ 124 395% $ (42) % of business unit net revenue ...... 4.2% (1.4)%

Net Revenue During Fiscal 2015, Dell Services experienced a 1% increase in net revenue. Revenue from applications and business process services increased 2% during Fiscal 2015, due to an increase in revenue from applications services. Revenue from infrastructure and cloud services was effectively unchanged during that period. At a regional level, Dell Services revenue is comprised primarily of the U.S. market, and U.S. revenue remained largely unchanged during Fiscal 2015.

Operating Income During Fiscal 2015, Dell Services operating income as a percentage of Dell Services revenue increased 560 basis points to 4.2%. Overall, this increase was attributable to an increase in our Dell Services gross margin percentage, driven by infrastructure and cloud services, coupled with a decline in our Dell Services operating expense percentage.

Services Backlog Services backlog decreased 4% to $8.0 billion as of January 30, 2015, compared to $8.3 billion as of January 31, 2014.

Dell Financial Services DFS offers a wide range of financial services, including originating, collecting, and servicing customer receivables primarily related to the purchase of Dell products. In some cases, we originate financing activities for our commercial customers related to the purchase of third-party technology products that complement our portfolio of products and services. New financing originations, which represent the amounts of financing provided by DFS to customers for equipment and related software and services, including third-party originations, were $3.7 billion, $3.7 billion and $3.3 billion for Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, respectively. As of January 29, 2016 and January 30, 2015, our financing receivables, net were $5.1 billion and $5.0 billion, respectively. The results of these operations are allocated to our business units based on the underlying product or service financed.

144 During Pro Forma Fiscal 2014, prior to the going-private transaction, we completed our acquisition of CIT Vendor Finance’s Dell-related financing assets portfolio and sales and servicing functions in Europe, which has enabled global expansion of the Company’s direct finance model. In connection with this transaction, we obtained a bank license from The Central Bank of Ireland to facilitate the Company’s ongoing offerings of financial services in Europe.

We maintain an allowance to cover expected financing receivable credit losses and evaluate credit loss expectations based on our total portfolio. For Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, the principal charge-off rate for our total portfolio was 2.5%, 2.9% and 3.7%, respectively. The credit quality mix of our financing receivables has improved in recent years due to our underwriting actions and as the mix of high quality commercial accounts in our portfolio has increased. The allowance for losses is determined based on various factors, including historical and anticipated experience, past due receivables, receivable type and customer risk profile. At January 29, 2016 and January 30, 2015, the allowance for financing receivable losses was $176 million and $194 million, respectively. In general, the loss rates on our financing receivables have improved over the periods presented. We expect the loss rates in future periods to stabilize, with movements in these rates being primarily driven by a continued shift in portfolio composition to lower risk commercial assets. We continue to monitor broader economic indicators and their potential impact on future loss performance. We have an extensive process to manage our exposure to customer credit risk, including active management of credit lines and our collection activities. We also sell selected fixed-term financing receivables to unrelated third parties on a periodic basis, primarily to manage certain concentrations of customer credit exposure. Based on our assessment of the customer financing receivables, we believe that we are adequately reserved. See note 5 of the notes to our audited consolidated financial statements included in this offering memorandum and “—Liquidity, Capital Commitments and Contractual Cash Obligations—Pre-Transaction Liquidity—DFS Financing Arrangements”.

Liquidity, Capital Commitments and Contractual Cash Obligations Overview We regularly monitor economic conditions and associated impacts on the financial markets and our business. We consistently evaluate the financial health of our supplier base, carefully manage customer credit, diversify counterparty risk and monitor the concentration risk of our cash and cash equivalents balances globally. We routinely monitor our financial exposure to borrowers and counterparties.

We monitor credit risk associated with our financial counterparties using various market credit risk indicators such as credit ratings issued by nationally recognized rating agencies and changes in market credit default swap levels. We perform periodic evaluations of our positions with these counterparties and may limit exposure to any one counterparty in accordance with our policies. We monitor and manage these activities depending on current and expected market developments.

We use derivative instruments to hedge certain foreign currency exposures. We use forward contracts and purchased options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in our forecasted transactions denominated in currencies other than the U.S. dollar. In addition, we primarily use forward contracts and may use purchased options to hedge monetary assets and liabilities denominated in a foreign currency. See note 7 of the notes to our audited consolidated financial statements included in this offering memorandum for more information about our use of derivative instruments.

See “Risk Factors” for further discussion of risks associated with our use of counterparties. The impact on our consolidated financial statements of any credit adjustments related to these counterparties has been immaterial.

145 Cash Flows The following table contains a summary of our consolidated statements of cash flows for the respective periods:

Successor(a) Predecessor Fiscal Year Fiscal Year Ended Ended October 29, 2013 February 2, 2013 January 29, January 30, through January 31, through October 28, 2016 2015 2014 2013 (in millions) Net change in cash from: Operating activities ...... $2,162 $ 2,551 $ 1,082 $ 1,604 Investing activities ...... (321) (355) (8,553) 1,564 Financing activities ...... (496) (3,094) 13,960 (4,630) Effect of exchange rate changes on cash and cash equivalents ..... (167) (153) (40) (67) Change in cash and cash equivalents...... $1,178 $(1,051) $ 6,449 $ (1,529) Cash and cash equivalents at beginningofperiod...... $5,398 $ 6,449 $ — $12,569 Cash and cash equivalents at end of theperiod...... $6,576 $ 5,398 $ 6,449 $11,040

(a) In accordance with authoritative guidance for business combinations, we have reflected the acquisition of Dell by Denali as a cash outflow, net of cash acquired, in cash used in investing activities in the Successor period ending January 31, 2014. See note 1 of the notes to our audited consolidated financial statements included in this offering memorandum for more information on the going-private transaction.

Operating Activities Cash provided by operating activities was $2.2 billion and $2.6 billion for Fiscal 2016 and Fiscal 2015, respectively. The decline in operating cash flows was due to a decline in profitability and lower working capital benefits in the current period. Despite this decline, our operating cash flow performance has remained strong over the periods presented.

Cash provided by operating activities was $1.1 billion for the Successor period ended January 31, 2014 and $1.6 billion for the Predecessor period ended October 28, 2013. Our strong operating cash flows over these periods were due to balanced working capital management and sustained profitability.

Investing Activities Investing activities primarily consist of capital expenditures for property, plant, and equipment, collections on purchased financing receivables and proceeds from sale of facilities, land and other assets. Cash used in investing activities was $321 million and $355 million during Fiscal 2016 and Fiscal 2015, respectively. During Fiscal 2015, investing activities also included $73 million used to fund acquisitions.

For the Successor period ended January 31, 2014, cash used in investing activities was primarily comprised of the net cash used to fund the acquisition of Dell by Denali. The cash consideration at the close of the going- private transaction was $19.7 billion, which is presented net of $11.0 billion in acquired cash in our consolidated statements of cash flow. See note 1 and note 3 of the notes to our audited consolidated financial statements

146 included in this offering memorandum for more information on the going-private transaction. For the Predecessor period ended October 28, 2013, cash provided by investing activities was $1.6 billion and was primarily driven by the liquidation of our investment portfolio in connection with the going-private transaction.

Financing Activities Financing activities primarily consist of the proceeds and repayments of debt. During Fiscal 2016, cash used in financing activities was $0.5 billion, as we issued $0.7 billion, net, in additional structured financing debt, repaid $0.7 billion with respect to certain existing unsecured notes and debentures and repaid $0.5 billion, net, with respect to the existing term loan facilities and related foreign currency derivative settlements. In comparison, during Fiscal 2015, cash used in financing activities primarily comprised of repayments of debt of $2.0 billion principal amount of the Microsoft note and $0.8 billion in borrowings outstanding under the existing ABL credit facility.

For the Successor period ended January 31, 2014, cash provided by financing activities was $14.0 billion, primarily attributable to the issuance of $13.9 billion in new debt used to finance the going-private transaction. Issuance costs for these borrowings totaled $0.3 billion. For the Predecessor period ended October 28, 2013, cash used in financing activities was $4.6 billion and was primarily attributable to repayment of debt. In connection with the going-private transaction, during the Predecessor period, we retired $1.3 billion in structured financing debt and paid $0.9 billion into escrow in order to retire our near term maturity notes. Also, during the Predecessor period ended October 28, 2013, we repaid $1.8 billion in outstanding commercial paper.

See note 5 of the notes to our audited consolidated financial statements included in this offering memorandum for more information about our securitization programs, and note 6 of the notes to our audited consolidated financial statements included in this offering memorandum for more information about our debt.

Accounts Receivable We sell products and services directly to customers and through a variety of sales channels, including retail distribution. As of January 29, 2016, our accounts receivable, net was $5.5 billion, compared to $6.1 billion as of January 30, 2015. This decrease was primarily driven by a decrease in revenue over the period and improved collections performance. We maintain an allowance for doubtful accounts to cover receivables that may be deemed uncollectible. The allowance for losses is based on a provision for accounts that are collectively evaluated based on historical bad debt experience as well as specific identifiable customer accounts that are deemed at risk. As of January 29, 2016 and January 30, 2015, the allowance for doubtful accounts was $57 million and $60 million, respectively. Based on our assessment, we believe that we are adequately reserved for expected credit losses. We monitor the aging of our accounts receivable and continue to take actions to reduce our exposure to credit losses.

Pre-Transaction Liquidity To support our ongoing business operations, we rely on operating cash flows as our primary source of liquidity. We monitor the efficiency of our balance sheet to ensure that we have adequate liquidity to support our strategic initiatives. In addition to internally generated cash, we have access to other capital sources, including the existing ABL credit facility, to finance our strategic initiatives and fund growth in our financing operations. As of January 29, 2016, we had $6.6 billion of total cash and cash equivalents, substantially all of which was held outside of the United States. Our strategy is to deploy capital from any potential source, whether internally generated cash or debt, depending on the adequacy and availability of that source of capital and whether it can be accessed in a cost effective manner.

A significant portion of our income is earned in non-U.S. jurisdictions. Under current law, earnings available to be repatriated to the United States would be subject to U.S. federal income tax, less applicable

147 foreign tax credits. We have provided for the U.S. federal tax liability on these amounts for financial statement purposes, except for foreign earnings that are considered permanently reinvested outside of the United States. We utilize a variety of tax planning and financing strategies with the objective of having our worldwide cash available in the locations where it is needed.

The following table summarizes our cash and cash equivalents as well as our available borrowings as of January 29, 2016 and January 30, 2015:

Successor January 29, January 30, 2016 2015 (in millions) Cash and cash equivalents, and available borrowings: Cash and cash equivalents ...... $6,576 $5,398 Remaining available borrowings under the existing ABL credit facility ...... 1,676 1,716 Total cash, cash equivalents, and available borrowings ...... $8,252 $7,114

The maximum aggregate borrowings under the existing ABL credit facility are approximately $2.0 billion. Borrowings under the existing ABL credit facility are subject to a borrowing base, which consists of certain receivables and inventory. Available borrowings under the existing ABL credit facility are reduced by draws on the facility as well as outstanding letters of credit. As of January 29, 2016, there were no draws on the facility and, after taking into account outstanding letters of credit, our available capacity totaled $1.7 billion.

To finance the going-private transaction, we issued $13.9 billion in debt, which included borrowings under the existing term loan facilities and the existing ABL credit facility, proceeds from the sale of the existing first lien notes and other notes, and borrowings under structured financing debt programs. See note 1 and note 6 of the notes to our audited consolidated financial statements included in this offering memorandum for more information on the going-private transaction and our outstanding borrowings. The following table summarizes our outstanding debt as of January 29, 2016 and January 30, 2015:

Successor January 29, January 30, 2016 2015 (in millions) Outstanding Debt Existing term loan facilities and existing first lien notes ...... $ 7,623 $ 8,071 Unsecured notes and debentures ...... 2,853 3,553 Structured financing debt ...... 3,411 2,690 Borrowings under the existing ABL credit facility ...... — — Other ...... 93 73 Total debt, principal amount ...... 13,980 14,387 Carrying value adjustments ...... (221) (232) Total debt, carrying value ...... $13,759 $14,155

During Fiscal 2016, we repaid $1.1 billion of debt, which primarily consisted of $0.7 billion with respect to certain existing unsecured notes and debentures, and $0.4 billion with respect to the existing term loan facilities. In addition, during Fiscal 2016, we issued $0.7 billion, net, in additional structured financing debt. During Fiscal 2015, we repaid $3.3 billion of debt, which primarily consisted of $2.0 billion principal amount of the Microsoft

148 note, $0.8 billion of borrowings outstanding under the existing ABL credit facility, $0.3 billion in maturing senior notes, and $0.2 billion in existing term loan facilities. In addition, during Fiscal 2015, we issued $0.2 billion, net, in additional structured financing debt.

Our requirements for cash to pay principal and interest have increased significantly due to the incremental borrowings we incurred to finance the going-private transaction. We may, from time to time, at our sole discretion, purchase, redeem, prepay, refinance or otherwise retire our outstanding indebtedness under the terms of such indebtedness, in open market or negotiated transactions with the holders of such indebtedness, or otherwise. On June 10, 2015, we refinanced and amended the existing term loan facilities to reduce interest rate floors and margins and to modify certain covenant requirements. The refinancing increased the outstanding existing term loan euro facility from €0.6 billion to €0.8 billion, offset by a decrease in the existing term loan B facility from $4.6 billion to $4.4 billion. The interest rate for both the term loan B facility and existing term loan euro facility was reduced to 4%.

We balance the use of our securitization programs with working capital and other sources of liquidity to fund growth in DFS. Of the $14.0 billion in outstanding principal debt as of January 29, 2016, $4.5 billion, which includes $3.4 billion in structured financing debt, is used to fund this business. Of the $14.4 billion in outstanding principal debt as of January 30, 2015, $4.4 billion, which includes $2.7 billion in structured financing debt, is used to fund this business.

DFS Financing Arrangements We have securitization programs to fund revolving loans and fixed-term leases and loans through consolidated special purpose entities (“SPEs”), which we account for as secured borrowings. We transfer certain U.S. customer financing receivables to these SPEs, whose purpose is to facilitate the funding of customer receivables through financing arrangements with multi-seller conduits that issue asset-backed debt securities in the capital markets and private investors. During Fiscal 2016, Fiscal 2015 and Pro Forma Fiscal 2014, we transferred $3.2 billion $2.7 billion and $5.4 billion to these SPEs, respectively. Our risk of loss related to these securitized receivables is limited to the amount of our over-collateralization in the transferred pool of receivables. The structured financing debt related to all of our securitization programs included as secured borrowing was $2.8 billion and $2.3 billion as of January 29, 2016 and January 30, 2015, respectively. In addition, the carrying amount of the corresponding financing receivables was $3.3 billion and $3.0 billion as of January 29, 2016 and January 30, 2015, respectively.

Post-Transaction Liquidity Following the consummation of the Transactions, our liquidity requirements will be changed, primarily due to the additional debt service requirements to our existing cash needs discussed above. Our principal sources of liquidity after the Transactions will be cash generated by our operating cash flows, as well as funds available under the senior secured credit facilities. Our principal uses of cash after the consummation of the Transactions will be to meet debt service requirements and to fund working capital and capital expenditures. We believe that our current cash and cash equivalents, along with cash that will be provided by future operations, and borrowings expected to be available under the senior secured credit facilities, will be sufficient to fund our operations, capital expenditures, debt service requirements, any liabilities in respect of appraisal proceedings in connection with the going-private transaction as described in note 11 of the notes to our audited consolidated financial statements, shares of EMC in respect of which appraisal rights (if any) have been properly exercised (to the extent that appraisal rights are determined to exist) and any tax audit settlements described in note 11 and note 12 of the notes to our audited consolidated financial statements, respectively, over at least the next twelve months. Our business may not generate sufficient operating cash flows or future borrowings may not be available to us under the senior secured credit facilities in an amount sufficient to enable us to pay our indebtedness, including the notes offered hereby, or to fund our other liquidity needs. In addition, as we are a holding company, we are dependent in part on the generation of cash flow by our subsidiaries and their ability to make such cash available to us or the issuers, by dividend, debt repayment or otherwise. We do not expect VMware or SecureWorks to pay

149 a dividend, and therefore do not expect to have access to the cash and cash equivalents held by VMware or SecureWorks. Our ability to do so depends on, among other factors, prevailing economic conditions, many of which are beyond our control. In addition, upon the occurrence of certain events, such as a change in control, we could be required to repay or refinance our indebtedness. We may not be able to refinance any of our indebtedness, including the senior secured credit facilities and the notes offered hereby, on commercially reasonable terms or at all. Any future acquisitions, joint ventures or other similar transactions may require additional capital and any such capital may not be available to us on acceptable terms or at all.

After the consummation of the Transactions, we will be substantially leveraged. On a pro forma basis, we and our subsidiaries would have had approximately $55,007 million aggregate principal amount of indebtedness outstanding as of January 29, 2016 after giving effect to the Transactions (or $57,707 million as adjusted for the EMC Transactions only), with an additional $1,175 million for future borrowing under the revolving facility (without giving effect to letters of credit outstanding) and an additional approximately $1,118 million available for borrowings under the ABS facilities (including approximately $3 million for future borrowing under the Canadian Facility, which is guaranteed by Dell). We also can incur additional indebtedness if certain specified conditions are met under the senior secured credit facilities, the indenture that will govern the unsecured notes, the indenture that will govern the notes offered hereby and the terms of other indebtedness we may incur in the future. On a pro forma basis, our total cash interest expense for the fiscal year ended January 29, 2016 would have been approximately $2,253 million after giving effect to the Transactions (or $2,399 million as adjusted for the EMC Transactions).

Senior Secured Credit Facilities In connection with the consummation of the EMC Transactions, we will enter into the senior secured credit facilities. Obligations under the senior secured facilities will be guaranteed by Denali Intermediate, Dell and certain of Denali Intermediate’s existing and future direct or indirect wholly-owned domestic subsidiaries. Obligations under the senior secured credit facilities will be secured by a first-priority lien on certain tangible and intangible assets of the borrowers and the guarantors, including pledges of all capital stock of the borrowers, Dell and of each wholly-owned material restricted subsidiary of the borrowers and the guarantors (but limited to 65% of the voting stock of any foreign subsidiary), subject to certain thresholds, exceptions and permitted liens. The obligations under the senior secured credit facilities will be secured on an equal and ratable basis as the notes offered hereby. We expect that the collateral for the senior secured credit facilities will also constitute collateral for the notes offered hereby, except as set forth under “Description of Notes—Security for the Notes.” We expect to draw approximately $19,900 million under the senior secured credit facilities upon the consummation of the Transactions (or $21,100 million as adjusted for the EMC Transactions only).

We will be subject to certain customary financial and non-financial covenants. The credit agreement that will govern the senior secured credit facilities will contain covenants that impose restrictions on, among other things, additional indebtedness, liens, investments, advances, guarantees and mergers and acquisitions. These covenants will also place restrictions on asset sales, dividends and certain transactions with affiliates. As of the date of this offering memorandum, the terms are not final and are subject to change. See “Description of Other Indebtedness—Senior Secured Credit Facilities.”

DFS Financing Arrangements Following the consummation of the Transactions, we will maintain our securitization programs to fund revolving loans and fixed-term leases and loans through SPEs. See “—Pre-Transaction Liquidity—DFS Financing Arrangements” and “Description of Other Indebtedness—ABS Facilities.”

Notes Offered Hereby Prior to the consummation of the mergers and the assumption, the notes offered hereby will not be guaranteed. Upon the consummation of the mergers and the assumption, the notes offered hereby will be fully

150 and unconditionally guaranteed, jointly and severally, by Denali, Denali Intermediate, Dell and each of Denali Intermediate’s existing and future direct or indirect wholly-owned domestic subsidiaries (including each of EMC’s existing and future wholly-owned domestic subsidiaries) that guarantee obligations under the senior secured credit facilities.

The notes and the note guarantees will be senior in right of payment to any future subordinated indebtedness of the issuers and the guarantors, be equal in right of payment with all of the issuers’ and the guarantors’ existing and future senior indebtedness (including obligations under the senior secured credit facilities, any senior unsecured debt expected to be incurred as part of the EMC Transactions and (only with respect to EMC) the existing EMC unsecured notes), be secured on a first-priority basis by substantially all of the tangible and intangible assets of the issuers and the guarantors that secure obligations under the senior secured credit facilities, be effectively senior to all existing and future unsecured indebtedness of the issuers and the guarantors (including any series of unsecured notes) and any future second lien obligations, to the extent of the value of the collateral securing the notes, be effectively subordinated to all existing and future indebtedness of the issuers and the guarantors that is secured by assets or properties not constituting collateral securing the notes (including indebtedness in respect of the margin bridge facility and the VMware note bridge facility) to the extent of the value of such assets and properties, be structurally senior to the existing Dell unsecured notes and (except with respect to EMC) the existing EMC unsecured notes and be structurally subordinated to all existing and future indebtedness and other liabilities of the non-guarantor subsidiaries (other than indebtedness and liabilities owed to one of the issuers or the guarantors) (including indebtedness in respect of the ABS facilities and the asset- backed debt securities). The notes will be issued under an indenture that will contain customary covenants and events of default for an issuance of secured investment grade debt securities. See “Description of Notes.”

Unsecured Notes In connection with the EMC Transactions, we expect the Fincos to issue $3,250 million in aggregate principal amount of one or more series of unsecured notes. We expect that upon the consummation of the mergers and the assumption, Dell International and EMC will become co-issuers of the unsecured notes and will become liable on a joint and several basis for all the obligations of the Fincos under the unsecured notes and the indenture that will govern the unsecured notes. The unsecured notes are not expected to be guaranteed prior to the consummation of the mergers and the assumption. We expect that following the consummation of the mergers and the assumption, the unsecured notes will be guaranteed on a joint and several basis by Denali, Denali Intermediate, Dell and Denali Intermediate’s existing and future direct or indirect wholly-owned domestic subsidiaries that guarantee obligations under the senior secured credit facilities. The unsecured notes are expected to be the issuers’ and the guarantors’ senior unsecured obligations and are expected to rank equally in right of payment with all of their existing and future unsecured and unsubordinated indebtedness. The unsecured notes are expected to be issued under an indenture that will contain customary covenants and events of default for an issuance of high-yield debt securities. As of the date of this offering memorandum, the unsecured notes have not yet been issued and the terms governing the unsecured notes are subject to change. See “Description of Other Indebtedness—Unsecured Notes.”

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

Asset Sale Bridge Facility In connection with the consummation of the EMC Transactions, to the extent the Dell Services Transaction is not consummated substantially concurrently with or prior to the closing of the Dell-EMC merger, we expect to enter into the $1,500 million asset sale bridge facility. Obligations under the asset sale bridge facility will be guaranteed on a senior unsecured basis by Denali Intermediate, Dell and certain of Denali Intermediate’s existing and future direct or indirect wholly-owned domestic subsidiaries.

151 We will be subject to certain customary financial and non-financial covenants. The credit agreement that will govern the asset sale bridge facility will contain covenants that impose restrictions on, among other things, additional indebtedness, liens, investments, advances, guarantees and mergers and acquisitions. These covenants will also place restrictions on asset sales, dividends and certain transactions with affiliates. As of the date of this offering memorandum, the terms are not final and are subject to change. See “Description of Other Indebtedness—Asset Sale Bridge Facility.”

Potential Payments Relating to Appraisal Rights EMC Transactions Holders of shares of EMC’s common stock who dissent from the Dell-EMC merger may attempt to seek the fair value of their shares in a judicial appraisal proceeding. We will, and we will cause EMC as our wholly- owned subsidiary following the completion of the Dell-EMC merger to, assert in any appraisal proceeding that an exception to appraisal rights is applicable to the Dell-EMC merger. In this regard, the MBCA generally provides that shareholders are not entitled to appraisal rights in a merger in which shareholders already holding marketable securities receive cash and/or marketable securities of the surviving corporation in the merger and no director, officer or controlling shareholder has an extraordinary financial interest in the transaction. Such provision has not been the subject of judicial interpretation as to whether this exception applies where, such as in the Dell-EMC merger, shareholders will receive marketable securities of the parent of the surviving corporation in a merger. If dissenting EMC shareholders are entitled to appraisal rights, and the shareholder certifies that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, under the MBCA, EMC would be required to pay its estimate of fair value in respect of shares for which appraisal rights have been properly demanded (plus interest) within 100 days of the closing date of the Dell-EMC merger. With respect to shares of EMC for which appraisal rights have been properly demanded and are held by a shareholder who does not certify that it beneficially owned such shares prior to the announcement of the Dell-EMC merger, instead of payment within 100 days of the closing date of the Dell-EMC merger, EMC must instead offer to make such payment that is conditioned on the shareholder’s agreement to accept such payment in full satisfaction of his claim. If such offer is not accepted, such shareholder may demand an appraisal of its shares through judicial proceedings but will only be entitled to receive payment for such shares upon completion of such proceedings. Any payment made to EMC shareholders who have properly exercised their appraisal rights would be required to be paid in cash (including in lieu of the Class V Common Stock originally offered). The appraised value of each share of EMC common stock could be more than, the same as, or less than the merger consideration that has been offered to each holder of shares of EMC’s common stock.

We expect that, to the extent that appraisal rights are determined to exist, and to the extent that any cash amount is required to be paid to EMC shareholders in respect of shares for which appraisal rights have been properly demanded and such amount exceeds the original cash consideration offered by us, such amount will be funded by cash on hand, the proceeds of additional indebtedness or a combination thereof. Any such excess amount may be significant. However, we cannot assure you that, at the time such payments are required to be made, we will have sufficient cash on hand or availability under our revolving credit facility and we may have to sell assets or incur debt (which may not be available on commercially reasonable terms or at all) in order to have sufficient cash to satisfy EMC’s obligations in respect of appraisal rights.

See “Risk Factors—Risks Related to the Combined Company and the Transactions—Holders of a substantial number of EMC’s shares may deliver written demands for the appraisal of their shares under Massachusetts law. If these shareholders are entitled to appraisal rights and properly demand appraisal of their shares, the combined company may be required to seek additional financing to fund payments in cash in respect of such appraised shares.”

Going-Private Transaction We are party to a number of appraisal proceedings filed by former Dell stockholders in connection with the going-private transaction in which such stockholders seek a determination of the fair value of a total of

152 approximately 38 million shares of Dell common stock plus interest, costs, and attorneys’ fees. We have recorded a liability of $13.75 for each share (which is equal to the consideration paid for each share in the going- private transaction) with respect to which appraisal has been demanded and as to which the demand has not been withdrawn, together with interest. As of January 29, 2016, this liability was approximately $593 million, including $72 million in accrued interest.

Capital Commitments Product demand, product mix and the increased use of contract manufacturers, as well as ongoing investments in operating and information technology infrastructure, influence the level and prioritization of our capital expenditures. During Fiscal 2016 and Fiscal 2015, we spent $482 million and $478 million, respectively, on property, plant, and equipment. These expenditures were primarily incurred in connection with our global expansion efforts and infrastructure investments made to support future growth. Product demand, product mix and the increased use of contract manufacturers, as well as ongoing investments in operating and information technology infrastructure, include the level and prioritization of our capital expenditures. Aggregate capital expenditures for Fiscal 2017, which will be primarily related to infrastructure investments and strategic initiatives, are currently expected to total approximately $0.5 billion.

Expenditures on property, plant, and equipment were $431 million during the Successor period ended January 31, 2014, and $101 million during the Predecessor period ended October 28, 2013. These expenditures were primarily in connection with our global expansion efforts and infrastructure investments made to support future growth.

Contractual Cash Obligations The table below summarizes Denali’s contractual cash obligations as of January 29, 2016 and EMC’s contractual cash obligations as of December 31, 2015, in each case, after giving effect to the Transactions. The payments due by period represent estimates of such payments, due to the different fiscal year ends of Denali and EMC:

Payments Due by Period Fiscal Fiscal Fiscal Total 2017 2018-2019 2020-2021 Thereafter (in millions) Contractual cash obligations: Principal payments on borrowings(c) ...... $55,007(a) $ 6,831(b) $16,025 $12,172 $19,979 Operating leases(d) ...... 2,444 464 687 409 884 Purchase obligations(e) ...... 5,636 2,346 140 1 — Interest(f) ...... 18,790 2,233 4,176 3,383 8,997 Uncertain tax positions(g) ...... — — — — — Other long-term obligations, including post-retirement obligations(h) ...... 480 480 — — — Contractual cash obligations ...... $82,357 $12,355 $21,028 $15,965 $29,860

(a) Reflects the aggregate principal amount of borrowings and does not reflect (i) any amortization of original issue discounts thereon or (ii) other accounting adjustments to reflect the carrying value of such indebtedness. To the extent the Dell Services Transaction is not consummated substantially concurrently

153 with or prior to the closing of the Dell-EMC merger, we expect that our total principal payments on borrowings will be $57,707 million, of which $8,331 million, $17,225 million, $12,172 million and $19,979 million are payable in Fiscal 2017, Fiscal 2018-2019, Fiscal 2020-Fiscal 2021 and thereafter, respectively. (b) Includes (i) $1.5 billion aggregate principal amount expected to be borrowed under the VMware note bridge facility, (ii) $2.5 billion aggregate principal amount expected to be borrowed under the margin bridge facility and (iii) $2.5 billion aggregate principal amount expected to be borrowed under the senior secured cash flow term loan facility, each of which are expected to become due 364 days after the consummation of the Dell-EMC merger. (c) Our expected principal cash payments on borrowings are exclusive of discounts and premiums. We have outstanding long-term notes with varying maturities. As of January 29, 2016, the future principal payments related to structured financing debt were expected to be $2.1 billion in Fiscal 2017 and $1.3 billion in Fiscal 2018 – 2021. For additional information, see note 6 of the notes to our audited consolidated financial statements included in this offering memorandum. (d) We lease property and equipment, manufacturing facilities and office space under non-cancelable leases. Certain of these leases obligate us to pay taxes, maintenance and repair costs. (e) Purchase obligations are defined as contractual obligations to purchase goods or services that are enforceable and legally binding on us. These obligations specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. Purchase obligations do not include contracts that may be canceled without penalty. EMC has approximately $3,149 million of purchase obligations for which EMC is unable to reasonably estimate the timing of future payments and, as a result, such amount has been reflected in the “Total” column but has not been reflected in any specific column with respect to the timing of the due date of such payment. Denali utilizes several suppliers to manufacture sub-assemblies for its products. Denali’s efficient supply chain management allows it to enter into flexible and mutually beneficial purchase arrangements with its suppliers in order to minimize inventory risk. Consistent with industry practice, Denali acquires raw materials or other goods and services, including product components, by issuing to suppliers authorizations to purchase based on its projected demand and manufacturing needs. These purchase orders are typically fulfilled within 30 days and are entered into during the ordinary course of business in order to establish best pricing and continuity of supply for its production. (f) See note 6 of the notes to our audited consolidated financial statements and note E of the notes to the audited consolidated financial statements of EMC included in this offering memorandum for further discussion of our and EMC’s debt and related interest expense, respectively. (g) Dell has approximately $3.1 billion and EMC has approximately $0.6 billion in additional liabilities associated with uncertain tax positions as of January 29, 2016 and December 31, 2015, respectively. Although the timing of resolution and closure of audits is uncertain, we believe it is reasonably possible that tax audit resolutions could result in reductions to the liability of between $300 million and $750 million within the next twelve months. See note 12 of the notes to our audited consolidated financial statements and note K of the notes to the audited consolidated financial statements of EMC included in this offering memorandum for further discussion regarding tax matters, including the status of income tax audits, relating to us and EMC, respectively.

Off-Balance Sheet Arrangements We do not have any off-balance sheet financing arrangements.

Critical Accounting Policies We prepare our financial statements in conformity with GAAP. The preparation of financial statements in accordance with GAAP requires certain estimates, assumptions and judgments to be made that may affect our Consolidated Statements of Financial Position and Consolidated Statements of Income. Accounting policies that have a significant impact on our Consolidated Financial Statements are described in note 2 of the notes to our

154 audited consolidated financial statements included elsewhere in this offering memorandum. The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical. We consider an accounting policy to be critical if the nature of the estimate or assumption is subject to a material level of judgment and if changes in those estimates or assumptions are reasonably likely to materially impact our Consolidated Financial Statements. We have discussed the development, selection and disclosure of our critical accounting policies with the Audit Committee of our Board of Directors.

Revenue Recognition and Related Allowances—We enter into contracts to sell our products and services, and frequently enter into sales arrangements with customers that contain multiple elements or deliverables, such as hardware, services, software and peripherals. We use general revenue recognition accounting guidance for hardware, software bundled with hardware that is essential to the functionality of the hardware, peripherals and certain services. We recognize revenue for these products when it is realized or realizable and earned. Revenue is considered realized and earned when persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; our fee is fixed and determinable; and collection of the resulting receivable is reasonably assured. Judgments and estimates are necessary to ensure compliance with GAAP. These judgments include the allocation of the proceeds received from an arrangement to the multiple elements, and the appropriate timing of revenue recognition.

Revenue from sales of third-party software and extended warranties for third-party products, for which we do not meet the criteria for gross revenue recognition, is recognized on a net basis. All other revenue is recognized on a gross basis.

Services revenue and cost of services revenue captions in our Consolidated Statements of Income include services revenue, third-party software revenue and support services related to Dell-owned software offerings.

Most of our products and services qualify as separate units of accounting. We allocate revenue to all deliverables based on their relative selling prices. GAAP requires the following hierarchy to be used to determine the selling price for allocating revenue to deliverables: (1) vendor-specific objective evidence (“VSOE”); (2) third-party evidence of selling price (“TPE”); or (3) best estimate of the selling price (“ESP”). In instances where we cannot establish VSOE, we establish TPE by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers.

We record reductions to revenue for estimated customer sales returns, rebates and certain other customer incentive programs. These reductions to revenue are made based upon reasonable and reliable estimates that are determined by historical experience, contractual terms and current conditions. The primary factors affecting our accrual for estimated customer returns include estimated return rates as well as the number of units shipped that have a right of return that has not expired as of the balance sheet date. If returns cannot be reliably estimated, revenue is not recognized until a reliable estimate can be made or the return right lapses. Each quarter, we reevaluate our estimates to assess the adequacy of our recorded accruals and allowance for doubtful accounts and adjust the amounts as necessary.

We sell our products directly to customers as well as through other distribution channels, including retailers, distributors and resellers. Sales through our distribution channels are primarily made under agreements allowing for limited rights of return, price protection, rebates and marketing development funds. We have generally limited return rights through contractual caps or we have an established selling history for these arrangements. Therefore, there is sufficient data to establish reasonable and reliable estimates of returns for the majority of these sales. To the extent price protection or return rights are not limited and a reliable estimate cannot be made, all of the revenue and related cost are deferred until the product has been sold to the end-user or the rights expire. We record estimated reductions to revenue or an expense for distribution channel programs at the later of the offer or the time revenue is recognized.

We recognize revenue in accordance with industry-specific software accounting guidance for all software and post-contract support (“PCS”) that are not essential to the functionality of the hardware.

155 Accounting for software that is essential to the functionality of the hardware is accounted for as specified above. We have not established VSOE for third-party software offerings. For the majority of Dell-owned software offerings, we have established VSOE to support a separation of the software license and PCS elements. VSOE of the PCS element is determined by reference to the prices customers pay for support when it is sold separately. In instances where VSOE is established, we recognize revenue from the sale of software licenses at the time of initial sale, assuming all of the above criteria have been met, and revenue from the PCS element over the maintenance period. When we have not established VSOE to support a separation of the software license and PCS elements, the revenue and related costs are generally recognized over the term of the agreement.

We offer extended warranty and service contracts to customers that extend and/or enhance the technical support, parts and labor coverage offered as part of the base warranty included with the product. Revenue from extended warranty and service contracts, for which we are obligated to perform, is recorded as deferred revenue and subsequently recognized on a straight-line basis over the term of the contract or ratably as services are completed.

Business Combinations and Intangible Assets Including Goodwill—We account for business combinations using the acquisition method of accounting, and accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the estimated fair value is recorded as goodwill. Any changes in the estimated fair values of the net assets recorded for acquisitions prior to the finalization of more detailed analysis, but not to exceed one year from the date of acquisition, will change the amount of the purchase price allocable to goodwill. Any subsequent changes to any purchase price allocations that are material to our consolidated financial results will be adjusted retroactively. All acquisition costs are expensed as incurred and in-process research and development costs are recorded at fair value as an indefinite-lived intangible asset and assessed for impairment thereafter until completion, at which point the asset is amortized over its expected useful life. Separately recognized transactions associated with business combinations are generally expensed subsequent to the acquisition date. The application of business combination and impairment accounting requires the use of significant estimates and assumptions.

The results of operations of acquired businesses are included in our Consolidated Financial Statements from the acquisition date.

Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third fiscal quarter and whenever events or circumstances may indicate that an impairment has occurred. To determine whether goodwill is impaired, we first assess certain qualitative factors. Based on this assessment, if it is determined more likely than not that the fair value of a reporting unit is less than its carrying amount, we perform the quantitative analysis of the goodwill impairment test. We determine the fair values of each of our reportable business units using a discounted cash flow methodology and then compare the fair values to the carrying values of each reportable business unit.

Standard Warranty Liabilities—We record warranty liabilities at the time of sale for the estimated costs that may be incurred under the terms of the limited warranty. The liability for standard warranties is included in accrued and other current and other non-current liabilities on the Consolidated Statements of Financial Position. The specific warranty terms and conditions vary depending upon the product sold and the country in which we do business, but generally include technical support, parts and labor over a period ranging from one to three years. Factors that affect our warranty liability include the number of installed units currently under warranty, historical and anticipated rates of warranty claims on those units and cost per claim to satisfy our warranty obligation. The anticipated rate of warranty claims is the primary factor impacting our estimated warranty obligation. The other factors are less significant due to the fact that the average remaining aggregate warranty period of the covered installed base is approximately 16 months, repair parts are generally already in stock or available at pre-determined prices and labor rates are generally arranged at pre-established amounts with service providers. Warranty claims are reasonably predictable based on historical experience of failure rates. If actual results differ from our estimates, we revise our estimated warranty liability to reflect such changes. Each quarter, we reevaluate our estimates to assess the adequacy of the recorded warranty liabilities and adjust the amounts as necessary.

156 Income Taxes—We are subject to income tax in the United States and numerous foreign jurisdictions. Significant judgments are required in determining the consolidated provision for income taxes. We calculate a provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes. We provide related valuation allowances for deferred tax assets, where appropriate. Significant judgment is required in determining any valuation allowance against deferred tax assets. In assessing the need for a valuation allowance, we consider all available evidence for each jurisdiction, including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. In the event we determine all or part of the net deferred tax assets are not realizable in the future, we will make an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made.

Significant judgment is also required in evaluating our uncertain tax positions. While we believe our tax return positions are sustainable, we recognize tax benefits from uncertain tax positions in the financial statements only when it is more likely than not that the positions will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s administrative practices and precedents. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties. We believe we have provided adequate reserves for all uncertain tax positions.

Loss Contingencies—We are subject to the possibility of various losses arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted and whether new accruals are required. Third parties have in the past asserted, and may in the future assert, claims or initiate litigation related to exclusive patent, copyright and other intellectual property rights to technologies and related standards that are relevant to us. If any infringement or other intellectual property claim made against us by any third party is successful, or if we fail to develop non-infringing technology or license the proprietary rights on commercially reasonable terms and conditions, our business, operating results and financial condition could be materially and adversely affected.

Inventories—We state our inventory at the lower of cost or market. We record a write-down for inventories of components and products, including third-party products held for resale, which have become obsolete or are in excess of anticipated demand or net realizable value. We perform a detailed review of inventory each fiscal quarter that considers multiple factors, including demand forecasts, product life cycle status, product development plans, current sales levels and component cost trends. The industries in which we compete are subject to demand changes. If future demand or market conditions for our products are less favorable than forecasted or if unforeseen technological changes negatively impact the utility of component inventory, we may be required to record additional write-downs, which would adversely affect our gross margin.

Recently Issued Accounting Pronouncements See note 2 of the notes to our audited consolidated financial statements included in this offering memorandum for a summary of recently issued accounting pronouncements that are applicable to our consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk Denali is exposed to a variety of risks, including foreign currency exchange rate fluctuations and changes in the market value of investments. In the normal course of business, Denali employs established policies and procedures to manage these risks.

157 Foreign Currency Risk During Fiscal 2016, the principal foreign currencies in which Denali transacted business were the Euro, Chinese Renminbi, Japanese Yen, British Pound, Canadian Dollar and Australian Dollar. Denali’s objective in managing its exposures to foreign currency exchange rate fluctuations is to reduce the impact of adverse fluctuations associated with foreign currency exchange rate changes on earnings and cash flows. Accordingly, Denali utilizes foreign currency option contracts and forward contracts to hedge its exposure on forecasted transactions and firm commitments for certain currencies. Denali monitors its foreign currency exchange exposures to ensure the overall effectiveness of its foreign currency hedge positions. However, there can be no assurance that Denali’s foreign currency hedging activities will continue to substantially offset the impact of fluctuations in currency exchange rates on the results of operations and financial position in the future.

Based on Denali’s foreign currency hedge instruments outstanding, which include designated and non- designated instruments, as of January 29, 2016, there was a maximum potential one-day loss at a 95% confidence level in fair value of approximately $18 million using a Value-at-Risk (“VAR”) model. By using market implied rates and incorporating volatility and correlation among the currencies of a portfolio, the VAR model simulates 10,000 randomly generated market prices and calculates the difference between the fifth percentile and the average as the Value-at-Risk. The VAR model is a risk estimation tool and is not intended to represent actual losses in fair value that will be incurred. Additionally, as Denali utilizes foreign currency instruments for hedging forecasted and firmly committed transactions, a loss in fair value for those instruments is generally offset by increases in the value of the underlying exposure.

Interest Rate Risk Pre-Transactions Denali is exposed to interest rate risk related to its debt and investment portfolios and financing receivables. Denali mitigates the risk related to its structured financing debt through the use of interest rate swaps to hedge the variability in cash flows related to the interest rate payments on such debt. Based on Denali’s variable rate debt portfolio outstanding as of January 29, 2016, a 100 basis point increase in interest rates would result in an increase of approximately $51 million in annual interest expense.

Denali mitigates the risks related to its investment portfolio by investing primarily in high quality credit securities, limiting the amount that can be invested in any single issuer and investing in short-to-intermediate- term investments. Due to the nature of Denali’s investment portfolio as of January 29, 2016, a 100 basis point increase or decrease in interest rates would not have a material impact on the fair value of this portfolio.

Post-Transactions Denali will continue to be subject to interest rate market risk in connection with its long-term debt following the Transactions. Denali’s principal interest rate exposure relates to outstanding amounts under the floating rate notes, the senior secured credit facilities, the margin bridge facility, the VMware note bridge facility, the ABS facilities and certain of our asset-backed debt securities.

As of January 29, 2016, after giving effect to the Transactions and as adjusted for the EMC Transactions, respectively, approximately $23,900 million or $26,600 million of our debt (other than floating rate notes offered hereby) would have been variable rate debt and the effect of a 0.125% increase or decrease in interest rates would increase or decrease such total annual cash interest by approximately $21 million or $24 million, respectively.

158 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF EMC

Introduction EMC manages its company as a federation of businesses to capitalize on the emerging and rapidly growing trends of cloud computing, Big Data, mobile, social networking and security. EMC’s federated businesses include EMC Information Infrastructure, Pivotal, VMware Virtual Infrastructure and Virtustream.

To capitalize on these trends and align EMC’s businesses effectively, EMC has developed a market growth strategy that has four main pillars: EMC’s high quality products and solutions, EMC’s continued focus on cloud services for both on and off-premise implementations, a coordinated go-to-market approach led by a federation go-to-market organization and EMC’s leadership team and global talent. EMC believes these pillars enable it to become a more trusted partner to its customers as they embark on their digital transformation and transition to the hybrid cloud, and to drive the overall revenue and growth opportunity of EMC Information Infrastructure and the faster growth opportunities of VMware Virtual Infrastructure, Pivotal and Virtustream.

Under EMC’s federation model, each of the businesses operates independently to build its own ecosystem and culture, operates with greater speed and agility and offers customers technology solutions that are free from vendor lock-in. At the same time, EMC’s businesses are strategically aligned in the mission to lead customers and partners through unprecedented, transformational shifts occurring in IT. EMC believes this ability to draw on resources from across the federation to offer tightly integrated solutions that can be rapidly deployed while retaining choice for the customers seeking flexibility is a distinct competitive advantage.

In 2015, EMC initiated a cost reduction and business transformation program to better align its expenses and improve the operations of its federation of businesses. This program was primarily in response to increased pressure on EMC’s traditional storage businesses and accordingly, the vast majority of this program is focused on its EMC Information Infrastructure segment. The goal of this new cost reduction and business transformation program is to reduce EMC’s current annual cost base by $800 million. As part of this cost reduction plan, during 2015 EMC approved a restructuring plan which is in advanced stages of implementation and is expected to be fully actioned this year.

EMC Information Infrastructure The EMC Information Infrastructure business consists of three segments: Information Storage, Enterprise Content Division, formerly known as Information Intelligence Group, and RSA Information Security. The objective for the EMC Information Infrastructure business is to simultaneously increase its market share through EMC’s strong portfolio of offerings while investing in the business. During 2015 and the first quarter of 2016, EMC continued to invest in expanding its total addressable market through increased internal R&D and through business acquisitions, with a focus on flash, Big Data storage, software-defined storage and converged infrastructure to facilitate the enablement of hybrid cloud infrastructures. EMC developed a product portfolio to address customer needs that enables the adoption of hybrid cloud approaches as most enterprises and organizations embark on IT transformation initiatives incorporating both new and traditional storage architectures including converged infrastructure, cloud services, Flash, storage sharing and software-defined and software-managed architectures.

EMC’s go-to market model, where it continues to leverage its direct sales force and services organization, as well as its channel and services partners and service providers, positions EMC to help enable customers to transition to cloud computing and benefit from Big Data in an advantageous manner for EMC’s businesses.

159 Pivotal Pivotal is focused on building a platform comprising the next generation of data fabrics, application fabrics and a cloud independent platform-as-a-service to support cloud computing and Big and Fast Data Applications. The foundation of its technology platform, Pivotal Cloud Foundry, continues to gain momentum as an open platform for developing and operating new cloud applications that can be run on multiple leading private and public clouds, in addition to EMC’s own, and not lock a customer into any one cloud in particular. It continues to enable developers to produce next generation applications and user experiences as well as transform existing applications to operate with greater speed at lower costs. On top of this platform, Pivotal will continue to offer its own suite of big and fast data capabilities, the Big Data Suite, featuring innovations that use Hadoop Distributed File System and scalar processing technologies. Additionally, its agile development services business, Pivotal Labs, continues to help existing customers and digital era startups build industrial-strength applications with more agility, more speed and better quality. Pivotal is becoming an increasingly important factor in EMC’s cross- federation solutions, which offer a combination of products, converged infrastructure and services that EMC believes provide a compelling value proposition to customers, positioning the business for rapid growth in the future.

VMware Virtual Infrastructure VMware is a leader in virtualization and cloud infrastructure solutions utilized by organizations to help transform the way they build, deliver and consume IT resources. VMware develops and markets its product and service offerings within three main product groups and allows organizations to leverage synergies and manage IT resources across complex multi-cloud, multi-device environments. These three product and service areas include: Software-Defined Data Center (“SDDC”), Hybrid Cloud Computing and End-User Computing.

VMware generally sells its solutions using EAs or as part of its non-EA, transactional business. EAs are comprehensive volume license offerings, offered both directly by VMware and through certain channel partners that also provide for multi-year maintenance and support.

Historically, the majority of VMware license sales have been from VMware vSphere, which is included in its compute product category within its SDDC product group. However, the market for VMware’s compute products is reaching maturity and VMware vSphere license sales have been declining. As the transformation of the IT industry continues, VMware expects that its growth of license sales within the SDDC product group will be increasingly derived from sales of its newer products, suites and services solutions across its SDDC portfolio. Hybrid cloud and computing is comprised of VMware vCloud Air Network Service Providers Program and VMware vCloud Air offerings. Revenues derived from these offerings grew during 2015. Hybrid cloud computing continued to grow during the three months ended March 31, 2016. VMware’s cloud strategy has three components: (i) continue to expand beyond compute virtualization in the private cloud, (ii) extend the private cloud into the public cloud, and (iii) connect and secure endpoints across a range of public clouds. VMware’s end-user computing product group continues to experience strong growth. VMware’s AirWatch business model includes an on-premise solution that it offers through the sale of perpetual licenses and an off-premise solution that it offers as software as a service (“SaaS”). AirWatch and Horizon products and services continued to contribute to the growth of its end-user computing product group during 2015 and the three months ended March 31, 2016.

160 Results Of Operations Three Months Ended March 31, 2016 Compared with Three Months Ended March 31, 2015 Revenues The following table presents total revenue by EMC’s segments (dollars in millions):

For the Three Months Ended March 31, March 31, Percentage 2016 2015 $ Change Change Information Storage ...... $3,447 $3,663 $(216) (6)% Enterprise Content Division ...... 134 138 (4) (3)% RSA Information Security ...... 228 248 (20) (8)% Pivotal ...... 83 54 29 56% VMware ...... 1,583 1,510 73 5% Total consolidated revenues ...... $5,475 $5,613 $(138) (2)%

Consolidated product revenues decreased 8% to $2,682 million for the three months ended March 31, 2016. The decrease was primarily driven by the decrease in product revenue in the Information Storage segment. EMC’s Information Storage business continues to be negatively impacted by the rapidly changing IT macro environment where EMC’s customers are changing their buying patterns and needs. Additionally, during the first part of 2016, EMC’s business results were again negatively impacted by currency fluctuations.

The Information Storage segment’s product revenues decreased 10% to $1,960 million for the three months ended March 31, 2016. This decrease was primarily driven by declines in EMC’s traditional high-end and mid- tier storage product sales as customers continue to purchase these product categories primarily to cover short- term needs as they begin to drive digital transformation of their IT infrastructures. Additionally, product revenues for the three months ended March 31, 2016 were negatively impacted by foreign currency fluctuations and higher than expected unshipped orders at March 31, 2016 as customers remained cautious about their transactional spend and placed their orders very late in the quarter. The decrease in EMC’s traditional product revenues for the three months ended March 31, 2016 was partially offset by growth in product revenues from EMC’s newer storage technologies, which include EMC’s all-flash XIO and VMAX, Isilon scale-out file, Data Domain purpose built backup appliance, Converged Infrastructure, and Software-Defined Storage products.

The Pivotal segment’s product revenues increased 72% to $27 million for the three months ended March 31, 2016 primarily due to a significant increase in subscription orders in the current and prior year for Pivotal CF and BDS which earn out over time. Pivotal is benefiting from the transition to next-generation applications by the enterprise and continues to expand the number of customers adopting Pivotal CF.

The VMware Virtual Infrastructure segment’s product revenues decreased 2% to $571 million for the three months ended March 31, 2016. The decrease in product revenues was driven by lower license sales of its core compute products and growth derived from its hybrid cloud and SaaS offerings, partially offset by increased sales in VMware’s emerging products, including NSX and vSAN, as well as VMware’s vCAN offering. Perpetual license revenues that are part of a multi-year arrangement are generally recognized upon delivery of the underlying license using the residual method, whereas revenues derived from VMware’s hybrid cloud and SaaS offerings are recognized over a period of time. Growth from VMware’s hybrid cloud and SaaS offerings have resulted in less revenue being recognized up-front which has had an adverse impact on its growth rate during the first quarter of 2016.

The RSA Information Security segment’s product revenues decreased 5% to $95 million for the three months ended March 31, 2016 resulting from declines in non-strategic products which more than offset growth in the rest of the RSA portfolio. Security remains a high customer priority and RSA is increasingly focused on the

161 rapidly growing security analytics and next generation identity management solution as well as extending its market leadership in governance, risk and compliance (“GRC”) which enables them to help customers secure their cloud-based IT environments.

The Enterprise Content Division segment’s product revenues increased 7% to $29 million for the three months ended March 31, 2016 due to growth in license sales. This business continues to innovate to meet customers’ demand for technologies that work seamlessly in mobile cloud environments.

Consolidated services revenues increased 3% to $2,793 million for the three months ended March 31, 2016. The consolidated services revenues increase was primarily driven by the Information Storage and VMware Virtual Infrastructure segments’ services revenues resulting from increased revenue associated with maintenance services.

The Information Storage segment’s services revenues were flat at $1,487 million for the three months ended March 31, 2016. Higher revenue associated with maintenance services due to a larger installed base as well as an increase in renewals associated with aforementioned customer caution on transactional spend was offset by decreased demand for professional services associated with lower product sales.

The Pivotal segment’s services revenues increased 49% to $56 million for the three months ended March 31, 2016. Services revenues increased primarily due to increases in professional services revenues resulting from continued strong demand for EMC’s Pivotal Labs services.

The VMware Virtual Infrastructure segment’s services revenues increased 9% to $1,012 million for the three months ended March 31, 2016. The increase in services revenues was primarily attributable to growth in VMware’s software maintenance revenues which benefited from renewals of software maintenance contracts sold in previous periods and additional maintenance contracts sold in conjunction with new software license sales.

The RSA Information Security segment’s services revenues decreased 10% to $133 million for the three months ended March 31, 2016. Services revenues decreased primarily due to a decrease in professional services.

The Enterprise Content Division segment’s services revenues decreased 6% to $105 million for the three months ended March 31, 2016. Services revenues decreased primarily due to a decrease in software-as-a-service and professional services.

Consolidated revenues by geography were as follows (dollars in millions):

For the Three Months Ended March 31, March 31, Percentage 2016 2015 change United States ...... $2,897 $3,013 (4)% Europe, Middle East and Africa ...... 1,537 1,559 (1)% Asia Pacific ...... 740 729 2% Latin America, Mexico and Canada ...... 301 312 (4)% Total Revenues ...... $5,475 $5,613 (2)%

Revenues decreased in the three months ended March 31, 2016 compared to the same period in 2015 in the United States, Europe, Middle East and Africa and in Latin America, Mexico and Canada. Revenues increased in the three months ended March 31, 2016 compared to the same period in 2015 in Asia Pacific and Japan.

Changes in exchange rates negatively impacted consolidated revenue growth by 2% for the three months ended March 31, 2016. Exchange rates in Europe, Middle East and Africa had the most significant impact on EMC’s consolidated growth rate. The negative impact of the changes in rates was the most significant for the Euro, British pound, Australia dollar and Brazilian real.

162 Changes in exchange rates which impacted revenue growth rates in EMC’s geographic regions include negative impacts to growth in Europe, Middle East and Africa of 3%, Asia Pacific and Japan of 2% and Latin America of 10% for the three months ended March 31, 2016.

Costs and Expenses The following table presents EMC’s costs and expenses, operating income and net income attributable to EMC (dollars in millions):

For the Three Months Ended March 31, March 31, Percentage 2016 2015 $ Change Change Cost of revenue: Information Storage ...... $1,736 $1,813 $ (77) (4)% Enterprise Content Division ...... 43 48 (5) (11)% RSA Information Security ...... 77 83 (6) (7)% Pivotal ...... 49 32 17 54% VMware Virtual Infrastructure ...... 210 199 11 5% Corporate reconciling items ...... 100 99 1 — % Total cost of revenue ...... 2,215 2,274 (59) (3)% Gross margins: Information Storage ...... 1,711 1,850 (139) (8)% Enterprise Content Division ...... 91 90 1 1% RSA Information Security ...... 151 165 (14) (8)% Pivotal ...... 34 22 12 59% VMware Virtual Infrastructure ...... 1,373 1,311 62 5% Corporate reconciling items ...... (100) (99) (1) — % Total gross margin ...... 3,260 3,339 (79) (2)% Operating expenses: Research and development(1) ...... 814 788 26 3% Selling, general and administrative(2) ...... 1,987 2,037 (50) (2)% Restructuring and acquisition-related charges ...... 49 135 (86) (64)% Total operating expenses ...... 2,850 2,960 (110) (4)% Operating income ...... 410 379 31 (8)% Investment income, interest expense and other income (expense), net ...... (24) (6) (18) 322% Income before income taxes ...... 386 373 13 3% Income tax provision ...... 89 82 7 8% Net income ...... 297 291 6 2% Less: Net income attributable to non-controlling interests ...... (29) (39) 10 (26)% Net income attributable to EMC Corporation .... $ 268 $ 252 $ 16 6%

(1) Amount includes corporate reconciling items of $119 million and $90 million for the three months ended March 31, 2016 and 2015, respectively. (2) Amount includes corporate reconciling items of $201 million and $215 million for the three months ended March 31, 2016 and 2015, respectively.

163 Gross Margins Overall EMC’s gross margin percentages remained flat at 59.5% for the three months ended March 31, 2016 and 2015. During the three months ended March 31, 2016 compared to 2015, the Information Storage segment decreased overall gross margins by 21 basis points, the RSA Information Security segment decreased overall gross margins by 3 points, and the Pivotal segment decreased overall gross margin by 9 basis points. These decreases were offset by the VMware Virtual Infrastructure segment, which increased overall gross margins by 34 basis points, and the Enterprise Content Division segment, which increased overall gross margins by 6 basis points.

The gross margin percentages for the Information Storage segment were 49.6% and 50.5% for the three months ended March 31, 2016 and 2015, respectively. The decrease in gross margin percentage for the three months ended March 31, 2016 compared to the same period in 2015 was primarily due to a decrease in product margins due to lower product volumes partially offset by an increase in services mix and services margins. Services margins increased as a result of the increase in the mix of maintenance services which have higher margins than professional services.

The gross margin percentages for the Pivotal segment were 41.2% and 40.3% for the three months ended March 31, 2016 and 2015, respectively. The increase in gross margin percentage for the three months ended March 31, 2016 compared to the same period in 2015 was primarily due to an increase in product margins and a shift in the mix of product revenue to products which have higher margins, somewhat offset by a decrease in services margins.

The gross margin percentages for the VMware Virtual Infrastructure segment were 86.7% and 86.8% for the three months ended March 31, 2016 and 2015, respectively. The slight decrease in gross margin percentage for the three months ended March 31, 2016 compared to the same period in 2015 was due to a higher mix of services revenues which have lower margins, partially offset by increases in both product and services margins year over year.

The gross margin percentages for the RSA Information Security segment were 66.4% and 66.6% for the three months ended March 31, 2016 and 2015, respectively. Gross margins decreased slightly for the three months ended March 31, 2016 compared to the same period in 2015 due to a slight decrease in services margins, somewhat offset by an increase in product margins.

The gross margin percentages for the Enterprise Content Division segment were 68.0% and 65.2% for the three months ended March 31, 2016 and 2015, respectively. The increase in gross margin percentage for the three months ended March 31, 2016 compared to the same period in 2015 was primarily driven by increases in both product and services margins.

Research and Development Research and development expenses include payroll, stock-based compensation expense and other personnel-related costs associated with product development. Also included in R&D expenses are infrastructure costs, which consist of equipment and facilities costs, and depreciation expense, intangible asset amortization and capitalized software development costs.

The following table summarizes EMC’s consolidated R&D expenses (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Research and development ...... $814 $788 $26 3% Percentage of revenue ...... 15% 14%

164 The increase in R&D expenses for the three months ended March 31, 2016 when compared to the same period in 2015 was attributable to the Pivotal business, which increased overall R&D expenses by $7 million, and the VMware Virtual Infrastructure business, which increased overall R&D expenses by $36 million. In addition, corporate reconciling items increased consolidated R&D expenses by $29 million. These increases were partially offset by the EMC Information Infrastructure business, which decreased overall R&D expenses by $46 million.

The following table summarizes R&D expenses within EMC’s Information Infrastructure business (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Research and development ...... $378 $424 $(46) (11)% Percentage of revenue ...... 10% 10%

R&D expenses within EMC’s Information Infrastructure business decreased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to decreases in personnel-related costs as well as increases in capitalized software development costs due to the timing of projects reaching technological feasibility, which reduced overall R&D expenses. Personnel-related costs decreased by $16 million for the three months ended March 31, 2016, primarily due to EMC’s cost reduction and business transformation program initiated in 2015. Capitalized software development costs increased by $30 million for the three months ended March 31, 2016.

The following table summarizes R&D expenses within the Pivotal business (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Research and development ...... $34 $27 $7 26% Percentage of revenue ...... 41% 50%

R&D expenses within the Pivotal business increased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to an increase in personnel-related costs, which are expenses driven by incremental headcount from strategic hiring and business acquisitions.

The following table summarizes R&D expenses within the VMware Virtual Infrastructure business (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Research and development ...... $283 $247 $36 15% Percentage of revenue ...... 18% 16%

R&D expenses within the VMware Virtual Infrastructure business increased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to growth in personnel-related expenses of $23 million driven by incremental growth in headcount. Additionally, depreciation and infrastructure related R&D expenses within the VMware Virtual Infrastructure business increased $7 million for the three months ended March 31, 2016.

165 The following table summarizes corporate reconciling items within R&D expenses (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Corporate Reconciling Items ...... $119 $90 $29 32%

Corporate reconciling items within R&D, which consist of stock-based compensation expense and intangible asset amortization, increased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to stock-based compensation expense, which increased by $29 million.

Selling, General and Administrative Selling expenses include payroll, sales commissions, stock-based compensation expense and other personnel-related costs associated with the marketing and sale of product offerings. Also included in selling expenses are product launch and business development costs, including travel expenses, as well as equipment and facilities costs, including the related depreciation expense and intangible asset amortization. General and administrative expenses include payroll, stock-based compensation expense and other personnel-related costs incurred to support the overall business. These expenses include costs associated with the finance, human resources, legal and other administrative functions and initiatives.

The following table summarizes EMC’s consolidated selling, general and administrative (“SG&A”) expenses (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Selling, general and administrative ...... $1,987 $2,037 $(50) (2)% Percentage of revenue ...... 36% 36%

The decrease in SG&A expenses for the three months ended March 31, 2016 when compared to the same period in 2015 was attributable to the EMC Information Infrastructure business, which decreased overall SG&A expenses by $85 million and corporate reconciling items which decreased consolidated SG&A expenses by $14 million. Partially offsetting the decreases were increases in the VMware Virtual Infrastructure business, which increased overall SG&A expenses by $40 million and the Pivotal business, which increased overall SG&A expenses by $9 million.

The following table summarizes SG&A expenses within EMC’s Information Infrastructure business (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Selling, general and administrative ...... $1,084 $1,169 $(85) (7)% Percentage of revenue ...... 29% 29%

SG&A expenses within EMC’s Information Infrastructure business decreased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to personnel-related costs which decreased by $68 million and business development costs which decreased by $10 million. These decreases were primarily due to EMC’s cost reduction and business transformation program which was initiated in 2015.

166 The following table summarizes SG&A expenses within the Pivotal business (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Selling, general and administrative ...... $58 $49 $9 17% Percentage of revenue ...... 70% 92%

SG&A expenses within the Pivotal business increased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to an increase of $9 million in personnel-related costs, which are expenses driven by incremental headcount from strategic hiring and business acquisitions. Pivotal continues to build out its go-to-market capabilities as it grows its business.

The following table summarizes SG&A expenses within the VMware Virtual Infrastructure business (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Selling, general and administrative ...... $644 $604 $40 7% Percentage of revenue ...... 41% 40%

SG&A expenses within the VMware Virtual Infrastructure business increased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to growth in personnel-related costs of $26 million due to incremental growth in headcount. Additionally, infrastructure and depreciation costs increased by $13 million for the three months ended March 31, 2016.

The following table summarizes corporate reconciling items within SG&A expenses (dollars in millions):

Three Months Ended March 31, March 31, 2016 2015 $ Change % Change Corporate Reconciling Items ...... $201 $215 $(14) (7)%

Corporate reconciling items within SG&A, which consist of stock-based compensation, intangible asset amortization, acquisition and other related charges and merger-related costs, decreased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to a decrease in acquisition and other related charges of $29 million due to the decreases in installment payments to certain key employees of AirWatch. In addition, intangible asset amortization decreased by $8 million. Partially offsetting these decreases was an increase in stock-based compensation of $27 million and an increase in merger-related costs of $7 million.

Restructuring and Acquisition-Related Charges For the three months ended March 31, 2016 and 2015, EMC incurred restructuring and acquisition-related charges of $49 million and $135 million, respectively. For the three months ended March 31, 2016, EMC incurred a $5 million credit related to EMC’s prior restructuring programs. For the three months ended March 31, 2016, VMware incurred $53 million of restructuring charges, primarily related to its current year restructuring program, and $1 million of charges in connection with acquisitions for financial, advisory, legal and accounting services.

For the three months ended March 31, 2015, EMC incurred $111 million of restructuring charges, primarily related to EMC’s 2015 restructuring programs, and $1 million of charges in connection with acquisitions for

167 financial, advisory, legal and accounting services. For the three months ended March 31, 2015, VMware incurred $22 million of restructuring charges, primarily related to its 2015 restructuring programs, and $1 million of charges in connection with acquisitions for financial, advisory, legal and accounting services.

In the first quarter of 2016, EMC did not commence any new restructuring programs. In the first quarter of 2016, VMware approved a plan to streamline its operations, with plans to reinvest the associated savings in field, technical and support resources associated with growth products. As a result, approximately 800 positions at VMware were eliminated during the three months ended March 31, 2016. All actions relating to VMware’s plan are expected to be completed within a year of the start of the program.

In the first quarter of 2015, EMC implemented restructuring programs to create further operational efficiencies which resulted in a workforce reduction of approximately 1,320 positions. The actions impacted positions around the globe covering EMC’s Information Storage, RSA Information Security and Enterprise Content Division segments. All of these actions were completed within a year of the start of the program. In the first quarter of 2015, VMware eliminated approximately 350 positions across all major functional groups and geographies to streamline its operations. All of these actions were completed within a year of the start of the program.

For the three months ended March 31, 2016 and 2015, EMC recognized $5 million and $6 million, respectively, of lease termination costs for facilities vacated in the period in accordance with EMC’s plan as part of all of EMC’s restructuring programs and for costs associated with terminating other contractual obligations. These accruals are expected to be utilized by the end of 2018.

Investment Income Investment income was $13 million and $24 million for the three months ended March 31, 2016 and 2015, respectively. Investment income decreased for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to an increase in net realized losses.

For the three months ended March 31, 2016 and 2015, interest income was $28 million and $25 million, respectively, and net realized losses were $16 million and $2 million, respectively.

Interest Expense Interest expense was $41 million and $40 million for the three months ended March 31, 2016 and 2015, respectively. Interest expense during the three months ended March 31, 2016 and 2015 consists primarily of interest on the $5.5 billion aggregate principal amount of senior notes (collectively, the “EMC Notes”), which EMC issued in June 2013.

Other Income Other income was $4 million and $10 million for the three months ended March 31, 2016 and 2015, respectively. Other income primarily consists of net gains and losses on strategic investments and foreign exchange gains and losses.

During the three months ended March 31, 2016, EMC recognized net gains from strategic investments of $5 million and foreign currency exchange gains of $11 million. Offsetting these gains was an $18 million foreign currency exchange loss related to the re-measurement of assets and liabilities of EMC’s Venezuela subsidiary in connection with the Venezuela currency devaluation. During the three months ended March 31, 2015, EMC recognized net gains from strategic investments of $20 million which were partially offset by foreign currency exchange losses of $10 million.

168 Provision for Income Taxes EMC’s effective income tax rates were 23.1% and 22.0% for the three months ended March 31, 2016 and 2015, respectively. EMC’s effective income tax rate is based upon estimated income before provision for income taxes for the year, composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for potential tax consequences, benefits and/or resolutions of tax audits or other tax contingencies. For the three months ended March 31, 2016, the effective income tax rate varied from the statutory income tax rate principally as a result of the mix of income attributable to foreign versus domestic jurisdictions and federal tax credit for increasing research activities. EMC’s aggregate income tax rate in foreign jurisdictions is lower than EMC’s income tax rate in the United States; substantially all of EMC’s income before provision for income taxes from foreign operations has been earned by its Irish subsidiaries. For the three months ended March 31, 2015, the effective income tax rate varied from the statutory income tax rate principally as a result of the mix of income attributable to foreign versus domestic jurisdictions. On December 18, 2015, the Consolidated Appropriations Act, 2016 was signed into law. Some of the provisions were retroactive to January 1, 2015 including a permanent extension of the U.S. federal tax credit for increasing research activities.

EMC’s effective income tax rate increased in the three months ended March 31, 2016 from the three months ended March 31, 2015 due primarily to higher state taxes. There were also differences in the mix of income attributable to foreign versus domestic jurisdictions, change in tax contingency reserves and discrete items, the net impact of which is immaterial.

EMC is routinely under audit by the Internal Revenue Service (the “IRS”). EMC has concluded all U.S. federal income tax matters for years through 2008. In the third quarter of 2012, the IRS commenced a federal income tax audit for the tax years 2009 and 2010. The IRS completed their field audit for the tax years 2009 and 2010 and issued Revenue Agent Reports (“RARs”) in the first quarter of 2016. EMC disagrees with certain proposed adjustments and has filed a formal protest to the IRS Appeals Office. In the first quarter of 2015, the IRS commenced a federal income tax audit for the tax year 2011, which is still ongoing. EMC also has income tax audits in process in numerous state, local and international jurisdictions. In EMC’s international jurisdictions that comprise a significant portion of its operations, the years that may be examined vary, with the earliest year being 2004. Based on the timing and outcome of examinations of EMC, the result of the expiration of statutes of limitations for specific jurisdictions or the timing and result of ruling requests from taxing authorities, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in EMC’s consolidated balance sheets. EMC anticipates that several of these audits may be finalized within the next twelve months. While EMC expects the amount of unrecognized tax benefits to change in the next twelve months, EMC does not expect the change to have a significant impact on its consolidated results of operations or financial position.

EMC’s effective income tax rate for the remainder of 2016 may be affected by such factors as changes in tax laws, regulations or income tax rates, changing interpretation of existing laws or regulations, the impact of accounting for stock-based compensation, the impact of accounting for business combinations, changes in EMC’s international organization, and changes in overall levels of income before provision for income taxes. EMC’s effective income tax rate may also be adversely affected by earnings being lower than anticipated in countries where it has lower statutory income tax rates and higher than anticipated in countries where it has higher statutory income tax rates.

Non-controlling Interests The net income attributable to the non-controlling interests was $29 million and $39 million for the three months ended March 31, 2016 and 2015, respectively. The net income attributable to the non-controlling interest in VMware was $30 million and $39 million for the three months ended March 31, 2016 and 2015, respectively. The decrease in the three months ended March 31, 2016 compared to the same period in 2015 was due to decreases in VMware’s reported net income. VMware’s reported net income was $161 million and $196 million

169 for the three months ended March 31, 2016 and 2015, respectively. The weighted average non-controlling interest in VMware was approximately 19% and 20% for the three months ended March 31, 2016 and 2015, respectively. EMC did not purchase any shares of VMware common stock during the three months ended March 31, 2016.

Year Ended December 31, 2015 Compared with Year Ended December 31, 2014 and Year Ended December 31, 2014 Compared with Year Ended December 31, 2013 Revenues The following table presents total revenue by EMC’s segments (dollars in millions):

For the Twelve Months Ended Percentage Change 2015 2014 2013 2015 vs 2014 2014 vs 2013 Information Storage ...... $16,301 $16,542 $16,262 (1)% 2% Enterprise Content Division ...... 599 640 647 (6)% (1)% RSA Information Security ...... 988 1,035 987 (5)% 5% Pivotal ...... 267 227 179 18% 27% VMware Virtual Infrastructure ...... 6,625 5,996 5,147 10% 16% Corporate Reconciling Items ...... (76) — — 100% — % Total consolidated revenues ...... $24,704 $24,440 $23,222 1% 5%

Consolidated product revenues decreased 4% to $13,514 million in 2015. The decrease was primarily driven by the decrease in product revenue in the Information Storage segment. EMC’s business continues to be impacted by the rapidly changing IT macro environment where its customers are changing their buying patterns and needs. During 2015, EMC’s business was also negatively impacted by economic trends in emerging markets including the Middle East, Russia and China as well as significant foreign currency fluctuations. Consolidated product revenues increased 3% to $14,051 million in 2014. Despite a challenging and rapidly changing IT environment and the impact of foreign currency fluctuations, EMC demonstrated solid performance across its major segments within its federation of businesses. The growth was driven by continued demand for EMC’s leading portfolio of offerings that help customers optimize their existing infrastructures and build new ones that take advantage of opportunities created by cloud, mobile, social and Big Data.

The Information Storage segment’s product revenues decreased 5% to $10,200 million in 2015. The decrease was driven by its traditional storage high-end and Unified and Backup Recovery product sales as customers continue to purchase these product categories primarily to cover short-term needs as they begin to drive digital transformation of their IT infrastructures. High-end and Unified and Backup Recovery product sales were also negatively impacted by increased pressure related to these business product cycles. Additionally, revenues were impacted by the negative impact of foreign currency fluctuations. These decreases were partially offset by an increase in Emerging Storage product revenue, primarily due to increased demand for XtremIO, Isilon and Software-Defined-Storage. XtremIO experienced triple-digit growth in the year ended December 31, 2015, maintaining its lead in the all-flash-array market segment. Isilon continued to gain traction in Big Data analytics running Hadoop workloads as well as the release of software-only versions and EMC’s Software- Defined-Storage portfolio that includes ViPR, Elastic Cloud Storage and ScaleIO continued to add new customers. The decrease in Information Storage product revenues was also partially offset as a result of the consolidation of VCE, which continues to grow considerably faster than the infrastructure market in general. The Information Storage segment’s product revenues increased slightly to $10,785 million in 2014 as EMC invested heavily in key technologies and innovations across all businesses. Revenue from the Emerging Storage business increased 52% for 2014 with notably strong growth for EMC XtremIO and EMC ViPR. EMC XtremIO secured the lead in the all-flash array market segment in its first year in the market. Additionally, Isilon revenue growth in 2014 accelerated, benefiting from growing demand for true scale-out systems and for Big Data analytics where

170 EMC Isilon Hadoop capabilities offer advantages in ease of use and total cost of ownership. Revenue from the Unified and Backup Recovery business increased 4% in 2014 primarily driven by growth generated from both EMC’s VNX and Data Domain offerings. Revenue from the high-end storage business, which includes revenues from EMC VMAX, decreased 13% due to an overall slow-down in the high-end market as many new customers invested in third platform applications which are better suited for alternative architectures that EMC also offers in its product portfolio. In addition, there was a pause in purchasing in anticipation of the new VMAX high-end storage system which became generally available at the end of the third quarter. Despite this, the transition to the new EMC VMAX 3 occurred at the pace EMC expected, representing about 30% of the new systems sold in the fourth quarter of 2014.

The Pivotal segment’s product revenues increased 34% to $87 million in 2015 due to a significant increase in subscription orders for Pivotal Cloud Foundry and Pivotal Big Data Suite, partially offset by a decrease in up- front license revenue. Pivotal is benefiting from the transition to next-gen applications by the enterprise and continues to expand the number of customers adopting Pivotal Cloud Foundry. The Pivotal segment’s product revenues decreased 3% to $65 million in 2014. The decrease was primarily attributable to an increase in license orders for Pivotal Cloud Foundry and Pivotal Big Data Suite, which have subscription-based, ratable revenue recognition rather than up-front revenue recognition. As a result, Pivotal’s product revenue decline did not reflect the strong growth in demand compared to the prior year. Pivotal benefited from the transition to next-gen applications by the enterprise and expanded the number of customers adopting Pivotal Cloud Foundry and Pivotal Big Data Suite.

The VMware Virtual Infrastructure segment’s product revenues increased 6% to $2,723 million in 2015. VMware’s license revenues increased during the year ended December 31, 2015 primarily due to increased sales from its emerging product offerings including VMware NSX, AirWatch mobile solutions and vSphere with Operations Management as well as revenues from its hybrid cloud offerings. Product revenues also benefited from a decrease in year over year deferred revenue balances. Partially offsetting these increases was the negative impact of certain factors including lower product sales of VMware’s core compute products, changes in foreign currency fluctuations and increased growth derived from its hybrid cloud and SaaS offerings for which revenue is recognized over time. Growth from its hybrid cloud and SaaS offerings has resulted in less revenue being recognized up-front, which has had an adverse impact on its growth rate during 2015. The VMware Virtual Infrastructure segment’s product revenues increased 14% to $2,575 million in 2014. VMware’s license revenues increased in 2014 primarily due to increased sales of integrated product suites, including VMware vCloud Suite and vSphere with Operations Management. Customers continued to transition to purchasing suite solutions rather than products such as vSphere that are sold on a standalone basis. Integrated product suites include various product offerings and are generally sold at a higher price than products that are sold on an individual basis. Additionally, revenue from VMware’s network virtualization solution, VMware NSX, as well as its end-user computing products, including AirWatch mobile solutions, also contributed to the increase in license revenues.

The RSA Information Security segment’s product revenues decreased 8% to $424 million in 2015 resulting from declines in non-strategic products which more than offset growth from products in RSA’s growth portfolio. The RSA Information Security segment’s product revenues increased 2% to $462 million in 2014. The increase in product revenue was driven by growth in both EMC’s Identity and Data Protection and Security Management and Compliance businesses. Security remains a high customer priority and RSA is increasingly focused on the rapidly growing security analytics and next generation identity management solution as well as extending its market leadership in GRC, which enables them to help customers secure their cloud-based IT environments.

The Enterprise Content Division segment’s product revenues decreased 5% to $156 million in 2015. The decrease during the year ended December 31, 2015 was primarily due to the timing of revenue recognition due to the increase in subscription-based offerings with ratable revenue recognition, partially offset by increased license sales during the second and third quarters. The Enterprise Content Division segment’s product revenues decreased 9% to $164 million in 2014. The year-over-year decrease in product revenues was primarily due to the timing of revenue recognition due to the increase in subscription-based offerings with ratable revenue recognition

171 such as Syncplicity. As a result of the rapid growth of EMC’s Syncplicity offering, its revenue doubled for the three months ended December 31, 2014 and for the full year. This business continues to innovate to meet customers’ demand for technologies that work seamlessly in mobile cloud environments.

Included in EMC’s 2015 consolidated product revenues is the VMware GSA settlement charge. During the second quarter of 2015, VMware reached an agreement with the Department of Justice and the General Services Administration (“GSA”) to pay $76 million to resolve allegations that VMware’s government sales practices between 2006 and 2013 had violated the federal False Claims Act. The settlement was paid and recorded as a reduction to product revenues during the year ended December 31, 2015 and included in corporate reconciling items as noted above.

Consolidated services revenues increased 8% to $11,190 million in 2015. The consolidated services revenues increases were primarily driven by the Information Storage and VMware Virtual Infrastructure segments’ services revenues resulting from increased revenue associated with maintenance services and increased demand for VMware professional services due to growth in its license sales across its three product groups, including its newer products. Consolidated services revenues increased 9% to $10,389 million in 2014. The consolidated services revenues increase was primarily driven by the Information Storage and VMware Virtual Infrastructure segments’ services revenues resulting from increased revenue associated with maintenance services and increased demand for professional services due to an increased focus on delivering business outcomes, as well as from its role in assembling cross-federation solutions.

The Information Storage segment’s services revenues increased 6% to $6,101 million in 2015 and increased 4% to $5,757 million in 2014. The increase in services revenues was primarily attributable to higher revenue associated with maintenance services due to a larger installed base as well as an increase in renewals associated with aforementioned customer caution on transactional spend. EMC has experienced a growing demand for professional services as it assists with customers’ transitions to cloud architectures, transforming IT infrastructures and virtualizing mission-critical applications.

The Pivotal segment’s services revenues increased 11% to $180 million in 2015 due to increases in professional services revenues resulting from continued strong demand for its Pivotal Labs agile development services. The Pivotal segment’s services revenues increased 44% to $162 million in 2014. The increase in services revenues was primarily attributable to higher professional services as Pivotal transitions to enterprise customers, with their renewed focus on agile development and services surrounding their Pivotal One and Pivotal CF platforms.

The VMware Virtual Infrastructure segment’s services revenues increased 14% to $3,902 million in 2015 and increased 18% to $3,421 million in 2014. The increase in services revenues was primarily attributable to growth in VMware’s software maintenance revenues which benefited from renewals of its software maintenance contracts sold in previous periods and additional maintenance contracts sold in conjunction with new software license sales. In addition, professional services increased due to growth in VMware’s license sales across its three product groups, including its newer products, resulting in increased demand for implementation and training services.

The RSA Information Security segment’s services revenues decreased 2% to $564 million in 2015 primarily due to decreases in professional services revenues related to the overall decline in product revenue as the business focuses on its growth portfolio, somewhat offset by increases in maintenance revenues, resulting from continued demand for support from EMC’s installed base. The RSA Information Security segment’s services revenues increased 7% to $573 million in 2014. Services revenues increased due to increases in both maintenance revenues, resulting from continued demand for support from EMC’s installed base and professional services.

The Enterprise Content Division segment’s services revenues decreased 7% to $443 million in 2015. Services revenues decreased due to decreases in both maintenance and professional services. The Enterprise

172 Content Division segment’s services revenues increased 2% to $476 million in 2014. The increase in services revenues was due to continued demand for support from EMC’s installed base and increased customer demand for services related to new product offerings and strategic professional services.

Consolidated revenues by geography were as follows (dollars in millions):

Percentage change 2015 2014 2013 2015 vs 2014 2014 vs 2013 United States ...... $13,361 $12,835 $12,230 4% 5% Europe, Middle East and Africa ...... 6,845 6,981 6,355 (2)% 10% Asia Pacific ...... 3,157 3,191 3,193 (1)% — % Latin America, Mexico and Canada ...... 1,341 1,433 1,444 (6)% (1)% Total Revenues ...... $24,704 $24,440 $23,222 1% 5%

Revenues increased in 2015 compared to 2014 in EMC’s United States market due to greater demand for EMC’s products and services offerings. Revenues decreased in EMC’s Europe, Middle East and Africa, Asia Pacific and Latin America, Mexico and Canada markets.

Revenues increased in 2014 compared to 2013 in all of EMC’s markets except for Asia Pacific, which stayed flat, and Latin America, Mexico and Canada, which declined slightly.

Changes in exchange rates negatively impacted the consolidated revenue growth by 4% in 2015 compared to 2014. Changes in exchange rates which impacted consolidated revenue include the negative impacts to growth in Europe, Middle East and Africa of 9%, Asia Pacific and Japan of 6% and Latin America of 11%. The negative impact of the change in rates was most significant for the euro, Australian dollar, Brazilian real, British pound and Japanese Yen. Changes in exchange rates negatively impacted the consolidated revenue growth by 1% in 2014 compared to 2013. The impact of the change in rates was most significant in the Asia Pacific markets, primarily Australia and Japan, and Brazil, partially offset by the United Kingdom.

173 Costs and Expenses The following table presents EMC’s costs and expenses, operating income and net income attributable to EMC (dollars in millions):

Percentage Change 2015 2014 2013 2015 vs 2014 2014 vs 2013 Cost of revenue: Information Storage ...... $ 7,783 $ 7,362 $ 7,153 6% 3% Enterprise Content Division ...... 192 223 228 (14)% (2)% RSA Information Security ...... 328 337 332 (3)% 2% Pivotal ...... 163 121 88 34% 38% VMware Virtual Infrastructure ...... 845 755 558 12% 35% Corporate reconciling items ...... 402 393 390 2% 1% Total cost of revenue ...... 9,713 9,191 8,749 6% 5% Gross margins: Information Storage ...... 8,518 9,180 9,109 (7)% 1% Enterprise Content Division ...... 407 417 419 (2)% — % RSA Information Security ...... 660 698 655 (5)% 6% Pivotal ...... 104 106 91 (1)% 16% VMware Virtual Infrastructure ...... 5,780 5,241 4,589 10% 14% Corporate reconciling items ...... (478) (393) (390) 22% 1% Total gross margin ...... 14,991 15,249 14,473 (2)% 5% Operating expenses: Research and development(1) ...... 3,167 2,991 2,761 6% 8% Selling, general and administrative(2) ...... 8,533 7,982 7,338 7% 9% Restructuring and acquisition-related charges ...... 450 239 224 88% 7% Total operating expenses ...... 12,150 11,212 10,323 8% 9% Operating income ...... 2,841 4,037 4,150 (30)% (3)% Investment income, interest expense and other income (expense), net ...... 41 (275) (285) (115)% (4)% Income before income taxes ...... 2,882 3,762 3,865 (23)% (3)% Income tax provision ...... 710 868 772 (18)% 12% Net income ...... 2,172 2,894 3,093 (25)% (6)% Less: Net income attributable to non-controlling interests ...... (182) (180) (204) 1% (12)% Net income attributable to EMC Corporation ..... $ 1,990 $ 2,714 $ 2,889 (27)% (6)%

(1) Amount includes corporate reconciling items of $399 million, $387 million and $365 million for the years ended December 31, 2015, 2014 and 2013, respectively. (2) Amount includes corporate reconciling items of $877 million, $826 million and $603 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Gross Margins EMC’s gross margin percentages were 60.7%, 62.4% and 62.3% in 2015, 2014 and 2013, respectively. The decrease in the gross margin percentage in 2015 compared to 2014 was largely attributable to the Information Storage segment, which decreased overall gross margins by 208 basis points, the RSA Information Security segment, which decreased overall gross margins by 2 basis points, and the Pivotal segment, which decreased overall gross margins by 11 basis points. These decreases were partially offset by the VMware Virtual

174 Infrastructure segment, which increased overall gross margins by 60 basis points, and the Enterprise Content Division segment, which increased overall gross margins by 6 basis points. The increase in corporate reconciling items, consisting of stock-based compensation, acquisition-related intangible asset amortization and the VMware GSA settlement charge, decreased the consolidated gross margin percentage by 15 basis points. The increase in the gross margin percentage in 2014 compared to 2013 was attributable to the VMware Virtual Infrastructure segment, which increased overall gross margins by 51 basis points, the RSA Information Security segment, which increased overall gross margins by 5 basis points, and the Enterprise Content Division segment, which increased overall gross margins by 1 basis point; these increases were largely offset by the Information Storage segment, which decreased overall gross margins by 43 basis points, and the Pivotal segment, which decreased overall gross margins by 6 basis points. The increase in corporate reconciling items, consisting of stock-based compensation and acquisition-related intangible asset amortization, decreased the consolidated gross margin percentage by 1 basis point.

For segment reporting purposes, stock-based compensation, acquisition and other related intangible asset amortization are recognized as corporate expenses in cost of revenues and are not allocated among EMC’s various operating segments. The increase of $9 million in the corporate reconciling items in 2015 was attributable to a $10 million increase in stock-based compensation expense driven by incremental growth in headcount, both organic and through the Virtustream acquisition offset by a $1 million decrease in intangible asset amortization expense. The increase of $3 million in the corporate reconciling items in 2014 was attributable to a $22 million increase in stock-based compensation expense driven by incremental growth in headcount, both organic and through acquisitions including AirWatch and DSSD and a $15 million increase in intangible asset amortization expense due to a larger intangible asset balance resulting from business acquisitions, partially offset by a $34 million decrease in amortization of VMware’s capitalized software from prior periods due to the capitalized balance being fully amortized in 2013.

The gross margin percentages for the Information Storage segment were 52.3%, 55.5% and 56.0% in 2015, 2014 and 2013, respectively. The decrease in gross margin percentage in 2015 compared to 2014 was primarily due to the consolidation of VCE and foreign currency impacts to revenue that do not impact costs in the same manner, as the Information Storage segment’s costs of sales tend to have less exposure to currency volatility. In addition, there were lower product volumes during 2015 compared to 2014. These decreases were partially offset by an increase in the mix of services revenues which have higher gross margins. The decrease in gross margin percentage in 2014 compared to 2013 was primarily due to a decrease in product margins during the first half of 2014. The decrease in product margins was primarily due to lower sales volume without a corresponding decrease in fixed costs and pricing pressures on EMC’s high-end storage products.

The gross margin percentages for the Pivotal segment were 39.0%, 46.5% and 50.7% in 2015, 2014 and 2013, respectively. The decrease in gross margin percentage in 2015 compared to 2014 and 2014 compared to 2013 was primarily due to a shift from perpetual-based sales to subscription sales, which resulted in an increase in the revenue mix of services. In addition, during 2015, costs of services revenues were higher than the comparable period in the prior year primarily due to costs incurred related to the expansion of EMC’s Pivotal Labs offices.

The gross margin percentages for the VMware Virtual Infrastructure segment were 87.3%, 87.4% and 89.2% in 2015, 2014 and 2013, respectively. The slight decrease in gross margin percentage in 2015 compared to 2014 was primarily attributable to a higher mix of services revenues which have lower margins. Costs of services revenues were higher than the comparable period in the prior year primarily due to employee-related expenses resulting from organic growth in headcount. Also contributing to the decrease in margin was the growth in its SaaS and professional services offerings which led to an increase in professional services costs. These decreases were mostly offset by increases in product margins driven by a decrease in royalty costs. The decrease in gross margin percentage in 2014 compared to 2013 was primarily attributable to a decrease in service margins driven by the investment in growth and in its SaaS and professional service offerings, which led to higher costs.

175 The gross margin percentages for the RSA Information Security segment were 66.8%, 67.4% and 66.4% in 2015, 2014 and 2013, respectively. The decrease in the gross margin percentage in 2015 compared to 2014 was primarily due to lower product margins. The increase in gross margin percentage in 2014 compared to 2013 was primarily due to higher product margins somewhat offset by a decline in service margins.

The gross margin percentages for the Enterprise Content Division segment were 67.9%, 65.2% and 64.8% in 2015, 2014 and 2013, respectively. The increase in gross margin percentage in 2015 compared to 2014 was attributable to higher support services revenues and margins as well as increases in product margins. The increase in gross margin percentage in 2014 compared to 2013 was attributable to an increase in services margins.

Research and Development Research and development expenses include payroll, stock-based compensation expense and other personnel-related costs associated with product development. Also included in R&D expenses are infrastructure costs, which consist of equipment and material costs, facilities-related costs, depreciation expense, intangible asset amortization and capitalized software development costs.

The following table summarizes EMC’s consolidated R&D expenses (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Research and development ...... $3,167 $2,991 $2,761 $176 6% $230 8% Percentage of revenue ...... 13% 12% 12%

The increase in R&D expenses in 2015 compared to 2014 was attributable to the EMC Information Infrastructure business, which increased overall R&D expenses by $104 million and the VMware Virtual Infrastructure business, which increased overall R&D expenses by $79 million. In addition, corporate reconciling items increased consolidated R&D expenses by $12 million. These increases were partially offset by the Pivotal business, which decreased overall R&D expenses by $19 million.

The increase in R&D expenses in 2014 compared to 2013 was attributable to the EMC Information Infrastructure business, which increased overall R&D expenses by $28 million, the Pivotal business, which increased overall R&D expenses by $19 million, and the VMware Virtual Infrastructure business, which increased overall R&D expenses by $161 million. In addition, corporate reconciling items increased consolidated R&D expenses by $22 million.

The following table summarizes R&D expenses within EMC’s Information Infrastructure business (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Research and development ...... $1,593 $1,489 $1,461 $104 7% $28 2% Percentage of revenue ...... 9% 8% 8%

R&D expenses increased $104 million in 2015 primarily due to increases in personnel-related costs, which are expenses driven by incremental headcount from strategic hiring and business acquisitions, depreciation expense and infrastructure costs. Personnel-related costs increased by $80 million primarily due to the consolidation of VCE, the acquisition of Virtustream and increased investments in EMC’s Emerging Storage business, partially offset by decreases in its traditional storage businesses. Depreciation expense also increased by $34 million and infrastructure costs increased by $38 million as EMC continues to develop product software and service offerings. Somewhat offsetting these increased costs were higher capitalized software development costs of $62 million, primarily due to the timing of products reaching technological feasibility.

176 R&D expenses increased $28 million in 2014 primarily due to increases in personnel-related costs, which are expenses driven by incremental headcount from strategic hiring and business acquisitions, material costs and depreciation expense. Personnel-related costs increased by $35 million, material costs increased by $27 million and depreciation expense increased by $19 million. Somewhat offsetting these increased costs was an increase in the capitalization of software development costs of $51 million, primarily due to the timing of products reaching technological feasibility.

The following table summarizes R&D expenses within the Pivotal business (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Research and development ...... $109 $128 $109 $(19) (15)% $19 17% Percentage of revenue ...... 41% 56% 61%

R&D expenses decreased $19 million in 2015, primarily due to personnel-related costs, which decreased by $20 million in 2015 as the business continues to transition away from non-strategic offerings. R&D expenses increased $19 million in 2014, primarily due to personnel-related costs of $4 million, driven by incremental headcount from strategic hiring, and a decrease in capitalized software development costs of $9 million.

The following table summarizes R&D expenses within the VMware Virtual Infrastructure business (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Research and development ...... $1,066 $987 $826 $79 8% $161 19% Percentage of revenue ...... 16% 16% 16%

R&D expenses within the VMware Virtual Infrastructure business increased $79 million in 2015 primarily due to increased personnel-related costs of $76 million driven by incremental headcount as well as increased infrastructure and depreciation costs of $6 million. These increased costs were partially offset by the favorable impact from fluctuations in the exchange rate between the U.S. dollar and foreign currencies in which EMC incurs expenses. R&D expenses increased $161 million in 2014 primarily due to increased personnel-related costs of $131 million driven by incremental headcount from strategic hiring and acquisitions as well as increased depreciation costs of $22 million.

The following table summarizes corporate reconciling items within R&D expenses (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Corporate Reconciling Items ...... $399 $387 $365 $12 3% $22 6%

Corporate reconciling items within R&D consist of stock-based compensation expense and intangible asset amortization. During 2015, corporate reconciling items within R&D increased primarily due to stock-based compensation expense, which increased by $12 million due to the supplemental 401(k) matching contribution EMC instituted during 2015. During 2014, corporate reconciling items within R&D increased $22 million primarily due to stock-based compensation expense which increased $25 million primarily due to the issuance of restricted stock and stock options in connection with acquisitions including AirWatch and DSSD.

177 expenses are product launch and business development costs, including travel expenses, as well as equipment and facilities costs, including the rental depreciation expense and intangible asset amortization. General and administrative expenses include payroll, stock-based compensation expense and other personnel-related costs incurred to support the overall business. These expenses include costs associated with the finance, human resources, legal and other administrative functions and initiatives.

The following table summarizes EMC’s consolidated selling, general and administrative (“SG&A”) expenses (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Selling, general and administrative ..... $8,533 $7,982 $7,338 $551 7% $644 9% Percentage of revenue ...... 35% 33% 32%

The increase in SG&A expenses in 2015 compared to 2014 was attributable to the Information Infrastructure business, which increased overall SG&A expenses by $251 million, the Pivotal business, which increased overall SG&A expenses by $33 million, and the VMware Virtual Infrastructure business, which increased overall SG&A expenses by $216 million. In addition, corporate reconciling items increased consolidated SG&A expenses by $51 million.

The increase in SG&A expenses in 2014 compared to 2013 was attributable to the Information Infrastructure business, which increased overall SG&A expenses by $12 million, the Pivotal business, which increased overall SG&A expenses by $22 million, and the VMware Virtual Infrastructure business, which increased overall SG&A expenses by $387 million. In addition, corporate reconciling items increased consolidated SG&A expenses by $223 million.

The following table summarizes SG&A expenses within EMC’s Information Infrastructure business (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Selling, general and administrative ..... $4,834 $4,583 $4,571 $251 6% $12 — % Percentage of revenue ...... 27% 25% 26%

SG&A expenses increased $251 million in 2015 primarily due to increases in personnel-related costs and infrastructure costs. Personnel-related costs increased by $250 million driven by incremental headcount from strategic hiring and business acquisitions. Infrastructure costs increased by $10 million, primarily due to the consolidation of VCE, the acquisition of Virtustream and increased investments in EMC’s Emerging Storage business, partially offset by decreases in its traditional storage businesses. Partially offsetting the increased costs was a decrease in business development costs of $12 million in 2015.

SG&A expenses increased $12 million in 2014 primarily due to increases in personnel-related costs of $21 million and depreciation expense of $16 million. These increases were partially offset by a decrease in travel related costs of $29 million due to controlled discretionary spending.

The following table summarizes SG&A expenses within the Pivotal business (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Selling, general and administrative ...... $216 $183 $161 $33 18% $22 14% Percentage of revenue ...... 81% 81% 90%

178 SG&A expenses increased $33 million in 2015 primarily due to increases in personnel-related costs of $20 million and business development costs of $4 million in 2015 as the business continues to build out its go-to- market capabilities. SG&A expenses increased $22 million in 2014 primarily due to increases in personnel- related costs of $14 million as the business continued to transition to its new strategic focus.

The following table summarizes SG&A expenses within the VMware Virtual Infrastructure business (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Selling, general and administrative ..... $2,606 $2,390 $2,003 $216 9% $387 19% Percentage of revenue ...... 39% 40% 39%

SG&A expenses within the VMware Virtual Infrastructure business increased $216 million in 2015 primarily due to growth in personnel-related expenses of $117 million, due to incremental headcount. Infrastructure and depreciation costs increased by $55 million and business development costs increased by $13 million. In addition, professional services costs increased $18 million. These increased costs were partially offset by the favorable impact from fluctuations in the exchange rate between the U.S. dollar and foreign currencies in which EMC incurs expenses.

SG&A expenses increased by $387 million in 2014 primarily due to growth in personnel-related expenses of $280 million driven by incremental headcount from strategic hiring and acquisitions as well as compensation expense relating to specified future employment conditions of certain key AirWatch employees. In addition, there were increases to both business development costs of $29 million and infrastructure costs of $41 million.

The following table summarizes corporate reconciling items within SG&A expenses (dollars in millions):

Year Ended December 31, 2015 vs 2014 2014 vs 2013 2015 2014 2013 $ Change % Change $ Change % Change Corporate Reconciling Items ...... $877 $826 $603 $51 6% $223 37%

Corporate reconciling items within SG&A, which consist of stock-based compensation, intangible asset amortization and acquisition and other related charges, increased $51 million in 2015, which was primarily due to an increase in stock-based compensation of $50 million. This increase relates primarily to the supplemental 401(k) matching contribution EMC instituted during 2015 as well as the consolidation of VCE.

During 2014, corporate reconciling items within SG&A increased $223 million primarily due to acquisition and other related costs relating to the specified future employment conditions of AirWatch and DSSD employees, which increased $173 million. Also contributing to this increase was stock-based compensation expense, which increased by $38 million, and VMware litigation and other contingencies of $11 million. The increase in stock- based compensation expense in 2014 was primarily driven by the issuance of restricted stock in connection with VMware’s acquisition of AirWatch and EMC’s acquisition of DSSD.

Restructuring and Acquisition-Related Charges During 2015, EMC initiated a cost reduction and business transformation program to better align its expenses and improve the operations of its federation of businesses. In 2015, as part of the previously announced program to reduce EMC’s existing cost base by $800 million annually, and consistent with prior restructuring actions to keep pace with changes in the industry, EMC approved a restructuring plan which is in advanced stages of implementation and is expected to be fully actioned this year. The total charge resulting from this plan is expected to be approximately $250 million, with total cash payments associated with the plan expected to be $220 million. Charges related to this restructuring action are included in the 2015 charges discussed below.

179 On January 22, 2016, VMware approved, subject to compliance with all applicable local legal obligations, a plan to streamline its operations, with plans to reinvest the associated savings in field, technical and support resources associated with growth products. The total charge resulting from this plan is estimated to be between $55 million and $65 million, consisting principally of employee-related charges to be paid in cash for the elimination of approximately 800 positions and personnel which are expected to be completed by June 30, 2016.

In 2015, 2014 and 2013, EMC incurred restructuring and acquisition-related charges of $450 million, $239 million and $224 million, respectively. In 2015, EMC incurred $420 million of restructuring charges, primarily related to its current year restructuring programs, and $4 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. In 2014, EMC incurred $210 million of restructuring charges, primarily related to its 2014 restructuring programs, and $6 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. In 2013, EMC incurred $139 million of restructuring charges, primarily related to its 2013 restructuring program, and $8 million of charges in connection with acquisitions for financial, advisory, legal and accounting services.

In 2015, VMware incurred $23 million of restructuring charges related to workforce reductions as part of its current year restructuring program and $3 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. In 2014, VMware incurred $18 million of restructuring charges related to workforce reductions as part of its current year restructuring program and $7 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. In 2013, VMware incurred $54 million of restructuring charges related to workforce reductions as part of its 2013 restructuring program and $5 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. In addition, VMware incurred a benefit of $2 million and a charge of $18 million primarily related to impairment charges related to its business realignments in 2014 and 2013, respectively.

During 2015, 2014 and 2013, EMC implemented restructuring programs to create further operational efficiencies which will result or have resulted in workforce reductions of approximately 4,600, 2,100 and 1,900 positions, respectively. The actions impact positions around the globe covering EMC’s Information Storage, RSA Information Security, Enterprise Content Division and Pivotal segments. All of these actions are expected to be completed or were completed within a year of the start of each program.

During 2015 and 2014, VMware eliminated approximately 380 and 180 positions, respectively, across all major functional groups and geographies to streamline its operations. During 2013, VMware approved and initiated a business realignment plan to streamline its operations. The plan included the elimination of approximately 710 positions across all major functional groups and geographies. All of these actions are expected to be completed or were completed within a year of the program.

During 2015, 2014 and 2013, EMC recognized $18 million in each year, respectively, of lease termination costs for facilities vacated in the period in accordance with EMC’s plan as part of all of its restructuring programs and for costs associated with terminating other contractual obligations. These costs are expected to be utilized by the end of 2017. The remaining cash portion owed for these programs in 2016 is approximately $4 million, plus an additional $7 million over the period from 2017 and beyond.

Investment Income Investment income was $94 million, $123 million and $128 million in 2015, 2014 and 2013, respectively. Investment income decreased in 2015 due to an increase in net realized losses. Interest income was $106 million, $99 million and $106 million in 2015, 2014 and 2013, respectively. Net realized losses were $16 million and net realized gains were $19 million and $17 million in 2015, 2014 and 2013, respectively.

180 Interest Expense Interest expense was $164 million, $147 million and $156 million in 2015, 2014 and 2013, respectively. Interest expense during 2015 and 2014 consists primarily of interest on the $5.5 billion aggregate principal amount of the EMC Notes, which EMC issued in June 2013. The increase in interest expense in 2015 compared to 2014 is due primarily to the amortization of interest rate swap losses of $22 million during 2015 compared to $11 million in 2014.

Interest expense during 2013 consists primarily of interest on the $1,725 million 1.75% convertible senior notes due 2013 (the “2013 EMC Notes”). Included in interest expense are non-cash interest charges related to amortization of the debt discount attributable to the conversion feature of $58 million for the year ended December 31, 2013, as EMC accreted the 2013 EMC Notes to their stated values over their terms. See note E to the audited consolidated financial statements of EMC included in this offering memorandum.

Other Income (Expense), Net Other income, net was $111 million in 2015 and other expense, net was $251 million and $257 million in 2014 and 2013, respectively. Other income (expense), net primarily consists of net gains and losses on strategic investments and foreign exchange gains and losses. During 2014 and 2013, other income (expense), net also included EMC’s consolidated share of the losses from EMC’s converged infrastructure joint venture, VCE Company LLC (“VCE”).

During 2015, EMC recognized net gains from strategic investments of $98 million and foreign currency exchange gains of $18 million. These gains were partially offset by a fair value adjustment on an asset held for sale of $20 million in 2015.

During 2014, EMC recognized a gain on previously held interests in strategic investments and joint ventures of $101 million in conjunction with EMC’s business acquisitions. In addition, EMC recognized net gains from strategic investments of $27 million. These were partially offset by foreign currency exchange losses and an impairment of a strategic investment of $33 million. During 2013, EMC recognized net losses from strategic investments of $11 million, which were partially offset by foreign currency exchange gains. Additionally, during 2013, EMC recorded net gains on the divestiture of businesses of $31 million.

Prior to EMC’s acquisition of the controlling interest in VCE in December 2014, the VCE joint venture had been accounted for under the equity method and EMC’s consolidated share of VCE’s losses was based upon EMC’s portion of the overall funding. This represented EMC’s share of the net losses of the joint venture, net of equity accounting adjustments. During 2014 and 2013, EMC incurred losses related to VCE of $357 million and $298 million, respectively.

Provision for Income Taxes EMC’s effective income tax rate was 24.6%, 23.1% and 20.0% in 2015, 2014 and 2013, respectively. EMC’s effective income tax rate is based upon income before provision for income taxes for the year, composition of the income in different countries and adjustments, if any, for potential tax consequences, benefits and/or resolutions of tax audits or other tax contingencies. EMC’s aggregate income tax rate in foreign jurisdictions is lower than its income tax rate in the United States; substantially all of EMC’s income before provision for income taxes from foreign operations has been earned by EMC’s Irish subsidiaries. EMC’s effective income tax rate may be adversely affected by earnings being lower than anticipated in countries where EMC has lower statutory income tax rates and higher than anticipated in countries where EMC has higher statutory income tax rates.

In 2015, the lower aggregate income tax rate in foreign jurisdictions reduced EMC’s effective income tax rate by 12.8 percentage points compared to EMC’s statutory federal tax rate of 35.0%. On December 18, 2015, the

181 Consolidated Appropriations Act, 2016 was signed into law. Some of the provisions were retroactive to January 1, 2015, including a permanent extension of the U.S. federal tax credit for increasing research activities. The federal tax credit for increasing research activities reduced EMC’s 2015 effective income tax rate by 2.1 percentage points. The net effect of other tax credits, state taxes, change in valuation allowance, U.S. domestic production activities deduction, non-deductible permanent differences, prior year true up adjustments, change in tax contingency reserves and other items collectively increased the effective income tax rate by 4.5 percentage points.

In 2014, the lower aggregate income tax rate in foreign jurisdictions reduced EMC’s effective income tax rate by 11.6 percentage points compared to EMC’s statutory federal tax rate of 35.0%. On December 19, 2014, the Tax Increase Prevention Act was signed into law. Some of the provisions were retroactive to January 1, 2014, including an extension of the U.S. federal tax credit for increasing research activities through December 31, 2014. The federal tax credit for increasing research activities reduced EMC’s 2014 effective income tax rate by 1.6 percentage points. The net effect of other tax credits, state taxes, change in valuation allowance, U.S. domestic production activities deduction, non-deductible permanent differences, prior year true up adjustments, change in tax contingency reserves and other items collectively increased the effective income tax rate by 1.3 percentage points.

In 2013, the lower aggregate income tax rate in foreign jurisdictions reduced EMC’s effective income tax rate by 15.3 percentage points compared to EMC’s statutory federal tax rate of 35.0%. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law. Some of the provisions were retroactive to January 1, 2012, including an extension of the U.S. federal tax credit for increasing research activities through December 31, 2013. Because the extension was enacted after December 31, 2012, EMC’s 2013 income tax provision included the federal tax credit for increasing research activities for 2012 as well as for 2013, which reduced EMC’s 2013 effective income tax rate by 3.5 percentage points. The net effect of other tax credits, state taxes, change in valuation allowance, U.S. domestic production activities deduction, non-deductible permanent differences, prior year true up adjustments, change in tax contingency reserves and other items collectively increased the effective income tax rate by 3.8 percentage points.

The effective income tax rate increased from 2014 to 2015 by 1.5%, from 23.1% to 24.6%, respectively. This increase was primarily attributable to a release of the valuation allowance against state tax credit carryforwards in 2014 partially offset by the impact of lower income before provision for income taxes in 2015.

The effective income tax rate increased from 2013 to 2014 by 3.1%, from 20.0% to 23.1%, respectively. This increase was principally attributable to higher income in the United States in 2014 and the inclusion of the 2012 federal tax credit for increasing research activities in 2013 as discussed above.

Non-controlling Interests The net income attributable to the non-controlling interests was $182 million, $180 million and $204 million in 2015, 2014 and 2013, respectively. The net income attributable to the non-controlling interest in VMware was $189 million, $180 million and $204 million in 2015, 2014 and 2013, respectively. The increase in 2015 was due to an increase in VMware’s net income compared to 2014. The decrease in 2014 was due to a decrease in VMware’s net income compared to 2013. VMware’s reported net income was $997 million, $886 million and $1,014 million in 2015, 2014 and 2013, respectively. The weighted-average non-controlling interest in VMware was approximately 19% in 2015 and 20% in 2014 and 2013. As of December 31, 2015, EMC had purchased approximately 16 million shares of VMware common stock for $1.2 billion.

182 Financial Condition The following tables summarize EMC’s cash flow activity for the three months ended March 31, 2016 and 2015 and for the years ended December 31, 2015, 2014 and 2013 (dollars in millions):

For the Three Months Ended March 31, 2016 March 31, 2015 $ Change Cash provided by operating activities ...... $932 $1,080 $ (148) Cash provided by (used in) investing activities ...... 156 (1,111) 1,267 Cash used in financing activities ...... (444) (1,821) 1,377 Effect of exchange rates on cash and cash equivalents ...... 31 (103) 134 Net (decrease) increase in cash and cash equivalents ...... $675 $(1,955) $2,630

For the Year Ended December 31, $ Change 2015 2014 2013 2015 vs 2014 2014 vs 2013 Cash provided by operating activities ...... $5,386 $ 6,523 $ 6,923 $(1,137) $ (400) Cash used in investing activities ...... (2,754) (2,551) (5,760) (203) 3,209 Cash (used in) provided by financing activities ...... (2,292) (5,437) 2,076 3,145 (7,513) Effect of exchange rates on cash and cash equivalents ...... (134) (83) (62) (51) (21) Net (decrease) increase in cash and cash equivalents . . $ 206 $(1,548) $ 3,177 $ 1,754 $(4,725)

Cash provided by operating activities Cash provided by operating activities consists primarily of cash collections from EMC’s customers somewhat offset by cash used for employee related expenditures, cash paid to suppliers for material and manufacturing costs and income tax payments.

The following table summarizes the primary drivers of the decrease in cash provided by operating activities for the three months ended March 31, 2016 and 2015 (dollars in millions):

For the Three Months Ended March 31, 2016 March 31, 2015 $ Change Cash received from customers ...... $6,878 $ 7,495 $(617) Cash paid to suppliers and employees ...... (5,373) (5,584) 211 Income taxes paid ...... (591) (855) 264

Net cash provided by operating activities decreased by $148 million to $932 million for the three months ended March 31, 2016 compared to the same period in 2015 primarily due to a decrease in cash received from customers, attributable to lower sales volume as well as entering the first quarter of 2016 with a significantly lower accounts receivable balance than at the start of the first quarter of 2015. This was partially offset by a decrease in cash paid to suppliers and employees resulting from EMC’s cost reduction and business transformation program which was initiated in 2015. Additionally, income tax payments, which are comprised of estimated taxes for the current year, extension payments for the prior year and refunds or payments associated with income tax filings and tax audits, decreased primarily due to lower pre-tax income in 2015 compared to 2014.

183 The following table summarizes the primary drivers of the decrease in cash provided by operating activities for the years ended December 31, 2015, 2014 and 2013 (in millions):

For the Year Ended December 31, $ Change 2015 2014 2013 2015 vs 2014 2014 vs 2013 Cash received from customers ...... $25,737 $ 25,360 $ 24,319 $ 377 $ 1,041 Cash paid to suppliers and employees ...... (19,312) (17,893) (16,708) (1,419) (1,185) Income taxes paid ...... (1,001) (953) (761) (48) (192)

Net cash provided by operating activities decreased by $1,137 million to $5,386 million and by $400 million to $6,523 million for the years ended December 31, 2015 and 2014, respectively, with respect to the comparable prior year periods. In each of these years, the decreases were primarily due to increases in cash paid to suppliers and employees due to general growth in the business to support the increased revenue base as well as income tax payments, which are comprised of estimated taxes for the current year, extension payments for the prior year and refunds or payments associated with income tax filings and tax audits, and which increased primarily due to higher pre-tax income in 2014 compared to 2013 and 2012 and the timing of various originating and reversing temporary book to tax differences. These were partially offset by increases in cash received from customers, attributable to an increase in sales volume.

Cash provided by (used in) investing activities Cash used in investing activities consists primarily of the timing of purchases, sales and maturities of EMC’s investments in available-for-sale securities, business acquisitions and the purchase of capital and other assets.

The following table summarizes the primary driver of the increase in cash used in investing activities for the three months ended March 31, 2016 and 2015 (dollars in millions):

For the Three Months Ended March 31, 2016 March 31, 2015 $ Change Net sales, maturities and (purchases) of available-for-sale securities ...... $491 $(688) $1,179

Net cash provided by investing activities increased by $1,267 million to $156 million for the three months ended March 31, 2016 compared to the same period in 2015 primarily due to a decrease in cash provided by/ (used in) the net sales, maturities and purchases of available-for-sale securities. The net sales, maturities and purchases of available-for-sale securities varies from period to period based upon EMC’s cash collections, cash requirements and maturity dates of its investments as well as cash available after the issuance and payment of debt.

The following table summarizes the primary drivers of the increase in cash used in investing activities for the years ended December 31, 2015, 2014 and 2013 (in millions):

For the Year Ended December 31, $ Change 2015 2014 2013 2015 vs 2014 2014 vs 2013 Net (purchases) sales of available-for-sale securities . . $ (77) $ 1,391 $(3,113) $(1,468) $ 4,504 Business acquisitions, net of cash acquired ...... (1,336) (1,973) (770) 637 (1,203)

Net cash used in investing activities increased by $203 million to $2,754 million for the year ended December 31, 2015 and decreased by $3,209 million to $2,551 million for the year ended December 31, 2014, with respect to the comparable prior year periods. The increase in 2015 compared to the same period in 2014 was primarily due to an increase in cash used in the net purchases and sales of available-for-sale securities, which was

184 partially offset by a decrease in cash spent on business acquisitions. During 2015, EMC paid $1,220 million in net cash to acquire Virtustream. The decrease in 2014 compared to the same period in 2013 was primarily due to an increase in cash received in the net purchases and sales of available-for-sale securities, which was partially offset by an increase in cash spent on business acquisitions. During 2014, EMC had significant acquisition activity, including VMware’s acquisition of AirWatch. Acquisition activity varies from period to period based upon the number and size of acquisitions in a given period. The net purchase and sales of available-for-sale securities varies from period to period based upon cash collections, cash requirements and maturity dates of EMC’s investments as well as cash available after the issuance and payment of debt.

Cash (used in) provided by financing activities Cash used in financing activities consists primarily of net proceeds or payments from the issuance or repayment of short-term and long-term debt as well as proceeds from the issuance of common stock, stock repurchases and dividend payments.

The following table summarizes the primary drivers of the decrease in cash used in financing activities for the three months ended March 31, 2016 and 2015 (dollars in millions):

For the Three Months Ended March 31, 2016 March 31, 2015 $ Change Repurchase of EMC and VMware common stock ...... $— $(1,784) $1,784 Net payments on short-term obligations ...... (376) — (376)

Net cash used in financing activities decreased by $1,377 million to $444 million for the three months ended March 31, 2016 compared to the same period in 2015 primarily due to a decrease in cash spent on EMC and VMware stock repurchases during 2016, partially offset by the cash outflows related to the repayment of short- term obligations in 2016.

The following table summarizes the primary drivers of the decrease in cash used in financing activities for the years ended December 31, 2015, 2014 and 2013 (in millions):

For the Year Ended December 31, $ Change 2015 2014 2013 2015 vs 2014 2014 vs 2013 Repurchase of EMC and VMware common stock ..... $(3,188) $(3,669) $(3,683) $ 481 $ 14 Payment of long-term and short-term obligations ..... — (1,665) (46) 1,665 (1,619) Net proceeds from the issuance of long-term and short- term obligations ...... 1,295 — 5,460 1,295 (5,460)

Net cash used in financing activities decreased by $3,145 million to $2,292 million and increased by $7,513 million to $5,437 million for the years ended December 31, 2015 and 2014, respectively, with respect to the comparable prior year periods. The decrease in 2015 compared to the same period in 2014 was primarily due to cash inflows related to the net proceeds from the issuance of Commercial Paper and amounts borrowed under the credit facility in 2015 and cash outflows related to the repayment of convertible debt in 2014. Cash spent on EMC and VMware stock repurchases during 2015 decreased slightly compared to 2014. The increase in 2014 compared to the same period in 2013 was primarily due to proceeds received through the issuance of the EMC Notes during 2013, somewhat offset by the repayment of the 2013 EMC Notes during 2014. During 2015, 2014 and 2013, EMC returned value to shareholders by repurchasing shares and paying dividends as part of EMC’s greater capital allocation strategy.

185 Liquidity Pre-Transactions At March 31, 2016, EMC’s total cash, cash equivalents and short-term and long-term investments were $15.0 billion. This balance includes approximately $8.2 billion held by VMware, of which $6.3 billion is held outside the United States and $1.9 billion is held in the United States, and $6.8 billion held by EMC, of which $5.8 billion is held outside the United States and $1.0 billion is held in the United States. If these funds that are held outside the United States are needed for EMC’s operations in the United States, EMC would be required to accrue and pay U.S. taxes to repatriate these funds. However, EMC’s intent is to permanently reinvest these funds outside of the United States and its current plans do not demonstrate a need to repatriate them to fund its U.S. operations.

Under the terms of the merger agreement, EMC is required to provide Denali with access to EMC’s cash to help fund the merger consideration. EMC has not finalized its plan to access such cash and has not determined if there would be a need to repatriate cash to meet the requirements of the Dell-EMC merger. If these overseas funds are required to be repatriated to the United States in accordance with the merger agreement, EMC may be required to accrue and pay U.S. taxes.

EMC expects that existing U.S. cash and cash equivalents, together with any cash generated from operations, will be sufficient to meet normal operating requirements for the next twelve months. EMC expects to continue to generate positive cash flows from operations and to use cash generated by operations as a primary source of liquidity. Should EMC require more capital than is generated by its operations to fund discretionary activities, such as business acquisitions, EMC has the ability to raise capital through the issuance of commercial paper or by drawing on its credit facility at reasonable interest rates.

Dividends During April 2016, VMware’s Board of Directors authorized the repurchase of up to an aggregate of $1.2 billion of VMware’s common stock through the end of 2016. For the three months ended March 31, 2016, VMware did not repurchase any shares as it is currently subject to a number of legal and regulatory constraints resulting from the Merger Agreement, which impacts the timing and ability to execute repurchases of VMware’s shares. VMware expects to repurchase the authorized $1,200 million of its Class A common stock during the remainder of 2016, following the EMC shareholder vote on the proposed merger of EMC and Dell.

During the three months ended March 31, 2015, EMC spent $1,346 million to repurchase 54 million shares of EMC’s common stock, and VMware spent $438 million to repurchase 5 million shares of their common stock.

During the years ended December 31, 2015, 2014 and 2013, EMC spent $2,063 million, $2,969 million and $3,015 million, respectively, to repurchase 76 million, 107 million and 122 million shares of EMC’s common stock, and VMware spent $1,125 million, $700 million and $508 million, respectively, to repurchase 13 million,

186 8 million and 7 million shares of their common stock. EMC’s Board of Directors declared the following dividends during 2016, 2015, 2014 and 2013:

Total Amount Declaration Date Dividend Per Share Record Date (in millions) Payment Date 2016: February 11, 2016 ...... $0.115 April 1, 2016 $229 April 22, 2016 2015: February 27, 2015 ...... $0.115 April 1, 2015 $229 April 23, 2015 May 20, 2015 ...... $0.115 July 1, 2015 $226 July 23, 2015 July 30, 2015 ...... $0.115 October 1, 2015 $229 October 23, 2015 December 17, 2015 ..... $0.115 January 4, 2016 $230 January 22, 2016 2014: February 6, 2014 ...... $ 0.10 April 1, 2014 $209 April 23, 2014 April 17, 2014 ...... $0.115 July 1, 2014 $237 July 23, 2014 July 30, 2014 ...... $0.115 October 1, 2014 $239 October 23, 2014 December 10, 2014 ..... $0.115 January 2, 2015 $234 January 23, 2015 2013: May 28, 2013 ...... $ 0.10 July 1, 2013 $212 July 23, 2013 August 1, 2013 ...... $ 0.10 October 1, 2013 $210 October 23, 2013 December 12, 2013 ..... $ 0.10 January 8, 2014 $206 January 23, 2014

Short-Term Debt On February 27, 2015, EMC entered into a credit agreement with the lenders named therein, Citibank, N.A., as Administrative Agent, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Syndication Agents, and Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Bookrunners (the “EMC Credit Agreement”). The EMC Credit Agreement provides for a $2.5 billion unsecured revolving credit facility to be used for general corporate purposes that is scheduled to mature on February 27, 2020. At EMC’s option, subject to certain conditions, any loan under the EMC Credit Agreement will bear interest at a rate equal to, either (i) the LIBOR Rate or (ii) the Base Rate (defined as the highest of (a) the Federal Funds rate plus 0.50%, (b) Citibank, N.A.’s “prime rate” as announced from time to time, or (c) one-month LIBOR plus 1.00%), plus, in each case the Applicable Margin, as defined in the EMC Credit Agreement. The EMC Credit Agreement contains customary representations and warranties, covenants and events of default. EMC may also, upon the agreement of the existing lenders and/or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $1.0 billion. In addition, EMC may request to extend the maturity date of its existing unsecured revolving credit facility, subject to certain conditions, for additional one-year periods. As of March 31, 2016, EMC was in compliance with customary required covenants and had no funds borrowed under the credit facility. At December 31, 2015, EMC had $600 million outstanding under the credit facility. The EMC Credit Agreement is expected to be repaid in connection with the EMC Transactions.

On March 23, 2015, EMC established a short-term debt financing program whereby EMC may issue short- term unsecured commercial paper notes. Amounts available under the program may be borrowed, repaid and re- borrowed from time to time, with the aggregate face or principal amount of the notes outstanding at any time not to exceed $2.5 billion. EMC’s existing commercial paper will have maturities of up to 397 days from the date of issue. The net proceeds from the issuance of EMC’s existing commercial paper are expected to be used for general corporate purposes. As of March 31, 2016, EMC was in compliance with customary required covenants. At March 31, 2016 EMC had $925 million of commercial paper outstanding. At December 31, 2015, EMC had $699 million of commercial paper outstanding. At May 5, 2016, EMC had $1,285 million of commercial paper outstanding. EMC’s existing commercial paper is expected to be refinanced in connection with the EMC Transactions.

187 Long-Term Debt During 2013, EMC issued $5.5 billion aggregate principal amount of EMC Notes, which pay a fixed rate of interest semi-annually in arrears. The proceeds from the EMC Notes were used to satisfy the cash payment obligation of the converted 2013 EMC Notes as well as for general corporate purposes including stock repurchases, dividend payments, business acquisitions, working capital needs and other business opportunities. The EMC Notes of each series are senior, unsecured obligations of EMC and are not convertible or exchangeable. Unless previously purchased and canceled, EMC will repay the EMC Notes of each series at 100% of the principal amount, together with accrued and unpaid interest thereon, at maturity. However, EMC has the right to redeem any or all of the EMC Notes at specified redemption prices. As of March 31, 2015, EMC was in compliance with all debt covenants, which are customary in nature.

Convertible Debt During 2006, EMC issued the 2013 EMC Notes. These 2013 EMC Notes matured and a majority of the noteholders exercised their rights to convert the outstanding 2013 EMC Notes as of December 31, 2013. Pursuant to the settlement terms, the majority of the converted 2013 EMC Notes were settled on January 7, 2014. At that time, EMC paid the noteholders $1.7 billion in cash for the outstanding principal and 35 million shares for the $858 million excess of the conversion value over the principal amount, as prescribed in the terms of the 2013 EMC Notes.

With respect to the conversion value in excess of the principal amount of the 2013 EMC Notes converted, EMC elected to settle the excess with shares of its common stock based on a daily conversion value, determined in accordance with the indenture, calculated on a proportionate basis for each day of the relevant 20-day observation period. The actual conversion rate for the 2013 EMC Notes was 62.6978 shares of EMC’s common stock per one thousand dollars of principal amount of 2013 EMC Notes, which represents a 26.5% conversion premium from the date the 2013 EMC Notes were issued and is equivalent to a conversion price of approximately $15.95 per share of EMC’s common stock.

In connection with the issuance of the 2013 EMC Notes, EMC entered into separate convertible note hedge transactions with respect to EMC’s common stock (the “Purchased Options”). The Purchased Options allowed EMC to receive shares of its common stock and/or cash related to the excess conversion value that EMC would pay to the holders of the 2013 EMC Notes upon conversion. EMC exercised 108 million of the Purchased Options in conjunction with the planned settlements of the 2013 EMC Notes and received 35 million shares of net settlement on January 7, 2014, representing the excess conversion value of the options.

EMC also entered into separate transactions in which EMC sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 215 million shares of its common stock at an exercise price of approximately $19.55 per share of its common stock. EMC received aggregate proceeds of $391 million from the sale of the associated warrants. Upon exercise, the value of the warrants was required to be settled in shares. The remaining 109 million associated warrants were exercised between February 18, 2014 and March 17, 2014 and were settled with 29 million shares of EMC’s common stock.

The Purchased Options and associated warrants had the effect of increasing the conversion price of the 2013 EMC Notes to approximately $19.31 per share of EMC’s common stock, representing an approximate 53% conversion premium based on the closing price of $12.61 per share of EMC’s common stock on November 13, 2006, the issuance date of the 2013 EMC Notes.

Post-Transactions In connection with the Dell-EMC merger, all principal, accrued but unpaid interest, fees and other amounts (other than certain contingent obligations) outstanding at the effective time of the Dell-EMC merger under the EMC Credit Agreement will be repaid in full substantially concurrently with the closing of the Dell-EMC merger

188 and all commitments to lend and guarantees in connection therewith will be terminated and/or released. In addition, all of EMC’s existing commercial paper will also be refinanced in connection with the EMC Transactions. However, certain existing indebtedness of EMC, consisting of $1,000 million aggregate principal amount of its 3.375% notes due June 2023, $2,000 million aggregate principal amount of its 2.650% notes due June 2020 and $2,500 million aggregate principal amount of its 1.875% notes due June 2018, will remain outstanding in accordance with their respective terms following the Dell-EMC merger. All such rollover indebtedness is expected be repaid in accordance with their respective contractual maturities. See “The Transactions.”

As a result of the Dell-EMC merger, EMC will become a wholly-owned subsidiary of Denali. For a description of the liquidity of the combined company following the Transactions, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali—Liquidity, Capital Commitments and Contractual Cash Obligations—Post-Transaction Liquidity.”

Use of Non-GAAP Financial Measures and Reconciliations to GAAP Results The financial statements are prepared in accordance with GAAP. EMC uses certain non-GAAP financial measures, which exclude stock-based compensation, intangible asset amortization, restructuring charges, acquisition and other related charges, infrequently occurring gains, losses, benefits and charges and special tax items to measure its revenues, gross margin, operating margin and net income for purposes of managing its business. EMC also assesses its financial performance by measuring its free cash flow, which is also a non- GAAP financial measure. Free cash flow is defined as cash flow from operations, less additions to property, plant and equipment and capitalized software development costs. These non-GAAP financial measures should be considered in addition to, not as a substitute for, measures of EMC’s financial performance or liquidity prepared in accordance with GAAP. EMC’s non-GAAP financial measures may be defined differently from time to time and may be defined differently than similar terms used by other companies, and accordingly, care should be exercised in understanding how EMC defines its non-GAAP financial measures.

EMC’s management uses the non-GAAP financial measures to gain an understanding of EMC’s comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects and excludes these items from its internal financial statements for purposes of its internal budgets and each reporting segment’s financial goals. These non-GAAP financial measures are used by EMC’s management in their financial and operating decision-making because management believes they reflect EMC’s ongoing business in a manner that allows meaningful period-to-period comparisons. EMC’s management believes that these non-GAAP financial measures provide useful information to investors and others (a) in understanding and evaluating EMC’s current operating performance and future prospects in the same manner as management does, if they so choose, and (b) in comparing in a consistent manner EMC’s current financial results with EMC’s past financial results.

EMC’s non-GAAP operating results for the three months ended March 31, 2016 and 2015 and the years ended December 31, 2015, 2014 and 2013 were as follows (in millions, except percentages):

For the Three Months Ended For the Year Ended March 31, March 31, December 31, December 31, December 31, 2016 2015 2015 2014 2013 Revenue ...... $5,475 $5,613 $24,780 $24,440 $23,222 Gross margin ...... 3,360 3,438 15,469 15,642 14,863 Gross margin percentage ...... 61.4% 61.3% 62.4% 64.0% 64.0% Operating income ...... 879 918 5,045 5,882 5,732 Operating margin percentage ...... 16.0% 16.4% 20.4% 24.1% 24.7% Income tax provision ...... 203 215 1,217 1,327 1,228 Net income attributable to EMC ...... 603 623 3,572 3,919 3,894

189 The decrease in non-GAAP gross margin for the three months ended March 31, 2016 compared to 2015 was attributable to lower sales volume and higher costs of revenue in Information Storage, partially offset by higher sales volume in VMware Virtual Infrastructure. Non-GAAP gross margin percentage increased slightly for the three months ended March 31, 2016 primarily due to a decrease in Information Storage gross margins, offset by an increase in the mix of VMware revenue which has higher overall margins. Information Storage gross margins decreased year over year primarily due to a decrease in product margins due to lower product volumes partially offset by an increase in services margins.

The decrease in the non-GAAP operating income for the three months ended March 31, 2016 was primarily attributable to the overall decrease in gross margin, somewhat offset by lower operating expenses resulting from our cost reduction program. Non-GAAP operating margin percentage decreased for the three months ended March 31, 2016 primarily due to operating expenses declining at a slower rate than revenue.

The decreases in the non-GAAP gross margin for the year ended December 31, 2015 compared to the year ended December 31, 2014 were attributable to the significant impacts of the consolidation of VCE, changes in foreign currencies and the VMware GSA settlement charge. The decrease in gross margin percentage was primarily attributable to decreases in Information Storage, VMware Virtual Infrastructure and Pivotal margins. Gross margin percentages decreased for the year ended December 31, 2015 compared to the year ended December 31, 2014. Information Storage and VMware Virtual Infrastructure gross margin percentages decreased for the year ended December 31, 2015 compared to the year ended December 31, 2014, however, the mix of VMware, which is a higher margin business, increased, which offset the decreases in gross margins. Information Storage gross margin percentage decreased year over year primarily due to the consolidation of VCE and foreign currency impacts to revenue that do not impact costs in the same manner, as EMC’s costs of sale tend to have less exposure to currency volatility. In addition, there were lower volumes during 2015 compared to 2014. VMware Virtual Infrastructure gross margin percentage decreased primarily due to a decrease in service margins as VMware continues to drive its strategic growth initiatives through investments in SaaS and professional service offerings.

The improvements in the non-GAAP gross margin were attributable to higher sales volume during the year ended December 31, 2014 compared to the year ended December 31, 2013. Gross margin percentages remained flat for the year ended December 31, 2014 compared to the year ended December 31, 2013. Information Storage and VMware gross margin percentages for the year ended December 31, 2014 decreased compared to the year ended December 31, 2013, however the mix of VMware, which is a higher margin business, increased which offset the decreases in gross margins. Information Storage gross margin percentage decreased slightly year over year primarily due to a decrease in product margins during the first half of 2014. The decrease in product margins was primarily due to lower sales volume without a corresponding decrease in fixed costs and pricing pressures on EMC’s high-end storage products. VMware gross margin decreased primarily due to a decrease in service margins as VMware continues to drive its strategic growth initiatives through investments in SaaS and professional service offerings.

The decrease in the non-GAAP operating income for the year ended December 31, 2015 compared to the year ended December 31, 2014 was attributable to higher costs during year ended December 31, 2015 compared to the year ended December 31, 2014. Non-GAAP operating margin percentage for the year ended December 31, 2015 decreased primarily due to the impacts of the consolidation of VCE and foreign currency impacts. In addition, operating expenses continued to increase as EMC continues to invest in its businesses and shift its focus to strategic high growth areas and acquisitions to meet the changing needs of its customers. The increases in operating expenses are driven by all of EMC’s operating segments.

The increase in the non-GAAP operating income for the year ended December 31, 2014 compared to the year ended December 31, 2013 was attributable to higher sales volume in the year ended December 31, 2014 compared to the year ended December 31, 2013. The decrease in operating expenses at EMC Information Infrastructure partially offset increases in operating expenses at Pivotal and VMware as EMC continues to invest in those businesses. Non-GAAP operating margin percentage for the year ended December 31, 2014 decreased

190 primarily due to increases in operating expenses resulting from EMC’s continued investments in strategic high growth areas and business acquisitions. The increase in operating expenses was primarily driven by the investments EMC is making at Pivotal and VMware.

The reconciliation of the above financial measures from GAAP to non-GAAP is as follows (in millions):

For the Three Months Ended March 31, 2016 Non-operating Income tax Net income Gross Operating (income) provision attributable margin income expense (benefit) to EMC GAAP ...... $3,260 $410 $ (24) $ 89 $268 Stock-based compensation expense ...... 41 304 — 69 212 Intangible asset amortization ...... 59 90 — 25 60 Restructuring charges ...... — 48 — 14 26 Acquisition and other related charges ...... — 20 — 5 13 Merger-related costs ...... — 7 — 1 6 Venezuela currency devaluation ...... — — 18 — 18 Non-GAAP ...... $3,360 $879 $ (6) $203 $608

For the Three Months Ended March 31, 2015 Non-operating Net income Gross Operating (income) Income tax attributable margin income expense provision to EMC GAAP ...... $3,339 $379 $ (6) $ 82 $252 Stock-based compensation expense ...... 37 244 — 55 170 Intangible asset amortization ...... 62 101 — 30 66 Restructuring charges ...... — 133 — 33 96 Acquisition and other related charges ...... — 50 — 16 28 R&D tax credit ...... — — — (5) 5 VMware litigation charge and other contingencies . . — 11 — 4 6 Non-GAAP ...... $3,438 $918 $ (6) $215 $623

For the Year Ended December 31, 2015 Net income Gross Operating Income tax attributable Revenue margin income provision to EMC GAAP ...... $24,704 $14,991 $2,841 $ 710 $1,990 Stock-based compensation expense ...... — 156 1,093 250 767 Intangible asset amortization ...... — 246 395 112 263 Restructuring charges ...... — — 443 103 336 Acquisition and other related charges ...... — — 178 56 103 Fair value adjustment on assets held for sale ...... — — — 8 12 VMware litigation and other contingencies ...... — — 11 4 6 GSA settlement ...... 76 76 70 18 42 Special tax items ...... — — — (44) 39 Merger related costs ...... — — 14 — 14 Non-GAAP ...... $24,780 $15,469 $5,045 $1,217 $3,572

191 For the Year Ended December 31, 2014 Net income Gross Operating Income tax attributable margin income provision to EMC GAAP ...... $15,249 $4,037 $ 868 $2,714 Stock-based compensation expense ...... 146 1,020 224 713 Intangible asset amortization ...... 247 402 118 263 Restructuring charges ...... — 226 56 168 Acquisition and other related charges ...... — 186 60 108 Gain on previously held interests in strategic investments and joint venture ...... — — (11) (77) Impairment of strategic investment ...... — — 10 23 VMware litigation and other contingencies ...... — 11 2 7 Non-GAAP ...... $15,642 $5,882 $1,327 $3,919

For the Year Ended December 31, 2013 Net income Gross Operating Income tax attributable margin income provision to EMC GAAP ...... $14,473 $4,150 $ 772 $2,889 Stock-based compensation expense ...... 124 935 225 638 Intangible asset amortization ...... 232 389 117 257 Restructuring charges ...... — 212 54 148 Acquisition and other related charges ...... — 12 3 8 Amortization of VMware’s capitalized software from prior periods ...... 34 34 11 18 Net gain on disposition of certain lines of business and other ...... — — (3) (22) Special tax items ...... — — (18) 19 R&D tax credit ...... — — 67 (61) Non-GAAP ...... $14,863 $5,732 $1,228 $3,894

EMC also monitors its ability to generate free cash flow. For the three months ended March 31, 2016, EMC’s free cash flow was $588 million, a decrease of 22% compared to the free cash flow generated for the three months ended March 31, 2015. For the year ended December 31, 2015, EMC’s free cash flow was $3,917 million, a decrease of 22% compared to the free cash flow generated for the year ended December 31, 2014. The free cash flow for the year ended December 31, 2015 exceeded EMC’s non-GAAP net income attributable to EMC by $345 million. For the year ended December 31, 2014, EMC’s free cash flow was $5,035 million, a decrease of 9% compared to the free cash flow generated for the year ended December 31, 2013. The free cash flow for the year ended December 31, 2014 exceeded EMC’s non-GAAP net income attributable to EMC by $1,116 million. EMC uses free cash flow, among other measures, to evaluate the ability of its operations to generate cash that is available for purposes other than capital expenditures and capitalized software development costs. EMC’s management believes that information regarding free cash flow provides investors with an important perspective on the cash available to make strategic acquisitions and investments, repurchase shares, service and issue debt, pay dividends and fund ongoing operations. As free cash flow is not a measure of liquidity calculated in accordance with GAAP, free cash flow should be considered in addition to, but not as a substitute for, the analysis provided in the statements of cash flows.

192 The reconciliation of the above free cash flow from GAAP to non-GAAP is as follows (in millions):

For the Three Months Ended For the Year Ended March 31, March 31, December 31, December 31, December 31, 2016 2015 2015 2014 2013 Cash Flow from Operations ...... $932 $1,080 $5,386 $6,523 $6,923 Additions to Property, Plant and Equipment . . . (188) (197) (902) (979) (943) Capitalized Software Development Costs ..... (156) (128) (567) (509) (465) Free Cash Flow(1) ...... $588 $ 755 $3,917 $5,035 $5,515

(1) EMC free cash flow is presented on a historical basis as cash flow from operations less additions to property, plant and equipment less capitalized software development costs. In contrast, see “Summary— Summary Historical and Pro Forma Financial and Other Data of Denali” for the presentation of unlevered free cash flow of Denali for the year ended January 29, 2016 as adjusted for the EMC Transactions and pro forma for the Transactions, which is presented as Adjusted EBITDA less capital expenditures.

Free cash flow represents a non-GAAP measure related to operating cash flows. In contrast, EMC’s GAAP measure of cash flow consist of three components. These are cash flows provided by operating activities of $932 million and $1,080 million for the three months ended March 31, 2016 and 2015, respectively, and $5,386 million and $6,523 million and $6,923 million for the years ended December 31, 2015, 2014 and 2013, respectively, cash provided by investing activities of $156 million and used in investing activities $1,111 million for the three months ended March 31, 2016 and 2015, respectively, and $2,754 million, $2,551 million and $5,760 million for the years ended December 31, 2015, 2014 and 2013, respectively, and cash used in financing activities of $444 million and $1,821 million for the three months ended March 31, 2016 and 2015, respectively, and $2,292 million, $5,437 million and $2,076 million for the years ended December 31, 2015, 2014 and 2013, respectively.

All of the foregoing non-GAAP financial measures have limitations. Specifically, the non-GAAP financial measures that exclude the items noted above do not include all items of income and expense that affect EMC’s operations or cash flows. Further, these non-GAAP financial measures are not prepared in accordance with GAAP, may not be comparable to non-GAAP financial measures used by other companies and do not reflect any benefit that such items may confer on EMC. EMC’s management compensates for these limitations by also considering EMC’s financial results as determined in accordance with GAAP.

Investments The following table summarizes the composition of EMC’s investments at March 31, 2016 (in millions):

Amortized Unrealized Unrealized Aggregate Cost Gains (Losses) Fair Value U.S. government and agency obligations ...... $2,054 $ 5 $ (1) $2,058 U.S. corporate debt securities ...... 2,364 11 (2) 2,373 High yield corporate debt securities ...... 220 3 (8) 215 Asset-backed securities ...... 13 — — 13 Municipal obligations ...... 640 — — 640 Auction rate securities ...... 25 — (2) 23 Foreign debt securities ...... 2,298 6 (2) 2,302 Total fixed income securities ...... 7,614 25 (15) 7,624 Publicly traded equity securities ...... 113 18 (9) 122 Total ...... $7,727 $ 43 $ (24) $7,746

193 Under the terms of the merger agreement, EMC is required to provide Denali with access to EMC’s cash to help fund the merger consideration. EMC has not finalized its plan to access such cash and has not determined if there would be a need to liquidate its investment portfolio based on the likelihood of the Dell-EMC merger closing. For all of EMC’s securities for which the amortized cost basis was greater than the fair value at March 31, 2016, EMC has concluded that currently it neither plans to sell the security nor is it more likely than not that EMC would be required to sell the security before its anticipated recovery. In making the determination as to whether the unrealized losses are other-than-temporary, EMC considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.

EMC’s fixed income and equity investments are classified as available for sale and recorded at their fair market values. At March 31, 2016, with the exception of EMC’s auction rate securities, the vast majority of EMC’s investments were priced by third-party pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities. In the event observable inputs are not available, EMC assesses other factors to determine the security’s market value, including broker quotes or model valuations. Each month, EMC performs independent price verifications of all of EMC’s fixed income holdings. In the event a price fails a pre-established tolerance check, it is researched so that EMC can assess the cause of the variance to determine what EMC believes is the appropriate fair market value.

Off-Balance Sheet Arrangements, Contractual Obligations, Contingent Liabilities and Commitments Contractual Obligations EMC has various contractual obligations impacting its liquidity. The following represents EMC’s contractual obligations as of December 31, 2015 (in millions):

Payments Due By Period Less than More than Total 1 year 1-2 years* 3-4 years** 4 years Operating leases ...... $ 2,008 $ 338 $ 510 $ 308 $ 852 Short-term debt ...... 1,299 1,299 Long-term debt ...... 5,475 — 2,491 1,989 995 Product warranty obligations ...... 172 — — — — Other long-term obligations, including post retirement obligations ...... 480 480 — — — Purchase orders ...... 3,149 — — — — Uncertain tax positions and related interest ...... 582 — — — — Total ...... $13,165 $2,117 $3,001 $2,297 $1,847

* Includes payments from January 1, 2017 through December 31, 2018. ** Includes payments from January 1, 2019 through December 31, 2020.

As of December 31, 2015, EMC had $172 million of product warranty obligations, approximately $150 million of long-term post retirement obligations, $3,149 million of purchase orders and $582 million of liabilities for uncertain tax positions. EMC is not able to provide a reasonably reliable estimate of the timing of future payments relating to these obligations. The purchase orders are for manufacturing and non-manufacturing related goods and services. While the purchase orders are generally cancellable without penalty, certain vendor agreements provide for percentage-based cancellation fees or minimum restocking charges based on the nature of the product or service. EMC’s operating leases are primarily for office space around the world. EMC believes leasing such space in most cases is more cost-effective than purchasing real estate. The short-term debt pertains to the commercial paper issued and credit facility borrowings outstanding at December 31, 2015. The long-term debt pertains to the $5.5 billion aggregate principal amount of EMC Notes issued in June 2013.

194 EMC has no other off-balance sheet arrangements.

Guarantees and Indemnification Obligations EMC’s subsidiaries have entered into arrangements with financial institutions for such institutions to provide guarantees for rent, taxes, insurance, leases, performance bonds, bid bonds and customs duties aggregating approximately $150 million as of December 31, 2015. The guarantees vary in length of time. In connection with these arrangements, EMC has agreed to guarantee substantially all of the guarantees provided by these financial institutions. EMC and certain of its subsidiaries have also entered into arrangements with financial institutions in order to facilitate the management of currency risk. EMC has agreed to guarantee the obligations of its subsidiaries under these arrangements.

EMC enters into agreements in the ordinary course of business with, among others, customers, resellers, original equipment manufacturers (“OEMs”), systems integrators and distributors. Most of these agreements require EMC to indemnify the other party against third-party claims alleging that an EMC product infringes a patent and/or copyright. Certain agreements in which EMC grants limited licenses to specific EMC-trademarks require EMC to indemnify the other party against third-party claims alleging that the use of the licensed trademark infringes a third-party trademark. Certain of these agreements require EMC to indemnify the other party against certain claims relating to the loss or processing of data, to real or tangible personal property damage, personal injury or the acts or omissions of EMC, its employees, agents or representatives. In addition, from time to time, EMC has made certain guarantees regarding the performance of its systems to its customers. EMC has also made certain guarantees for obligations of its subsidiaries.

EMC has agreements with certain vendors, financial institutions, lessors and service providers pursuant to which EMC has agreed to indemnify the other party for specified matters, such as acts and omissions of EMC, its employees, agents or representatives.

EMC has procurement or license agreements with respect to technology that is used in its products and agreements in which EMC obtains rights to a product from an OEM. Under some of these agreements, EMC has agreed to indemnify the supplier for certain claims that may be brought against such party with respect to EMC’s acts or omissions relating to the supplied products or technologies.

EMC has agreed to indemnify the directors, executive officers and certain other officers of EMC and its subsidiaries, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or officer.

In connection with certain acquisitions, EMC has agreed to indemnify the current and former directors, officers and employees of the acquired company in accordance with the acquired company’s by-laws and charter in effect immediately prior to the acquisition or in accordance with indemnification or similar agreements entered into by the acquired company and such persons. In a substantial majority of instances, EMC has maintained the acquired company’s directors’ and officers’ insurance, which should enable EMC to recover a portion of any future amounts paid. These indemnities vary in length of time.

Based upon EMC’s historical experience and information known as of December 31, 2015, EMC believes its liability on the above guarantees and indemnities at December 31, 2015 is not material.

Pension EMC has a noncontributory defined benefit pension plan that was assumed as part of the acquisition of Data General Corporation in 1999, which covers substantially all former Data General employees located in the United States. This plan has been frozen resulting in employees no longer accruing pension benefits for future services. The assets for this defined benefit plan are invested in common stocks and bonds. The market-related value of the plan’s assets is based upon the assets’ fair value. The expected long-term rate of return on assets for the year ended December 31, 2015 was 6.50%.

195 The Company has begun to shift, and may continue to shift in the future as market conditions permit, its asset allocation to lower the percentage of investments in equity securities and increase the percentage of investments in fixed-income securities. The effect of such a change results in a reduction to the expected long- term rate of return on plan assets and an increase in future pension expense consistent with the sensitivity described below. The actual average annual rate of return for the ten years ended December 31, 2015 was 6.45%. Based upon current market conditions, the expected long-term rate of return for 2016 will be 6.50%. A 25 basis point change in the expected long-term rate of return on the plans’ assets would have approximately a $1 million impact on the 2016 pension expense.

As of December 31, 2015, the pension plan had a $186 million unrecognized actuarial loss that will be expensed over the average future working lifetime of active participants. For the year ended December 31, 2015, the discount rate to determine the benefit obligation was 4.24%. The discount rate selected was based on highly rated long-term bond indices and yield curves that match the duration of the plan’s benefit obligations. The bond indices and yield curve analyses include only bonds rated AA or higher from reputable rating agencies. The discount rate reflects the rate at which the pension benefits could be effectively settled. A 25 basis point change in the discount rate would have approximately a $1 million impact on the 2016 pension expense.

Critical Accounting Policies EMC’s consolidated financial statements are based on the selection and application of generally accepted accounting principles which requires EMC to make estimates and assumptions about future events that affect the amounts reported in EMC’s financial statements and the accompanying notes. Future events and their effects cannot be determined with certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results could differ from those estimates, and any such differences may be material to EMC’s financial statements. EMC believes that the areas set forth below may involve a higher degree of judgment and complexity in their application than EMC’s other accounting policies and represent the critical accounting policies used in the preparation of EMC’s financial statements. If different assumptions or conditions were to prevail, the results could be materially different from EMC’s reported results. EMC’s significant accounting policies are presented within note A to the audited consolidated financial statements of EMC included in this offering memorandum.

Revenue Recognition The application of the appropriate guidance within the Accounting Standards Codification to EMC’s revenue is dependent upon the specific transaction and whether the sale or lease includes information systems, including hardware storage and hardware-related devices, software, including required storage operating systems and optional value-added software application programs, and services, including installation, professional, software and hardware maintenance and training, or a combination of these items. As EMC’s business evolves, the mix of products and services sold will impact the timing of when revenue and related costs are recognized. Additionally, revenue recognition involves judgments, including estimates of fair value and selling price in arrangements with multiples deliverables, assessments of expected returns and the likelihood of nonpayment. EMC analyzes various factors, including a review of specific transactions, the credit-worthiness of its customers, its historical experience and market and economic conditions. Changes in judgments on these factors could materially impact the timing and amount of revenue and costs recognized. Should market or economic conditions deteriorate, EMC’s actual return experience could exceed its estimate.

Warranty Costs EMC accrues for systems warranty costs at the time of shipment. EMC estimates systems warranty costs based upon historical experience, specific identification of system requirements and projected costs to service items under warranty. While EMC engages in extensive product quality programs and processes, EMC’s warranty obligation is affected by product failure rates, material usage and service delivery costs. To the extent that EMC’s actual systems warranty costs differed from its estimates by 5 percent, consolidated pre-tax income would have increased/decreased by approximately $9 million and $10 million in 2015 and 2014, respectively.

196 Asset Valuation Asset valuation includes assessing the recorded value of certain assets, including accounts and notes receivable, investments, inventories, goodwill and other intangible assets. EMC uses a variety of factors to assess valuation, depending upon the asset.

Accounts and notes receivable are evaluated based upon the credit-worthiness of EMC’s customers, EMC’s historical experience, the age of the receivable and current market and economic conditions. Should current market and economic conditions deteriorate, EMC’s actual bad debt experience could exceed its estimate.

The market value of EMC’s short- and long-term investments is based primarily upon the listed price of the security. At December 31, 2015, with the exception of EMC’s auction rate securities, the vast majority of EMC’s investments were priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs such as market transactions involving identical or comparable securities. In the event observable inputs are not available, EMC assesses other factors to determine the security’s market value, including broker quotes or model valuations. Each month, EMC performs independent price verifications of all of EMC’s fixed income holdings. In the event a price fails a pre-established tolerance check, it is researched so that EMC can assess the cause of the variance to determine what EMC believes is the appropriate fair market value. In the event the fair market values that EMC determines are not accurate or EMC is unable to liquidate its investments in a timely manner, EMC may not realize the recorded value of its investments.

EMC holds investments whose market values are below its cost. The determination of whether unrealized losses on investments are other-than-temporary is based upon the type of investments held, market conditions, financial condition and near-term prospects of the issuers, the time to maturity, length of the impairment, magnitude of the impairment and ability and intent to hold the investment to maturity or to the anticipated recovery. Should current market and economic conditions deteriorate, EMC’s ability to recover the cost of its investments may be impaired.

The recoverability of inventories is based upon the types and EMC’s levels of inventory held, forecasted demand, pricing, competition and changes in technology. Should current market and economic conditions deteriorate, EMC’s actual recovery could be less than its estimate.

Other intangible assets are evaluated based upon the expected period the asset will be utilized, forecasted cash flows, changes in technology and customer demand. Changes in judgments on any of these factors could materially impact the value of the asset. EMC performs an assessment of the recoverability of goodwill, at least annually, in the fourth quarter of each year. EMC’s assessment is performed at the reporting unit level which, for certain of EMC’s operating segments, is one step below EMC’s segment reporting level. EMC employs both qualitative and quantitative tests of its goodwill. For some of EMC’s reporting units, EMC performed a qualitative assessment on goodwill to determine whether a quantitative assessment was necessary and determined there were no indicators of potential impairment. For other reporting units, EMC evaluated goodwill using a quantitative model. For all of EMC’s goodwill assessments, EMC determined that there was sufficient market value above the carrying value of those reporting units so that EMC would not expect any near term changes in the operating results that would trigger an impairment. The determination of relevant comparable industry companies impacts EMC’s assessment of fair value. Should the operating performance of EMC’s reporting units change in comparison to these companies or should the valuation of these companies change, this could impact EMC’s assessment of the fair value of the reporting units. EMC’s discounted cash flow analyses factor in assumptions on revenue and expense growth rates. These estimates are based upon EMC’s historical experience and projections of future activity, factoring in customer demand, changes in technology and a cost structure necessary to achieve the related revenues. Additionally, these discounted cash flow analyses factor in expected amounts of working capital and weighted average cost of capital. Changes in judgments on any of these factors could materially impact the value of the reporting unit.

197 Restructuring Charges EMC recognized restructuring charges in 2015, 2014, 2013 and prior years. The restructuring charges include, among other items, estimated employee termination benefit costs, subletting leased facilities and the cost of terminating various contracts. In addition, during 2014 and 2013, VMware incurred impairment charges related to its business realignment. The amount of the actual obligations may be different than EMC’s estimates due to various factors, including market conditions, negotiations with third parties and finalization of severance agreements with employees. Should the actual amounts differ from EMC’s estimates, the amount of the restructuring charges could be materially impacted.

Accounting for Income Taxes As part of the process of preparing EMC’s financial statements, EMC is required to estimate its provision for income taxes in each of the jurisdictions in which it operates. This process involves estimating EMC’s actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within EMC’s consolidated balance sheets. EMC assesses the likelihood that its deferred tax assets will be realized through future taxable income and record a valuation allowance to reduce gross deferred tax assets to an amount EMC believes is more likely than not to be realized. In the event that actual results differ from these estimates, EMC’s provision for income taxes could be materially impacted.

Accounting for Stock-Based Compensation For EMC’s share-based payment awards, EMC makes estimates and assumptions to determine the underlying value of stock options, including volatility, expected life and forfeiture rates. Additionally, for awards which are performance-based, EMC makes estimates as to the probability of the underlying performance being achieved. Changes to these estimates and assumptions may have a significant impact on the value and timing of stock-based compensation expense recognized, which could have a material impact on EMC’s consolidated financial statements.

Quantitative And Qualitative Disclosures About Market Risk Market Risk EMC is exposed to market risk, primarily from changes in foreign exchange rates, interest rates and credit risk. To manage the volatility relating to foreign exchange risk, EMC enters into various derivative transactions pursuant to its policies to hedge against known or forecasted market exposures.

Foreign Exchange Risk Management As a multinational corporation, EMC is exposed to changes in foreign exchange rates. Any foreign currency transaction, defined as a transaction denominated in a currency other than the U.S. dollar, will be reported in U.S. dollars at the applicable exchange rate. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date and income and expense items are translated at average rates for the period. The primary foreign currency denominated transactions include revenue and expenses and the resultant accounts receivable and accounts payable balances are reflected on EMC’s balance sheet. Therefore, the change in the value of the U.S. dollar as compared to foreign currencies will have either a positive or negative effect on EMC’s financial position and results of operations. EMC enters into derivative contracts with the sole objective of decreasing the volatility of the impact of currency fluctuations. These exposures may change over time and could have a material adverse impact on EMC’s financial results. Historically, EMC’s primary exposure has related to sales denominated in the Euro, the Japanese yen and the British pound. Additionally, EMC has exposure to emerging market economies, particularly in Latin America and Southeast Asia. EMC uses foreign currency

198 forward and option contracts to manage the risk of exchange rate fluctuations. In all cases, EMC uses these derivative instruments to reduce its foreign exchange risk by essentially creating offsetting market exposures. The success of the hedging program depends on EMC’s forecasts of transaction activity in the various currencies. To the extent that these forecasts are overstated or understated during periods of currency volatility, EMC could experience unanticipated currency gains or losses. The instruments EMC holds are not leveraged and are not held for trading or speculative purposes.

EMC performed sensitivity analyses as of December 31, 2015, 2014 and 2013 based on scenarios in which market spot rates are hypothetically changed in order to produce a potential net exposure loss. The hypothetical change was based on a 10 percent strengthening or weakening in the U.S. dollar, whereby all other variables are held constant. The analyses include all of EMC’s foreign currency contracts outstanding as of December 31 for each year, as well as the offsetting underlying exposures. The sensitivity analyses indicated that a hypothetical 10 percent adverse movement in foreign currency exchange rates would result in a foreign exchange loss of $13 million, $10 million and $12 million at December 31, 2015, 2014 and 2013, respectively.

Interest Rate Risk EMC maintains an investment portfolio consisting of debt and equity securities of various types and maturities. The investments are classified as available-for-sale and are all denominated in U.S. dollars. These securities are recorded on the consolidated balance sheet at market value, with any unrealized gain or temporary non-credit related loss recorded in other comprehensive loss. These instruments are not leveraged and are not held for trading purposes.

EMC employs a Historical Value-At-Risk calculation to calculate value-at-risk for changes in interest rates for its combined investment portfolios. This model assumes that the relationships among market rates and prices that have been observed daily over at least the last 105 days are valid for estimating risk over the next trading day. This model measures the potential loss in fair value that could arise from changes in interest rates, using a 95% confidence level and assuming a one-day holding period. The value-at-risk on the debt portion of the investment portfolio was $3 million as of December 31, 2015 and $8 million as of December 31, 2014. The average, high and low value-at-risk amounts for 2015 and 2014 were as follows (in millions):

Average High Low 2015 ...... $5 $6 $3 2014 ...... 5 8 2

The average value represents an average of the quarter-end values. The high and low valuations represent the highest and lowest values of the quarterly amounts.

Credit Risk Financial instruments that potentially subject EMC to concentration of credit risk consist principally of bank deposits, money market investments, short- and long-term investments, accounts and notes receivable and foreign currency exchange contracts. Deposits held with banks in the United States may exceed the amount of FDIC insurance provided on such deposits. Deposits held with banks outside the United States generally do not benefit from FDIC insurance. The majority of EMC’s day-to-day banking operations globally are maintained with Citibank. EMC believes that Citibank’s position as a primary clearing bank, coupled with the substantial monitoring of their daily liquidity, both by their internal processes and by the Federal Reserve and the FDIC, mitigate some of its risk.

EMC’s money market investments are placed with money market funds that are 2a-7 qualified. Rule 2a-7, adopted by the SEC under the Investment Company Act of 1940, establishes strict standards for quality, diversity and maturity, the objective of which is to maintain a constant net asset value of a dollar. EMC limits its

199 investments in money market funds to those that are primarily associated with large, money center financial institutions and limits its exposure to Prime funds. EMC’s short- and long-term investments are invested primarily in investment grade securities, and EMC limits the amount of its investment in any single issuer and institution. Due to the European financial crisis, in the fourth quarter of 2011, EMC took steps to limit exposure to investments and financial institutions in this region.

EMC provides credit to customers in the normal course of business. Credit is extended to new customers based upon checks of credit references, credit scores and industry reputation. Credit is extended to existing customers based on prior payment history and demonstrated financial stability. The credit risk associated with accounts and notes receivables is generally limited due to the large number of customers and their broad dispersion over many different industries and geographic areas. EMC establishes an allowance for the estimated uncollectible portion of its accounts and notes receivable. The allowance was $92 million and $74 million at December 31, 2015 and 2014, respectively. EMC customarily sells the notes receivable it derives from its leasing activity. Generally, EMC does not retain any recourse on the sale of these notes. EMC’s sales are generally dispersed to a large number of customers, minimizing the reliance on any particular customer or group of customers.

The counterparties to EMC’s foreign currency exchange contracts consist of a number of major financial institutions. In addition to limiting the amount of contracts EMC enters into with any one party, EMC monitors the credit quality of the counterparties on an ongoing basis.

200 OUR BUSINESS

Business of the Combined Company As used in this “Business of the Combined Company” section, references to “Company,” “we,” “us” and “our” refer to the combined company after giving effect to the consummation of the Dell-EMC merger.

We believe that the combined company will be well-positioned in the rapidly evolving IT market. In particular, we believe that the combined company will continue to be a leader in developing innovative technology solutions that will drive innovation and growth within the IT industry by addressing the following trends: • Transforming and modernizing IT infrastructure. Our enterprise customers are increasingly focused on transforming and modernizing their traditional data center infrastructure by adopting more efficient and responsive products and solutions that optimize their IT operations. This focus on transformation and modernization has also caused a shift in customer demand to next-generation IT architectures and technologies such as hybrid cloud solutions, which consist of a mix of on- and off-premise IT infrastructure. Hybrid cloud solutions combine the economic and strategic benefits of the control and security of on-premise infrastructure with the scalability and flexibility of off-premise cloud platforms. In addition, IT organizations are focusing on software-defined computing, networking, storage and security, which enhance the responsiveness and efficiency of modern data center infrastructure to changing operating conditions and business needs. This focus on next-generation IT architectures and technologies has also caused a shift in customer demand from building and assembling IT platforms to purchasing cloud-ready scalable integrated IT solutions, such as converged and hyper-converged infrastructure, as customers seek to accelerate their digital transformation and enable modern IT environments. • The exponential growth of data. The growth in digital data continues to challenge IT departments as businesses seek to store, manage and use such data. Organizations seek to gain a competitive advantage through real-time analysis of significant amounts of data to obtain deeper insights into consumer behavior and market trends. The retention, processing and analysis of such vast quantities of digital data necessitate new computing, networking, storage and security resources, which creates significant demand for innovative data center infrastructure products, services and applications.

201 • Connecting people anytime, anywhere. IT consumers across customer segments seek to enable and connect an increasingly mobile workforce from anywhere in the world at any time. This focus on mobility puts significant strain on our customers’ data center infrastructure. Technologies, such as cloud clients, desktop virtualization, enterprise mobile device management tools and thinner and lighter PCs with enhanced security features, aim to enable a highly mobile and interconnected workforce. • Protecting against evolving security threats. The transformation of traditional data center infrastructure and applications to hybrid cloud and software-based solutions, the exponential growth of digital data and the emphasis on accessibility and connectivity, including on mobile platforms, as well as the pervasiveness and increasing sophistication of cyber attacks drive the growing demand for IT security and the need for protection across modern data center infrastructure, networks and endpoints.

Our Businesses Our family of complementary and strategically aligned businesses will share a common vision and pursue collective goals, while maintaining flexibility to effectively compete in diverse markets, provide innovative and differentiated solutions to our customers that are free from vendor lock-in and preserve customer choice. • Enterprise Solutions. We will merge EMC’s Information Storage segment and Dell’s Enterprise Solutions Group to create our Enterprise Solutions business under the Dell EMC brand. Our Enterprise Solutions business will enable our enterprise customers’ digital transformation through our trusted hybrid cloud and big data solutions which are built upon modern data center infrastructure that incorporate industry-leading converged infrastructure and storage technologies. Our comprehensive portfolio of advanced storage solutions will include traditional storage solutions as well as next- generation storage solutions (including all-flash arrays, scale out file and object platforms and other solutions). Our server portfolio will include high-performance rack, blade, tower and hyperscale servers. In addition, the combination of Dell’s and EMC’s strengths in core server and storage solutions in our Enterprise Solutions business will enable us to offer leading converged and hyper-converged solutions, which allow our customers to accelerate their IT transformation by buying scalable integrated IT solutions instead of building and assembling their own IT platforms. Our Enterprise Solutions business will also offer attached software, peripherals and services, including support and deployment, configuration and extended warranty services as well as financing options and services offered by Dell Financial Services. In 2015, our combined Enterprise Solutions business would have been the #1 external storage provider with 36% global market share, and the #2 x86 server provider with 21% global market share. In addition, in 2015, our combined Enterprise Solutions business would have been the #1 purpose-built backup appliance provider with 62% global market share and the #1 all-flash arrays provides with approximately 40% global market share. In 2015, EMC was the #1 provider of integrated infrastructure solutions with 50% global market share, and in the fourth quarter of 2015, the combined Enterprise Solutions business would have been the #1 cloud IT infrastructure provider with 19% global market share. Our Enterprise Solutions business will also include Virtustream and RSA. Virtustream’s cloud software and infrastructure-as-a-service solutions enable customers to migrate, run and manage mission-critical applications in cloud-based IT environments and represents a critical element of our strategy to help customers move their applications to a cloud-based IT infrastructure. RSA provides cybersecurity capabilities to help manage an organization’s security and risk profile by providing more effective detection and response through enhanced visibility and analytics. • Client Solutions. Our Client Solutions business will consist of Dell’s Client Solutions Group, which will retain the Dell brand. Our Client Solutions offerings include branded hardware, such as desktop PCs, notebooks and tablets, and branded peripherals, such as monitors, printers and projectors, as well as third-party software and peripherals. Our computing devices are designed with our commercial and consumer customers’ needs in mind, and we seek to optimize performance, reliability, manageability, design and security. In addition to our traditional PC business, we have a portfolio of end-to-end thin

202 client offerings that is well-positioned to benefit from the growth trends in cloud computing. Similar to our Enterprise Solutions business, we also offer attached software, peripherals and services, including support and deployment, configuration and extended warranty services as well as financing options and services offered by Dell Financial Services. Dell has grown its global market share in PCs from 12% in 2010 to 15% in the first quarter of 2016, and has gained share in the global PC market year over year in 12 consecutive quarters following the announcement of the going-private transaction in February 2013. In addition, in the first quarter of 2016, Dell was also the #1 provider of PCs in the United States with a 26% market share. In 2015, Dell was the #1 global provider of PC monitors with a 17% market share. In addition to our Enterprise Solutions offerings, our Client Solutions offerings are an important element of the combined company’s strategy, generating strong cash flow and providing significant opportunities for cross-selling complementary solutions. • VMware. VMware (NYSE: VMW) is a leader in virtualization, which enables organizations to efficiently manage IT resources across complex multi-cloud, multi-device environments. VMware has expanded beyond its core business of compute virtualization to offer a broad portfolio of virtualization technologies by leveraging synergies across three main product groups: software-defined data center, hybrid cloud computing and end-user computing. VMware’s software-defined data center includes the fundamental compute layer for the data center (vSphere), storage and availability to offer cost-effective holistic data storage and protection options (virtual SAN), network and security (VMware NSX) as well as management and automation (vRealize) products. VMware provides offerings, such as VMware vCloud Air, that enable its customers to utilize off-premise vSphere-based hybrid cloud computing capacity. VMware’s end-user computer offerings (such as AirWatch mobile solutions and Horizon application and desktop virtualization solutions) enables IT organizations to efficiently deliver more secure access to applications, data and devices for their end users by leveraging VMware’s software-defined data center solutions to extend virtualization from data centers to devices. In 2014, VMware was the #1 provider of server virtualization software with 87% global market share. We believe that VMware has significant growth opportunities in storage, networking and security virtualization, as well as management and automated products for multi-cloud, multi-device environments. VMware is a strategically aligned business and we will own approximately 81% of VMware. • SecureWorks. SecureWorks (NASDAQ: SCWX) is a leading global provider of intelligence-driven information security solutions focused on protecting customers from cyber-attacks to small and mid- sized businesses, large enterprises and U.S. state and local government agencies. SecureWorks’ solutions enable organizations to strengthen their cyber defenses to prevent security breaches by detecting malicious activity in real time, prioritizing and responding rapidly to security breaches and predicting emerging threats. With over 16 years of operations, SecureWorks has developed proprietary technologies, processes and extensive expertise in the information security industry. SecureWorks is a strategically aligned business and we will own approximately 87% of SecureWorks. • Emerging Cloud Solutions. Our next-generation cloud platforms include Pivotal and Boomi, which are strategically aligned businesses. Pivotal is a leading provider of application and data infrastructure software and application development services. Following the completion of Pivotal’s previously announced Series C Financing, we will own (including our indirect interest through VMware) approximately 81% of Pivotal, while General Electric, Ford and Microsoft, as well as Pivotal employees, will own the remaining interests. Boomi provides a cloud integration platform enabling customers to move, manage and govern data between cloud and on-premises applications. As a leading integration platform-as-a-service provider, Boomi helps customers achieve significant cost savings by eliminating the need for traditional middleware, appliances or custom code. We will own 100% of Boomi. • Dell Software. Our software business offers systems management, security software and information management.

203 In 2015, the global market for our Enterprise Solutions storage and server offerings was $74 billion. In 2015, the global market for our Client Solutions P.C. offerings was $318 billion. In 2015, the global market for our Virtualization business was $19 billion. The global market for our security solutions was $35 billion in 2015. The global market for our cloud solutions was $19 billion in 2015. The categories of businesses described above are largely representative of the current expected financial reportable segments of the combined company. However, we are still in the process of evaluating the organization of the combined company and our future reportable segments may ultimately differ after a final determination has been made.

Our Strengths We believe the following competitive strengths have been instrumental to Dell’s and EMC’s performance and position the combined company for future success:

The combined company is also well-positioned within the high-growth areas of our four core end markets. In the fourth quarter of 2015, the combined company would have had a leading 19% global market share of the cloud IT infrastructure market, which is anticipated to grow from $28 billion in 2015 to $48 billion in 2019, representing a CAGR of 14%. In addition, sales of converged and hyper-converged solutions, which are a meaningful part of IT infrastructure sales, are expected to double from $7 billion in 2015 to $14 billion in 2019. We were the leading global provider of converged and hyper-converged solutions in 2015, with 45% global market share. Further, in 2015, our high-growth businesses in virtualization and security solutions outperformed their respective markets, with our network virtualization and security platform for the software-defined data center growing over 100% year-over-year and SecureWorks achieving approximately 25% year-over-year growth in revenue (as adjusted for the impact of purchase accounting). We believe that our market-leading positions in our core end markets and our strong positions in high-growth markets will continue to drive our growth.

204 Differentiated Business Model Focused on Generating Attractive Pull-Through Opportunities. Our businesses generate attractive pull-through revenue from software, peripherals and services that attach to our offerings. These attached software, peripherals and services are typically high-margin and often generate up-front and recurring payments, which have provided us with high revenue visibility and predictability. For example, within our Enterprise Solutions business, at the time of the direct sale of a server to a commercial customer, we also offer attached software, peripherals and services, including support and deployment, configuration and extended warranty services. In addition, we also offer financing options and services through Dell Financial Services. These attached products and services create significant added value to customers by streamlining the set-up process and guaranteeing component compatibility and performance, as well as by providing financing assistance. Dell has a consistently high attach rate, as evidenced by its provision of attached services in approximately 56% and 64% of its server unit sales in the first quarter of 2015 and 2016, respectively, and approximately 46% and 45% of its commercial client unit sales in the first quarter of 2015 and 2016, respectively. The combined company’s comprehensive range of core and attached IT software, peripherals and services will provide a competitive advantage and financial benefit as customers increasingly seek to consolidate their vendor base.

Recurring and Diversified Revenue Streams Driving Strong Cash Flow Generation. We have historically generated strong and stable free cash flows due to our recurring and diversified revenue streams, low capital expenditure requirements, global supply chain capabilities and efficient cash conversion cycle. During the year ended January 29, 2016, the combined company would have generated over $7.6 billion of Unlevered Free Cash Flow (as defined in note 8 under “—Summary Historical and Pro Forma Financial and Other Data of Denali”) after giving pro forma effect to the Transactions. Both Dell and EMC generate high-margin revenue streams through the sale of attached software, peripherals and services, such as Dell’s deferred hardware and software maintenance services that attach to Client Solutions and Enterprise Solutions offerings, Dell’s financing services through Dell Financial Services, as well as deferred software maintenance and license fees driven by the sale of EMC offerings and other support services provided by EMC. These attached services also have provided predictable revenue streams as the average term of an attached services contract is approximately two years and the fees for such services are often paid up-front. In Fiscal 2016, Dell’s deferred revenue increased 10% as compared to Fiscal 2015, and Dell’s Client Solutions Group and Enterprise Solutions Group had gross margins associated with deferred revenue of approximately 67% and 64%, respectively. In addition, the combined company’s businesses in high-growth areas such as security solutions and cloud platforms generally utilize a subscription model, providing recurring revenue streams and high levels of revenue visibility. The combined company’s revenue base will also be highly diversified, as evidenced by a broad client portfolio that will include U.S. State governments, G20 governments and Fortune 500 companies. As a result, the combined company will not be dependent on any one customer, product or service, which increases the stability of cash flows. In addition, Dell and EMC both have proven track records of increasing cash flow generation by reducing operating costs and realizing operating efficiencies in their businesses. The combined company’s strong operating cash flows, together with its strong working capital management, will position it to reduce debt while enabling it to invest in operations and R&D and pursue attractive growth opportunities.

Proven Track Record of Developing and Commercializing Innovative Technologies. The combined company will unite EMC’s and Dell’s strong track records of driving innovation. The combined company will collectively own over 20,000 patents and patent applications. Dell’s direct distribution business model, which emphasizes direct communication with customers, provides real-time feedback and allows us to refine and further develop our R&D initiatives to focus on products and solutions that are responsive to customer needs. EMC’s strong relationships with its enterprise customers through its direct enterprise sales force and high-touch dedicated account executives with product specialists also provide EMC with insight that has helped to optimize its R&D investments. In addition to organic R&D investments, the combined company will build on both companies’ proven history of nurturing technology acquisitions into profitable and growing businesses that offer innovative IT solutions. For example, VMware grew rapidly from revenues of $74 million in 2003 to revenues of over $1 billion in just five years. More recently, EMC successfully grew XtremIO from a business with minimal revenues at the time of its acquisition to revenues of over $1 billion in less than four years. We believe that the combined company’s continued commitment to both organic and inorganic R&D investments, together with the

205 agility and flexibility to make long-term R&D investments afforded by its privately-controlled corporate governance structure, will allow it to better develop and commercialize innovative technologies and leading IT solutions. Experienced Management Team. The combined company will be led by a deep, committed and highly experienced management team with significant industry expertise and operating experience in a variety of economic and technology cycles. Upon completion of the Transactions, Michael Dell, Dell’s founder and Chief Executive Officer, will lead the combined company as chairman and Chief Executive Officer. In addition, key executives on Michael Dell’s team will include Tom Sweet, our Chief Financial Officer, Marius Haas, our President and Chief Commercial Officer, Rory Read, our Chief Integration Officer, Howard Elias, our President, Global Services and IT, Jeff Clarke, the President of our Client Solutions business, David Goulden, the President of our Enterprise Solutions business, and Rodney Rogers, the Chief Executive Officer of Virtustream. In addition, key executives of our strategically aligned business include Pat Gelsinger, the Chief Executive Officer of VMware, Rob Mee, the Chief Executive Officer of Pivotal, and Mike Cote, the Chief Executive Officer of SecureWorks. The senior management team of the combined company will consist of accomplished industry veterans with an average of more than 30 years of industry experience who have a deep understanding of changing market trends, consumer needs and innovative technologies and have proven track records of executing upon strategies in a dynamic marketplace to achieve profitable growth. We believe this will give us the ability to capitalize on the opportunities resulting from market changes, bolstered by a culture and spirit of entrepreneurship within our family of complementary and strategically aligned businesses.

Our Strategy We intend to maintain and extend our leading market positions and increase our revenue and profitability by pursuing the following strategies:

Leverage Our Leading Market Positions. We are focused on profitably leveraging our expansive portfolio of market-leading IT products and solutions by: • Providing a Broad Portfolio of Technology Solutions. The combined company will offer a broad range of integrated and innovative IT products and solutions, empowering customers to optimize their IT operations. Our extensive array of IT products and solutions will enable our customers to simplify the purchasing process, ensure hardware and software compatibility and provide an integrated user support experience. We will leverage the combined company’s broad portfolio of industry-leading IT solutions to capitalize on the market trend towards IT vendor consolidation. • Offering Complementary Premium and Value Offerings. We will offer a complementary portfolio of products and solutions that meet the diverse needs of our customers across different market segments. Dell’s high-quality and scalable products and services designed for the midmarket delivers value at compelling price points, which complements EMC’s premium offerings of next-generation IT technologies and solutions and its high-touch services tailored for large enterprises. • Developing Transformative IT Solutions. We will offer new and transformative IT solutions that utilize the best technologies and products from both Dell and EMC to capture a greater share of the growing customer IT spend. We will leverage Dell’s compute capabilities, EMC’s leading storage franchise, Virtustream’s next-generation cloud technology and VMware’s virtualization expertise to develop innovative IT solutions (such as converged and hyper-converged infrastructure) that transform and modernize traditional data center infrastructure to optimize our customers’ IT performance and address their rapidly evolving needs. • Expanding Our Global Market Share. We are focused on strategically expanding our presence in emerging markets such as China and India. Dell and EMC both have strong brand recognition in many emerging markets and we aim to continue to expand our sales coverage with respect to both Dell and EMC offerings and invest in localized R&D to capitalize on regional growth trends.

206 Expand our Go-To-Market Strengths and Cross-Selling Opportunities. We will combine and leverage Dell’s and EMC’s go-to-market strengths to drive incremental revenue. Dell’s direct generalist sales force primarily targets small businesses and the mid-market while EMC’s high-touch and dedicated account executives and product specialists have long-standing relationships with large enterprises. We have identified thousands of EMC customer accounts with minimal Dell presence as well as thousands of Dell customer accounts where EMC has a limited presence, which represent significant revenue opportunities. We also intend to upsell Dell’s PCs and servers to EMC’s customer base and cross-sell EMC’s enterprise storage products and solutions and VMware’s virtualization solutions through Dell’s direct distribution channels and to Dell’s mid-market customers. The Dell sales force has a proven track record of reselling EMC products. Prior to the termination of the reselling arrangement as a result of the acquisition by Dell of a similar product, in 2007, Dell had contributed up to 14% of EMC’s annual revenue, with a run-rate of more than $2.0 billion. We intend to build on this historical success and effectively execute these cross-selling opportunities to drive revenue growth.

We believe these factors will enable us to profitably deliver high-quality products at lower costs with customer- centric and compelling value proposition.

Focus on De-Leveraging and Achieving a Corporate Investment Grade Rating. One of our objectives is to reduce indebtedness in the first 18-24 months after the completion of the Dell-EMC merger to achieve and maintain a corporate investment grade credit rating. The cash necessary to achieve this objective is expected to come from cash flows from operations, cash generated by reductions in working capital requirements and divestitures of non-core businesses, such as the Dell Services Transaction. In addition, Dell and EMC have identified $550 million and $800 million, respectively, of net structural standalone annual cost savings opportunities on a run-rate basis, including workforce optimization, pricing optimization and reduction in procurement costs, which are in the advanced implementation stages. Further, we expect to realize significant cost savings as a result of combining the Dell and EMC businesses. We have currently identified approximately $2 billion in cost synergies opportunities from the Dell-EMC merger. In addition, EMC has averaged approximately $3.5 billion of stock repurchases and dividends as a public company annually over the last three years, which will no longer be required to be made as a result of the Dell-EMC merger. Dell has demonstrated its focus on, and ability to, de-leverage, as evidenced by the pay down as of April 29, 2016 of $5.1 billion of outstanding debt since its going-private transaction in October 2013. As a result, Dell successfully obtained a two-notch corporate rating upgrade from Standard & Poor’s and a one-notch corporate rating upgrade from Moody’s and Fitch. We believe that our strong operating cash flows, together with the cash from cost-saving initiatives, realization of synergies from the Dell-EMC merger and divestitures of non-core businesses, will enable us to de-leverage and achieve a corporate investment grade rating in the near- to medium-term.

207 Selectively Pursue Opportunities for Strategic Acquisitions and Alliances. We have demonstrated our ability to execute complementary acquisitions that have expanded our core capabilities and platform and accelerated development of new and innovative technologies. In addition, we have also made venture investments that align with our strategic priorities through our corporate venturing team. We intend to continue to augment our organic growth by executing on our disciplined investment strategy to acquire and integrate businesses, technologies and products that strengthen our market-leading positions, enhance our product and services portfolio and/or leverage our scale. We may also enter into joint ventures and alliances with selected partners to jointly develop and market new products and solutions. Given our market-leading positions, we believe we are well-positioned to benefit from consolidation trends within the IT market to leverage our core competencies and infrastructure.

Business of Denali As used in this “Business of Denali” section, references to “Company,” “we,” “us” and “our” refer to Denali and all of its consolidated subsidiaries prior to the consummation of the Dell-EMC merger (excluding, for the avoidance of doubt, EMC and its subsidiaries).

Overview We design, develop, manufacture, market, sell and support a wide range of products and services through our four product and services business units: Client Solutions, Enterprise Solutions Group, Dell Software Group and Dell Services.

In the first quarter of Fiscal 2016, we redefined the categories within Client Solutions and Enterprise Solutions Group to reflect the way we currently organize products and services within these business units. The commercial and consumer categories of Client Solutions consist of products designed to meet the needs of the relevant customer. None of these changes impacted our consolidated or total business unit results. Prior period amounts have been reclassified to conform to the current year presentation.

Client Solutions. Our Client Solutions offerings include desktops, thin client products, notebooks and services that are closely tied to the sale of Client Solutions hardware offerings, and Client Solutions peripherals and third-party software related to the sale of these product offerings. Our computing devices are designed with customer needs in mind. Our offerings balance performance, manageability, design and security. We believe that the strategic and profitable expansion of the Client Solutions offerings is critical to our long-term success. • Commercial—On an ongoing basis, we continue to refresh and enhance our commercial line of desktops, notebooks and thin client products. We also offer a variety of support and deployment services, customized configuration services and extended warranty services that are tailored to meet the wide-ranging needs of our commercial customers. These services are highly integrated with the sale and deployment of hardware for our commercial customers. • Consumer—Our desktops and notebooks provide strong performance, superior display and enhanced entertainment capabilities. In addition to these hardware offerings, our portfolio of solutions includes peripherals and other service offerings, such as support and extended warranty services, which are closely tied to the sale of consumer hardware. • Third-party software and after-point-of-sale peripherals—We sell a variety of Client Solutions third- party software and peripherals, including monitors, printers and projectors.

208 Since the announcement of the going-private transaction in February 2013, we have consistently grown share in the global PC market in 12 consecutive quarters compared to the corresponding quarter in the prior year. The chart below shows the change (expressed in basis points) for each quarter in our share of the global PC market by units compared to the corresponding quarter in the prior year.

Change in Dell’s Share of the Global PC Market (by units)

Announcement of Going Private Transaction 190 188 149 135 131 123 114 110 102 92 79 47 22 21 5 3 (4) (27) (28) (41) (54) (69) (76) (111) (230) Q310 Q311 Q212 Q114 Q414 Q315 Q110 Q410 Q211 Q112 Q312 Q113 Q213 Q413 Q214 Q314 Q115 Q415 Q210 Q111 Q411 Q412 Q313 Q215 Q116

Enterprise Solutions Group. Offerings by ESG include servers, networking, storage, services that are closely tied to the sale of ESG hardware offerings, and ESG-related peripherals and third-party software. • Servers and Networking—Our servers are designed to offer customers affordable performance, reliability and scalability. Our offerings include high-performance rack, blade, tower and hyperscale servers for our business customers as well as converged infrastructure that combines servers, storage and networking capabilities. Our networking portfolio is designed to help companies transform and modernize their infrastructure, mobilize and enrich end-user experiences and accelerate business applications and processes. We offer integrated and simplified solutions for wired and wireless connectivity to complement our Client Solutions portfolio. In the data center, our open networking line complements our server and storage portfolios, helping customers boost performance and reduce management costs through convergence and software-defined solutions. • Storage—We offer a comprehensive portfolio of advanced storage solutions, including storage area networks, network-attached storage, direct-attached storage, software-defined storage and various data protection solutions. Our storage offerings allow customers to grow capacity, add performance and protect their data in a more economical manner. The flexibility and scalability offered by our storage systems help organizations optimize storage for diverse environments with varied IT requirements. We continue to evolve our storage portfolio through enhancements across the entire portfolio, including advances in flash technology, new hyper-converged architectures and software-defined storage offerings. We also provides services and third-party software and peripherals that are closely tied to the sale of storage products.

Dell Software Group. DSG offers systems management, security software solutions and information management software.

Dell Services. Dell Services offers a broad range of IT and business services, including infrastructure, cloud, applications and business process services. Infrastructure and cloud services may be performed under multiyear outsourcing arrangements. Within these arrangements, we are often responsible for defining the infrastructure technology strategies for our customers through the identification and delivery of new technology offerings and innovations that deliver value to our customers. Applications services include such services as application development, modernization and maintenance, application migration and management services, package

209 implementation, testing and quality assurance functions, business intelligence and data warehouse solutions and application consulting services. Through our business process services, we assume responsibility for certain customer business functions, including back office administration, call center management and other technical and administration services.

On March 27, 2016, we entered into a definitive agreement with NTT Data International L.L.C. to sell substantially all of the Dell Services business, including the Dell Services Federal Government business but excluding the global support, deployment and professional services business, for cash consideration of approximately $3.1 billion. See “—Divestitures” for more information regarding the divestiture.

Dell Financial Services We offer or arrange various financing options and services for our commercial and consumer customers in the United States, Canada, Europe and Mexico through DFS. DFS offers a wide range of financial services, including originating, collecting and servicing customer receivables primarily related to the purchase of our products. DFS offers private label credit financing programs to qualified commercial and consumer customers and offers leases and fixed-term financing primarily to commercial customers. Financing through DFS is one of many sources of funding our customers may select. For additional information about our financing arrangements, see note 5 of the notes to our audited consolidated financial statements included in this offering memorandum.

Product Development We focus on developing scalable technology solutions that incorporate highly desirable features and capabilities at competitive prices. We employ a collaborative approach to product design and development in which our engineers, with direct customer input, design innovative solutions and work with a global network of technology companies to architect new system designs, influence the direction of future development and integrate new technologies into our products. We manage our RD&E spending by targeting those innovations and products that we believe are most valuable to our customers and by relying on the capabilities of our strategic relationships. Through this collaborative, customer-focused approach, we strive to deliver new and relevant products to the market quickly and efficiently.

To further our goal of transforming our operations to become the leading provider of scalable end-to-end technology solutions, we have been investing in research and development activities that support our strategic initiatives. At January 29, 2016, we operated 17 global research and development centers, including the Dell Silicon Valley Research and Development Center. Our total RD&E expenses were $1.3 billion, $1.2 billion and $1.3 billion for Fiscal 2016, Fiscal 2015 and Combined Fiscal 2014, respectively. These investments reflect our commitment to research and development activities that support our initiatives to grow our enterprise solutions and services offerings.

Manufacturing and Materials Third parties manufacture the majority of the client products sold under the Dell brand. We use contract manufacturers and manufacturing outsourcing relationships as part of our strategy to enhance our variable cost structure and to achieve our goals of generating cost efficiencies, delivering products faster, better serving our customers and building a world-class supply chain. Our manufacturing facilities are located in Penang, Malaysia; Chengdu, China; Xiamen, China; Hortolândia, Brazil; Chennai, India; and Lodz, Poland. See “—Properties” for information about our manufacturing and distribution locations.

210 Our manufacturing process consists of assembly, software installation, functional testing and quality control. Testing and quality control processes are also applied to components, parts, sub-assemblies and systems obtained from third-party suppliers. Quality control is maintained through the testing of components, subassemblies and systems at various stages in the manufacturing process. Quality control procedures also include a burn-in period for completed units after assembly, ongoing production reliability audits, failure tracking for early identification of production and component problems and information from customers obtained through services and support programs. We are certified to the ISO (International Organization for Standardization) 9001: 2008 Quality management systems standard. This certification includes most of our global sites that design, manufacture and service our products.

We purchase materials, supplies, product components and products from a large number of vendors. In some cases, where multiple sources of supply are not available, we rely on single-source or a limited number of sources of supply if we believe it is advantageous to do so because of performance, quality, support, delivery, capacity, or price considerations. We believe that any disruption that may occur because of our dependence on single- or limited-source vendors would not disproportionately disadvantage us relative to our competitors. However, see “Risk Factors—Risks Related to Our Business—Reliance on vendors for products and components, many of whom are single-source or limited-source suppliers, could harm our business by adversely affecting product availability, delivery, reliability and cost” for information about the risks associated with our use of single- or limited-source suppliers.

Geographic Operations Our global corporate headquarters is located in Round Rock, Texas. We have operations and conducts business in many countries located in the Americas, Europe, the Middle East, Asia and other geographic regions. To increase our global presence, we continue to focus on emerging markets outside of the United States, Western Europe, Canada, China and Japan. We continue to view these geographical markets, which include the vast majority of the world’s population, as a long-term growth opportunity. Accordingly, we continue to pursue the development of technology solutions that meet the needs of these markets. Our continued expansion in emerging markets creates additional complexity in coordinating the design, development, procurement, manufacturing, distribution and support of our product and services offerings. For information about percentages of revenue we generated from our operations outside of the United States and other financial information for each of the last three fiscal years, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Denali—Results of Operations” and note 15 of the notes to our audited consolidated financial statements included in this offering memorandum.

Competition We operate in an industry in which there are rapid technological advances in hardware, software and services offerings. We face ongoing product and price competition in all areas of our business, including from both branded and generic competitors. We compete based on our ability to offer customers competitive, scalable and integrated solutions that provide the most current and desired product and services features at a competitive price. We closely monitor competitor list pricing, including the effect of foreign exchange rate movements, in an effort to provide the best value for our customers. We believe that our strong relationships with our customers and channel partners allow us to respond quickly to changing customer needs and other macroeconomic factors.

Sales and Marketing We sell products and services directly to customers and through other sales distribution channels, such as retailers, third-party solutions providers, system integrators and third-party resellers. Our customers include large global and national corporate businesses, public institutions that include government, education, healthcare organizations, law enforcement agencies, small and medium-sized businesses and consumers.

211 Our sales efforts are organized around the evolving needs of our customers and our marketing initiatives reflect this focus. We believe that our unified global sales and marketing team creates a sales organization that is more customer-focused, collaborative and innovative. Our go-to-market strategy includes a direct business model, as well as channel distribution. Our direct business model emphasizes direct communication with customers, thereby allowing us to refine our products and marketing programs for specific customers groups, and we continue to rely on this strategy. In addition to our direct business model, we rely on a network of channel partners to sell our products and services, enabling us to serve a greater number of customers.

We market our products and services to small and medium-sized businesses and consumers through various advertising media. Customers may offer suggestions for current and future Dell products, services and operations on Dell IdeaStorm, an interactive portion of our internet website. To react quickly to our customers’ needs, we track Dell’s Net Promoter Score, a customer loyalty metric that is widely used across various industries. Increasingly, we also engage with customers through our social media communities on www.dell.com and in external social media channels.

For large business and institutional customers, we maintain a field sales force throughout the world. Dedicated account teams, which include enterprise solutions specialists, form long-term relationships to provide our largest customers with a single source of assistance, develop tailored solutions for these customers and provide us with customer feedback. For these customers, we offer several programs designed to provide single points of contact and accountability with global account specialists, special global pricing and consistent global service and support programs. We also maintain specific sales and marketing programs targeted at federal, state and local governmental agencies, as well as healthcare and educational customers.

Patents, Trademarks and Licenses At January 29, 2016, we held a worldwide portfolio of 5,177 patents and had an additional 2,716 patent applications pending. We also hold licenses to use numerous third-party patents. To replace expiring patents, we obtain new patents through our ongoing research and development activities. The inventions claimed in our patents and patent applications cover aspects of our current and possible future computer system products, manufacturing processes and related technologies. Our product, business method and manufacturing process patents may establish barriers to entry in many product lines. Although we use our patented inventions and also license them to others, we are not substantially dependent on any single patent or group of related patents. We have entered into a variety of intellectual property licensing and cross-licensing agreements and software licensing agreements with other companies. We anticipate that our worldwide patent portfolio will be of value in negotiating intellectual property rights with others in the industry.

We have obtained U.S. federal trademark registration for the DELL word mark and the Dell logo mark. At May 3, 2016, we owned registrations for 198 of our other trademarks in the United States and had pending applications for registration of 15 other trademarks. We believe that the establishment of the DELL word mark and logo mark in the United States is material to our operations. At May 3, 2016, we also had applied for, or obtained registration of, the DELL word mark and several other marks in approximately 191 other countries.

From time to time, other companies and individuals assert exclusive patent, copyright, trademark, or other intellectual property rights to technologies or marks that are alleged to be relevant to the technology industry or our business. We evaluate each claim relating to our products and, if appropriate, seek a license to use the protected technology. The licensing agreements generally do not require the licensor to assist us in duplicating the licensor’s patented technology, nor do the agreements protect us from trade secret, copyright, or other violations by us or our suppliers in developing or selling these products.

212 Government Regulation and Sustainability Government Regulation Our business is subject to regulation by various U.S. federal and state governmental agencies and other governmental agencies. Such regulation includes the activities of the U.S. Federal Communications Commission; the anti-trust regulatory activities of the U.S. Federal Trade Commission, the U.S. Department of Justice and the European Union; the consumer protection laws and financial services regulation of the U.S. Federal Trade Commission and various state governmental agencies; the export regulatory activities of the U.S. Department of Commerce and the U.S. Department of Treasury; the import regulatory activities of the U.S. Customs and Border Protection; the product safety regulatory activities of the U.S. Consumer Product Safety Commission and the U.S. Department of Transportation; the health information privacy and security requirements of the U.S. Department of Health and Human Services; and the environmental, employment and labor and other regulatory activities of a variety of governmental authorities in each of the countries in which we conduct business. We were not assessed any material environmental fines, nor did we have any material environmental remediation or other environmental costs, during Fiscal 2016.

Sustainability Environmental stewardship and social responsibility are both integral parts of how we manage our business and complement our focus on business efficiencies and customer satisfaction. We believe that our focus on environmental and social responsibility drives top-line performance and customer loyalty, reduces operational and regulatory risk and enhances our brand.

We use open dialogue with our customers, vendors and other stakeholders as part of our sustainability governance process in which we solicit candid feedback and offer honest discussions on the challenges we face globally. Our environmental initiatives take many forms, including maximizing product energy efficiency, reducing and eliminating sensitive materials from our products and providing responsible, convenient computer recycling options for customers. Our social responsibility initiatives are focused on both our own facilities and our complex supply chain.

We were the first company in our industry to offer a free worldwide recycling program for consumers. We have streamlined our transportation network to reduce transit times, minimize air freight and reduce emissions. Our sustainable packaging is designed to minimize box size and to increase recycled content of materials along with recyclability. When developing and designing products, we select materials guided by a precautionary approach in which we seek to eliminate environmentally sensitive substances (where reasonable alternatives exist) from our products and works towards developing reliable, environmentally sound and commercially scalable solutions. We also have created a series of tools that help customers assess their current IT operations and uncover ways to reduce both the costs of those operations and their impact on the environment.

Product Backlog We believe that product backlog is not a meaningful indicator of net revenue that can be expected for any period. Our business model generally gives us flexibility to manage product backlog at any point in time by expediting shipping or prioritizing customer orders toward products that have shorter lead times, thereby reducing product backlog and increasing current period revenue. Moreover, product backlog at any point in time may not result in the generation of any predictable amount of net revenue in any subsequent period, as unfilled orders can generally be canceled at any time by the customer.

Employees At the end of Fiscal 2016, we had approximately 101,400 total full-time employees, compared to approximately 97,900 total full-time employees at the end of Fiscal 2015. At the end of Fiscal 2016, approximately 36% of these full-time employees were located in the United States, and approximately 64% of these full-time employees were located in other countries.

213 Properties At January 29, 2016, we owned or leased a total of approximately 18 million square feet of office, manufacturing and warehouse space worldwide, approximately 7 million square feet of which is located in the United States. At the same date, we owned approximately 48% of this space and leased the remaining 52%. Included in these amounts are approximately 532,000 square feet that are either vacant or sublet.

Our principal executive offices and our global headquarters are located at One Dell Way, Round Rock, Texas. At January 29, 2016, our business centers, which include facilities that contain operations for sales, technical support and administrative and support functions, occupy 12 million square feet of space, of which we owned 47%. At the same date, our manufacturing operations occupied 2.5 million square feet of manufacturing space, of which we owned 86%. In addition, at January 29, 2016, our research and development centers were housed in 2.8 million square feet of space, of which we owned 55%.

We believe that our existing properties are suitable and adequate for our current needs and that we can readily meet our requirements for additional space at competitive rates by extending expiring leases or by finding alternative space.

Because of the interrelation of the products and services offered in each of our business units, we do not designate our properties to any business unit. With limited exceptions, each property is used at least in part by all of our business units, and we retain the flexibility to make future use of each of the properties available to each of the business units.

Legal Proceedings We are involved in various claims, suits, assessments, investigations and legal proceedings that arise from time to time in the ordinary course of business, consisting of matters involving consumer, antitrust, tax, intellectual property and other issues on a global basis. Information about their significant legal matters and other proceedings is set forth under note 11 of the notes to our audited consolidated financial statements included in this offering memorandum.

As of the date of this offering memorandum, we do not believe there is a reasonable possibility that a material loss exceeding the amounts already accrued for these or other proceedings or matters has been incurred. However, since the ultimate resolution of any such proceedings and matters is inherently unpredictable, our business, financial condition, results of operations, or cash flows could be materially affected in any particular period by unfavorable outcomes in one or more of these proceedings or matters. Whether the outcome of any claim, suit, assessment, investigation, or legal proceeding, individually or collectively, could have a material adverse effect on our business, financial condition, results of operations, or cash flows will depend on a number of variables, including the nature, timing and amount of any associated expenses, amounts paid in settlement, damages, or other remedies or consequences.

Divestitures We expect that we may divest certain businesses lines, assets, equity interests or properties of ours and EMC to be determined, the proceeds of which may be used, among other purposes, to repay indebtedness incurred in connection with the Dell-EMC merger. Such divestitures may be material to each company’s financial condition and results of operations.

On March 27, 2016, we entered into a definitive agreement with NTT Data International L.L.C. to sell the Dell Services divested businesses, for cash consideration of approximately $3.1 billion. Accordingly, we have reflected the assets and liabilities relating to the Dell Services divested businesses in the “assets held for sale” column of our pro forma condensed combined statement of financial position and have removed such assets and liabilities in the “pro forma adjustments” column of our pro forma condensed combined statement of financial

214 position to reflect the divestiture in our unaudited pro forma financial statement included elsewhere in this offering memorandum and the results of the Dell Services divested businesses will be reclassified to discontinued operations beginning with the first quarter of Fiscal 2017. We anticipate the transaction will close in the third quarter of Fiscal 2017. To the extent that the transaction closes prior to the consummation of the Dell-EMC merger, we expect to apply the estimated $2.7 billion of net proceeds from such transaction to fund the EMC Transactions. See “The Transactions.” We expect that we may divest certain other business lines, assets, equity interests or properties of us and EMC, as yet to be determined. The proceeds from future divestitures may be used, among other purposes, to repay indebtedness incurred in connection with the Dell-EMC merger. Such divestitures may be material to each company’s financial condition and results of operations. As of the date of this offering memorandum, there is no commitment or probable transaction related to these potential divestitures, and the manner in which any potential divestitures might be effected has not been determined. Accordingly, the pro forma financial information included elsewhere in this offering memorandum only gives effect to the Dell Services Transaction (unless otherwise specified) and does not reflect any adjustments relating to other divestitures.

215 BUSINESS OF EMC

EMC manages its company as a federation of businesses in order to capitalize on the emerging and rapidly growing trends of cloud computing, Big Data, mobile, social networking and security. EMC’s federated businesses include EMC Information Infrastructure, VMware Virtual Infrastructure, Pivotal and Virtustream, which EMC acquired on July 9, 2015, to further develop its cloud services strategy. EMC believes the combined strength of its federated businesses allows it to enable the digital enterprise through business and IT transformation via trusted hybrid cloud, modern application development, Big Data and cyber security solutions.

As data centers become more agile, managing information becomes central to EMC’s customers’ operations. EMC Information Infrastructure provides a foundation for organizations to store, manage, protect, analyze and secure ever-increasing quantities of information, while at the same time improving business agility, lowering cost and increasing competitive advantage. These benefits can be greatly enhanced with virtualization. VMware Virtual Infrastructure, which is represented by EMC’s majority equity stake in VMware, is a leader in virtualization and cloud infrastructure solutions utilized by organizations to help transform the way they build, deliver and consume IT resources. EMC’s majority-owned Pivotal is a leading provider of application and data infrastructure software, agile development services and data science consulting. Pivotal has built a new platform comprising next-generation data fabrics, application fabrics and a cloud-independent PaaS. Virtustream runs mission-critical business applications on its own modern cloud architecture. Additionally, EMC recently combined EMC managed services and EMC object storage services with Virtustream to offer a portfolio of cloud-based solutions for tiered data storage, archiving backup and disaster recovery.

Under EMC’s federation model, each of the businesses operates independently to build its own ecosystem and culture, operate with greater speed and agility and offer customers technology solutions that are free from vendor lock-in. At the same time, EMC’s businesses are strategically aligned in the mission to lead customers and partners through unprecedented transformational shifts occurring in IT. EMC believes this ability to draw on resources from across the federation to offer tightly integrated solutions that can be rapidly deployed while retaining choice for customers seeking flexibility is a distinct competitive advantage.

In 2015, EMC initiated a cost reduction and business transformation program to better align its expenses and improve the operations of its federation of businesses. This program was primarily in response to increased pressure on EMC’s traditional storage businesses and accordingly, the vast majority of this program will be focused on its EMC Information Infrastructure segment. The goal of this new cost reduction and business transformation program is to reduce EMC’s current annual cost base by $800 million and currently addresses various major areas including direct materials procurement, facilities and manufacturing optimization and SKU simplification. EMC expects such initiatives to be fully actioned this year.

EMC supports a broad range of customers, including businesses, governments, not-for-profit organizations and service providers, around the world and in every major industry, in both public and private sectors, and of sizes ranging from the Fortune 500 to small business and individual consumers.

Industry and Strategic Overview The IT industry is experiencing one of the most disruptive periods of transition in its history. Macro trends toward technology that is mobile, social, cloud-based and Big Data-driven are forming what has become known as the third platform of IT, which is based on next-generation technologies. As a result, enterprise customers are investing beyond traditional IT solutions built for the client-server era, known as the second platform, and increasingly building out solutions that accommodate the new architectures of the third platform of IT. While the second platform of IT continues to support the vast majority of enterprise workloads, much of the new data that is being generated, stored and managed by enterprises is best accommodated by third-platform technologies. As a result, customers are seeking solutions that bridge the two platforms. Enterprises today are focused on building hybrid clouds consisting of IT assets both on and off premise.

216 The adoption of the third platform is changing the way IT is built, operated and consumed. IT leaders around the world are transforming the way they operate, and forging a new, always-on, data-driven computing infrastructure that can be accessed from anywhere in the world by a highly mobile and social workforce.

Contributing to the rise of the third platform is the unrelenting expansion of the world’s data, which is expected to double in size every two years. Cloud infrastructures represent the best platform for organizations to leverage the massive quantities of data generated by the proliferation of smart phones, social networks, machine- to-machine communications and sensor networks. For businesses, this new relationship to Big Data is enabling profound opportunities for operational efficiency, strategic insights and solving some of the world’s biggest problems. Hybrid clouds provide businesses with the ability to harness the power of Big Data by integrating it with proprietary, on-premise data and applications.

Yet, the increasing sophistication of cyber criminals stands as a primary obstacle to accessing the full benefits of cloud computing and Big Data. To realize true adoption, applications and services must be delivered on a fully trusted IT infrastructure.

An organization’s ability to achieve revenue goals and operational excellence increasingly depends largely on the successful implementation of information technology. The global pervasiveness of smart, mobile devices and the broad exposure of consumers to online retailers, social networks and technology-enhanced entertainment have put pressure on the IT industry to provide highly responsive, always-on applications and services.

In order for the IT organization to become more agile and responsive to business and consumer needs, the IT infrastructure must be made more efficient, so it can act as an enabler of business. To achieve this, data centers are becoming more and more driven by policy-based automation that improves the productivity and effectiveness of its operators. Such “software-defined data centers” feature virtualized infrastructure—consisting of software-defined computing, software-defined networking, software-defined storage and software-defined security—that can respond instantly to changing operating conditions and business imperatives.

Cloud Many companies are building a “private cloud” inside their own data centers—consolidating, standardizing, virtualizing and then automating much of the existing infrastructure and applications. Many organizations also look to hosted, off-premise cloud services, delivered by service providers that can run business applications, provide additional compute and storage capacity and provide business continuity options. These public clouds will continue to provide and expand consumable IT services, especially for emerging development and analytic applications. IT departments are thus coming to rely on a combination of private cloud, managed private clouds and public cloud infrastructures—moving to a hybrid cloud model.

With this in mind, EMC believes companies choose EMC as their IT transformation partner for three reasons: • First, EMC delivers significant improvements in efficiency of the IT infrastructure; • Second, EMC provides IT with a solution that gives companies confidence in their control of critical data and applications; and • Third, EMC offers choice—retaining an open architecture with the ability to run a broad range of applications on both virtual and physical infrastructure and with platform-as-a-service that provides a foundation for next-generation applications to run on a variety of clouds.

Big Data

The continued growth of data in the digital universe creates a huge challenge for IT departments that must store and manage information, but Big Data also creates huge opportunities for a new generation of applications that help organizations turn massive amounts of data into insight and competitive advantage.

217 Many business-critical systems have amassed tens or hundreds of terabytes of structured and unstructured data—stored, managed and protected in many cases by EMC storage and security infrastructure. Companies want to analyze this data for trends and to gain understanding of customer or organizational behavior. In addition, many would like to use data to change business in real time, using fast-data techniques to adjust prices and product availability and to address changing external conditions. Analysts are also predicting rapid growth in the Internet of Things, where sensors and machinery are also generating steady streams of analyzable data.

To capitalize on the Big Data opportunity, IT leaders are developing applications that require new computing and storage workloads. These emerging workloads represent a new paradigm for data storage products, services and applications. As a long-time leader in storage technology and an emerging leader in analytics and applications for these workloads, EMC is strongly positioned to lead in this critical sector of the new IT economy.

Trust The adoption of cloud computing and Big Data analytics is dependent upon IT’s ability to maintain a trustworthy infrastructure and application environment, one that supports business expectations while protecting and securing data assets and intellectual property.

An increasingly mobile workforce along with increasing use of hosted or public cloud services challenges the boundaries that define enterprise IT and the notion of a perimeter-based approach to cybersecurity. As the value of enterprise information grows, security threats become stealthier, more pervasive and more advanced. A Big Data approach to security analyzes vast flows of information and patterns of behavior in order to spot anomalies in activity. IT must move from an approach of static security to dynamic security in order to secure trust in cloud computing models.

In the cloud era, trust in IT is achieved when an organization can anticipate, identify and repel advanced threats while ensuring availability of applications, systems and data. With EMC’s emphasis on innovations like RSA security analytics and forensics, advanced data protection and next-generation backup, EMC plays a central role in enabling trusted cloud environments.

EMC Federated Solutions EMC Information Infrastructure, VMware, Pivotal and Virtustream form a unique federation of strategically aligned businesses, each focused and free to execute individually or together. The federation provides customers with modern data center infrastructure solutions and choice for the software-defined enterprise and the emerging third platform of cloud, mobile, social and Big Data, transformed by billions of users and millions of apps.

The ability of EMC’s federated businesses to work together results in differentiated solutions, including Enterprise Hybrid Cloud and Business Data Lake, with broad transformational capabilities which allow customers to increase their control, efficiency and choice.

Enterprise Hybrid Cloud EMC’s Enterprise Hybrid Cloud solutions provide customers with a single platform designed to reduce the cost of delivering mission-critical IT services, while providing the financial transparency, on-demand services and agility that businesses need. EMC delivers on this by combining the control, reliability and confidence of the private cloud with the simplicity, flexibility and cost efficiency of public clouds to transform delivery of IT services. Workflows and application blueprints transform what was once manual into automated infrastructure provisioning, on-demand, with management insights and cost transparency. Built-in security and data protection allows customers to run a hybrid cloud with confidence.

218 Designed, integrated and tested in EMC federation labs with advanced technologies, automated workflows and application templates, EMC’s Enterprise Hybrid Cloud solutions can be deployed in as little as 28 days as the foundation for Infrastructure-as-a-Service. EMC can deliver Anything-as-a-Service with add-on modules for data protection, disaster recovery, continuous availability, applications, Hadoop, encryption, continuous software release orchestration, ecosystem extensions and more. With thousands of engineering hours, the federation brings together high quality products and services from EMC Information Infrastructure, Virtustream and VMware to create fully integrated, enterprise-ready solutions.

Business Data Lake EMC’s data lake strategy is a holistic approach that brings data, applications and analytics together. Data is ingested, cataloged, inventoried and controlled regardless of the source or destination. Analytics capabilities are delivered where needed.

EMC provides a complete and flexible solution with a broad choice of data lake foundation platforms powered by industry-leading, scale-out object, file and block storage platforms. This makes it easy to collect, store, manage, protect and analyze data through a single shared storage platform. With all of an organization’s data in one place, EMC’s data lake makes accessing and analyzing it even easier with industry-standard protocol support (Hadoop) and certified integrations of leading Business Analytics Application vendors such as Cloudera, Splunk, Hortonworks, Pivotal and more.

EMC’s fully-engineered, enterprise-grade data lake solutions are built on federation solutions from EMC Information Infrastructure, Pivotal and VMware. Some of EMC’s solutions solving Big Data needs include EMC Isilon and EMC Elastic Cloud Storage. With EMC Isilon scale-out networked-attached storage, customers can aggregate big data sets onto a powerful yet easy-to-manage storage platform that provides massive scalability, high performance and efficiency and operational flexibility to support a wide range of applications. EMC Elastic Cloud Storage is a software-defined, cloud scale object and HDFS storage platform that has the ability to efficiently store billions of objects, while delivering data anywhere to any device.

EMC Information Infrastructure Products and Offerings Information Storage Segment EMC offers a comprehensive portfolio of enterprise storage systems and software—including high-end VMAX and mid-tier VNX and all-flash XtremIO storage arrays that have become fast-growing products within EMC’s portfolio. EMC Isilon and Elastic Cloud Storage are storage families specifically designed to handle vast quantities of unstructured data, while software offerings such as ViPR and Storage Resource Manager automate the provisioning and management of storage networks and arrays. Complementing these storage platforms, EMC also offers a portfolio of backup products that supports a wide range of enterprise application workloads. As the foundation of an information infrastructure within traditional data centers, virtual data centers and cloud-based IT infrastructures, EMC storage systems can be deployed in storage-area networks, networked-attached storage, unified storage combining networked-attached storage and storage-area networks, object storage and/or direct- attached storage environments. Customer adoption of EMC’s storage products and offerings in 2015 was driven by storage innovations, new features and capabilities and a focused emphasis on expanding EMC’s partner ecosystem.

EMC continues to lead the high-end and mid-range storage markets. In 2015, EMC built on this leadership with an expanded set of new data services and capabilities that further automate, consolidate and protect mission- critical IT operations. This new approach to enterprise storage architectures separates software-based services from the underlying hardware, allowing these capabilities to extend to other platforms.

The significant demand for flash storage continued to benefit EMC in 2015 given its comprehensive flash portfolio, which includes flash-optimized hybrid arrays, server-flash solutions and all-flash arrays. In 2015, EMC

219 unveiled XtremIO version 4.0 through a non-disruptive software upgrade. This new version supports larger all- flash array configurations, expands on-demand capabilities and consolidates workloads at unprecedented levels of performance and availability. XtremIO 4.0 uses a scale-out architecture that more than doubles the density of the previous system with 40TBs per X-Brick and offering configuration of up to eight 40TB X-Bricks, with non- disruptive performance and capacity expansions that automatically re-balance data to maintain consistent and predictable sub-millisecond performance. With these improvements, EMC remained the all-flash market leader in 2015 and XtremIO generated more than $1 billion in revenue. In addition, EMC’s comprehensive flash portfolio addresses different market segments, use cases, workloads, applications, budgets and deployment scenarios based on customer needs.

EMC Isilon storage systems continue to give high performance at reduced costs for Big Data storage via a scale-out networked-attached storage architecture that delivers both capacity and performance alongside simplified management. In 2015, EMC announced the next generation Isilon scale-out networked-attached storage Data Lake, which includes new products, features and capabilities that allow enterprises to scale easily to edge locations as well as public clouds. The new IsilonSD Edge and Isilon Cloud Pools enhance the Data Lake by allowing unstructured data to be available not only within the core data center, but also at data center edge locations, such as remote offices, and archived in the cloud. The new Isilon solutions consolidate multiple workloads and allow users to access and analyze data from all locations. The new solutions were made available in early 2016.

In July 2015, EMC completed its acquisition of Virtustream. Virtustream represents a transformational element of EMC’s strategy to help customers move all of their applications to cloud-based IT environments. The addition of Virtustream provides EMC with one of the industry’s most comprehensive hybrid cloud portfolio to support all applications, all workloads and all cloud models.

Virtustream is trusted by enterprises worldwide to migrate, run and manage mission-critical applications in the cloud. Virtustream’s cloud software and Infrastructure-as-a-Service portfolio will be delivered directly to customers and through partners. EMC federation service provider partners will receive access to Virtustream’s xStream cloud management software platform and be enabled to adopt and deliver their own branded services based upon it. Additionally, EMC recently combined EMC managed services and EMC object storage services with Virtustream to offer a portfolio of cloud-based solutions for tiered data storage, archiving backup and disaster recovery.

Converged Infrastructure Enterprises are increasingly turning towards converged infrastructure to simplify deployments and increase efficiency in their data centers. VCE Vblock systems accelerate the adoption of cloud-based computing models that reduce the cost of IT, simplify operations and increase business agility, enabling customers to transform their IT for faster time to market. VCE solutions are available through an extensive partner network, and cover horizontal applications, vertical industry offerings and application development environments, allowing customers to focus on business innovation instead of integrating, validating and managing IT infrastructure. Throughout 2015, VCE expanded its portfolio of offerings to address new customer use cases and emerging industry trends.

In 2015, EMC expanded its converged infrastructure offering with VxRACK—the industry’s first hyper- converged rackscale system. VxRACK enables enterprises and service providers to simplify the deployment of next generation scale out mobile, cloud and distributed Tier 2 applications. The system enables customers to start from dozens of servers and scale to many thousands of servers—tens of petabytes of storage capacity while delivering the highest performance and value per IOP. VxRACK systems are fully software-defined and support a choice of hypervisors and software stacks.

220 EMC Global Services EMC Global Services enables customers and partners to transform IT, realize the agility and efficiency of a trusted cloud and capitalize on the competitive advantage of Big Data. EMC’s 17,000+ services professionals worldwide, plus EMC’s global network of partners, deliver the skills, knowledge and experience organizations need to accelerate their cloud, Big Data and trust initiatives and get the maximum value from their EMC technology investments. EMC Global Services provides a broad and comprehensive mix of services and consulting capabilities to assist customers with every phase of their journey—from developing a strategy to designing, deploying, operating and supporting their IT environment, and providing their workforce with the necessary skills, knowledge and certifications.

EMC Global Services continually enhances its services portfolio and skills to support EMC’s strategies and to stay ahead of rapidly evolving market and customer demands. EMC Global Services has invested in several new professional services offerings that enable EMC’s customers to realize the benefits of hybrid clouds. EMC Global Services helps clients transform infrastructure, operating models and applications. For example, EMC Global Services plays an integral role in accelerating time-to-value via the aforementioned Enterprise Hybrid Cloud solutions.

Underpinning EMC’s course offerings is EMC Proven Professional, a leading education and certification program in the IT industry. The knowledge, expertise and thought leadership provided by certified EMC Proven Professionals is increasingly vital as the IT industry undergoes transformation.

In 2015, EMC Global Services continued to achieve record-high customer satisfaction scores and earned an industry award for its exemplary customer service around its customer-centric service culture and its excellence in online service and support.

RSA Information Security Segment RSA, the Security Division of EMC, provides essential cybersecurity capabilities that fuse comprehensive visibility with advanced analytics designed to enable more effective detection and response, and drive faster, better-informed decisions to help manage an organization’s security and risk posture. RSA solutions are engineered to enable organizations to detect, investigate and respond to advanced attacks; confirm and manage identities; and ultimately, help reduce IP theft, fraud and cybercrime.

RSA released a number of innovations throughout 2015. Most notably, RSA introduced the RSA Via portfolio of Smart Identity solutions, engineered to combine authentication, identity and access management and identity governance silos into one unified solution that allows dynamic, end-to-end identity management across diverse systems and users. Identity and credential manipulation have become a fundamental part of cyber-attack campaigns, enabling adversaries to initially breach organizations and facilitate lateral movement once inside to get to an organization’s digital “crown jewels.” The RSA Via portfolio of solutions—including RSA Via Access, RSA Via Lifecycle and RSA Via Governance along with RSA SecurID authentication and RSA Adaptive Authentication—is designed to address the convenience needs of end-users and security needs of business.

Also in 2015, RSA updated its other growth portfolio products including RSA Security Analytics, RSA ECAT and RSA Archer GRC. RSA Security Analytics was engineered to enhance its ability to provide visibility from the endpoint to the cloud, giving organizations the necessary context to help detect and respond to today’s advanced attack campaigns before they can damage the business. RSA ECAT is now built to enable active endpoint defense against advanced threats by rapidly detecting and blocking or quarantining suspicious files and processes without the need for signatures, even while those devices are outside the corporate network. RSA Archer GRC has been re-engineered for today’s business realities, enabling greater agility and speed through decentralized, enterprise-wide risk management.

221 Additionally, RSA made a number of organizational changes during 2015 to pursue a more aggressive growth strategy, including reorganizing its sales team and go to market strategy to focus on its growth products and better leveraging its services organization to increase customer satisfaction with those products.

Enterprise Content Division Segment The Enterprise Content Division (“ECD”) provides enterprise software and cloud solutions that help organizations leverage their business content throughout its lifecycle to drive their digital agenda. The Documentum product line enables the digitization and flow of content through demanding organizations in regulated industries and includes capabilities like intelligent capture of information, enterprise content, library services, customer communications, information governance and compliance as well as purpose built industry solutions for Life Science, Healthcare, Energy and Engineering. The InfoArchive product line helps customers take cost out of their current IT environments by archiving inactive information to decommission legacy applications and make their current applications run better.

In 2015, besides delivering customer value through innovation in Documentum and InfoArchive, ECD announced Project Horizon and a multi-year strategy for leadership in Next Generation of Enterprise Content Management. Project Horizon is a curated app marketplace of content related end-user productivity apps. It is based on a modular cloud native platform powered by Pivotal Cloud Foundry. In July 2015, ECD announced the divestiture of Syncplicity to Skyview Capital in order to focus its innovation efforts on its growth strategy.

Within the Documentum franchise, in addition to continued investment in reducing total cost of ownership and improving security and manageability, in 2015 ECD focused on making the technology more consumable by business users through new releases of D2, xCP, Captiva and ApplicationXtender. The InfoArchive product-line saw robust growth driven by cost reduction and compliance drivers, and introduced “Compliant Data Lake” capability. This entailed storing archived information in Hadoop file system format, allowing Big Data analytics solutions to process archived information. Finally, on the go-to-market dimension, ECD focused on reinvigorating inside and channel sales as well as invested in Digital Marketing to create a route to market for new customer logos.

Pivotal Products and Offerings As many enterprises are transitioning to cloud computing and seeing their industries disrupted by smaller, more nimble software-driven companies, these enterprises are seeking to transform their businesses by developing and using next generation software applications to differentiate themselves from their competitors. These applications are designed to drive more efficiencies within these organizations as well as provide a better customer experience for their products and services.

With the combination of Pivotal’s cloud platform, big data products, agile development services and its roots in Silicon Valley, EMC believes Pivotal is in a unique position to help these enterprise customers with their digital transformation. Pivotal’s mission is to transform how the world builds software.

EMC and VMware, with an investment from General Electric, formed Pivotal in 2013. Pivotal is an enterprise software and services company that uses its innovative software development methodologies, a cloud platform and big data analytics tools to help customers, comprised of some of the world’s largest enterprises and most admired brands, with their digital transformation.

Pivotal’s main offering is its next generation cloud platform-as-a-service—Pivotal Cloud Foundry—which is designed to accelerate the speed in which developers build and deploy sophisticated modern software. Clients can also co-develop with Pivotal Labs, Pivotal’s agile software development consulting business unit, to learn modern development, pair programming methodologies designed to rapidly deliver web and mobile software applications. As Pivotal helps these clients quickly build more software applications, often these clients

222 choose to deploy the applications on Pivotal Cloud Foundry. Furthermore, Pivotal offers clients its comprehensive big and fast data solutions—Pivotal Big Data Suite—as well as the expertise of its data scientists, in each case to help these clients analyze their business data in real-time.

In 2015, Pivotal completed the transition of its business model from perpetual software licenses to software subscriptions. Pivotal grew to over 2,000 employees and saw continued strong growth in its Pivotal Cloud Foundry and Pivotal Big Data Suite software subscription businesses, including its annualized recurring revenue and backlog. Pivotal Labs continued its expansion in 2015 with offices in 7 cities around the world.

VMware Virtual and Cloud Infrastructure Products and Offerings VMware is a leader in virtualization and cloud infrastructure solutions utilized by organizations to help transform the way they build, deliver and consume IT resources. VMware develops and markets its product and service offerings within three main product groups, which allow organizations to manage IT resources across complex multi-cloud, multi-device environments by leveraging synergies across these three product groups: Software-Defined Data Center, Hybrid Cloud Computing and End-User Computing.

VMware enables its customers to utilize off-premise vSphere-based hybrid cloud computing capacity through two offerings: VMware vCloud Air Network Service Providers (“vCAN”) and VMware vCloud Air (“vCloud Air”). The vCAN program is directed at hosting and cloud computing vendors, enabling organizations to choose between running applications in virtual machines on their own “private clouds” inside their data center or on “public clouds” hosted by a service provider. vCloud Air, built on the foundation of vSphere, is a public cloud operated by VMware that includes infrastructure and disaster recovery, while providing customers with a common platform to seamlessly extend their data center to the cloud. VMware vCloud Air enables customers to extend the same skills, tools, networking and security models across both on-premise and off-premise environments.

VMware’s cloud strategy has three components: (i) continue to expand beyond compute virtualization in the private cloud, (ii) extend the private cloud into the public cloud and (iii) connect and secure endpoints across a range of public clouds. VMware’s cloud strategy is designed to provide organizations with solutions that work across all clouds and all devices. VMware plans to narrow the focus of vCloud Air to provide specialized cloud software and services that are distinct from those offered by other cloud providers.

VMware’s end-user computing solutions portfolio, which includes Horizon workplace suites and enterprise mobile management offerings led by the company’s AirWatch mobile solutions, continues to experience strong growth. Currently, AirWatch business models include an on-premise solution that VMware offers through the sale of perpetual licenses and an off-premise solution that the company offers as SaaS.

Customers rely on VMware to help them transform the way they build, deliver and consume IT resources. The company is headquartered in Palo Alto, California, with offices throughout the world.

Markets and Distribution Channels Markets EMC supports a broad range of customers, including service providers, around the world—in every major industry, in both public and private sectors, and of sizes ranging from the Fortune 500 to small business and individual consumers.

Distribution Channels EMC markets its products through direct sales and through multiple distribution channels. EMC has a direct sales presence throughout North America, Latin America, Europe, the Middle East, South Africa and the Asia

223 Pacific region. EMC also has agreements in place with many partners, including value-added resellers and distributors, cloud service providers, systems integrators, outsourcers, independent software vendors and OEMs. These agreements, subject to certain terms and conditions, help EMC extend its reach in established markets and expand EMC technologies into new markets.

EMC’s Business Partner Program is focused on partner enablement in a variety of ways, including reselling EMC solutions, providing cloud services powered by EMC technologies, including EMC as part of a strategic business solution, or embedding EMC technologies in their own technology and systems. These partners contribute over half of EMC’s storage revenue. EMC’s Business Partner Program offers partners direct connections to EMC’s federation of businesses, simplifies and aligns partner operations and provides opportunities for further growth and profitability.

The success of EMC’s Business Partner Program can be attributed to having a combination of a broad product portfolio, a program that rewards partners who are trained to effectively position, sell and service EMC products and go-to-market innovations, such as EMC’s VSPEX program. VSPEX, which is sold exclusively through partners, incorporates storage and data protection technology from EMC, and virtualization, server and networking technology from technology alliance partners like Brocade, Cisco, Citrix, Microsoft, Oracle and VMware, as well as support for business continuity and disaster recovery with EMC VPLEX, RecoverPoint, Avamar and Data Domain. VSPEX Labs has also enabled several independent software vendors to validate their software offerings as part of a VSPEX solution, further expanding the VSPEX technology partner ecosystem.

As a core element of EMC’s hybrid cloud strategy, EMC continues to establish focused and committed partnerships with service providers around the world to expand the range of options for IT organizations seeking to gain business agility through the efficiency and choice offered by cloud computing, without sacrificing trust or control. EMC’s Service Provider Partner program is designed to increase sales, marketing, planning and education benefits for EMC’s partners with the singular goal of delivering compelling cloud services to the global IT market. EMC also provides business development and services creation resources to enable partners to develop differentiated offerings built on EMC technology, as well as marketing support including market development funds, campaigns, field execution and sales enablement tools. The Service Provider Partner program is open to cloud service providers of all kinds, including networking and communications companies, managed hosting firms, outsourcers, independent software vendors, resellers, value-added resellers, distributors and enterprises. The program has evolved to enable qualified partner companies to participate and capture cloud opportunities.

VMware works closely with more than 1,200 technology partners, including leading server, microprocessor, storage, networking, software and security vendors. VMware facilitates joint solution creation and coordinated go-to-market activities with its partners.

Technology Alliances EMC engages in numerous alliances with other technology companies to deliver significant technology integration, create best practices and expand choice for EMC’s customers to help accelerate their journey to implementing private, public and hybrid cloud environments. In 2015, EMC continued to strengthen its technology innovations and to expand its partner ecosystem globally by deepening existing relationships and solidifying new alliances with emerging technology companies in the cloud stack and data fabric areas: • EMC introduced a new Federation Ready credential program that expands deployment options through EMC Federation Business Partners. • EMC introduced a new go-to-market team comprised of a highly specialized collection of experts from across the EMC Federation to provide dedicated support to the most strategic EMC Federation customers on their Digital Transformation and Hybrid Cloud journey. • Virtustream became one of a select few premier strategic providers of cloud infrastructure services for SAP business-critical applications in SAP HANA® Enterprise Cloud.

224 Manufacturing and Quality EMC conducts operations utilizing a formal, documented quality management system to ensure that EMC’s products and services satisfy customer needs and expectations. The quality management system also provides the framework for continual improvement of EMC’s processes and products. This system is certified to the ISO 9001 International Standard. Several additional ISO 9001 certifications are maintained for sales and service operations worldwide. EMC has also implemented Lean Six Sigma methodologies to ensure that the quality of EMC’s designs, manufacturing, test processes and supplier relationships are continually improved. EMC order fulfillment, manufacturing and test facilities in Massachusetts, North Carolina and Ireland are certified to the ISO 14001 International Standard for environmental management systems. EMC’s Franklin, Massachusetts, Apex, North Carolina and Cork, Ireland manufacturing facilities have achieved OHSAS 18001 certification, an international standard for facilities with world-class safety and health management systems. EMC also maintains Support Center Practices certification for EMC’s primary customer support centers.

EMC maintains a Supplier Code of Conduct, actively manages recycling processes for EMC’s returned products and is also certified by the Environmental Protection Agency as a Smartway Transport Partner.

EMC’s hardware products are assembled and tested primarily at EMC’s facilities in the United States and Ireland or at global manufacturing service suppliers. EMC works closely with its suppliers to design, assemble and test product components in accordance with production standards and quality controls established by EMC. EMC software products are designed, developed and tested primarily at EMC’s facilities in the United States and abroad. The products are tested to meet EMC’s quality standards.

EMC has five manufacturing facilities: two in Massachusetts, which manufacture storage products and security products for the North American markets; two in Ireland, which manufacture storage products and security products for markets outside of North America; and one in North Carolina, which manufactures storage products for domestic markets. EMC also utilizes contract manufacturers throughout the world to manufacture or assemble its Data Domain, Isilon, and, in limited amounts, other Information Infrastructure products.

Product Components EMC purchases many sophisticated components and products from an approved list of qualified suppliers. EMC’s products utilize industry-standard and semi-custom components and subsystems. Among the most important components that EMC uses are disk drives, solid-state drives, high-density memory components, microcontrollers and power supplies. While such components are generally available, EMC has experienced delivery delays from time to time because of high industry demand or the inability of some vendors to consistently meet EMC’s quality or delivery requirements.

Research and Development EMC continually enhances its existing products and develops new products to meet changing customer requirements. In 2015, 2014 and 2013, EMC’s R&D expenses totaled $3,167 million, $2,991 million and $2,761 million, respectively. EMC supports its R&D efforts through state-of-the-art development labs worldwide.

Backlog EMC produces its products on the basis of its forecast of near-term demand and maintains inventory in advance of receipt of firm orders from customers. EMC configures to customer specifications and generally delivers products shortly after receipt of the order. Service engagements are also included in certain orders. Customers generally may reschedule or cancel orders with little or no penalty. EMC believes that its backlog at any particular time is not meaningful because it is not necessarily indicative of future sales levels.

225 Competition EMC competes with many companies in the industries it serves, including companies that offer a broad spectrum of IT products and services and others that offer specific information storage, protection, security, management and intelligence, data analytics or virtualization products or services. EMC believes that most of these companies compete based on their market presence, products, service or price. Some of these companies also compete by offering information storage, information governance, security or virtualization-related products or services, together with other IT products or services, at minimal or no additional cost in order to preserve or gain market share.

EMC believes that it has a number of competitive advantages over these companies, including product, distribution and service. EMC believes the advantages in its products include quality, breadth of offerings, performance, functionality, scalability, availability, interoperability, connectivity, time-to-market enhancements and total value of ownership. EMC believes its advantages in distribution include the world’s largest information infrastructure-focused direct sales force and a broad network of channel partners. EMC believes its advantages in service include its ability to provide its customers with a full range of expertise before, during and after their purchase of solutions from EMC or other vendors.

VMware competes with large and small vendors in different segments of the cloud computing, end-user computing and virtualization spaces, and expects that new entrants will continue to enter these industries and develop technologies that, if commercialized, may compete with VMware’s products and services.

Seasonality EMC generally experiences the lowest demand for its products and services in the first quarter of the year and the greatest demand for its products and services in the last quarter of the year, which is consistent with the seasonality of the IT industry as a whole.

Intellectual Property EMC generally relies on patent, copyright, trademark and trade secret laws and contract rights to establish and maintain EMC’s proprietary rights in its technology and products. While EMC’s intellectual property rights are important to its success, EMC believes that its business as a whole is not materially dependent on any particular patent, trademark, license or other intellectual property right.

As of January 1, 2016, EMC has been granted or owns by assignment approximately 6,100 patents issued by the U.S. Patent and Trademark Office, of which approximately 5,100 are owned by EMC, approximately 900 are owned by VMware, approximately 75 are owned by Pivotal and 7 are owned by VCE. EMC, VMware, Pivotal and VCE have approximately 4,700 patent applications pending with the U.S. Patent and Trademark Office. EMC also has a corresponding number of international patents and patent applications. While the durations of EMC’s patents vary, EMC believes that the durations of its patents are adequate relative to the expected lives of EMC’s products.

EMC has used, registered or applied to register certain trademarks and copyrights in the United States and in other countries. EMC also licenses certain technology from third parties for use in its products and processes and licenses some of EMC’s technologies to third parties.

Employees As of December 31, 2015, EMC had approximately 72,000 employees worldwide, of which approximately 19,000 were employed by or working on behalf of VMware. None of EMC’s domestic employees are represented by a labor union, and EMC has never suffered an interruption of business as a result of a labor dispute. EMC considers its relations with its employees to be good.

226 Legal Proceedings EMC is involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of its business, including actions with respect to contracts, intellectual property, product liability, employment, benefits and securities matters. As required by authoritative guidance, EMC has estimated the amount of probable losses that may result from all currently pending matters, and such amounts are reflected in its consolidated financial statements. These recorded amounts are not material to its consolidated financial position or results of operations and no additional material losses related to these pending matters are reasonably possible. While it is not possible to predict the outcome of these matters with certainty, EMC does not expect the results of any of these actions to have a material adverse effect on its business, results of operations or financial condition. Because litigation is inherently unpredictable, however, the actual amounts of loss may prove to be larger or smaller than the amounts reflected in EMC’s consolidated financial statements, and EMC could incur judgments or enter into settlements of claims that could adversely affect its operating results or cash flows in a particular period. See “Risk Factors—Risks Related to the Business of EMC—EMC may become involved in litigation that may materially adversely affect it” and “Risk Factors—Risks Related to the Combined Company and the Transactions—Holders of a substantial number of EMC’s shares may deliver written demands for the appraisal of their shares under Massachusetts law. If these shareholders are entitled to appraisal rights and properly demand appraisal of their shares, the combined company may be required to seek additional financing to fund payments in cash in respect of such appraised shares.”

Properties As of December 31, 2015, EMC owned or leased the facilities described below:

Location Approximate Sq. Ft.* Principal Use(s) Principal Segment(s) Hopkinton, MA owned: 1,681,000 executive and administrative Information Storage, offices, R&D, customer Enterprise Content Division service, sales and marketing Franklin, MA owned: 922,000 manufacturing Information Storage leased: 288,000 Bedford, MA leased: 328,000 R&D, customer service, RSA Information Security sales, administrative offices and marketing Apex, NC owned: 390,000 manufacturing Information Storage Palo Alto, CA owned: 1,500,000 executive and administrative VMware Virtual leased: 107,000 offices, R&D, sales, Infrastructure marketing and data center Other North American owned: 1,304,000 executive and administrative ** Locations leased: 4,952,000 offices, sales, customer service, R&D, data center and marketing Asia Pacific leased: 3,294,000 sales, marketing, customer ** service, R&D, data center and administrative offices Cork, Ireland owned: 588,000 manufacturing, customer ** leased: 348,000 service, R&D, administrative offices, sales and marketing Europe, Middle East and owned: 160,000 sales, manufacturing, ** Africa (excluding Cork, leased: 1,991,000 customer service, R&D, data Ireland) center, marketing and administrative offices Latin America owned: 28,000 sales, customer service, ** leased: 257,000 R&D and marketing

227 * Of the total square feet owned and leased, approximately 522,000 square feet was vacant, approximately 157,000 square feet was leased or subleased to non-EMC businesses and approximately 215,000 square feet were under construction for various VMware projects. ** All segments of EMC’s business generally utilize these facilities.

EMC also owns land in Massachusetts and Ireland for possible future expansion purposes. EMC believes its existing facilities are suitable and adequate for its present purposes. For further information regarding EMC’s lease obligations, see note M to the audited consolidated financial statements of EMC included in this offering memorandum.

Financial Information About Segments, Foreign and Domestic Operations and Export Sales EMC manages its company as a federation of businesses: EMC Information Infrastructure, Pivotal, VMware Virtual Infrastructure and Virtustream. EMC Information Infrastructure operates in three segments: Information Storage, Enterprise Content Division and RSA Information Security, while Pivotal and VMware Virtual Infrastructure each operate as a single segment. The results of Virtustream are currently reported within EMC’s Information Storage segment.

Sales and marketing operations outside the United States are conducted through sales subsidiaries and branches located principally in Europe, Latin America and the Asia Pacific region. EMC has five manufacturing facilities: two in Massachusetts, which manufacture storage products and security products for the North American markets; two in Ireland, which manufacture storage products and security products for markets outside of North America; and one in North Carolina, which manufactures storage products for domestic markets. EMC also utilizes contract manufacturers throughout the world to manufacture or assemble EMC’s Data Domain, Isilon, and, in limited amounts, other Information Infrastructure products. See note R to the audited consolidated financial statements of EMC included in this offering memorandum for information about revenues by segment and geographic area.

Sustainability EMC believes that investing in a sustainable future makes EMC a stronger and healthier company. Sustainable business practices are creating financial value by producing savings from more efficient products and operations, generating revenues from leveraging new market opportunities and positioning EMC for long-term success in a changing world. Incorporating principles of sustainability in EMC’s product designs, operations and decision-making has enhanced EMC’s resilience and agility in the face of global, social and environmental events.

EMC’s sustainability strategy is to leverage its talent and technology to drive positive change in the areas where it has greatest potential for impact, hold itself accountable by measuring and reporting EMC’s progress, maintain open and candid communication with EMC’s internal and external stakeholders, and collaborate with EMC’s peer companies and those in EMC’s value chain to expand the scale of EMC’s impact.

EMC’s areas of focus follow from its business objectives and the context in which it operates, prioritizing the issues that have the greatest potential to impact EMC’s business (positively or negatively) and where EMC has the greatest potential to mitigate negative impacts and drive positive results through its own actions and its ability to influence others.

As a result, EMC continues to focus on five social and environmental priorities: Energy Efficiency and Climate Change; eWaste; Science, Technology, Engineering and Math (“STEM”) education; Supply Chain Responsibility; and the Role of Information Technology in Society. Four additional pertinent topics include: Corporate Governance; Diversity & Inclusion; Information Privacy & Security; and Innovation.

228 Energy efficiency is critical to EMC as its primary greenhouse gas emissions arise indirectly from the generation and transmission of electricity needed to run EMC’s business and even more, to power EMC’s products at customer sites. As EMC’s customers’ businesses become increasingly digital, EMC must help them make the transition in ways that mitigate their costs and their emissions. Therefore, EMC’s energy and climate change strategy is focused on increasing energy efficiency in its products as well as in its facilities and data centers; supplying technology that enables energy efficient operations in EMC’s customers’ data centers; engaging with suppliers to reduce emissions in the supply chain; and leveraging the transformative power of technology to reduce global energy demand. While availability of clean water is an urgent societal concern, EMC’s primary interaction with water is in its use for the generation of electricity; as such, EMC believes energy efficiency provides EMC’s greatest opportunity for positive impact on water supplies. EMC continues to work toward its 2020 science-based goals and have engaged with peers to help drive the market for renewable energy. EMC submitted its eighth annual greenhouse gas disclosure report to the Carbon Disclosure Project in 2015, and was honored as a Climate Performance Leader with a rating of A, and was included in the 2014 Carbon Disclosure Leadership Index for the seventh time with a score of 100.

EMC’s takeback and eWaste program encompasses the full life cycle of EMC’s products, which is increasingly important as IT becomes more pervasive and embedded in nearly every domain of the economy. In the design phase, EMC continuously pursues opportunities to reduce the amount of material used in EMC’s products, and to find viable alternatives for substances which may be harmful to people or the environment. When the product reaches the end of its useful life, EMC offers product takeback to all of EMC’s customers worldwide to help ensure those products are disposed of responsibly and in compliance with the law. To increase environmental and financial benefit, EMC seeks to reuse, reprocess or recycle wherever possible, and to handle any waste responsibly. EMC’s published principles include commitments to avoid shipment of eWaste from countries in the Organisation for Economic Co-operation and Development (“OECD”) to non-OECD countries, and to ensure that no prison, child or forced labor is used in the processing of EMC’s eWaste. EMC requires its disposal suppliers to be properly certified by third parties and in 2015, conducted business exclusively with disposal suppliers certified by the R2 or e-Stewards programs.

Environmental and social responsibility within EMC’s supply chain is central to EMC’s ability to drive change through collaboration and influence. EMC works directly with hundreds of suppliers in more than 20 countries, and relies indirectly on many more. EMC is committed to building a resilient supply chain that respects workers and the environment, mitigates risks and creates opportunities that benefit stakeholders. In support of these goals, EMC engages suppliers through its Supply Chain Social and Environmental Responsibility (“SER”) program, which EMC integrates with other supply chain programs such as Business Continuity Planning to ensure a multifaceted, strategic approach to enhancing resiliency.

EMC has public sustainability reporting as a metric within its supplier scorecard, and launched an engagement tool built on EMC’s Archer GRC platform to manage both internal processes as well as communications with suppliers. EMC provides training and tools to its suppliers to assist them in their reporting, and introduced the Supply Chain Sustainability Management and Resource Training, or “SMaRT”, Library to provide training modules, case studies and access to other resources that help its suppliers build their capacity to address SER issues.

STEM education helps to address technology skills gaps and is important to drive innovation, support communities and provide a pipeline of skilled employees to EMC and to other companies. EMC and its employees invest time, talent and funds to support global education initiatives that expand access to education and encourage students, particularly from underrepresented groups, to pursue science and math programs. EMC has launched the Global Impact Corps as an opportunity for EMC employees to use their professional skills to build capacity in NGOs around the world to scale its impact.

The role of IT in society explores the potential arising from the pervasive nature of IT to contribute to long- term environmental, societal and economic prosperity. In 2015, EMC undertook a number of projects focused on

229 the positive impact of IT, including a collaborative effort with BC Hydro to support their smart metering program using Big Data hardware and software solutions and the launch of the Whenology Project, a collaboration between EMC, Earthwatch and the Schoodic Institute to study the impacts of climate change using publicly available climate and ecology data.

230 MANAGEMENT

The following table sets forth information as of April 1, 2016 about the expected members of the board of directors and executive officers of Denali upon completion of the EMC Transactions. The business and affairs of Denali, Denali Intermediate and Dell will be managed under the direction of the Denali board of directors. The Denali board of directors will consist of three classes: the Group I Directors, the Group II Directors and the Group III Directors. We expect that there will initially be three Group I Directors, one Group II Director and two Group III Directors. Denali expects to determine the initial Group I Directors prior to completion of the Dell-EMC merger.

Name Age Position(s) Michael S. Dell ...... 51 Chief Executive Officer, Chairman of the Board and Group II Director Egon Durban ...... 42 Group III Director Simon Patterson ...... 42 Group III Director Jeremy Burton ...... 48 Chief Marketing Officer Jeffrey W. Clarke ...... 53 Vice Chairman and President, Operations and Client Solutions Howard D. Elias ...... 58 President, Global Services and IT David I. Goulden ...... 56 President, Enterprise Solutions Group Marius Haas ...... 49 President and Chief Commercial Officer Steven H. Price ...... 54 Chief Human Resources Officer Karen H. Quintos ...... 52 Chief Customer Officer Rory Read ...... 54 Chief Integration Officer Richard J. Rothberg ...... 52 General Counsel John A. Swainson ...... 61 President, Dell Software Thomas W. Sweet ...... 56 Chief Financial Officer Suresh C. Vaswani ...... 56 President, Dell Services

Directors Michael S. Dell—Mr. Dell serves as Chairman of the Board and Chief Executive Officer of Dell and, since the closing of Dell’s going-private transaction in October 2013, Denali. Mr. Dell has held the title of Chairman of the Board of Dell since he founded the company in 1984. Mr. Dell also served as Chief Executive Officer of Dell from 1984 until July 2004 and resumed that role in January 2007. In 1998, Mr. Dell formed MSD Capital for the purpose of managing his and his family’s investments, and, in 1999, he and his wife established the Michael & Susan Dell Foundation to provide philanthropic support to a variety of global causes. He is an honorary member of the Foundation Board of the World Economic Forum and is an executive committee member of the International Business Council. He serves as a member of the Technology CEO Council and is a member of the U.S. Business Council and the Business Roundtable. He also serves on the governing board of the Indian School of Business in Hyderabad, India, and is a board member of Catalyst, Inc., a non-profit organization that promotes inclusive workplaces for women. In June 2014, Mr. Dell was named the United Nations foundation’s first Global Advocate for Entrepreneurship.

On October 13, 2010, a federal district court approved settlements by Dell and Mr. Dell with the SEC resolving an SEC investigation into Dell’s disclosures and alleged omissions before fiscal year 2008 regarding certain aspects of its commercial relationship with Intel Corporation and into separate accounting and financial reporting matters. Dell and Mr. Dell entered into the settlements without admitting or denying the allegations in the SEC’s complaint, as is consistent with common SEC practice. The SEC’s allegations with respect to Mr. Dell and his settlement were limited to the alleged failure to provide adequate disclosures with respect to Dell’s commercial relationship with Intel Corporation prior to fiscal year 2008. Mr. Dell’s settlement did not involve any of the separate accounting fraud charges settled by Dell and others. Moreover, Mr. Dell’s settlement was limited to claims in which only negligence, and not fraudulent intent, is required to establish liability, as well as secondary liability claims for other non-fraud charges. Under his settlement, Mr. Dell consented to a permanent

231 injunction against future violations of these negligence-based provisions and other non-fraud based provisions related to periodic reporting. Specifically, Mr. Dell consented to be enjoined from violating Sections 17(a)(2) and (3) of the Securities Act and Rule 13a-14 under the Exchange Act, and from aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 under the Exchange Act. In addition, Mr. Dell agreed to pay a civil monetary penalty of $4 million which has been paid in full. The settlement did not include any restrictions on Mr. Dell’s continued service as an officer or director of Dell.

Egon Durban—Mr. Durban has been a member of the boards of directors of Dell and Denali since the closing of Dell’s going-private transaction in October 2013. Mr. Durban is a Managing Partner and Managing Director of Silver Lake Partners, a global private equity firm. Mr. Durban joined Silver Lake Partners in 1999 as a founding principal and is based in the firm’s Menlo Park office. He has previously worked in the firm’s New York office, as well as the London office, which he launched and managed from 2005 to 2010. Mr. Durban serves on the board of directors of Intelsat S.A., a communications satellite services provider, and is chairman of the board of directors of William Morris Endeavor Entertainment, an entertainment and media company. Previously, he served on the board of directors of Skype Global S.à r.l., a communications services provider, was the chairman of its operating committee, served on the supervisory board and operating committee of NXP B.V., a manufacturer of semiconductor chips, and served on the board of directors of MultiPlan Inc., a provider of healthcare cost management solutions. Mr. Durban currently serves on the board of directors of Tipping Point, a poverty-fighting organization that identifies and funds leading non-profit programs in the Bay Area to assist individuals and families in need. Prior to joining Silver Lake Partners, Mr. Durban worked in Morgan Stanley’s investment banking division. While at Morgan Stanley, Mr. Durban organized and led a joint initiative between the Corporate Finance Technology Group and the Mergers and Acquisitions Financial Sponsors Group to analyze and present investment opportunities in the technology industry. Previously, Mr. Durban worked in Morgan Stanley’s Corporate Finance Technology and Equity Capital Markets groups.

Simon Patterson—Mr. Patterson has been a member of the boards of directors of Dell and Denali since the closing of Dell’s going-private transaction in October 2013. Mr. Patterson is a Managing Director of Silver Lake Partners, which he joined in 2005. Mr. Patterson previously worked at Global Freight Exchange Limited, an electronic information and reservation systems for the air freight industry that was acquired by Descartes Systems Group, the Financial Times Group, a provider of business information, news and services, and McKinsey & Company, a management consulting firm. Mr. Patterson also serves on the boards of directors of Intelsat S.A. and N Brown Group plc, a digital fashion retailer, and on the board of trustees of the U.K. Natural History Museum. Previously, he served on the boards of directors of Skype Global S.à r.l., Gerson Lehrman Group, Inc., an online platform for professional learning, and MultiPlan, Inc.

Board Structure The Group I Directors, the Group II Directors and the Group III Directors will be entitled to the following number of votes while serving on the Denali board of directors: • each Group I Director will be entitled to cast one vote; • each Group II Director will be entitled to cast that number of votes (or a fraction thereof) equal to the quotient obtained by dividing (1) the Aggregate Group II Director Votes (as defined in Denali’s amended and restated certificate of incorporation), which will initially equal seven, by (2) the number of Group II Directors then in office; and • each Group III Director will be entitled to cast that number of votes (or a fraction thereof) equal to the quotient obtained by dividing (1) the Aggregate Group III Director Votes (as defined in Denali’s amended and restated certificate of incorporation), which will initially equal three, by (2) the number of Group III Directors then in office.

Michael S. Dell will be the sole Group II Director immediately following the completion of the Dell-EMC merger and Mr. Dell will therefore possess enough votes as a director to pass any matter submitted to a vote of

232 the Denali board of directors, other than those matters that also require the approval of the capital stock committee or the audit committee. Egon Durban and Simon Patterson are expected to be the sole Group III Directors following the completion of the Dell-EMC merger. Pursuant to the Denali stockholders agreement, the MD Investors and the SLP Investors will agree to vote their shares in favor of the Group I Director nominees they jointly designate.

The following table summarizes certain features relating to the election, number and voting power of members of the Denali board of directors:

Initial Number of Total Number of Directors Votes Initially Initial Stockholders Entitled to Constituting Entitled to be Percentage of Vote in Election of Such Such Director Cast by Director Board Votes by Denali Director Group Director Group Group Group Director Group % of Total Votes Expected to Be Cast in Director Series Election Group I ...... Class A 73% Three Three (one per 23% Class B 23% Group I director) Class C *% Class V 4% Seven (regardless 54% Group II ...... Class A 100% One (Mr. Dell) of the number of Group II directors) Two (Messrs. Three (regardless 23% Group III ...... Class B 100% Durban and of the number of Patterson Group III directors) * Less than 1%.

Committees of the Board of Directors Upon completion of the Dell-EMC merger, the Denali board of directors will establish an executive committee, an audit committee and a capital stock committee composed of the directors set forth below. Pursuant to the Denali stockholders agreement, until the earliest to occur of (1) an initial underwritten public offering that is registered under the Securities Act of DHI Group common stock, (2) with respect to the Class A Common Stock, the Aggregate Group II Director Votes (as defined in Denali’s amended and restated certificate of incorporation) equaling zero and (3) with respect to the Class B Common Stock, the Aggregate Group III Director Votes (as defined in Denali’s amended and restated certificate of incorporation) equaling zero (a “Designation Rights Trigger Event”) has occurred with respect to the Class A Common Stock, each committee of the Denali board of directors other than the audit committee and the capital stock committee will include at least one Group II Director and, until a Designation Rights Trigger Event has occurred with respect to the Class B Common Stock, each committee of the Denali board of directors other than the audit committee and the capital stock committee will include at least one Group III Director. Each committee of the Denali board of directors will further include such additional members as determined by the Denali board of directors.

The composition and responsibilities of each of the committees of the Denali board of directors is further described below. Members will serve on these committees until their resignation or, subject to the membership requirements described above, until otherwise determined by the Denali board of directors.

233 Audit Committee The audit committee of the Denali board of directors is expected to initially consist of the directors to be appointed as Group I Directors prior to the completion of the Dell-EMC merger. Pursuant to the shareholders agreements, the membership of the audit committee will be required to consist entirely of the Group I Directors, each of whom are required to be independent under the current listing standards of The New York Stock Exchange and SEC rules and regulations (as determined by the Denali board of directors). Each member of the audit committee of the Denali board of directors will meet the financial literacy requirements of the listing standard of The New York Stock Exchange and one member of the audit committee will be a financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act.

The audit committee of the Denali board of directors will, among other things: • elect a qualified firm to serve as the independent registered public accounting firm to audit Denali’s financial statements; • help to ensure the independence and performance of the independent registered public accounting firm; • discuss the scope and results of the audit with the independent registered public accounting firm, and review, with management and the independent registered public accounting firm, Denali’s interim and year-end operating results; • develop procedures for employees to submit concerns anonymously about questionable accounting or audit matters; • review Denali’s policies on risk assessment and risk management; • review related party transactions; • obtain and review a report by the independent registered public accounting firm at least annually, that describes Denali’s internal control procedures, any material issues with such procedures, and any steps taken to deal with such issues; and • approve (or, as permitted, pre-approve) all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm.

Capital Stock Committee Pursuant to Denali’s amended and restated certificate of incorporation and the Denali bylaws, the capital stock committee will consist of a majority of independent directors under the listing standards of The New York Stock Exchange and SEC rules and regulations (as determined by the Denali board of directors). The membership of the capital stock committee of the Denali board of directors is expected to be determined prior to completion of the Dell-EMC merger. Each director serving on the capital stock committee will have one vote on all matters presented to such committee.

The capital stock committee will have such powers, authority and responsibilities as may be granted by the Denali board of directors in connection with the adoption of general policies governing the relationship between business groups or otherwise, including such powers, authority and responsibilities granted by the Denali board of directors with respect to the Class V Common Stock, among other things.

Executive Committee Pursuant to the Denali stockholders agreement, the executive committee will consist entirely of at least one Group II Director and one Group III Director. Following the completion of the Dell-EMC merger, the executive committee of the Denali board of directors is expected to initially consist of Messrs. Dell and Durban. The voting power of the Group II Directors and Group III Directors on the executive committee will be proportionate to their

234 respective voting power on the Denali board of directors. The executive committee of the Denali board of directors will, among other things, • provide our executive officers with advice and input regarding the operations and management of our business; and • consider and make recommendations to the Denali board of directors regarding Denali’s business strategy. The executive committee of the Denali board of directors will be delegated the power and authority of the Denali board of directors over the following matters to the fullest extent permitted under Delaware law: • review and approval of acquisitions and dispositions by Denali and its subsidiaries, to the extent requiring approval of the Denali board of directors and excluding dispositions of shares of VMware common stock; • review and approval of the annual budget and business plan of Denali and its subsidiaries; • the incurrence of indebtedness by Denali and its subsidiaries, to the extent that such incurrence requires approval of the Denali board of directors; • the entering into of material commercial agreements, joint ventures and strategic alliances by Denali and its subsidiaries; • acting as the compensation committee of the Denali board of directors, including (1) reviewing and approving compensation policy for Denali’s senior executives and directors and approving (or making recommendations to the full Denali board of directors to approve) cash and equity compensation for Denali’s senior executives and directors, (2) the appointment and removal of senior executives of Denali and its subsidiaries, (3) reviewing and approving recommendations regarding aggregate salary and bonus budgets and guidelines for other employees and (4) acting as administrator of Denali’s equity and cash compensation plans; • the adoption of employee benefit plans by Denali and its subsidiaries, to the extent that such action requires approval of the Denali board of directors; • the redemption or repurchase by Denali of DHI Group common stock; • the commencement and settlement by Denali and its subsidiaries of material litigation; and • such other matters as may be delegated by the Denali board of directors to the executive committee.

Executive Officers We have listed below biographical information for each individual who is anticipated to serve as an executive officer after the completion of the Dell-EMC merger, in addition to Mr. Dell, who will serve as chief executive officer of Denali after the completion of the Dell-EMC merger.

Jeremy Burton—Mr. Burton is expected to serve as the Chief Marketing Officer of Denali after the completion of the Dell-EMC merger, responsible for brand, events, marketing analytics and communications. Mr. Burton has been EMC’s President, Products and Marketing since March 2014. He was Executive Vice President, Product Operations and Marketing from July 2012 to March 2014. Mr. Burton joined EMC in March 2010 as Chief Marketing Officer. Prior to joining EMC, Mr. Burton was President and Chief Executive Officer of Serena Software, Inc., a global independent software company. Previously, Mr. Burton was Group President of the Security and Data Management Business Unit of Symantec Corporation, a provider of security, storage and systems management solutions, where he was responsible for the company’s $2 billion Enterprise Security product line. Prior to his service in that role, he served as Executive Vice President of the Data Management Group at VERITAS Software Corporation (now a part of Symantec) where he was responsible for the company’s backup and archiving products. He also served as the Chief Marketing Officer of VERITAS. Earlier in his career,

235 Mr. Burton spent nearly a decade at Oracle Corporation, a large enterprise software company, ultimately in the role of Senior Vice President of Product and Services Marketing.

Jeffrey W. Clarke—Mr. Clarke is expected to serve as Vice Chairman and President, Operations and Client Solutions after the completion of the Dell-EMC merger, leading the global supply chain and client solutions organizations. Mr. Clarke has served in this role since January 2009, in which he has been responsible for global manufacturing, procurement and supply chain activities worldwide, as well as the engineering, design and development of desktop PCs, notebooks and workstations for customers ranging from consumers and small and medium-sized businesses to large corporate enterprises. In addition, Mr. Clarke currently leads customer support, sales operations, commerce services functions and IT planning and governance globally for Dell. From January 2003 until January 2009, Mr. Clarke served as Senior Vice President, Business Product Group. From November 2001 to January 2003, Mr. Clarke served as Vice President and General Manager, Relationship Product Group. In 1995, Mr. Clarke became the director of desktop development. Mr. Clarke joined Dell in 1987 as a quality engineer and has served in a variety of other engineering and management roles.

Howard D. Elias—Mr. Elias is expected to serve as President, Global Services and IT after the completion of the Dell-EMC merger, a position he is expected to share with Rory Read. Mr. Elias has been EMC’s President and Chief Operating Officer, Global Enterprise Services since January 2013 and was President and Chief Operating Officer, EMC Information Infrastructure and Cloud Services from September 2009 to January 2013. Since October 2015, Mr. Elias has also been responsible for leading the development of EMC’s integration plans in connection with the proposed transaction with Denali. Previously, Mr. Elias served as President, EMC Global Services and EMC Ionix from September 2007 to September 2009. Mr. Elias served as Executive Vice President, Global Services and Resource Management Software Group from May 2006 to September 2007 and served as Executive Vice President, Global Marketing and Corporate Development from January 2006 to May 2006. He served as Executive Vice President, Corporate Marketing, Office of Technology and New Business Development from January 2004 to January 2006. Prior to joining EMC, Mr. Elias served in various capacities at Hewlett- Packard Company, a provider of information technology products, services and solutions for enterprise customers, most recently as Senior Vice President of Business Management and Operations in the Enterprise Solutions Group. Mr. Elias is a director of TEGNA Inc., which is comprised of a dynamic portfolio of media and digital businesses.

David I. Goulden—Mr. Goulden is expected to serve as President, Enterprise Solutions Group after the completion of the Dell-EMC merger, responsible for the global infrastructure organization, including servers, storage, networking, converged infrastructure and solutions. Mr. Goulden has been EMC’s Chief Executive Officer of EMC Information Infrastructure business since January 2014. Prior to his service in that role, he was President and Chief Operating Officer, overseeing EMC’s business units as well as Global Sales and Customer Operations, Global Services, Global Marketing and G&A functions, since July 2012. Mr. Goulden previously served as Executive Vice President and Chief Financial Officer from August 2006 to July 2012 and as Executive Vice President, Customer Operations from April 2004 to August 2006. He also served as Executive Vice President, Customer Solutions and Marketing and New Business Development from November 2003 to April 2004. Prior to joining EMC in 2002, Mr. Goulden served in various capacities at Getronics N.V., an information technology services company, most recently as a member of the Board of Management, President and Chief Operating Officer for the Americas and Asia Pacific.

Marius Haas—Mr. Haas is expected to serve as Denali’s President and Chief Commercial Officer after the completion of the Dell-EMC merger, responsible for the global go-to-market organization serving commercial customers. Mr. Haas has been Chief Commercial Officer and President, Enterprise Solutions since 2012, leading the Dell sales and marketing teams in delivering innovative and practical technology solutions to consumers, small and medium-sized businesses, Dell partners, public institutions and large enterprises worldwide. He is also responsible for worldwide engineering, design, development and marketing of Dell enterprise products, including servers, networking and storage systems. Mr. Haas came to Dell in 2012 from Kohlberg Kravis Roberts & Co. L.P, a global investment firm, where he was responsible for identifying and pursuing new investments, with a

236 particular focus on the technology sector, and was responsible for supporting existing portfolio companies with operational expertise. Before his service in that role, Mr. Haas served at Hewlett-Packard Networking Division as Senior Vice President and Worldwide General Manager from 2008 to 2011 and as Senior Vice President of Strategy and Corporate Development from 2003 to 2008. Mr. Haas serves on the Board of Directors for the US- China Business Council.

Steven H. Price—Mr. Price is expected to serve as Denali’s Chief Human Resources Officer after the completion of the Dell-EMC merger, responsible for overall human resources strategy in support of the purpose, values and business initiatives of Denali. He will also responsible for developing and driving people strategy and fostering an environment where the global Dell team thrives. Mr. Price has been Dell’s Senior Vice President, Human Resources since June 2010. Mr. Price joined Dell in February 1997 and has played leadership roles throughout the HR organization, including Vice President of HR for the global Consumer business, Global Talent Management and Americas Human Resources. From November 2006 until June 2010, he served as Vice President, Human Resources Dell Global Consumer Group. Mr. Price served as Vice President, Human Resources Dell Americas Business Group from January 2003 until November 2006, as Vice President, Human Resources Global HR Operations from July 2001 until January 2003, and as Vice President, Human Resources Dell EMEA from May 1999 until July 2001. Prior to joining Dell in 1997, Mr. Price spent 13 years with SC Johnson Wax, a producer of consumer products based in Racine, Wisconsin. Having started his career there in sales, he later moved into HR, where he held a variety of senior positions.

Karen H. Quintos—Ms. Quintos is expected to serve as Chief Customer Officer for Denali, responsible for leading revenue and margin-enhancing programs, ensuring consistent customer experience across multiple channels and driving strategies to strengthen and build profitable customer relationships. Ms. Quintos will also lead corporate citizenship, including social responsibility, entrepreneurship and diversity. Ms. Quintos has been Senior Vice President and Chief Marketing Officer (CMO) for Dell since September 2010, where she led marketing for Dell’s global commercial business, brand strategy, global communications, social media, corporate responsibility, customer insights, marketing talent development and agency management. Before becoming CMO, Ms. Quintos served as Vice President of Dell’s global public business, from January 2008 to September 2010, and was responsible for driving global marketing strategies, product and pricing programs, communications and channel plans. She has also held various executive roles in marketing to small and medium- sized businesses and in Dell’s Services and Supply Chain Management teams since joining Dell in 2000. She came to Dell from Citigroup, Inc., an investment banking and financial services company, where she served as Vice President of Global Operations and Technology. She also spent 12 years with Merck & Co., a manufacturer and distributor of pharmaceuticals, where she held a variety of leadership roles in marketing, planning, operations and supply chain management. She has served on multiple boards of directors and currently serves on the boards of Lennox International, the Susan G. Komen for the Cure and Penn State’s Smeal Business School.

Rory Read—Mr. Read serves as Denali’s Chief Integration Officer, and is expected to continue to serve as Denali’s Chief Integration Officer after the completion of the Dell-EMC merger. Mr. Read has served in his present role since October 2015, and is responsible for leading the development of Denali’s integration plans in connection with the proposed transaction with EMC. Mr. Read joined Denali in March 2015, acting as Chief Operating Officer and President of Worldwide Commercial Sales, where he was responsible for cross-business unit and country-level operational planning, building and leading Dell’s sales engine, and overseeing the strategy for the company’s global channel team, system integrator partners and direct sales force. Prior to joining Dell, Mr. Read served as President and Chief Executive Officer at Advanced Micro Devices, Inc., a technology company, from August 2011 to October 2014, where he also served as a member of the board of directors. Before that service, he spent over five years as President and Chief Operating Officer at Lenovo Group Ltd., a computer technology company, and also held various leadership roles at International Business Machines Corporation (IBM), a technology and consulting company, for 23 years.

Richard J. Rothberg—Mr. Rothberg serves as General Counsel and Secretary for Denali. In this role, in which he has served since November 2013, Mr. Rothberg oversees the global legal department and manages government

237 affairs and compliance and ethics for Denali and Dell. He is also responsible for global security. Mr. Rothberg joined Dell in 1999 and has served in key leadership roles in the legal department. He served as Vice President of Legal, supporting business in the Europe, Middle East and Africa region before moving to Singapore in 2008 as Vice President of Legal for the Asia-Pacific and Japan region. Mr. Rothberg returned to the United States in 2010 to serve as Vice President of Legal for the North America and Latin America regions. In this role, he was lead counsel for sales and operations in the Americas and for the enterprise solutions, software and end-user computing business units. He also led the government affairs organization worldwide. Prior to joining Dell, Mr. Rothberg spent nearly eight years in senior legal roles at Caterpillar Inc., an equipment manufacturing company, and was also an attorney for IBM Credit Corporation and for Rogers & Wells, a law firm.

John A. Swainson—Mr. Swainson joined Dell in February 2012. He currently serves as President of Dell’s Software Group. Immediately prior to joining Dell, Mr. Swainson was a Senior Advisor to Silver Lake Partners, a global private equity firm, from May 2010 to February 2012. From February 2005 until December 2009, Mr. Swainson served as Chief Executive Officer and Director of CA, Inc., an enterprise software company. Before joining CA, Inc., Mr. Swainson worked for IBM for over 26 years, where he held various management positions in the United States and Canada, including seven years in the role of General Manager of the Application Integration Middleware Division. Mr. Swainson currently serves on the board of directors of Visa Inc., a financial services corporation. Mr. Swainson also served on the boards of directors of Cadence Design Systems, Inc., a software and engineering services company, from February 2006 to May 2012, Assurant Inc., an insurance company, from May 2010 to May 2012, and Broadcom Corporation, a semi-conductor company in the communications business, from August 2010 to May 2012.

Thomas W. Sweet—Mr. Sweet serves as Chief Financial Officer of Denali. In this role, in which he has served since January 2014, he is responsible for all aspects of Dell’s finance function, including accounting, financial planning and analysis, tax, treasury and investor relations, and for corporate strategy and development. Mr. Sweet joined Dell in 1997 and served in a variety of finance leadership roles, including as corporate controller and chief accounting officer from May 2007 to January 2014. Prior to his service in those roles, Mr. Sweet served as Finance Vice President responsible for overall finance activities within the corporate business, education, government and healthcare business units of Dell. Mr. Sweet also has served as head of internal audit. Prior to joining Dell, Mr. Sweet was Vice President, Accounting and Finance, for Telos Corporation, an information technology consulting company and, before assuming that position, spent 13 years with Price Waterhouse, a professional services firm, in a variety of roles primarily focused on providing audit and accounting services to the technology industry.

Suresh C. Vaswani—Mr. Vaswani joined Dell in April 2011, and was named President of Services, the global IT services and business solutions unit of Dell, in December 2012. With over 25 years of leadership experience in the global IT industry, he provides strategic leadership to grow and expand Dell Services and is responsible for developing and delivering end-to-end scalable IT services and business solutions that help customers accelerate innovation and achieve business results. From April 2011 to December 2012, Mr. Vaswani led the global Applications & Business Process Outsourcing services business for Dell Services, where he was responsible for building solutions for the future, utilizing next-generation technologies and service models. His additional responsibilities include service as Chairman of Dell India. Prior to joining Dell, Mr. Vaswani was joint-CEO of the IT business of Wipro Limited, a software and technology services provider, and served as a member of the board of directors of that company.

Employment Agreement with Michael S. Dell On October 29, 2013, Denali and Dell entered into an employment agreement with Mr. Dell, pursuant to which Mr. Dell serves as CEO of Denali and Dell and chairman of the board of directors of both entities. Mr. Dell may resign for any or no reason or the Denali board of directors may terminate him for cause (as defined therein) at any time or following a change in control or a qualified initial public offering (as defined therein), the Denali board of directors may terminate Mr. Dell for any or no reason. Pursuant to the employment

238 agreement, Mr. Dell receives an annual base salary of $950,000 and is eligible for an annual bonus with a target opportunity equal to 200% of his base salary. In addition, Dell reimburses Mr. Dell for financial counseling and tax preparation up to $12,500 per year, an annual physical (for himself and his spouse) up to $5,000 per person and all travel and business expenses reasonably incurred. Dell also provides Mr. Dell with business-related security protection.

Pursuant to the agreement, Mr. Dell received a stock option to purchase 10,909,091 shares of the common stock of Denali with a per share exercise price equal to $13.75. Subject to Mr. Dell’s continued employment, the option vests ratably over a five-year period with accelerated vesting upon a change in control. Unvested options will be forfeited upon the latest of a resignation of employment by Mr. Dell, a termination by Dell for cause and Mr. Dell ceasing to serve as a member of the board of directors of Denali or Dell. Mr. Dell is subject to an indefinite covenant not to disclose confidential information and an obligation to assign to Denali and Dell any intellectual property created by Mr. Dell during his employment.

239 PRINCIPAL STOCKHOLDERS

Finco 1 and Finco 2 are each wholly-owned subsidiaries of Dell International. Dell International is a wholly- owned subsidiary of Dell. Immediately following the consummation of the EMC Transactions, EMC will be a wholly-owned subsidiary of Dell. Dell is a wholly-owned subsidiary of Denali Intermediate, and Denali Intermediate is a wholly-owned subsidiary of Denali.

Following the consummation of the EMC Transactions, our principal equity investors will be (i) the MD Investors, (ii) the MSD Partners Investors, (iii) investment funds affiliated with the SLP Investors and (iv) the Temasek Investor, and we will be controlled by the MD Investors and investment funds affiliated with the SLP Investors.

240 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Related Party Transactions of Denali Denali Stockholders Agreement Denali will be party to an amended and restated stockholders agreement with the MD Investors, the MSD Partners Investors and the SLP Investors (the “Denali stockholders agreement”). The Denali stockholders agreement, as further described below, will contain specific rights, obligations and agreements of these parties as owners of Denali’s common stock. In addition, the Denali stockholders agreement will contain provisions related to the composition of the Denali board of directors and its committees, which are further discussed under “Management.”

MD Investor and SLP Investor Approvals The Denali stockholders agreement will provide that, subject to Denali’s amended and restated certificate of incorporation, the Denali bylaws and applicable law, Denali and its subsidiaries (other than VMware) shall not take any of the following actions without the approval of the MD Investors and the SLP Investors: • amend the organizational documents of Denali or certain of Denali’s subsidiaries, subject to limited exceptions; • increase or decrease the size of the Denali board of directors or certain of Denali’s subsidiaries or delegate the powers of any such board of directors to a committee, subject to certain exceptions; • make acquisitions or investments or enter into joint ventures or create any non-wholly-owned subsidiaries for aggregate consideration in excess of $500 million in any calendar year, subject to certain exceptions; • enter into a transaction, commercial agreement or capital investment involving consideration or commitments payable by Denali and its subsidiaries in excess of $500 million; • enter into any transaction involving a merger, consolidation or other business combination of Denali or its subsidiaries, a sale of Denali common stock or other securities representing a majority of the outstanding voting power of all Denali capital stock, or a sale of all or substantially all of the assets of Denali, other than a change in control of Denali in which the SLP Investors receive consideration consisting entirely of cash and marketable securities for their shares of DHI Group common stock having an aggregate value that results in the SLP Investors receiving a return on their investment in the DHI Group common stock of at least both two times the amount invested by the SLP Investors and a 20% internal rate of return; • sell, transfer or license assets or other rights for aggregate consideration in excess of $500 million in any calendar year, subject to certain exceptions; • incur, assume or guarantee additional indebtedness in excess of $500 million in the aggregate, subject to certain exceptions; • create any new class or series of, or sell or issue, any equity securities, debt securities exercisable or exchangeable for, or convertible into equity securities, or any option, warrant or other right to acquire any such equity securities or debt securities, subject to certain exceptions including issuances pursuant to the Denali management equity plan; • effect an initial public offering of DHI Group common stock except for an initial public offering of Class C Common Stock after October 29, 2013 involving the sale of more than 10% of the outstanding DHI Group common stock to the public after giving effect to such transaction and results in the Class C Common Stock being listed on the New York Stock Exchange or National Association of Securities Dealers Automated Quotations or any listing of equity securities on a national securities exchange or substantially equivalent market other than Class V Common Stock, subject to certain exceptions;

241 • enter into, amend or terminate any transactions with the MD Investors, the SLP Investors or any of their respective affiliates, subject to certain exceptions; • redeem, acquire or reclassify any of Denali’s equity securities, subject to certain exceptions; • liquidate, dissolve or wind-up the operations of Denali or any of its material subsidiaries; • adopt, terminate or amend any new employee equity plan or grant any equity award to any directors or members of the Denali executive leadership team, subject to certain exceptions; • settle or compromise any litigation, governmental investigation or proceeding that would result in a payment by Denali or its subsidiaries in excess of $500 million, that would impose materially adverse limitations on the operations of Denali or any of its subsidiaries or in which any MD Investor or MSD Partners Investors or their family members or affiliates has a material interest; • convert shares of VMware Class B common stock into shares of VMware Class A common stock; • vote to approve or consent to (1) any matter subject to EMC’s consent rights under the VMware certificate, (2) any action under Article VI of the VMware certificate, (3) any amendment to the VMware certificate or the Amended and Restated Bylaws of VMware, (4) any sale of all or substantially all of the assets of VMware or (5) any other action submitted to a vote of the VMware stockholders other than the ratification of the appointment of VMware’s independent auditors and the election of directors; • take any action as a stockholder of VMware to remove or appoint (other than to fill vacancies) any directors of VMware other than the reelection of those VMware directors who will be standing for reelection at the 2016 annual meeting of stockholders of VMware; and • take any other action by written consent as a stockholder of VMware.

The consent rights of the MD Investors and the SLP Investors will terminate on the earliest of (1) the consummation of an initial underwritten public offering of the DHI Group common stock on the New York Stock Exchange or National Association of Securities Dealers Automated Quotations involving the offering and sale of a number of shares of DHI Group common stock in excess of 10% of the outstanding DHI Group common stock after giving effect to such initial public offering, (2) an initial underwritten public offering of DHI Group common stock that is approved by the MD Investors and the SLP Investors and (3) such time as the aggregate number of shares of DHI Group common stock beneficially owned by the MD Investors (with respect to their consent rights) or the SLP Investors (with respect to their consent rights) is less than 50% of 98,181,818 shares of DHI Group common stock (as adjusted for any stock split, stock dividend, reverse stock split or similar event occurring after the Dell-EMC merger).

The Denali stockholders agreement will also provide that prior to an initial underwritten public offering of DHI Group common stock, as long as Michael S. Dell has not died and is not disabled and the MD Investors own more than 35% of the outstanding DHI Group common stock or, if less, the number of shares of DHI Group common stock beneficially owned by the SLP Investors, then (1) removal of the chief executive officer of Denali will require the approval of the holders of a majority of the outstanding shares of Class A Common Stock, voting separately as a class and (2) unless otherwise consented to by the holders of a majority of the outstanding Class A Common Stock, voting separately as a class, the chief executive officer of Denali will also serve as chairman of the Denali board of directors.

Nominees to the Board of Directors Prior to an initial public offering of the DHI Group common stock, the Denali stockholders agreement will provide the right of the MD Investors and the SLP Investors to nominate for election individuals to serve as members of the Denali board of directors. Prior to a Designation Rights Trigger Event with respect to the Class A Common Stock or the Class B Common Stock, respectively, the MD Investors and the SLP Investors will be

242 jointly entitled to nominate for election as directors three directors who, if elected, will be designated the Group I Directors. Additionally, prior to a Designation Rights Trigger Event with respect to the Class A Common Stock, the MD Investors will be entitled to nominate for election as directors up to three directors who, if elected, will be designated the Group II Directors. Further, prior to a Designation Rights Trigger Event with respect to the Class B Common Stock, the SLP Investors will be entitled to nominate for election as directors up to three directors who, if elected, will be designated the Group III Directors.

Following an initial public offering of the DHI Group common stock, so long as the MD Investors or the SLP Investors beneficially own at least 5% of all outstanding shares of Denali’s stock entitled to vote generally in the election of directors, the MD Investors or the SLP Investors, as the case may be, will be entitled to nominate at least one individual for election to the board, with the MD Investors or the SLP Investors, as the case may be, having the right to nominate a number of individuals for election as directors as is equal to the percentage of the total voting power for the regular election of directors of Denali beneficially owned by the MD Investors or by the SLP Investors, as the case may be, multiplied by the number of directors then on the Denali board.

Transfer Restrictions and Registration Rights The Denali stockholders agreement will include the following provisions relating to the transfer of the shares of DHI Group common stock held by the MD Investors, the MSD Partners Investors and the SLP Investors: • the MD Investors will generally be prohibited from transferring shares of DHI Group common stock prior to an initial underwritten public offering of DHI Group common stock except (1) in connection with a change in control of Denali in which the SLP Investors receive consideration consisting entirely of cash and marketable securities for their shares of DHI Group common stock having an aggregate value that results in the SLP Investors receiving a minimum return on their investment in DHI Group common stock of at least both two times the amount invested by the SLP Investors and a 20% internal rate of return, (2) to their permitted transferees specified in the Denali stockholders agreement, (3) after October 28, 2018, in any twelve-month period, a number of shares of DHI Group common stock equal to 5% of the number of shares of DHI Group common stock held by the MD Investors on October 29, 2013, (4) following the death or disability of Michael S. Dell, provided that he or his power of attorney, guardian or comparable person has waived certain rights under the Denali stockholders agreement or (5) with the consent of the SLP Investors; • the MSD Partners Investors will generally be prohibited from transferring shares of DHI Group common stock prior to the earlier of October 29, 2018 or an initial underwritten public offering of DHI Group common stock, except (1) to their permitted transferees specified in the Denali stockholders agreement or (2) with the consent of the MD Investors and the SLP Investors; and • the SLP Investors will generally be prohibited from transferring shares of DHI Group common stock prior to the earlier of October 29, 2018 or an initial underwritten public offering of DHI Group common stock, except (1) to their permitted transferees specified in the Denali stockholders agreement or (2) with the consent of the MD Investors.

The SLP Investors may require an initial underwritten public offering of DHI Group common stock to be consummated on the New York Stock Exchange or National Association of Securities Dealers Automated Quotations prior to October 29, 2018, if the offering price implies a return on the SLP Investors’ investment in DHI Group common stock that satisfies certain minimum thresholds, and at any time on or after October 29, 2018.

Call and Put Rights; Liquidity Program Before an initial underwritten public offering of DHI Group common stock or a change in control of Denali, any shares of Class C Common Stock of Denali held by an executive officer (other than Michael S. Dell) will be

243 subject to post-termination repurchase (call) and sale (put) rights and to an in-service liquidity program. Selected employees of Denali in addition to its executive officers will be subject to the call and put rights and will be entitled to participate in the liquidity program.

Under the call rights, following the termination of any such executive officer’s employment for any reason, Michael S. Dell will have the right (but not the obligation) to repurchase any or all shares of Class C Common Stock then held by the executive (or any of the executive’s permitted transferees) or acquired by the executive as a result of the exercise of stock options or settlement of RSUs after the termination of employment. If Mr. Dell does not exercise his call right with respect to the executive’s shares within 30 days, Denali may exercise the call right. Denali’s call right expires on the nine-month anniversary of the later of (1) the date on which the executive’s employment was terminated and (2) the date after the employment termination on which the executive acquired shares upon the exercise of options or in settlement of RSUs. If Denali does not exercise its call right, the MD Investors, the MSD Partners Investors and the SLP Investors will each have the right to exercise the call right (based on their respective pro rata ownership of DHI Group common stock at such time), within the 30-day period following the expiration of Denali’s call right. The price for any shares repurchased by any person under the call right will be equal to their fair market value on the date on which the call is exercised unless the executive is terminated for cause, in which case the purchase price for such shares will be equal to the lower of the executive’s cost to acquire the shares or their fair market value on the date on which the call right is exercised.

Under the put rights, any such executive officer may require Denali to repurchase any or all shares of Class C Common Stock held by the executive officer for at least six months. The put period begins on the 30th day following the later of (1) the termination of an executive’s employment for any reason other than for cause and (2) the date after the employment termination on which the executive acquired such shares upon the exercise of the options or in settlement of RSUs, and ends on the six-month anniversary of each such date. The purchase price for any such shares generally will be equal to their fair market value on the date on which the executive exercises the put right. The purchase price will be equal to 80% of such fair market value, however, if the executive resigns without good reason before the later of the fourth anniversary of (a) the closing of the going- private transaction and (b) the date on which the executive began employment with Denali and its affiliates (including in connection with the completion of the Dell-EMC merger).

Twice during each calendar year, Denali will open a 30-day liquidity program under which any such executive officer who remains employed in good standing may require that Denali repurchase, at fair market value, any shares of Class C Common Stock that have been held by the executive (and have been vested) for at least six months.

The amount payable by Denali during any fiscal year for repurchases of Class C Common Stock from any executive officer upon the exercise of put rights under the liquidity program will be subject to an individual cap. In addition, the total amount payable by Denali during any fiscal year for all repurchases from all employees and for tax withholding upon the exercise of options and the vesting of RSUs will be subject to an aggregate cap equal to the lesser of $200 million or the amount of all repurchases and tax withholdings permitted under Denali’s credit facilities to be made during such fiscal year. Denali may waive the aggregate $200 million repurchase cap or any or all of the repurchase caps as they apply to any executive officer and his or her permitted transferees. Given the expected increase in the over-all size of Denali’s employee equity program following the completion of the Dell-EMC merger, Denali anticipates that the size of the aggregate fiscal year cap will be increased following the completion of the Dell-EMC merger, although no decision has been made as of the date of this offering memorandum regarding the amount of such increase (if any).

Other Provisions The Denali stockholders agreement will provide for a renunciation of corporate opportunities presented to any director or officer of Denali or any of its subsidiaries who is also a director, officer, employee, managing

244 director or other affiliate of MSD Partners, L.P. or Silver Lake Partners (other than Michael S. Dell for so long as he is an executive officer of Denali or certain of its subsidiaries).

Under the Denali stockholders agreement, Denali will agree, subject to certain exceptions, to indemnify the MD Investors, the MSD Partners Investors, the SLP Investors and various respective affiliated persons from certain losses arising out of the indemnified persons’ investment in, or actual, alleged or deemed control or ability to influence, Denali.

Registration Rights Agreement Denali will be a party to an amended and restated registration rights agreement with certain holders of DHI Group common stock (and other securities convertible into or exchangeable or exercisable for shares of DHI Group common stock) (the “Denali registration rights agreement”). Pursuant to the Denali registration rights agreement, certain of Denali’s security holders, their affiliates and certain of their transferees, will have the right, under certain circumstances and subject to certain restrictions, to require Denali to register for resale the shares of Class C Common Stock (including shares of Class C Common Stock issuable upon conversion of Class A Common Stock, Class B Common Stock and Class D Common Stock) to be sold by them.

Following an initial public offering of DHI Group common stock, certain holders will each have the right to demand that Denali register Class C Common Stock to be sold by them. Subject to certain exceptions, such registration demands are limited in number and each registration demand must be expected to result in aggregate net cash proceeds to the participating registration rights holders in excess of $100 million. In certain circumstances, Denali may postpone the filing of a registration statement for up to 90 days once in any twelve month period.

In addition, following an initial public offering of DHI Group common stock, Denali will be required to use reasonable best efforts to register the sale of shares of Class C Common Stock on Form S-3 or Form F-3, or on Form S-1 or Form F-1 permitting sales of shares of Class C Common Stock into the market from time to time over an extended period and certain holders will have the right to request that Denali do the same. Subject to certain limitations, at any time when Denali has an effective shelf registration statement, certain holders each shall have the right to make no more than two marketed underwritten shelf takedowns during any twelve month period.

Certain holders will also have the ability to exercise certain piggyback registration rights in respect of shares of Class C Common Stock to be sold by them in connection with registered offerings requested by certain other holders or initiated by Denali.

Transactions with Michael S. Dell and Related Persons Pursuant to a Dell policy, Mr. Dell, Denali’s Chairman and Chief Executive Officer, is required to fly privately when traveling. Mr. Dell owns a private aircraft through a wholly-owned limited liability company. For Mr. Dell’s business flights, Dell leases the plane from the limited liability company and engages a third-party flight services company to act as its agent, including operating the aircraft and providing flight personnel. Dell pays the flight services company a fee attributable to Mr. Dell’s business travel on the aircraft. During Fiscal 2016, Dell paid approximately $1.1 million for Mr. Dell’s business travel through these arrangements. Mr. Dell directly pays one hundred percent of the costs of operating the aircraft for all personal flights.

Entities affiliated with MSD Capital, L.P., the investment firm that exclusively manages the capital of Mr. Dell and his family, purchase services or products from Dell on standard commercial terms available to comparable unrelated customers. These entities paid Dell approximately $700,000 for services and products in Fiscal 2016.

Mr. Dell reimburses Dell for costs related to his or his family’s personal security protection. Reimbursements for this purpose in Fiscal 2016 totaled approximately $1.9 million.

245 Mr. Dell also holds a non-controlling equity interest in, and appoints a representative to serve on the board of, a landscaping services company. During Fiscal 2016, Dell’s third-party facilities maintenance vendor subcontracted its landscaping obligations to the landscaping services company. The landscaping services company was paid approximately $513,295 in Fiscal 2016 for landscaping services to Dell. Future annual payments are expected to be a minimum of $741,662.

Related Party Transactions of EMC In 2014 and 2013, EMC leased certain real estate from Carruth Management LLC (“Carruth”), for which payments aggregated approximately $3.2 million in 2014 and approximately $4.5 million in 2013. John R. Egan, a director of EMC, and his siblings are the beneficial owners of Carruth. EMC initially assumed the lease in connection with its acquisition of Data General Corporation in 1999 and renewed it in 2003 for a ten-year term. The lease expired in September 2014 and EMC has vacated the facility.

A brother of one of EMC’s executive officers, Erin McSweeney, Executive Vice President, Human Resources of EMC, is a Senior Manager, Facilities of EMC. During 2015, he earned approximately $165,000 and was granted 922 restricted stock units.

A brother of one of EMC’s executive officers, William F. Scannell, President, Global Sales and Customer Operations of EMC, is a Vice President, Mid-Market Division of EMC. During 2015, he earned approximately $1,289,000 and was granted 24,364 restricted stock units. During 2014, he earned approximately $1,066,034 and was granted 21,740 restricted stock units. During 2013, he earned approximately $1,063,000 and was granted 22,945 restricted stock units.

Another brother-in-law of Mr. Scannell is a Senior Consultant Pricing Manager of EMC. During 2015, he earned approximately $194,000 and was granted 375 restricted stock units. During 2014, he earned approximately $345,514 and was granted 335 restricted stock units. During 2013, he earned approximately $211,000 and was granted 268 restricted stock units.

Another brother-in-law of Mr. Scannell is a Vice President, Global Financial Services Americas of EMC. During 2015, he earned approximately $387,000 and was granted 8,415 restricted stock units. During 2014, he earned approximately $348,767 and was granted 1,673 restricted stock units. During 2013, he earned approximately $342,000 and was granted 1,530 restricted stock units.

A half-brother of one of EMC’s executive officers, Amit Yoran, President, RSA, the Security Division of EMC, is Counsel at EMC. During 2015, he earned approximately $190,000 and was granted 263 restricted stock units.

Review, Approval or Ratification of Transactions with Related Persons Pursuant to existing arrangements between Denali, the MD Investors and the SLP Investors, certain transactions between Denali and its subsidiaries, on the one hand, and Michael S. Dell and his affiliates, on the other hand, must be approved by the Denali directors appointed by the SLP Investors. Similarly, certain transactions between Denali and its subsidiaries, on the one hand, and Silver Lake and its affiliates, on the other hand, must be approved by the Denali directors appointed by the MD Investors. In addition to these approval requirements, in connection with the completion of the Dell-EMC merger the Denali board intends to adopt a written policy setting forth procedures for the review and approval or ratification of related transactions. The policy will cover, with various exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which Denali was or is to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including transactions between Denali and its subsidiaries and Mr. Dell, SLP or their respective affiliates. Denali’s audit committee will be responsible for reviewing and approving transactions with related persons. Following the consummation of the EMC Transactions, EMC and its subsidiaries will also be subject to such review, approval and ratification procedures.

246 DESCRIPTION OF OTHER INDEBTEDNESS

Below is a description of certain expected terms of certain of our indebtedness, including the senior secured credit facilities, the unsecured notes, the asset sale bridge facility, the margin bridge facility, the VMware note bridge facility, the ABS facilities, the asset-backed debt securities and the existing senior notes and senior debentures of Dell. We have received committed financing of $49.5 billion which terms differ from, and are currently expected to be replaced by, the terms described below. The terms described below represent our current expectation of the terms of such financing, which are subject to change and a number of factors and conditions. To the extent that any of the conditions with respect to such indebtedness are not satisfied, such indebtedness may not be available on the terms described herein or at all.

Unless otherwise specified, we expect all of the indebtedness described below to remain outstanding after the Transactions in accordance with their terms.

Senior Secured Credit Facilities Overview In connection with the EMC Transactions, we will enter into the senior secured credit facilities with Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Bank of America, N.A., Barclays Bank PLC, Citibank N.A., Goldman Sachs Bank USA, Deutsche Bank Securities Inc. and RBC Capital Markets, LLC, as joint lead arrangers and joint bookrunners.

The term loan facilities are expected to provide senior secured financing in an aggregate principal amount of up to $20,425 million consisting of an up to $8,000 million term loan B facility, an up to $3,700 million term loan A-1 facility (which we expect to reduce to $2,500 million if the Dell Services Transaction is consummated substantially concurrently with or prior to the consummation of the Dell-EMC merger), an up to $3,925 million term loan A-2 facility, an up to $3,500 million term loan A-3 facility and an up to $2,500 million cash flow term loan facility. The revolving facility is expected to provide senior secured financing in an aggregate principal amount of up to $3,150 million. The revolving facility will include borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as swingline loans.

We expect that the initial borrower(s) under the senior secured credit facilities will be Dell International and Merger Sub. Upon the consummation of the Dell-EMC merger, Dell International and EMC will become co- borrowers under the term loan facilities and revolving facility and will be liable for all the obligations under the term loan facilities and revolving facility on a joint and several basis.

It is expected that the senior secured credit facilities will provide that we will have the right at any time subject to customary conditions to request incremental term or incremental revolving commitments in an aggregate principal amount of up to (a) the greater of (x) $10,000 million and (y) 100% of Consolidated EBITDA (as defined in the credit agreement that will govern the senior secured credit facilities) plus (b) an amount equal to all voluntary prepayments of the term loan facilities and voluntary prepayments of revolving loans to the extent accompanied by a permanent reduction of the revolving commitments thereunder, in each case, prior to the date of any such incurrence plus (c) an additional unlimited amount so long as we do not exceed a pro forma net first lien leverage ratio of 3.25:1.0. The lenders under these facilities will not be under any obligation to provide any such incremental loans, and any such addition of or increase in loans will be subject to certain customary conditions precedent and other provisions.

Interest Rate and Fees Borrowings under the senior secured credit facilities are expected to bear interest at a rate per annum equal to an applicable margin, plus, at our option, either (a) a base rate or (b) a LIBOR rate, which, under the term loan B facility, will be subject to an interest rate floor. From and after the delivery by the borrower to the

247 administrative agent of financial statements for the first full fiscal quarter completed after the closing date of the senior secured credit facilities, the applicable margin under the term loan B facility will be subject to a stepdown based on our first lien leverage ratio. In addition, the applicable margins under the term loan A-1 facility, the term loan A-2 facility, the term loan A-3 facility and the revolving facility will vary based upon a corporate ratings-based pricing grid.

The borrower may elect interest periods under the senior secured 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 revolving facility. The initial commitment fee rate is 0.375% per annum and after the date of closing of the Dell-EMC merger, will vary based upon a corporate ratings-based pricing grid. The borrower is also required to pay customary letter of credit fees.

Prepayments The term loan facilities are expected to require the borrower to prepay outstanding term loans and, in certain instances as specified below, the borrower may prepay outstanding borrowings under the revolving facility, 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; • 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 (to the extent such senior secured bridge facility is entered into), 100% of the net cash proceeds of any issuance or incurrence of debt by Dell or any of its restricted subsidiaries under the term loan facilities, 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 under the term loan facilities of net cash proceeds received from asset sales and dispositions of property of at least $8,500 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 prepay loans in respect of the asset sale bridge facility, then the term loan A-1 facility, then at the option of Dell, the revolving facility in an amount up to $1,000 million (with no permanent reduction in commitments), then the term loan A-3 facility and thereafter, as elected by the borrower. We expect that we will only enter into the senior secured bridge facility in the event that we do not issue at least $16,000 million of senior secured notes in order to fund the EMC Transactions.

The borrower may voluntarily repay outstanding loans under the senior secured credit facilities at any time without premium or penalty, other than customary “breakage” costs with respect to LIBOR loans and we expect that the term loan B facility will be subject to a 1% prepayment premium in the event of certain voluntary prepayments or refinancings thereof during a period of at least six months after the date of closing of the mergers and the assumption.

248 Amortization and Maturity The term loan A-1 facility will mature three years from the date of closing of the Dell-EMC merger and will have no amortization. The term loan A-2 facility will mature five years from the date of closing of the Dell-EMC 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 Dell-EMC merger, 10% of the original principal amount in each of the third and fourth years after the date of closing of the Dell-EMC merger and 70% of the original principal amount in the fifth year after the date of closing of the Dell-EMC merger. The term loan A-3 facility will mature three years from the date of closing of the Dell-EMC merger and will have no amortization. The term loan B facility will mature seven years from the date of closing of the Dell- EMC merger and will amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount. The cash flow term loan facility will mature 364 days after the date of closing of the Dell-EMC merger and will have no amortization. The revolving facility will mature five years from the date of closing of the Dell-EMC merger and will have no amortization.

Guarantee and Security All obligations of the borrowers under the senior secured credit facilities and any swap agreements, cash management arrangements and certain letters of credit provided by any lender party to the senior secured credit facilities or any of its affiliates and certain other persons will be unconditionally guaranteed by Denali Intermediate, Dell and each existing and subsequently acquired or organized direct or indirect material wholly- owned domestic restricted subsidiary of Denali Intermediate, with customary exceptions including, among other things, where providing such guarantees is not permitted by law, regulation or contract or would result in material adverse tax consequences.

All obligations under the senior secured credit facilities and any swap agreements, cash management arrangements and certain letters of credit provided by any lender party to the senior secured credit facilities or any of its affiliates and certain other persons, and the guarantees of such obligations, will be secured, subject to permitted liens and other exceptions, by (1) a first priority security interest in certain tangible and intangible assets of the borrowers and the guarantors and (2) a first-priority pledge of 100% of the capital stock of the borrowers, Dell and of each wholly-owned material restricted subsidiary of the borrowers and the 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 thresholds, exceptions and permitted liens. The collateral will not include, among other things, (i) a pledge of the assets or equity interests of certain subsidiaries, including SecureWorks, Boomi, Virtustream, Pivotal and VMware and their respective subsidiaries or (ii) any “principal property” as defined in the indentures governing the existing Dell and EMC unsecured notes and capital stock of any subsidiary holding “principal property” as defined in the indentures governing the existing Dell unsecured notes. We expect that the collateral for the senior secured credit facilities will also constitute collateral for the notes offered hereby, except as set forth under “Description of Notes—Security for the Notes.”

Certain Covenants and Events of Default The senior secured credit facilities are expected to 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 senior secured credit facilities are also expected to contain customary negative covenants that, subject to certain exceptions, qualifications and “baskets,” generally will limit Dell’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 term loan A-1 facility, the term loan A-2 facility, the term loan A-3 facility and revolving facility will be subject to a first lien net leverage ratio that is no greater than 5.5:1.0 or a higher leverage ratio based on the consolidated EBITDA of Dell that will be tested at the end of each fiscal quarter of Dell.

249 The senior secured credit facilities are also expected to contain certain customary events of default (including upon a change of control).

Unsecured Notes In connection with the EMC Transactions, we expect the Fincos to issue $3,250 million in aggregate principal amount of one or more series of unsecured notes. We expect that upon the consummation of the mergers and the assumption, Dell International and EMC will become co-issuers of the unsecured notes and will become liable on a joint and several basis for all the obligations of the Fincos under the unsecured notes and the indenture that will govern the unsecured notes. In the event that the offering of the unsecured notes is consummated prior to the closing of the Dell-EMC merger, we expect that the proceeds of the unsecured notes offering will be deposited into an escrow account. In addition, we expect that the unsecured notes will be subject to a special mandatory redemption pursuant to which if the Dell-EMC merger is not consummated by a certain date or if the Fincos have notified the trustee of the unsecured notes in writing that Denali will no longer pursue the Dell-EMC merger, the Fincos will be required to redeem all of the unsecured notes on the special mandatory redemption date in accordance with the terms of the indenture that will govern the unsecured notes. If Denali Intermediate or its restricted subsidiaries sells certain of its assets or if Denali experiences specific kinds of changes in control, we expect that the issuers of the unsecured notes will be required to offer to purchase the unsecured notes pursuant to the indenture that will govern the unsecured notes.

The unsecured notes are not expected to be guaranteed prior to the consummation of the mergers and the assumption. We expect that following the consummation of the mergers and the assumption, the unsecured notes will be guaranteed on a joint and several basis by Denali, Denali Intermediate, Dell and Denali Intermediate’s existing and future direct or indirect wholly-owned domestic subsidiaries that guarantee obligations under the senior secured credit facilities.

The unsecured notes are expected to be the issuers’ and the guarantors’ senior unsecured obligations and are expected to rank equally in right of payment with all of their existing and future unsecured and unsubordinated indebtedness.

We expect that the indenture that will govern the unsecured notes will contain covenants that, prior to the mergers and the assumption, limit the Fincos’ ability, and, after consummation of the mergers and the assumption, limit Denali Intermediate’s ability and the ability of Denali Intermediate’s restricted subsidiaries to: • incur additional debt or issue certain preferred shares; • pay dividends on or make other distributions in respect of Denali Intermediate’s capital stock or make other restricted payments; • make certain investments; • sell or transfer certain assets; • create liens on certain assets to secure debt; • consolidate, merge, sell or otherwise dispose of all or substantially all of their respective assets; • enter into certain transactions with their respective affiliates; and • designate its subsidiaries as unrestricted subsidiaries.

We expect that the indenture that will govern the unsecured notes will provide for customary events of default.

250 We expect that, to the extent that we issue less than $3,250 million of unsecured notes to fund the EMC Transactions, we will enter into a senior unsecured bridge facility that will provide senior unsecured financing in an amount such that, together with the aggregate principal amount of issued unsecured notes, provides us with senior unsecured financing of $3,250 million in the aggregate. We expect that the senior unsecured bridge facility will have substantially the same terms and conditions as the asset sale bridge facility described below in “—Asset Sale Bridge Facility,” except that interest under the senior unsecured bridge facility will be payable at a LIBOR-based rate plus an escalating margin to be agreed, up to a cap.

Asset Sale Bridge Facility Overview In the event that the Dell Services Transaction is not consummated substantially concurrently with or prior to the closing of the Dell-EMC merger, we expect to enter into the asset sale bridge facility with Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets, Inc. or one of its affiliates, Goldman Sachs Bank USA, Deutsche Bank Securities Inc. and RBC Capital Markets, LLC, as joint lead arrangers and joint bookrunners.

The asset sale bridge facility is expected to provide senior unsecured financing in an aggregate principal amount of up to $1,500 million.

The initial borrower under the asset sale bridge facility will be Dell International prior to the closing of the Dell-EMC merger and, after the closing of the Dell-EMC merger, Dell International and EMC will be co- borrowers under the asset sale bridge facility.

We expect to repay all outstanding amounts under the asset sale bridge facility with a portion of the net proceeds from the Dell Services Transaction following consummation of such transaction.

Interest Rate and Fees Interest under the asset sale bridge facility are expected to bear interest at a fixed rate per annum until the date that is 90 days after the closing of the Dell-EMC merger and, thereafter, at a LIBOR-based rate interest rate, subject to 50 basis point increases every three months thereafter, subject to a total cap. Interest will be payable, at the end of each interest period (but at least every three months), in arrears.

Prepayments The asset sale bridge facility requires the borrower to prepay outstanding borrowings under the 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 margin bridge facility at any time without premium or penalty, other than customary “breakage” costs.

Amortization and Maturity The asset sale bridge facility will mature on the one year anniversary of the closing date of the Dell-EMC merger. The asset sale bridge facility will have no amortization.

Guarantee All obligations of the borrowers under the asset sale bridge facility will be unconditionally guaranteed by Denali Intermediate, Dell and each existing and subsequently acquired or organized direct or indirect material wholly-owned domestic restricted subsidiary of Denali Intermediate that guarantees the senior secured credit facilities.

251 Certain Covenants and Events of Default The asset sale bridge facility is expected to 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 asset sale bridge facility is also expected to 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 asset sale bridge facility is also expected to contain certain customary events of default (including upon a change of control).

Margin Bridge Facility Overview In connection with the EMC Transactions, we will enter into the margin bridge facility with Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets, Inc. or one of its affiliates, Goldman Sachs Bank USA, Deutsche Bank Securities Inc. and RBC Capital Markets, LLC, as joint lead arrangers and joint bookrunners.

The margin bridge facility is expected to provide senior secured financing in an aggregate principal amount of up to $2,500 million.

The borrower under the margin bridge facility will be Merger Sub prior to the closing of the Dell-EMC merger and, after the closing of the Dell-EMC merger, will be EMC.

It is contemplated that after the closing of the Dell-EMC merger, a new margin loan facility in an aggregate principal amount of up to $2,500 million may be entered into by a special purpose vehicle to refinance the margin bridge facility.

Interest Rate and Fees 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.

Prepayments The margin bridge facility requires the borrower to prepay outstanding borrowings under the margin bridge facility 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.

Amortization and Maturity The margin bridge facility will mature 364 days after the date of closing of the Dell-EMC merger and will have no amortization.

252 Guarantee and Security 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 and any proceeds thereof.

Certain Covenants and Events of Default The margin bridge facility is not expected to 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 senior secured credit facilities, as modified to reflect the nature of the margin bridge facility.

VMware Note Bridge Facility Overview In connection with the EMC Transactions, we will enter into the VMware note bridge facility with Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Barclays Bank PLC, Citigroup Global Markets, Inc. or one of its affiliates, Goldman Sachs Bank USA, Deutsche Bank Securities Inc. and RBC Capital Markets, LLC, as joint lead arrangers and joint bookrunners.

The VMware note bridge facility is expected to provide senior secured financing in an aggregate principal amount of up to $1,500 million.

The borrower under the VMware note bridge facility will be Merger Sub prior to the closing of the Dell- EMC merger and, after the closing of the Dell-EMC merger, will be EMC.

It is contemplated that after the closing of the Dell-EMC merger, a permanent financing solely secured by the VMware intercompany notes in an aggregate principal amount of up to $1,500 million may be entered into to refinance the VMware note bridge facility.

Interest Rate and Fees 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.

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.

Amortization and Maturity The VMware note bridge facility will mature 364 days after the date of closing of the Dell-EMC merger and will have no amortization.

253 Guarantee and Security 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 solely by the VMware intercompany notes, which are payable to EMC, and the proceeds thereof.

Certain Covenants and Events of Default The VMware note bridge facility is not expected to 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 senior secured credit facilities, as modified to reflect the nature of the VMware note bridge facility.

ABS Facilities Term/Commercial Receivables Facility The lenders under the $1,500 million term/commercial receivables facility include certain of the lenders under the senior secured credit facilities and/or one or more commercial paper conduits with backstop funding commitments from one or more of such lenders. Interest under the term/commercial receivables facility is payable at a variable interest rate which, in the case of a commercial paper conduit lender, is generally based on such lender’s cost of funds in the commercial paper market plus a usage fee or, if funding occurs through its backstop funding commitments, one-month LIBOR plus 1.75%, and, in the case of any other lender, will be daily one-month LIBOR plus a usage fee. The usage fee is 0.78% per annum, increasing to 1.75% per annum after the end of the commitment term. Interest is payable monthly. The commitment term under the term/commercial receivables facility expires in February 2018 and the term/commercial receivables facility will mature in the twelfth month after the due date of the latest installment payment due under any receivable being funded at the end of the commitment term.

The receivables to be financed under the term/commercial receivables facility are fixed-rate, fixed-term sales-type equipment lease and loan contracts originated by DFS. The contracts are required to satisfy certain eligibility criteria. Borrowings under the term/commercial receivables facility are subject to availability under a borrowing base. The advance rate is generally 88% of the discounted present value of the periodic payments due under the eligible contracts, plus, in the case of the lease contracts, a percentage of the present value of the residual value of the leased equipment thereunder at the end of the term. The discount is generally based on the borrower’s usage fees, hedging costs, servicing expenses and certain other transaction expenses.

The borrower under the term/commercial receivables facility is a special purpose bankruptcy-remote indirect subsidiary of Dell established to purchase the contracts and the related lease equipment on a periodic basis. DFS will act as the servicer of the contracts. Dell provides a performance undertaking to the borrower and the lenders ensuring the performance and obligations (including the payment obligations) of DFS as servicer and of the subsidiary of Dell acting as the seller of the contracts to the borrower.

The term/commercial receivables facility is secured by a first priority security interest in the contracts, interests in the related equipment and other related property and the proceeds thereof.

The term/commercial receivables facility contains customary affirmative covenants, including, among other things, maintenance of existence, further assurances and filing financing statements, maintenance of books and records, delivering unaudited annual financial statements of the borrower and annual audited and quarterly unaudited financial statements of Dell, inspection rights, notice of certain events, payment of taxes and compliance with laws and regulations. The term/commercial receivables facility also contains customary

254 negative covenants that generally limit the borrower’s ability to incur any debt other than under the term/ commercial receivables facility, create liens other than under the term/commercial receivables facility, engage in activities other than in connection with the term/commercial receivables facility or like financings, engage in asset sales, mergers, consolidations or dissolutions and pay dividends or make other payments in respect of equity interests after the occurrence of certain events.

The term/commercial receivables facility also contains events of default triggered by, among other things, payment defaults and the bankruptcy of the borrower, as well as certain customary early commitment termination events, including a change of control, a cross-default to material indebtedness of Dell and its subsidiaries and certain receivable performance measures.

Revolving/Consumer Receivables Facility The lenders under the $640 million revolving/consumer receivable facility include certain of the lenders under the senior secured credit facilities and/or one or more commercial paper conduits with backstop funding commitments from one or more of the lenders. Interest under the revolving/consumer receivables facility is payable at a variable interest rate which, in the case of a commercial paper conduit lender, is generally based on such lender’s cost of its funds in the commercial paper market plus a usage fee or, if funding occurs through its backstop funding commitments, one-month LIBOR plus 2.25% and, in the case of any other lender, is daily one- month LIBOR plus a usage fee. The usage fee is 1.75% per annum, increasing to 2.50% per annum after the end of the commitment term. Interest is payable monthly. The commitment term under the revolving/consumer receivables facility expires in October 2016 and the revolving/consumer receivables facility will mature in the twelfth month after the end of the commitment term. On April 12, 2016, the commitment term of the revolving/ consumer receivables facility was extended to expire in April 2018.

The receivables financed under the revolving/consumer receivables facility are finance charge receivables and principal receivables arising under revolving credit accounts established under the “Dell Preferred Account” program, any successor program related to consumer financing or any program related to consumer financing that utilizes the same underwriting guidelines as the “Dell Preferred Account” program (“Consumer Credit Accounts”) or the “Dell Business Credit” program, any successor program related to business financing or any program related to business financing that utilizes the same underwriting guidelines as the “Dell Business Credit” program (“Business Credit Accounts”). The receivables are required to satisfy certain eligibility criteria. Borrowings under the revolving/consumer receivables facility are subject to availability under a borrowing base. The advance rate is generally 60% of the principal receivables arising under the Consumer Credit Accounts and 85% of the principal receivables arising under the Business Credit Accounts.

The borrower under the revolving/consumer receivables facility is a special purpose bankruptcy-remote indirect subsidiary of Dell established to purchase the receivables arising in designated Consumer Credit Accounts and Business Credit Accounts on a daily basis as they are originated. DFS acts as the servicer of the receivables and the administrator of the borrower. Dell provides a performance undertaking to the borrower and the lenders ensuring the performance and obligations (including the payment obligations) of DFS as servicer and administrator and of the subsidiary of Dell acting as the initial seller of the receivables.

The revolving/consumer receivables facility is secured by a first priority security interest in the receivables, related property and the proceeds thereof.

The revolving/consumer receivables facility contains customary affirmative covenants, including, among other things, maintenance of existence, further assurances and filing financing statements, maintenance of books and records, delivering unaudited annual financial statements of the borrower and annual audited and quarterly unaudited financial statements of Dell, inspection rights, notice of certain events, payment of taxes and compliance with laws and regulations. The revolving/consumer receivables facility also contains customary negative covenants that will generally limit the borrower’s ability to incur debt other than under the revolving/

255 consumer receivables facility, create liens other than under the revolving/consumer receivables facility, engage in activities other than in connection with the revolving/consumer receivables facility, engage in asset sales, mergers, consolidations or dissolutions and pay dividends or make other payments in respect of equity interests after the occurrence of certain events.

The revolving/consumer receivables facility also contains events of default triggered by payment defaults and the bankruptcy of the borrower, as well as certain customary early commitment termination events, including a change of control, a cross-default to material indebtedness of Dell and its subsidiaries (including without limitation, the notes and the senior secured credit facilities) and certain receivable performance measures.

EMEA Revolving Credit Facility BNP Paribas and certain other lenders have agreed to establish in favor of Dell Bank International Limited (“Dell Bank”) a revolving credit facility of up to €600 million available in euros (the “EMEA Facility”) to be used by Dell Bank for working capital requirements, including the purchase of receivables. Borrowings under the EMEA Facility are subject to availability under a borrowing base. Loans made under the EMEA Facility will be secured by Dell Bank’s portfolio of euro, Swiss franc, Swedish krona, British pound, and U.S. dollar commercial leases, commercial term loans, hire purchase contracts and receivables from sales of equipment at the end of a lease from certain permitted lending activities (including ordinary course day to day lending with customers) and by an unsecured guarantee from Dell Global B.V.

Interest under the EMEA Facility will be payable at a variable interest rate which will be 3 month EURIBOR for the interest period of the applicable loan plus the applicable margin. The applicable margin is currently 1.75% and is subject to variation in the event of certain changes in Dell’s corporate credit ratings. The initial maturity of the revolving loan under the EMEA Facility is February 14, 2018, which may be extended in the event the incremental facility is utilized.

The EMEA Facility contains customary affirmative covenants, including, among other things, Dell Bank’s compliance with a solvency ratio, solvency testing and general undertakings given by each of Dell Bank and Dell Global B.V., relating to, among other things, compliance with laws and confirmation regarding ranking, maintenance of existence, further assurances and filing of financing statements, maintenance of books and records, delivering unaudited quarterly and annual financial statements of Dell Bank and annual audited and quarterly unaudited financial statements of Dell Global B.V., provision of further information, notice of certain events, payment of taxes and compliance with laws and regulations.

The EMEA Facility also contains customary negative covenants that generally limit Dell Bank’s ability to incur any debt other than under the EMEA Facility, incur debt pursuant to the shareholder loan from Dell Global B.V. to Dell Bank that is senior to the EMEA Facility, create liens over any of its assets (including receivables) other than under the EMEA Facility, dispose of any of its assets (including receivables), distribute dividends, provide loans or credit, provide guarantees or indemnities, in each case unless otherwise permitted by the EMEA Facility.

The EMEA Facility also contains customary events of default.

Canadian Revolving/Commercial Receivables Facility Wells Fargo has agreed to establish in favor of Dell Financial Services Canada Limited (“DFS Canada”) a $135 million revolving credit facility available in Canadian dollars and U.S. dollars (the “Canadian Facility”) to be used by DFS Canada for its working capital and general corporate purposes, including, subject to customary conditions and financial covenants, paying dividends and/or making distributions to Dell or any of its affiliates. Loans made under the Canadian Facility are secured by DFS Canada’s portfolio of commercial leases, loans and conditional sale agreements (the “Commercial Receivables”), a blocked account arrangement wherein the proceeds from the Commercial Receivables shall be deposited and by an unsecured guarantee of Dell.

256 The aggregate principal amount of the loans made under the Canadian Facility is not to exceed, at any time, the lesser of a dollar amount and 90% of the Commercial Receivables balance (excluding from such balance any Commercial Receivables that are over 60 days past due or that are otherwise eligible), discounted at the applicable interest rate and subject to customary reserves.

Interest under the Canadian Facility is payable at a variable interest rate which, in the case of loans secured by any Canadian dollar Commercial Receivables, is one-month CDOR plus 1.75% and, in the case of loans secured by any U.S. dollar Commercial Receivables, is one-month LIBOR plus 2.50%. These margins are subject to variation in the event of certain changes in Dell’s credit ratings. The term of the revolving loan under the Canadian Facility is two years.

The Canadian Facility contains customary affirmative covenants, including, among other things, maintenance of existence, further assurances and filing of financing statements, maintenance of books and records, delivering unaudited quarterly and annual financial statements of DFS Canada and annual audited and quarterly unaudited financial statements of Dell, inspection rights, notice of certain events, payment of taxes and compliance with laws and regulations.

The Canadian Facility also contains customary negative covenants that generally limit DFS Canada’s ability to incur any debt other than under the Canadian Facility or indebtedness that is secured by DFS Canada’s consumer portfolio, create liens other than under the Canadian Facility or for any of its other permitted secured debt, undertake mergers, amalgamations, consolidations, dissolutions and certain other transactions with affiliates, and pay dividends or make other payments in respect of equity interests after the occurrence of certain events.

The Canadian Facility also contains certain customary events of default.

Asset-Backed Debt Securities As of January 29, 2016, $1.6 billion aggregate principal amount of 18 classes of asset-backed notes (the “DEFT Notes”) were outstanding, with final maturities between April 22, 2016 and March 22, 2021. As of January 29, 2016, 17 classes of the DEFT Notes bear interest at fixed rates ranging from 0.42% to 3.61% and one class of the DEFT Notes bear interest at a variable rate based on LIBOR plus 0.90%. The DEFT Notes were issued by certain Delaware statutory trusts (together, the “DEFT Issuers”), which are special purpose entities that are indirect wholly-owned subsidiaries of Dell. The DEFT Issuers were formed in order to issue notes that are backed by a pledge of such DEFT Issuer’s assets, which primarily consist of loan and lease contracts located in the United States and ownership of, or security interests in, the related equipment and other property. DFS acts as the originator, sponsor and servicer of the receivables that are transferred to each of the DEFT Issuers.

The DEFT Notes were issued pursuant to indentures, each of which includes customary representations, warranties and covenants. In addition, the trust agreements pursuant to which each DEFT Issuer was established also includes customary representations, warranties and covenants. Each of the DEFT Issuers entered into a servicing agreement with DFS and the backup servicer, which governs the servicing of the receivables and the remarketing of the related equipment by the servicer on behalf of the applicable DEFT Issuer and contains customary representations, warranties and covenants. The servicer is entitled to receive a monthly fee from each DEFT Issuer for the servicing and administrative functions that are performed by the servicer pursuant to the applicable servicing agreement. DFS also acts as the administrator of the DEFT Issuers under administration agreements, each of which include customary representations, warranties and covenants. The administrator is entitled to receive an annual fee from each DEFT Issuer for performing the administrative duties pursuant to the applicable administration agreement.

257 Existing Senior Notes and Senior Debentures of Dell 2018 Notes General. As of January 29, 2016, Dell had outstanding $500 million aggregate principal amount of its 5.65% senior notes due April 2018, which were issued on April 17, 2008 (the “2018 notes”). The 2018 notes bear interest at a rate of 5.65% per annum with interest payment dates on April 15 and October 15 of each year. The 2018 notes will mature on April 15, 2018.

Ranking. The 2018 notes rank equally in right of payment with all of Dell’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2018 notes may be redeemed at any time or in part from time to time at a price equal to the sum of (1) 100% of the principal amount of the 2018 notes to be redeemed plus (2) accrued and unpaid interest through the redemption date plus (3) the greater of (i) zero and (ii) (x) the sum of the present values of the remaining scheduled principal and interest payments, discounted to the redemption date on a semi-annual basis at the Treasury Rate, as defined in the indenture governing the 2018 notes, plus 35 basis points, minus (y) 100% of the principal amount of the 2018 notes.

Restrictive Covenants. Subject to certain exceptions, neither Dell nor any of its subsidiaries may issue or guarantee any debt secured by a pledge, lien or other encumbrance upon any principal property, as defined in the indenture governing the 2018 notes, or upon the shares of stock or indebtedness of any subsidiary that owns any such principal property. Dell and its subsidiaries are allowed to issue or guarantee debt secured by a pledge, lien or encumbrance on principal property if it provides concurrently with the issue or guarantee of such debt that the 2018 notes will be secured equally and ratably with (or at Dell’s option, prior to) such debt. The notes offered hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property or the capital stock or indebtedness of any entity that owns any principal property and, as a result, the 2018 notes will not be secured by any principal property as a result of the offering of the notes offered hereby or the incurrence of such other debt. In addition, certain sale and lease-back transactions are subject to restrictions.

2019 Notes General. As of January 29, 2016, Dell had outstanding $600 million aggregate principal amount of its 5.875% senior notes due June 2019, which were issued on June 15, 2009 (the “2019 notes”). The 2019 notes bear interest at 5.875% per annum with interest payment dates on June 15 and December 15 of each year. The 2019 notes will mature on June 15, 2019.

Ranking. The 2019 notes rank equally in right of payment with all of Dell’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2019 notes may be redeemed at any time or in part from time to time at a price equal to the sum of (1) the greater of (i) 100% of the principal amount of the 2019 notes to be redeemed and (ii) the sum of (x) the present values of the remaining scheduled principal and interest payments, discounted to the redemption date on a semi-annual basis at the Treasury Rate, as defined in the supplemental indenture establishing the terms of the 2019 notes, plus (y) 30 basis points, plus (2) accrued and unpaid interest to, but not including, the redemption date.

258 hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property or the capital stock or indebtedness of any entity that owns any principal property and, as a result, the 2019 notes will not be secured by any principal property as a result of the offering of the notes offered hereby or the incurrence of such other debt. In addition, certain sale and lease-back transactions are subject to restrictions.

2021 Notes General. As of January 29, 2016, Dell had outstanding $400 million aggregate principal amount of its 4.625% senior notes due April 2021, which were issued on March 31, 2011 (the “2021 notes”). The 2021 notes bear interest at 4.625% per annum with interest payment dates on April 1 and October 1 of each year. The 2021 notes will mature on April 1, 2021.

Ranking. The 2021 notes rank equally in right of payment with all of Dell’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2021 notes may be redeemed at any time or in part from time to time at a price equal to the sum of (1) the greater of (i) 100% of the principal amount of the 2021 notes to be redeemed and (ii) the sum of (x) the present values of the remaining scheduled principal and interest payments, discounted to the redemption date on a semi-annual basis at the Treasury Rate, as defined in the supplemental indenture establishing the terms of the 2021 notes, plus (y) 20 basis points, plus (2) accrued and unpaid interest to, but not including, the redemption date.

Restrictive Covenants. Subject to certain exceptions, neither Dell nor any of its subsidiaries may issue or guarantee any debt secured by a pledge, lien or other encumbrance upon any principal property, as defined in the indenture governing the 2021 notes, or upon the shares of stock or indebtedness of any subsidiary that owns any such principal property. Dell and its subsidiaries are allowed to issue or guarantee debt secured by a pledge, lien or encumbrance on principal property if it provides concurrently with the issue or guarantee of such debt that the 2021 notes will be secured equally and ratably with (or at Dell’s option, prior to) such debt. The notes offered hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property or the capital stock or indebtedness of any entity that owns any principal property and, as a result, the 2021 notes will not be secured by any principal property as a result of the offering of the notes offered hereby or the incurrence of such other debt. In addition, certain sale and lease-back transactions are subject to restrictions.

2028 Debentures General. As of January 29, 2016, Dell had outstanding $300 million aggregate principal amount of its 7.10% senior debentures due April 2028, which were issued on April 27, 1998 (the “2028 debentures”). The 2028 debentures bear interest at 7.10% per annum with interest payment dates on April 15 and October 15 of each year. The 2028 debentures will mature on April 15, 2028.

Ranking. The 2028 debentures rank equally in right of payment with all of Dell’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2028 debentures may be redeemed at any time at a price equal to the sum of (1) the greater of (i) 100% of the principal amount of the 2028 debentures to be redeemed and (ii) the sum of (x) the present values of the remaining scheduled payments of principal and interest (exclusive of interest accrued to the redemption date), discounted to the redemption date on a semi-annual basis at the Treasury Rate, as defined in the officer’s certificate establishing the terms of the 2028 debentures, plus (y) 15 basis points plus (2) accrued and unpaid interest to, but not including, the redemption date.

259 indenture governing the 2028 debentures, or upon the shares of stock or indebtedness of any subsidiary that owns any such principal property. Dell and its subsidiaries are allowed to issue or guarantee debt secured by a pledge, lien or encumbrance on principal property if it provides concurrently with the issue or guarantee of such debt that the 2028 debentures will be secured equally and ratably with (or at Dell’s option, prior to) such debt. The notes offered hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property or the capital stock or indebtedness of any entity that owns any principal property and, as a result, no such provision will be required in respect of the 2028 debentures. In addition, certain sale and lease- back transactions are subject to restrictions.

2038 Notes General. As of January 29, 2016, Dell had outstanding approximately $388 million aggregate principal amount of its 6.50% senior notes due April 2038, which were issued on April 17, 2008 (the “2038 notes”). The 2038 notes bear interest at 6.50% per annum with interest payment dates on April 15 and October 15 of each year. The 2038 notes will mature on April 15, 2038.

Ranking. The 2038 notes rank equally in right of payment with all of Dell’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2038 notes may be redeemed at any time or in part from time to time at a price equal to the sum of (1) 100% of the principal amount of the 2038 notes to be redeemed plus (2) accrued and unpaid interest through the redemption date plus (3) the greater of (i) zero and (ii) (x) the sum of the present values of the remaining scheduled principal and interest payments, discounted to the redemption date on a semi-annual basis at the Treasury Rate, as defined in the indenture governing the 2038 notes, plus 35 basis points, minus (y) 100% of the principal amount of the 2038 notes.

Restrictive Covenants. Subject to certain exceptions, neither Dell nor any of its subsidiaries may issue or guarantee any debt secured by a pledge, lien or other encumbrance upon any principal property, as defined in the indenture governing the 2038 notes, or upon the shares of stock or indebtedness of any subsidiary that owns any such principal property. Dell and its subsidiaries are allowed to issue or guarantee debt secured by a pledge, lien or encumbrance on principal property if it provides concurrently with the issue or guarantee of such debt that the 2038 notes will be secured equally and ratably with (or at Dell’s option, prior to) such debt. The notes offered hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property or the capital stock or indebtedness of any entity that owns any principal property and, as a result, the 2038 notes will not be secured by any principal property as a result of the offering of the notes offered hereby or the incurrence of such other debt. In addition, certain sale and lease-back transactions are subject to restrictions.

2040 Notes General. As of January 29, 2016, Dell had outstanding approximately $265 million aggregate principal amount of its 5.40% senior notes due September 2040, which were issued on September 10, 2010 (the “2040 notes”). The 2040 notes bear interest at 5.40% per annum with interest payment dates on March 10 and September 10 of each year. The 2040 notes will mature on September 10, 2040.

Ranking. The 2040 notes rank equally in right of payment with all of Dell’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2040 notes may be redeemed at any time or in part from time to time a price equal to the sum of (1) the greater of (i) 100% of the principal amount of the 2040 notes to be redeemed and (ii) the sum of (x) the present values of the remaining scheduled principal and interest payments, discounted to the redemption date on a semi-annual basis at the Treasury Rate, as defined in the supplemental indenture establishing the terms of the 2040 notes, plus (y) 30 basis points plus (2) accrued and unpaid interest to, but not including, the redemption date.

260 Restrictive Covenants. Subject to certain exceptions, neither Dell nor any of its subsidiaries may issue or guarantee any debt secured by a pledge, lien or other encumbrance upon any principal property, as defined in the indenture governing the 2040 notes, or upon the shares of stock or indebtedness of any subsidiary that owns any such principal property. Dell and its subsidiaries are allowed to issue or guarantee debt secured by a pledge, lien or encumbrance on principal property if it provides concurrently with the issue or guarantee of such debt that the 2040 notes will be secured equally and ratably with (or at Dell’s option, prior to) such debt. The notes offered hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property or the capital stock or indebtedness of any entity that owns any principal property and, as a result, no such provision will be required in respect of the 2040 notes. In addition, certain sale and lease-back transactions are subject to restrictions.

Existing Senior Notes of EMC 2018 Notes General. As of December 31, 2015, EMC had outstanding approximately $2,500 million aggregate principal amount of its 1.875% notes due June 2018, which were issued on June 6, 2013 (the “2018 notes”). The 2018 notes bear interest at 1.875% per annum with interest payment dates on June 1 and December 1 of each year. The 2018 notes will mature on June 1, 2018.

Ranking. The 2018 notes rank equally in right of payment with all of EMC’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2018 notes may be redeemed at any time or in part from time to time a price equal to the sum of (1) the greater of (i) 100% of the principal amount of the 2018 notes to be redeemed and (ii) the sum of (x) the present values of the remaining scheduled principal and interest payments, discounted to the redemption date on a semi-annual basis at the Treasury Rate, as defined in the supplemental indenture establishing the terms of the 2018 notes, plus (y) 15 basis points plus (2) accrued and unpaid interest to, but not including, the redemption date.

Restrictive Covenants. Subject to certain exceptions, neither EMC nor any of its domestic wholly-owned subsidiaries may issue or guarantee any debt secured by a pledge, lien or other encumbrance upon any principal property, as defined in the indenture governing the 2018 notes. EMC and its domestic wholly-owned subsidiaries are allowed to issue or guarantee debt secured by a pledge, lien or encumbrance on principal property if it provides concurrently with the issue or guarantee of such debt that the 2018 notes will be secured equally and ratably with (or at EMC’s option, prior to) such debt. The notes offered hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property and, as a result, the 2018 notes will not be secured by any principal property as a result of the offering of the notes offered hereby or the incurrence of such other debt.

2020 Notes General. As of December 31, 2015, EMC had outstanding approximately $2,000 million aggregate principal amount of its 2.650% notes due June 2020, which were issued on June 6, 2013 (the “2020 notes”). The 2020 notes bear interest at 2.650% per annum with interest payment dates on June 1 and December 1 of each year. The 2020 notes will mature on June 1, 2020.

Ranking. The 2020 notes rank equally in right of payment with all of EMC’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2020 notes may be redeemed at any time or in part from time to time a price equal to the sum of (1) the greater of (i) 100% of the principal amount of the 2020 notes to be redeemed and (ii) the sum of (x) the present values of the remaining scheduled principal and interest payments, discounted to the redemption

261 date on a semi-annual basis at the Treasury Rate, as defined in the supplemental indenture establishing the terms of the 2020 notes, plus (y) 20 basis points plus (2) accrued and unpaid interest to, but not including, the redemption date.

Restrictive Covenants. Subject to certain exceptions, neither EMC nor any of its domestic wholly-owned subsidiaries may issue or guarantee any debt secured by a pledge, lien or other encumbrance upon any principal property, as defined in the indenture governing the 2020 notes. EMC and its domestic wholly-owned subsidiaries are allowed to issue or guarantee debt secured by a pledge, lien or encumbrance on principal property if it provides concurrently with the issue or guarantee of such debt that the 2020 notes will be secured equally and ratably with (or at EMC’s option, prior to) such debt. The notes offered hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property and, as a result, the 2020 notes will not be secured by any principal property as a result of the offering of the notes offered hereby or the incurrence of such other debt.

2023 Notes General. As of December 31, 2015, EMC had outstanding approximately $1,000 million aggregate principal amount of its 3.375% notes due June 2023, which were issued on June 6, 2013 (the “2023 notes”). The 2023 notes bear interest at 3.375% per annum with interest payment dates on June 1 and December 1 of each year. The 2023 notes will mature on June 1, 2023.

Ranking. The 2023 notes rank equally in right of payment with all of EMC’s existing and future unsecured and unsubordinated indebtedness.

Redemption. The 2023 notes may be redeemed at any time or in part from time to time, prior to March 1, 2023, at a price equal to the sum of (1) the greater of (i) 100% of the principal amount of the 2023 notes to be redeemed and (ii) the sum of (x) the present values of the remaining scheduled principal and interest payments, discounted to the redemption date on a semi-annual basis at the Treasury Rate, as defined in the supplemental indenture establishing the terms of the 2023 notes, plus (y) 20 basis points plus (2) accrued and unpaid interest to, but not including, the redemption date. In addition, on or after March 1, 2023, the 2023 notes are redeemable, in whole at any time or in part from time to time, at a price equal to 100% of the principal amount of the 2023 notes to be redeemed, plus accrued and unpaid interest to, but not including, the redemption date.

Restrictive Covenants. Subject to certain exceptions, neither EMC nor any of its domestic wholly-owned subsidiaries may issue or guarantee any debt secured by a pledge, lien or other encumbrance upon any principal property, as defined in the indenture governing the 2023 notes. EMC and its domestic wholly-owned subsidiaries are allowed to issue or guarantee debt secured by a pledge, lien or encumbrance on principal property if it provides concurrently with the issue or guarantee of such debt that the 2023 notes will be secured equally and ratably with (or at EMC’s option, prior to) such debt. The notes offered hereby and the other debt incurred in connection with the EMC Transactions will not be secured by any principal property and, as a result, the 2023 notes will not be secured by any principal property as a result of the offering of the notes offered hereby or the incurrence of such other debt.

262 DESCRIPTION OF NOTES

The Issuers will issue $ aggregate principal amount of % First Lien Notes due (the “ Notes”), $ aggregate principal amount of % First Lien Notes due (the “ Notes” and together with the Notes, the “Fixed Rate Notes”) $ aggregate principal amount of First Lien Floating Rate Notes due (the “Floating Rate Notes” and, together with the Fixed Rate Notes, the “Notes”), pursuant to an indenture, dated as of the Issue Date (the “Indenture”), among the Issuers and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and as collateral agent (the “Notes Collateral Agent”). The Indenture will be supplemented by a supplemental indenture for each series of Notes. Each supplemental indenture will set forth certain specific terms applicable only to the particular series of Notes governed thereby and references to the “Indenture” herein mean the Indenture as so amended and supplemented by the applicable supplemental indenture. The Notes will be issued in a private transaction that is not subject to the registration requirements of the Securities Act. See “Transfer Restrictions.” The terms of the Notes will include the terms stated in the Indenture and, upon the qualification of the Indenture under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”), the terms made part of the Indenture by reference to the Trust Indenture Act.

The following description is only a summary of certain provisions of the Indenture, the Intercreditor Agreements, the Security Documents and the Notes, does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, the Intercreditor Agreements, the Security Documents and the Notes, including the definitions therein of certain terms used below. We urge you to read each of these documents because they, not this description, define your rights as Holders. You may request copies of these agreements at the address of Denali set forth under the heading “Summary.”

Certain terms used in this description are defined under the heading “Certain Definitions.” In this section of the offering memorandum, references to the “Issuers” are to (i) prior to the consummation of the Mergers, Diamond 1 Finance Corporation, a Delaware corporation (“Finco 1”), and Diamond 2 Finance Corporation, a Delaware corporation (“Finco 2” and, together with Finco 1, the “Fincos”), the co-issuers of the Notes offered hereby, and (ii) from and after the consummation of the Mergers, Dell International and EMC, the co-issuers of the Notes offered hereby.

Brief Description of the Notes Upon the consummation of the EMC Transactions, the Notes will be: • senior secured obligations of the Issuers; • senior in right of payment to any future subordinated indebtedness of the Issuers; • pari passu in right of payment with all existing and future senior indebtedness of the Issuers, including the Senior Credit Facility Obligations and unsecured debt constituting Additional Merger Financing; • as to EMC, pari passu in right of payment with the Existing EMC Notes (except that the Existing EMC Notes do not have the benefit of Subsidiary Guarantees or Collateral); • secured on a first-priority basis by Liens on the Collateral on an equal and ratable basis with the Senior Credit Facility Obligations, subject to certain Liens permitted under the Indenture; • effectively senior to all existing and future unsecured indebtedness of the Issuers, including any series of unsecured debt constituting Additional Merger Financing, and any future Second Lien Obligations, in each case, to the extent of the value of the Collateral; • effectively subordinated to all existing and future indebtedness of the Issuers that is secured by assets or properties not constituting Collateral, including indebtedness in respect of the Margin Bridge Facility and the VMware Note Bridge Facility, to the extent of the value of such assets and properties; • structurally senior to all existing and future indebtedness and other liabilities of any Person that is a direct or indirect parent of the Issuers, including the Existing Dell Notes; and

263 • structurally subordinated to all existing and future indebtedness and other liabilities of Subsidiaries of either Issuer that are not Guarantors, including indebtedness in respect of the ABS Facilities and the asset-backed debt securities, other than indebtedness and liabilities owed to one of the Issuers or Guarantors.

Note Guarantees On the Issue Date and prior to the Effective Date, the Notes will not be guaranteed. On the Effective Date, upon the consummation of the Transactions, the Guarantors, as primary obligors and not merely as sureties, will jointly and severally irrevocably and unconditionally guarantee, on a senior secured basis, the performance and full and punctual payment when due, whether at maturity, by acceleration or otherwise, of all obligations of the Issuers under the Notes and the Indenture, whether for payment of principal of, premium, if any, or interest on the Notes, expenses, indemnification or otherwise, on the terms set forth in the Indenture.

The Guarantors on the Effective Date will be Denali, Denali Intermediate, Dell and each Wholly-Owned Subsidiary that is a Domestic Subsidiary of Denali Intermediate that guarantees the Issuers’ Senior Credit Facility Obligations. Not all of Denali Intermediate’s Subsidiaries will guarantee the Notes. In particular, none of Denali Intermediate’s non-Wholly-Owned Subsidiaries, Foreign Subsidiaries, Receivables Subsidiaries or Credit Facilities Unrestricted Subsidiaries will guarantee the Notes. SecureWorks, Boomi, Virtustream, Pivotal and VMware will be Credit Facilities Unrestricted Subsidiaries and therefore we do not expect them to guarantee the Notes or the Senior Credit Facility Obligations. In addition, Denali Intermediate’s future Subsidiaries may not be required to guarantee the Notes, and Note Guarantees may be released under certain circumstances as described under “—Release of Note Guarantees.”

The Note Guarantee of each Guarantor will be: • senior secured obligations of the Guarantors; • senior in right of payment to all existing and future subordinated indebtedness of such Guarantor; • pari passu in right of payment with all existing and future senior indebtedness of such Guarantor, including guarantees of the Senior Credit Facility Obligations and unsecured debt constituting Additional Merger Financing; • secured on a first-priority basis by Liens on the Collateral on an equal and ratable basis with the Senior Credit Facility Obligations, subject to certain Liens permitted under the Indenture; • effectively senior to all existing and future unsecured indebtedness of the Guarantors, including guarantees of any series of unsecured debt constituting Additional Merger Financing, and any future Second Lien Obligations of such Guarantor, in each case, to the extent of the value of the Collateral; • effectively subordinated to any future indebtedness of the Guarantors that is secured by assets or properties not constituting Collateral, to the extent of the value of such assets and properties; • structurally senior to the Existing Notes; and • structurally subordinated to all existing and future indebtedness and other liabilities of Subsidiaries of either Issuer that are not Guarantors, including indebtedness in respect of the ABS Facilities and the asset-backed debt securities, other than indebtedness and liabilities owed to one of the Issuers or Guarantors.

In the event of a bankruptcy, liquidation or reorganization of any of the non-guarantor Subsidiaries, the non- guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute any of their assets to the Issuers. As adjusted for the EMC Transactions, the non-guarantor Subsidiaries (excluding the Issuers) would have accounted for approximately $42,502 million, or 55%, of Denali’s total net revenue, and approximately $4,505 million of Denali’s operating income, in each case for the year ended January 29, 2016. Excluding the effect of intercompany balances as well as intercompany transactions, after

264 giving pro forma effect to the Transactions, the non-guarantor Subsidiaries (excluding the Issuers) would have accounted for approximately $44,984 million, or 33%, of Denali’s total assets, and approximately $31,494 million, or 28%, of Denali’s total liabilities, in each case as of January 29, 2016.

Although the Indenture contains limitations on the amount of additional secured Indebtedness that Covenant Parent and certain of its Subsidiaries may incur, under certain circumstances the amount of such secured Indebtedness could be substantial. Moreover, the Indenture does not limit the amount of unsecured indebtedness that can be incurred, including by non-guarantor Subsidiaries. See “Risk Factors—Risks Related to the Notes and this Offering—We may be able to incur more indebtedness, in which case the risks associated with our substantial leverage, including our ability to service our indebtedness, would increase. In addition, the value of the rights of holders of the notes to the collateral may be reduced by any increase in the indebtedness secured by the collateral” and “—The notes will be structurally subordinated to the debt and other liabilities of our non- guarantor subsidiaries (other than the issuers), and your right to receive payments on the notes could be adversely affected if any of such non-guarantor subsidiaries declares bankruptcy, liquidates or reorganizes.”

Each Guarantor that makes a payment under its Note Guarantee will be entitled upon payment in full of all guaranteed obligations under the Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

The obligations of each Subsidiary Guarantor under its Note Guarantee will be limited as necessary to prevent such Note Guarantee from constituting a fraudulent conveyance under applicable law and, therefore, are limited to the amount that such Guarantor could guarantee without such Note Guarantee constituting a fraudulent conveyance; this limitation, however, may not be effective to prevent such Note Guarantee from constituting a fraudulent conveyance. If a Note Guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the Guarantor, and, depending on the amount of such indebtedness, a Guarantor’s liability on its Note Guarantee could be reduced to zero. See “Risk Factors—Risks Related to the Notes and this Offering—The note guarantees and the liens securing the note guarantees may not be enforceable because of fraudulent conveyance laws and, as a result, you may be required to return payments received by you in respect of the note guarantees and the liens.”

Release of Note Guarantees Each Note Guarantee of a series of Notes by a Subsidiary Guarantor shall provide by its terms that its Obligations under the Indenture with respect to such series and such Note Guarantee shall be automatically and unconditionally released and discharged upon: (a) in the case of a Subsidiary Guarantor, any sale, exchange, transfer or other disposition (by merger, consolidation, amalgamation, dividend, distribution or otherwise) of (i) the Capital Stock of such Subsidiary Guarantor, after which the applicable Subsidiary Guarantor is no longer a direct or indirect Subsidiary of Covenant Parent or (ii) all or substantially all of the assets of such Subsidiary Guarantor to a non-Affiliate, in each case, if such sale, exchange, transfer or other disposition is not prohibited by the applicable provisions of the Indenture; (b) the release or discharge of the guarantee by, or direct obligation of, such Subsidiary Guarantor with respect to the Senior Credit Facilities (including as a result of such Subsidiary Guarantor being designated as a Credit Facilities Unrestricted Subsidiary) or the release or discharge of such other guarantee or direct obligation that resulted in the creation of such Note Guarantee, except a discharge or release by or as a result of payment under such guarantee or direct obligation (it being understood that a release subject to a contingent reinstatement is still a release); (c) with respect to such series of Notes, the Issuers exercising the legal defeasance option or covenant defeasance option with respect to such series as described under “Legal Defeasance and Covenant Defeasance” or the Issuers’ obligations under the Indenture with respect to such series being discharged in accordance with the terms of the Indenture;

265 (d) the merger, amalgamation or consolidation of any Subsidiary Guarantor with and into an Issuer or another Subsidiary Guarantor that is the surviving Person in such merger, amalgamation or consolidation, or upon the liquidation of a Subsidiary Guarantor; or (e) upon the occurrence of an Investment Grade Event.

After the occurrence of an Investment Grade Event, Subsidiaries of Covenant Parent may be required under “Certain Covenants—Additional Note Guarantees” to provide a Post-Release Event Note Guarantee (as defined below).

Ranking The Indebtedness evidenced by the Notes and the Note Guarantees will be senior indebtedness of the Issuers or the applicable Guarantor, as the case may be, will rank equal in right of payment with all existing and future senior indebtedness of the Issuers and the Guarantors, as the case may be, and will be secured by the Collateral, which Collateral will be shared on an equal and ratable basis with any First Lien Obligations (including the Senior Credit Facility Obligations). The Obligations under the Notes, the Indenture, the Note Guarantees and any First Lien Obligations will have a first-priority security interest with respect to the Collateral. Such security interests are described under “Security for the Notes.” The phrase “in right of payment” refers to the contractual ranking of a particular Obligation, regardless of whether an Obligation is secured.

A significant portion of the operations of the Issuers and the Parent Guarantors are conducted through the Issuers’ respective Subsidiaries. Not all of the Subsidiaries of Covenant Parent will guarantee the Notes, and as described under “Note Guarantees,” Note Guarantees may be released under certain circumstances. In addition, some or all of Covenant Parent’s future Subsidiaries may not be required to guarantee the Notes. Unless the Subsidiary is a Guarantor or an Issuer, claims of creditors of such Subsidiaries, including trade creditors, and claims of preferred stockholders (if any) of such Subsidiaries generally will have priority with respect to the assets and earnings of such Subsidiaries over the claims of creditors of the Issuers and the Guarantors, even if such claims do not constitute senior indebtedness. The Notes, therefore, will be structurally subordinated to holders of indebtedness and other creditors (including trade creditors) and preferred stockholders (if any) of Subsidiaries of Covenant Parent (excluding the Issuers) that are not Guarantors.

As of January 29, 2016, on a pro forma basis after giving effect to the Transactions, the Issuers and the Guarantors would have had: • $39,926 million (or $41,126 million as adjusted for the EMC Transactions only) of secured indebtedness, of which: • $35,926 million (or $37,126 million as adjusted for the EMC Transactions only) (including the Senior Credit Facility Obligations and the Notes) were secured on a first-priority basis by the Collateral; and • $4,000 million (including the Obligations under the Margin Bridge Facility and the VMware Note Bridge Facility) were secured by assets or properties not constituting Collateral; and • $11,603 million (or $13,103 million as adjusted for the EMC Transactions only) of unsecured senior indebtedness.

As of January 29, 2016, on a pro forma basis after giving effect to the Transactions, the non-guarantor Subsidiaries (excluding the Issuers) would have had $3,452 million of indebtedness and other liabilities (including indebtedness in respect of the ABS Facilities and excluding intercompany liabilities), all of which would have been structurally senior to the Notes and the Note Guarantees. Dell provides an unsecured guarantee of the borrowings under the Canadian Revolving/Commercial Receivables Facility, of which $132 million was outstanding as of January 29, 2016. In addition, as of January 29, 2016, on a pro forma basis after giving effect to the Transactions, there would have been approximately $1,118 million for future borrowing under the ABS Facilities (including approximately $3 million under the Canadian Revolving/Commercial Receivables Facility), all of which would be structurally senior to the Notes and the Note Guarantees.

266 Although the Indenture contains limitations on the amount of additional secured Indebtedness that Covenant Parent and certain of its Subsidiaries may incur, under certain circumstances the amount of such secured Indebtedness could be substantial. See “Certain Covenants—Limitation on Liens.” See “Risk Factors—Risks Related to the Notes and this Offering—We may be able to incur more indebtedness, in which case the risks associated with our substantial leverage, including our ability to service our indebtedness, would increase. In addition, the value of the rights of holders of the notes to the collateral may be reduced by any increase in the indebtedness secured by the collateral.”

In addition, the Notes will be structurally senior to all existing and future indebtedness and other liabilities of any Person that is a direct or indirect parent of the Issuers, including the Existing Dell Notes. The Existing EMC Notes will be (i) pari passu in right of payment with EMC’s obligations under the Notes, (ii) effectively subordinated to the extent of the value of the Collateral securing the Notes and (iii) structurally subordinated to the Notes by virtue of not having the benefit of subsidiary guarantees.

Paying Agent and Registrar for the Notes The Issuers will maintain one or more paying agents for the Notes. The initial paying agent for the Notes will be the Trustee.

The Issuers will also maintain a registrar. The initial registrar will be the Trustee. The registrar will maintain a register reflecting ownership of the Notes outstanding from time to time and will make payments on and facilitate transfer of Notes on behalf of the Issuers.

The Issuers may change the paying agents or the registrars without prior notice to the Holders. Denali or any of its Subsidiaries may act as a paying agent or registrar.

Transfer and Exchange A Holder may transfer or exchange Notes in accordance with the Indenture and the restrictions set forth in the section of this offering memorandum entitled “Transfer Restrictions.” The registrar and the Trustee may require a Holder to furnish appropriate endorsements and transfer documents in connection with a transfer of Notes. Holders will be required to pay all taxes and fees required by law and due on transfer. The Issuers are not required to transfer or exchange any Note selected for redemption or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer, an Asset Sale Offer or other tender offer. Also, the Issuers are not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed.

The registered Holder will be treated as the owner of the Note for all purposes.

Principal and Maturity The Issuers will issue the Notes initially with an aggregate principal amount of $ , the Notes initially with an aggregate principal amount of $ and the Floating Rate Notes initially with an aggregate principal amount of $ . The Notes will mature on , the Notes will mature on and the Floating Rate Notes will mature on . Subject to compliance with the covenant described below under the caption “Certain Covenants—Limitation on Liens,” the Issuers may issue additional Notes of a series from time to time after this offering under the Indenture (“Additional Notes”). The Notes of a series offered by the Issuers and any Additional Notes of such series subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including waivers, amendments, redemptions and offers to purchase; provided that if any Additional Notes of a series are not fungible with the Notes of such series for U.S. federal income tax purposes, such Additional Notes of such series will have a separate CUSIP number and ISIN from the Notes of such series. Unless the context requires otherwise, references to “Notes” of a series for all purposes of the Indenture, the Note Guarantees and this “Description of Notes” include any Additional Notes of such series that are actually issued.

267 Interest Fixed Rate Notes Interest on the Notes will accrue at the rate of % per annum and will be payable in cash semi- annually in arrears on and of each year commencing on , 2016, to the Holders of record as of the close of business (if applicable) on the immediately preceding and (whether or not a Business Day). Interest on the Notes will accrue at the rate of % per annum and will be payable in cash semi-annually in arrears on and of each year commencing on , 2016, to the Holders of record as of the close of business (if applicable) on the immediately preceding and (whether or not a Business Day). Interest on the Fixed Rate Notes will accrue from the most recent date to which interest has been paid or duly provided for or, if no interest has been paid or duly provided for, from and including the Issue Date. Interest on the Fixed Rate Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Floating Rate Notes The Floating Rate Notes will bear interest for each interest period at a rate determined by the calculation agent. The calculation agent is The Bank of New York Mellon Trust Company, N.A., until such time as we appoint a successor calculation agent. The interest rate on the Floating Rate Notes for a particular interest period will be a per annum rate equal to three-month USD LIBOR as determined on the interest determination date plus % (the “Initial Spread”). The interest determination date for an interest period will be the second London business day preceding the first day of such interest period. Promptly upon determination, the calculation agent will inform the Trustee and us of the interest rate for the Floating Rate Notes for the next interest period. Absent manifest error, the determination of the interest rate by the calculation agent shall be binding and conclusive on the Holders of the Floating Rate Notes, the Trustee and us. A London business day is a day on which dealings in deposits in U.S. dollars are transacted in the London interbank market.

Interest on the Floating Rate Notes will be paid to but excluding the relevant interest payment date. Interest payments on the Floating Rate Notes will be made quarterly in arrears on,,,and of each year, commencing , 2016 to the person in whose name the Floating Rate Notes are registered at the close of business on the Business Day immediately preceding the interest payment date. Interest on the Floating Rate Notes will accrue from and including , 2016 to, but excluding, the first interest payment date and then from and including the immediately preceding interest payment date to which interest has been paid or duly provided for to but excluding the next interest payment date or maturity date, as the case may be. Each of these periods is referred to as an “interest period.” The amount of accrued interest that we will pay for any interest period shall be calculated by multiplying the face amount of the Floating Rate Notes then outstanding by an accrued interest factor. This accrued interest factor is computed by adding the interest factor calculated for each day from , 2016, or from the latest date interest was paid to the date for which accrued interest is being calculated. The interest factor for each day is computed by dividing the interest rate applicable to that date by 360. If an interest payment date for the Floating Rate Notes falls on a day that is not a Business Day, the interest payment date shall be postponed to the next succeeding Business Day unless such next succeeding Business Day would be in the following month, in which case, the interest payment date shall be the immediately preceding Business Day. If any such interest payment date (other than the maturity date) is postponed or brought forward as described in the preceding sentence, the interest amount shall be adjusted accordingly and the Holder shall be entitled to more or less interest, respectively.

On any interest determination date, LIBOR will be equal to the offered rate for deposits in U.S. dollars having an index maturity of three months, in amounts of at least $1,000,000, as such rate appears on Bloomberg L.P.’s page “BBAM” at approximately 11:00 a.m., London time, on such interest determination date. If on an interest determination date, such rate does not appear on Bloomberg L.P.’s page “BBAM” as of 11:00 a.m., London time, or if the Bloomberg L.P.’s page “BBAM” is not available on such date, the calculation agent will

268 obtain such rate from “Reuters Page LIBOR01” or such other service or services as may be nominated for the purpose of displaying London interbank offered rates for U.S. dollar deposits by ICE Benchmark Administration Limited (“IBA”) or its successor or such other entity assuming the responsibility of IBA or its successor in calculating the London Interbank Offered Rate in the event IBA or its successor no longer does so.

If no offered rate appears on Bloomberg L.P.’s page “BBAM” or “Reuters Page LIBOR01” on an interest determination date at approximately 11:00 a.m., London time, then we will select four major banks in the London interbank market and shall request each of their principal London offices to provide a quotation of the rate at which three-month deposits in U.S. dollars in amounts of at least $1,000,000 are offered by it to prime banks in the London interbank market, on that date and at that time, that is representative of single transactions at that time. If at least two quotations are provided, LIBOR will be the arithmetic average of the quotations provided. Otherwise, we will select three major banks in New York City and shall request each of them to provide a quotation of the rate offered by them at approximately 11:00 a.m., New York City time, on the interest determination date for loans in U.S. dollars to leading European banks having an index maturity of three months for the applicable interest period in an amount of at least $1,000,000 that is representative of single transactions at that time. If three quotations are provided, LIBOR will be the arithmetic average of the quotations provided. Otherwise, the rate of LIBOR for the next interest period will be set equal to the rate of LIBOR for the then current interest period.

Upon request from any Holder of Floating Rate Notes, the calculation agent will provide the interest rate in effect for the Floating Rate Notes for the current interest period and, if it has been determined, the interest rate to be in effect for the next interest period.

All percentages resulting from any calculation of the interest rate on the Floating Rate Notes will be rounded to the nearest one hundred-thousandth of a percentage point with five one millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculation on the Floating Rate Notes will be rounded to the nearest cent (with one-half cent being rounded upward). Each calculation of the interest rate on the Floating Rate Notes by the calculation agent will (in the absence of manifest error) be final and binding on the Holders of the Floating Rate Notes and us.

The interest rate on the Floating Rate Notes will in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application.

The Notes The Issuers also will pay Additional Interest to Holders if the Issuers fail to complete the exchange offer described in the Registration Rights Agreement within five years after the Effective Date or if certain other conditions contained in the Registration Rights Agreement are not satisfied. See “Exchange Offer; Registration Rights.” All references in the Indenture and this “Description of Notes,” in any context, to any interest or other amount payable on or with respect to the Notes shall be deemed to include any Additional Interest required to be paid pursuant to the Registration Rights Agreement.

Principal of, premium, if any, and interest on the Notes will be payable at the office or agency of the Paying Agent maintained for such purpose as described under “Paying Agent and Registrar for the Notes” or, at the option of the Issuers, payment of interest may be made by check mailed to the Holders at their respective addresses set forth in the register of Holders; provided that all payments of principal, premium, if any, and interest with respect to the Notes represented by one or more global notes registered in the name of or held by DTC or its nominee will be made in accordance with DTC’s applicable procedures. Until otherwise designated by the Issuers, the Issuers’ office or agency will be the office of the Trustee maintained for such purpose. If any interest payment date, the maturity date or any earlier required repurchase or redemption date falls on a day that is a Legal Holiday, the required payment will be made on the next succeeding Business Day and no interest on such payment will accrue in respect of the delay.

269 Each of the Notes, the Notes and the Floating Rate Notes will constitute a separate series of notes for purposes of the Indenture. The Notes will be issued in minimum denominations of $2,000 and any integral multiple of $1,000 in excess thereof.

Interest Rate Adjustment of the Notes Based on Certain Rating Events The Indenture provides that the interest rate payable on each series of Notes will be subject to adjustment from time to time if either Moody’s (as defined below) or S&P (as defined below) (or, if applicable, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) under the Exchange Act selected by the Issuers under the Indenture, as a replacement for Moody’s or S&P, or both, as the case may be (each, a “Substitute Rating Agency”)) downgrades (or subsequently upgrades) its rating assigned to such series of Notes, as set forth below. Each of Moody’s, S&P and any Substitute Rating Agency is an “Interest Rate Rating Agency,” and together they are “Interest Rate Rating Agencies.”

Neither the Trustee nor the calculation agent shall be responsible for monitoring the ratings of any series of Notes. Should the interest rate be subject to adjustment due to a ratings change, we will notify the Trustee in writing.

If the rating of the Notes of a series from one or both of Moody’s or S&P (or, if applicable, any Substitute Rating Agency) is decreased to a rating set forth in either of the immediately following tables, the interest rate on such series of Notes will increase from (x) in the case of the Fixed Rate Notes, the interest rate set forth on the cover page of this offering memorandum and (y) in the case of the Floating Rate Notes, the then applicable interest rate, by an amount equal to the sum of the percentages per annum set forth in the following tables opposite those ratings:

Moody’s Rating* Percentage Ba1...... 0.25% Ba2...... 0.50% Ba3...... 0.75% B1 or below ...... 1.00%

S&P Rating* Percentage BB+ ...... 0.25% BB ...... 0.50% BB-...... 0.75% B+ or below ...... 1.00% * Including the equivalent ratings of any Substitute Rating Agency therefor.

For purposes of making adjustments to the interest rate on any series of Notes, the following rules of interpretation will apply: (1) if at any time less than two Interest Rate Rating Agencies provide a rating on such series of Notes for reasons not within our control (i) the Issuers will use commercially reasonable efforts to obtain a rating on such series of Notes from a Substitute Rating Agency for purposes of determining any increase or decrease in the interest rate on such series of Notes pursuant to the tables above, (ii) such Substitute Rating Agency will be substituted for the last Interest Rate Rating Agency to provide a rating on such series of Notes but which has since ceased to provide such rating, (iii) the relative ratings scale used by such Substitute Rating Agency to assign ratings to senior secured debt will be determined in good faith by an independent investment banking institution of national standing appointed by the Issuers and, for purposes of determining the applicable ratings included in the applicable table above with respect to such Substitute Rating Agency, such ratings shall be deemed to be the equivalent ratings used by Moody’s or S&P, as applicable, in such table, and (iv) the interest rate on such series of Notes will increase or decrease, as the

270 case may be, such that the interest rate equals (x) in the case of Fixed Rate Notes, the interest rate with respect to such series of Notes, as set forth on the cover page of this offering memorandum and (y) in the case of the Floating Rate Notes, the then applicable interest rate plus, in each case of (x) and (y), the appropriate percentage, if any, set forth opposite the rating from such Substitute Rating Agency in the applicable table above (taking into account the provisions of clause (iii) above) (plus any applicable percentage resulting from a decreased rating by the other Interest Rate Rating Agency); (2) for so long as only one Interest Rate Rating Agency provides a rating on such series of Notes, any increase or decrease in the interest rate on such series of Notes necessitated by a reduction or increase in the rating by that Interest Rate Rating Agency shall be twice the applicable percentage set forth in the applicable table above; (3) if both Interest Rate Rating Agencies cease to provide a rating of such series of Notes for any reason, and no Substitute Rating Agency has provided a rating on such series of Notes, the interest rate on such series of Notes will increase to, or remain at, as the case may be, 2.00% per annum above the interest rate on such series of Notes prior to any such adjustment; (4) if Moody’s or S&P ceases to rate such series of Notes or make a rating of such series of Notes publicly available for reasons within our control, we will not be entitled to obtain a rating from a Substitute Rating Agency and the increase or decrease in the interest rate on such series of Notes shall be determined in the manner described above as if either only one or no Interest Rate Rating Agency provides a rating on such series of Notes, as the case may be; (5) each interest rate adjustment required by any decrease or increase in a rating as set forth above, whether occasioned by the action of Moody’s or S&P (or, in either case, any Substitute Rating Agency), shall be made independently of (and in addition to) any and all other interest rate adjustments occasioned by the action of the other Interest Rate Rating Agency; (6) in no event will the interest rate on such series of Notes be reduced to below (x), with respect to the Fixed Rate Notes, the interest rate on the Issue Date and (y) with respect to the Floating Rate Notes, to three-month USD LIBOR as determined on the interest determination date plus the Initial Spread; and (7) subject to clauses (3) and (4) above, no adjustment in the interest rate on such series of Notes shall be made solely as a result of an Interest Rate Rating Agency ceasing to provide a rating of such series of Notes.

If at any time the interest rate on a series of Notes has been adjusted upward and either of the Interest Rate Rating Agencies subsequently increases its rating of such series of Notes, the interest rate on such series of Notes will again be adjusted (and decreased, if appropriate) such that the interest rate on such series of Notes equals the interest rate on such series of Notes prior to any such adjustment plus (if applicable) an amount equal to the sum of the percentages per annum set forth opposite the ratings in the tables above with respect to the ratings assigned to such series of Notes (or deemed assigned) at that time, all calculated in accordance with the rules of interpretation set forth above. If Moody’s or any Substitute Rating Agency subsequently increases its rating on such series of Notes to “Baa3” (or its equivalent if with respect to any Substitute Rating Agency) or higher and S&P or any Substitute Rating Agency subsequently increases its rating on such series of Notes to “BBB–” (or its equivalent if with respect to any Substitute Rating Agency) or higher, the interest rate on such series of Notes will be decreased to the interest rate on such series of Notes prior to any adjustments made pursuant to this section.

Any interest rate increase or decrease described above will take effect from the first day of the interest period immediately following which a rating change occurs requiring an adjustment in the interest rate. If either Interest Rate Rating Agency changes its rating of such series of Notes more than once during any particular interest period, the last such change by such Interest Rate Rating Agency to occur will control in the event of a conflict for purposes of any increase or decrease in the interest rate with respect to such series of Notes.

271 The interest rate on a series of Notes will permanently cease to be subject to any adjustment described above (notwithstanding any subsequent decrease in the ratings by either Interest Rate Rating Agency) if such series of Notes become rated “A3” or higher by Moody’s (or its equivalent if with respect to any Substitute Rating Agency) and “A-” or higher by S&P (or its equivalent if with respect to any Substitute Rating Agency), in each case with a stable or positive outlook.

If the interest rate on any series of Notes is increased as described above, the term “interest,” as used with respect to such series of Notes, will be deemed to include any such additional interest unless the context otherwise requires.

Escrow of Proceeds; Escrow Conditions Concurrently with the closing of this offering, the Fincos will enter into a customary escrow agreement (as amended, supplemented or modified from time to time, the “Escrow Agreement”) with the Trustee and The Bank of New York Mellon Trust Company, N.A., as escrow agent (in such capacity, together with its successors, the “Escrow Agent”). Pursuant to the Escrow Agreement, the Fincos will (1) deposit into an escrow account (the “Escrow Account”) an amount equal to the gross proceeds of the offering of the Notes sold on the Issue Date and (2) either (x) the Fincos will also deposit (or caused to be deposited) in cash or (y) Dell International or its Affiliate will cause the issuing lenders under its existing ABL credit facility to issue letters of credit for the benefit of the Escrow Agent and the Holders of the Notes (or a combination of (x) and (y)), in each case of (x) and (y), in an amount that, when taken together with the proceeds of the offering of the Notes deposited into the Escrow Account, will be sufficient to fund a Special Mandatory Redemption (as defined below) of the Notes on , 2016 (the date one month after the Issue Date), if a Special Mandatory Redemption were to occur on such date (collectively and, together with any other property from time to time held by the Escrow Agent in the Escrow Accounts, the “Escrowed Property”).

In addition, the Escrow Agreement will provide that unless the Fincos have then delivered notice to the Escrow Agent to the effect set forth in clause (ii) under “Special Mandatory Redemption” below on the date that is two Business Days prior to the last day of each month beginning on , 2016, and ending on , 2016 (in each case, unless the Escrow Release Date has occurred), either (x) the Fincos will deposit (or cause to be deposited) cash into the Escrow Account or (y) Dell International or its Affiliate will cause the issuing lenders under its existing ABL credit facility to issue letters of credit for the benefit of the Escrow Agent and the Holders of the Notes (or a combination of (x) and (y)), in each case, equal to 30 days of interest that would accrue on the Notes (or with respect to the deposit two Business Days prior to , 2016, equal to interest from , 2016 to but excluding the Escrow End Date) (in each case, as calculated by the Issuers).

The Escrowed Property will be held in the Escrow Account until the earliest of (i) the date on which the Fincos deliver to the Escrow Agent the Officer’s Certificate referred to in the next succeeding paragraph, (ii) the Escrow End Date, (iii) the date on which the Fincos deliver notice to the Escrow Agent to the effect set forth in clause (ii) under “Special Mandatory Redemption” below and (iv) the date that is five Business Days after either (x) the Fincos fail to timely deposit (or cause to be timely deposited) in cash and/or (y) Dell International or its Affiliate fails to cause such lenders to issue such letters of credit in such amounts required by the preceding paragraph on or by any applicable deposit date; provided, that the Fincos may, pursuant to the terms of the Escrow Agreement, withdraw Escrowed Property from the Escrow Account in an amount sufficient to make any required interest payments. The Fincos will grant the Trustee, for its benefit and the benefit of the Holders, subject to certain liens of the Escrow Agent, a first-priority security interest in the Escrow Account and all Eligible Escrow Investments therein to secure the payment of the Special Mandatory Redemption Price (as defined below); provided, however, that such lien and security interest shall automatically be released and terminate at such time as the Escrowed Property is released from the Escrow Account on the Escrow Release Date. The Escrow Agent will invest the Escrowed Property in such Eligible Escrow Investments as the Fincos will from time to time direct in writing. Prior to the Escrow Release Date, the Notes will be secured only by a pledge of the Escrow Account and the Escrowed Property.

272 The Fincos will only be entitled to direct the Escrow Agent to release Escrowed Property (in which case the Escrowed Property will be paid to or as directed by the Fincos) (the “Escrow Release”) upon delivery to the Escrow Agent, on or prior to the Escrow End Date, of an Officer’s Certificate, certifying that the following conditions have been or, substantially concurrently with the release of the Escrowed Property, will be satisfied (the date of the Escrow Release is hereinafter referred to as the “Escrow Release Date”): (1) the Dell-EMC Merger will occur substantially concurrently with such release; (2) all conditions precedent to the effectiveness of, and borrowings under, the Additional Merger Financing (other than the release of the Escrowed Property) have been satisfied or waived in all material respects, and prior to or substantially concurrently with the release of the funds from the Escrow Account, the borrowings under the Additional Merger Financing to be drawn or released from escrow in connection with the Dell-EMC Merger will be available on the Escrow Release Date; and (3)(A) Dell International has assumed, or substantially concurrently with the Escrow Release shall assume, all of the obligations of Finco 1 under the Notes and the Indenture, (B) EMC has assumed, or substantially concurrently with the Escrow Release shall assume, all of the obligations of Finco 2 under the Notes and the Indenture and (C) the Guarantors shall have, by supplemental indenture, become, or substantially concurrently with the Escrow Release shall become, parties to the Indenture in the capacities described herein and (D) Dell International, EMC and the Guarantors shall become, or substantially concurrently with the Escrow Release shall become, parties to the applicable Security Documents and the Intercreditor Agreement, as contemplated by the Indenture.

The Escrow Release shall occur promptly upon receipt by the Escrow Agent of an Officer’s Certificate certifying to the foregoing. Upon the occurrence of the Escrow Release, the Escrow Account shall be reduced to zero and the Escrowed Property and interest thereon shall be paid out in accordance with the Escrow Agreement.

Special Mandatory Redemption If (i) the Escrow Agent has not received the Officer’s Certificate described above under “Escrow of Proceeds; Escrow Conditions” on or prior to the Escrow End Date, (ii) the Fincos notify the Escrow Agent in writing that Denali and Dell will not pursue the consummation of the Dell-EMC Merger or (iii) either (x) the Fincos fail to timely deposit (or cause to be timely deposited) in cash and/or (y) Dell International or its Affiliate fails to cause such lenders to issue such letters of credit in such amounts required by the second paragraph under “Escrow of Proceeds; Escrow Conditions” above on or one Business Day after the applicable deposit date, then the Escrow Agent shall release the Escrowed Property (including investment earnings thereon and proceeds thereof) to the Trustee and the Trustee shall pay the amounts to the paying agent for payment to the Holders of the Notes (the “Special Mandatory Redemption”) on the third Business Day following the date of the release of the Escrowed Property to the Trustee (the “Special Mandatory Redemption Date”) or as otherwise required by the applicable procedures of DTC at a redemption price calculated by the Fincos (the “Special Mandatory Redemption Price”) equal to 101% of the initial issue price of such series of Notes, plus accrued and unpaid interest from the Issue Date to, but excluding, the Special Mandatory Redemption Date. On the Special Mandatory Redemption Date, the Trustee will pay to the Fincos any Escrowed Property in excess of the amount necessary to effect the Special Mandatory Redemption.

Security for the Notes Collateral Generally On the Issue Date and prior to the Effective Date, the Notes will not be secured by any assets or collateral other than the Escrowed Property and letters of credit issued for the benefit of the Escrow Agent. From and after the Effective Date until the occurrence of any Release Event, including an Investment Grade Event, the Notes and the Note Guarantees will be secured on a pari passu basis with the obligations under the Senior Credit Facilities by perfected first-priority security interests in the Collateral. Certain First Lien Secured Parties other

273 than the Holders have rights and remedies with respect to the Collateral that, if exercised, could also adversely affect the value of the Collateral benefiting the Holders, particularly the rights described below under “—First Lien Intercreditor Agreement.”

The Issuers and the Guarantors are and will be able to incur additional indebtedness in the future which could share in the Collateral, including Additional First Lien Obligations and Obligations secured by Permitted Liens. The amount of such additional Obligations will be limited by the covenant described under “Certain Covenants—Limitation on Liens.” Under certain circumstances, the amount of any such additional Obligations could be significant. See “Risk Factors—Risks Related to the Notes and this Offering—We may be able to incur more indebtedness, in which case the risks associated with our substantial leverage, including our ability to service our indebtedness, would increase. In addition, the value of the rights of holders of the notes to the collateral may be reduced by any increase in the indebtedness secured by the collateral.”

The Notes will be secured by first-priority liens on the Collateral, which will generally consist of the following assets of the Covenant Parties (other than Excluded Assets), whether now owned or hereafter acquired: (a) 100% of the Equity Interests of the Issuers, Dell and of each direct Material Subsidiary that is a Wholly-Owned Subsidiary of the Issuers and the Guarantors that is a Credit Facilities Restricted Subsidiary (which pledge, in the case of Capital Stock of any Foreign Subsidiary or FSHCO, shall be limited to 65% of the voting Capital Stock and 100% of the non-voting Capital Stock of such Foreign Subsidiary or FSHCO); and (b) substantially all tangible and intangible personal property and material fee-owned real property of the Covenant Parties (including but not limited to, accounts receivable, inventory, equipment, general intangibles (including contract rights), investment property, U.S. intellectual property, real property, intercompany notes, instruments, chattel paper and documents, letter of credit rights, commercial tort claims and proceeds of the foregoing.

Certain Limitations on the Collateral The Collateral securing the Notes will not include any of the following assets (together with any Capital Stock and other securities excluded in accordance with the second following paragraph, the “Excluded Assets”): (1) any fee-owned real property with a book value of less than $150 million as determined on the Effective Date for existing real property and on the date of acquisition for after-acquired real property; (2) all leasehold interests in real property; (3) any governmental licenses or state or local franchises, charters or authorizations, to the extent a security interest in any such license, franchise, charter or authorization would be prohibited or restricted thereby (including any legally effective prohibition or restriction, but excluding any prohibition or restriction that is ineffective under the Uniform Commercial Code of any applicable jurisdiction); (4) any asset if, to the extent that and for so long as the grant of a Lien thereon to secure the Obligations under the Notes is prohibited by any requirements of law (other than to the extent that any such prohibition would be rendered ineffective pursuant to any other applicable requirements of law) or would require consent or approval of any governmental authority; (5) margin stock (including the VMware Class A Common Stock) and, to the extent prohibited by, or creating an enforceable right of termination in favor of any other party thereto (other than the Issuers and any Guarantor) under the terms of any applicable organizational documents, joint venture agreement or shareholders’ agreement, Equity Interests in any Person other than Wholly-Owned Subsidiaries that are Credit Facilities Restricted Subsidiaries; (6) assets to the extent a security interest in such assets would result in material adverse tax consequences to Covenant Parent or one of its Subsidiaries as reasonably determined by the Issuers in consultation with the Bank Collateral Agent;

274 (7) any intent-to-use trademark application prior to the filing of a “Statement of Use” or “Amendment to Allege Use” with respect thereto; (8) any lease, license or other agreement or any property subject thereto (including pursuant to a purchase money security interest or similar arrangement) to the extent that a grant of a security interest therein would violate or invalidate such lease, license or agreement or purchase money arrangement or create a breach, default or right of termination in favor of any other party thereto (other than the Issuers or any Guarantor) after giving effect to the applicable anti-assignment provisions of the Uniform Commercial Code of any applicable jurisdiction or other similar applicable law, other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Uniform Commercial Code of any applicable jurisdiction or other similar applicable law notwithstanding such prohibition; (9) [reserved]; (10) for so long as any Existing Notes remain outstanding and contain provisions limiting the incurrence of Liens with respect to “principal properties,” any “Principal Property” (as such term is defined in the indentures governing the Existing Notes); (11) for so long as any Existing Dell Notes remain outstanding and contain provisions limiting the incurrence of Liens with respect to “principal properties,” any Equity Interests in any Subsidiary that owns any “Principal Property” (as such term is defined in the indentures governing the Existing Dell Notes); (12) receivables, DFS Financing Assets and related assets (or interests therein) (a) transferred to any Receivables Subsidiary or (b) otherwise pledged, factored, transferred or sold in connection with any Permitted Receivables Financing; (13) commercial tort claims with a value of less than $50 million and letter-of-credit rights with a value of less than $50 million (except to the extent a security interest therein can be perfected by a UCC filing); (14) vehicles and other assets subject to certificates of title; (15) any aircraft, airframes, aircraft engines or helicopters, or any equipment or other assets constituting a part thereof; (16) any and all assets and personal property owned or held by any Subsidiary that is not an Issuer or a Guarantor (including any Credit Facilities Unrestricted Subsidiary); (17) the Equity Interests of any Credit Facilities Unrestricted Subsidiary; (18) the Pledged VMware Shares; (19) the VMware Intercompany Notes; (20) any proceeds from any issuance of indebtedness that are paid into an escrow account to be released upon satisfaction of certain conditions or the occurrence of certain events, including cash or Cash Equivalents set aside at the time of the incurrence of such indebtedness, to the extent such cash or Cash Equivalents prefund the payment of interest or premium or discount on such indebtedness (or any costs related to the issuance of such indebtedness) and are held in such escrow account or similar arrangement to be applied for such purpose; and (21) any asset with respect to which the Bank Collateral Agent and the Issuers agree, in writing (each acting reasonably), that the cost of obtaining such a security interest or perfection thereof shall be excessive in view of the benefits to be obtained by the lenders and other parties holding obligations under the Senior Credit Facility therefrom, and confirmed in writing by notice to the Trustee.

We believe that, as of January 29, 2016, after giving effect to the Transactions on a pro forma basis, Dell (including EMC and its Subsidiaries) would not have held any property qualifying as “Principal Property” (as such term is defined in the indentures governing the Existing Dell Notes) that would be excluded from the Collateral pursuant to clause (10) of the immediately preceding paragraph. We believe that, as of March 31, 2016, EMC held

275 certain properties that constituted “Principal Property” (as such term is defined in the indentures governing the Existing EMC Notes) that would be excluded from the Collateral pursuant to clause (10) of the immediately preceding paragraph, of which the aggregate book value was approximately $838 million. Pursuant to clauses (16) and (17) of the immediately preceding paragraph, the Collateral will also exclude the Equity Interests and other assets of Credit Facilities Unrestricted Subsidiaries, including SecureWorks, Boomi, Virtustream, Pivotal and VMware and their respective Subsidiaries. As of January 29, 2016, excluding the effect of intercompany balances as well as intercompany transactions, after giving effect to the Transactions on a pro forma basis, such Credit Facilities Unrestricted Subsidiaries and their Subsidiaries and the EMC Subsidiaries that own “Principal Property” (as such term is defined in the indentures governing the Existing EMC Notes) would have accounted for approximately $19,471 million, or 25%, of our total net revenue, approximately $4,364 million of operating income, and approximately $32,660 million, or 24%, of our total assets. See “Risk Factors—Risks Related to the Collateral for the Notes—The value of the collateral securing the notes may not be sufficient to satisfy our obligations under the notes.”

Upon registration of the Notes, the Capital Stock and other securities of an Affiliate of the Issuers will constitute Collateral only to the extent that the pledge of such Capital Stock and other securities in respect of any series of Notes or any other series of SEC-registered secured debt securities of Denali and its Subsidiaries will not result in the requirement to file separate financial statements of such Affiliate with the SEC, but only to the extent necessary to not be subject to such requirement and only for so long as such requirement is in existence. In the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the SEC (or any other governmental agency) of separate financial statements of any Affiliate of the Issuers due to the fact that such Affiliate’s Capital Stock or other securities secure any series of Notes or any other series of SEC-registered secured debt securities of Denali and its Subsidiaries, then the Capital Stock or other securities of such Affiliate will automatically be deemed not to be part of the Collateral securing the Notes but only to the extent necessary to not be subject to such requirement and only for so long as such requirement is in existence. In such event, the Security Documents may be amended or modified, without the consent of any Holder of the Notes, to the extent necessary to exclude such shares of Capital Stock or other securities that are so deemed to not constitute part of the Collateral.

In the event that Rule 3-16 of Regulation S-X under the Securities Act is amended, modified or interpreted by the SEC to permit (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would permit) such Affiliate’s Capital Stock or other securities to secure the Notes in excess of the amount then pledged without the filing with the SEC (or any other governmental agency) of separate financial statements of such Affiliate, then the Capital Stock of such Affiliate will automatically be deemed to be a part of the Collateral. In such event, the Security Documents may be amended or modified, without the consent of any Holder of the Notes, to the extent necessary to add such shares of Capital Stock or other securities that are so deemed to constitute part of the Collateral.

In accordance with the limitations set forth in the two immediately preceding paragraphs, upon registration of the Notes, the Collateral securing the Notes and the Note Guarantees will include Capital Stock and other securities of any Affiliates of the Issuers only to the extent that the applicable value of such Capital Stock or other securities (on an entity-by-entity basis) is less than 20% of the lowest aggregate principal amount of any series of Notes or any other series of SEC-registered secured debt securities of Denali and its Subsidiaries that is then outstanding. The applicable value of the Capital Stock or other securities of any entity is deemed to be the greatest of its par value, book value or market value. We expect that if the Notes were registered as of the date of the Offering Memorandum, a substantial majority of such Capital Stock and other securities would be excluded from the Collateral as a result of the foregoing provisions. The portion of the Capital Stock and other securities of the Affiliates of the Issuers that constitute Collateral securing the Notes and the Note Guarantees may decrease or increase over time as the value of such Capital Stock and other securities, as well as the outstanding aggregate principal amount of the smallest tranche of outstanding SEC-registered debt securities, changes over time. Although the assets of an Affiliate whose Capital Stock or other securities is excluded from the Collateral as a

276 result of the foregoing limitation may be pledged to secure the Notes and the Note Guarantees, it may be more difficult, costly and time-consuming for Holders to foreclose on or sell such assets than to foreclose on or sell such Affiliate’s Capital Stock or other securities, so the proceeds realized upon any such foreclosure could be significantly less than those that would have been received upon any sale of such Capital Stock or other securities. See “Risk Factors—Risks Related to the Collateral for the Notes—The pledge of the capital stock and other securities of our affiliates that will secure the notes will be limited to the extent such capital stock and securities can secure each series of notes and each other series of SEC registered secured debt without requiring the filing of separate financial statements with the SEC for that affiliate.”

In addition, the Collateral securing the Senior Credit Facilities will not be subject to the limitations set forth in the three immediately preceding paragraphs and, as a result the Notes and the Note Guarantees will be effectively subordinated to the Senior Credit Facility Obligations to the extent of the value of the Capital Stock and other assets excluded from the Collateral securing the Notes and the Note Guarantees as a result of such limitations.

In addition: (a) Liens required to be granted from time to time pursuant to the Indenture shall be subject to exceptions and limitations set forth in the Security Documents; (b) control agreements or other control or similar arrangements shall not be required with respect to deposit accounts, securities accounts, commodities accounts or other assets requiring perfection by control agreements; (c) no actions in any non-U.S. jurisdiction or required by the laws of any non-U.S. jurisdiction shall be required to be taken to create any security interests in assets located or titled outside of the United States (including any Equity Interests of any Foreign Subsidiary and foreign intellectual property) or to perfect or make enforceable any security interests in any such assets (it being understood that there shall be no Security Document (or other security agreements or pledge agreements) governed under the laws of any non-U.S. jurisdiction); and (d) no actions shall be required to perfect a security interest in letter of credit rights (other than the filing of a UCC financing statement).

It is understood and agreed that prior to the Discharge of the First Lien Obligations, to the extent that the Bank Collateral Agent is satisfied with or agrees to any deliveries or documents required to be provided in respect of any matters relating to the Collateral or makes any determination in respect of any matters relating to the Collateral (including, without limitation, extensions of time or waivers for the creation and perfection of security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, particular assets (including extensions beyond the Effective Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Effective Date) where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by the Senior Credit Facilities), the Notes Collateral Agent shall be deemed to be satisfied with such deliveries and/or documents and the judgment of the Bank Collateral Agent in respect of any such matters under the Senior Credit Facilities shall be deemed to be the judgment of the Notes Collateral Agent in respect of such matters under the Indenture and the Security Documents.

All terms used in the preceding paragraphs and defined in the Uniform Commercial Code and not otherwise defined in this “Description of Notes” section have the meanings given to such terms in the Uniform Commercial Code; provided that the term “instrument” has the meaning given to such term in Article 9 of the Uniform Commercial Code.

277 Possession of the Collateral Subject to the terms of the Security Documents, and unless an Event of Default shall have occurred and be continuing, the Covenant Parties will have the right to remain in possession and retain exclusive control of the Collateral securing the Obligations under the Notes, the Note Guarantees and the Indenture to freely operate the Collateral and to collect, invest and dispose of any income therefrom. See “Risk Factors—Risks Related to the Collateral for the Notes—Sales of assets by the issuers and the guarantors could reduce the pool of assets securing the notes and the note guarantees.”

After-Acquired Collateral From and after the Effective Date, and subject to certain limitations and exceptions, if any Covenant Party creates any additional security interest upon any property or asset that would constitute Collateral to secure any First Lien Obligations, it must concurrently grant a first priority perfected security interest (subject to Permitted Liens) upon any such Collateral, as security for the First Lien Notes Obligations.

Liens with Respect to the Collateral On the Effective Date, the Covenant Parties and the Notes Collateral Agent will enter into the Security Documents establishing the terms of the security interests with respect to the Collateral. These security interests will secure the payment and performance when due of all of the First Lien Notes Obligations of the Covenant Parties.

First Lien Intercreditor Agreement On or before the Effective Date, the Notes Collateral Agent, the Bank Collateral Agent and the Covenant Parties will enter into an intercreditor agreement (as the same may be amended from time to time, the “First Lien Intercreditor Agreement”) with respect to the Collateral, which may be amended from time to time without the consent of the Holders to add other parties holding First Lien Obligations permitted to be incurred under the Indenture, the Senior Credit Facilities and the First Lien Intercreditor Agreement.

Under the First Lien Intercreditor Agreement, only the “Controlling Collateral Agent” will have the right to act or refrain from acting with respect to any Shared Collateral. The Controlling Collateral Agent will initially be the Bank Collateral Agent and will remain the Bank Collateral Agent until the earlier of (1) the Discharge of First Lien Obligations that are Senior Credit Facility Obligations and (2) the Non-Controlling Collateral Agent Enforcement Date (such earlier date, the “Controlling Collateral Agent Change Date”). After the Controlling Collateral Agent Change Date, the Controlling Collateral Agent will be the Collateral Agent (other than the Bank Collateral Agent) of the Series of First Lien Obligations that constitutes the largest outstanding principal amount of any then outstanding Series of First Lien Obligations (excluding the Series of Senior Credit Facility Obligations) with respect to such Shared Collateral, but solely to the extent that such Series of First Lien Obligations has a larger aggregate principal amount than the Series of Senior Credit Facility Obligations then outstanding.

With respect to any Shared Collateral, no Non-Controlling Collateral Agent or other Non-Controlling Secured Party shall or shall instruct the Controlling Collateral Agent to, commence any judicial or nonjudicial foreclosure proceedings with respect to, seek to have a trustee, receiver, liquidator or similar official appointed for or over, attempt any action to take possession of, exercise any right, remedy or power with respect to, or otherwise take any action to enforce its security interest in or realize upon, or take any other action available to it in respect of, any Shared Collateral.

The Controlling Collateral Agent will initially be the Bank Collateral Agent and the Notes Collateral Agent will have no rights to take any action under the First Lien Intercreditor Agreement with respect to the Shared Collateral unless and until it becomes the Controlling Collateral Agent.

278 Notwithstanding the equal priority of the Liens, the Controlling Collateral Agent may deal with the Shared Collateral as if the Controlling Collateral Agent had a senior Lien on such Collateral. No Non-Controlling Collateral Agent or Non-Controlling Secured Party will contest, protest or object to any foreclosure proceeding or action brought by the Controlling Collateral Agent or any Controlling Secured Party or any other exercise by the Controlling Collateral Agent or any Controlling Secured Party of any rights and remedies relating to the Shared Collateral. Each of the First Lien Secured Parties also will agree that it will not contest or support any other person in contesting, in any proceeding (including any insolvency or liquidation proceeding), the perfection, priority, validity, attachment or enforceability of a Lien held by or on behalf of any of the First Lien Secured Parties in all or any part of the Shared Collateral, or the provisions of the First Lien Intercreditor Agreement.

If an Event of Default or an event of default under any document governing a Series of First Lien Obligations has occurred and is continuing and the Controlling Collateral Agent is taking action to enforce rights in respect of any Shared Collateral, or any distribution is made with respect to any Shared Collateral in any bankruptcy case of the Covenant Parties or any First Lien Secured Party receives any payment pursuant to any intercreditor agreement (other than the First Lien Intercreditor Agreement) with respect to any Shared Collateral, the proceeds of any sale, collection or other liquidation of any such Shared Collateral by any Collateral Agent or any First Lien Secured Party and proceeds of any such distribution or payment (subject, in the case of any such proceeds, to the immediately following paragraph) to which the First Lien Obligations are entitled under any other intercreditor agreement shall be applied among the First Lien Obligations to the payment in full of the First Lien Obligations on a ratable basis, after payment of all amounts owing to each Collateral Agent (in its capacity as such).

It is the intention of the First Lien Secured Parties of each Series that the holders of First Lien Obligations of such Series (and not the First Lien Secured Parties of any other Series) bear the risk of (i) any determination by a court of competent jurisdiction that (x) any of the First Lien Obligations of such Series are unenforceable under applicable law or are subordinated to any other obligations (other than another Series of First Lien Obligations), (y) any of the First Lien Obligations of such Series do not have an enforceable security interest in any of the Collateral securing any other Series of First Lien Obligations and/or (z) any intervening security interest exists securing any other obligations (other than another Series of First Lien Obligations) on a basis ranking prior to the security interest of such Series of First Lien Obligations but junior to the security interest of any other Series of First Lien Obligations or (ii) the existence of any Collateral for any other Series of First Lien Obligations that is not Shared Collateral (any such condition referred to in the foregoing clauses (i) or (ii) with respect to any Series of First Lien Obligations, an “Impairment” of such Series); provided that the existence of a maximum claim with respect to Mortgaged Properties (as defined in the Senior Credit Facilities) which applies to all First Lien Obligations shall not be deemed to be an Impairment of any Series of First Lien Obligations. In the event of any Impairment with respect to any Series of First Lien Obligations, the results of such Impairment shall be borne solely by the holders of such Series of First Lien Obligations, and the rights of the holders of such Series of First Lien Obligations (including, without limitation, the right to receive distributions in respect of such Series of First Lien Obligations permitted by the First Lien Intercreditor Agreement) set forth in the First Lien Intercreditor Agreement shall be modified to the extent necessary so that the effects of such Impairment are borne solely by the holders of the Series of such First Lien Obligations subject to such Impairment. Additionally, in the event the First Lien Obligations of any Series are modified pursuant to applicable law (including, without limitation, pursuant to Section 1129 of the Bankruptcy Code), any reference to such First Lien Obligations or the First Lien Documents governing such First Lien Obligations shall refer to such obligations or such documents as so modified.

None of the First Lien Secured Parties may institute in any bankruptcy case or other proceeding any claim against the Controlling Collateral Agent or any other First Lien Secured Party seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Shared Collateral. In addition, none of the First Lien Secured Parties may seek to have any Shared Collateral or any part thereof marshaled upon any foreclosure or other disposition of such Collateral. If any First Lien Secured Party obtains possession of any Shared

279 Collateral or realizes any proceeds or payment in respect thereof pursuant to any First Lien Security Document or by the exercise of any rights available to it under applicable law or in any bankruptcy case or through any other exercise of remedies (including pursuant to any intercreditor agreement), at any time prior to the discharge of each of the First Lien Obligations, then it must hold such Shared Collateral, proceeds or payment in trust for the other First Lien Secured Parties and promptly transfer such Shared Collateral, proceeds or payment to the Controlling Collateral Agent to be distributed in accordance with the First Lien Intercreditor Agreement.

Under the First Lien Intercreditor Agreement, if at any time the Controlling Collateral Agent forecloses upon or otherwise exercises remedies against any Shared Collateral, then (whether or not any insolvency or liquidation proceeding is pending at the time) the Liens in favor of the other Collateral Agents for the benefit of the Trustee and the Holders and each other Series of First Lien Secured Parties upon such Shared Collateral will automatically be released and discharged. However, any proceeds of any Shared Collateral realized therefrom will be applied as described in the First Lien Intercreditor Agreement.

If any Covenant Party becomes subject to any bankruptcy case, the First Lien Intercreditor Agreement provides that if any Covenant Party shall, as debtor(s)-in-possession, move for approval of financing (“DIP Financing”) to be provided by one or more lenders (the “DIP Lenders”) under Section 364 of the Bankruptcy Code or the use of cash collateral under Section 363 of the Bankruptcy Code (in each case, or under any equivalent provision of any other applicable bankruptcy law), each First Lien Secured Party will agree not to object to any such financing or to the Liens on the Shared Collateral securing the same (the “DIP Financing Liens”) or to any use of cash collateral that constitutes Shared Collateral, unless the Controlling Collateral Agent or any Controlling Secured Party with respect to such Shared Collateral opposes or objects to such DIP Financing or such DIP Financing Liens or use of cash collateral (and (i) to the extent that such DIP Financing Liens are senior to the Liens on any such Shared Collateral for the benefit of the Controlling Secured Parties, each Non- Controlling Secured Party will subordinate its Liens with respect to such Shared Collateral on the same terms as the Liens of the Controlling Secured Parties (other than any Liens of any First Lien Secured Parties constituting DIP Financing Liens) are subordinated thereto, and (ii) to the extent that such DIP Financing Liens rank pari passu with the Liens on any such Shared Collateral granted to secure the First Lien Obligations of the Controlling Secured Parties, each Non-Controlling Secured Party will confirm the priorities with respect to such Shared Collateral as set forth in the First Lien Intercreditor Agreement), in each case so long as: (A) First Lien Secured Parties of each Series retain the benefit of their Liens on all such Shared Collateral pledged to the DIP Lenders, including proceeds thereof arising after the commencement of such proceeding, with the same priority vis-a-vis all the other First Lien Secured Parties (other than any Liens of the First Lien Secured Parties constituting DIP Financing Liens) as existed prior to the commencement of the bankruptcy case; (B) the First Lien Secured Parties of each Series are granted Liens on any additional collateral pledged to any First Lien Secured Parties as adequate protection or otherwise in connection with such DIP Financing or use of cash collateral, with the same priority vis-a-vis the First Lien Secured Parties as set forth in the First Lien Intercreditor Agreement; (C) if any amount of such DIP Financing or cash collateral is applied to repay any of the First Lien Obligations, such amount is applied pursuant to the First Lien Intercreditor Agreement; and (D) if any First Lien Secured Parties are granted adequate protection, including in the form of periodic payments, in connection with such DIP Financing or use of cash collateral, the proceeds of such adequate protection are applied pursuant to the First Lien Intercreditor Agreement; provided that the First Lien Secured Parties of each Series will have a right to object to the grant of a Lien to secure the DIP Financing over any Collateral subject to Liens in favor of the First Lien Secured Parties of such Series or its representative that do not constitute Shared Collateral; and provided, further, that the First Lien Secured Parties receiving adequate protection shall not object to any other First Lien Secured Party receiving adequate protection comparable to any adequate protection granted to such First Lien Secured Parties in connection with a DIP Financing or use of cash collateral.

280 The First Lien Secured Parties acknowledge that the First Lien Obligations of any Series may, subject to the limitations set forth in the other First Lien Documents, be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, refinanced or otherwise amended or modified from time to time, all without affecting the priority of claims and application of Proceeds set forth in the First Lien Intercreditor Agreement or the other provisions thereof defining the relative rights of the First Lien Secured Parties of any Series.

Second Lien Intercreditor Agreement If any of the Covenant Parties were to incur indebtedness secured by the Collateral with a Junior Lien Priority relative to the Notes, the Bank Collateral Agent, the Notes Collateral Agent, the other Collateral Agents (if any) and the applicable Second Lien Collateral Agent will enter into an intercreditor agreement (as the same may be amended from time to time, the “Second Lien Intercreditor Agreement”). The Second Lien Intercreditor Agreement may be amended from time to time without the consent of the Holders to add other parties holding Second Lien Obligations and First Lien Obligations permitted to be incurred under the relevant agreements, or their respective representatives.

Notwithstanding the date, time, manner or order of filing or recordation of any document or instrument or grant, attachment or perfection of any Liens granted to the Second Lien Collateral Agent or any Second Lien Secured Parties on the Collateral or of any Liens granted to any First Lien Secured Parties on the Collateral (or any actual or alleged defect in any of the foregoing) and notwithstanding any provision of the UCC, any applicable law, any Second Lien Documents or any First Lien Documents or any other circumstance whatsoever, the Second Lien Collateral Agent and each other Second Lien Representative, on behalf of itself and each Second Lien Secured Party under its Second Lien Documents, will agree that any Lien on the Collateral securing any First Lien Obligations now or hereafter held by or on behalf of any First Lien Secured Parties or any First Lien Representative or other agent or trustee therefor, regardless of how acquired, whether by grant, statute, operation of law, subrogation or otherwise, shall have priority over and be senior in all respects and prior to any Lien on the Collateral securing any Second Lien Obligations.

Pursuant to the terms of the Second Lien Intercreditor Agreement, prior to the Discharge of First Lien Obligations, the Controlling Collateral Agent or any person authorized by it will have the exclusive right to exercise any right or remedy with respect to the Collateral and will also have the exclusive right to determine and direct the time, method and place for exercising such right or remedy or conducting any proceeding with respect thereto.

The Second Lien Collateral Agent, for itself and on behalf of each Second Lien Secured Party, will agree pursuant to the Second Lien Intercreditor Agreement that it will not (and thereby waives any right to) take any action to, contest or support any other Person in contesting, in any proceeding (including any insolvency or liquidation proceeding), the validity, extent, perfection, priority or enforceability of a Lien securing any First Lien Obligations held (or purported to be held) by or on behalf of the Controlling Collateral Agent or any of the First Lien Secured Parties or any agent or trustee therefor in any Collateral or other collateral securing both the First Lien Obligations and any Second Lien Obligations. The Second Lien Intercreditor Agreement will provide for a reciprocal restriction on the ability of any Collateral Agent to contest or support any other Person in contesting, in any proceeding (including any insolvency or liquidation proceeding), the validity, extent, perfection, priority or enforceability of any Lien securing any Second Lien Obligations held (or purported to be held) by or on behalf of the Second Lien Collateral Agent or any of the Second Lien Secured Parties in the Collateral securing the Second Lien Obligations.

The Collateral or proceeds thereof received in connection with the sale or other disposition of, or collection on, such Collateral upon the exercise of remedies will be applied to the First Lien Obligations prior to application to any Second Lien Obligations in such order as specified in the relevant First Lien Security Documents until the Discharge of First Lien Obligations has occurred.

281 In addition, so long as the Discharge of First Lien Obligations has not occurred, none of the Grantors shall grant or permit any additional Liens on any asset or property of any Grantor to secure any Second Lien Obligations unless it has granted, or concurrently therewith grants, a Lien on such asset or property of such Grantor to secure the First Lien Obligations. If the Second Lien Collateral Agent or any Second Lien Secured Party holds any Lien on any assets or property of any Covenant Party securing any Second Lien Obligations that are not also subject to the senior-priority Liens securing First Lien Obligations under the First Lien Documents, the Second Lien Collateral Agent or such Second Lien Secured Party (i) is obligated to notify the Controlling Collateral Agent promptly upon becoming aware thereof and, unless such Covenant Party shall promptly grant a similar Lien on such assets or property to the Collateral Agents as security for the First Lien Obligations, must assign such Lien to the Collateral Agents as security for the First Lien Obligations (but may retain a junior lien on such assets or property subject to the terms of the Second Lien Intercreditor Agreement) and (ii) until such assignment or such grant of a similar Lien to the Collateral Agents, will be deemed to hold and have held such Lien for the benefit of the Collateral Agents as security for the First Lien Obligations.

If any First Lien Secured Party is required in any insolvency or liquidation proceeding or otherwise to disgorge, turn over or otherwise pay to the estate of any Covenant Party (or any trustee, receiver or similar person therefor), because the payment of such amount was declared to be fraudulent or preferential in any respect or for any other reason, any amount (a “Recovery”), whether received as proceeds of security, enforcement of any right of setoff, recoupment or otherwise, then the First Lien Obligations shall be reinstated to the extent of such Recovery and deemed to be outstanding as if such payment had not occurred and such First Lien Secured Party shall be entitled to a future Discharge of First Lien Obligations with respect to all such recovered amounts and shall have all rights thereunder. If the Second Lien Intercreditor Agreement shall have been terminated prior to such Recovery, the Second Lien Intercreditor Agreement shall be reinstated in full force and effect, and such prior termination shall not diminish, release, discharge, impair or otherwise affect the obligations of the parties thereto. The Second Lien Collateral Agent, for itself and on behalf of each Second Lien Secured Party will agree that none of them shall be entitled to benefit from any avoidance action affecting or otherwise relating to any distribution or allocation made in accordance with the Second Lien Intercreditor Agreement, whether by preference or otherwise, it being understood and agreed that the benefit of such avoidance action otherwise allocable to them shall instead be allocated and turned over for application in accordance with the priorities set forth in that agreement.

The Second Lien Intercreditor Agreement will provide that so long as the Discharge of First Lien Obligations has not occurred, whether or not any insolvency or liquidation proceeding has been commenced by or against any Covenant Party, (i) neither the Second Lien Collateral Agent nor any Second Lien Secured Party will (x) exercise or seek to exercise any rights or remedies (including setoff or recoupment) with respect to any Collateral securing both the First Lien Obligations and any Second Lien Obligations in respect of any Second Lien Obligations, or institute any action or proceeding with respect to such rights or remedies (including any action of foreclosure), (y) contest, protest or object to any foreclosure proceeding or action brought with respect to the Collateral or any other collateral by the Controlling Collateral Agent or any First Lien Secured Party in respect of the First Lien Obligations, the exercise of any right by the Controlling Collateral Agent or any First Lien Secured Party (or any agent or sub-agent on their behalf) in respect of the First Lien Obligations under any lockbox agreement, control agreement, landlord waiver or bailee’s letter or similar agreement or arrangement to which the Controlling Collateral Agent or any First Lien Secured Party either is a party or may have rights as a third-party beneficiary, or any other exercise by any such party of any rights and remedies relating to such Collateral or any other collateral under the First Lien Security Documents or otherwise in respect of First Lien Obligations, or (z) object to forbearance by the First Lien Secured Parties from bringing or pursuing any foreclosure proceeding or action or any other exercise of any rights or remedies relating to such Collateral or any other collateral in respect of First Lien Obligations and (ii) except as otherwise provided in the Second Lien Intercreditor Agreement, the Controlling Collateral Agent and the First Lien Secured Parties shall have the exclusive right to enforce rights, exercise remedies (including setoff, recoupment, and the right to credit bid their debt), and make determinations regarding the release, disposition or restrictions with respect to such Collateral without any consultation with or the consent of the Second Lien Collateral Agent or any Second Lien Secured

282 Party; provided, however that (a) in any insolvency or liquidation proceeding, any Second Lien Representative may file a claim, proof of claim or statement of interest with respect to the Second Lien Obligations, (b) any Second Lien Representative may take any action (not adverse to the prior Liens on the Collateral securing the First Lien Obligations or the rights of the Controlling Collateral Agent or the First Lien Secured Parties to exercise remedies in respect thereof) in order to create, prove, perfect, preserve or protect (but not enforce) its rights in, and perfection and priority of its Lien on, the Collateral, (C) to the extent not otherwise inconsistent with the Second Lien Intercreditor Agreement, any Second Lien Representative and the Second Lien Secured Parties may exercise their rights and remedies as unsecured creditors, as provided in the Second Lien Intercreditor Agreement, (D) any Second Lien Representative may exercise the rights and remedies provided for in the Second Lien Intercreditor Agreement with respect to seeking adequate protection in an insolvency or liquidation proceeding, and (E) any Second Lien Representative and the Second Lien Secured Parties may file any necessary or appropriate responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims or Liens of the Second Lien Secured Parties, including any claims secured by the Collateral, in each case in accordance with the terms of the Second Lien Intercreditor Agreement. In exercising rights and remedies with respect to the Collateral, the Controlling Collateral Agent and the First Lien Secured Parties may enforce the provisions of the First Lien Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in the exercise of their sole discretion. Such exercise and enforcement shall include the rights of an agent appointed by them to sell or otherwise dispose of Collateral upon foreclosure, to incur expenses in connection with such sale or disposition and to exercise all the rights and remedies of a secured lender under the Uniform Commercial Code of any applicable jurisdiction and of a secured creditor under bankruptcy laws of any applicable jurisdiction.

In the event of a sale, transfer or other disposition of any specified item of Collateral (including all or substantially all of the equity interests of any Subsidiary of Covenant Parent), the Liens granted to the Second Lien Representatives and the Second Lien Secured Parties upon such Collateral to secure Second Lien Obligations shall terminate and be released, automatically and without any further action, concurrently with the termination and release of all Liens granted upon such Collateral to secure First Lien Obligations.

Certain Matters in Connection with Liquidation and Insolvency Proceedings Debtor-in-Possession Financings The Second Lien Collateral Agent and each other Second Lien Secured Party will agree, among other things, that if any Covenant Party is subject to any insolvency or liquidation proceeding and the Controlling Collateral Agent or any other First Lien Secured Party desires to permit (or not object to) the use of cash collateral or to permit any Covenant Party to obtain DIP Financing to be secured by the Collateral, then each Second Lien Representative, on behalf of itself and each applicable Second Lien Secured Party, will not object to such use of cash collateral or DIP Financing and will not request adequate protection or any other relief in connection therewith (except to the extent permitted by the Second Lien Intercreditor Agreement) and, to the extent the Liens securing the First Lien Obligations are subordinated to or pari passu with such DIP Financing, will subordinate its Liens in the Collateral and any other collateral to such DIP Financing (and all Obligations relating thereto), any adequate protection liens granted to the First Lien Secured Parties, and any “carve out” for professional and United States trustee fees agreed to by the Controlling Collateral Agent, on the same basis as they are subordinated to the First Lien Obligations. The Second Lien Collateral Agent, for itself and on behalf of each Second Lien Secured Party, will agree that notice received two Business Days prior to the entry of an order approving such usage of cash or other collateral or approving such DIP Financing shall be adequate notice.

Relief from Automatic Stay; Bankruptcy Sales; and Post-Petition Interest No Second Lien Secured Party may (x) seek relief from the automatic stay with respect to any Collateral without the prior written consent of the Controlling Collateral Agent, or object to any motion for relief from the automatic stay with respect to the Collateral made by the Controlling Collateral Agent, (y) object to any lawful

283 exercise by any holder of First Lien Obligations of the right to credit bid such claims under Section 363(k) of the Bankruptcy Code or any other similar provision of the Bankruptcy Code, or to any sale or other disposition of any Collateral that the Controlling Collateral Agent has consented to, provided that in the case of such a sale, the parties’ respective liens will attach to the proceeds of such sale on the same basis of priority as such liens existed on the Collateral pursuant to the Second Lien Intercreditor Agreement, or (z) object to any claim of any holder of First Lien Obligations for post-petition interest, fees, costs, expenses, and/or other charges under Section 506(b) of the Bankruptcy Code or otherwise (for this purpose ignoring all claims and Liens held by the Second Lien Secured Parties on the Collateral).

Adequate Protection Each Second Lien Representative, for itself and on behalf of each applicable Second Lien Secured Party, will agree that none of them shall object to (a) any request by the Controlling Collateral Agent or the First Lien Secured Parties for adequate protection in any form, (b) any objection by the Controlling Collateral Agent or the First Lien Secured Parties to any motion, relief, action, or proceeding based on the Controlling Collateral Agent’s or the First Lien Secured Parties’ claiming a lack of adequate protection, or (c) the allowance and payment of interest, fees, expenses, or other amounts of the Controlling Collateral Agent or the First Lien Secured Parties as adequate protection or otherwise under Section 506(b) or 506(c) of the Bankruptcy Code or any similar provision of any other Bankruptcy Law. If the First Lien Secured Parties (or any subset thereof) are granted adequate protection in the form of a Lien on additional or replacement collateral and/or a superpriority administrative expense claim in connection with any DIP Financing or use of cash collateral under Section 363 or 364 of the Bankruptcy Code or any similar provision of any other Bankruptcy Law, then each Second Lien Representative, for itself and on behalf of applicable Second Lien Secured Parties, may seek or request adequate protection in the form of (as applicable) a Lien on such additional or replacement collateral and/or a superpriority administrative expense claim, which Lien and/or superpriority administrative expense claim (as applicable) will be subordinated to the Liens securing and claims with respect to the First Lien Obligations and such DIP Financing (and all obligations relating thereto) on the same basis as the other Liens securing and claims with respect to the Second Lien Obligations are so subordinated to the Liens securing and claims with respect to the First Lien Obligations under the Second Lien Intercreditor Agreement and (ii) in the event any Second Lien Representatives, for themselves and on behalf of the applicable Second Lien Secured Parties, seek or request adequate protection and such adequate protection is granted in the form of (as applicable) a Lien on additional or replacement collateral and/or a superpriority administrative expense claim, then such Second Lien Representatives, for themselves and on behalf of the applicable Second Lien Secured Parties, agree that the First Lien Representatives shall also be granted (as applicable) a senior Lien on such additional or replacement collateral as security for the First Lien Obligations and/or a senior superpriority administrative expense claim, and that any Lien on such additional or replacement collateral securing the Second Lien Obligations and/or superpriority administrative expense claim shall be subordinated to the Liens on such collateral securing and claims with respect to the First Lien Obligations and any such DIP Financing (and all obligations relating thereto) and any other Liens and claims granted to the First Lien Secured Parties as adequate protection on the same basis as the other Liens securing and claims with respect to the Second Lien Obligations are so subordinated to such Liens securing and claims with respect to First Lien Obligations under the Second Lien Intercreditor Agreement. To the extent that the First Lien Secured Parties are granted adequate protection in the form of payments in the amount of current post-petition fees and expenses, and/or other cash payments, then the Second Lien Representatives shall not be prohibited from seeking adequate protection in the form of payments in the amount of current post-petition incurred fees and expenses, and/or other cash payments (as applicable), subject to the right of the First Lien Secured Parties to object to the reasonableness of the amounts of fees and expenses or other cash payments so sought by the Second Lien Secured Parties.

Plans of Reorganization No Second Lien Representative or any other Second Lien Secured Party may support or vote in favor of any plan of reorganization (and each shall be deemed to have voted to reject any plan of reorganization) that is inconsistent with the terms of the Second Lien Intercreditor Agreement. Without limiting the generality of the

284 foregoing, no Second Lien Representative or any other Second Lien Secured Party may support or vote in favor of any plan of reorganization unless such plan (a) pays off, in cash in full, all First Lien Obligations or (b) is accepted by the class of holders of First Lien Obligations voting thereon in accordance with Section 1126(c) of the Bankruptcy Code.

If it is held that the claims of the First Lien Secured Parties and the Second Lien Secured Parties in respect of the Collateral constitute only one secured claim (rather than separate classes of senior and junior secured claims) under a plan of reorganization, then each Second Lien Representative, for itself and on behalf of the applicable Second Lien Secured Parties, will acknowledge and agree that all distributions from the Collateral shall be made as if there were separate classes of senior and junior secured claims against the Covenant Parties in respect of the Collateral (with the effect being that, to the extent that the aggregate value of the Collateral is sufficient (for this purpose ignoring all claims held by the Second Lien Secured Parties), the First Lien Secured Parties shall be entitled to receive, in addition to amounts distributed to them in respect of principal, pre-petition interest and other claims, all amounts owing in respect of post-petition interest, fees, and expenses (whether or not allowed or allowable in such insolvency or liquidation proceeding) before any distribution is made from the Collateral in respect of the Second Lien Obligations, with each Second Lien Representative, for itself and on behalf of each applicable Second Lien Secured Party, acknowledging and agreeing to turn over to the Controlling Collateral Agent amounts otherwise received or receivable by them from the Collateral to the extent necessary to effectuate the intent of this sentence, even if such turnover has the effect of reducing the claim or recovery of the Second Lien Secured Parties.

Release of Collateral The Covenant Parties will be entitled to the release of property and other assets constituting Collateral from the Liens securing the Notes of any series and the First Lien Notes Obligations under any one or more of the following circumstances: (1) to enable any Covenant Party to consummate the sale, transfer or other disposition of such property or assets to the extent not prohibited under the covenant described under “Certain Covenants—Limitation on Asset Sales;” (2) in the case of a Guarantor that is released from its Note Guarantee with respect to the Notes of such series pursuant to the terms of the Indenture, upon the release from such Note Guarantee; (3) with respect to Collateral that is Capital Stock, upon (i) the dissolution or liquidation of the issuer of that Capital Stock that is not prohibited by the Indenture or (ii) upon the designation by Covenant Parent of the issuer of that Capital Stock as a Credit Facilities Unrestricted Subsidiary in compliance with the terms of the Senior Credit Facilities; (4) with respect to any Collateral that becomes an “Excluded Asset,” upon it becoming an Excluded Asset; (5) upon the occurrence of an Investment Grade Event; (6) in accordance with the fourth paragraph under “Certain Covenants—Limitation on Liens;” (7) to the extent the Liens on the Collateral securing the Senior Credit Facility Obligations are released by the Bank Collateral Agent (other than any release by, or as a result of, payment of the Senior Credit Facility Obligations), upon the release of such Liens; (8) in connection with any enforcement action taken by the Controlling Collateral Agent in accordance with the terms of the First Lien Intercreditor Agreement; or (9) as described under “Amendment, Supplement and Waiver” below.

The Liens on the Collateral securing each series of Notes and related Note Guarantees also will be terminated and released (i) upon payment in full of the principal of, together with accrued and unpaid interest on,

285 the Notes of such series and all other Obligations with respect to such series under the Indenture, the related Note Guarantees and the Security Documents with respect to such series that are due and payable at or prior to the time such principal, together with accrued and unpaid interest, are paid, (ii) upon a legal defeasance or covenant defeasance with respect to such series under the Indenture as described below under “Legal Defeasance and Covenant Defeasance” or a satisfaction and discharge of the Indenture with respect to such series as described under “Satisfaction and Discharge” or (iii) pursuant to the Intercreditor Agreements described above and the Security Documents with respect to such series.

In addition, any Lien on any Collateral may be released or subordinated to the holder of any Lien on such Collateral securing any Capitalized Lease Obligations or any Lien on such Collateral that is permitted by clause (12) or (16) of the definition of “Permitted Liens” to the extent required by the terms of the Obligations secured by such Liens.

Except as provided under “Certain Covenants—Limitation on Liens,” following the occurrence of a Release Event, the Notes and the Note Guarantees will not be secured by any assets or property, regardless of whether any Post-Release Event Note Guarantees have been provided by any Subsidiary of Covenant Parent.

In connection with any release of Collateral which requires execution by the Notes Collateral Agent, the Notes Collateral Agent shall receive an Opinion of Counsel and an Officer’s Certificate stating that such release is permitted by the Indenture and the Security Documents.

Sufficiency of Collateral The fair market value of the Collateral is subject to fluctuations based on factors that include, among others, the ability to sell the Collateral in an orderly sale, general economic conditions, the availability of buyers and similar factors. The amount to be received upon a sale of the Collateral would also be dependent on numerous factors, including, but not limited to, the actual fair market value of the Collateral at such time and the timing and the manner of the sale. By their nature, portions of the Collateral may be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral can be sold in a short period of time or in an orderly manner. In addition, in the event of a bankruptcy, the ability of the Holders to realize upon any of the Collateral may be subject to certain bankruptcy law limitations as described below. See “Risk Factors—Risks Related to the Collateral for the Notes—The value of the collateral securing the notes may not be sufficient to satisfy our obligations under the notes” and “Risk Factors—Risks Related to the Collateral for the Notes—Sales of assets by the issuers and the guarantors could reduce the pool of assets securing the notes and the note guarantees.”

Foreclosure Subject to the terms of the First Lien Intercreditor Agreement and certain other restrictions, after the occurrence of an Event of Default but only for so long as such Event of Default is continuing, the Security Documents and the First Lien Intercreditor Agreement provide for (among other available remedies) the foreclosure upon and sale of the Collateral by the Controlling Collateral Agent and the distribution of the net proceeds of any such sale to the Holders and the lenders under the Senior Credit Facilities and any other First Lien Obligations on a pro rata basis, subject to any prior Liens on the Collateral. In the event of foreclosure on the Collateral, the proceeds from the sale of the Collateral may not be sufficient to satisfy in full the Covenant Parties’ obligations under the Notes.

Certain Bankruptcy Limitations The right of the Notes Collateral Agent to repossess and dispose of the Collateral after the occurrence of an Event of Default for so long as such Event of Default is continuing would be significantly impaired by any Bankruptcy Law in the event that a bankruptcy case were to be commenced by or against any Covenant Party

286 prior to the Notes Collateral Agent’s having repossessed and disposed of the Collateral. Upon the commencement of a case for relief under the Bankruptcy Code, a secured creditor such as the Notes Collateral Agent is prohibited from repossessing its security from a debtor in a bankruptcy case, or from disposing of security without bankruptcy court approval.

In view of the broad equitable powers of a U.S. bankruptcy court, it is impossible to predict how long payments under the Notes could be delayed following commencement of a bankruptcy case, whether or when the Notes Collateral Agent could repossess or dispose of the Collateral, the value of the Collateral at any time during a bankruptcy case or whether or to what extent Holders would be compensated for any delay in payment or loss of value of the Collateral. The Bankruptcy Code permits only the payment and/or accrual of post-petition interest, costs and attorneys’ fees to a secured creditor during a debtor’s bankruptcy case to the extent the value of such creditor’s interest in the Collateral is determined by the bankruptcy court to exceed the outstanding aggregate principal amount of the obligations secured by the Collateral. See “Risk Factors—Risks Related to the Collateral for the Notes—In the event of a bankruptcy of either of the issuers or any of our guarantors, holders of the notes may be deemed to have an unsecured claim to the extent that the issuers’ obligations in respect of the notes exceed the fair market value of the collateral securing the notes and the note guarantees.”

Furthermore, in the event a domestic or foreign bankruptcy court determines that the value of the Collateral is not sufficient to repay all amounts due on the Notes, the Holders would hold secured claims only to the extent of the value of the Collateral to which the Holders are entitled, and unsecured claims with respect to such shortfall.

Compliance with Trust Indenture Act The Trust Indenture Act will become applicable to the Indenture upon the qualification of the Indenture under the Trust Indenture Act, which will occur at such time as the Exchange Notes have been registered under the Securities Act. The Indenture provides that the Issuers will comply with the provisions of Section 314 of the Trust Indenture Act to the extent applicable. To the extent applicable, the Issuers will cause Section 313(b) of the Trust Indenture Act, relating to reports, and Section 314(d) of the Trust Indenture Act, relating to the release of property or securities subject to the Lien of the Security Documents, to be complied with. Any certificate or opinion required by Section 314(d) of the Trust Indenture Act may be made by an officer or legal counsel, as applicable, of the Issuers except in cases where Section 314(d) of the Trust Indenture Act requires that such certificate or opinion be made by an independent Person, which Person will be an engineer, appraiser or other expert reasonably satisfactory to the Trustee. Notwithstanding anything to the contrary in this paragraph, the Issuers will not be required to comply with all or any portion of Section 314(d) of the Trust Indenture Act if they determine, in good faith based on the written advice of counsel, a copy of which written advice shall be provided to the Trustee, that under the terms of Section 314(d) of the Trust Indenture Act or any interpretation or guidance as to the meaning thereof of the SEC and its staff, including “no action” letters or exemptive orders, all or any portion of Section 314(d) of the Trust Indenture Act is inapplicable to any release or series of releases of Collateral. Until such time as the Exchange Notes have been registered under the Securities Act, the Notes will not be subject to Section 316(b) of the Trust Indenture Act and the provisions set forth under “Amendment, Supplement and Waiver” do not conform to the express provisions in Section 316(b) of the Trust Indenture Act.

Optional Redemption of Fixed Rate Notes Redemption Price Prior to , , in the case of the Notes ( months prior to the maturity date of the Notes (the “ Notes par call date”)) and , , in the case of the Notes ( months prior to the maturity date of the Notes (the “ Notes par call date” which, together with the Notes par call date, are referred to as a “par call date”)), the Notes and Notes will be redeemable, at any time in whole or from time to time in part, at the Issuers’ option, at a redemption price at any time equal to the greater of: (a) 100% of the principal amount of the Fixed Rate Notes to be redeemed; and

287 (b) the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the relevant par call date for such Fixed Rate Notes on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below), plus basis points in the case of the Notes and basis points in the case of the Notes; plus, in each case, accrued and unpaid interest thereon to the date of redemption.

Notwithstanding the foregoing, installments of interest on the Fixed Rate Notes to be redeemed that are due and payable on interest payment dates falling on or prior to a redemption date will be payable on the interest payment date to the registered Holders as of the close of business on the relevant record date according to such Fixed Rate Notes and the Indenture.

In addition, at any time and from time to time on or after the Notes par call date, in the case of the Notes, and on or after the Notes par call date, in the case of the Notes, such Fixed Rate Notes will be redeemable, in whole or in part at any time, at the Issuers’ option, at a redemption price equal to 100% of the principal amount of the Fixed Rate Notes being redeemed plus accrued and unpaid interest on such Fixed Rate Notes to the redemption date.

For purposes of the optional redemption provisions of the Fixed Rate Notes, the following terms have the meanings indicated below:

“Comparable Treasury Issue” means, with respect to any series of Fixed Rate Notes, the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the Fixed Rate Notes of such series to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Fixed Rate Notes of such series.

“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of four Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Quotation Agent obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations, or (iii) if only one Reference Treasury Dealer Quotation is received, such quotation.

“Quotation Agent” means each Reference Treasury Dealer appointed by the Issuers.

“Reference Treasury Dealer” means (i) Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., J.P. Morgan Securities LLC, and Merrill Lynch, Pierce Fenner & Smith Incorporated (or their respective affiliates that are Primary Treasury Dealers); provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in the United States (a “Primary Treasury Dealer”), the Issuers will substitute therefor another Primary Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the Issuers.

“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Quotation Agent, of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such redemption date.

“Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the applicable Comparable Treasury Issue, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the applicable Comparable Treasury Price for such redemption date.

288 Mandatory Redemption; Offers to Purchase; Open Market Purchases The Issuers are not required to make any mandatory redemption or sinking fund payments with respect to the Notes, other than as described above under “Special Mandatory Redemption.” In addition, other than as required under “Change of Control Triggering Event” and “Certain Covenants—Limitation on Asset Sales,” the Issuers will not be required to offer to repurchase or redeem or otherwise modify the terms of any of the Notes upon a change in control of, or other events involving, Denali or any of its Subsidiaries which may adversely affect the creditworthiness of the Notes. The Issuers and their Affiliates may at any time and from time to time purchase Notes in the open market, in privately negotiated transactions or otherwise.

Change of Control Triggering Event The Notes will provide that if a Change of Control Triggering Event occurs with respect to a series of Notes, unless, prior to the time the Issuers are required to make a Change of Control Offer, the Issuers have previously or concurrently mailed or delivered, or otherwise sent through electronic transmission, a redemption notice with respect to all the outstanding Notes of such series as described under “Optional Redemption” or “Satisfaction and Discharge,” the Issuers will make an offer to purchase all of the Notes of such series pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest, if any, to, but excluding the date of purchase, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control Triggering Event, the Issuers will send notice of such Change of Control Offer by first-class mail, with a copy to the Trustee, to each Holder of Notes to the address of such Holder appearing in the security register or otherwise in accordance with the procedures of DTC, with the following information: (1) that a Change of Control Offer is being made pursuant to the covenant entitled “Change of Control Triggering Event,” and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for payment by the Issuers; (2) the purchase price and the purchase date, which will be no earlier than 20 Business Days nor later than 60 days from the date such notice is sent (the “Change of Control Payment Date”); provided, that the Change of Control Payment Date may be delayed, in the Issuers’ discretion, until such time (including more than 60 days after the date such notice is sent) as any or all such conditions referred to in clause (8) below shall be satisfied; (3) that any Note not properly tendered will remain outstanding and continue to accrue interest; (4) that unless the Issuers default in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date; (5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the paying agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that Holders will be entitled to withdraw their tendered Notes and their election to require the Issuers to purchase such Notes, provided that the paying agent receives, not later than the expiration time of the Change of Control Offer, a telegram, facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased; (7) that if the Issuers are redeeming less than all of the Notes, the Holders of the remaining Notes will be issued new Notes and such new Notes will be equal in principal amount to the unpurchased portion of the Notes surrendered (the unpurchased portion of the Notes must be equal to $2,000 or an integral multiple of $1,000 in excess thereof);

289 (8) if such notice is sent prior to the occurrence of a Change of Control Triggering Event, stating that the Change of Control Offer is conditional on the occurrence of such Change of Control Triggering Event or such other conditions specified therein and shall describe each such condition, and, if applicable, shall state that, in the Issuers’ discretion, the Change of Control Payment Date may be delayed until such time as any or all such conditions shall be satisfied, or that such purchase may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the Change of Control Payment Date, or by the Change of Control Payment Date as so delayed; and (9) the other instructions, as determined by the Issuers, consistent with this covenant, that a Holder must follow.

The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof.

On the Change of Control Payment Date, the Issuers will, to the extent permitted by law, (1) accept for payment all Notes issued by them or portions thereof properly tendered pursuant to the Change of Control Offer, (2) deposit with the paying agent an amount equal to the aggregate Change of Control Payment in respect of all Notes or portions thereof so tendered, and (3) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officer’s Certificate to the Trustee stating that such Notes or portions thereof have been tendered to and purchased by the Issuers.

The Senior Credit Facilities will, and any Additional Merger Financing, future credit agreements or other agreements relating to Senior Indebtedness to which the Issuers become parties may, provide that certain change of control events with respect to the Issuers would constitute a default thereunder (including a Change of Control under the Indenture). If Covenant Parent experiences a change of control that triggers a default under the Senior Credit Facilities, any Additional Merger Financing and/or such other agreements, we could seek a waiver of such default or seek to refinance the Senior Credit Facilities, such Additional Merger Financing and/or such other agreements. In the event we do not obtain such a waiver or refinance the Senior Credit Facilities, such Additional Merger Financing and/or such other agreements, such default could result in amounts outstanding under the Senior Credit Facilities, such Additional Merger Financing and/or such other agreements being declared due and payable.

Our ability to pay cash to the Holders of Notes following the occurrence of a Change of Control Triggering Event may be limited by our then-existing financial resources. Therefore, sufficient funds may not be available when necessary to make any required repurchases. See “Risk Factors—Risks Related to the Notes and this Offering—We may not be able to finance a change of control offer as required by the indenture governing the notes offered hereby.”

The Change of Control Triggering Event purchase feature of the Notes may in certain circumstances make it more difficult or discourage a sale or takeover of Dell or any Parent Entity, and, thus, the removal of incumbent management. The Change of Control Triggering Event purchase feature is a result of negotiations between the initial purchasers and us. After the Effective Date, we have no present intention to engage in a transaction involving a Change of Control, although it is possible that we could decide to do so in the future. Subject to the limitations discussed below, we could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control Triggering Event under the

290 Indenture, but that could increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings. Restrictions on the ability of Covenant Parent and its Subsidiaries to incur additional secured Indebtedness are contained in the covenant described under “Certain Covenants—Limitation on Liens.” Such restrictions in the Indenture with respect to any series of Notes can be waived only with the consent of the Holders of a majority in principal amount of the Notes of such series then outstanding. Except for the limitations contained in such covenants, however, the Indenture will not contain any covenants or provisions that may afford Holders of the Notes protection in the event of a highly leveraged transaction.

The Issuers will not be required to make a Change of Control Offer if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Issuers and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control Triggering Event, conditional upon such Change of Control Triggering Event or such other conditions specified therein, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.

With respect to the Notes of any series, if Holders of not less than 90% in aggregate principal amount of the outstanding Notes of such series validly tender and do not withdraw such Notes in a Change of Control Offer and the Issuers, or any third party making a Change of Control Offer in lieu of the Issuers as described above, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Issuers or such third party will have the right, upon not less than 15 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer described above, to redeem all Notes of such series that remain outstanding following such purchase on a date (the “Second Change of Control Payment Date”) at a price in cash equal to the Change of Control Payment in respect of the Second Change of Control Payment Date.

The definition of “Change of Control” includes a disposition of all or substantially all of the assets of Covenant Parent to any Person. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of “all or substantially all” of the assets of Covenant Parent. As a result, it may be unclear as to whether a Change of Control has occurred and whether a Holder of Notes may require the Issuers to make an offer to repurchase the Notes as described above.

The provisions of the Indenture relating to the Issuers’ obligation to make a Change of Control Offer with respect to the Notes of any series upon a Change of Control Triggering Event may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes of such series.

Selection and Notice With respect to any partial redemption or purchase of Notes of a series made pursuant to the Indenture, selection of the Notes of such series for redemption or purchase will be made by the Trustee on a pro rata basis to the extent applicable or by lot or by such method as the Trustee shall deem fair and appropriate; provided that if the Notes are represented by global notes, interests in the Notes shall be selected for redemption or purchase by DTC in accordance with its standard procedures therefor; provided, further, that no Notes of less than $2,000 can be redeemed or repurchased in part.

Notices of redemption or offer to purchase shall be delivered electronically or mailed by first-class mail, postage prepaid, at least 15 days (or such shorter period as is specified solely in respect of any Special Mandatory Redemption), but except as set forth in the immediately succeeding paragraph, not more than 60 days before the redemption date or purchase date to each Holder at such Holder’s registered address or otherwise in accordance with the procedures of DTC, except that notices of redemption may be delivered or mailed more than 60 days

291 prior to a redemption date if the notice is issued in connection with a defeasance of any series of Notes or a satisfaction and discharge of the Indenture with respect to any series of Notes. If any Note is to be redeemed or purchased in part only, any notice of redemption or offer to purchase that relates to such Note shall state the portion of the principal amount thereof that has been or is to be redeemed or purchased.

Notice of any redemption of, or any offer to purchase, the Notes may, at the Issuers’ discretion, be given in connection with another transaction (or series of related transactions) and prior to the completion or the occurrence thereof, and any such redemption or purchase may, at the Issuers’ discretion, be subject to one or more conditions precedent, including, but not limited to, completion or occurrence of the related transaction or event, as the case may be. In addition, if such redemption or purchase is subject to satisfaction of one or more conditions precedent, such notice shall describe each such condition, and if applicable, shall state that, in the Issuers’ discretion, the redemption or purchase date may be delayed until such time (including more than 60 days after the date the notice of redemption or offer to purchase was mailed or delivered, including by electronic transmission) as any or all such conditions shall be satisfied, or such redemption or purchase may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption or purchase date or by the redemption or purchase date as so delayed, or such notice may be rescinded at any time in the Issuers’ discretion if the Issuers reasonably believe that any or all of such conditions will not be satisfied. In addition, the Issuers may provide in such notice that payment of the redemption or purchase price and performance of the Issuers’ obligations with respect to such redemption or offer to purchase may be performed by another Person.

With respect to Notes represented by certificated notes, if any Notes are to be redeemed or purchased in part only, the Issuers will issue a new Note in a principal amount equal to the unredeemed or unpurchased portion of the original Note in the name of the Holder thereof upon cancellation of the original Note; provided that the new Notes will be only issued in denominations of $2,000 and any integral multiple of $1,000 in excess thereof.

Notes called for redemption or purchase become due on the date fixed for redemption or purchase, unless such redemption or purchase is conditioned on the happening of a future event. On and after the redemption or purchase date, unless the Issuers default in payment of the redemption or purchase price, interest shall cease to accrue on Notes or portions of them called for redemption or purchase, unless such redemption or purchase remains conditioned on the occurrence of a future event.

Activities Prior to the Release Each of the Fincos is a limited purpose entity. Prior to the consummation of the Transactions, the Fincos’ primary activities will be restricted to (i) issuing Additional Merger Financing, (ii) issuing capital stock to, and receiving capital contributions from, Affiliates of Denali, (iii) performing its obligations in respect of the Notes, the Indenture and any Additional Merger Financing, (iv) consummating the Transactions, (v) redeeming the Notes and any Additional Merger Financing, if applicable, pursuant to mandatory redemption provisions and (vi) conducting such other activities as are necessary or appropriate to carry out the activities described above.

Certain Covenants Except as set forth below, neither the Issuers nor any of the Guarantors will be restricted by the Indenture from: • incurring additional indebtedness or other obligation; • paying dividends or making distributions on its Capital Stock; or • purchasing or redeeming its Capital Stock.

Denali will not be subject to any of the covenants under the Indenture. In addition, SecureWorks, Boomi, Virtustream, Pivotal and VMware will be Credit Facilities Unrestricted Subsidiaries, and therefore such entities and

292 their Subsidiaries will not constitute Restricted Subsidiaries and will not be subject to the covenants contained in the Indenture. Further, after the occurrence of a Release Event, the covenants in the Indenture described below will apply only to Covenant Parent and its Wholly-Owned Subsidiaries that are Domestic Subsidiaries and that own “Principal Property,” as defined in the Indenture and set forth below under “Certain Definitions.”

The Indenture shall provide that, so long as a Parent Guarantor that is a direct or indirect parent entity of Covenant Parent and does not hold any material assets other than the Equity Interests of Covenant Parent (as determined in good faith by the Board or senior management of such Parent Guarantor), any calculations or measure that is determined with reference to Covenant Parent’s financial statements (including, without limitation, Consolidated Net Tangible Assets and Permitted Receivables Financing) may be determined with reference to such Parent Guarantor’s financial statements instead.

Limitation on Liens Prior to the occurrence of a Release Event, the Issuers and, after the Effective Date, the other Covenant Parties will not, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) on the Collateral or any Principal Property that secures Indebtedness.

Following the occurrence of a Release Event, the Issuers will not, and will not permit any of their Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Post- Release Liens) on any of their or any Restricted Subsidiary’s Principal Property or upon any shares of stock or indebtedness of any of our Restricted Subsidiaries that directly owns any Principal Property (whether such Principal Property or shares are now existing or owed or hereafter created or acquired) that secures Indebtedness, unless the Notes are equally and ratably secured with (or, at an Issuer’s option, on a senior basis to) the Indebtedness so secured.

Notwithstanding the immediately preceding paragraph, following the occurrence of a Release Event, the Issuers and their Restricted Subsidiaries may, without equally and ratably securing the Notes, create, incur, assume or suffer to exist any Lien which would otherwise be prohibited by such paragraph if, after giving effect thereto and at the time of determination, Aggregate Debt does not exceed at any one time outstanding the greater of (x) $2,000 million and (y) 15% of Consolidated Net Tangible Assets.

Any Lien created for the benefit of the Holders of any series of Notes pursuant to second paragraph under this “Limitation on Liens” covenant shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Lien that gave rise to the obligation to secure the Notes of such series.

Limitation on Sale and Lease-Back Transactions Following the occurrence of a Release Event, the Issuers will not, and will not permit any of their Restricted Subsidiaries to, enter into any Sale and Lease-Back Transaction with respect to any Principal Property unless (a) the Issuers or such Restricted Subsidiary would be entitled to incur Indebtedness secured by a Lien on the Principal Property involved in such transaction at least equal in amount to the Attributable Indebtedness with respect to such Sale and Lease-Back Transaction without equally and ratably securing the Notes pursuant to the second paragraph under “—Limitation on Liens,” or (b) the Issuers shall apply an amount equal to the net proceeds of the Attributable Indebtedness with respect to such Sale and Lease-Back Transaction within 365 days after such Sale and Lease-Back Transaction to the defeasance or retirement of any series of Notes or other indebtedness of the Issuers or a Restricted Subsidiary or to the purchase, construction or development of other property.

Notwithstanding the foregoing, following the occurrence of a Release Event, the Issuers and their Restricted Subsidiaries may enter into any Sale and Lease-Back Transaction which would otherwise be prohibited by the foregoing paragraph if, after giving effect thereto and at the time of determination, Aggregate Debt does not exceed at any one time outstanding the greater of (x) $2,000 million and (y) 15% of Consolidated Net Tangible Assets.

293 Limitation on Asset Sales Prior to the occurrence of a Release Event, each Issuer and, after the Effective Date, the other Covenant Parties will not consummate, directly or indirectly, an Asset Sale of Collateral unless: (1) such Covenant Party receives consideration at the time of such Asset Sale at least equal to the fair market value (measured at the time of contractually agreeing to such Asset Sale) of the assets sold or otherwise disposed of; and (2) except in the case of a Permitted Asset Swap, at least 75% of the consideration (measured at the time of contractually agreeing to such Asset Sale) for such Asset Sale, together with all other Asset Sales since the Effective Date (on a cumulative basis), received by the Covenant Parties is in the form of cash or Cash Equivalents.

Within 450 days after the receipt of any Net Proceeds from any Asset Sale covered by this covenant (the “Asset Sale Proceeds Application Period”), a Covenant Party, at its option, may apply an amount equal to the Net Proceeds from such Asset Sale, (a) to repay either (i) Obligations under the Notes, (ii) Obligations under the Senior Credit Facilities or the Asset Sale Bridge Facility or (iii) First Lien Obligations (other than the Notes and the Senior Credit Facilities), and in the case of revolving obligations (other than obligations in respect of any asset-based credit facility), to correspondingly reduce commitments with respect thereto; provided that in the case of any repayment pursuant to clause (iii), such Covenant Party will either (A) reduce the aggregate principal amount of Obligations under the Notes on an equal or ratable basis with any First Lien Obligations repaid pursuant to clause (iii) by, at its option, (x) redeeming Notes as provided under “Optional Redemption of Fixed Rate Notes” and/or (y) purchasing Notes through open-market purchases or in privately negotiated transactions at market prices (which may be below par) and/or (B) make an offer (in accordance with the provisions set forth below for an Asset Sale Offer) to all Holders to purchase their Notes on an equal or ratable basis with any First Lien Obligations repaid pursuant to clause (iii) (which offer shall be deemed to be an Asset Sale Offer for purposes hereof); (b) to invest in the business of the Covenant Parent and its Subsidiaries, including (i) any investment in Additional Assets and (ii) making capital expenditures; (c) to repay indebtedness of a Subsidiary of an Issuer that is not a Guarantor, other than Indebtedness owed to an Issuer or a Guarantor; or (d) any combination of the foregoing; provided that, in the case of clause (b) above, a binding commitment or letter of intent shall be treated as a permitted application of the Net Proceeds from the date of such commitment or letter of intent so long as such Covenant Party enters into such commitment or letter of intent with the good faith expectation that such Net Proceeds will be applied to satisfy such commitment or letter of intent within 180 days of the expiration of the Asset Sale Proceeds Application Period (an “Acceptable Commitment”) and such Net Proceeds are actually applied in such manner within 180 days of the expiration of the Asset Sale Proceeds Application Period (the period from the consummation of the Asset Sale to such date, the “First Commitment Application Period”), and, in the event any Acceptable Commitment is later cancelled or terminated for any reason after the expiration of the Asset Sale Proceeds Application Period and before the Net Proceeds are applied in connection therewith, then such Net Proceeds shall constitute Excess Proceeds unless such Covenant Party reasonably expects to enter into another Acceptable Commitment prior to the expiration of the First Commitment Application Period (a “Second Commitment”) and such Net Proceeds are actually applied in such manner prior to 180 days from the date of entering into the Second Commitment; provided, further, that if any Second Commitment is later cancelled or terminated for any reason before such Net Proceeds are applied or if such Second Commitment is not entered into prior to the expiration of the First Commitment Application Period, then such Net Proceeds shall constitute Excess Proceeds.

294 Any Net Proceeds from the Asset Sale covered by this covenant that are not invested or applied as provided and within the time period set forth in this covenant will be deemed to constitute “Excess Proceeds.” No later than 20 Business Days after the date that the aggregate amount of Excess Proceeds exceeds $500 million, the Issuers shall make an offer to all Holders and, if required by the terms of other First Lien Obligations, to the holders of such other First Lien Obligations (an “Asset Sale Offer”), to purchase the maximum aggregate principal amount (or accreted value, as applicable) of the Notes and such other First Lien Obligations that is, in the case of the Notes only, equal to $1,000 or an integral multiple thereof that may be purchased out of the Excess Proceeds at an offer price, in the case of the Notes only, in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the date fixed for the repurchase of such Notes pursuant to such offer, in accordance with the procedures set forth in the Indenture and, if applicable, the other documents governing such other First Lien Obligations. The Issuers will commence an Asset Sale Offer by sending the notice required pursuant to the terms of the Indenture, with a copy to the Trustee. The Issuers may satisfy the foregoing obligation with respect to such Net Proceeds from an Asset Sale by making an Asset Sale Offer in advance of being required to do so by the Indenture (an “Advance Offer”) with respect to all or part of the available Net Proceeds (the “Advance Portion”).

To the extent that the aggregate principal amount (or accreted value, as applicable) of Notes and such other First Lien Obligations tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds (or, in the case of an Advance Offer, the Advance Portion), the Issuers may use any remaining Excess Proceeds (or, in the case of an Advance Offer, the Advance Portion) in any manner not prohibited by the Indenture. If the aggregate principal amount (or accreted value, as applicable) of Notes or such other First Lien Obligations tendered pursuant to an Asset Sale Offer exceeds the amount of Excess Proceeds (or, in the case of an Advance Offer, the Advance Portion), the Trustee shall select the Notes (subject to applicable DTC procedures as to global notes) and the Issuers or the representative of such other First Lien Obligations shall select such other First Lien Obligations to be purchased or repaid on a pro rata basis based on the accreted value or principal amount of the Notes and such other First Lien Obligations tendered, with adjustments as necessary so that no Notes or such other First Lien Obligations, as the case may be, will be repurchased in an unauthorized denomination; provided, that no Notes of $2,000 or less shall be repurchased in part. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero (regardless of whether there are any remaining Excess Proceeds upon such completion), and in the case of an Advance Offer, the Advance Portion shall be excluded in subsequent calculations of Excess Proceeds.

Pending the final application of an amount equal to the Net Proceeds pursuant to this covenant, the holder of such Net Proceeds may apply any Net Proceeds temporarily to reduce indebtedness outstanding under a revolving credit facility (including under the Senior Credit Facilities) or otherwise invest such Net Proceeds in any manner not prohibited by the Indenture.

For purposes of this covenant (and no other provision), the following shall be deemed to be cash or Cash Equivalents: (1) the greater of the principal amount and the carrying value of any liabilities (as reflected on the most recent balance sheet of a Covenant Party or in the footnotes thereto, or if incurred, accrued or increased subsequent to the date of such balance sheet, such liabilities that would have been reflected on the balance sheet of a Covenant Party or in the footnotes thereto if such incurrence, accrual or increase had taken place on or prior to the date of such balance sheet, as determined in good faith by Covenant Parent) of a Covenant Party, other than liabilities that are by their terms subordinated to the Notes, that are assumed by the transferee of any such assets (or are otherwise extinguished in connection with the transactions relating to such Asset Sale) pursuant to a written agreement which releases such Covenant Party from such liabilities; (2) any securities, notes or other obligations or assets received by a Covenant Party from such transferee that are converted by such Covenant Party into cash or Cash Equivalents, or by their terms are required to be satisfied for cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received), in each case, within 180 days following the closing of such Asset Sale; and

295 (3) any Designated Non-cash Consideration received by a Covenant Party in such Asset Sale having an aggregate fair market value, taken together with all other Designated Non-cash Consideration received pursuant to this clause (3) that is at that time outstanding, not to exceed 5.0% of the Total Assets at the time of the receipt of such Designated Non-cash Consideration, with the fair market value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value.

The Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the asset sale provisions of the Indenture, the Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under the asset sale provisions of the Indenture by virtue of such compliance.

The provisions of the Indenture relating to the Issuers’ obligation to make an offer to repurchase the Notes of any series as a result of an Asset Sale may be waived or modified with the written consent of the Holders of a majority in principal amount of the Notes of such series.

Merger, Consolidation, Amalgamation or Sale of All or Substantially All Assets The Issuers, Covenant Parent and any Subsidiary of Covenant Parent that is a Parent Guarantor will not merge, consolidate or amalgamate with or into or wind up into (whether or not such Issuer, Covenant Parent or such Parent Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of the properties or assets of Covenant Parent and its Subsidiaries, taken as a whole, in one or more related transactions, to any Person unless: (a) an Issuer, Covenant Parent or a Subsidiary of Covenant Parent that is a Parent Guarantor, as the case may be, is the surviving Person or the Person formed by or surviving any such merger, consolidation or amalgamation (if other than an Issuer, Covenant Parent or a Subsidiary of Covenant Parent that is a Parent Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation, partnership, limited partnership, limited liability company, trust or other entity organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Issuer, such Covenant Parent, such Subsidiary of Covenant Parent that is a Parent Guarantor or such Person, as the case may be, being herein called the “Successor Company”); provided that in the case where the Successor Company of an Issuer is not a corporation, a co-issuer of the Notes is a corporation; (b) the Successor Company, if other than an Issuer, Covenant Parent or a Subsidiary of Covenant Parent that is a Parent Guarantor, expressly assumes, in the case of Covenant Parent or a Subsidiary of Covenant Parent that is a Parent Guarantor, all the obligations of Covenant Parent or such Parent Guarantor, as the case may be, under the Indenture, its Note Guarantee, the Registration Rights Agreement, the Intercreditor Agreements and the Security Documents, and, in the case of an Issuer, all of the obligations of such Issuer under the Indenture, the Notes, the Intercreditor Agreements and the Security Documents, in each case, pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee; (c) immediately after such transaction, no Event of Default exists; and (d) prior to a Release Event, to the extent any assets of the Person which is merged, consolidated or amalgamated with or into the Successor Company are assets of the type which would constitute Collateral under the Security Documents, the Successor Company will take such action as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the Security Documents in the manner and to the extent required in the Indenture or any of the Security Documents and shall take all reasonably necessary action so that such Lien is perfected to the extent required by the Security Documents.

296 The Successor Company will succeed to, and be substituted for an Issuer, Covenant Parent or a Subsidiary of Covenant Parent that is a Parent Guarantor, as the case may be, under the Indenture, the Note Guarantees and the Notes, as applicable, and such Issuer, Covenant Parent or such Parent Guarantor, as applicable, will automatically be released and discharged from its obligations under the Indenture, the Note Guarantees and the Notes, as applicable. Notwithstanding the foregoing clause (c), (a) any Subsidiary may merge, consolidate or amalgamate with or into or sell, assign, transfer, lease, convey or otherwise dispose of all or part of its properties and assets to Covenant Parent and any of its Subsidiaries (including the Issuers), and (b) an Issuer, Covenant Parent or a Subsidiary of Covenant Parent that is a Parent Guarantor may merge, consolidate or amalgamate with or into an Affiliate of such Issuer, Covenant Parent or such Parent Guarantor, as the case may be, solely for the purpose of reincorporating such Issuer, Covenant Parent or such Parent Guarantor in the United States, any state thereof, the District of Columbia or any territory thereof.

Subject to the provisions described in the Indenture governing release of a Note Guarantee upon the sale, disposition or transfer of Capital Stock of a Subsidiary Guarantor, no Subsidiary Guarantor will, and Covenant Parent will not permit a Subsidiary Guarantor to, merge, consolidate or amalgamate with or into or wind up into (whether or not an Issuer or a Guarantor is the surviving Person), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets, in one or more related transactions, to any Person unless: (1)(a) such Subsidiary Guarantor is the surviving Person or the Person formed by or surviving any such merger, consolidation or amalgamation (if other than such Subsidiary Guarantor) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation, partnership, limited partnership, limited liability company, trust or other entity organized or existing under the laws of the jurisdiction of organization of such Subsidiary Guarantor or the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Subsidiary Guarantor or such Person, as the case may be, being herein called the “Successor Person”); (b) the Successor Person, if other than such Subsidiary Guarantor, expressly assumes all the obligations of such Subsidiary Guarantor under the Indenture and such Subsidiary Guarantor’s related Note Guarantee pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee; (c) immediately after such transaction, no Event of Default exists; and (d) prior to a Release Event, to the extent any assets of the Subsidiary Guarantor which is merged, consolidated or amalgamated with or into the Successor Person are assets of the type which would constitute Collateral under the Security Documents, the Successor Person will take such action as may be reasonably necessary to cause such property and assets to be made subject to the Lien of the Security Documents in the manner and to the extent required in the Indenture or any of the Security Documents and shall take all reasonably necessary action so that such Lien is perfected to the extent required by the Security Documents; or (2) the transaction is not prohibited by the covenant described under “Certain Covenants—Asset Sales.”

The Successor Person will succeed to, and be substituted for, such Subsidiary Guarantor under the Indenture and such Subsidiary Guarantor’s Note Guarantee and such Subsidiary Guarantor will automatically be released and discharged from its obligations under the Indenture and such Subsidiary Guarantor’s Note Guarantee. Notwithstanding the foregoing, any Subsidiary Guarantor may (i) merge, consolidate or amalgamate with or into, wind up into or transfer all or part of its properties and assets to another Subsidiary Guarantor, Covenant Parent, any Subsidiary of Covenant Parent that is a Parent Guarantor or an Issuer, (ii) merge, consolidate or amalgamate with or into an Affiliate of an Issuer, Covenant Parent or any Subsidiary of Covenant Parent that is a Parent Guarantor solely for the purpose of reincorporating or reorganizing the Subsidiary Guarantor in the United States, any state thereof, the District of Columbia or any territory thereof, (iii) convert into a corporation, partnership, limited

297 partnership, limited liability company , trust or other entity organized or existing under the laws of the jurisdiction of organization of such Subsidiary Guarantor or a jurisdiction in the United States or (iv) liquidate or dissolve or change its legal form if the Board of Covenant Parent or the senior management of Covenant Parent determines in good faith that such action is in the best interests of Covenant Parent and is not materially disadvantageous to the Holders, in each case, without regard to the requirements set forth in the preceding paragraph.

Notwithstanding anything in this “Merger, Consolidation, Amalgamation or Sale of All or Substantially All Assets” covenant, the Transactions (including, without limitation, the Mergers) will be permitted under the Indenture with the only requirement under this covenant being that, after consummation of the Mergers, Dell International expressly assumes all the obligations of Finco 1 and EMC expressly assumes all the obligations of Finco 2 under the Indenture, the Intercreditor Agreements, the Security Documents, the Note Guarantees and the Notes.

Reports and Other Information Whether or not Dell is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, so long as any Notes are outstanding, Dell will have its annual consolidated financial statements audited by a nationally recognized firm of independent auditors and its interim consolidated financial statements reviewed by a nationally recognized firm of independent auditors in accordance with Statement on Auditing Standards No. 100 issued by the American Institute of Certified Public Accountants (or any similar replacement standard). In addition, so long as any Notes are outstanding, Dell will furnish to the Holders: (x) all annual and quarterly financial statements substantially in forms that would be required to be contained in a filing with the SEC on Forms 10-K and 10-Q of Dell, if Dell is at such time required to file such forms and (y) with respect to the annual financial statements only, a report on the annual financial statements by Dell’s independent registered public accounting firm; provided, however, that (i) in no event shall such reports be required to comply with Rule 3-10 of Regulation S-X promulgated by the SEC or contain separate financial statements for the Issuers, the Guarantors or other Subsidiaries the shares of Capital Stock and other securities of which are pledged to secure the Notes or any Note Guarantee that would be required under Section 3-10 or Section 3-16 of Regulation S-X, respectively, promulgated by the SEC and (ii) in no event shall such reports be required to comply with Regulation G under the Exchange Act or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-GAAP financial measures contained therein.

All such annual reports shall be furnished within 90 days after the end of the fiscal year to which they relate, and all such quarterly reports shall be furnished within 45 days after the end of the fiscal quarter to which they relate.

Dell will make available such information and such reports (as well as the details regarding the conference call (to the extent there is one) described below) to the Trustee under the Indenture, to any Holder of the Notes and, upon request, to any beneficial owner of the Notes, in each case by posting such information on its website on Intralinks or any comparable password-protected online data system which will require a confidentiality acknowledgment, and will make such information readily available to any Holder of the Notes, any bona-fide prospective investor in the Notes, any securities analyst (to the extent providing analysis of investment in the Notes) or any market maker in the Notes who agrees to treat such information as confidential or accesses such information on Intralinks or any comparable password-protected online data system which will require a confidentiality acknowledgment; provided that Dell shall post such information thereon and make readily available any password or other login information to any such Holder of the Notes, bona-fide prospective investor, securities analyst or market maker; provided, further, however, Dell may deny access to any competitively-sensitive information otherwise to be provided pursuant to this paragraph to any such Holder, bona-fide prospective investor, security analyst or market maker that is a competitor of Dell and its Subsidiaries to the extent that Dell determines in good faith that the provision of such information to such Person would be competitively harmful to Dell and its Subsidiaries.

298 So long as any Notes are outstanding, Dell will either, at its option, (A) include a Management’s Discussion and Analysis of Financial Condition and Results of the Operations” with delivery of the annual and quarterly reports required by clause (1) of the first paragraph of this “Reports and Other Information” covenant; or (B) (1) as promptly as reasonably practicable after furnishing to the Trustee the annual and quarterly reports required by clause (1) of the first paragraph of this “Reports and Other Information” covenant, hold a conference call to discuss such reports and the results of operations for the relevant reporting period; and (2) post a press release on its website on Intralinks or any comparable password-protected online data system prior to the date of the conference call required to be held in accordance with clause (1) of this paragraph, announcing the time and date of such conference call and including all information necessary to access the call.

In addition, Dell shall furnish to prospective investors, upon their request, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Notes are not freely transferable under the Securities Act.

Any Parent Entity may satisfy the obligations of Dell set forth in this “Reports and Other Information” covenant by providing the requisite financial and other information of such Parent Entity instead of Dell, provided that to the extent such Parent Entity holds assets (other than its direct or indirect interest in Dell) that exceeds the lesser of (i) 1% of the Total Assets of such Parent Entity and (ii) 1% of the total revenue for the preceding fiscal year of such Parent Entity, then such information related to such Parent Entity shall be accompanied by consolidating information, which may be unaudited, that explains in reasonable detail the differences between the information of such Parent Entity, on the one hand, and the information relating to Dell and its Subsidiaries on a stand-alone basis, on the other hand.

The Issuers will be deemed to have furnished the reports referred to clauses (1) and (2) of the first paragraph and clause (A) of the fourth paragraph of this covenant if any Issuer or any direct or indirect parent of any Issuer has filed reports containing such information with the SEC.

Additional Note Guarantees After the Effective Date and prior to the occurrence of a Release Event, Covenant Parent will not permit any of its Domestic Subsidiaries that is a Wholly-Owned Subsidiary (other than the Issuers, the Guarantors, a Receivables Subsidiary or a Credit Facilities Unrestricted Subsidiary), to become an obligor with respect to any Indebtedness under the Senior Credit Facilities or any capital markets debt securities in an aggregate principal amount in excess of $350.0 million unless such Subsidiary within 60 days (or, in the case of mortgages, within 90 days) executes and delivers a supplemental indenture to the Indenture providing for a Note Guarantee by such Subsidiary and joinders to the First Lien Intercreditor Agreement and Security Documents or new intercreditor agreements and Security Documents, together with any other filings and agreements required by the Security Documents to create or perfect the security interests for the benefit of the Holders in the Collateral of such Subsidiary.

After the occurrence of a Release Event, with respect to each series of Notes, if the aggregate principal amount of Indebtedness of non-guarantor Domestic Subsidiaries that are Wholly-Owned Subsidiaries (excluding any Indebtedness under any Permitted Receivables Financing and any Indebtedness of any Credit Facilities Unrestricted Subsidiary or Receivables Subsidiary) that is incurred or issued and outstanding exceeds, in the aggregate, the greater of (x) $2,000 million and (y) 15% of Consolidated Net Tangible Assets (the “Guarantee Threshold”), then Covenant Parent shall cause such of its non-guarantor Subsidiaries to, within 60 days, execute and deliver a supplemental indenture to the Indenture providing for a Note Guarantee by such non-guarantor

299 Subsidiaries (each such Note Guarantee, a “Post-Release Event Note Guarantee”) such that the aggregate principal amount of Indebtedness of all other non-guarantor Domestic Subsidiaries that are Wholly-Owned Subsidiaries (excluding any Indebtedness under any Permitted Receivables Financing and any Indebtedness of any Credit Facilities Unrestricted Subsidiary or Receivables Subsidiary) that is incurred or issued and outstanding does not exceed the Guarantee Threshold (after giving effect to the provision of Post-Release Event Note Guarantees pursuant to the foregoing); provided that (i) this covenant shall not be applicable to any Indebtedness of any Subsidiary that existed at the time such Person became a Subsidiary of Covenant Parent (including any Indebtedness incurred in connection with, or in contemplation of, such Person becoming a Subsidiary, so long as Covenant Parent and its Subsidiaries (other than such Person and its Subsidiaries) are not obligors under such Indebtedness), (ii) if the Guarantee Threshold would be exceeded immediately after giving effect to the occurrence of a Release Event, then such Release Event shall be deemed not to have occurred with respect to the release of such Note Guarantees only and (iii) a Post-Release Event Note Guarantee shall be released to the extent the Guarantee Threshold would not be exceeded after giving effect to such release.

Each Note Guarantee shall be released in accordance with the provisions of the Indenture described under “Note Guarantees.”

Events of Default Each of the following events is an “Event of Default” with respect to the Notes of any series under the Indenture: (1) the failure to pay the principal of (or premium, if any, on) such series of the Notes when due and payable (including pursuant to a Special Mandatory Redemption); (2) the failure to pay any interest installment or Additional Interest (as required by the Registration Rights Agreement) on such series of the Notes when due and payable, which failure continues for 30 days; (3) the failure by any Covenant Party to comply for 90 days after written notice given by the Trustee or the Holders of not less than 30% in principal amount of the outstanding Notes of such series with its covenants or other agreements (other than those described in clauses (1) through (2) above) contained in the Indenture; (4) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Issuers or any of the Subsidiaries or the payment of which is guaranteed by the Issuers or any of the Subsidiaries (other than Indebtedness owed to Dell or a Subsidiary or any Permitted Receivables Financing), whether such Indebtedness or guarantee now exists or is created after the issuance of the Notes, if both: (a) such default results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity; and (b) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness, the maturity of which has been so accelerated, aggregate $500 million (or its foreign currency equivalent) or more at any one time outstanding; (5) certain events of bankruptcy, insolvency or reorganization involving Covenant Parent, any Subsidiary of Covenant Parent that is a Parent Guarantor, any Issuer or any Subsidiary Guarantor that is a Significant Subsidiary (or group of Subsidiary Guarantors that, taken together, would constitute a Significant Subsidiary) (the “bankruptcy provisions”); (6) any Note Guarantee of any Subsidiary Guarantor that is a Significant Subsidiary (or Note Guarantees of any group of Subsidiary Guarantors that, taken together, would constitute a Significant Subsidiary) of such series of Notes ceases to be in full force and effect (other than in accordance with the terms of such Note Guarantee) or any such Subsidiary Guarantor or such group of Subsidiary Guarantors denies or disaffirms its obligations under its Note Guarantee of such series of Notes (other than by reason of

300 the satisfaction in full of all obligations under the Indenture and discharge of the Indenture with respect to such series of Notes or the release of such Note Guarantee with respect to such series of Notes in accordance with the terms of the Indenture); (7) other than by reason of the satisfaction in full of all obligations under the Indenture and discharge of the Indenture with respect to such series of Notes or the release of such Collateral with respect to such series of Notes in accordance with the terms of the Indenture and the Security Documents, (a) in the case of any security interest with respect to Collateral having a fair market value in excess of 5% of Total Assets, individually or in the aggregate, such security interest under the Security Documents shall, at any time, cease to be a valid and perfected security interest or shall be declared invalid or unenforceable and any such default continues for 30 days after notice of such default shall have been given to the Issuers by the Trustee or the Holders of at least 30% of the principal amount of the then outstanding Notes issued under the Indenture, except to the extent that any such default (A) results from the failure of the Collateral Agent to maintain possession of certificates, promissory notes or other instruments actually delivered to it representing securities pledged under the Security Documents or (B) to the extent relating to Collateral consisting of real property, is covered by a title insurance policy with respect to such real property and such insurer has not denied coverage; or (b) any Issuer, Covenant Parent, any Subsidiary of Covenant Parent that is a Parent Guarantor or any Subsidiary Guarantor that is a Significant Subsidiary (or any group of Subsidiary Guarantors that, taken together, would constitute a Significant Subsidiary) shall assert, in any pleading in any court of competent jurisdiction, that any security interest under any Security Document is invalid or unenforceable; or (8) the failure by the Fincos to consummate the Special Mandatory Redemption, to the extent required, as described under “Special Mandatory Redemption.”

If an Event of Default enumerated above with respect to the Notes of any series at the time outstanding shall occur and be continuing, then either the Trustee or the Holders of at least 30% in aggregate principal amount of the outstanding Notes of such series may declare to be due and payable immediately by a notice in writing to the Issuers (and to the Trustee if given by the Holders) the entire principal amount of all the Notes of such series. At any time after such a declaration of acceleration has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in principal amount of the outstanding Notes of such series, by written notice to the Issuers and the Trustee, may, in certain circumstances, rescind and annul such acceleration. If an Event of Default relating to the bankruptcy provisions (with respect to any Issuer, Covenant Parent or any Subsidiary of Covenant Parent that is a Parent Guarantor) occurs and is continuing, the principal of and interest on all the Notes will ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

Subject to the terms of the First Lien Intercreditor Agreement and certain other restrictions, no Holder of any Notes of any series shall have any right to institute any proceeding with respect to the Indenture or the Notes of such series or for any remedy thereunder, unless such Holder previously shall have given to the Trustee written notice of a continuing Event of Default with respect to the Notes of such series and unless also the Holders of not less than 30% in principal amount of the outstanding Notes of such series shall have made written request upon the Trustee, and have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with the request, and the Trustee, for 60 days after receipt of such notice, request and offer of indemnity, shall have failed to institute such proceeding and, during such 60-day period, the Trustee shall not have received direction inconsistent with such request in writing by the Holders of a majority in principal amount of the outstanding Notes of such series. These limitations do not apply, however, to a suit instituted by a Holder of a Note for the enforcement of payment of the principal of, premium, if any, or interest on such note on or after the respective due date expressed in such Note.

301 Subject to the terms of the First Lien Intercreditor Agreement and certain other restrictions, the Holders of a majority in principal amount of the outstanding Notes of a series will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee with respect to such series. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other Holder of a Note of such series or that would involve the Trustee in personal liability.

If a Default occurs and is continuing and the Trustee has received notice thereof, the Trustee must mail (or otherwise transmit in accordance with DTC) to each Holder notice of the Default within 90 days of having received such notice; provided, that, except in the case of a Default in the payment of principal or premium, if any, or interest on any Note, the Trustee may withhold notice if the Trustee determines in good faith that withholding notice is not opposed to the interests of the Holders.

Covenant Parent will be required to deliver to the Trustee, within 120 days after the end of each fiscal year, an officer’s certificate indicating whether the signer of the certificate knows of any failure by the Covenant Parties to comply with all conditions and covenants of the Indenture during such fiscal year.

Amendment, Supplement and Waiver Subject to certain exceptions, modifications and amendments of the Notes, the Indenture, the Intercreditor Agreements, the Security Documents and the Registration Rights Agreement may be made by the Issuers, the Guarantors and the Trustee with the consent of the Holders of not less than a majority in principal amount of the outstanding Notes of each series affected thereby (including consents obtained in connection with a tender offer or exchange offer for the Notes of such series), and any past Default or compliance with certain provisions also may be waived with the consent of the Holders of not less than a majority in principal amount of the outstanding Notes of each series affected thereby; provided, however, that no such modification or amendment may, without the consent of the Holder of each outstanding Note affected thereby: • change the stated maturity of the principal of, or any installment of principal of or interest on, any such Note; • reduce the principal amount of, or the rate of interest on, any such Note; • reduce any premium, if any, or redemption price payable upon the redemption of any such Note; • reduce the amount of the principal of an original discount Note that would be due and payable upon a declaration of acceleration of the maturity thereof; • change any place of payment where, or the coin or currency in which, the principal of, premium, if any, or interest on any such Note is payable; • amend the contractual right expressly set forth in this Indenture or any Note of any Holder to institute suit for the enforcement of any payment of principal of, premium, if any, or interest on such Note on or after the stated maturity or redemption date of any such Note; • reduce the percentage in principal amount of the outstanding Notes of any series, the consent of whose Holders is required to approve any such modification or amendment or for any waiver of compliance with certain provisions of the Indenture or of certain Defaults; • modify any of the provisions in the Indenture regarding the waiver of past Defaults and the waiver of certain covenants by the Holders of each such Note affected thereby, except to increase any percentage vote required or to provide that certain other provisions of the Indenture may not be modified or waived without the consent of the Holder of each Note affected thereby; or • modify any of the above provisions.

302 Notwithstanding the foregoing, without the consent of the Holders of at least 66 2/3% in aggregate principal amount of the Notes of a series then outstanding, no amendment or waiver may (A) make any change in any Security Document, the Intercreditor Agreements or the provisions in the Indenture dealing with Collateral or application of trust proceeds of the Collateral with the effect of releasing the Liens on all or substantially all of the Collateral which secure the Obligations in respect of the Notes of such series or (B) change or alter the priority of the Liens securing the Obligations in respect of the Notes of such series in any material portion of the Collateral in any way adverse to the Holders of the Notes of such series in any material respect, other than, in each case, as provided under the terms of the Security Documents or the Intercreditor Agreements.

Notwithstanding the foregoing, the Issuers, the Guarantors and the Trustee, without the consent of any Holders, may amend the Notes, the Indenture, the Intercreditor Agreements, the Security Documents and the Registration Rights Agreement, in each case with respect to a series of Notes for any of the following purposes: • to cure any ambiguity or omission or correct any defect or inconsistency, to convey, transfer, assign, mortgage or pledge any property to or with the Trustee, or to make such other provisions in regard to matters or questions arising under the Indenture, in each case as shall not adversely affect the interests of any Holders of the Notes of such series in any material respect; • to evidence the succession of another Person to an Issuer or any Guarantor and the assumption by any such successor of the covenants, agreements and obligations of such Issuer or Guarantor, as the case may be, under the Notes, the Note Guarantees, the Indenture, the Security Documents, the Intercreditor Agreements or the Registration Rights Agreement, as described above under “Certain Covenants— Merger, Consolidation, Amalgamation or Sale of All or Substantially All Assets”; • to surrender any right or power conferred upon the Issuers with respect to such series or to add further covenants, restrictions, conditions or provisions relating to the Issuers or the Guarantors for the protection of the Holders of any series of the Notes, and to add any additional defaults or Events of Default for the Issuers’ or any Guarantor’s failure to comply with any such further covenants, restrictions, conditions or provisions; • to modify or amend the Indenture in such a manner to permit the qualification of the Indenture or any supplemental indenture under the Trust Indenture Act; • to add Note Guarantees with respect to any or all of the Notes of such series; • to add Collateral with respect to any or all the Notes of such series; • to make any change that does not adversely affect the rights of any Holder of Notes of such series; • to evidence and provide for the acceptance of appointment by a successor or separate Trustee with respect to the Notes of such series; • to comply with the rules of any applicable securities depositary; • to provide for the issuance of Exchange Notes or private exchange notes (which shall be identical to Exchange Notes except that they will not be freely transferable) in exchange for Notes of such series and which shall be treated, together with any outstanding Notes of such series, as a single class of securities; • to provide for uncertificated Notes in addition to or in place of certificated Notes; • to conform the text of the Indenture, the Notes, any Note Guarantee, the Intercreditor Agreements, any Security Document or the Registration Rights Agreement to any provision of this “Description of Notes” or “Exchange Offer; Registration Rights” to the extent that such provision in this “Description of Notes” or “Exchange Offer; Registration Rights” was intended to be a verbatim recitation of a provision in the Notes, the Indenture, such Note Guarantee, the Intercreditor Agreements, such Security Document or the Registration Rights Agreement;

303 • to make any amendment to the provisions of the Indenture relating to the transfer and legending of Notes or Exchange Notes; provided, however, that (a) compliance with the Indenture as so amended would not result in Notes or Exchange Notes being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not adversely affect the rights of Holders to transfer Notes or Exchange Notes; • in the case of any Security Document, to include therein any legend required to be set forth therein pursuant to the Intercreditor Agreements or to modify any such legend as required by the Intercreditor Agreements; • to release Collateral from the Lien securing the Notes of such series when permitted or required by the Security Documents, the Indenture or the Intercreditor Agreements; • to enter into any intercreditor agreement having substantially similar terms with respect to the Holders as those set forth in the First Lien Intercreditor Agreement or the Second Lien Intercreditor Agreement, taken as a whole, or any joinder thereto; or • with respect to the Security Documents, as provided in the Intercreditor Agreements (including to add or replace First Lien Secured Parties or Second Lien Secured Parties).

The consent of the Holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment.

Satisfaction and Discharge The Indenture provides that, when (1) the Issuers deliver to the Trustee all outstanding Notes of a series under the Indenture for cancellation or (2) all outstanding Notes of a series under the Indenture not previously delivered to the Trustee for cancellation have become due and payable, whether at maturity or on a redemption date as a result of the mailing of notice of redemption, or will become due and payable within one year, and, in the case of clause (2), the Issuers irrevocably deposit with the Trustee funds sufficient to pay at maturity or upon redemption all such outstanding Notes of such series, including interest thereon to maturity or such redemption date, and if in either case the Issuers pay all other sums payable by the Issuers under the Indenture with respect to such series of Notes and satisfy certain other conditions, then the Indenture will, subject to certain exceptions, cease to be of further effect with respect to such series of Notes.

Legal Defeasance and Covenant Defeasance The Indenture provides that the Issuers may elect with respect to any series of the Notes either (1) to defease and be discharged from any and all obligations with respect to such Notes (except for, among other things, certain obligations to register the transfer or exchange of the Notes, to replace temporary or mutilated, destroyed, lost or stolen Notes, to maintain an office or agency with respect to the Notes and to hold moneys for payment in trust) (“legal defeasance”) or (2) to be released from their obligations to comply with the restrictive covenants under the Indenture, and any omission to comply with such obligations will not constitute a Default or an Event of Default with respect to such Notes, and clause (3) under “Events of Default” will no longer be applied (“covenant defeasance”). If the Issuers exercise their legal defeasance option or their covenant defeasance option with respect to a series of Notes, each Guarantor will be released from all of its obligations with respect to its Note Guarantee and the Security Documents with respect to such series of Notes. Legal defeasance or covenant defeasance, as the case may be, will be conditioned upon, among other things, the irrevocable deposit by the Issuers with the Trustee, in trust, of an amount in U.S. dollars, or U.S. government obligations (that through the scheduled payment of principal and interest in accordance with their terms will provide money in an amount), or both, sufficient in the opinion of a nationally recognized public accounting firm to pay the principal or premium, if any, and interest on the applicable Notes on the scheduled due dates therefor.

If the Issuers effect covenant defeasance with respect to any series of the Notes and such Notes are declared due and payable because of the occurrence of any Event of Default other than under clause (3) under “Events of

304 Default,” the amount in U.S. dollars, or U.S. government obligations, or both, on deposit with the Trustee will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay amounts due on such Notes at the time of the stated maturity but may not be sufficient to pay amounts due on such Notes at the time of the acceleration resulting from such Event of Default. However, the Issuers would remain liable to make payment of such amounts due at the time of acceleration.

To effect legal defeasance or covenant defeasance, the Issuers will be required to deliver to the Trustee an Opinion of Counsel that the deposit and related defeasance will not cause the Holders of the applicable Notes to recognize income, gain or loss for U.S. Federal income tax purposes. If the Issuers elect legal defeasance, that Opinion of Counsel must be based upon a ruling from the U.S. Internal Revenue Service or a change in law to that effect.

The Issuers may exercise their legal defeasance option notwithstanding their prior exercise of their covenant defeasance option.

Concerning the Trustee The Indenture will contain certain limitations on the rights of the Trustee, should it become a creditor of an Issuer or a Guarantor, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign as Trustee.

The Indenture will provide that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person under the circumstances in the conduct of his own affairs. The Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Governing Law The Notes, the Indenture, the Note Guarantees, the Intercreditor Agreements, the Registration Rights Agreement and (subject to certain exceptions) the Security Documents will be governed by, and construed in accordance with, the laws of the State of New York.

Certain Definitions Set forth below are certain defined terms to be used in the Indenture. For purposes of the Indenture, unless otherwise specifically indicated, the term “consolidated” with respect to any Person refers to such Person on a consolidated basis in accordance with GAAP.

“ABS Facilities” means, collectively, the Term/Commercial Receivables Facility, the Revolving/Consumer Receivables Facility, the EMEA Facility and the Canadian Revolving/Commercial Receivables Facility.

“Additional Assets” means (1) any property or other assets used or useful in a Similar Business, (2) the Capital Stock of a Person that becomes a Subsidiary of Covenant Parent as a result of the acquisition of such Capital Stock by Covenant Parent or a Subsidiary of Covenant Parent, or (3) Capital Stock constituting a minority interest in any Person that at such time is a Subsidiary of Covenant Parent, provided, however, that any Subsidiary described in clause (2) or (3) above is engaged in a Similar Business.

“Additional First Lien Obligations” means the Obligations with respect to any indebtedness having Pari Passu Lien Priority (but without regard to the control of remedies) relative to the Notes with respect to the Collateral; provided that an authorized representative of the holders of such indebtedness shall have executed a joinder to the First Lien Intercreditor Agreement (or entered into such other intercreditor agreement having substantially similar terms as the First Lien Intercreditor Agreement, taken as a whole).

305 “Additional First Lien Secured Parties” means the holders of any Additional First Lien Obligations and any trustee, authorized representative or agent of such Additional First Lien Obligations.

“Additional Interest” means the interest payable as a consequence of the failure to effectuate in a timely manner the exchange offer and/or shelf registration set forth in the Registration Rights Agreement.

“Additional Merger Financing” means Indebtedness incurred under any debt facilities (including, without limitation, the Senior Credit Facilities and the Asset Sale Bridge Facility) or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit or other Indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, in order to finance the Dell-EMC Merger (including, for the avoidance of doubt, any fees and expenses related thereto and any Indebtedness incurred after the Effective Date to finance any consideration or other payments made to holders of Equity Interests in EMC pursuant, or any obligations attributable, to any exercise of appraisal rights by such holders and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto), but excluding Indebtedness incurred under the Margin Bridge Facility and the VMware Note Bridge Facility.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“Aggregate Debt” means, as of the date of determination, the sum of (1) the aggregate principal amount of Indebtedness of the Issuers and their Restricted Subsidiaries secured by Liens (other than Permitted Post-Release Liens) that is not permitted by the second paragraph under “Certain Covenants—Limitation on Liens” and (2) the Attributable Indebtedness of the Issuers and their Restricted Subsidiaries in respect of Sale and Lease-Back Transactions entered into after the occurrence of a Release Event pursuant to the second paragraph of “Certain Covenants—Limitation on Sale and Lease-Back Transactions”.

“Asset Sale” means: (1) the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of property or assets (including by way of a sale and lease-back transaction) of any Covenant Party (each referred to in this definition as a “disposition”); or (2) the issuance or sale of Equity Interests of any Credit Facilities Restricted Subsidiary and any other Subsidiary for which an agreement to sell such Equity Interests has been entered into by Covenant Parent or any of its Subsidiaries within 12 months of the Issue Date, whether in a single transaction or a series of related transactions;

in each case, other than: (a) any disposition of Cash Equivalents or Investment Grade Securities or obsolete, damaged, unnecessary, unsuitable or worn out property or equipment or other assets, in each case, in the ordinary course of business or any disposition of inventory, immaterial assets or goods (or other assets), property or equipment held for sale or no longer used or useful, or economically practicable to maintain, in the conduct of the business of Covenant Party and any of its Subsidiaries; (b) the disposition of all or substantially all of the assets of any Covenant Party in a manner permitted pursuant to the provisions described above under “Certain Covenants—Merger, Consolidation, Amalgamation or Sale of All or Substantially All Assets”;

306 (c) any disposition of property or assets, or issuance or sale of Equity Interests of any Covenant Party, in any single transaction or series of related transactions with an aggregate fair market value of less than the greater of (x) $150 million and (y) 1% of Consolidated Net Tangible Assets; (d) any disposition of property or assets or issuance of securities by a Covenant Party to Covenant Parent or any of its Subsidiaries; (e) any disposition of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property, (ii) an amount equal to the Net Proceeds of such disposition are promptly applied to the purchase price of similar replacement property or (iii) to the extent allowable under Section 1031 of the Code, or any comparable or successor provision, any exchange of like property (excluding any boot thereon) for use in a Similar Business; (f) the lease, assignment, sublease, license or sublicense of any real or personal property (including the provision of software under an open source license) in the ordinary course of business; (g) foreclosures, condemnation, expropriation, forced dispositions, eminent domain or any similar action (whether by deed in lieu of condemnation or otherwise) with respect to assets or the granting of Liens not prohibited by the Indenture, and transfers of any property that have been subject to a casualty to the respective insurer of such property as part of an insurance settlement; (h) sales of (i) accounts receivable in connection with the collection or compromise thereof (including sales to factors or other third parties) and (ii) receivables, DFS Financing Assets and related assets pursuant to any Permitted Receivables Financing or any participation therein; (i) any financing transaction with respect to property built or acquired by any Covenant Party after the Effective Date, including sale and lease-back transactions and assets securitizations permitted by the Indenture; (j) any surrender or waiver of contractual rights or the settlement, release or surrender of contractual rights or other litigation claims in the ordinary course of business; (k) the sale, lease, assignment, license, sublease or discount of inventory, equipment, accounts receivable, notes receivable or other assets in the ordinary course of business or the conversion of accounts receivable for notes receivable or other dispositions of accounts receivable in connection with the collection or compromise thereof; (l) the licensing, sub-licensing or cross-licensing of intellectual property or other general intangibles in the ordinary course of business or that is immaterial; (m) the unwinding of any Hedging Obligations or Cash Management Obligations; (n) sales, transfers and other dispositions of investments in joint ventures to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements; (o) the lapse, abandonment or invalidation of intellectual property rights, which in the reasonable determination of the Board of Covenant Parent or the senior management thereof are not material to the conduct of the business of Covenant Parent and its Subsidiaries, taken as a whole, or are no longer used or useful or no longer economically practicable or commercially reasonable to maintain; (p) the issuance of directors’ qualifying shares and shares issued to foreign nationals or other third parties as required by applicable law; (q) the sale or discount (with or without recourse) (including by way of assignment or participation) of DFS Financing Assets or other receivables (including, without limitation, trade and lease receivables) and related assets in connection with a Permitted Receivables Financing; (r) the disposition of any assets (including Equity Interests) (i) acquired in a transaction, which assets are not used or useful in the core or principal business of Covenant Parent and its Subsidiaries, or (ii) made in connection with the approval of any applicable antitrust authority or otherwise necessary or advisable in the good faith determination of Covenant Parent to consummate any acquisition; and

307 (s) the sales of property or assets (other than property or assets for which an agreement to sell such property or assets has been entered into by Covenant Parent or any of its Subsidiaries within 12 months of the Issue Date as specified in clause (2) above) for an aggregate fair market value not to exceed (x) $2,000 million and (y) 15% of Consolidated Net Tangible Assets.

“Asset Sale Bridge Facility” means the senior unsecured bridge facility expected to be entered into in connection with the EMC Transactions in the event the Dell Services Transaction is not consummated concurrently with or prior to the consummation of the Dell-EMC Merger, by and among Dell International, the other borrowers and guarantors party thereto, the lenders party thereto and the other agents party thereto as the same may be in effect from time to time, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings, replacements, exchanges or refinancings thereof, in whole or in part, and any financing arrangements that amend, supplement, modify, extend, renew, restate, refund, replace, exchange or refinance any part thereof, including, without limitation, any such amended, supplemented, modified, extended, renewed, restated, refunding, replacement, exchanged or refinancing financing arrangement that increases the amount permitted to be borrowed or issued thereunder or alters the maturity thereof or adds Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders, investors, holders or otherwise.

“Attributable Indebtedness” when used in connection with a Sale and Lease-Back Transaction relating to a Principal Property means, at the time of determination, the lesser of (a) the fair market value of property or assets involved in the Sale and Lease-Back Transaction, (b) the present value of the total net amount of rent required to be paid under such lease during the remaining term thereof (including any renewal term or period for which such lease has been extended), computed by discounting from the respective due dates to such date such total net amount of rent at the rate of interest set forth or implicit in the terms of such lease or, if not practicable to determine such rate, the rate per annum equal to the weighted average interest rate per annum borne by the Notes of each series outstanding pursuant to the Indenture compounded semi-annually, or (c) if the obligation with respect to the Sale and Lease-Back Transaction constitutes a Capitalized Lease Obligation, the amount equal to the capitalized amount of such obligation determined in accordance with GAAP and included in the financial statements of the lessee. For purposes of the foregoing definition, rent shall not include amounts required to be paid by the lessee, whether or not designated as rent or additional rent, on account of or contingent upon maintenance and repairs, insurance, taxes, assessments, water rates and similar charges. In the case of any lease that is terminable by the lessee upon the payment of a penalty, such net amount shall be the lesser of the net amount determined assuming termination upon the first date such lease may be terminated (in which case the net amount shall also include the amount of the penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated) or the net amount determined assuming no such termination.

“Bank Collateral Agent” means the collateral agent for the lenders and other secured parties under the Senior Credit Facilities, together with its successors and permitted assigns under the Senior Credit Facilities.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Bankruptcy Law” means the Bankruptcy Code and any similar federal, state or foreign law for the relief of debtors.

“Board” with respect to a Person means the board of directors (or similar body) of such Person or any committee thereof duly authorized to act on behalf of such board of directors (or similar body).

“Business Day” means each day which is not a Legal Holiday.

“Canadian Revolving/Commercial Receivables Facility” means the transactions contemplated from time to time in that certain Second Amended and Restated Credit Agreement, dated as of April 15, 2016, by and among, Dell Financial Services Canada Limited, Wells Fargo Capital Finance Corporation Canada, RBC Capital Markets and the financial institutions from time to time party thereto.

308 “Capital Stock” means: (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP as in effect on the Issue Date.

“Cash Equivalents” means: (1) United States dollars; (2)(a) Canadian dollars, Australia dollars, Chinese yuan, Japanese yen, euro, pound sterling or any national currency of any participating member state of the EMU; or (b) other currencies held by Covenant Parent and its Subsidiaries from time to time in the ordinary course of business; (3) securities issued or directly and fully and unconditionally guaranteed or insured by the U.S. government or any agency or instrumentality thereof as a full faith and credit obligation of the U.S. government, with average maturities of 24 months or less from the date of acquisition; (4) certificates of deposit, time deposits and eurodollar time deposits with average maturities of one year or less from the date of acquisition, demand deposits, bankers’ acceptances with average maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus of not less than $100.0 million in the case of U.S. banks or other U.S. financial institutions and $100.0 million (or the U.S. dollar equivalent as of the date of determination) in the case of non-U.S. banks or other non-U.S. financial institutions; (5) repurchase obligations for underlying securities of the types described in clauses (3), (4) and (10) entered into with any financial institution meeting the qualifications specified in clause (4) above; (6) commercial paper rated at least P-2 by Moody’s or at least A-2 by S&P (or, if at any time, neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) and variable or fixed rate notes issued by any financial institution meeting the qualifications specified in clause (4) above, in each case, with average maturities of 36 months after the date of creation thereof; (7) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency); (8) investment funds investing at least 90% of their assets in securities of the types described in clauses (1) through (7) above and (9) through (12) below; (9) securities issued or directly and fully and unconditionally guaranteed by any state, commonwealth or territory of the United States of America or any political subdivision or taxing authority of any such state, commonwealth or territory or any public instrumentality thereof or any political subdivision or taxing authority of any such state, commonwealth or territory or any public instrumentality thereof having average maturities of not more than 36 months from the date of acquisition thereof;

309 (10) readily marketable direct obligations issued or directly and fully and unconditionally guaranteed by any foreign government or any political subdivision or public instrumentality thereof, in each case (other than in the case of such securities issued or guaranteed by any participating member state of the EMU) having an Investment Grade Rating from either Moody’s or S&P (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) with average maturities of 36 months or less from the date of acquisition; (11) Indebtedness or Preferred Stock issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency) with average maturities of 36 months or less from the date of acquisition; and (12) Investments with average maturities of 36 months or less from the date of acquisition in money market funds rated A (or the equivalent thereof) or better by S&P or A2 (or the equivalent thereof) or better by Moody’s (or, if at any time, neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency); (13) in the case of investments by any Foreign Subsidiary of Covenant Parent, investments for cash management purposes of comparable tenor and credit quality to those described in the foregoing clauses (1) through (12) customarily utilized in countries in which such Foreign Subsidiary operates; and (14) investments, classified in accordance with GAAP as current assets, in money market investment programs that are registered under the Investment Company Act of 1940 or that are administered by financial institutions meeting the qualifications specified in clause (4) above, and, in either case, the portfolios of which are limited such that substantially all of such investments are of the character, quality and maturity described in clauses (1) through (13) of this definition.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (1) and (2) above, provided that such amounts are converted into any currency listed in clauses (1) and (2) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

For the avoidance of doubt, any items identified as Cash Equivalents under this definition will be deemed to be Cash Equivalents under the Indenture regardless of the treatment of such items under GAAP.

“Cash Management Obligations” means (1) obligations in respect of any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management or treasury services or any automated clearing house transfers of funds, (2) other obligations in respect of netting services, employee credit or purchase card programs and similar arrangements and (3) obligations in respect of any other services related, ancillary or complementary to the foregoing (including any overdraft and related liabilities arising from treasury, depository, cash pooling arrangements and cash management services, corporate credit and purchasing cards and related programs or any automated clearing house transfers of funds).

“Change of Control” means the occurrence of one or more of the following events after the Effective Date (and excluding, for the avoidance of doubt, the Transactions): (1) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of Denali and its Subsidiaries, taken as a whole, to any Person other than any Permitted Holders; (2) Denali becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), including any group acting for the purpose of acquiring, holding or disposing of Equity Interests of Denali (within the meaning of Rule 13d- 5(b)(1) under the Exchange Act), other than the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase, of

310 beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the total voting power of the Voting Stock entitled to vote for the election of directors of Denali having a majority of the aggregate votes on the Board of Directors of Denali, unless the Permitted Holders otherwise have the right (pursuant to contract, proxy or otherwise), directly or indirectly, to designate, nominate or appoint directors of Denali having a majority of the aggregate votes on the Board of Directors of Denali; (3) Denali consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, Denali, in any such event pursuant to a transaction in which any of Denali’s outstanding Voting Stock or the Voting Stock of such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of Denali’s Voting Stock outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person or any direct or indirect parent company of the surviving Person, measured by voting power rather than number of shares, immediately after giving effect to such transaction; (4) either of the Issuers shall cease to be a direct or indirect Subsidiary of Denali; or (5) the adoption by Denali of a plan providing for its liquidation or dissolution.

Notwithstanding the preceding or any provision of Section 13d-3 of the Exchange Act, (i) a Person or group shall not be deemed to beneficially own Voting Stock subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Voting Stock in connection with the transactions contemplated by such agreement, (ii) if any group includes one or more Permitted Holders, the issued and outstanding Voting Stock of Denali owned, directly or indirectly, by any Permitted Holders that are part of such group shall not be treated as being beneficially owned by such group or any other member of such group for purposes of determining whether a Change of Control has occurred and (iii) a Person or group will not be deemed to beneficially own the Voting Stock of another Person as a result of its ownership of Voting Stock or other securities of such other Person’s Parent Entity (or related contractual rights) unless it owns 50% or more of the total voting power of the Voting Stock entitled to vote for the election of directors of such Parent Entity having a majority of the aggregate votes on the Board of Directors of such Parent Entity.

“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Decline with respect to such series of Notes.

“Code” means the Internal Revenue Code of 1986, as amended, or any successor thereto.

“Collateral” means all of the assets and property of the Covenant Parties, whether real, personal or mixed, securing or purported to secure any First Lien Notes Obligations.

“Collateral Agent” means (1) in the case of any Senior Credit Facility Obligations, the Bank Collateral Agent, (2) in the case of the First Lien Notes Obligations, the Notes Collateral Agent and (3) in the case of any Additional First Lien Obligations, the collateral agent, administrative agent or the trustee with respect thereto.

“Consolidated Net Tangible Assets” means, at any time, the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (1) all current liabilities, except for (a) notes and loans payable, (b) current maturities of long-term debt and (c) current maturities of obligations under Capitalized Lease Obligations (such current liabilities referred to in this clause (1), less the items set forth in sub-clauses (a) through (c), the “Adjusted Current Liabilities”), and (2) to the extent included in such aggregate amount of assets, all intangible assets, goodwill, trade names, trademarks, patents, organization and development expenses, unamortized debt discount and expenses and deferred charges (other than capitalized unamortized product development costs, such as, without limitation, capitalized hardware and software development costs) (such items referred to in this clause (2), the “Intangible Assets”), all as set forth on the most recent consolidated balance sheet of Covenant Parent and its Subsidiaries as of the end of the most recently

311 ended fiscal quarter prior to the applicable date of determination for which financial statements are available; provided that, for purposes of testing the covenants under the Indenture in connection with any transaction, (i) the assets and Intangible Assets of Covenant Parent and its Subsidiaries shall be adjusted to reflect any acquisitions and dispositions of assets or Intangible Assets, as the case may be, that have occurred during the period from the date of the applicable balance sheet through the applicable date of determination, including the transaction being tested under the Indenture and (ii) the Adjusted Current Liabilities of Covenant Parent and its Subsidiaries shall be adjusted to reflect any increase or decrease in Adjusted Current Liabilities as a result of such transaction being tested under the Indenture or any acquisitions or dispositions of assets that have occurred during the period from the date of the applicable balance sheet through the applicable date of determination.

“Controlling Collateral Agent” means, with respect to any Shared Collateral, (1) until the earlier of (a) the Discharge of First Lien Obligations that are Senior Credit Facility Obligations and (b) the Non-Controlling Collateral Agent Enforcement Date, the Bank Collateral Agent and (2) from and after the earlier of (a) the Discharge of First Lien Obligations that are Senior Credit Facility Obligations and (b) the Non-Controlling Collateral Agent Enforcement Date, the Major Non-Controlling Collateral Agent.

“Controlling Secured Parties” means, with respect to any Shared Collateral, the Series of First Lien Secured Parties whose Collateral Agent is the Controlling Collateral Agent for such Shared Collateral.

“Covenant Parent” means (1) if the direct parent entity of Dell is a Guarantor, such direct parent entity, (2) if Dell is, but none of its direct or indirect parent entities are, a Guarantor, Dell or (3) if neither Dell nor any of its direct or indirect parent entities are Guarantors, each Issuer.

“Covenant Parties” means, collectively, Covenant Parent, any of its Subsidiaries that are Parent Guarantors, the Issuers and the Subsidiary Guarantors.

“Credit Facility” means, with respect to Covenant Parent or any of its Subsidiaries, one or more debt facilities (including, without limitation, the Senior Credit Facilities) or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit or other Indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings, replacements, exchanges or refinancings thereof, in whole or in part, and any financing arrangements that amend, supplement, modify, extend, renew, restate, refund, replace, exchange or refinance any part thereof, including, without limitation, any such amended, supplemented, modified, extended, renewed, restated, refunding, replacement, exchanged or refinancing financing arrangement that increases the amount permitted to be borrowed or issued thereunder or alters the maturity thereof or adds Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders, investors, holders or otherwise.

“Credit Facilities Restricted Subsidiary” means any “Restricted Subsidiary” under the Senior Credit Facilities and, if Dell is not the Covenant Parent, Dell.

“Credit Facilities Unrestricted Subsidiary” means any “Unrestricted Subsidiary” under the Senior Credit Facilities.

“Default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.

“Dell” means Dell Inc., a Delaware corporation.

“Dell-EMC Merger” means the merger of (1) Merger Sub or any other Wholly-Owned Subsidiary of Denali and (2) EMC.

312 “Dell International” means Dell International L.L.C., a Delaware limited liability company.

“Dell Services Transaction” has the meaning set forth in “Summary—Recent Developments—Dell Services Divestiture” in the Offering Memorandum.

“Denali” means Denali Holding Inc., a Delaware corporation.

“Denali Intermediate” means Denali Intermediate, Inc., a Delaware corporation.

“Designated Non-cash Consideration” means the fair market value of non-cash consideration received by any Covenant Party in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of or collection on such Designated Non-cash Consideration. A particular item of Designated Non-cash Consideration will no longer be considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed of in compliance with “Certain Covenants—Limitation on Asset Sales”.

“DFS Financing Assets” means loans, installment sale contracts, receivables arising under revolving credit accounts, software licenses, maintenance services agreements, service contracts, leases (including all equipment and software subject to leases) or subleases (including any related account receivable or note receivable) entered into with or purchased by Covenant Parent or any Credit Facilities Restricted Subsidiary to finance the acquisition or use of products or services and other assets customarily included in connection with a financing thereof.

“Discharge” means, with respect to any Collateral, the date on which such Series of First Lien Obligations or Second Lien Obligations is no longer secured by such Collateral. The term “Discharged” shall have a corresponding meaning.

“Discharge of First Lien Obligations” means, with respect to any Collateral, the Discharge of the applicable First Lien Obligations with respect to such Collateral; provided that a Discharge of First Lien Obligations shall not be deemed to have occurred in connection with a refinancing of such First Lien Obligations with additional First Lien Obligations secured by such Collateral under an additional First Lien Document which has been designated in writing by the applicable Collateral Agent (under the First Lien Obligation so refinanced) or by the Issuers, in each case, to each other Collateral Agent as a “First Lien Obligation” for purposes of the First Lien Intercreditor Agreement.

“Domestic Subsidiary” means any Subsidiary (other than a Foreign Subsidiary) that is organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof.

“DTC” means The Depository Trust Company.

“Effective Date” means the Escrow Release Date.

“Eligible Escrow Investments” means such customary short-term liquid investments in which the Escrowed Property may be invested in accordance with the Escrow Agreement.

“EMC” means EMC Corporation, a Massachusetts corporation.

“EMC Transactions” has the meaning set forth in “Summary—The Transactions” in the Offering Memorandum.

“EMEA Facility” means the transactions contemplated from time to time in the “Finance Documents” as defined in that certain Revolving Credit Facility Agreement, dated as of December 23, 2013, as amended by that certain Amendment Agreement dated as of April 14, 2015, by and among, Dell Global B.V., Dell Bank International d.a.c. (formerly known as Dell Bank International Limited), BNP Paribas London Branch, Barclays Bank Ireland PLC, and SGBT Finance Ireland Limited.

313 “EMU” means economic and monetary union as contemplated in the Treaty on European Union.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital Stock.

“Escrow End Date” means December 16, 2016.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, as in effect on the Issue Date.

“Exchange Notes” means Notes issued in a registered exchange offer pursuant to the Registration Rights Agreement.

“Excluded Assets” has the meaning set forth in “Security for the Notes—Certain Limitations on the Collateral.”

“Existing Dell Notes” means, collectively, the (1) 5.65% senior notes due April 2018, (2) 5.875% senior notes due June 2019, (3) 4.625% senior notes due April 2021, (4) 6.50% senior notes due April 2038, (5) 5.40% senior notes due September 2040 and (6) 7.10% senior debentures due April 2028, in each case, issued by Dell.

“Existing EMC Notes” means, collectively, the (1) 1.875% notes due June 2018, (2) 2.650% notes due June 2020 and (3) 3.375% notes due June 2023, in each case, issued by EMC.

“Existing Notes” means collectively, the Existing Dell Notes and the Existing EMC Notes.

“fair market value” means, with respect to any asset or liability, the fair market value of such asset or liability as determined in good faith by the Board or senior management of Covenant Parent.

“First Lien Documents” means the credit, guarantee and security documents governing the First Lien Obligations, including, without limitation, the related First Lien Security Documents and First Lien Intercreditor Agreement.

“First Lien Intercreditor Agreement” has the meaning set forth under “Security for the Notes—First Lien Intercreditor Agreement.”

“First Lien Notes Obligations” means Obligations in respect of the Notes, the Indenture, the Note Guarantees and the Security Documents relating to the Notes.

“First Lien Notes Secured Parties” means the Trustee, the Notes Collateral Agent and the Holders.

“First Lien Obligations” means, collectively, (1) the Senior Credit Facility Obligations, (2) the First Lien Notes Obligations and (3) each Series of Additional First Lien Obligations.

“First Lien Secured Parties” means, collectively, (1) the Senior Credit Facility Secured Parties, (2) First Lien Notes Secured Parties and (3) any Additional First Lien Secured Parties.

“First Lien Security Documents” means the Security Documents and any other agreement, document or instrument pursuant to which a Lien is granted or purported to be granted securing First Lien Obligations or under which rights or remedies with respect to such Liens are governed, in each case to the extent relating to the collateral securing the First Lien Obligations.

“Fitch” means Fitch Inc., a subsidiary of Fimalac, S.A., and any successor to its rating agency business.

314 “Foreign Subsidiary” means any Subsidiary that is not organized under the laws of the United States of America or any state thereof or the District of Columbia and any Subsidiary of such Foreign Subsidiary.

“FSHCO” means any direct or indirect Domestic Subsidiary of Denali Intermediate (other than Dell and the Issuers) that has no material assets other than Equity Interests in one or more direct or indirect Foreign Subsidiaries that are “controlled foreign corporations” within the meaning of Section 957 of the Code.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time; provided that all terms of an accounting or financial nature used in the Indenture shall be construed, and all computations of amounts and ratios referred to in the Indenture shall be made (a) without giving effect to any election under FASB Accounting Standards Codification Topic 825—Financial Instruments, or any successor thereto (including pursuant to the FASB Accounting Standards Codification), to value any indebtedness of Covenant Parent or any Subsidiary at “fair value,” as defined therein and (b) the amount of any indebtedness under GAAP with respect to Capitalized Lease Obligations shall be determined in accordance with the definition of Capitalized Lease Obligations. At any time after the Effective Date, Covenant Parent may elect to apply IFRS accounting principles in lieu of GAAP and, upon any such election, references herein to GAAP shall thereafter be construed to mean IFRS (except as otherwise provided in the Indenture); provided that any such election, once made, shall be irrevocable; provided, further, any calculation or determination in the Indenture that requires the application of GAAP for periods that include fiscal quarters ended prior to Covenant Parent’s election to apply IFRS shall remain as previously calculated or determined in accordance with GAAP. Covenant Parent shall give notice of any such election made in accordance with this definition to the Trustee.

If there occurs a change in generally accepted accounting principles and such change would cause a change in the method of calculation of any term or measure used in the Indenture (an “Accounting Change”), then Covenant Parent may elect, as evidenced by a written notice of Covenant Parent to the Trustee, that such term or measure shall be calculated as if such Accounting Change had not occurred.

“guarantee” means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

“Guarantor” means, with respect to each series of Notes, Denali, Denali Intermediate, Dell and each Subsidiary of Covenant Parent (excluding the Issuers) that executes the Indenture as a Guarantor on the Effective Date and each other Affiliate of Covenant Parent that thereafter guarantees the Notes of such series, until, in each case, such Person is released from its Note Guarantee with respect to such series of Notes in accordance with the terms of the Indenture.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person with respect to (1) any rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (2) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

315 “holder” means, with reference to any indebtedness or other Obligations, any holder or lender of, or trustee or collateral agent or other authorized representative with respect to, such indebtedness or Obligations, and, in the case of Hedging Obligations, any counter-party to such Hedging Obligations.

“Holder” means the Person in whose name a Note is registered on the registrar’s books.

“IFRS” means the international accounting standards as promulgated by the International Accounting Standards Board.

“Immaterial Subsidiary” means any Subsidiary that is not a Material Subsidiary.

“Indebtedness” means, with respect to any Person on any date of determination, the principal in respect of (1) indebtedness of such Person (a) in respect of borrowed money, including indebtedness for borrowed money evidenced by notes, debentures, bonds or other similar instruments or reimbursement obligations in respect of letters of credit, (b) representing any balance deferred and unpaid portion of the purchase price of any property (or, after a Release Event, any Principal Property) (including pursuant to Capitalized Lease Obligations), except (i) any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business and (ii) any earn-out obligations until, after 120 days of becoming due and payable, has not been paid and such obligation is reflected as a liability on the balance sheet of such Person in accordance with GAAP or (c) representing any net Hedging Obligations if and to the extent that any of the foregoing Indebtedness in clauses (a) through (c) (other than net Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP; provided that Indebtedness of any Parent Entity appearing on the balance sheet of Covenant Parent solely by reason of push down accounting under GAAP shall be excluded, (2) all guarantees in respect of such indebtedness specified in clause (1) of another Person and (3) to the extent not otherwise included, the obligations of the type referred to in clause (1) of a third Person secured by a Lien on any assets owned by such first Person, whether or not such Indebtedness is assumed by such first Person; provided, however, that the amount of such Indebtedness will be the lesser of (x) the fair market value of such assets at such date of determination and (y) the amount of such Indebtedness of such other Person (it being understood, however, that Indebtedness shall in no event include any amounts payable or other liabilities to trade creditors (including undrawn letters of credit) arising in the ordinary course of business.

“Intercreditor Agreements” means, collectively, the First Lien Intercreditor Agreement and the Second Lien Intercreditor Agreement.

“Investment Grade Event” means (1) the Issuers have obtained a rating or, to the extent any Rating Agency will not provide a rating, an advisory or prospective rating from any two of the three Rating Agencies that reflect an Investment Grade Rating (i) for the corporate rating of the Issuers (or any Parent Guarantor) and (ii) with respect to each outstanding series of Notes after giving effect to the proposed release of all of the Note Guarantees and the Collateral securing the Notes; and (2) no Event of Default shall have occurred and be continuing with respect to any series of Notes.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) (and, for purposes of a Release Event, stable or better outlook) by Moody’s, BBB- (or the equivalent) (and, for purposes of a Release Event, stable or better outlook) by S&P and BBB- (or the equivalent) (and, for purposes of a Release Event, stable or better outlook) by Fitch, or the equivalent investment grade credit rating from any other Rating Agency substituted for Moody’s, S&P or Fitch pursuant to clause (b) of the definition of “Rating Agency.”

“Investment Grade Securities” means: (1) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents); (2) debt securities or debt instruments with an Investment Grade Rating, but excluding any debt securities or instruments constituting loans or advances among Covenant Parent and its Subsidiaries;

316 (3) investments in any fund that invests at least 90% of its assets in investments of the type described in clauses (1) and (2) which fund may also hold immaterial amounts of cash pending investment or distribution; and (4) corresponding instruments in countries other than the United States customarily utilized for high quality investments.

“Investors” means each of (1) Michael S. Dell and his Affiliates, related estate planning and charitable trusts and vehicles and his family members, and also upon Michael S. Dell’s death, (a) any Person who was an Affiliate of Michael S. Dell that upon his death directly or indirectly owns Equity Interests in any Parent Entity of Dell, Dell or any Subsidiary and (b) Michael S. Dell’s heirs, executors and/or administrators, (2) MSDC Management L.P., its Affiliates and any funds, partnerships or other co-investment vehicles managed, advised or controlled by the foregoing or their respective Affiliates and (3) Silver Lake Partners III, L.P., Silver Lake Technology Investors III, L.P., Silver Lake Partners IV, L.P., Silver Lake Technology Investors IV, L.P., SLP Denali Co- Invest, L.P. and their Affiliates and any funds, partnerships or other co-investment vehicles managed, advised or controlled by the foregoing or their respective Affiliates, excluding, in each case, Denali Intermediate Inc. and its Subsidiaries and any portfolio companies of any of the foregoing.

“Issue Date” means , 2016.

“Junior Lien Priority” means, with respect to specified indebtedness, such indebtedness is secured by a Lien that is junior in priority to the Liens on specified Collateral and is subject to the Second Lien Intercreditor Agreement (or such other intercreditor agreement having substantially similar terms as the Second Lien Intercreditor Agreement, taken as a whole).

“Legal Holiday” means a Saturday, a Sunday or a day on which commercial banking institutions are not required to be open in the State of New York.

“Lien” means, with respect to any asset, (1) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset and (2) the interest of a vendor or a lessor under any conditional sale agreement, Capitalized Lease Obligation or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; provided that in no event shall an operating lease (as determined under GAAP on the Issue Date) be deemed to constitute a Lien.

“Margin Bridge Facility” means the margin bridge facility to be entered into as of the Effective Date by and among EMC, the other borrowers and guarantors party thereto, the lenders party thereto and the other agents party thereto as the same may be in effect from time to time, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings, replacements, exchanges or refinancings thereof, in whole or in part, and any financing arrangements that amend, supplement, modify, extend, renew, restate, refund, replace, exchange or refinance any part thereof, including, without limitation, any such amended, supplemented, modified, extended, renewed, restated, refunding, replacement, exchanged or refinancing financing arrangement that increases the amount permitted to be borrowed or issued thereunder or alters the maturity thereof or adds Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders, investors, holders or otherwise.

“Major Non-Controlling Collateral Agent” has the meaning set forth under “Security for the Notes—First Lien Intercreditor Agreement.”

“Material Subsidiary” means (1) each Wholly-Owned Subsidiary that is a Credit Facilities Restricted Subsidiary that, as of the last day of the fiscal quarter of Covenant Parent most recently ended for which financial statements are available, had revenues or total assets for such quarter in excess of 2.5% of the consolidated revenues or total assets, as applicable, of Covenant Parent for such quarter or that is designated by Covenant Parent as a Material Subsidiary and (2) any group comprising Wholly-Owned Subsidiaries that are Credit

317 Facilities Restricted Subsidiaries that each would not have been a Material Subsidiary under clause (1) but that, taken together, as of the last day of the fiscal quarter of Covenant Parent most recently ended for which financial statements are available, had revenues or total assets for such quarter in excess of 10.0% of the consolidated revenues or total assets, as applicable, of Covenant Parent for such quarter.

“Merger Agreement” means the Agreement and Plan of Merger, dated as of October 12, 2015, as it may be amended from time to time, among Denali, Dell, Merger Sub and EMC.

“Merger Sub” means Universal Acquisition Co., a Delaware corporation and Wholly-Owned Subsidiary of Denali.

“Mergers” means, collectively, (1) the Dell-EMC Merger, (2) the merger of Finco 1 and Dell International and (3) the merger of Finco 2 and EMC.

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

“Net Proceeds” means the aggregate cash proceeds received by any Covenant Party in respect of any Asset Sale, including any cash received upon the sale or other disposition of any Designated Non-cash Consideration received in any Asset Sale, net of (1) the fees, out-of-pocket expenses and other direct costs relating to such Asset Sale or the sale or disposition of such Designated Non-cash Consideration (including, without limitation, legal, accounting, consulting, investment banking and other customary fees, underwriting discounts and commissions, survey costs, title and recordation expenses, title insurance premiums, payments made in order to obtain a necessary consent or required by applicable law, brokerage and sales commissions and any relocation expenses incurred as a result thereof), (2) all federal, state, provincial, foreign and local taxes paid or reasonably estimated to be payable as a result thereof (including transfer taxes, deed or mortgage recording taxes and taxes in connection with any repatriation of funds and after taking into account any available tax credits or deductions and any tax sharing arrangements), (3) amounts required to be applied to the repayment of principal, premium, if any, and interest on Senior Indebtedness (other than any unsecured Indebtedness or any Indebtedness secured by the Collateral) required (other than required by the second paragraph under “Certain Covenants—Limitation on Asset Sales”) to be paid as a result of such transaction, (4) any costs associated with unwinding any related Hedging Obligations in connection with such transaction, (5) any deduction of appropriate amounts to be provided by any Covenant Party as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by any Covenant Party after such sale or other disposition thereof, including pension and other post- employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction, (6) any portion of the purchase price from an Asset Sale placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Asset Sale or otherwise in connection with such Asset Sale; provided, that upon the termination of that escrow (other than in connection with a payment in respect of any such adjustment or satisfaction of indemnities), Net Proceeds will be increased by any portion of funds in the escrow that are released to any Covenant Party and (7) the amount of any liabilities (other than Indebtedness in respect of the Senior Credit Facilities, the Notes and any other First Lien Obligations) directly associated with such asset being sold and retained by any Covenant Party. Any non- cash consideration received in connection with any Asset Sale that is subsequently converted to cash shall become Net Proceeds only at such time as it is so converted.

“Non-Controlling Collateral Agent” means, at any time with respect to any Shared Collateral, any Collateral Agent that is not the Controlling Collateral Agent at such time with respect to such Shared Collateral.

“Non-Controlling Collateral Agent Enforcement Date” means, with respect to any Non-Controlling Collateral Agent, the date that is 90 days (throughout which 90-day period such Non-Controlling Collateral Agent was the Major Non-Controlling Collateral Agent) after the occurrence of both (1) an event of default, as defined in the indenture or other debt facility for the applicable Series of First Lien Obligations, but only for so long as such event of default is continuing, and (2) the Controlling Collateral Agent and each other Collateral

318 Agent’s receipt of written notice from such Non-Controlling Collateral Agent certifying that (a) such Non- Controlling Collateral Agent is the Major Non-Controlling Collateral Agent and that an event of default, as defined in the indenture or other debt facility for that Series of First Lien Obligations has occurred and is continuing and (b) the First Lien Obligations of that Series are currently due and payable in full (whether as a result of acceleration thereof or otherwise) in accordance with the indenture or debt facility for that Series of First Lien Obligations; provided that the Non-Controlling Collateral Agent Enforcement Date will be stayed and will not occur and will be deemed not to have occurred with respect to any Shared Collateral (i) at any time the Controlling Collateral Agent has commenced and is diligently pursuing any enforcement action with respect to such Shared Collateral or (ii) at any time any Covenant Party that has granted a security interest in such Shared Collateral is then a debtor under or with respect to (or otherwise subject to) any insolvency or liquidation proceeding.

“Non-Controlling Secured Parties” means, with respect to any Shared Collateral, the First Lien Secured Parties which are not Controlling Secured Parties with respect to such Shared Collateral.

“Nonrecourse Obligation” means indebtedness or other Obligations substantially related to (1) the acquisition of assets not previously owned by Covenant Parent or any of its Subsidiaries or (2) the financing of a project involving the development or expansion of properties of Covenant Parent or any of its Subsidiaries, as to which the obligee with respect to such indebtedness or Obligation has no recourse to Covenant Parent or any of its Subsidiaries or any assets of Covenant Parent or any of its Subsidiaries other than the assets which were acquired with the proceeds of such transaction or the project financed with the proceeds of such transaction (and the proceeds thereof).

“Note Guarantee” means the guarantee by any Guarantor of the Issuers’ Obligations under the Indenture and the Notes (including, for the avoidance of doubt, any Post-Release Event Note Guarantee).

“Notes Collateral Agent” means The Bank of New York Mellon Trust Company, N.A., as collateral agent for the holders of the First Lien Notes Obligations under the Security Documents and any successor pursuant to the provisions of the Indenture and the Security Documents.

“Obligations” means any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable state, federal or foreign law), premium, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any indebtedness; provided, that any of the foregoing (other than principal and interest) shall no longer constitute “Obligations” after payment in full of such principal and interest.

“Offering Memorandum” means the Offering Memorandum dated , 2016 relating to the offering of the Notes.

“Officer” means the Chairman of the Board, any Manager or Director, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer, the Controller or the Secretary or any other officer designated by any such individuals of Covenant Parent or any other Person, as the case may be.

“Officer’s Certificate” means a certificate signed on behalf of Covenant Parent or an Issuer by an Officer of Covenant Parent or an Issuer or on behalf of any other Person, as the case may be, that meets the requirements set forth in the Indenture.

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee (which opinion may be subject to customary assumptions and exclusions). The counsel may be an employee of or counsel to Covenant Parent or the Issuers.

319 “Parent Entity” means any Person that, with respect to another Person, owns 50% or more of the total voting power of the Voting Stock entitled to vote for the election of directors of such other Person having a majority of the aggregate votes on the Board of Directors of such other Person.

“Parent Guarantor” means a Guarantor that is a direct or indirect parent of any of the Issuers.

“Pari Passu Lien Priority” means, with respect to specified indebtedness, such indebtedness is secured by a Lien that is equal in priority to the Liens on specified Collateral (without regard to control of remedies) and is subject to the First Lien Intercreditor Agreement (or such other intercreditor agreement having substantially similar terms as the First Lien Intercreditor Agreement, taken as a whole).

“Permitted Asset Swap” means the substantially concurrent purchase and sale or exchange, including as a deposit for future purchases, of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between any Covenant Party and another Person; provided that any cash or Cash Equivalents received must be applied in accordance with the “Certain Covenants—Limitation on Asset Sales” covenant.

“Permitted Holders” means (1) each of the Investors and members of management of Denali and its Subsidiaries who are holders of Equity Interests of Denali on the Effective Date and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) of which any of the foregoing or any Permitted Holder specified in the last sentence of this definition are members and any member of such group; provided, that, in the case of such group and without giving effect to the existence of such group or any other group, such Investors, members of management and Person or group specified in the last sentence of this definition, collectively, own, directly or indirectly, more than 50% of the total voting power of the Voting Stock entitled to vote for the election of directors of Denali having a majority of the aggregate votes on the Board of Directors of Denali held by such group, (2) any Permitted Parent and (3) any Permitted Plan. Any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) whose acquisition of beneficial ownership constitutes a Change of Control Triggering Event in respect of which a Change of Control Offer is made in accordance with the requirements of the Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.

“Permitted Liens” means: (1) Liens for taxes, assessments or other governmental charges that are not overdue for a period of more than 60 days or not yet payable or subject to penalties for nonpayment or that are being contested in good faith by appropriate actions diligently conducted, if adequate reserves with respect thereto are maintained on the books of Covenant Parent or any of its Subsidiaries in accordance with GAAP, or for property taxes on property that Covenant Parent or any of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge, levy or claim is to such property; (2) Liens imposed by law or regulation, such as landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, architects’ or construction contractors’ Liens and other similar Liens that secure amounts not overdue for a period of more than 60 days or, if more than 60 days overdue, are unfiled and no other action has been taken to enforce such Liens or that are being contested in good faith by appropriate actions or other Lien arising out of judgments or awards against Covenant Parent or any of its Subsidiaries with respect to which Covenant Parent or such Subsidiary shall then be proceeding with an appeal or other proceeding for review, if adequate reserves with respect thereto are maintained on the books of Covenant Parent or such Subsidiary in accordance with GAAP; (3) Liens incurred or deposits made in the ordinary course of business (a) in connection with workers’ compensation, unemployment insurance, employers’ health tax, and other social security or similar legislation or other insurance related obligations (including, but not limited to, in respect of deductibles, self-insured retention amounts and premiums and adjustments thereto) and (b) securing reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees or similar instruments for the benefit of) insurance carriers providing property, casualty or liability insurance to Covenant Parent or any of its Subsidiaries or otherwise supporting the payment of items set forth in the foregoing clause (a);

320 (4) Liens incurred or deposits made to secure the performance of bids, tenders, trade contracts, governmental contracts, leases, public or statutory obligations, surety, indemnity, warranty, release, appeal or similar bonds or with respect to other regulatory requirements, completion guarantees, stay, customs and appeal bonds, performance bonds, bankers’ acceptance facilities and other obligations of a like nature (including those to secure health, safety and environmental obligations), deposits as security for contested taxes or import duties or for payment of rent and obligations in respect of letters of credit, bank guarantees or similar instruments that have been posted to support the same, incurred in the ordinary course of business; (5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, rights-of-way, restrictions, encroachments, protrusions, servitudes, sewers, electric lines, drains, telegraph, telephone and cable television lines and other similar purposes, or zoning, building codes or other restrictions (including minor defects and irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of Covenant Parent and its Subsidiaries or to the ownership of their respective properties which were not incurred in connection with Indebtedness and which do not in any case materially interfere with the ordinary conduct of the business of Covenant Parent and its Subsidiaries, taken as a whole; (6) Liens (x) on the VMware Intercompany Notes securing the VMware Note Bridge Facility and (y) on the Pledged VMware Shares securing the Margin Bridge Facility; (7) Liens on goods the purchase price of which is financed by a documentary letter of credit issued for the account of Covenant Parent or any of its Subsidiaries or Liens on bills of lading, drafts or other documents of title arising by operation of law or pursuant to the standard terms of agreements relating to letters of credit, bank guarantees and other similar instruments and specific items of inventory or other goods and proceeds of Covenant Parent or any of its Subsidiaries securing Covenant Parent’s or such Subsidiary’s accounts payable or similar trade obligations in respect of bankers’ acceptances or documentary or trade letters of credit issued or created for the account of Covenant Parent or such Subsidiary to facilitate the purchase, shipment or storage of such inventory or other goods; (8) (a) rights of set-off, banker’s liens, netting agreements and other Liens arising by operation of law or by the terms of documents of banks or other financial institutions in relation to the maintenance of administration of deposit accounts, securities accounts, cash management arrangements or in connection with the issuance of letters of credit, bank guarantees or other similar instruments, (b) Liens securing Secured Letter of Credit Obligations or (c) Liens securing, or otherwise arising from, judgements; (9) Liens arising from Uniform Commercial Code financing statements, including precautionary financing statements, or any similar filings made in respect of operating leases (as determined in accordance with GAAP on the Issue Date) or consignments entered into by Covenant Parent or any of its Subsidiaries; (10) Liens securing Additional Merger Financing (other than any unsecured Indebtedness incurred to finance the Transactions) (including Indebtedness incurred under the Senior Credit Facilities and any letter of credit facility relating thereto); (11) Liens existing on the Effective Date after giving effect to the Transactions (other than Liens incurred in connection with the Senior Credit Facilities, the Notes, the Note Guarantees, the VMware Note Bridge Facility and the Margin Bridge Facility); (12) Liens to secure any indebtedness (including Capitalized Lease Obligations) incurred to finance the purchase, lease, construction, installation, replacement, repair or improvement of property (real or personal), equipment or any other asset, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, so long as such indebtedness exists at the date of such purchase, lease or improvement or is created within 12 months thereafter; provided that the aggregate amount of indebtedness incurred or issued and outstanding pursuant to this clause (12) does not exceed, together with any modification, refinancing, refunding, restatement, exchange, extension, renewal or replacement (or successive refinancing, refunding, restatement, exchange, extensions, renewals or replacements) as a whole,

321 or in part, of such Indebtedness secured by any Lien under clause (32), the greater of (x) $2,000 million and (y) 15% of Consolidated Net Tangible Assets at any one time outstanding; provided, further, that Liens securing indebtedness permitted to be incurred pursuant to this clause (12) extend only to the assets purchased with the proceeds of such indebtedness, accessions to such assets and the proceeds and products thereof, any lease of such assets (including accessions thereto) and the proceeds and products thereof and customary security deposits in respect thereof; provided, however, that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender; (13) Leases (including leases of aircraft), licenses, subleases or sublicenses granted to others that do not (a) interfere in any material respect with the business of Covenant Parent and its Subsidiaries, taken as a whole or (b) secure any Indebtedness; (14) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (15) Liens (a) of a collection bank arising under Section 4-210 of the Uniform Commercial Code or any comparable or successor provision on items in the course of collection, (b) attaching to pooling, commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business and (c) in favor of a banking or other financial institution or electronic payment service providers arising as a matter of law or under general terms and conditions encumbering deposits (including the right of setoff) and that are within the general parameters customary in the banking or finance industry; (16) Liens (a) on cash advances or escrow deposits in favor of the seller of any property to be acquired in an investment to be applied against the purchase price for such investment or otherwise in connection with any escrow arrangements with respect to any such investment (including any letter of intent or purchase agreement with respect to such investment), and (b) consisting of an agreement to sell, transfer, lease or otherwise dispose of any property in a transaction permitted under “Certain Covenants—Limitation on Asset Sales,” in each case, solely to the extent such sale, disposition, transfer or lease, as the case may be, would have been permitted on the date of the creation of such Lien; (17) Liens existing on property at the time of its acquisition (by a merger, consolidation or amalgamation or otherwise) or existing on the property or shares of stock or other assets of any Person at the time such Person becomes a Subsidiary, in each case after the Effective Date (whether or not such existing Liens thereon were given to secure the payment of all or any part of the purchase price thereof, so long as such Lien extends only to such property being acquired or the property or shares of stock or other assets of such Person that becomes a Subsidiary, as the case may be, and accessions to such property and the proceeds and products thereof and customary security deposits in respect thereof); provided, however, that in the case of multiple financings of equipment provided by any lender, individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender; (18) any interest or title of a lessor under leases (other than leases constituting Capitalized Lease Obligations) entered into by Covenant Parent or any of its Subsidiaries in the ordinary course of business; (19) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods by Covenant Parent or any of its Subsidiaries in the ordinary course of business; (20) Liens deemed to exist in connection with investments in repurchase agreements permitted under clause (5) of the definition of “Cash Equivalents;” (21) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to commodity trading accounts or other brokerage accounts incurred in the ordinary course of business and not for speculative purposes; (22) Liens that are contractual rights of setoff or rights of pledge (a) relating to the establishment of depository relations with banks not given in connection with the incurrence of Indebtedness, (b) relating to

322 pooled deposit or sweep accounts to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of Covenant Parent and its Subsidiaries or (c) relating to purchase orders and other agreements entered into with customers of Covenant Parent or any of its Subsidiaries in the ordinary course of business; (23) ground leases, subleases, licenses or sublicenses in respect of real property on which facilities owned or leased by Covenant Parent or any of its Subsidiaries are located; (24) (a) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto or (b) deposits made or other security provided to secure liabilities to insurance carriers under insurance or self-insurance arrangements in the ordinary course of business; (25) Liens on cash and any investments used to satisfy or discharge indebtedness; (26) Liens on DFS Financing Assets, other receivables and related assets incurred in connection with Permitted Receivables Financings; (27) receipt of progress payments and advances from customers in the ordinary course of business to the extent the same creates a Lien on the related inventory and proceeds thereof; (28) Liens securing Hedging Obligations; (29) Liens securing Obligations relating to any indebtedness or other obligations of a Subsidiary owing to Covenant Parent or any of its Subsidiary Guarantors; (30) Liens in favor of an Issuer or any Guarantor or the Trustee; (31) Liens on vehicles or equipment of Covenant Parent or any of its Subsidiaries granted in the ordinary course of business; (32) Liens to secure any modification, refinancing, refunding, restatement, exchange, extension, renewal or replacement (or successive refinancing, refunding, restatement, exchange, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien included in this definition of “Permitted Liens” (including any accrued but unpaid interest thereon and any dividend, premium (including tender premiums), defeasance costs, underwriting discounts and any fees, costs and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with such modification, refinancing, refunding, restatement, exchange, extension, renewal or replacement); provided, however, that such new Lien shall be limited to all or part of the same property that secured the original Lien (plus accessions, additions and improvements on such property, including after-acquired property that is (a) affixed or incorporated into the property covered by such Lien, (b) after-acquired property subject to a Lien securing such indebtedness, the terms of which indebtedness require or include a pledge of after- acquired property (it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (c) the proceeds and products thereof); provided further that any modification, refinancing, refunding, restatement, exchange, extension, renewal or replacement (or successive refinancing, refunding, restatement, exchange, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien pursuant to clause (45) shall have Junior Lien Priority on the Collateral; (33) other Liens securing indebtedness in an aggregate principal amount not to exceed at any one time outstanding, together with any modification, refinancing, refunding, restatement, exchange, extension, renewal or replacement (or successive refinancing, refunding, restatement, exchange, extensions, renewals or replacements) as a whole, or in part, of such Indebtedness secured by any Lien under clause (32), the greater of (x) $2,000 million and (y) 15% of Consolidated Net Tangible Assets, with the amount determined on the dates of incurrence of such obligations; (34) Liens to secure any Credit Facility in an aggregate principal amount not to exceed at any one time outstanding, together with any modification, refinancing, refunding, restatement, exchange, extension, renewal or replacement (or successive refinancing, refunding, restatement, exchange, extensions, renewals or replacements) as a whole, or in part, of such Indebtedness secured by any Lien under clause (32), the sum

323 of (i) the lesser of (x) $10.0 billion and (y) the amount permitted to be incurred pursuant to the “fixed amount” incremental facilities provision of the Senior Credit Facilities, as in effect on the Effective Date plus (ii) all voluntary prepayments of term loan facilities under the Senior Credit Facilities and voluntary prepayments of revolving loans (to the extent accompanied by a permanent reduction of the revolving commitments thereunder) under the Senior Credit Facilities, in each case made prior to the date of the incurrence of such Credit Facility and not funded with the proceeds of long term Indebtedness plus (iii) an additional amount, such that after giving effect to the incurrence of any such Credit Facility, the Covenant Parent and its Subsidiaries would be in compliance with the “first lien ratio” based incremental facilities provision of the Senior Credit Facilities, as in effect on the Effective Date and as described in the Offering Memorandum (but without giving effect to any amount incurred simultaneously under clause (i) or (ii) above), with such amount to be determined at the time of incurrence; (35) (a) any encumbrance or restriction (including put and call arrangements) with respect to capital stock of any joint venture or similar arrangement pursuant to any joint venture or similar agreement, (b) Liens on Equity Interests in joint ventures; provided that any such Lien is in favor of a creditor of such joint venture and such creditor is not an Affiliate of any partner to such joint venture and (c) purchase options, call, and similar rights of, and restrictions for the benefit of, a third party with respect to Equity Interests held by Covenant Parent or any of its Subsidiaries in joint ventures; (36) agreements to subordinate any interest of Covenant Parent or any of its Subsidiaries in any accounts receivable or other proceeds arising from inventory consigned by Covenant Parent or any of its Subsidiaries pursuant to an agreement entered into in the ordinary course of business; (37) Lien on property or assets used to defease or to irrevocably satisfy and discharge indebtedness; (38) Liens on deposits taken by a Subsidiary of Covenant Parent that constitutes a regulated bank incurred in connection with the taking of such deposits; (39) Liens securing the Notes (other than any Additional Notes) and the related Note Guarantees; (40) Liens created in connection with a project financed with, and created to secure, a Nonrecourse Obligation; (41) Liens relating to future escrow arrangements securing Indebtedness, including (i) Liens on escrowed proceeds from the issuance of Indebtedness for the benefit of the related holders of debt securities or other Indebtedness (or the underwriters, arrangers, trustee or collateral agent thereof) and (ii) Liens on cash or Cash Equivalents set aside at the time of the incurrence of any Indebtedness, in either case to the extent such cash or Cash Equivalents prefund the payment of interest or premium or discount on such Indebtedness (or any costs related to the issuance of such Indebtedness) and are held in an escrow account or similar arrangement to be applied for such purpose; (42) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of Covenant Parent or any of its Subsidiaries in the ordinary course of business; (43) Liens securing Cash Management Obligations owed by Covenant Parent or any of its Subsidiaries to any lender under the Senior Credit Facilities or any Affiliate of such a lender; (44) Liens solely on any cash earnest money deposits made by Covenant Parent or any of its Subsidiaries in connection with any letter of intent or purchase agreement; and (45) Lien having Junior Lien Priority on the Collateral relative to the Notes and the Note Guarantees.

For purposes of determining compliance with this definition, (i) a Lien need not be incurred solely by reference to one category of Permitted Liens described in this definition but are permitted to be incurred in part under any combination thereof and of any other available exemption and (ii) in the event that a Lien (or any portion thereof) meets the criteria of one or more of the categories of Permitted Liens, Covenant Parent shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition.

324 For purposes of this definition, the term “indebtedness” shall be deemed to include interest on such indebtedness.

“Permitted Parent” means any Parent Entity that at the time it became a Parent Entity of Denali was a Permitted Holder pursuant to clause (1) of the definition thereof and was not formed in connection with, or in contemplation of, a transaction (other than the Transactions) that would otherwise constitute a Change of Control.

“Permitted Plan” means any employee benefits plan of Denali or its Affiliates and any Person acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan.

“Permitted Post-Release Liens” means: (1) Liens in effect as of the effective date of the Release Event (other than Permitted Liens incurred pursuant to clause (33) and (34) of the definition thereof); (2) Liens securing Obligations in respect of Notes outstanding on the effective date of the Release Event; (3) Liens existing on property at the time of its acquisition (by a merger, consolidation or amalgamation or otherwise) or existing on the property or shares of stock or other assets of any Person at the time such Person becomes a Subsidiary (whether or not such existing Liens thereon were given to secure the payment of all or any part of the purchase price thereof); (4) Liens described in clauses (7), (8), (9), (28), (37), (40), (41) and (44) of the definition of “Permitted Liens”; (5) Liens to secure any indebtedness (including Capitalized Lease Obligations) incurred to finance the purchase, lease, construction, installation, replacement, repair or improvement of property (real or personal), equipment or any other asset, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, so long as such indebtedness exists at the date of such purchase, lease or improvement or is created within 24 months thereafter; provided, that Liens securing indebtedness permitted to be incurred pursuant to this clause (5) extend only to the assets purchased with the proceeds of such indebtedness, accessions to such assets and the proceeds and products thereof, any lease of such assets (including accessions thereto) and the proceeds and products thereof and customary security deposits in respect thereof; provided, however, that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender; (6) Liens in favor of Covenant Parent or any of its Subsidiaries or the Trustee; and (7) Liens to secure any modification, refinancing, refunding, extension, renewal or replacement (or successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in part, of any indebtedness secured by any Lien referred to in this definition of “Permitted Post-Release Liens” (including any accrued but unpaid interest thereon and any dividend, premium (including tender premiums), defeasance costs, underwriting discounts and any fees, costs and expenses (including original issue discount, upfront fees or similar fees) incurred in connection with such modification, refinancing, refunding, extension, renewal or replacement); provided, however, that such new Lien shall be limited to all or part of the same property that secured the original Lien (plus accessions, additions and improvements on such property, including after-acquired property that is (a) affixed or incorporated into the property covered by such Lien, (b) after-acquired property subject to a Lien securing such indebtedness, the terms of which indebtedness require or include a pledge of after-acquired property (it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (c) the proceeds and products thereof).

For purposes of determining compliance with this definition, (i) a Lien need not be incurred solely by reference to one category of Permitted Post-Release Liens described in this definition but are permitted to be

325 incurred in part under any combination thereof and of any other available exemption and (ii) in the event that a Lien (or any portion thereof) meets the criteria of one or more of the categories of Permitted Post-Release Liens, Covenant Parent shall, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this definition.

For purposes of this definition, the term “indebtedness” shall be deemed to include interest on such indebtedness.

“Permitted Receivables Financing” means, collectively, (a)(i) with respect to receivables of the type supporting the ABS Facilities or otherwise constituting DFS Financing Assets, any term securitizations, receivables securitizations or other financing transactions with respect to DFS Financing Assets (including any factoring program), and (ii) with respect to receivables (including, without limitation, trade and lease receivables) not of the type supporting the ABS Facilities and not otherwise constituting DFS Financing Assets, term securitizations, other receivables securitizations or other similar financings (including any factoring program) (provided that with respect to Permitted Receivables Financings incurred in the form of a factoring program under this clause (a)(ii), the outstanding amount of such Permitted Receivables Financing for the purposes of this definition shall be deemed to be equal to the Permitted Receivables Net Investment for the most recently completed four consecutive fiscal quarters of Covenant Parent ending on or prior to such date for which internal financial statements are available) so long as, in the case of each of clause (a)(i) and (a)(ii), such financings are non-recourse to Covenant Parent and its Credit Facilities Restricted Subsidiaries (except for (A) recourse to any Foreign Subsidiaries, (B) any customary limited recourse that is no more expansive in any material respect than the recourse under the ABS Facilities (as in effect on the Effective Date), (C) any performance undertaking or Guarantee that is no more extensive in any material respect than the “Performance Undertakings” (as defined in the ABS Facilities as of the Effective Date) provided by Dell (as in effect on the Effective Date) in connection with the ABS Facilities, (D) an unsecured parent Guarantee by Covenant Parent or Dell or (E) an unsecured parent Guarantee by any Credit Facilities Restricted Subsidiary that is a parent company of a Foreign Subsidiary referred to in the foregoing clause (A) (other than an Issuer or any other Domestic Subsidiary) of obligations of Foreign Subsidiaries, and in each case, reasonable extensions thereof) and (b)(i) the ABS Facilities (including any term securitizations of DFS Financing Assets as of the Effective Date) and (ii) any modifications, refinancings, renewals, replacements or extension thereof; provided that, in the case of this clause (b)(ii), the terms of the applicable ABS Facility, after giving effect to any modifications, refinancings, renewals, replacements or extension thereof would satisfy the requirements set forth in clause (a)(i) above and (c) the financings and factoring facilities existing on the Effective Date and any modifications, refinancings, renewals, replacements or extensions thereof; provided that any recourse to a Covenant Parent or a Credit Facilities Restricted Subsidiary is not expanded in any material respect by any such modification, refinancing, renewal, replacement or extension and the aggregate outstanding amount of such facilities is not increased after the Effective Date, in each case, except to the extent such recourse or increase would otherwise be permitted by clause (a) above.

“Permitted Receivables Net Investment” means the aggregate cash amount paid by the purchasers under any Permitted Receivables Financing in the form of a factoring program in connection with their purchase of accounts receivable and customary related assets or interests therein, as the same may be reduced from time to time by collections with respect to such accounts receivable and related assets or otherwise in accordance with the terms of such Permitted Receivables Financing (but excluding any such collections used to make payments of commissions, discounts, yield and other fees and charges incurred in connection with any Permitted Receivables Financing in the form of a factoring program which are payable to any Person other than Covenant Parent or any of its Credit Facilities Restricted Subsidiaries).

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

326 “Pledged VMware Shares” means any Equity Interests of VMware that have been pledged to secure the Margin Bridge Facility, which is expected to initially comprise 77,033,442 shares of Class B common stock, par value $0.01 per share, of VMware as of the Effective Date.

“Preferred Stock” means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.

“Principal Property” means the land, land improvements, buildings and fixtures (to the extent they constitute real property interests) (including any leasehold interest therein) constituting the principal corporate office, any manufacturing plant or any manufacturing facility (whether now owned or hereafter acquired) and the equipment located thereon which (a) is owned by Covenant Parent or any of its Subsidiaries; (b) has not been determined in good faith by the Board of Covenant Parent not to be materially important to the total business conducted by Covenant Parent and its Subsidiaries taken as a whole; and (c) has a net book value on the date as of which the determination is being made in excess of 1.0% of Consolidated Net Tangible Assets as most recently determined on or prior to such date (including, for purposes of such calculation, the land, land improvements, buildings and such fixtures comprising such office, plant or facilities, as the case may be).

“Rating Agency” means (1) S&P, Moody’s and Fitch or (2) if S&P, Moody’s or Fitch or each of them shall not make a corporate rating with respect to the Issuers (or any Parent Guarantor) or a rating on any series of the Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by Covenant Parent, which shall be substituted for any or all of S&P, Moody’s or Fitch, as the case may be, with respect to such corporate rating or the rating of such series of Notes, as the case may be.

“Rating Decline” means, with respect to any series of Notes, the occurrence of a decrease in the rating of the Notes of such series by one or more gradations by any two of three Rating Agencies (including gradations within the rating categories, as well as between categories), within 60 days before or after the earlier of (x) a Change of Control, (y) the date of public notice of the occurrence of a Change of Control or (z) public notice of the intention of Covenant Parent to effect a Change of Control (which 60-day period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by either of such two Rating Agencies); provided, however, that a Rating Decline otherwise arising by virtue of a particular reduction in rating will not be deemed to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Decline for purposes of the definition of Change of Control Triggering Event) unless each of such two Rating Agencies making the reduction in rating to which this definition would otherwise apply announces or publicly confirms or informs the Trustee in writing at Covenant Parent’s or its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control has occurred at the time of the Rating Decline); provided, further, that notwithstanding the foregoing, a Ratings Decline shall not be deemed to have occurred so long as such series of Notes has an Investment Grade Rating from at least two of three Rating Agencies.

“Receivables Subsidiary” (1) means Dell Asset Revolving Trust–B, Dell Revolving Transferor L.L.C., and Dell Conduit Funding–B L.L.C. and (2) any other Special Purpose Entity established in connection with a Permitted Receivables Financing.

“Registration Rights Agreement” means that certain Registration Rights Agreement to be entered into as of the Issue Date by and between the Fincos and the initial purchasers set forth therein and, with respect to any Additional Notes, one or more substantially similar registration rights agreements among the Issuers and the other parties thereto, as such agreements may be amended from time to time.

“Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Similar Business, provided that any assets received by any Covenant Party in exchange for assets transferred by such Covenant Party shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Subsidiary of Covenant Parent.

327 “Release Event” means, with respect to any series of Notes, the occurrence of an event as a result of which all Collateral securing such series of Notes is permitted to be released in accordance with the terms of the Indenture and the Security Documents, it being understood that any action taken by any Issuer or its Affiliates to, solely at its option, provide Collateral to secure such series of Notes that is not required to be provided pursuant to the terms of the Indenture and the Security Documents, shall not be deemed to cause such Release Event to not have occurred.

“Restricted Subsidiary” means (1) any Subsidiary of an Issuer that (a) is a Wholly-Owned Subsidiary, (b) is a Domestic Subsidiary and (c) owns or is a lessee of any Principal Property and (2) any other Subsidiary that the Board of any Issuer may designate as a Restricted Subsidiary; provided, that “Restricted Subsidiary” shall not include any Receivables Subsidiary or any Credit Facilities Unrestricted Subsidiary.

“Revolving/Consumer Receivables Facility” means the transactions contemplated from time to time in the “Transaction Documents” as defined in that certain Note Purchase Agreement, dated as of October 29, 2013, by and among, Dell Financial Services L.L.C., as the servicer and administrator, Dell Asset Revolving Trust-B, as the issuer, Dell Revolving Transferor L.L.C., as the transferor, Dell Revolver Company L.P., as the seller, Bank of America, N.A., as administrative agent, the financial institutions party thereto and the other agents party thereto.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor to its rating agency business.

“Sale and Lease-Back Transaction” means any arrangement with any Person providing for the leasing by an Issuer or any of its Restricted Subsidiaries of any Principal Property, which property has been or is to be sold or transferred by such Issuer or such Restricted Subsidiary to such Person, other than (1) any such transaction involving a lease for a term of not more than three years, (2) any such transaction between any Issuer and any Subsidiary of any Issuer or between Subsidiaries of any Issuer, (3) any such transaction executed by the time of or within 365 days after the latest of the acquisition, the completion of construction or improvement or the commencement of commercial operation of such Principal Property or (4) any such transaction entered into before the Effective Date or entered into by a Restricted Subsidiary before the time it became a Restricted Subsidiary.

“SEC” means the U.S. Securities and Exchange Commission.

“Second Lien Collateral Agent” means the Second Lien Representative for the holders of any initial Second Lien Obligations.

“Second Lien Documents” means the credit, guarantee and security documents governing the Second Lien Obligations, including, without limitation, the related Second Lien Security Documents and Second Lien Intercreditor Agreement.

“Second Lien Intercreditor Agreement” has the meaning set forth under “Security for the Notes—Second Lien Intercreditor Agreement.”

“Second Lien Obligations” means the Obligations with respect to any indebtedness having Junior Lien Priority relative to the Notes and the Note Guarantees with respect to the Collateral; provided, that the holders of such indebtedness or their Second Lien Representative shall become party to the Second Lien Intercreditor Agreement (or such other intercreditor agreement having substantially similar terms as the Second Lien Intercreditor Agreement, taken as a whole) and any other applicable Intercreditor Agreements.

“Second Lien Representative” means any duly authorized representative of any holders of Second Lien Obligations, which representative is named as such in the Second Lien Intercreditor Agreement (or such other intercreditor agreement having substantially similar terms as the Second Lien Intercreditor Agreement, taken as a whole) or any joinder thereto.

328 “Second Lien Secured Parties” means the holders from time to time of any Second Lien Obligations, the Second Lien Collateral Agent and each other Second Lien Representative.

“Second Lien Security Agreement” means any security agreement covering a portion of the Collateral to be entered into by certain Covenant Parties and a Second Lien Representative.

“Second Lien Security Documents” means, collectively, the Second Lien Security Agreement, other security agreements relating to the Collateral and the mortgages and instruments filed and recorded in appropriate jurisdictions to preserve and protect the Liens on the Collateral (including, without limitation, financing statements under the Uniform Commercial Code of the relevant states) applicable to the Collateral, as amended, amended and restated, modified, renewed or replaced from time to time.

“Secured Letter of Credit Obligations” means Obligations of Covenant Parent or any of its Subsidiaries in respect of letters of credit, bank guarantees or similar instruments provided to Covenant Parent or any of its Subsidiaries (whether absolute or contingent and howsoever and whenever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor)) that are not letters of credit or bank guarantees issued pursuant to the Senior Credit Facilities.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Security Agreement” means that certain Security Agreement, dated as of the Effective Date, among the Covenant Parties and the Notes Collateral Agent.

“Security Documents” means, collectively, the First Lien Intercreditor Agreement, the Second Lien Intercreditor Agreement, if any, the Security Agreement, other security agreements relating to the Collateral and the mortgages and instruments filed and recorded in appropriate jurisdictions to preserve and protect the Liens on the Collateral (including, without limitation, financing statements under the Uniform Commercial Code of the relevant states) applicable to the Collateral, each for the benefit of the Notes Collateral Agent, as amended, amended and restated, modified, renewed or replaced from time to time.

“Senior Credit Facilities” means the new revolving credit facility and term loan facilities under the credit agreement to be entered into on or before the Effective Date by and among Denali Intermediate, Dell, Dell International, Merger Sub, the other borrowers and guarantors party thereto, the lenders party thereto and the other agents party thereto as the same may be in effect from time to time, including, in each case, any related notes, mortgages, letters of credit, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any appendices, exhibits, annexes or schedules to any of the foregoing (as the same may be in effect from time to time) and any amendments, supplements, modifications, extensions, renewals, restatements, refundings, replacements, exchanges or refinancings thereof, in whole or in part, and any financing arrangements that amend, supplement, modify, extend, renew, restate, refund, replace, exchange or refinance any part thereof, including, without limitation, any such amended, supplemented, modified, extended, renewed, restated, refunding, replacement, exchanged or refinancing financing arrangement that increases the amount permitted to be borrowed or issued thereunder or alters the maturity thereof or adds Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders, investors, holders or otherwise.

“Senior Credit Facility Obligations” means the “Secured Obligations” as defined in the Senior Credit Facilities.

“Senior Credit Facility Secured Parties” means the “Secured Parties” as defined in the Senior Credit Facilities.

329 “Senior Indebtedness” means: (1) all Indebtedness of an Issuer or any Guarantor outstanding under the Senior Credit Facilities or Notes and related Note Guarantees (including interest accruing on or after the filing of any petition in bankruptcy or similar proceeding or for reorganization of an Issuer or any Guarantor (at the rate provided for in the documentation with respect thereto, regardless of whether or not a claim for post-filing interest is allowed in such proceedings)), and any and all other fees, expense reimbursement obligations, indemnification amounts, penalties, and other amounts (whether existing on the Issue Date or thereafter created or incurred) and all obligations of the Issuers or any Guarantor to reimburse any bank or other Person in respect of amounts paid under letters of credit, acceptances or other similar instruments; (2) all (a) Hedging Obligations (and guarantees thereof) and (b) Cash Management Obligations (and guarantees thereof), provided that such Hedging Obligations and Cash Management Obligations, as the case may be, are permitted to be incurred under the terms of the Indenture; (3) any other indebtedness of an Issuer or any Guarantor permitted to be incurred under the terms of the Indenture, unless the instrument under which such indebtedness is incurred expressly provides that it is subordinated in right of payment to the Notes or any related Note Guarantee; and (4) all Obligations with respect to the items listed in the preceding clauses (1), (2) and (3); provided, however, that Senior Indebtedness shall not include: (a) any obligation of such Person to Covenant Parent or any of its Subsidiaries; (b) any liability for federal, state, local or other taxes owed or owing by such Person; (c) any accounts payable or other liability to trade creditors arising in the ordinary course of business; (d) any indebtedness or other Obligation of such Person which is subordinate or junior in right of payment to any other indebtedness or other Obligation of such Person; or (e) that portion of any indebtedness which at the time of incurrence is incurred in violation of the Indenture.

“Series” means (1) with respect to the First Lien Secured Parties, each of (i) the Senior Credit Facility Secured Parties (in their capacities as such), (ii) the First Lien Notes Secured Parties (in their capacity as such) and (iii) the Additional First Lien Secured Parties that become subject to the First Lien Intercreditor Agreement (or such other intercreditor agreement having substantially similar terms as the First Lien Intercreditor Agreement, taken as a whole, that replaces the First Lien Intercreditor Agreement) after the date hereof that are represented by a common representative (in its capacity as such for such Additional First Lien Secured Parties) and (2) with respect to any First Lien Obligations, each of (i) the Senior Credit Facility Obligations, (ii) the First Lien Notes Obligations and (iii) the Additional First Lien Obligations incurred pursuant to any applicable agreement, which are to be represented under the First Lien Intercreditor Agreement (or under such other intercreditor agreement having substantially similar terms as the First Lien Intercreditor Agreement, taken as a whole, that replaces the First Lien Intercreditor Agreement) by a common representative (in its capacity as such for such Additional First Lien Obligations).

“Shared Collateral” means, at any time, Collateral in which the holders of two or more Series of First Lien Obligations hold a valid and perfected security interest at such time. If more than two Series of First Lien Obligations are outstanding at any time and the holders of less than all Series of First Lien Obligations hold a valid and perfected security interest in any Collateral at such time, then such Collateral shall constitute Shared Collateral for those Series of First Lien Obligations that hold a valid security interest in such Collateral at such time and shall not constitute Shared Collateral for any Series which does not have a valid and perfected security interest in such Collateral at such time.

“Significant Subsidiary” means any Subsidiary that would be a “Significant Subsidiary” of Covenant Parent within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

330 “Similar Business” means any business conducted or proposed to be conducted by Covenant Parent and its Subsidiaries or any business that is similar, complementary, reasonably related, incidental or ancillary thereto, or is a reasonable extension, development or expansion thereof.

“Special Purpose Entity” means a direct or indirect subsidiary of Covenant Parent, whose organizational documents contain restrictions on its purpose and activities and impose requirements intended to preserve its separateness from Covenant Parent and/or one or more Subsidiaries of Covenant Parent.

“Subsidiary” means, with respect to any Person: (1) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company or similar entity) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof; and (2) any partnership, joint venture, limited liability company or similar entity of which (a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

For the avoidance of doubt, any entity that is owned at a 50% or less level (as described above) shall not be a “Subsidiary” for any purpose under the Indenture, regardless of whether such entity is consolidated on Covenant Parent’s or any of its Subsidiaries’ financial statements.

“Subsidiary Guarantor” means a Guarantor that is a Subsidiary of Covenant Parent.

“Term/Commercial Receivables Facility” means the transactions contemplated from time to time in the “Transaction Documents” as defined in that certain Loan and Servicing Agreement, dated as of October 29, 2013, by and among, Dell Conduit Funding–B L.L.C., as the borrower, Bank of America, N.A., as administrative agent, Dell Financial Services L.L.C., as the servicer, the financial institutions party thereto and the other agents party thereto.

“Total Assets” means, at any time, the total assets of Covenant Parent and its Subsidiaries on a consolidated basis, as shown on the most recent consolidated balance sheet of Covenant Parent and its Subsidiaries as of the end of the most recently ended fiscal quarter prior to the applicable date of determination for which financial statements are available; provided that, for purposes of testing the covenants under the Indenture in connection with any transaction, the Total Assets of Covenant Parent and its Subsidiaries shall be adjusted to reflect any acquisitions and dispositions of assets that have occurred during the period from the date of the applicable balance sheet through the applicable date of determination, including the transaction being tested under the Indenture.

“Transactions” has the meaning set forth in “Summary—The Transactions” in the Offering Memorandum.

“Trustee” means The Bank of New York Mellon Trust Company, N.A. until a successor replaces it and, thereafter, means the successor.

“Uniform Commercial Code”or“UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

331 “VMware” means VMware, Inc., a Delaware corporation.

“VMware Class A Common Stock” means the Class A common stock, par value $0.01 per share, of VMware.

“VMware Intercompany Notes” means collectively, (1) the $680,000,000 Promissory Note due May 1, 2018, issued by VMware in favor of EMC, (2) the $550,000,000 Promissory Note due May 1, 2020, issued by VMware in favor of EMC and (3) the $270,000,000 Promissory Note due December 1, 2022, issued by VMware in favor of EMC.

“VMware Note Bridge Facility” means the bridge facility to be entered into as of the Effective Date by and among EMC, the other borrowers and guarantors party thereto, the lenders party thereto and the other agents party thereto, to be secured by a first-priority Lien on the VMware Intercompany Notes, as the same may be in effect from time to time, and any amendments, supplements, modifications, extensions, renewals, restatements, refundings, replacements, exchanges or refinancings thereof, in whole or in part, and any financing arrangements that amend, supplement, modify, extend, renew, restate, refund, replace, exchange or refinance any part thereof, including, without limitation, any such amended, supplemented, modified, extended, renewed, restated, refunding, replacement, exchanged or refinancing financing arrangement that increases the amount permitted to be borrowed or issued thereunder or alters the maturity thereof or adds Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, trustee, lender or group of lenders, investors, holders or otherwise.

“Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the outstanding Equity Interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person.

332 EXCHANGE OFFER; REGISTRATION RIGHTS

The Fincos and the initial purchasers will enter into a registration rights agreement on the issue date of the notes. In the registration rights agreement, each of the issuers will agree for the benefit of the holders of each series of the notes to, (i) file one or more registration statements on an appropriate registration form (each, an “exchange offer registration statement”) with respect to a registered offer (each, an “exchange offer”) to exchange each series of the notes for new notes guaranteed by the guarantors of the notes at such time with terms substantially identical in all material respects to the notes offered hereby (the notes so exchanged, the “exchange notes”), except that the exchange notes will not contain terms with respect to transfer restrictions or any increase in the annual interest rate as described below, and (ii) use their commercially reasonable efforts to cause the exchange offer registration statement to be declared effective under the Securities Act. Upon the exchange offer registration statement being declared effective, we will offer the applicable exchange notes (and the related guarantees) in exchange for surrender of the applicable series of notes. We will keep each exchange offer open for at least 20 business days (or longer if required by applicable law) after the date that notice of such exchange offer is mailed to holders of the applicable series of notes. For each note surrendered to us pursuant to an exchange offer, the holder who surrendered such note will receive an exchange note having a principal amount equal to that of the surrendered note. Interest on each exchange note will accrue from the later of (i) the last interest payment date on which interest was paid on the note surrendered in exchange therefor, or if no interest has been paid on the notes, from , 2016, or (ii) if the note is surrendered for exchange on a date in a period that includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date. Upon the consummation of the mergers and the assumption, Dell International, EMC and the guarantors will become party to the registration rights agreement.

Under existing interpretations of the SEC contained in several no-action letters to third parties, the exchange notes and the related note guarantees will generally be freely transferable by holders thereof (other than our affiliates) after the applicable exchange offer without further registration under the Securities Act; provided, however, that each holder that wishes to exchange its notes for exchange notes will be required to represent: (i) that any exchange notes to be received by it will be acquired in the ordinary course of its business, (ii) that, at the time of the commencement of the applicable exchange offer, it has no arrangement or understanding with any person to participate in the distribution (within the meaning of Securities Act) of the applicable exchange notes in violation of the Securities Act, (iii) that it is not an “affiliate” (as defined in Rule 405 promulgated under Securities Act) of ours, (iv) if such holder is not a broker-dealer, that it is not engaged in, and does not intend to engage in, the distribution of applicable exchange notes; and (v) if such holder is a broker-dealer (a “participating broker-dealer”) that will receive exchange notes for its own account in exchange for notes that were acquired as a result of market-making or other trading activities, that it will deliver a prospectus in connection with any resale of such exchange notes.

We will agree to make available, during the period required by the Securities Act, a prospectus meeting the requirements of the Securities Act for use by participating broker-dealers and other persons, if any, with similar prospectus delivery requirements for use in connection with any resale of exchange notes.

If (i) because of any change in law or in currently prevailing interpretations of the staff of the SEC, we are not permitted to effect the exchange offer, (ii) the exchange offer is not consummated within five years after the date on which the EMC Transactions are consummated, (iii) in certain circumstances, certain holders of unregistered notes so request, or (iv) in the case of any holder that participates in an exchange offer, such holder does not receive exchange notes on the date of the exchange that may be sold without restriction under state and federal securities laws (other than due solely to the status of such holder as an affiliate of ours within the meaning of the Securities Act) and notifies us within 30 days after such holder first becomes aware of such restrictions,

333 then, in each case, we will (x) promptly deliver to the holders of the applicable notes and the trustee written notice thereof and (y) at our sole expense, (a) promptly file with the SEC a shelf registration statement covering resales of the applicable series of notes and (b) use our commercially reasonable efforts to keep effective such shelf registration statement until the earliest of (i) seven years after the effective date on which the EMC Transactions are consummated, (ii) such time as all of the applicable notes have been sold thereunder or (iii) the date upon which all notes covered by such shelf registration statement are resold to the public pursuant to Rule 144 under the Securities Act (the “shelf registration period”). We will, in the event that the shelf registration statement is filed, provide to each holder whose notes are registered under such shelf registration statement copies of the prospectus that is a part of such shelf registration statement, notify each such holder when such shelf registration statement has become effective and take certain other actions as are required to permit unrestricted resales of the applicable series of notes. A holder of notes that sells its notes pursuant to the shelf registration statement generally (i) will be required to make certain representations to us (as described in the registration rights agreement), be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, (ii) will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and (iii) will be bound by the provisions of the applicable registration rights agreement that are applicable to such a holder (including certain indemnification rights and obligations thereunder). In addition, each holder of the notes will be required to deliver information to be used in connection with the shelf registration statement and to provide any comments on the shelf registration statement within a reasonable period of time, in each case in order to have their notes included in the shelf registration statement. Notes not tendered in an exchange offer will bear interest at the rate set forth on the cover page of this offering memorandum and be subject to all the terms and conditions specified in the indenture, including transfer restrictions, but will not retain any rights under the applicable registration rights agreement (including with respect to the increase in annual interest rate described below) after the consummation of such exchange offer.

If (A) we have not exchanged exchange notes for all notes validly tendered in accordance with the terms of an exchange offer on or prior to the day that is five years after the date on which the EMC Transactions are consummated or (B) if applicable, a shelf registration statement covering resales of the applicable series of notes eligible for inclusion in the shelf registration statement has been declared effective and after effectiveness of such shelf registration statement ceases to be effective at any time during the shelf registration period (subject to certain exceptions), then additional interest shall accrue on the principal amount of the applicable series of notes at a rate of 0.25% per annum (which rate shall be increased by an additional 0.25% per annum for each subsequent 90-day period that such additional interest continues to accrue; provided that the rate at which such additional interest accrues may in no event exceed 1.00% per annum) commencing on (x) the day after the date that is five years after the date on which the EMC Transactions are consummated, in the case of (A) above, or (y) the day such shelf registration statement (if required) ceases to be effective, in the case of (B) above; provided, however, that upon the exchange of exchange notes for all notes tendered (in the case of clause (A) above), or upon the effectiveness of a shelf registration statement that had ceased to remain effective (in the case of clause (B) above), special interest on the notes as a result of such clause (or the relevant sub-clause thereof), as the case may be, shall cease to accrue; provided, further, that notwithstanding any provision in this paragraph to the contrary, no special interest shall accrue on the notes following the seventh anniversary of the effective date on which the EMC Transactions are consummated. Any amounts of special interest due will be payable in cash on the same original interest payment dates as interest on the notes is payable.

The exchange notes will be accepted for clearance through DTC.

This summary of the provisions of the registration rights agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the registration rights agreement, copies of which will be available from us upon request.

334 BOOK ENTRY; DELIVERY AND FORM

The notes are being offered and sold to qualified institutional buyers in reliance on Rule 144A under the Securities Act (“Rule 144A Notes”). The notes also may be offered and sold in offshore transactions in reliance on Regulation S under the Securities Act (“Regulation S Notes”). Except as set forth below, the notes will be issued in registered, global form in minimum denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. Notes will be issued at the closing of this offering only against payment in immediately available funds.

Rule 144A Notes initially will be represented by global notes in registered form without interest coupons (collectively, the “Rule 144A Global Notes”). Regulation S Notes initially will be represented by temporary global notes in registered form without interest coupons (collectively, the “Regulation S Temporary Global Notes”). The Rule 144A Global Notes and the Regulation S Temporary Global Notes will be deposited upon issuance with the trustee as custodian for The Depository Trust Company (“DTC”) in New York, New York, and registered in the name of DTC or its nominee, in each case, for credit to an account of a direct or indirect participant in DTC as described below. Through and including the 40th day after the later of the commencement of this offering and the closing of this offering (such period through and including such 40th day, the “Restricted Period”), beneficial interests in the Regulation S Temporary Global Notes may be held only through Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear”), and Clearstream Banking, Société Anonyme (“Clearstream, Luxembourg”) (as indirect participants in DTC), unless transferred to a person that takes delivery through a Rule 144A Global Note in accordance with the certification requirements described under “—Exchanges Between Regulation S Notes and Rule 144A Notes” below. Within a reasonable time period after the expiration of the Restricted Period, the Regulation S Temporary Global Notes will be exchanged for permanent notes in registered, global form without interest coupons (collectively, the “Regulation S Permanent Global Notes” and, together with the Regulation S Temporary Global Notes, the “Regulation S Global Notes;” the Regulation S Global Notes and the Rule 144A Global Notes collectively being the “Global Notes”) upon delivery to DTC of certification of compliance with the transfer restrictions applicable to the notes and pursuant to Regulation S as provided in the indenture governing the notes. Beneficial interests in the Rule 144A Global Notes may not be exchanged for beneficial interests in the Regulation S Global Notes at any time except in the limited circumstances described under “—Exchanges Between Regulation S Notes and Rule 144A Notes” below.

Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for definitive notes in registered certificated form (“Certificated Notes”) except in the limited circumstances described below. See “—Exchange of Global Notes for Certificated Notes.” Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of notes in certificated form.

Rule 144A Notes (including beneficial interests in the Rule 144A Global Notes) will be subject to certain restrictions on transfer and will bear a restrictive legend as described under “Transfer Restrictions.” Regulation S Notes will also be subject to certain restrictions on transfer and will also bear the legend as described under “Transfer Restrictions.” In addition, transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream, Luxembourg), which may change from time to time.

Depository Procedures The following description of the operations and procedures of DTC, Euroclear and Clearstream, Luxembourg is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures and urge investors to contact the system or their participants directly to discuss these matters.

335 DTC has advised us that DTC is a limited-purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those securities between the Participants through electronic book- entry changes in accounts of its Participants. The Participants include securities brokers and dealers (including the initial purchasers), banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

DTC has also advised us that, pursuant to procedures established by it: • upon deposit of the Global Notes, DTC will credit the accounts of the Participants designated by the initial purchasers with portions of the principal amount of the Global Notes; and • ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests in the Global Notes).

Investors in the Rule 144A Global Notes who are Participants may hold their interests therein directly through DTC. Investors in the Rule 144A Global Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream, Luxembourg) that are Participants. Investors in the Regulation S Global Notes must initially hold their interests therein through Euroclear or Clearstream, Luxembourg if they are participants in such systems, or indirectly through organizations that are participants. After the expiration of the Restricted Period (but not earlier), investors may also hold interests in the Regulation S Global Notes through Participants in DTC other than Euroclear and Clearstream, Luxembourg. Euroclear and Clearstream, Luxembourg will hold interests in the Regulation S Global Notes on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositories, which in turn hold such interests in customers’ securities accounts in the depositaries’ names on the books of DTC. Citibank, N.A. acts as depositary for Clearstream, Luxembourg, and JPMorgan Chase Bank acts as depositary for Euroclear. All interests in a Global Note, including those held through Euroclear or Clearstream, Luxembourg, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream, Luxembourg may also be subject to the procedures and requirements of such systems. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a person having beneficial interests in a Global Note to pledge such interests to persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

Except as described below, owners of interests in the Global Notes will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or “holders” thereof under the indenture governing the notes for any purpose.

Payments in respect of the principal of, and interest and premium, if any, on a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the indenture. Under the terms of the indenture, we and the trustee thereunder will treat the persons in whose names the notes,

336 including the Global Notes, are registered as the owners of the notes for the purpose of receiving payments and for all other purposes. Consequently, neither we nor any agent of ours or either trustee has or will have any responsibility or liability for: • any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to, or payments made on account of, beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or • any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe that it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be our responsibility or the responsibility of DTC or either trustee. Neither we nor the trustee will be liable for any delay by DTC or any of the Participants or the Indirect Participants in identifying the beneficial owners of the notes, and we and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

Subject to the transfer restrictions set forth under “Transfer Restrictions,” transfers between the Participants will be effected in accordance with DTC’s procedures and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream, Luxembourg will be effected in accordance with their respective rules and operating procedures.

Subject to compliance with the transfer restrictions applicable to the notes described herein, cross-market transfers between the Participants, on the one hand, and Euroclear or Clearstream, Luxembourg participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, Luxembourg, as the case may be, by its respective depositary. However, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, Luxembourg, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, Luxembourg, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note from DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream, Luxembourg participants may not deliver instructions directly to the depositories for Euroclear or Clearstream, Luxembourg.

DTC has advised us that it will take any action permitted to be taken by a holder of notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the notes as to which such Participant or Participants has or have given such direction. However, if there is an event of default under any of the notes, DTC reserves the right to exchange the Global Notes in respect of such notes for legended notes in certificated form and to distribute such notes to its Participants.

Although DTC, Euroclear and Clearstream, Luxembourg have agreed to the foregoing procedures to facilitate transfers of interests in the Rule 144A Global Notes and the Regulation S Global Notes among participants in DTC, Euroclear and Clearstream, Luxembourg, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither we nor the

337 trustee nor any of our or its agents will have any responsibility for the performance by DTC, Euroclear or Clearstream, Luxembourg or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes A Global Note is exchangeable for Certificated Notes if: • DTC (1) notifies us that it is unwilling or unable to continue as depositary for the Global Notes or (2) has ceased to be a clearing agency registered under the Exchange Act and, in either case, we fail to appoint a successor depositary; or • there has occurred and is continuing an event of default with respect to such notes.

In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the trustee by or on behalf of DTC in accordance with the indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures) and will bear the applicable restrictive legend referred to in “Transfer Restrictions,” unless that legend is not required by applicable law.

Exchange of Certificated Notes for Global Notes Certificated Notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the trustee a written certificate (in the form provided in the indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such notes. See “Transfer Restrictions.”

Exchanges Between Regulation S Notes and Rule 144A Notes Prior to the expiration of the Restricted Period, beneficial interests in the Regulation S Global Notes may be exchanged for beneficial interests in the Rule 144A Global Notes only if: • such exchange occurs in connection with a transfer of the notes pursuant to Rule 144A; and • the transferor first delivers to the trustee a written certificate (in the form provided in the indenture) to the effect that the notes are being transferred to a person: • who the transferor reasonably believes to be a QIB within the meaning of Rule 144A; • purchasing for its own account or the account of a QIB in a transaction meeting the requirements of Rule 144A; and • in accordance with all applicable securities laws of the states of the United States and other jurisdictions.

Beneficial interests in a Rule 144A Global Note may be transferred to a person who takes delivery in the form of an interest in the Regulation S Global Notes, whether before or after the expiration of the Restricted Period, only if the transferor first delivers to the trustee a written certificate (in the form provided in the indenture) to the effect that such transfer is being made in accordance with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if such transfer occurs prior to the expiration of the Restricted Period, the interest transferred will be held immediately thereafter through Euroclear or Clearstream, Luxembourg.

Transfers involving exchanges of beneficial interests between the Regulation S Global Notes and the Rule 144A Global Notes will be effected by DTC by means of an instruction originated by the indenture trustee through the DTC Deposit/Withdraw at Custodian system. Accordingly, in connection with any such transfer,

338 appropriate adjustments will be made to reflect a decrease in the principal amount of the Regulation S Global Notes and a corresponding increase in the principal amount of the Rule 144A Global Notes or vice versa, as applicable. Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in the other Global Note will, upon transfer, cease to be an interest in such Global Note and will become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer restrictions and other procedures applicable to beneficial interests in such other Global Note for so long as it remains such an interest. The policies and practices of DTC may prohibit transfers of beneficial interests in the Regulation S Temporary Global Notes prior to the expiration of the Restricted Period.

Certifications by Holders of the Regulation S Temporary Global Notes A holder of a beneficial interest in the Regulation S Temporary Global Notes must provide Euroclear or Clearstream, Luxembourg, as the case may be, with a certificate in the form required by the indenture certifying that the beneficial owner of the interest in the Regulation S Temporary Global Notes is either a non-U.S. person or a U.S. person that has purchased such interest in a transaction that is exempt from the registration requirements under the Securities Act and Euroclear or Clearstream, Luxembourg, as the case may be, must deliver to the trustee (or the paying agent if other than such trustee) a certificate in the form required by the indenture, prior to any exchange of such beneficial interest for a beneficial interest in the Regulation S Permanent Global Notes.

Same Day Settlement and Payment We will make payments in respect of the notes represented by the Global Notes (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by DTC or its nominee. We will make all payments of principal, interest and premium, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder’s registered address. The notes represented by the Global Notes are expected to be eligible to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. We expect that secondary trading in any Certificated Notes will also be settled in immediately available funds.

Because of time-zone differences, credits of interests in the Global Notes received in Clearstream, Luxembourg or Euroclear as a result of a transaction with a DTC Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. Such credits or any transactions involving interests in such Global Notes settled during such processing will be reported to the relevant Clearstream, Luxembourg or Euroclear participants on such business day. Cash received in Clearstream, Luxembourg or Euroclear as a result of sales of interests in the Global Notes by or through a Clearstream, Luxembourg participant or a Euroclear Participant to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream, Luxembourg or Euroclear cash account only as of the business day following settlement in DTC.

339 TRANSFER RESTRICTIONS

The issuance and sale of the notes have not been registered under the Securities Act or any other applicable securities laws and, unless so registered, the notes may not be offered, sold, pledged or otherwise transferred within the United States or to or for the account of any U.S. person, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any other applicable securities laws. The notes are being offered and issued, only (a) to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) (“QIBs”), in a private transaction in reliance upon an exemption from the registration requirements of the Securities Act and (b) outside the United States to persons other than U.S. persons in reliance upon Regulation S under the Securities Act.

Each purchaser of notes (and in the case of clause (7), each transferee of the notes) will be deemed to represent, warrant, and agree as follows (terms used in this paragraph that are defined in Rule 144A or Regulation S under the Securities Act are used herein as defined therein): (1) It (A) (i) is a QIB, (ii) is acquiring the notes for its own account or for the account of a QIB and (iii) is aware that the initial purchasers are selling the notes to it in reliance on Rule 144A or (B) is not a U.S. person and is acquiring the notes in an offshore transaction pursuant to Regulation S. (2) It understands that the notes are being offered in a transaction not involving any public offering in the United States within the meaning of the Securities Act, that the notes have not been registered under the Securities Act and that (A) if in the future it decides to offer, resell, pledge or otherwise transfer any of the notes, such notes may be offered, resold, pledged or otherwise transferred only (i) for so long as the notes are eligible for resale under Rule 144A, to a person whom the seller reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, (ii) outside the United States in a transaction complying with the provisions of Rule 904 under the Securities Act, (iii) pursuant to an exemption from registration under the Securities Act, other than the exemption provided by Rule 144, (iv) pursuant to an effective registration statement under the Securities Act or (v) to us or any of our subsidiaries, in each of cases (i) through (v) in accordance with any applicable securities laws of any State of the United States; provided that prior to any transfer pursuant to clause (i), (ii) or (iii), the issuers and the trustee are furnished with an opinion of counsel, certification and/or other information satisfactory to each of them that such transfer is in compliance with the Securities Act), and that (B) it will, and each subsequent holder is required to, notify any subsequent purchaser of the notes from it of the resale restrictions referred to in clause (A) above. (3) It understands that the notes will, unless otherwise agreed by the issuers and the holder thereof, bear a legend substantially to the following effect: THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE THAT IS ONE YEAR (IN THE CASE OF THE 144A NOTES) OR 40 DAYS (IN THE CASE OF THE REGULATION S NOTES) AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THE NOTES AND THE LAST DATE ON WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF THIS NOTE) ONLY (A) TO THE ISSUERS OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE

340 PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE SECURITIES ACT, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT OR (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, OTHER THAN THE EXEMPTION PROVIDED BY RULE 144, SUBJECT TO THE ISSUERS’ AND THE TRUSTEE’S RIGHTS PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. (4) If such purchaser is an acquirer in a transaction that occurs outside the United States within the meaning of Regulation S, you acknowledge that until the expiration of the “40-day distribution compliance period” within the meaning of Rule 903 of Regulation S under the Securities Act, any offer or sale of these notes shall not be made by such purchaser to a U.S. person or for the account or benefit of a U.S. person within the meaning of Rule 902 under the Securities Act, except in compliance with applicable securities laws. (5) It (a) is able to act on its own behalf in the transactions contemplated by this offering memorandum, (b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its prospective investment in the notes and (c) (or the account for which it is acting) has the ability to bear the economic risks of its prospective investment in the notes and can afford the complete loss of such investment. (6) It acknowledges that (a) none of us, the initial purchasers or any person acting on behalf of any of the foregoing has made any statement, representation, or warranty, express or implied, to it with respect to the issuers or the offer or sale of any notes, other than the information we have included in this offering memorandum, and (b) any information it desires concerning the issuers, the notes or any other matter relevant to its decision to acquire the notes (including a copy of the offering memorandum) is or has been made available to it. (7) Either (i) it is not acquiring or holding such note with the assets of any (a) employee benefit plan that is subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (b) plan, individual retirement account or other arrangement that is subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) or provisions under any other federal, state, local, non- U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws”), or (c) entity whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement or (ii) the acquisition and holding of such note will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or a similar violation under any applicable Similar Laws. (8) It acknowledges that the trustee under the indenture governing the notes will not be required to accept for registration of transfer any notes acquired by it, except upon presentation of evidence satisfactory to us and the trustee that the restrictions set forth herein have been complied with. (9) It acknowledges that we, the initial purchasers and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agrees that if any of the acknowledgments, representations or agreements deemed to have been made by its purchase of the notes are no longer accurate, it shall promptly notify us and the initial purchasers thereof. If it is acquiring the notes as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account.

341 CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES

The following is a summary of certain United States federal income and, in the case of Non-U.S. Holders (as defined below), estate tax consequences of the purchase, ownership and disposition of the notes as of the date hereof.

This summary deals only with notes that are purchased for cash upon original issuance at their “issue price” (the first price at which a substantial amount of notes is sold for money to investors, excluding sales to bond houses, brokers or similar persons or organizations acting in the capacity of underwriter, placement agent or wholesaler) and are held as capital assets, and does not represent a detailed description of the United States federal income and estate tax consequences applicable to you if you are subject to special treatment under the United States federal income and estate tax laws, including if you are: • a dealer in securities or currencies; • a financial institution; • a regulated investment company; • a real estate investment trust; • a tax-exempt entity; • an insurance company; • a controlled foreign corporation; • a passive foreign investment company; • a person holding the notes as part of a hedging, integrated, conversion or constructive sale transaction or a straddle; • a trader in securities that has elected the mark-to-market method of accounting for your securities; • a person liable for alternative minimum tax; • a partnership or other pass-through entity for United States federal income tax purposes; • a U.S. Holder (as defined below) whose “functional currency” is not the U.S. dollar; or • a U.S. expatriate.

The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income and estate tax consequences different from those discussed below.

If any entity classified as a partnership for United States federal income tax purposes holds notes, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership considering an investment in the notes, you should consult your tax advisors.

This summary does not represent a detailed description of the United States federal income and estate tax consequences to you in light of your particular circumstances and does not address the effects of any other United States federal tax laws (such as the Medicare contribution tax on net investment income) or any state, local or non-United States tax laws. It is not intended to be, and should not be construed to be, legal or tax advice to any particular purchaser of notes. If you are considering the purchase of notes, you should consult your own tax advisors concerning the particular United States federal income and estate tax consequences to you of the purchase, ownership and disposition of the notes, as well as any consequences to you arising under other United States federal tax laws and the laws of any other taxing jurisdiction.

342 Effect of Contingencies in the Notes In certain circumstances we may be obligated to pay amounts on the notes that are in excess of stated interest or principal on the notes (see “Description of Notes—Special Mandatory Redemption,” “Description of Notes—Optional Redemption of Fixed Rate Notes” and “Description of Notes—Change of Control Triggering Event”). We intend to take the position that, as of the initial issue date for the notes, the possibility that we will pay these additional amounts does not result in the notes being treated as “contingent payment debt instruments” under the applicable United States Treasury regulations. However, additional income will be recognized if any such additional payment is made. Our determination that the notes are not contingent payment debt instruments is binding on all holders unless they disclose their contrary position to the Internal Revenue Service (the “IRS”) in the manner required by applicable United States Treasury regulations. However, our determination is not binding on the IRS. It is possible that the IRS may take a different position, in which case a holder might be required to accrue interest income at a higher rate than the stated interest rate on the notes (and any applicable original issue discount), and to treat as ordinary interest income any of the gain realized on the taxable disposition (including redemption or retirement) of a note. The remainder of this discussion assumes that the notes will not be treated as contingent payment debt instruments. Holders should consult their own tax advisors regarding the possible application of the contingent payment debt instrument rules to the notes.

Finco Mergers We intend to take the position that the merger of Finco 1 with and into Dell International, with Dell International as the surviving entity, and the merger of Finco 2 with and into EMC, with EMC as the surviving entity (together, the “Finco Mergers”), as described above under “Description of Notes,” will not result in a taxable event to holders of the notes for U.S. federal income tax purposes. Our position, however, is not binding on the IRS. If the IRS were to successfully challenge this position, the Finco Mergers may result in a taxable event to holders of the notes, and such taxable event could cause the amount and timing of a holder’s income with respect to the notes to differ from that otherwise described herein. This discussion assumes that the Finco Mergers will not result in a taxable event for U.S. federal income tax purposes. Prospective holders should consult with their own tax advisors regarding the possible U.S. federal income tax consequences of the Finco Mergers to them.

U.S. Holders The following is a summary of certain United States federal income tax consequences that will apply to you if you are a U.S. Holder of the notes.

“U.S. Holder” means a beneficial owner of a note that is for United States federal income tax purposes: • an individual who is a citizen or resident of the United States; • a corporation (or any other entity treated as a corporation for United States federal income tax purposes) that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia; • an estate the income of which is subject to United States federal income taxation regardless of its source; or • a trust if it (a) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

Payments of Stated Interest Stated interest on a note will generally be taxable to you as ordinary income at the time it is paid or accrued, in accordance with your method of accounting for tax purposes.

343 Sale, Exchange, Retirement, Redemption or Other Taxable Disposition of Notes Your adjusted tax basis in a note will, in general, be your cost for that note. Upon the sale, exchange, retirement, redemption or other taxable disposition of a note, you will generally recognize gain or loss equal to the difference, if any, between the amount realized upon the sale, exchange, retirement, redemption or other taxable disposition (less any amount attributable to any accrued but unpaid stated interest, which will be taxable as ordinary income for United States federal income tax purposes to the extent not previously included in income) and the adjusted tax basis of the note. Any gain or loss will be capital gain or loss. Capital gains of non- corporate U.S. Holders derived in respect of capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

Non-U.S. Holders The following is a summary of certain United States federal income and estate tax consequences that will apply to you if you are a “Non-U.S. Holder” of notes. “Non-U.S. Holder” means a beneficial owner of a note, other than an entity treated as a partnership for United States federal income tax purposes, that is not a U.S. Holder (as defined under “—U.S. Holders” above).

United States Federal Withholding Tax Subject to the discussion below concerning backup withholding and FATCA, United States federal withholding tax will not apply to any payment of interest on a note under the “portfolio interest” rule, provided that: • interest paid on the note is not effectively connected with your conduct of a trade or business in the United States; • you do not actually or constructively own 10% or more of the total combined voting power of all classes of our voting stock within the meaning of the Code and applicable United States Treasury regulations; • you are not a controlled foreign corporation that is related to us through stock ownership; • you are not a bank whose receipt of interest on a note is described in Section 881(c)(3)(A) of the Code; and • either (a) you provide your name and address on an applicable IRS Form W-8BEN (or other applicable form), and certify, under penalties of perjury, that you are not a United States person as defined under the Code or (b) you hold your notes through certain financial intermediaries and satisfy the certification requirements of applicable United States Treasury regulations. Special certification rules apply to Non- U.S. Holders that are pass-through entities rather than corporations or individuals.

If you cannot satisfy the requirements of the “portfolio interest” exception described above, payments of interest made to you will be subject to a 30% United States federal withholding tax, unless you provide us or our paying agent, as the case may be, with a properly executed (1) IRS Form W-8BEN or W-8BEN-E (or other applicable form) claiming an exemption from or reduction in withholding under the benefit of an applicable income tax treaty or (2) IRS Form W-8ECI (or other applicable form) stating that interest paid on the note is not subject to withholding tax because it is effectively connected with your conduct of a trade or business in the United States (as discussed below under “—United States Federal Income Tax”). Alternative documentation may be applicable in certain situations. The 30% United States federal withholding tax generally will not apply to any payment of principal or gain that you realize on the sale, exchange, retirement, redemption or other disposition of a note.

United States Federal Income Tax If you are engaged in a trade or business in the United States and interest on the notes is effectively connected with the conduct of that trade or business (and, if required by an applicable income tax treaty, is

344 attributable to a United States permanent establishment), you will be subject to United States federal income tax on such interest on a net income basis in generally the same manner as if you were a United States person. In addition, if you are a foreign corporation, you may be subject to a branch profits tax equal to 30% (or a lesser rate under an applicable income tax treaty) of your effectively connected earnings and profits attributable to such interest, subject to adjustments. Interest that is effectively connected with a U.S. trade or business will be exempt from the 30% United States federal withholding tax, provided the certification requirements discussed above in “—United States Federal Withholding Tax” are satisfied.

Any gain realized on the sale, exchange, retirement, redemption or other taxable disposition of a note generally will not be subject to United States federal income tax unless: • the gain is effectively connected with your conduct of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment), in which case you will be taxed in the same manner as discussed above with respect to effectively connected interest; or • you are an individual who is present in the United States for 183 days or more in the taxable year of such disposition, and certain other conditions are met (in which case you will be subject to a 30% United States federal income tax on any gain recognized (except as otherwise provided by an applicable income tax treaty), which may be offset by certain United States source losses).

United States Federal Estate Tax If you are an individual who is neither a citizen nor a resident (as specifically defined for United States federal estate tax purposes) of the United States at the time of your death, your estate will not be subject to United States federal estate tax on notes owned (or deemed to be owned) by you at the time of your death, provided that any payment to you of interest on the notes would be eligible for exemption from the 30% United States federal withholding tax under the “portfolio interest” rule described above under “—United States Federal Withholding Tax,” without regard to the statement requirement described in the fifth bullet point of that section.

Information Reporting and Backup Withholding U.S. Holders In general, information reporting requirements will apply to certain payments of interest and to the proceeds of a sale or other taxable disposition (including a retirement or redemption) of a note paid to you (unless you are an exempt recipient such as a corporation). Backup withholding may apply to such payments and proceeds if you fail to provide a taxpayer identification number or a certification that you are not subject to backup withholding, or if you fail to report in full dividend and interest income.

Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against your United States federal income tax liability provided the required information is timely furnished to the IRS.

Non-U.S. Holders Information reporting will generally apply to payments of interest made to you and the amount of tax, if any, withheld with respect to such payments. Copies of the information returns reporting such interest payments and any withholding may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty.

In general, you will not be subject to backup withholding (currently at a rate of 28%) with respect to payments of interest on the notes that we make to you provided that the applicable withholding agent does not

345 have actual knowledge or reason to know that you are a United States person as defined under the Code, and such applicable withholding agent has received from you the required certification that you are a Non-U.S. Holder described above in the fifth bullet point under “—Non-U.S. Holders—United States Federal Withholding Tax,” or you otherwise establish an exemption.

Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other taxable disposition (including a retirement or redemption) of notes within the United States or conducted through certain United States-related financial intermediaries, unless you certify under penalties of perjury that you are a Non-U.S. Holder (and the payor does not have actual knowledge or reason to know that you are a United States person as defined under the Code), or you otherwise establish an exemption.

Additional Withholding Requirements Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), a 30% United States federal withholding tax may apply to any interest income paid on the notes and, for a disposition of a note occurring after December 31, 2018, the gross proceeds from such disposition, in each case paid to (i) a “foreign financial institution” (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) its compliance (or deemed compliance) with FATCA (which may alternatively be in the form of compliance with an intergovernmental agreement with the United States) in a manner which avoids withholding, or (ii) a “non- financial foreign entity” (as specifically defined in the Code) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) adequate information regarding certain substantial United States beneficial owners of such entity (if any). If an interest payment is both subject to withholding under FATCA and subject to the withholding tax discussed above under “—Non-U.S. Holders—United States Federal Withholding Tax,” the withholding under FATCA may be credited against, and therefore reduce, such other withholding tax. You should consult your own tax advisors regarding these rules and whether they may be relevant to your ownership and disposition of the notes.

346 CERTAIN ERISA CONSIDERATIONS

The following is a summary of certain considerations associated with the purchase of the notes by employee benefit plans that are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plans, individual retirement accounts and other arrangements that are subject to Section 4975 of the Code or provisions under any other federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code (collectively, “Similar Laws”), and entities whose underlying assets are considered to include “plan assets” of any such plan, account or arrangement (each, a “Plan”).

General Fiduciary Matters ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (an “ERISA Plan”) and prohibit certain transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such an ERISA Plan or any authority or control over the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA Plan, is generally considered to be a fiduciary of the ERISA Plan.

In considering an investment in the notes of a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.

Prohibited Transaction Issues Section 406 of ERISA and Section 4975 of the Code prohibit ERISA Plans from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person that engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of the ERISA Plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or holding of notes by an ERISA Plan with respect to which any issuer, any initial purchaser or guarantor is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor has issued prohibited transaction class exemptions (“PTCEs”) that may apply to the acquisition and holding of the notes. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers. In addition, Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code provide relief from the prohibited transaction provisions of ERISA and Section 4975 of the Code for certain transactions, provided that neither the issuer of the securities nor any of its affiliates (directly or indirectly) has or exercises any discretionary authority or control or renders any investment advice with respect to the assets of any ERISA Plan involved in the transaction and provided further that the ERISA Plan pays no more than adequate consideration in connection with the transaction. There can be no assurance that all of the conditions of any such exemptions will be satisfied in connection with purchases of the notes.

347 Furthermore, a Plan that is a “governmental plan” (as defined in Section 3(32) of ERISA and Section 414(d) of the Code), church plan (as defined in Section 3(33) of ERISA and Section 414(e) of the Code) or foreign plan, which is not subject to the provisions of Title I of ERISA or Section 4975 of the Code, may be subject to Similar Laws.

Because of the foregoing, the notes should not be purchased or held by any person investing “plan assets” of any Plan, unless such purchase and holding will not constitute or result in a non-exempt prohibited transaction under ERISA or the Code or a similar violation of any applicable Similar Laws.

Representation To address the above concerns, the notes may not be purchased by or transferred to any investor unless such investor makes the representations contained in paragraph 7 of “Transfer Restrictions,” which are designed to ensure that the acquisition of the notes will not constitute or result in a non-exempt prohibited transaction under ERISA or the Code or a similar violation under any applicable Similar Laws.

The foregoing discussion is general in nature and is not intended to be all inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the notes (and holding the notes) on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to such investment and whether an exemption would be applicable to the purchase and holding of the notes.

Purchasers of the notes have the exclusive responsibility for ensuring that their purchase and holding of the notes complies with the fiduciary responsibility rules of ERISA and does not violate the prohibited transaction rules of ERISA, the Code or any applicable Similar Laws.

348 PLAN OF DISTRIBUTION

Under the terms and subject to the conditions contained in a purchase agreement, we have agreed to sell to the initial purchasers, and the initial purchasers have agreed to purchase from us, the entire principal amount of the notes.

The purchase agreement provides that the obligations of the initial purchasers to purchase the notes are subject to approval of legal matters by counsel and to other conditions. The initial purchasers must purchase all of the notes if they purchase any of the notes. The offering of the notes by the initial purchasers is subject to receipt and acceptance and subject to the initial purchasers’ right to reject any order in whole or in part.

The initial purchasers propose to resell the notes at the issue prices set forth on the cover page of this offering memorandum and may also offer the notes to selling group members at such offering price less a selling concession within the United States to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. See “Transfer Restrictions.” The price at which the notes are offered may be changed at any time without notice.

However, we cannot assure you that the prices at which the notes will sell in the market after this offering will not be lower than the initial offering price or that an active trading market for any series of notes will develop and continue after this offering.

The notes have not been registered under the Securities Act and are being offered and sold only (i) to persons in the United States and to, or for the account or benefit of, U.S. persons, in each case that are qualified institutional buyers (as defined in Rule 144A under the Securities Act) in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A thereunder, and (ii) to non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. The initial purchasers have agreed that, except as permitted by the purchase agreement, they will not offer, sell or deliver the notes (a) as part of their distribution at any time or (b) otherwise until 40 days after the later of the commencement of the offering and the closing date, within the United States or to, or for the account or benefit of, U.S. persons, and they will have sent to each broker/dealer to which they sell notes in reliance on Regulation S during such 40-day period a confirmation or other notice detailing the restrictions on offers and sales of the notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act. Resales of the notes are restricted as described under “Transfer Restrictions.”

In addition, until 40 days after the commencement of the offering, an offer or sale of notes within the United States by a dealer (that is not it is participating in this offering) may violate the registration requirements of the Securities Act if that offer or sale is made other than pursuant in accordance with to Rule 144A.

The notes are offered for sale in those jurisdictions in the United States, Canada, Europe, the United Kingdom and elsewhere where it is lawful to make such offers.

The initial purchasers have represented and agreed that they have not offered, sold or delivered and will not offer, sell or deliver any of the notes directly or indirectly, or distribute this offering memorandum or any other offering material relating to the notes, in or from any jurisdiction except under circumstances that will result in compliance with the applicable laws and regulations thereof and that will not impose any obligations on us except as set forth in the purchase agreement.

General The issuers have agreed and Dell International, EMC and the guarantors will agree to indemnify the several initial purchasers against liabilities that could arise including liabilities under the Securities Act or to contribute to payments that the initial purchasers may be required to make because of any of those liabilities.

349 The notes will constitute a new class of securities with no established trading market. The initial purchasers have advised us that they currently intend to make a market in the notes. However, they are not obligated to do so and may discontinue any market-making. Accordingly, no assurance can be given as to the development or liquidity of any market for the notes.

We expect that delivery of the notes will be made against payment therefor on or about the closing date specified on the cover page of this offering memorandum, which is the tenth business day following the date of pricing of the notes (this settlement cycle being referred to as “T+10” ). Under Rule 15c6-1 of the SEC under the Exchange Act, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade their notes on the date of pricing or the next six succeeding business days will be required, by virtue of the fact that the notes initially will settle in T+10, to specify an alternative settlement cycle at the time of any such trade to prevent a failed settlement. Purchasers of the notes who wish to trade their notes on the date of pricing or the next six succeeding business days should consult their own advisor.

In connection with the offering, the initial purchasers may purchase and sell notes in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions and stabilizing purchases. • Short sales involve secondary market sales by the initial purchasers of a greater number of notes than they are required to purchase in the offering. • Stabilizing transactions involve bids to purchase the notes so long as the stabilizing bids do not exceed a specified maximum. • Covering transactions involve purchases of the notes in the open market after the distribution has been completed in order to cover short positions. • Penalty bids permit the initial purchasers to reclaim a selling concession from a syndicate member when the initial purchasers, in covering short positions or making a stabilizing purchase, repurchases notes originally sold by that syndicate member cover positions.

Purchases to cover short positions and stabilizing purchases, as well as other purchases by the initial purchasers for their own accounts, may have the effect of preventing or retarding a decline in the market price of the notes. These over-allotments, stabilizing transactions, covering transactions and penalty bids may cause the prices of the notes to be higher than it would otherwise be in the absence of these transactions. These transactions, if commenced, may be discontinued at any time. The initial purchasers may conduct these transactions in the over-the-counter market or otherwise. If the initial purchasers commence any of these transactions, they may discontinue them at any time.

The initial purchasers and their respective affiliates are full service financial institutions engaged in various activities which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. The initial purchasers and their respective affiliates have provided and/or may provide in the future, investment banking, commercial banking and other financial services for us and our affiliates in the ordinary course of business, for which they have received and will receive customary compensation.

In addition, in the ordinary course of their various business activities, the initial purchasers and their respective affiliates may make or hold a broad array of investments including serving as counterparties to certain derivative and hedging arrangements and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers, and may at any time hold long and short positions in such securities and instruments and such investment and securities activities may involve our securities and/or instruments. If the initial purchasers or their affiliates have a lending relationship with us, certain of those initial purchasers or their affiliates routinely hedge, certain of the initial purchasers or their affiliates are likely to hedge

350 or otherwise reduce, and certain other of these initial purchasers or their affiliates may hedge, their credit exposure to us consistent with their customary risk management policies. The initial purchasers and their affiliates may hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in our securities or the securities of our affiliates, including potentially the notes offered hereby. Any such credit default swaps or short positions could adversely affect future trading prices of the notes offered hereby. The initial purchasers and/or their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold for their own account and for the accounts of their customers, or recommend to clients that they acquire long and/or short positions in such securities and instruments. Certain of the initial purchasers or their affiliates have acted as financial advisors to us in connection with the Transactions and may receive fees in connection therewith.

Affiliates of certain of the initial purchasers act as lenders and/or agents under the existing term loan facilities, the existing ABL credit facility and the EMC Credit Agreement, each of which are being terminated in connection with the EMC Transactions and may receive fees in connection therewith. Affiliates of certain of the initial purchasers act as lenders and/or agents under certain of our structured financing debt. In addition, affiliates of certain of the initial purchasers are holders of our existing first lien notes. Because we will use the proceeds from the sale of the notes upon release from escrow, together with the proceeds from the senior secured credit facilities, the margin bridge facility and the VMware note bridge facility along with cash to prepay and terminate the existing term loan facilities, the existing ABL credit facility and the EMC Credit Agreement and to redeem, satisfy and discharge the existing first lien notes, certain of the initial purchasers and/or their affiliates will receive a portion of the proceeds from this offering. See “Use of Proceeds.”

In addition, affiliates of each of the initial purchasers will act as agents and/or lenders under the senior secured credit facilities, the margin bridge facility and/or the VMware note bridge facility and will receive fees in connection with such roles. Certain of the initial purchasers and/or their respective affiliates have also agreed to provide interim financing to us under certain circumstances in the event this offering or certain other financings in connection with the Transactions is not consummated, for which these initial purchasers and/or their respective affiliates will be paid customary fees. These interim financing commitments will be reduced by the aggregate gross proceeds of notes issued in this offering upon the closing of this offering.

Notice to European Economic Area Investors In relation to each Member State of the European Economic Area (each, a “Relevant Member State”), each initial purchaser has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of notes which are the subject of the offering contemplated by this Offering Memorandum to the public in that Relevant Member State other than: (i) to any legal entity which is a qualified investor as defined in the Prospectus Directive; (ii) to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the issuers for any such offer; or (iii) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of notes shall require the issuers or any initial purchaser to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of notes to the public” in relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe the notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (as amended, including by Directive 2010/73/EU), and includes any relevant implementing measure in the Relevant Member State.

351 Notice to Investors in the United Kingdom Each initial purchaser has represented and agreed that: (i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell the notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the notes] would otherwise constitute a contravention of Section 19 of the FSMA by the issuers; (ii) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuers or the Guarantor; and (iii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving the United Kingdom.

Notice to Prospective Investors in Switzerland This document is not intended to constitute an offer or solicitation to purchase or invest in the notes described herein. The notes may not be publicly offered, sold or advertised, directly or indirectly, in, into or from Switzerland and will not be listed on the SIX Swiss Exchange or on any other exchange or regulated trading facility in Switzerland. Neither this offering memorandum nor any other offering or marketing material relating to the notes constitutes a prospectus as such term is understood pursuant to article 652a or article 1156 of the Swiss Code of Obligations.

Notice to Prospective Investors in the Dubai International Financial Centre This document relates to an Exempt Offer in accordance with the Markets Rules 2012 of the Dubai Financial Services Authority (“DFSA”). This document is intended for distribution only to persons of a type specified in the Markets Rules 2012 of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus supplement nor taken steps to verify the information set forth herein and has no responsibility for this document. The securities to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If you do not understand the contents of this document you should consult an authorized financial advisor.

In relation to its use in the Dubai International Financial Centre (the “DIFC”), this document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the securities may not be offered or sold directly or indirectly to the public in the DIFC.

Notice to Prospective Investors in Hong Kong Each initial purchaser represents, warrants and agrees that (i) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any notes other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”) and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for the purposes of issue,

352 whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under that Ordinance.

Notice to Prospective Investors in Japan The notes have not been and will not be registered under the Financial Instruments and Exchange Act. The initial purchasers have agreed that they have not, directly or indirectly, offered or sold and will not offer or sell any notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to or for the benefit of a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Act and any other applicable laws, regulations and ministerial guidelines of Japan.

Notice to Prospective Investors in Singapore Each initial purchaser acknowledges that this offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each initial purchaser represents, warrants and agrees that it has not offered or sold any notes or caused such notes to be made notes or caused such notes to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this offering memorandum or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

Notice to Prospective Investors in Canada The notes may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the notes must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non- Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (“NI 33-105”), the initial purchasers are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

353 LEGAL MATTERS

Certain legal matters in connection with the offering will be passed upon for us by Simpson Thacher & Bartlett LLP, New York, New York. An investment vehicle comprised of several partners of Simpson Thacher & Bartlett LLP, members of their families, related persons and others own interests representing less than 1% of the capital commitments of funds affiliated with Silver Lake. Certain legal matters in connection with the offering will be passed upon for the initial purchasers by Cahill Gordon & Reindel LLP, New York, New York.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

The consolidated financial statements of Denali Holding Inc. and its subsidiaries as of January 29, 2016 and January 30, 2015, and for the years ended January 29, 2016 and January 30, 2015, and the period October 29, 2013 to January 31, 2014, referred to as the Successor, and the consolidated financial statements of Dell Inc. and its subsidiaries for the period February 2, 2013 to October 28, 2013, referred to as the Predecessor, included in this offering memorandum have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their reports appearing herein.

The consolidated financial statements and financial statement schedule listed in the accompanying Index to Consolidated Financial Statements of EMC Corporation and its subsidiaries as of December 31, 2015 and 2014 and for each of the three years in the period ended December 31, 2015 included in this offering memorandum have been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing herein.

354 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page Audited Consolidated Financial Statements of Denali Holding Inc. Report of Independent Registered Public Accounting Firm ...... F-2 Consolidated Statements of Financial Position as of January 29, 2016 and January 30, 2015 of Denali Holding Inc. (Successor) ...... F-4 Consolidated Statements of Income (Loss) for the year ended January 29, 2016, the year ended January 30, 2015, the period from October 29, 2013 through January 31, 2014 of Denali Holding Inc. (Successor), and the period from February 2, 2013 through October 28, 2013 of Dell Inc. (Predecessor) ...... F-5 Consolidated Statements of Comprehensive Income (Loss) for the year ended January 29, 2016, the year ended January 30, 2015, the period from October 29, 2013 through January 31, 2014 of Denali Holding Inc. (Successor), and the period from February 2, 2013 through October 28, 2013 of Dell Inc. (Predecessor) ...... F-6 Consolidated Statements of Cash Flows for the year ended January 29, 2016, the year ended January 30, 2015, the period from October 29, 2013 through January 31, 2014 of Denali Holding Inc. (Successor), and the period from February 2, 2013 through October 28, 2013 of Dell Inc. (Predecessor) ...... F-7 Consolidated Statements of Stockholders’ Equity for the year ended January 29, 2016, the year ended January 30, 2015, the period from October 29, 2013 through January 31, 2014 of Denali Holding Inc. (Successor), and the period from February 2, 2013 through October 28, 2013 of Dell Inc. (Predecessor) ...... F-9 Notes to Audited Consolidated Financial Statements ...... F-11 Audited Consolidated Financial Statements of EMC Corporation Report of Independent Registered Public Accounting Firm ...... F-67 Consolidated Balance Sheets at December 31, 2015 and 2014 ...... F-68 Consolidated Income Statements for the years ended December 31, 2015, 2014 and 2013 ...... F-69 Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013 ...... F-70 Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 ...... F-71 Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2015, 2014 and 2013 ...... F-73 Notes to Consolidated Financial Statements ...... F-75 Schedule: Schedule II- Valuation of Qualifying Accounts ...... S-1 Unaudited Consolidated Financial Statements of EMC Corporation Consolidated Balance Sheets at March 31, 2016 (unaudited) and December 31, 2015 ...... F-132 Consolidated Income Statements for the three months ended March 31, 2016 (unaudited) and March 31, 2015 (unaudited) ...... F-133 Consolidated Statements of Comprehensive Income for the three months ended March 31, 2016 (unaudited) and March 31, 2015 (unaudited) ...... F-134 Consolidated Statements of Cash Flows for the three months ended March 31, 2016 (unaudited) and March 31, 2015 (unaudited) ...... F-135 Consolidated Statements of Shareholders’ Equity for the three months ended March 31, 2016 (unaudited) and March 31, 2015 (unaudited) ...... F-136 Notes to Consolidated Financial Statements (unaudited) ...... F-137

F-1 Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Denali Holding Inc.

In our opinion, the accompanying consolidated statements of financial position at January 29, 2016 and January 30, 2015 and the related consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for the years ended January 29, 2016 and January 30, 2015 and for the period from October 29, 2013 through January 31, 2014 present fairly, in all material respects, the financial position of Denali Holding Inc. and its subsidiaries (the “Successor”) at January 29, 2016 and January 30, 2015, and the results of their operations and their cash flows for the years ended January 29, 2016 and January 30, 2015 and for the period from October 29, 2013 through January 31, 2014 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it classifies deferred tax assets and liabilities on the consolidated balance sheet as of January 29, 2016.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP Austin, Texas March 10, 2016

F-2 Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Denali Holding Inc.

In our opinion, the accompanying consolidated statements of income (loss), comprehensive income (loss), stockholders’ equity and cash flows for the period from February 2, 2013 through October 28, 2013 present fairly, in all material respects, the results of operations and cash flows of Dell Inc. and its subsidiaries (the “Predecessor”) for the period from February 2, 2013 through October 28, 2013 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP Austin, Texas December 14, 2015

F-3 DENALI HOLDING INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (in millions)

Successor January 29, January 30, 2016 2015 ASSETS Current assets: Cash and cash equivalents ...... $ 6,576 $ 5,398 Accounts receivable, net ...... 5,535 6,066 Short-term financing receivables, net ...... 2,915 3,022 Inventories, net ...... 1,643 1,663 Other current assets ...... 3,615 4,799 Total current assets ...... 20,284 20,948 Property, plant, and equipment, net ...... 2,270 2,630 Long-term investments ...... 114 95 Long-term financing receivables, net ...... 2,177 2,003 Goodwill ...... 10,049 10,053 Intangible assets, net ...... 9,578 11,774 Other non-current assets ...... 778 689 Total assets ...... $45,250 $48,192 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Short-term debt ...... $ 2,984 $ 2,921 Accounts payable ...... 12,934 13,439 Accrued and other ...... 4,556 5,040 Short-term deferred revenue ...... 4,339 3,948 Total current liabilities ...... 24,813 25,348 Long-term debt ...... 10,775 11,234 Long-term deferred revenue ...... 4,475 4,069 Other non-current liabilities ...... 3,615 4,584 Total liabilities ...... 43,678 45,235 Commitments and contingencies (Note 11) Redeemable shares ...... 106 53 Stockholders’ equity: Common stock and capital in excess of $.01 par value; shares authorized: 700 (Series A: 350, Series B: 150, Series C: 200); shares issued and outstanding: 405 (Series A: 307, Series B: 98) and 405 (Series A: 307, Series B: 98), respectively ...... 5,727 5,708 Retained earnings (deficit) ...... (3,937) (2,833) Accumulated other comprehensive income (loss) ...... (324) 29 Total stockholders’ equity ...... 1,466 2,904 Total liabilities and stockholders’ equity ...... $45,250 $48,192

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-4 DENALI HOLDING INC. CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in millions; except per share amounts)

Successor Predecessor October 29, 2013 February 2, 2013 Fiscal Year Ended Fiscal Year Ended through through January 29, 2016 January 30, 2015 January 31, 2014 October 28, 2013 Net revenue: Products ...... $43,317 $46,690 $11,253 $32,786 Services, including software related ...... 11,569 11,429 2,822 9,516 Total net revenue ...... 54,886 58,119 14,075 42,302 Cost of net revenue: Products ...... 37,923 40,415 10,695 28,150 Services, including software related ...... 7,131 7,496 1,987 6,161 Total cost of net revenue ...... 45,054 47,911 12,682 34,311 Gross margin ...... 9,832 10,208 1,393 7,991 Operating expenses: Selling, general, and administrative . . 8,900 9,428 2,863 6,528 Research, development, and engineering ...... 1,315 1,202 328 945 Total operating expenses ...... 10,215 10,630 3,191 7,473 Operating income (loss) ...... (383) (422) (1,798) 518 Interest and other, net ...... (792) (924) (204) (198) Income (loss) before income taxes . . . (1,175) (1,346) (2,002) 320 Income tax provision (benefit) ...... (71) (125) (390) 413 Net income (loss) ...... $(1,104) $ (1,221) $ (1,612) $ (93) Earnings (loss) per share: ...... Basic ...... $ (2.73) $ (3.02) $ (4.06) $ (0.05) Diluted ...... $ (2.73) $ (3.02) $ (4.06) $ (0.05) Cash dividends declared per common share ...... $ — $ — $ — $ 0.37 Weighted-average shares outstanding: Basic ...... 405 404 397 1,755 Diluted ...... 405 404 397 1,755

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5 DENALI HOLDING INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in millions)

Successor Predecessor October 29, 2013 February 2, 2013 Fiscal Year Ended Fiscal Year Ended through through January 29, 2016 January 30, 2015 January 31, 2014 October 28, 2013 Net income (loss) ...... $(1,104) $(1,221) $(1,612) $ (93) Other comprehensive income (loss), net of tax Foreign currency translation adjustments ...... (138) (192) (28) (44) Available-for-sale investments Change in unrealized gains (losses) ...... — — — (4) Reclassification adjustment for net (gains) losses included in net income (loss) ...... — — — (4) Net change ...... — — — (8) Cash flow hedges Change in unrealized gains (losses) ...... 152 427 3 5 Reclassification adjustment for net (gains) losses included in net income (loss) ...... (367) (179) (2) (56) Net change ...... (215) 248 1 (51) Total other comprehensive income (loss), net of tax benefit (expense) of $8, $(10), $(3), and $3 respectively ...... (353) 56 (27) (103) Comprehensive income (loss), net of tax...... $(1,457) $(1,165) $(1,639) $(196)

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-6 DENALI HOLDING INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; continued on next page)

Successor Predecessor Fiscal Year Fiscal Year October 29, 2013 February 2, 2013 Ended Ended through through January 29, January 30, January 31, October 28, 2016 2015 2014 2013 Cash flows from operating activities: Net loss ...... $(1,104) $(1,221) $(1,612) $ (93) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization ...... 2,872 2,977 762 990 Stock-based compensation expense ...... 72 72 82 184 Effects of exchange rate changes on monetary assets and liabilities denominated in foreign currencies ...... 122 90 12 68 Deferred income taxes ...... (205) (465) (544) (239) Provision for doubtful accounts—including financing receivables ...... 171 216 290 158 Other ...... 115 153 19 42 Changes in assets and liabilities, net of effects from acquisitions: Accounts receivable ...... 187 (238) (102) 134 Financing receivables ...... (321) (550) (199) 65 Inventories ...... (5) 71 (36) (206) Other assets ...... (28) (623) 72 59 Accounts payable ...... (374) 1,029 1,316 (311) Deferred revenue ...... 867 1,431 410 49 Accrued and other liabilities ...... (207) (391) 612 704 Change in cash from operating activities ..... 2,162 2,551 1,082 1,604 Cash flows from investing activities: Investments: Purchases ...... (27) (27) (10) (514) Maturities and sales ...... 7 15 129 2,939 Capital expenditures ...... (482) (478) (101) (431) Proceeds from sale of facilities, land, and other assets ...... 88 23 — — Collections on purchased financing receivables ...... 85 175 53 93 Acquisition of businesses, net of cash acquired ...... — (73) (8,624) (571) Divestitures of businesses, net of cash transferred .... 8 10 — 48 Change in cash from investing activities ..... (321) (355) (8,553) 1,564

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-7 DENALI HOLDING INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (continued, in millions)

Successor Predecessor Fiscal Year Fiscal Year October 29, 2013 February 2, 2013 Ended Ended through through January 29, January 30, January 31, October 28, 2016 2015 2014 2013 Cash flows from financing activities: Payment of dissenting shares obligation ...... — — (251) — Cash dividends paid ...... — — — (653) Proceeds from equity issuance ...... — 28 2,096 — Issuance of common stock under employee plans . . 2 — — 44 Payments for debt issuance costs ...... (10) (7) (264) — Proceeds from debt ...... 5,460 2,936 14,074 1,127 Repayments of debt ...... (5,950) (6,053) (1,584) (5,149) Settlement of predecessor stock options ...... — — (111) — Other ...... 2 2 — 1 Change in cash from financing activities . . . (496) (3,094) 13,960 (4,630) Effect of exchange rate changes on cash and cash equivalents ...... (167) (153) (40) (67) Change in cash and cash equivalents ...... 1,178 (1,051) 6,449 (1,529) Cash and cash equivalents at beginning of the period ...... 5,398 6,449 — 12,569 Cash and cash equivalents at end of the period ...... $6,576 $ 5,398 $ 6,449 $11,040 Income tax paid ...... $ 264 $ 557 $ 95 $ 572 Interest paid ...... $ 585 $ 724 $ 135 $ 228

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-8 DENALI HOLDING INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (in millions; continued on next page)

Common Stock and Capital in Excess of Treasury Accumulated Par Value Stock Retained Other Total Denali Non- Total Issued Earnings Comprehensive Stockholders’ Controlling Stockholders’ Shares Amount Shares Amount (Deficit) Income/(Loss) Equity Interest Equity Predecessor Balances at February 1, 2013 ...... 3,413 $12,554 1,200 $(32,145) $30,330 $ (59) $10,680 $ 21 $10,701 Net loss ...... — — — — (93) — (93) — (93) Other comprehensive loss ...... — — — — — (103) (103) — (103) Stock issuances under employee plans and other (a) ...... 22 40 — — — — 40 — 40 Cash dividends declared ...... — — — — (653) — (653) — (653) Stock-based compensation related ...... — 184 — — — — 184 — 184 Net tax shortfall from employee stock plans ...... — (23) — — — — (23) — (23) Sale of noncontrolling interest ...... — — — — — — — (21) (21) Retirement of outstanding common stock .... (475) — — — — — — — — Balances at October 28, 2013 ...... 2,960 $12,755 1,200 $(32,145) $29,584 $(162) $10,032 $— $10,032

(a) Stock issuance under employee plans is net of shares withheld for employee taxes.

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-9 DENALI HOLDING INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued, in millions)

Common Stock and Capital in Excess of Accumulated Par Value Retained Other Total Issued Earnings Comprehensive Stockholders’ Shares Amount (Deficit) Income/(Loss) Equity Successor Balances at October 29, 2013 ...... —$—$— $— $— Issuance of common stock ...... 402 5,521 — — 5,521 Net loss ...... — — (1,612) — (1,612) Other comprehensive loss ...... — — — (27) (27) Stock-based compensation expense ...... — 132 — — 132 Balances at January 31, 2014 ...... 402 5,653 (1,612) (27) 4,014 Issuance of common stock ...... 3 36 — — 36 Net loss ...... — — (1,221) — (1,221) Other comprehensive income ...... — — — 56 56 Stock-based compensation expense ...... — 72 — — 72 Revaluation of redeemable shares ...... — (53) — — (53) Balances at January 30, 2015 ...... 405 5,708 (2,833) 29 2,904 Issuance of common stock ...... — — — — — Net loss ...... — — (1,104) — (1,104) Other comprehensive loss ...... — — — (353) (353) Stock-based compensation expense ...... — 72 — — 72 Revaluation of redeemable shares ...... — (53) — — (53) Balances at January 29, 2016 ...... 405 $5,727 $(3,937) $(324) $ 1,466

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-10 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—EMC MERGER TRANSACTION, GOING-PRIVATE TRANSACTION AND BASIS OF PRESENTATION EMC Merger Transaction—On October 12, 2015, Denali Holding Inc. (“Parent,” “Denali” or “Denali Holding”) entered into an agreement and plan of merger (the “EMC merger agreement”) with EMC Corporation (“EMC”), Dell Inc. (“Dell”) and Universal Acquisition Co., a direct wholly-owned subsidiary of Parent (“EMC Merger Sub”). Pursuant to the EMC merger agreement, EMC Merger Sub will merge with and into EMC (“the EMC merger”), with EMC continuing as the surviving corporation and a wholly-owned subsidiary of Parent.

Upon the closing of the EMC merger, each share of EMC common stock, par value $0.01 per share (“EMC common stock”) owned immediately prior to the effective time of the EMC merger (other than shares owned by Parent, EMC Merger Sub, EMC or any of its wholly-owned subsidiaries, and other than shares with respect to which EMC’s shareholders are entitled to and properly exercise appraisal rights) 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 of Parent (the “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 EMC merger, plus cash in lieu of any fractional shares. No fractional shares of Class V Common Stock will be issued in the EMC merger. The approximately 223 million shares of Class V Common Stock issuable in the EMC merger (assuming EMC shareholders are not entitled to or do not properly exercise appraisal rights) are intended to track and reflect the economic performance of approximately 65% of EMC’s current economic interest in the business of VMware, Inc. (“VMware”), which currently consists of approximately 343 million shares of VMware common stock. Based on the number of shares of EMC common stock Parent currently expects will be issued and outstanding immediately prior to the completion of the EMC merger, it is estimated that EMC shareholders will receive in the EMC merger approximately 0.111 shares of Class V Common Stock for each share of EMC common stock.

The EMC merger will be financed with a combination of equity and debt financing and cash on hand. Parent has obtained committed equity financing for up to $4.25 billion in the aggregate from Michael S. Dell, Chairman, Chief Executive Officer and founder of Dell, a separate property trust for the benefit of Mr. Dell’s wife, MSDC Denali Investors, L.P., and MSDC Denali EIV, LLC (the “MSD Partners Funds”), funds affiliated with Silver Lake Partners, and Venezio Investments Pte. Ltd., an affiliate of Temasek Holdings (Private) Limited. Parent also has obtained debt financing commitments for up to $49.5 billion in the aggregate from financial institutions for the purpose of financing the EMC merger and refinancing certain existing indebtedness of Parent and EMC. The obligations of the lenders under Parent’s debt financing commitments are subject to a number of customary conditions. Parent’s debt financing commitments will terminate upon the earlier of the termination of the EMC merger agreement in accordance with its terms and December 16, 2016. In addition, each of Parent and EMC has agreed to make available a certain amount of cash on hand (at least $2.95 billion, in the case of Parent, and $4.75 billion, in the case of EMC) at the completion of the EMC merger for the purpose of financing the transactions contemplated by the EMC merger agreement.

The completion of the EMC merger is subject to specified conditions, including (a) approval by EMC’s shareholders, (b) the absence of an order or law prohibiting consummation of the transactions contemplated by the EMC merger agreement, (c) the effectiveness of the registration statement of Parent registering the shares of Class V Common Stock issuable in connection with the EMC merger and (d) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of certain foreign antitrust approvals. In addition, each party’s obligation to consummate the EMC merger is subject to other conditions, including (1) the accuracy of the other party’s representations and warranties (including the absence of a material adverse effect), (2) the other party’s compliance with its obligations, (3) receipt by each party of an opinion of counsel, dated as of the date of the EMC merger, as to certain tax matters and (4) the listing of the Class V Common Stock on the New York Stock Exchange or the Nasdaq Stock Market.

F-11 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The EMC merger agreement contains specified termination rights for both Parent and EMC, including that either party may terminate the EMC merger agreement if the EMC merger is not consummated by December 16, 2016, if any governmental authority has adopted any law or regulation prohibiting or rendering the consummation of the EMC merger permanently illegal, or if any governmental authority has issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the EMC merger, and such order, decree or ruling has become final and nonappealable. If the EMC merger agreement is terminated under certain specified circumstances, including in connection with EMC’s entry into a definitive agreement for a superior proposal, EMC must pay Parent a termination fee of $2.5 billion. Further, if the EMC merger agreement is terminated under specified circumstances and, within 12 months after the termination, EMC enters into a definitive agreement providing for, or consummates, an acquisition proposal, EMC will be obligated to pay Parent a termination fee of $2.5 billion. The EMC merger agreement also provides that Parent and Dell will be obligated to pay EMC a reverse termination fee of $4 billion under specified circumstances and, in certain instances, an alternative reverse termination fee of $6 billion.

Other than the recognition of certain expenses related to the pending EMC merger, there was no impact of the EMC merger on the Audited Consolidated Financial Statements included in this report.

Going-Private Transaction—On October 29, 2013, Dell was acquired by Denali in a merger transaction pursuant to the terms of an agreement and plan of merger, dated as of February 5, 2013, as amended (“the going- private transaction”). Denali is a Delaware corporation owned by Michael S. Dell and a separate property trust for the benefit of Mr. Dell’s wife, investment funds affiliated with Silver Lake Partners, the MSD Partners Funds, and certain members of Dell’s management. Mr. Dell serves as Chairman and Chief Executive Officer of Denali and Dell.

See Note 3 of the Notes to the Audited Consolidated Financial Statements for more information on the going-private transaction.

Basis of Presentation—For the purposes of these financial statements, periods prior to October 29, 2013 reflect the financial position, results of operations, and changes in financial position of Dell and its consolidated subsidiaries prior to the going-private transaction (the “Predecessor”) and periods beginning on or after October 29, 2013 reflect the financial position, results of operations, and changes in financial position of Denali and its consolidated subsidiaries (individually and together with its consolidated subsidiaries, “the Company”) subsequent to the going-private transaction (the “Successor”).

The going-private transaction was recorded using the acquisition method of accounting in accordance with the accounting guidance for business combinations. This guidance prescribes that the purchase price be allocated to assets acquired and liabilities assumed based on the estimated fair market value of such assets and liabilities on the date of acquisition. Accordingly, periods prior to the going-private transaction are not comparable to subsequent periods due to the difference in the basis of presentation of purchase accounting as compared to historical cost.

NOTE 2—DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business—The Company offers a broad range of technology solutions, including servers and networking products, storage products, software, mobility products, desktops, and third-party software and peripherals.

Fiscal Year—The Company’s fiscal year is the 52 or 53 week period ending on the Friday nearest January 31. The fiscal years ended January 29, 2016 (“Fiscal 2016”), January 30, 2015 (“Fiscal 2015”), and January 31, 2014 (“Fiscal 2014”) all included 52 weeks.

F-12 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Principles of Consolidation—The accompanying consolidated financial statements include the accounts of Denali Holding and its wholly-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated.

Use of Estimates—The preparation of financial statements in accordance with GAAP requires the use of management’s estimates. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at fiscal year-end, and the reported amounts of revenues and expenses during the fiscal year. Actual results could differ from those estimates.

Cash and Cash Equivalents—All highly liquid investments, including credit card receivables due from banks, with original maturities of 90 days or less at date of purchase, are reported at fair value and are considered to be cash equivalents. All other investments not considered to be cash equivalents are separately categorized as investments.

Investments—In the successor period, the Company’s investments are in non-marketable equity securities. These investments are recorded at cost which approximates fair value. If the fair value of an individual investment declines below its cost or carrying value and is determined to be permanently impaired, an impairment loss will be recognized in interest and other, net, and will reduce the investment’s carrying amount. In the predecessor period, Dell’s investments were primarily in debt securities, which were classified as available-for-sale and reported at fair value (based primarily on quoted prices and market observable inputs), using the specific identification method. Unrealized gains and losses, net of taxes, were reported as a component of stockholders’ equity, while realized gains and losses were recognized in interest and other, net.

Allowance for Doubtful Accounts—The Company recognizes an allowance for losses on accounts receivable in an amount equal to the estimated probable losses, net of recoveries. The allowance is based on an analysis of historical bad debt experience, current receivables aging, and expected future write-offs, as well as an assessment of specific identifiable customer accounts considered at risk or uncollectible. The expense associated with the allowance for doubtful accounts is recognized in selling, general, and administrative expenses.

Financing Receivables—Financing receivables are presented net of allowance for losses and consist of customer receivables and residual interest. Customer receivables include revolving loans and fixed-term leases and loans resulting primarily from the sale of the Company’s products and services. The Company has two portfolios that are based on how risk is assessed to determine the appropriate allowance levels: (1) fixed-term leases and loans and (2) revolving loans. The portfolio segments are further segregated into classes based on products, customer type, and credit risk evaluation: (1) Revolving—Dell Preferred Account (“DPA”); (2) Revolving—Dell Business Credit (“DBC”); (3) Fixed-term—Consumer and Small Commercial; and (4) Fixed-term—Medium and Large Commercial. Fixed-term leases and loans are offered to qualified small and medium-sized businesses, large commercial accounts, governmental organizations, and educational entities. Additionally, fixed-term loans are also offered to certain individual consumer customers. Revolving loans are offered under private label credit financing programs. The DPA revolving loan programs are offered to individual consumers and the DBC revolving loan programs are offered to small and medium-sized business customers.

The Company retains a residual interest in equipment leased under its fixed-term lease programs. The amount of the residual interest is established at the inception of the lease based upon estimates of the value of the equipment at the end of the lease term using historical studies, industry data, and future value-at-risk demand valuation methods. On a quarterly basis, the Company assesses the carrying amount of its recorded residual

F-13 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS values for impairment. Anticipated declines in specific future residual values that are considered to be other-than- temporary are recorded currently in earnings.

Allowance for Financing Receivable Losses The Company recognizes an allowance for losses on financing receivables in an amount equal to the probable losses net of recoveries. The allowance for losses is generally determined at the aggregate portfolio level based on a variety of factors, including historical and anticipated experience, past due receivables, receivable type, and customer risk profile. Customer account principal and interest are charged to the allowance for losses when an account is deemed to be uncollectible or generally when the account is 180 days delinquent. While the Company does not generally place financing receivables on non-accrual status during the delinquency period, accrued interest is included in the allowance for loss calculation, and therefore, the Company is adequately reserved in the event of charge off. Recoveries on receivables previously charged off as uncollectible are recorded to the allowance for financing receivables losses. The expense associated with the allowance for financing receivables losses is recognized as cost of net revenue. Both fixed and revolving receivable loss rates are affected by macro-economic conditions, including the level of GDP growth, unemployment rates, the level of commercial capital equipment investment, and the credit quality of the borrower.

Asset Securitization The Company transfers certain U.S. customer financing receivables to Special Purpose Entities (“SPEs”) that meet the definition of a Variable Interest Entity (“VIE”) and are consolidated into the Company’s Consolidated Financial Statements. These SPEs are bankruptcy remote legal entities with separate assets and liabilities. The purpose of the SPEs is to facilitate the funding of customer receivables in the capital markets. These SPEs have entered into financing arrangements with multi-seller conduits that, in turn, issue asset-backed debt securities in the capital markets. The asset securitizations in the SPEs are being accounted for as secured borrowings. See Note 5 of the Notes to the Audited Consolidated Financial Statements for additional information on the impact of the consolidation.

Inventories—Inventories are stated at the lower of cost or market with cost being determined on a first-in, first-out basis. Adjustments to reduce the cost of inventory to its net realizable value are made, if required, for estimated excess, obsolescence, or impaired balances.

Property, Plant, and Equipment—Property, plant, and equipment are carried at depreciated cost. Depreciation is determined using the straight-line method over the estimated economic lives of the assets, which range from ten to thirty years for buildings and two to five years for all other assets. Leasehold improvements are amortized over the shorter of five years or the lease term. Gains or losses related to retirements or disposition of fixed assets are recognized in the period incurred.

Software Development Costs—Costs incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any additional costs are capitalized in accordance with authoritative guidance until the product is available for general release. Software development costs incurred subsequent to a product establishing technological feasibility are usually not significant. No significant software development costs have been capitalized as of January 29, 2016 or January 30, 2015.

The Company capitalizes eligible internal-use software development costs incurred subsequent to the completion of the preliminary project stage. Development costs are amortized over the shorter of the expected useful life of the software or five years. Costs associated with maintenance and minor enhancements to the features and functionality of the Company’s website are expensed as incurred.

F-14 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Impairment of Long-Lived Assets—The Company reviews long-lived assets for impairment when circumstances indicate the carrying amount of an asset may not be recoverable based on the undiscounted future cash flows of the assets. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. The Company reviews long-lived assets for impairment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified.

Business Combinations—The Company accounts for business combinations, including the going-private transaction described in Note 1 of the Notes to the Audited Consolidated Financial Statements, using the acquisition method of accounting. Accordingly, the assets and liabilities of the acquired business are recorded at their fair values at the date of acquisition. The excess of the purchase price over the fair value of the assets acquired and the liabilities assumed is recorded as goodwill. During the measurement period, if new information is obtained about facts and circumstances that existed as of the acquisition date, changes in the estimated fair values of the net assets recorded may change the amount of the purchase price allocable to goodwill. During the measurement period, which expires one year from the acquisition date, changes to any purchase price allocations that are material to the Company’s consolidated financial results will be adjusted retroactively.

In-process research and development costs are recorded at fair value as an indefinite-lived intangible asset and assessed for impairment thereafter until completion, at which point the asset is amortized over its expected useful life. All acquisition costs are expensed as incurred, and the results of operations of acquired businesses are included in the Consolidated Financial Statements from the acquisition date.

Intangible Assets Including Goodwill—Identifiable intangible assets with finite lives are amortized over their estimated useful lives. In addition, intangible assets are reviewed for impairment if indicators of potential impairment exist. Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis in the third fiscal quarter, or sooner if an indicator of impairment occurs.

Foreign Currency Translation—The majority of the Company’s international sales are made by international subsidiaries, most of which have the U.S. dollar as their functional currency. The Company’s subsidiaries that do not have the U.S. dollar as their functional currency translate assets and liabilities at current rates of exchange in effect at the balance sheet date. Revenue and expenses from these international subsidiaries are translated using the monthly average exchange rates in effect for the period in which the items occur. Foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) (“OCI”) in stockholders’ equity.

Local currency transactions of international subsidiaries that have the U.S. dollar as the functional currency are remeasured into U.S. dollars using the current rates of exchange for monetary assets and liabilities and historical rates of exchange for non-monetary assets and liabilities. Gains and losses from remeasurement of monetary assets and liabilities are included in interest and other, net.

Hedging Instruments—The Company uses derivative financial instruments, primarily forwards, options, and swaps, to hedge certain foreign currency and interest rate exposures. The relationships between hedging instruments and hedged items, as well as the risk management objectives and strategies for undertaking hedge transactions, are formally documented. The Company does not use derivatives for speculative purposes.

All derivative instruments are recognized as either assets or liabilities in the Consolidated Statements of Financial Position and are measured at fair value. Hedge accounting is applied based upon the criteria established by accounting guidance for derivative instruments and hedging activities. Derivatives are assessed for hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative. Any

F-15 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS hedge ineffectiveness is recognized currently in earnings as a component of interest and other, net. For derivatives that are not designated as hedges or do not qualify for hedge accounting treatment, the Company recognizes the change in the instrument’s fair value currently in earnings as a component of interest and other, net. The Company’s hedge portfolio includes non-designated derivatives and derivatives designated as cash flow hedges.

For derivative instruments that are designated as cash flow hedges, hedge ineffectiveness is measured by comparing the cumulative change in the fair value of the hedge contract with the cumulative change in the fair value of the hedged item, both of which are based on forward rates. The Company records the effective portion of the gain or loss on the derivative instrument in accumulated other comprehensive income (loss), as a separate component of stockholders’ equity, and reclassifies the gain or loss into earnings in the period during which the hedged transaction is recognized in earnings.

Cash flows from derivative instruments are presented in the same category on the Consolidated Statements of Cash Flows as the cash flows from the underlying hedged items. See Note 7 of the Notes to the Audited Consolidated Financial Statements for a description of the Company’s derivative financial instrument activities.

Revenue Recognition—Net revenue includes sales of hardware, services, software, and peripherals. The Company recognizes revenue for these products and services when it is realized or realizable and earned. Revenue is considered realized and earned when persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the Company’s fee to its customer is fixed or determinable; and collection of the resulting receivable is reasonably assured.

Revenue from third-party software sales and extended warranties for third-party products, for which the Company does not meet the criteria for gross revenue recognition, is recognized on a net basis. All other revenue is recognized on a gross basis.

Services revenue and cost of services revenue captions in the Consolidated Statements of Income (Loss) include the Company’s services, third-party software revenue, and support services related to the Company- owned software offerings.

Multiple Deliverables The Company’s multiple deliverable arrangements include hardware products that are sold with software or services such as extended warranty, installation, maintenance, and other services contracts. The Company’s service contracts may include a combination of services arrangements, including support and deployment services, infrastructure, cloud and security services, and applications and business process services. The nature and terms of these multiple deliverable arrangements will vary based on the customized needs of the Company’s customers. The deliverables included in the Company’s multiple deliverable arrangements typically represent a separate unit of accounting. Accordingly, consideration is allocated to these deliverables based on each unit’s relative selling price. The hierarchy used to determine the selling price of a deliverable is: (1) vendor specific objective evidence (“VSOE”), (2) third-party evidence of selling price (“TPE”), and (3) best estimate of the selling price (“ESP”). In instances where the Company cannot establish VSOE, the Company establishes TPE by evaluating largely similar and interchangeable competitor products or services in standalone sales to similarly situated customers.

F-16 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Products Revenue from the sale of products is recognized when title and risk of loss passes to the customer. Delivery is considered complete when products have been shipped to the Company’s customer, title and risk of loss has transferred to the customer, and customer acceptance has been satisfied. Customer acceptance is satisfied if acceptance is obtained from the customer, if all acceptance provisions lapse, or if the Company has evidence that all acceptance provisions have been satisfied. The Company records reductions to revenue for estimated customer sales returns, rebates, and certain other customer incentive programs. These reductions to revenue are made based upon reasonable and reliable estimates that are determined by historical experience, contractual terms, and current conditions. The primary factors affecting the Company’s accrual for estimated customer returns include estimated return rates as well as the number of units shipped that have a right of return that has not expired as of the balance sheet date. If returns cannot be reliably estimated, revenue is not recognized until a reliable estimate can be made or the return right lapses. The Company sells its products directly to customers as well as through other distribution channels, such as retailers, distributors, and resellers. The Company recognizes revenue on these sales when the reseller has economic substance apart from the Company; any credit risk has been identified and quantified; title and risk of loss has passed to the sales channel; the fee paid to the Company is not contingent upon resale or payment by the end user; and the Company has no further obligations related to bringing about resale or delivery. Sales through the Company’s distribution channels are primarily made under agreements allowing for limited rights of return, price protection, rebates, and marketing development funds. The Company has generally limited return rights through contractual caps or has an established selling history for these arrangements. Therefore, there is sufficient data to establish reasonable and reliable estimates of returns for the majority of these sales. To the extent price protection or return rights are not limited and a reliable estimate cannot be made, all of the revenue and related costs are deferred until the product has been sold to the end-user or the rights expire. The Company records estimated reductions to revenue or an expense for distribution channel programs at the later of the offer or the time revenue is recognized. The Company defers the cost of shipped products awaiting revenue recognition until revenue is recognized.

Services Services include a broad range of configurable IT and business services, including support and deployment services, infrastructure, cloud, and security services, and applications and business process services. Revenue is recognized for services contracts as earned, which is generally on a straight-line basis over the term of the contract or on a proportional performance basis as the services are rendered and the Company’s obligations are fulfilled. Revenue from time and materials or cost-plus contracts is recognized as the services are performed. Revenue from fixed price contracts is recognized on a straight-line basis, unless revenue is earned and obligations are fulfilled in a different pattern. These service contracts may include provisions for cancellation, termination, refunds, or service level adjustments. These contract provisions would not have a significant impact on recognized revenue as the Company generally recognizes revenue for these contracts as the services are performed. For sales of extended warranties with a separate contract price, the Company defers revenue equal to the separately stated price. Revenue associated with undelivered elements is deferred and recorded when delivery occurs or services are provided. Revenue from extended warranty and service contracts, for which the Company is obligated to perform, is recorded as deferred revenue and subsequently recognized over the

F-17 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

term of the contract on a straight-line basis or when the service is completed and the costs associated with these contracts are recognized as incurred.

Software The Company recognizes revenue in accordance with industry specific software accounting guidance for all software and post-contract support (“PCS”) that are not essential to the functionality of the hardware. Accounting for software that is essential to the functionality of the hardware is accounted for as specified above under “Multiple Deliverables.” The Company has not established VSOE of fair value for the undelivered elements of third-party software offerings. For the majority of the Company-owned software offerings, the Company has established VSOE to support a separation of the software license and undelivered elements. These elements include PCS as well as professional services. VSOE of the undelivered element is determined by reference to the prices customers pay for support when it is sold separately. In instances where VSOE is established, the Company recognizes revenue from the sale of software licenses at the time of initial sale, assuming all of the above criteria have been met, and revenue from the undelivered elements over the maintenance period. When the Company has not established VSOE to support a separation of the software license and undelivered elements, the revenue and related costs are generally recognized over the term of the agreement.

Other The Company records revenue from the sale of equipment under sales-type leases as product revenue in an amount equal to the present value of minimum lease payments at the inception of the lease. Sales-type leases also produce financing income, which is included in net revenue in the Consolidated Statements of Income (Loss) and is recognized at consistent rates of return over the lease term. The Company also offers qualified customers revolving credit lines for the purchase of products and services offered by the Company. Financing income attributable to these revolving loans is recognized in net revenue on an accrual basis.

The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions.

Standard Warranty Liabilities—The Company records warranty liabilities for its standard limited warranty at the time of sale for the estimated costs that may be incurred under its limited warranty. The liability for standard warranties is included in accrued and other current and other non-current liabilities in the Consolidated Statements of Financial Position. The specific warranty terms and conditions vary depending upon the product sold and the country in which the Company does business, but generally includes technical support, parts, and labor over a period ranging from one to three years. Factors that affect the Company’s warranty liability include the number of installed units currently under warranty, historical and anticipated rates of warranty claims on those units, and cost per claim to satisfy the Company’s warranty obligation. The anticipated rate of warranty claims is the primary factor impacting the estimated warranty obligation. The other factors are less significant due to the fact that the average remaining aggregate warranty period of the covered installed base is approximately 16 months, repair parts are generally already in stock or available at pre-determined prices, and labor rates are generally arranged at pre-established amounts with service providers. Warranty claims are relatively predictable based on historical experience of failure rates. If actual results differ from the estimates, the Company revises its estimated warranty liability. Each quarter, the Company reevaluates its estimates to assess the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Deferred Revenue—Deferred revenue represents amounts received in advance for extended warranty services, amounts due or received from customers under a legally binding commitment prior to services being

F-18 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS rendered, deferred revenue related to internally-developed software offerings, and other deferred revenue, which primarily consists of deferred profit on third-party software offerings.

Vendor Rebates and Settlements—The Company may receive consideration from vendors in the normal course of business. Certain of these funds are rebates of purchase price paid and others are related to reimbursement of costs incurred by the Company to sell the vendor’s products. The Company recognizes a reduction of cost of goods sold and inventory if the funds are a reduction of the price of the vendor’s products. If the consideration is a reimbursement of costs incurred by the Company to sell or develop the vendor’s products, then the consideration is classified as a reduction of that cost in the Consolidated Statements of Income (Loss), most often operating expenses. In order to be recognized as a reduction of operating expenses, the reimbursement must be for a specific, incremental, and identifiable cost incurred by the Company in selling the vendor’s products or services.

In addition, the Company may settle commercial disputes with vendors from time to time. Claims for loss recoveries are recognized when a loss event has occurred, recovery is considered probable, the agreement is finalized, and collectibility is assured. Amounts received by the Company from vendors for loss recoveries are generally recorded as a reduction of cost of goods sold.

Loss Contingencies—The Company is subject to the possibility of various losses arising in the ordinary course of business. The Company considers the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as the Company’s ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. The Company regularly evaluates current information available to determine whether such accruals should be adjusted and whether new accruals are required.

Shipping Costs—The Company’s shipping and handling costs are included in cost of net revenue in the Consolidated Statements of Income (Loss).

Selling, General, and Administrative—Selling expenses include items such as sales salaries and commissions, marketing and advertising costs, and contractor services. Advertising costs are expensed as incurred in selling, general, and administrative expenses in the Consolidated Statements of Income (Loss). For the fiscal years ended January 29, 2016 and January 30, 2015 and the successor period ended January 31, 2014, advertising expenses were $668 million, $660 million, and $166 million respectively, and for the predecessor period ended October 28, 2013, advertising expenses were $504 million. General and administrative expenses include items for the Company’s administrative functions, such as finance, legal, human resources, and information technology support. These functions include costs for items such as salaries, maintenance and supplies, insurance, depreciation expense, and allowance for doubtful accounts.

Research, Development, and Engineering Costs—Research, development, and engineering costs are expensed as incurred. Research, development, and engineering expenses primarily include payroll and headcount-related costs, contractor fees, infrastructure costs, and administrative expenses directly related to research and development support.

Income Taxes—Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company calculates a provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized by identifying the temporary differences arising from the different treatment of items for tax and accounting purposes. The Company provides

F-19 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS valuation allowances for deferred tax assets, where appropriate. In assessing the need for a valuation allowance, the Company considers all available evidence for each jurisdiction, including past operating results, estimates of future taxable income, and the feasibility of ongoing tax planning strategies. In the event the Company determines all or part of the net deferred tax assets are not realizable in the future, the Company will make an adjustment to the valuation allowance that would be charged to earnings in the period such determination is made.

The accounting guidance for uncertainties in income tax prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The Company recognizes a tax benefit from an uncertain tax position in the financial statements only when it is more likely than not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority’s administrative practices and precedents.

Stock-Based Compensation—The Company measures stock-based compensation expense for all share-based awards granted based on the estimated fair value of those awards at grant date. In connection with the acquisition of Dell by Denali Holding, the board of directors of Denali Holding approved the Denali Holding Inc. 2013 Stock Incentive Plan (the “2013 Stock Incentive Plan”). For service-based stock options issued under the 2013 Stock Incentive Plan, the Company typically estimates the fair value of these awards using the Black-Scholes valuation model and for performance-based stock options issued under the 2013 Stock Incentive Plan, the Company estimates the fair value of these awards using the Monte Carlo valuation model. In accordance with authoritative guidance, the Company records stock-based compensation expense for equity plans issued by Denali Holding at the Dell level, as the associated benefits reside at that level. Denali Holding primarily grants service-based and performance-based stock options under this plan.

The compensation cost of service-based stock options is recognized net of any estimated forfeitures on a straight-line basis over the employee requisite service period. Compensation cost for performance-based options, containing a market condition, is recognized on a graded accelerated basis net of estimated forfeitures over the requisite service period. Forfeiture rates are estimated at grant date based on historical experience and adjusted in subsequent periods for differences in actual forfeitures from those estimates. See Note 14 of the Notes to the Audited Consolidated Financial Statements for further discussion of stock-based compensation.

Recently Issued Accounting Pronouncements Revenue from Contracts with Customers—In May 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance on the recognition of revenue from contracts with customers. The objective of the new standard is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The new standard requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB approved a one-year deferral of the effective date of this standard. Public entities are required to adopt the new standard for fiscal years, and interim periods within those years, beginning after December 15, 2017, with the option of applying the standard as early as the original effective date for public entities. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of the new guidance, the effective date, and the method of adoption.

Presentation of Debt Issuance Costs—In April 2015, the FASB issued amended guidance which will change the classification of debt issuance costs in the Consolidated Statements of Financial Position. The new guidance

F-20 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS will require debt issuance costs to be presented as a direct deduction from the carrying amount of the related debt liability consistent with the presentation of debt discounts, rather than as an asset as currently presented. The guidance related to recognition and measurement of debt issuance costs remains unchanged. Public entities must implement the new presentation for fiscal years, and interim periods within those years, beginning after December 15, 2015. Except for the reclassification of debt issuance costs in the Consolidated Statements of Financial Position, there will be no other impact to the Consolidated Financial Statements.

Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement—In April 2015, the FASB issued guidance about whether a cloud computing arrangement includes software and how to account for that software license. If a cloud computing arrangement includes a software license element, the related fees are accounted for as an internal-use software intangible. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a services contract. Public entities must adopt the new guidance for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early application permitted. The Company is currently evaluating the impact of the new guidance and timing of adoption, but does not expect it to have a material impact on its Consolidated Financial Statements.

Simplifying the Accounting for Measurement-Period Adjustments—In September 2015, the FASB issued amended guidance which eliminates the requirement that an acquirer in a business combination account for a measurement-period adjustment retrospectively. Instead, an acquirer will be required to recognize a measurement-period adjustment during the period in which the amount of the adjustment is determined. Public entities must adopt the new guidance for fiscal years, and interim periods within those years, beginning after December 15, 2015. The Company is currently evaluating the impact of the new guidance on the Consolidated Financial Statements.

Balance Sheet Classification of Deferred Taxes—In November 2015, the FASB amended guidance for classification of deferred income taxes which requires that deferred tax assets and liabilities be classified as non- current in the Consolidated Statement of Financial Position. The Company elected to early adopt this standard in the fourth quarter of Fiscal 2016 on a prospective basis. Other than the reclassification of deferred tax amounts in the Consolidated Statement of Financial Position as of January 29, 2016, there was no impact on the Consolidated Financial Statements.

Recognition and Measurement of Financial Assets and Financial Liabilities—In January 2016, the FASB issued amended guidance on Recognition and Measurement of Financial Assets and Financial Liabilities. The standard addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Public entities must adopt the new guidance for fiscal years, and interim periods within those years, beginning after December 15, 2017. The Company is currently evaluating the impact that the standard will have on the Consolidated Financial Statements.

Leases—In February 2016, the FASB issued amended guidance on the accounting for leasing transactions. The primary objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Public entities must adopt the new guidance for reporting periods beginning after December 15, 2018, with early adoption permitted. Companies are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact that the standard will have on the Consolidated Financial Statements.

F-21 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3—BUSINESS COMBINATIONS Acquisition of Dell by Denali Holding On October 29, 2013, Dell was acquired, for an aggregate GAAP purchase price of $24.1 billion for all of its outstanding shares, by Denali Holding, a Delaware corporation owned, upon the closing of the going-private transaction, by Michael S. Dell, the Chairman, Chief Executive Officer, and founder of Dell, and a separate property trust for the benefit of Mr. Dell’s wife, investment funds affiliated with Silver Lake Partners, the MSD Partners Funds, and certain members of Dell’s management. There was no contingent consideration related to this transaction, other than with respect to dissenting shares for which appraisal has been demanded under Delaware law, as discussed in Note 11 of the Notes to the Audited Consolidated Financial Statements.

Through January 29, 2016, the Company has incurred $335 million in transaction-related expenses. These expenses consist of professional fees and the reimbursement of certain expenses, which were approved by Dell’s former board of directors, incurred in connection with the going-private transaction. Of this amount, $23 million was incurred in the fiscal year ended January 29, 2016, $20 million was incurred in the fiscal year ended January 30, 2015, $120 million was recognized in the successor period ended January 31, 2014, and $172 million was recognized in the predecessor period ended October 28, 2013. These costs were recognized in selling, general, and administrative expenses in the Consolidated Statements of Income (Loss).

In addition, as of January 29, 2016, the Company expects to incur approximately $54 million in compensation-related expenses, net of forfeitures, that will be expensed through October 2018. These expenses will be recognized in cost of net revenue and operating expenses in Dell’s Consolidated Statements of Income (Loss). See Note 1 and Note 14 of the Notes to the Audited Consolidated Financial Statements for more information on these expenses.

The following table summarizes the purchase price of this transaction as of October 29, 2013:

Purchase Price (in millions) Purchase price: Consideration paid ...... $19,664 Equity rollover ...... 3,440 Other (a) ...... 247 Liability for dissenting shares (Note 11) ...... 770 Total ...... $24,121

(a) Represents the fair value for which services were rendered as of the close of the transaction under share- based payment arrangements.

F-22 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the going-private transaction, all of Dell’s assets and liabilities were accounted for and recognized at fair value on October 29, 2013, in the Company’s Consolidated Financial Statements. The following table summarizes the fair value of the assets acquired and the liabilities assumed by major class as a result of this transaction:

Weighted-Average Cost Useful Life (in millions) (in years) Intangible Assets: Amortizable intangible assets: Customer relationships ...... $10,776 6.6 Technology ...... 1,955 4.7 Trade names ...... 334 6.5 Total amortizable intangible assets ...... 13,065 6.3 In-process research and development ...... 141 Indefinite lived intangible asset (Dell trade name) .... 1,435 Total intangible assets ...... 14,641 Goodwill ...... 10,005 Cash and cash equivalents (a) ...... 11,040 Accounts receivable, net ...... 6,274 Inventories, net ...... 1,760 Short-term financing receivables, net ...... 3,456 Short-term investments and other current assets ...... 3,912 Property, plant, and equipment, net ...... 3,002 Long-term financing receivables, net ...... 1,610 Long-term investments and other non-current assets ...... 916 Short-term debt ...... (1,399) Accounts payable ...... (11,228) Accrued and other ...... (4,146) Short-term deferred revenue ...... (3,219) Long-term debt ...... (3,418) Long-term deferred revenue ...... (3,034) Other non-current liabilities ...... (6,051) Total ...... $24,121

(a) Of the above cash and cash equivalents, $4.3 billion was used in connection with the financing requirements of the going-private transaction.

The Company recorded $10.0 billion in goodwill related to this transaction. This amount represents the excess of the purchase price over the fair value of the assets acquired and liabilities assumed associated with this transaction. Goodwill is an asset representing future economic benefits arising from other assets acquired that are not individually identified and separately recognized.

F-23 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4—FAIR VALUE MEASUREMENTS The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of January 29, 2016 and January 30, 2015:

Successor January 29, 2016 January 30, 2015 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Quoted Quoted Prices Prices in Active Significant in Active Significant Markets for Other Significant Markets for Other Significant Identical Observable Unobservable Identical Observable Unobservable Assets Inputs Inputs Total Assets Inputs Inputs Total (in millions) Assets: Cash equivalents: Money market funds ..... $3,832 $— $— $3,832 $1,778 $— $— $1,778 Derivative instruments ...... — 195 — 195 — 437 — 437 Common stock purchase agreement ...... — — 10 10 — — — — Total assets ...... $3,832 $195 $ 10 $4,037 $1,778 $437 $— $2,215 Liabilities: Derivative instruments ...... $ — $ 12 $— $ 12 $ — $ 56 $— $ 56 Debt—Other ...... — — 28 28 — — — — Total liabilities ..... $ — $ 12 $ 28 $ 40 $ — $ 56 $— $ 56

The Company did not transfer any securities between levels during the fiscal year ended January 29, 2016.

The following section describes the valuation methodologies the Company uses to measure financial instruments at fair value: Money Market Funds—The Company’s money market funds are classified as cash equivalents with original maturities of 90 days or less and are recognized at fair value. The valuations of these securities are based on quoted prices in active markets for identical assets, when available, or pricing models whereby all significant inputs are observable or can be derived from or corroborated by observable market data. The Company reviews security pricing and assesses liquidity on a quarterly basis.

Derivative Instruments—The Company’s derivative financial instruments consist primarily of foreign currency forward and purchased option contracts and interest rate swaps. The fair value of the portfolio is determined using valuation models based on market observable inputs, including interest rate curves, forward and spot prices for currencies, and implied volatilities. Credit risk is also factored into the fair value calculation of the Company’s derivative instrument portfolio. See Note 7 of the Notes to the Audited Consolidated Financial Statements for a description of the Company’s derivative financial instrument activities.

Debt—Other—As of January 29, 2016, the Company recognized a portion of its long-term debt at fair value. This debt is represented by promissory notes issued on August 3, 2015 and September 14, 2015. The Company determined fair value using a discounted cash flow model which included significant unobservable inputs and assumptions. The unobservable inputs used include projected cash outflows over varying possible maturity dates, weighted by the probability of those possible outcomes, along with assumed discount rates.

F-24 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Varying these inputs could alter the fair value recognized for this instrument, but no material changes in fair value are expected given the maximum settlement amount of approximately $28 million under the agreement pursuant to which the promissory notes were issued.

Common Stock Purchase Agreements—The equity financing agreements obtained by Parent in connection with the EMC merger transaction described in Note 1 of the Notes to the Audited Consolidated Financial Statements permit Michael S. Dell, the MSD Partners Funds, Silver Lake Partners, and Temasek to purchase Parent common stock at a fixed price per share contingent on the closing of the EMC merger transaction. Each agreement also provides for a price protection in the event additional equity investors purchase Parent common stock at a lower price. The agreements with Michael S. Dell, the MSD Partners Funds, and Silver Lake Partners are not required to be remeasured to fair value and are effectively capital commitments, because of the degree of control and influence such persons can exercise over Parent, including control over when and at what price Parent will issue new shares, as well as the fact that the equity agreements were entered into solely for the purpose of financing the EMC merger transaction. The provision relating to price protection is considered substantive to Temasek as an unrelated party. Consequently, the Company has recognized the contract as an asset or liability, initially recorded at fair value of zero, with subsequent changes in fair value recorded in earnings. As of January 29, 2016, the Company recognized an asset of $10 million related to the Temasek equity contract.

The Company determined the fair value of this forward contract using a Black-Scholes valuation model, which included significant unobservable inputs and assumptions. The unobservable inputs used include the current value of the Parent common stock, which was estimated based on a combination of a discounted cash flow methodology and a market approach, the probability of the EMC merger occurring, the time period to contract expiration, and the probability that Parent will issue its shares below the foregoing fixed price per share. Varying these inputs could materially alter the fair value recognized for this instrument.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis—Certain assets are measured at fair value on a nonrecurring basis and therefore are not included in the recurring fair value table above. These assets consist primarily of non-financial assets such as goodwill and intangible assets and investments accounted for under the cost method. See Note 8 of the Notes to the Audited Consolidated Financial Statements for additional information about goodwill and intangible assets. Investments accounted for under the cost method are measured at fair value initially. Subsequently, when there is an indicator of impairment, the impairment is recognized.

NOTE 5—FINANCIAL SERVICES Dell Financial Services The Company offers or arranges various financing options and services for its business and consumer customers in the United States, Canada, Europe, and Mexico through Dell Financial Services and its affiliates (“DFS”). The key activities of DFS include the origination, collection, and servicing of customer receivables primarily related to the purchase of Dell products and services. New financing originations, which represent the amounts of financing provided by DFS to customers for equipment and related software and services, including third-party originations, were $3.7 billion for the fiscal years ended ended January 29, 2016 and January 30, 2015, and $1.0 billion and $2.3 billion for the successor period ended January 31, 2014 and the predecessor period ended October 28, 2013, respectively.

The Company’s financing receivables are aggregated into the following categories: • Revolving loans—Revolving loans offered under private label credit financing programs provide qualified customers with a revolving credit line for the purchase of products and services offered by

F-25 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Dell. These private label credit financing programs are referred to as Dell Preferred Account (“DPA”) and Dell Business Credit (“DBC”). The DPA product is primarily offered to individual consumer customers, and the DBC product is primarily offered to small and medium-sized commercial customers. Revolving loans in the United States bear interest at a variable annual percentage rate that is tied to the prime rate. Based on historical payment patterns, revolving loan transactions are typically repaid within twelve months on average. • Fixed-term sales-type leases and loans—The Company enters into sales-type lease arrangements with customers who desire lease financing. Leases with business customers have fixed terms of generally two to four years. Future maturities of minimum lease payments as of January 29, 2016, were as follows: Fiscal 2017—$1,541 million; Fiscal 2018—$1,021 million; Fiscal 2019—$458 million; Fiscal 2020—$111 million; Fiscal 2021 and beyond—$17 million. The Company also offers fixed-term loans to qualified small businesses, large commercial accounts, governmental organizations, educational entities, and certain individual consumer customers. These loans are repaid in equal payments including interest and have defined terms of generally three to five years.

The following table summarizes the components of the Company’s financing receivables segregated by portfolio segment as of January 29, 2016 and January 30, 2015:

Successor January 29, 2016 January 30, 2015 Revolving Fixed-term Total Revolving Fixed-term Total (in millions) Financing Receivables, net: Customer receivables, gross ...... $1,173 $3,637 $4,810 $1,438 $3,291 $4,729 Allowances for losses ...... (118) (58) (176) (145) (49) (194) Customer receivables, net ...... 1,055 3,579 4,634 1,293 3,242 4,535 Residual interest ...... — 458 458 — 490 490 Financing receivables, net ...... $1,055 $4,037 $5,092 $1,293 $3,732 $5,025 Short-term ...... $1,055 $1,860 $2,915 $1,293 $1,729 $3,022 Long-term ...... — 2,177 2,177 — 2,003 2,003 Financing receivables, net ...... $1,055 $4,037 $5,092 $1,293 $3,732 $5,025

The following table summarizes the changes in the allowance for financing receivable losses for the respective periods:

Successor Fiscal Year Ended Fiscal Year Ended January 29, 2016 January 30, 2015 Revolving Fixed-term Total Revolving Fixed-term Total (in millions) Allowance for financing receivable losses: Balance at beginning of period ...... $145 $49 $194 $171 $44 $215 Charge-offs, net of recoveries ...... (105) (17) (122) (151) (17) (168) Provision charged to income statement ..... 78 26 104 125 22 147 Balance at end of period ...... $118 $58 $176 $145 $49 $194

F-26 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Successor Predecessor October 29, 2013 February 2, 2013 through through January 31, 2014 October 28, 2013 Revolving Fixed-term Total Revolving Fixed-term Total (in millions) Allowance for financing receivable losses: Balance at the beginning of period ...... $— $— $— $169 $23 $192 Charge-offs, net of recoveries ...... (35) (4) $ (39) (104) (15) (119) Provision charged to income statement .... 206 48 $254 79 16 95 Balance at end of period ...... $171 $ 44 $215 $ 144 $ 24 $ 168

On October 29, 2013, in connection with the acquisition of Dell by Denali Holding, the Company’s financing receivables, net, were re-measured on a fair value basis and recognized in the Consolidated Statement of Financial Position accordingly. In addition, in accordance with authoritative guidance for business combinations, the Company recorded a provision for losses of $204 million on customer receivables to recognize an estimate of incurred losses on principal balances. The provision was calculated using the same methodology in determining the allowance for the Predecessor entity and was recognized in cost of net revenue in the Consolidated Statement of Income (Loss) for the Successor entity.

The following table summarizes the aging of the Company’s customer financing receivables, gross, including accrued interest, as of January 29, 2016 and January 30, 2015, segregated by class:

Successor January 29, 2016 January 30, 2015 Past Past Past Past Due Due Due Due 1—90 >90 1—90 >90 Current Days Days Total Current Days Days Total (in millions) Revolving—DPA ...... $ 812 $ 99 $36 $ 947 $ 969 $140 $54 $1,163 Revolving—DBC ...... 202 20 4 226 244 26 5 275 Fixed-term—Consumer and Small Commercial ...... 315 11 3 329 319 14 3 336 Fixed-term—Medium and Large Commercial ...... 3,131 157 20 3,308 2,800 138 17 2,955 Total customer receivables, gross ...... $4,460 $287 $63 $4,810 $4,332 $318 $79 $4,729

Credit Quality

The following table summarizes customer receivables, gross, including accrued interest, by credit quality indicator segregated by class, as of January 29, 2016 and January 30, 2015. The categories shown in the table below segregate customer receivables based on the relative degrees of credit risk. The credit quality indicators for DPA revolving accounts are measured primarily as of each quarter-end date, while all other indicators are generally updated on a periodic basis.

For DPA revolving receivables shown in the table below, the Company makes credit decisions based on proprietary scorecards, which include the customer’s credit history, payment history, credit usage, and other credit agency-related elements. The higher quality category includes prime accounts generally of a higher credit quality that are comparable to U.S. customer FICO scores of 720 or above. The mid-category represents the mid-

F-27 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS tier accounts that are comparable to U.S. customer FICO scores from 660 to 719. The lower category is generally sub-prime and represents lower credit quality accounts that are comparable to U.S customer FICO scores below 660. For the DBC revolving receivables and fixed-term commercial receivables shown in the table below, an internal grading system is utilized that assigns a credit level score based on a number of considerations, including liquidity, operating performance, and industry outlook. The grading criteria and classifications for the fixed-term products differ from those for the revolving products as loss experience varies between these product and customer groups. The credit quality categories cannot be compared between the different classes as loss experience varies substantially between the classes.

Successor January 29, 2016 January 30, 2015 Higher Mid Lower Total Higher Mid Lower Total (in millions) Revolving—DPA ...... $ 148$ 270 $529 $ 947 $ 165 $327 $671 $1,163 Revolving—DBC ...... $ 68$ 65 $ 93 $ 226$ 84$ 80 $111 $ 275 Fixed-term—Consumer and Small Commercial .... $ 93$ 136 $100 $ 329 $ 92 $145 $ 99 $ 336 Fixed-term—Medium and Large Commercial ...... $1,597 $1,075 $636 $3,308 $1,701 $761 $493 $2,955

DFS Acquisitions

During Fiscal 2014, prior to the acquisition of Dell by Denali Holding, the Company completed its acquisition of CIT Vendor Finance’s Dell-related financing assets portfolio and sales and servicing functions in Europe to enable global expansion of the Company’s direct finance model. This acquisition included a purchased portfolio of $374 million in gross contractual payments under fixed-term leases and loans with a fair value at purchase of approximately $356 million. As part of the same purchase, the Company acquired a liquidating portfolio of operating leases which are included in property, plant, and equipment in the Consolidated Statements of Financial Position. At the time of the acquisition, the gross amount of the equipment associated with these operating leases was approximately $169 million. In connection with this transaction, a subsidiary of the Company, Dell International Bank Limited, obtained a bank license from The Central Bank of Ireland to facilitate the Company’s ongoing offerings of financial services in Europe.

Securitizations and Structured Financing Debt

The Company transfers certain U.S. customer financing receivables to Special Purpose Entities (“SPEs”) that meet the definition of a Variable Interest Entity (“VIE”) and are consolidated, along with the associated debt, into the Company’s Consolidated Financial Statements, as the Company is the primary beneficiary of those VIEs. These SPEs are bankruptcy remote legal entities with separate assets and liabilities. The purpose of these SPEs is to facilitate the funding of customer receivables in the capital markets.

The following table shows financing receivables held by the consolidated VIEs as of the respective dates:

Successor January 29, January 30, 2016 2015 (in millions) Financing receivables held by consolidated VIEs, net: Short-term, net ...... $2,125 $2,086 Long-term, net ...... 1,215 891 Financing receivables held by consolidated VIEs, net ...... $3,340 $2,977

F-28 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Financing receivables transferred via securitization through SPEs were $3.2 billion and $2.7 billion for the fiscal years ended January 29, 2016 and January 30, 2015, respectively.

Some of the SPEs have entered into financing arrangements with multi-seller conduits that, in turn, issue asset-backed debt securities in the capital markets. The Company’s risk of loss related to securitized receivables is limited to the amount by which the Company’s right to receive collections for assets securitized exceeds the amount required to pay interest, principal, and fees and expenses related to the asset-backed securities. The Company provides credit enhancement to the securitization in the form of over-collateralization.

The Company’s total structured financing debt, which is collateralized by financing receivables in the U.S., Canada, and Europe, was $3.4 billion and $2.7 billion, as of January 29, 2016 and January 30, 2015, respectively, under the following programs: • The structured financing debt program in the U.S., which is related to the fixed-term lease and loan securitization program and the revolving loan securitization program, was $1.3 billion and $1.8 billion as of January 29, 2016 and January 30, 2015, respectively. This debt is collateralized solely by the U.S financing receivables in the programs. The debt has a variable interest rate and the duration of this debt is based on the terms of the underlying financing receivables. As of January 29, 2016, the total debt capacity related to the securitization programs was $2.1 billion. The Company enters into interest swap agreements to effectively convert the portion of its structured financing debt from a floating rate to a fixed rate. See Note 7 of the Notes to the Audited Consolidated Financial Statements for additional information about interest rate swaps. The Company’s securitization programs became effective on October 29, 2013. The revolving program is effective for three years. The fixed term program, which was extended during the first quarter of Fiscal 2016, is effective for four and one-half years. The programs contain standard structural features related to the performance of the securitized receivables which include defined credit losses, delinquencies, average credit scores, and minimum collection requirements. In the event one or more of these criteria are not met and the Company is unable to restructure the program, no further funding of receivables will be permitted and the timing of the Company’s expected cash flows from over- collateralization will be delayed. As of January 29, 2016, these criteria were met. • The Company may periodically issue asset-backed debt securities to private investors. As of January 29, 2016, the associated debt balance of these securities was $1.6 billion. The asset-backed debt securities are collateralized solely by the U.S. fixed-term financing receivables in the offerings, which are held by SPEs. The interest rate on these securities is fixed and ranges from 0.26% to 3.61% and the duration of these securities is based on the terms of the underlying financing receivables. See Note 4 of the Notes to the Audited Consolidated Financial Statements for additional information regarding the Company’s structured financing debt. • In connection with the Company’s international financing operations, the Company has entered into revolving structured financing debt programs related to its fixed-term lease and loan products sold in Canada and Europe. As of January 29, 2016, the Canadian program, which is effective for two years, beginning on September 19, 2014, and is collateralized solely by the Canadian financing receivables, had a total debt capacity of $135 million. The European program, which was extended during the first quarter of Fiscal 2016, is effective for four years, beginning on December 23, 2013. The program is collateralized solely by the European financing receivables and had a total debt capacity of $653 million as of January 29, 2016. The aggregate outstanding balances of the Canadian and European revolving structured loans as of January 29, 2016 and January 30, 2015 were $559 million and $388 million, respectively.

F-29 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Financing Receivable Sales To manage certain concentrations of customer credit exposure, the Company may sell selected fixed-term financing receivables to unrelated third parties on a periodic basis. During the fiscal years ended January 29, 2016 and January 30, 2015, the amount of receivables sold was $91 million and $61 million, respectively. During the successor period ended January 31, 2014, the Company did not sell any receivables. During the predecessor period ended October 28, 2013, the amount of receivables sold was $127 million.

NOTE 6—DEBT The following table summarizes the Company’s outstanding debt as of the dates indicated:

Successor January 29, January 30, 2016 2015 (in millions) Secured Debt Structured financing debt ...... $ 3,411 $ 2,690 3.75% Floating rate due October 2018 (“Term Loan C Facility”) ...... 1,003 1,284 4.00% Floating rate due April 2020 (“Term Loan B Facility”) ...... 4,329 4,602 4.00% Floating rate due April 2020 (“Term Loan Euro Facility”) ...... 891 785 5.625% due October 2020 (“Senior First Lien Notes”) ...... 1,400 1,400 Unsecured Notes and Debentures 2.30% due September 2015 ...... — 700 3.10% due April 2016 ...... 400 400 5.65% due April 2018 ...... 500 500 5.875% due June 2019 ...... 600 600 4.625% due April 2021 ...... 400 400 7.10% due April 2028 ...... 300 300 6.50% due April 2038 ...... 388 388 5.40% due September 2040 ...... 265 265 Other 93 73 Total debt, principal amount ...... 13,980 14,387 Unamortized discount, net of unamortized premium ...... (221) (232) Total debt, carrying value ...... $13,759 $14,155 Total short-term debt ...... $ 2,984 $ 2,921 Total long-term debt ...... $10,775 $11,234

To finance the acquisition of Dell by Denali Holding, the Company issued $13.9 billion in debt, which included borrowings under the Term Loan facilities and the ABL Credit Facility, proceeds from the sale of the Senior First Lien Notes and other notes, as well as borrowings under the structured financing debt programs. During the year ended January 29, 2016, the Company repaid $0.7 billion of maturing Unsecured Notes and Debentures as well as $0.4 billion, net, of Term Loan debt. In addition, during the year ended January 29, 2016, the Company issued $0.7 billion, net, in additional structured financing debt.

Term Loan Facilities—The $1.5 billion Term Loan C Facility was issued on October 29, 2013, and provides for equal quarterly principal amortizations in an annual amount equal to 10% of the original principal amount in the first year of the agreement and increasing annual percentage amounts in subsequent years with the payment of the outstanding balance due at maturity, in October 2018. The annual principal amortization percentage is

F-30 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS currently 22.5%. The $4.7 billion Term Loan B Facility and the €0.7 billion Term Loan Euro Facility were issued on October 29, 2013, and provide for quarterly principal amortizations in an annual amount equal to 1% of the original principal amount and payment of the outstanding balances due at maturity in April 2020. Borrowings under the Term Loan facilities bear interest, payable quarterly, at a rate per annum equal to an applicable margin, plus, at the borrowers’ option, either (a) a base rate or (b) a LIBOR rate for the applicable currency, in each case, subject to interest rate floors. Under the Term Loan facilities, if the Company has excess cash flows that are not reinvested in working capital, strategic investments, or finance activities on an annual basis and if the Company’s secured leverage ratio falls within certain thresholds, a percentage of the excess cash flows is required to be applied to prepay secured debt. An excess cash flow payment of approximately $38 million was determined to be required for the year ended January 29, 2016, and this amount has been reclassified from long-term debt to short- term debt.

On June 10, 2015, the Company refinanced and amended the Term Loan facilities to reduce interest rate floors and margins and to modify certain covenant requirements. The refinancing increased the outstanding Term Loan Euro Facility from €0.6 billion to €0.8 billion, which was offset by a decrease in the Term Loan B Facility from $4.6 billion to $4.4 billion. The interest rate for both the Term Loan B Facility and Term Loan Euro Facility was reduced to 4%. The refinancing was evaluated in accordance with FASB Accounting Standards Codification 470-50, Debt-Modifications and Extinguishments. The refinancing was accounted for as a debt extinguishment with respect to lenders that exited the syndicate, and as a debt modification with respect to lenders remaining in the syndicate. The Company recognized a resulting $9 million loss on extinguishment of debt during the year ended January 29, 2016, which represented write-offs of debt issuance costs and original issuance discounts. The Company also recognized $3 million of repricing fees under the modification during the year ended January 29, 2016

Senior First Lien Notes—The Senior First Lien Notes were issued on October 7, 2013 in an aggregate principal amount of $1.5 billion and are payable in full at maturity, in October 2020. As of January 29, 2016, the outstanding balance of these notes was $1.4 billion. Interest on the Senior First Lien Notes is payable semiannually.

ABL Credit Facility—On October 29, 2013, the Company entered into a secured ABL Credit Facility to support its working capital needs. The maximum aggregate borrowings under this revolving credit facility are approximately $2.0 billion. Borrowings under the ABL Credit Facility are subject to a borrowing base, which consists of certain receivables and inventory. Available borrowings under the ABL Credit Facility are reduced by draws on the facility as well as letters of credit. As of January 29, 2016, there were no draws on the facility and, after taking into account outstanding letters of credit, available borrowings totaled $1.7 billion. Borrowings under the facility bear interest at a rate per annum equal to an applicable margin, plus, at the borrowers’ option, either (a) a base rate, (b) a LIBOR rate or (c) certain other applicable rates. The applicable margin under the facility is determined based on excess liquidity as a percentage of the maximum borrowing amount under the facility. The ABL Credit Facility will expire in October 2018.

The borrowers under the Term Loan facilities and the ABL Credit Facility and the co-issuers of the Senior First Lien Notes are subsidiaries of Dell Inc. Dell Inc. and substantially all of its domestic subsidiaries guarantee the borrowings under the Term Loan facilities and the obligations under the Senior First Lien Notes. Dell Inc. and certain of its domestic subsidiaries guarantee the borrowings under the ABL Credit Facility. All borrowings and other obligations under the Term Loan facilities and the ABL Credit Facility generally are secured by first- priority or second-priority security interests in substantially all of the assets of Dell Inc., the borrowers under the facilities and the guarantors of the facilities, as well as by pledges of the equity interests of Dell Inc. and certain of its subsidiaries, and a portion of the equity interests of certain first-tier foreign subsidiaries of Dell Inc. All obligations under the Senior First Lien Notes are secured by a first-priority security interest in certain cash flow collateral and a second-priority security interest in other collateral securing the ABL Credit Facility.

F-31 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Structured Financing Debt—As of January 29, 2016 and January 30, 2015, the Company had $3.4 billion and $2.7 billion, respectively in outstanding structured financing debt, which was primarily related to the fixed- term lease and loan securitization programs and the revolving loan securitization programs. See Note 5 and Note 7 of the Notes to the Audited Consolidated Financial Statements for further discussion of the structured financing debt and the interest rate swap agreements that hedge a portion of that debt.

Unsecured Notes and Debentures—The Company’s Unsecured Notes and Debentures were issued by the Predecessor entity prior to the acquisition of Dell by Denali Holding. Interest on these borrowings is payable semiannually.

The total carrying value and estimated fair value of the outstanding Senior First Lien Notes and Unsecured Notes and Debentures, including the current portion, were $4.1 billion and $4.2 billion, respectively, as of January 29, 2016 and $4.8 billion and $5.1 billion, respectively, as of January 30, 2015. The total carrying value and estimated fair value of the Term Loan facilities, including the current portion, were both $6.2 billion as of January 29, 2016 and were $6.6 billion and $6.7 billion, respectively, as of January 30, 2015. The fair value of the outstanding Senior First Lien Notes, the outstanding Unsecured Notes and Debentures, and the Term Loan facilities was determined based on observable market prices in a less active market and was categorized as Level 2 in the fair value hierarchy. The fair values of the other short-term debt and the structured financing debt approximate their carrying values due to their short-term maturities.

As of January 29, 2016, aggregate future maturities of the Company’s debt were as follows:

Maturities by Fiscal Year 2017 2018 2019 2020 2021 Thereafter Total (in millions) Structured Financing Debt ...... $2,088 $ 887 $ 388 $ 43 $ 5 $ — $ 3,411 Term Loan Facilities and Senior First Lien Notes ...... 437 428 334 52 6,372 — 7,623 Unsecured Notes and Debentures ...... 400 — 500 600 — 1,353 2,853 Other ...... 59 8 — — — 26 93 Total maturities, principal amount ...... 2,984 1,323 1,222 695 6,377 1,379 13,980 Associated carrying value adjustments ...... — — 1 (2) (43) (177) (221) Total maturities, carrying value amount ...... $2,984 $1,323 $1,223 $693 $6,334 $1,202 $13,759

Covenants and Restricted Net Assets—The credit agreements for the Term Loan facilities and the ABL Credit Facility and the indenture governing the Senior First Lien Notes contain covenants restricting the ability of the Company and its restricted subsidiaries, subject to specified exceptions, to incur additional debt, create liens on certain assets to secure debt, pay dividends and make other restricted payments, make certain investments, sell or transfer certain assets, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets, and enter into certain transactions with affiliates. As of August 1, 2015, the Company designated certain subsidiaries as unrestricted subsidiaries for all purposes of credit agreements and the indenture, the impact of which was not material to its financial position as of January 29, 2016 or results of operations for the six months ended January 29, 2016. The indentures governing the Unsecured Notes and Debentures contain covenants limiting the Company’s ability to create certain liens, enter into sale-and-lease back transactions, and consolidate or merge with, or convey, transfer, or lease all or substantially all of its assets to, another person. The credit agreements and all such indentures contain customary events of default, including failure to make required

F-32 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS payments, failure to comply with covenants, and the occurrence of certain events of bankruptcy and insolvency. The ABL Credit Facility requires compliance with conditions that must be satisfied prior to any borrowing and maintenance of a minimum fixed charge coverage ratio. The Company was in compliance with all financial covenants as of January 29, 2016.

NOTE 7—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Instruments As part of its risk management strategy, the Company uses derivative instruments, primarily forward contracts, purchased options, and interest rate swaps to hedge certain foreign currency and interest rate exposures. The Company’s objective is to offset gains and losses resulting from these exposures with gains and losses on the derivative contracts used to hedge the exposures, thereby reducing volatility of earnings and protecting the fair values of assets and liabilities. For derivatives designated as cash flow hedges, the Company assesses hedge effectiveness both at the onset of the hedge and at regular intervals throughout the life of the derivative and recognizes any ineffective portion of the hedge in earnings as a component of interest and other, net. Hedge ineffectiveness recognized in earnings was not material during the fiscal years ended January 29, 2016 and January 30, 2015, the successor period ended January 31, 2014, and the predecessor period ended October 28, 2013.

Foreign Exchange Risk The Company uses forward contracts and purchased options designated as cash flow hedges to protect against the foreign currency exchange rate risks inherent in its forecasted transactions denominated in currencies other than the U.S. dollar. The risk of loss associated with purchased options is limited to premium amounts paid for the option contracts. The risk of loss associated with forward contracts is equal to the exchange rate differential from the time the contract is entered into until the time it is settled. The majority of these contracts typically expire in twelve months or less.

During the fiscal year ended January 29, 2016, the Company did not discontinue any cash flow hedges related to foreign exchange contracts that had a material impact on the Company’s results of operations due to the probability that the forecasted cash flows would not occur. However, as a result of the acquisition by Denali Holding, the cash flow hedges that were outstanding at the end of the predecessor period were de-designated as of October 29, 2013 due to the change in control of Dell resulting from the going-private transaction.

The Company uses forward contracts to hedge monetary assets and liabilities denominated in a foreign currency. These contracts generally expire in three months or less, are considered economic hedges, and are not designated for hedge accounting. The change in the fair value of these instruments represents a natural hedge as their gains and losses offset the changes in the underlying fair value of the monetary assets and liabilities due to movements in currency exchange rates.

In connection with the expanded offerings of Dell Financial Services in Europe, forward contracts are used to hedge financing receivables denominated in foreign currencies. The majority of these contracts expire within three years or less and are not designated for hedge accounting.

Interest Rate Risk The Company uses interest rate swaps to hedge the variability in cash flows related to the interest rate payments on structured financing debt. The interest rate swaps economically convert the variable rate on the structured financing debt to a fixed interest rate to match the underlying fixed rate being received on fixed-term customer leases and loans. Most of the contracts expire within three years or less and are not designated for hedge accounting.

F-33 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Interest rate swaps are utilized to manage the interest rate risk, at a portfolio level, associated with Dell Financial Services operations in Europe. The interest rate swaps economically convert the fixed rate on financing receivables to a three-month Euribor floating rate basis in order to match the floating rate nature of the banks’ funding pool. Most of the contracts expire within three years or less and are not designated for hedge accounting.

Notional Amounts of Outstanding Derivative Instruments The notional amounts of the Company’s outstanding derivative instruments were as follows as of the dates indicated:

Successor January 29, January 30, 2016 2015 (in millions) Foreign Exchange Contracts Designated as cash flow hedging instruments ...... $3,947 $4,759 Non-designated as hedging instruments ...... 985 1,219 Total ...... $4,932 $5,978 Interest Rate Contracts Non-designated as hedging instruments ...... $1,017 $1,434 Total ...... $1,017 $1,434

Effect of Derivative Instruments on the Consolidated Statements of Financial Position and the Consolidated Statements of Income (Loss)

Gain (Loss) Gain (Loss) Recognized in Reclassified Location of Accumulated Location of from Gain (Loss) Gain (Loss) OCI, Net Gain (Loss) Accumulated Recognized Recognized in of Tax, on Reclassified OCI into in Income on Income on Derivatives in Derivatives from Accumulated Income Derivative Derivative Cash Flow (Effective OCI into Income (Effective (Ineffective (Ineffective Hedging Relationships Portion) (Effective Portion) Portion) Portion) Portion) (in millions) Successor For the fiscal year ended January 29, 2016 Total net revenue ...... $328 Foreign exchange contracts . . . Total cost of net $152 revenue ...... 40 Interest and other, Interest and Interest rate contracts ...... — net ...... — other, net ..... $(1) Total ...... $152 $368 $(1) For the fiscal year ended January 30, 2015 Total net revenue ...... $163 Foreign exchange contracts . . . Total cost of net $427 revenue ...... 15 Interest and other, Interest and other, Interest rate contracts ...... — net ...... — net...... $1 Total ...... $427 $178 $ 1

F-34 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Derivative Instruments in the Consolidated Statements of Financial Position The Company presents its foreign exchange derivative instruments on a net basis in the Consolidated Statements of Financial Position due to the right of offset by its counterparties under master netting arrangements. The fair value of those derivative instruments presented on a gross basis as of each date indicated below was as follows:

Successor January 29, 2016 Other Other Other Non- Other Non- Total Current Current Current Current Fair Assets Assets Liabilities Liabilities Value (in millions) Derivatives Designated as Hedging Instruments Foreign exchange contracts in an asset position ...... $100 $— $— $— $100 Foreign exchange contracts in a liability position ...... (11) — — — (11) Net asset (liability) ...... 89 — — — 89 Derivatives not Designated as Hedging Instruments Foreign exchange contracts in an asset position ...... 301 1 — — 302 Foreign exchange contracts in a liability position ...... (198) — (5) (3) (206) Interest rate contracts in an asset position ...... — 2 — — 2 Interest rate contracts in a liability position ...... — — — (4) (4) Net asset (liability) ...... 103 3 (5) (7) 94 Total derivatives at fair value ...... $192 $ 3 $ (5) $ (7) $183

Successor January 30, 2015 Other Other Other Non- Other Non- Total Current Current Current Current Fair Assets Assets Liabilities Liabilities Value (in millions) Derivatives Designated as Hedging Instruments Foreign exchange contracts in an asset position ...... $254 $— $ 33 $— $287 Foreign exchange contracts in a liability position ...... (8) — (2) — (10) Net asset (liability) ...... 246 — 31 — 277 Derivatives not Designated as Hedging Instruments Foreign exchange contracts in an asset position ...... 556 — 36 — 592 Foreign exchange contracts in a liability position ...... (365) — (120) — (485) Interest rate contracts in a liability position ...... — — — (3) (3) Net asset (liability) ...... 191 — (84) (3) 104 Total derivatives at fair value ...... $437 $— $ (53) $ (3) $ 381

F-35 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the gross amounts of the Company’s derivative instruments, amounts offset due to master netting agreements with the Company’s various counterparties, and the net amounts recognized in the Consolidated Statements of Financial Position.

Successor January 29, 2016 Net Amounts Gross of Assets/ Amounts (Liabilities) Gross Amounts not Offset Gross Offset in Presented in the Statement of Amounts the in the Financial Position of Statement Statement Cash Recognized of of Collateral Assets/ Financial Financial Financial Received or Net (Liabilities) Position Position Instruments Pledged Amount (in millions) Derivative Instruments Financial assets ...... $404 $(209) $195 $— $— $195 Financial liabilities ...... (221) 209 (12) — — (12) Total Derivative Instruments ..... $183 $— $183 $— $— $183

Successor January 30, 2015 Net Amounts Gross of Assets/ Amounts (Liabilities) Gross Amounts not Offset Gross Offset in Presented in the Statement of Amounts the in the Financial Position of Statement Statement Cash Recognized of of Collateral Assets/ Financial Financial Financial Received or Net (Liabilities) Position Position Instruments Pledged Amount (in millions) Derivative Instruments Financial assets ...... $879 $(442) $437 $— $— $437 Financial liabilities ...... (498) 442 (56) — — (56) Total Derivative Instruments ..... $381 $— $381 $— $— $381

NOTE 8—GOODWILL AND INTANGIBLE ASSETS In connection with the acquisition of Dell by Denali Holding on October 29, 2013, all of the Company’s tangible and intangible assets and liabilities were accounted for and recognized at fair value on the transaction date. The excess of the purchase price over the fair value of the assets acquired and liabilities assumed was accounted for and recognized as goodwill. Accordingly, on the date of the going-private transaction, there was no excess fair value for any of the Company’s goodwill reporting units.

F-36 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Goodwill The following table presents goodwill allocated to Denali’s business segments as of January 29, 2016 and January 30, 2015, and changes in the carrying amount of goodwill for the respective periods:

Enterprise Dell Client Solutions Software Dell Solutions Group Group Services Total (in millions) Successor Balance at January 31, 2014 ...... $4,433 $3,911 $1,362 $310 $10,016 Goodwill recognized during the period (a) ...... — — 49 — 49 Adjustments (b) ...... (5) (4) (1) (2) (12) Balance at January 30, 2015 ...... $4,428 $3,907 $1,410 $308 $10,053

Balance at January 30, 2015 ...... $4,428 $3,907 $1,410 $308 $10,053 Goodwill recognized during the period ...... — — — — — Adjustments ...... — — (4) — (4) Balance at January 29, 2016 ...... $4,428 $3,907 $1,406 $308 $10,049

(a) Amount represents goodwill acquired in connection with the acquisition of StatSoft, Inc. The purchase price for this acquisition was $73 million. (b) During Fiscal 2015, the Company recorded $12 million in net adjustments to goodwill primarily related to purchase accounting for the going-private transaction described above. These adjustments included a reduction of a liability balance as well as a change in tax assumption related to purchase accounting.

Goodwill and indefinite-lived intangible assets are tested for impairment annually during the third fiscal quarter and whenever events or circumstances may indicate that an impairment has occurred. Based on the results of the annual impairment test, which was a qualitative and quantitative test, no impairment of goodwill or indefinite-lived intangible assets existed for any reporting unit as of October 30, 2015. As a result of this analysis, it was determined that the excess of fair value over carrying amount was greater than 15% for all of the Company’s goodwill reporting units, with the exception of Dell Software Group, which had an excess of fair value over carrying amount of 14%. Management will continue to monitor the Dell Software Group goodwill reporting unit and consider potential impacts to the impairment assessment. No triggering events transpired subsequent to the annual impairment test that would indicate a potential impairment of goodwill as of January 29, 2016. Further, the Company did not have any accumulated goodwill impairment charges as of January 29, 2016.

Management exercised significant judgment related to the above assessment, including the identification of goodwill reporting units, assignment of assets and liabilities to goodwill reporting units, assignment of goodwill to reporting units, and determination of the fair value of each goodwill reporting unit. The fair value of each goodwill reporting unit is generally estimated using a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, the estimation of the long-term growth rate of the Company’s business, and the determination of the Company’s weighted average cost of capital. Changes in these estimates and assumptions could materially affect the fair value of the goodwill reporting unit, potentially resulting in a non-cash impairment charge.

F-37 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets Denali’s intangible assets as of January 29, 2016 and January 30, 2015, were as follows:

Successor Successor January 29, 2016 January 30, 2015 Accumulated Accumulated Gross Amortization Net Gross Amortization Net (in millions) Customer relationships ...... $10,764 $(3,889) $6,875 $10,766 $(2,236) $ 8,530 Technology ...... 2,115 (1,062) 1,053 2,120 (579) 1,541 Trade names ...... 334 (119) 215 334 (66) 268 Finite-lived intangible assets ...... 13,213 (5,070) 8,143 13,220 (2,881) 10,339 Indefinite-lived intangible assets ...... 1,435 — 1,435 1,435 — 1,435 Total intangible assets ...... $14,648 $(5,070) $9,578 $14,655 $(2,881) $11,774

Amortization expense related to finite-lived intangible assets was approximately $2.2 billion and $2.3 billion during the fiscal years ended January 29, 2016 and January 30, 2015, respectively, $584 million during the successor period ended January 31, 2014, and $594 million during the predecessor period ended October 28, 2013. There were no material impairment charges related to intangible assets during the fiscal years ended January 29, 2016 and January 30, 2015, the successor period ended January 31, 2014, or the predecessor period ended October 28, 2013.

Estimated future annual pre-tax amortization expense of finite-lived intangible assets as of January 29, 2016 over the next five fiscal years and thereafter is as follows:

Fiscal Years (in millions) 2017 ...... $2,160 2018 ...... 1,923 2019 ...... 1,842 2020 ...... 971 2021 ...... 690 Thereafter ...... 557 Total ...... $8,143

NOTE 9—WARRANTY AND DEFERRED EXTENDED WARRANTY REVENUE The Company records a liability for its standard limited warranties at the time of sale for the estimated costs that may be incurred. The liability for standard warranties is included in accrued and other current liabilities and other non-current liabilities in the Consolidated Statements of Financial Position.

F-38 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Changes in the Company’s liabilities for standard limited warranties are presented in the following table for the periods indicated.

Successor Predecessor October 29, 2013 February 2, 2013 Fiscal Year Ended Fiscal Year Ended through through January 29, 2016 January 30, 2015 January 31, 2014 October 28, 2013 (in millions) Warranty liability: Warranty liability at beginning of period ...... $679 $774 $— $762 Fair value realized through purchase accounting ...... — — 822 — Costs accrued for new warranty contracts and changes in estimates for pre- existing warranties (a) (b) ...... 754 860 225 775 Service obligations honored ...... (859) (955) (273) (771) Warranty liability at end of period . . . $ 574 $ 679 $ 774 $ 766 Current portion ...... $381 $453 $496 $486 Non-current portion ...... 193 226 278 280 Warranty liability at end of period . . . $ 574 $ 679 $ 774 $ 766

(a) Changes in cost estimates related to pre-existing warranties are aggregated with accruals for new standard warranty contracts. The Company’s warranty liability process does not differentiate between estimates made for pre-existing warranties and new warranty obligations. (b) Includes the impact of foreign currency exchange rate fluctuations.

Revenue from the sale of extended warranties is recognized over the term of the contract or when the service is completed, and the costs associated with these contracts are recognized as incurred. Deferred extended warranty revenue is included in deferred revenue in the Consolidated Statements of Financial Position.

Changes in the Company’s liabilities for deferred revenue related to extended warranties are presented in the following table for the periods indicated.

Successor Predecessor October 29, 2013 February 2, 2013 Fiscal Year Ended Fiscal Year Ended through through January 29, 2016 January 30, 2015 January 31, 2014 October 28, 2013 (in millions) Deferred extended warranty revenue: Deferred extended warranty revenue at beginning of period ...... $ 6,573 $ 5,686 $ — $ 7,048 Fair value recognized through purchase accounting ...... — — 5,466 — Revenue deferred for new extended warranties (a) ...... 4,252 4,370 983 2,955 Service revenue recognized ...... (3,596) (3,483) (763) (3,034) Deferred extended warranty revenue at end of period ..... $ 7,229 $ 6,573 $5,686 $ 6,969 Current portion ...... $3,250 $ 2,958 $2,742 $ 3,334 Non-current portion ...... 3,979 3,615 2,944 3,635 Deferred extended warranty revenue at end of period ..... $ 7,229 $ 6,573 $5,686 $ 6,969

(a) Includes the impact of foreign currency exchange rate fluctuations.

F-39 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10—SEVERANCE In connection with the transformation of the Company’s business model, the Company incurs costs related to employee severance. The Company records a liability for these costs when it is probable that employees will be entitled to termination benefits and the amounts can be reasonably estimated. The liability related to these actions is included in accrued and other current liabilities in the Consolidated Statements of Financial Position. The liability related to these actions was $40 million and $110 million for fiscal years ended January 29, 2016 and January 30, 2015, respectively.

The following table sets forth the activity related to the Company’s severance liability for the respective periods:

Severance Costs (in millions) Predecessor Balance at February 1, 2013 ...... $ 53 Severance charges to provision ...... 237 Cash paid and other ...... (125) Balance at October 28, 2013 ...... 165 Successor Balance at October 29, 2013 ...... — Fair value recognized through purchase accounting ...... 165 Severance charges to provision ...... 399 Cash paid and other ...... (66) Balance at January 31, 2014 ...... 498 Severance charges to provision ...... 77 Cash paid and other ...... (465) Balance at January 30, 2015 ...... 110 Severance charges to provision ...... 52 Cash paid and other ...... (122) Balance at January 29, 2016 ...... $ 40

Severance costs are included in cost of net revenue, selling, general, and administrative expenses, and research, development, and engineering expense in the Consolidated Statement of Income as follows:

Successor Predecessor October 29, 2013 February 2, 2013 Fiscal Year Ended Fiscal Year Ended through through January 29, 2016 January 30, 2015 January 31, 2014 October 28, 2014 (in millions) Severance: Cost of net revenue ...... $15 $36 $ 68 $ 33 Selling, general, and administrative ...... 18 36 293 192 Research, development, and engineering ...... 19 5 38 12 Total ...... $52 $77 $399 $237

F-40 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11—COMMITMENTS AND CONTINGENCIES Lease Commitments—The Company leases property and equipment, manufacturing facilities, and office space under non-cancelable leases. Certain of these leases obligate the Company to pay taxes, maintenance, and repair costs. At January 29, 2016, future minimum lease payments under these non-cancelable leases were as follows: $126 million in Fiscal 2017; $99 million in Fiscal 2018; $78 million in Fiscal 2019; $57 million in Fiscal 2020; $44 million in Fiscal 2021; and $32 million thereafter.

Rent expense under all leases totaled $132 million, $159 million, and $40 million during the fiscal years ended January 29, 2016 and January 30, 2015 and the successor period ended January 31, 2014, respectively. During the predecessor period ended October 28, 2013, rent expense under all leases totaled $128 million.

Purchase Obligations—The Company has contractual obligations to purchase goods or services, which specify significant terms, including fixed or minimum quantities to be purchased; fixed, minimum, or variable price provisions; and the approximate timing of the transaction. As of January 29, 2016, the Company had $2.3 billion, $89 million, and $53 million in purchase obligations for Fiscal 2017, Fiscal 2018, and Fiscal 2019 and thereafter, respectively.

Legal Matters—The Company is involved in various claims, suits, assessments, investigations, and legal proceedings that arise from time to time in the ordinary course of its business, including those identified below, consisting of matters involving consumer, antitrust, tax, intellectual property, and other issues on a global basis. The Company accrues a liability when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these accruals at least quarterly and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel, and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations, or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period in which such determination is made. For some matters, the amount of liability is not probable or the amount cannot be reasonably estimated and therefore accruals have not been made. The following is a discussion of the Company’s significant legal matters and other proceedings:

EMC Merger Litigation—The Company, Dell, Denali Holding Inc. (“Denali”), and Universal Acquisition Co. (“Universal”) have been named as defendants in fifteen putative class-action lawsuits brought by purported EMC shareholders and VMware stockholders challenging the proposed merger between the Company, Dell, and Universal on the one hand, and EMC on the other. Those suits are captioned as follows: (1) IBEW Local No. 129 Benefit Fund v. Tucci, Civ. No. 1584-3130-BLS1 (Mass. Super. Ct., Suffolk Cnty. filed Oct. 15, 2015); (2) Barrett v. Tucci, Civ. No. 15-6023-A (Mass. Super. Ct, Middlesex Cnty. filed Oct. 16, 2015); (3) Graulich v. Tucci, Civ. No. 1584-3169-BLS1 (Mass. Super. Ct, Suffolk Cnty. filed Oct. 19, 2015; (4) Vassallo v. EMC Corp., Civ. No. 1584-3173-BLS1 (Mass. Super. Ct, Suffolk Cnty. filed Oct. 19, 2015); (5) City of Miami Police Relief & Pension Fund v. Tucci, Civ. No. 1584- 3174-BLS1 (Mass. Super. Ct. Suffolk Cnty. filed Oct. 19, 2015); (6) Lasker v. EMC Corp., Civ. No. 1584- 3214-BLS1 (Mass. Super. Ct. Suffolk Cnty. filed Oct. 23, 2015); (7) Walsh v. EMC Corp., Civ. No. 15- 13654 (D. Mass. filed Oct. 27, 2015); (8) Local Union No. 373 U.A. Pension Plan v. EMC Corp., Civ. No. 1584-3253-BLS1 (Mass. Super. Ct. Suffolk Cnty. filed Oct. 28, 2015); (9) City of Lakeland Emps.’ Pension & Ret. Fund v. Tucci, Civ. No. 1584-3269-BLS1 (Mass. Super. Ct. Suffolk Cnty. filed Oct. 28, 2015); (10) Ma v. Tucci, Civ. No. 1584-3281-BLS1 (Mass. Super. Ct. Suffolk Cnty. filed Oct. 29, 2015); (11) Stull v. EMC Corp., Civ. No. 15-13692 (D. Mass. filed Oct. 30, 2015); (12) Jacobs v. EMC Corp., Civ. No. 15-6318-H (Mass. Super. Ct. Middlesex Cnty. filed Nov. 12, 2015); (13) Ford v. VMware, Inc., C.A. No. 11714-VCL (Del. Ch. filed Oct. 17, 2015); (14) Pancake v. EMC Corp., Civ. No. 16-10040 (D. Mass. filed Jan. 11, 2016); and (15) Booth Family Trust v. EMC Corp. Civ. No. 16-10114 (D. Mass. filed Jan. 26, 2016).

F-41 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The fifteen lawsuits seek, among other things, injunctive relief enjoining the EMC merger, rescission of the EMC merger if consummated, an award of fees and costs, or an award of damages. The complaints in the IBEW, Barrett, Graulich, Vassallo, City of Miami, Lasker, Local Union No. 373, City of Lakeland, and Ma actions generally allege that the EMC directors breached their fiduciary duties to EMC shareholders in connection with the EMC merger by, among other things, failing to maximize shareholder value and agreeing to provisions in the EMC merger agreement that discourage competing bids. The complaints generally further allege that there were various conflicts of interest in the proposed transaction. The IBEW, Graulich, City of Miami, and Ma plaintiffs brought suit against the Company, Dell, Denali, and Universal for injunctive relief. The Barrett, Vassallo, Lasker, Lakeland, and Local Union No. 373 plaintiffs brought suit against the Company, Dell, Denali, and Universal as alleged aiders and abettors. After consolidating the nine complaints, by decision dated December 7, 2015, the Suffolk County, Massachusetts Superior Court, Business Litigation Session, dismissed all nine complaints for failure to make a demand on the EMC board of directors. On January 21, 2016, the plaintiffs in the consolidated actions appealed. That appeal is currently pending. The complaints in the Walsh, Stull, Pancake, and Booth actions allege that the EMC directors breached their fiduciary duties to EMC shareholders in connection with the EMC merger by, among other things, failing to maximize shareholder value and agreeing to provisions in the EMC merger agreement that discourage competing bids. The complaints generally further allege that there were various conflicts of interest in the proposed transaction and that the preliminary SEC Form S-4 filed by the Company on December 14, 2015 in connection with the transaction contained material misstatements and omissions, in violation of Section 14(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 14a-9 promulgated thereunder (“Rule 14a-9”). Under the amended complaints, the plaintiffs in the Walsh, Stull, and Pancake actions have brought suit against the Company, Dell, Denali, and Universal under Section 20(a) of the Exchange Act as alleged controlling persons of EMC. The plaintiffs in the Booth action have brought suit against the Company, Dell, Denali, and Universal under Section 14(a) of the Exchange Act and Rule 14a-9. The amended complaints in the Jacobs and Ford actions allege that EMC, as the majority stockholder of VMware, and the individual defendants, who are directors of EMC, VMware, or both, breached their fiduciary duties to minority stockholders of VMware in connection with the proposed EMC merger by allegedly entering into or approving a merger that favors the interests of EMC and Dell at the expense of the minority stockholders. Under the amended complaint, the plaintiffs in the Jacobs action have brought suit against the Company, Dell, Denali, and Universal as alleged aiders and abettors. On March 7, 2016, defendants moved to stay or dismiss the Jacobs action in favor of the Ford action. No oral argument date has been set for the motions to dismiss/motions to stay Jacobs. Under the amended complaint, the plaintiffs in the Ford action have brought suit against the Company and individual defendants for alleged breach of fiduciary duties to VMware and its stockholders, or, alternatively, against the Company, Dell, Denali, and Universal for aiding and abetting the alleged breach of fiduciary duties by EMC and VMware’s directors. On November 17, 2015, the plaintiffs in the Ford action moved for a preliminary injunction and for expedited discovery. Certain defendants filed motions to dismiss the amended complaint in the Ford action on February 26, 2016 and February 29, 2016. Unaudited update—On April 19, 2016, EMC, Dell, Denali, Universal and certain of the individual defendants filed briefs in support of the previously filed motions to dismiss. No trial dates have been set in any of these actions. The outcome of these lawsuits is uncertain, and additional lawsuits may be brought or additional claims advanced concerning the EMC merger. An adverse judgment for monetary damages could have an adverse effect on the Company’s operations. A preliminary injunction could delay or jeopardize the completion of the EMC merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin the completion of the EMC merger.

F-42 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Appraisal Proceedings—Holders of shares of Dell common stock who did not vote on September 12, 2013 in favor of the proposal to adopt the amended going-private transaction agreement and who properly demanded appraisal of their shares and who otherwise comply with the requirements of Section 262 of the Delaware General Corporate Law (“DGCL”) are entitled to seek appraisal for, and obtain payment in cash for the judicially determined “fair value” (as defined pursuant to Section 262 of the DGCL) of, their shares in lieu of receiving the going-private transaction consideration. This appraised value could be more than, the same as, or less than the $13.75 per share going-private transaction consideration. Dell has recorded a liability of $13.75 for each share with respect to which appraisal has been demanded and as to which the demand has not been withdrawn, together with interest at the statutory rate discussed below. As of January 29, 2016, this liability was approximately $593 million, including $72 million in accrued interest.

Between October 29, 2013 and February 25, 2014, former Dell stockholders filed petitions in thirteen separate matters commencing appraisal proceedings in the Delaware Court of Chancery in which they seek a determination of the fair value of a total of approximately 38 million shares of Dell common stock plus interest, costs, and attorneys’ fees. These matters have been consolidated as In Re Appraisal of Dell (C.A. No. 9322-VCL). The trial took place the week of October 5, 2015. The parties expect a ruling sometime in 2016.

The appraisal proceedings are being conducted in accordance with the rules of the Delaware Court of Chancery. In these proceedings, the Court of Chancery will determine the fair value of the shares as to which appraisal has been properly demanded, exclusive of any element of value arising from the accomplishment or expectation of the going-private transaction. Unless the Court of Chancery in its discretion determines otherwise for good cause shown, interest on such fair value from the effective time of the going-private transaction through the date of payment of the judgment will be compounded quarterly and will accrue at a per annum rate of 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time. Any payment in respect of the shares subject to appraisal rights will be required to be paid in cash.

The outcome of the appraisal proceedings is uncertain. A judgment determining fair value in excess of the recorded liability of $13.75 per share noted above for any shares properly subject to appraisal could have a material adverse effect on the Company’s results of operations and liquidity. In this regard, petitioners are seeking $28.61 per share, plus interest. Dell, by contrast, believes that the fair value of Dell on the day the going-private transaction was completed was $12.68. The number of shares subject to appraisal demands, including shares held by those parties who have sought appraisal but not filed petitions, originally was 38,765,130. By orders dated June 27 and September 10, 2014, and May 13, May 14, July 13 and July 28, 2015, the Court of Chancery dismissed claims of holders of approximately 2,530,432 shares for failure to comply with the statutory requirements for seeking appraisal. On July 30, 2015, Dell moved for summary judgment seeking to dismiss claims of holders of an additional 30,730,930 shares (as well as a number of shares previously disqualified on other grounds) because those shares were voted in favor of the going- private transaction, and thus failed to comply with the statutory requirements for seeking appraisal. Unaudited update—A hearing on the motion for summary judgment was held on March 18, 2016. The parties expect a ruling sometime in 2016.

Securities Litigation—On May 22, 2014, a securities class action seeking compensatory damages was filed in the United States District Court for the Southern District of New York, captioned the City of Pontiac Employee Retirement System vs. Dell Inc. et. al. (Case No. 1:14-cv-03644). The action names as defendants Dell Inc. and certain current and former executive officers, and alleges that Dell made false and misleading statements about Dell’s business operations and products between February 22, 2012 and May 22, 2012, which resulted in artificially inflated stock prices. The case was transferred to the Western District of Texas,

F-43 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS where the defendants filed a motion to dismiss. The motion is fully briefed and a ruling is expected in 2016. The defendants believe the claims asserted are without merit and the risk of material loss is remote.

Copyright Levies—The Company’s obligation to collect and remit copyright levies in certain European Union (“EU”) countries may be affected by the resolution of legal proceedings pending in Germany against various companies, including Dell’s German subsidiary, and elsewhere in the EU against other companies in Dell’s industry. The plaintiffs in those proceedings, some of which are described below, generally seek to impose or modify the levies with respect to sales of such equipment as multifunction devices, phones, personal computers, and printers, alleging that such products enable the copying of copyrighted materials. Some of the proceedings also challenge whether the levy schemes in those countries comply with EU law. Certain EU member countries that do not yet impose levies on digital devices are expected to implement legislation to enable them to extend existing levy schemes, while some other EU member countries are expected to limit the scope of levy schemes and their applicability in the digital hardware environment. Dell, other companies, and various industry associations have opposed the extension of levies to the digital environment and have advocated alternative models of compensation to rights holders. The Company continues to collect levies in certain EU countries where it has determined that based on local laws it is probable that it has a payment obligation. The amount of levies is generally based on the number of products sold and the per-product amounts of the levies, which vary. The Company accrues a liability when it believes that it is both probable that a loss has been incurred and when it can reasonably estimate the amount of the loss.

On December 29, 2005, Zentralstelle Für private Überspielungrechte (“ZPÜ”), a joint association of various German collecting societies, instituted arbitration proceedings against Dell’s German subsidiary before the Board of Arbitration at the German Patent and Trademark Office in Munich, and subsequently filed a lawsuit in the German Regional Court in Munich on February 21, 2008, seeking levies to be paid on each personal computer sold by Dell in Germany through the end of calendar year 2007. On December 23, 2009, ZPÜ and the German industry association, BCH, reached a settlement regarding audio-video copyright levy litigation (with levies ranging from €3.15 to €13.65 per unit). Dell joined this settlement on February 23, 2010, and has paid the amounts due under the settlement. On March 25, 2014, ZPÜ and Dell reached a settlement for levies to be paid on each personal computer sold for the period of January 2, 2011 through December 31, 2016. The amount of the settlement is not material to the Company. The amount of any levies payable after calendar year 2016, as well as the Company’s ability to recover such amounts through increased prices, remains uncertain.

German courts are also considering a lawsuit originally filed in July 2004 by VG Wort, a German collecting society representing certain copyright holders, against Hewlett-Packard Company in the Stuttgart Civil Court seeking levies on printers, and a lawsuit originally filed in September 2003 by the same plaintiff against Fujitsu Siemens Computer GmbH in Munich Civil Court in Munich, Germany seeking levies on personal computers. In each case, the civil and appellate courts held that the subject classes of equipment were subject to levies. In July 2011, the German Federal Supreme Court, to which the lower court holdings have been appealed, referred each case to the Court of Justice of the European Union, submitting a number of legal questions on the interpretation of the European Copyright Directive which the German Federal Supreme Court deems necessary for its decision. In August 2014, the German Supreme Court delivered an opinion ruling that printers and personal computers are subject to levies, and referred the case back to the Court of Appeals. Unaudited update—Dell joined the industry settlement in the Fujitsu Siemens case and Dell now believes it has no remaining material obligation in either case.

Proceedings seeking to impose or modify copyright levies for sales of digital devices also have been instituted in courts in other EU member states. Even in countries where Dell is not a party to such

F-44 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

proceedings, decisions in those cases could impact Dell’s business and the amount of copyright levies Dell may be required to collect.

The ultimate resolution of these proceedings and the associated financial impact to the Company, if any, including the number of units potentially affected, the amount of levies imposed, and the ability of the Company to recover such amounts, remain uncertain at this time. Should the courts determine there is liability for previous units shipped beyond the amount of levies the Company has collected or accrued, the Company would be liable for such incremental amounts. Recovery of any such amounts from others by the Company would be possible only on future collections related to future shipments.

Other Litigation—The various legal proceedings in which Dell is involved include commercial litigation and a variety of patent suits. In some of these cases, Dell is the sole defendant. More often, particularly in the patent suits, Dell is one of a number of defendants in the electronics and technology industries. Dell is actively defending a number of patent infringement suits, and several pending claims are in various stages of evaluation. While the number of patent cases has grown over time, Dell does not currently anticipate that any of these matters will have a material adverse effect on its business, financial condition, results of operations, or cash flows.

As of January 29, 2016, the Company does not believe there is a reasonable possibility that a material loss exceeding the amounts already accrued for these or other proceedings or matters has been incurred. However, since the ultimate resolution of any such proceedings and matters is inherently unpredictable, the Company’s business, financial condition, results of operations, or cash flows could be materially affected in any particular period by unfavorable outcomes in one or more of these proceedings or matters. Whether the outcome of any claim, suit, assessment, investigation, or legal proceeding, individually or collectively, could have a material adverse effect on the Company’s business, financial condition, results of operations, or cash flows will depend on a number of variables, including the nature, timing, and amount of any associated expenses, amounts paid in settlement, damages, or other remedies or consequences.

Indemnifications—In the ordinary course of business, the Company enters into contractual arrangements under which it may agree to indemnify the third party to such arrangements from any losses incurred relating to the services it performs on behalf of the Company or for losses arising from certain events as defined in the particular contract, such as litigation or claims relating to past performance. Such indemnification obligations may not be subject to maximum loss clauses. Historically, payments related to these indemnifications have not been material to the Company.

Certain Concentrations—The Company maintains cash and cash equivalents, derivatives, and certain other financial instruments with various financial institutions that potentially subject it to concentration of credit risk. As part of its risk management processes, the Company performs periodic evaluations of the relative credit standing of these financial institutions. The Company has not sustained material credit losses from instruments held at these financial institutions. Further, the Company does not anticipate nonperformance by any of the counterparties.

The Company markets and sells its products and services to large corporate clients, governments, and health care and education accounts, as well as to small and medium-sized businesses and individuals. No single customer accounted for more than 10% of the Company’s consolidated net revenue during the fiscal years ended January 29, 2016 or January 30, 2015, the successor period ended January 31, 2014, or the predecessor period ended October 28, 2013.

The Company utilizes a limited number of contract manufacturers who assemble its products. The Company may purchase components from suppliers and sell those components to the contract manufacturers, thereby

F-45 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS creating receivable balances from the contract manufacturers. The agreements with the majority of the contract manufacturers allow the Company to offset its payables against these receivables, thus mitigating the credit risk wholly or in part. Receivables from four contract manufacturers represented the majority of the gross non-trade receivables of $2.6 billion and $2.8 billion as of January 29, 2016 and January 30, 2015, respectively, of which $2.3 billion and $2.1 billion as of January 29, 2016 and January 30, 2015, respectively, have been offset against the corresponding payables. The portion of receivables not offset against payables is included in other current assets in the Consolidated Statement of Financial Position. The Company does not reflect the sale of the components in revenue and does not recognize any profit on the component sales until the related products are sold.

NOTE 12—INCOME AND OTHER TAXES The provision (benefit) for income taxes consisted of the following for the respective periods:

Successor Predecessor October 29, 2013 February 2, 2013 Fiscal Year Ended Fiscal Year Ended through through January 29, 2016 January 30, 2015 January 31, 2014 October 28, 2013 (in millions) Current: Federal ...... $(126) $ 118 $ 73 $ 420 State/local ...... 3 4 35 36 Foreign ...... 257 218 46 196 Current ...... 134 340 154 652 Deferred: Federal ...... (149) (405) (428) (339) State/local ...... (18) (29) (75) (15) Foreign ...... (38) (31) (41) 115 Deferred ...... (205) (465) (544) (239) Provision (benefit) for income taxes ...... $ (71) $(125) $(390) $ 413

Income before provision for income taxes consisted of the following for the respective periods:

Successor Predecessor October 29, 2013 February 2, 2013 Fiscal Year Ended Fiscal Year Ended through through January 29, 2016 January 30, 2015 January 31, 2014 October 28, 2013 (in millions) Domestic ...... $(3,581) $(3,316) $(1,680) $(448) Foreign ...... 2,406 1,970 (322) 768 Income (loss) before income taxes ...... $(1,175) $(1,346) $(2,002) $ 320

F-46 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The components of the Company’s net deferred tax assets (liabilities) were as follows as of January 29, 2016 and January 30, 2015:

Successor January 29, January 30, 2016 2015 (in millions) Deferred tax assets: Deferred revenue and warranty provisions ...... $ 865 $1,018 Provisions for product returns and doubtful accounts ...... 130 142 Credit carryforwards ...... 176 86 Loss carryforwards ...... 744 334 Operating and compensation related accruals ...... 283 321 Other ...... 149 166 Deferred tax assets ...... 2,347 2,067 Valuation allowance ...... (816) (432) Deferred tax assets, net of valuation allowance ...... 1,531 1,635 Deferred tax liabilities: Leasing and financing ...... (125) (140) Property and equipment ...... (180) (254) Acquired intangibles ...... (1,720) (2,014) Other ...... (231) (138) Deferred tax liabilities ...... (2,256) (2,546) Net deferred tax assets (liabilities) ...... $ (725) $ (911)

The tables below summarize the net operating losses, tax credit carryforwards, and other deferred tax assets with related valuation allowances recognized as of January 29, 2016 and January 30, 2015.

Successor January 29, 2016 (in millions) Deferred Valuation Net Deferred First Year Tax Assets Allowance Tax Assets Expiring Credit carryforwards ...... $ 176 $ (59) $ 117 Fiscal 2017 Loss carryforwards ...... 744 (614) 130 Fiscal 2017 Other deferred tax assets ...... 1,427 (143) 1,284 NA Total ...... $2,347 $(816) $1,531

Successor January 30, 2015 (in millions) Deferred Valuation Net Deferred First Year Tax Assets Allowance Tax Assets Expiring Credit carryforwards ...... $ 86 $ (38) $ 48 Fiscal 2016 Loss carryforwards ...... 334 (177) 157 Fiscal 2016 Other deferred tax assets ...... 1,647 (217) 1,430 NA Total ...... $2,067 $(432) $1,635

F-47 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company had deferred tax assets related to federal, state, and foreign net operating loss carryforwards of $97 million, $49 million, and $598 million, respectively, as of January 29, 2016, and $100 million, $41 million, and $193 million, respectively, as of January 30, 2015. The increase in foreign net operating loss carryforwards is due to a foreign exchange loss for tax purposes only, recorded for the year ended January 29, 2016 in a jurisdiction subject to a full valuation allowance, and as a result it is not reflected in the U.S. GAAP rate reconciliation below. The Company’s credit carryforwards as of January 29, 2016 and January 30, 2015, relate primarily to U.S. tax credits. The valuation allowances for other deferred tax assets as of January 29, 2016 and January 30, 2015, are primarily related to foreign jurisdictions. The Company has determined that it will be able to realize the remainder of its deferred tax assets.

Deferred taxes have not been recorded on the excess book basis in the shares of certain foreign subsidiaries because these basis differences are not expected to reverse in the foreseeable future and are expected to be permanent in duration. The basis differences in the amount of approximately $22.5 billion as of January 29, 2016 arose primarily from undistributed book earnings, which the Company intends to reinvest indefinitely. The basis differences could be reversed through a sale of the subsidiaries or the receipt of dividends from the subsidiaries, as well as various other events. Net of available foreign tax credits, residual income tax of approximately $6.9 billion would be due upon reversal of this excess book basis as of January 29, 2016.

A portion of the Company’s operations is subject to a reduced tax rate or is free of tax under various tax holidays. For the successor periods ended January 29, 2016, January 30, 2015, and January 31, 2014, the income tax benefits attributable to the tax status of these subsidiaries were estimated to be approximately $205 million ($0.51 per share), $218 million ($0.54 per share), and $65 million ($0.16 per share), respectively. For the predecessor period ended October 28, 2013, these benefits were estimated to be approximately $87 million ($0.05 per share). A significant portion of these income tax benefits is related to a tax holiday that will expire on January 31, 2017. The Company is currently seeking new terms for the affected subsidiary and it is uncertain whether any terms will be agreed upon. The Company’s other tax holidays will expire in whole or in part during Fiscal 2019 through Fiscal 2023. Many of these tax holidays and reduced tax rates may be extended when certain conditions are met or may be terminated early if certain conditions are not met.

A reconciliation of the Company’s income tax provision to the statutory U.S. federal tax rate is as follows:

Successor Predecessor October 29, 2013 February 2, 2013 Fiscal Year Ended Fiscal Year Ended through through January 29, 2016 January 30, 2015 January 31, 2014 October 28, 2013 U.S. federal statutory rate ...... 35.0% 35.0% 35.0% 35.0% State income taxes, net of federal tax benefit ...... 1.9 2.4 2.1 6.6 Tax impact of foreign operations ...... (37.1) (25.3) (15.8) 4.1 Change in valuation allowance impacting tax rate and non- deductible operating losses . . . 4.6 (7.1) (0.1) 78.1 Non-deductible transaction costs ...... (0.7) — (1.1) 8.8 Vendor and other settlements . . . 2.7 2.8 — — Other ...... (0.4) 1.5 (0.6) (3.5) Total ...... 6.0% 9.3% 19.5% 129.1%

F-48 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the Predecessor and Successor entities is as follows:

Total (in millions) Predecessor Balance at February 1, 2013 ...... $2,446 Increases related to tax positions of the current year ...... 121 Increases related to tax position of prior years ...... 6 Reductions for tax positions of prior years ...... (42) Lapse of statute of limitations ...... (16) Audit settlements ...... 2 Balance at October 28, 2013 ...... 2,517 Successor Balance at October 29, 2013 ...... — Fair value recognized through purchase accounting ...... 2,517 Increases related to tax positions of the current year ...... 29 Increases related to tax position of prior years ...... 22 Reductions for tax positions of prior years ...... (11) Lapse of statute of limitations ...... (26) Audit settlements ...... (68) Balance at January 31, 2014 ...... 2,463 Increases related to tax positions of the current year ...... 142 Increases related to tax position of prior years ...... 14 Reductions for tax positions of prior years ...... (80) Lapse of statute of limitations ...... (34) Audit settlements ...... (50) Balance at January 30, 2015 ...... 2,455 Increases related to tax positions of the current year ...... 70 Increases related to tax position of prior years ...... 52 Reductions for tax positions of prior years ...... (61) Lapse of statute of limitations ...... (24) Audit settlements ...... (13) Balance at January 29, 2016 ...... $2,479

The Company recorded net unrecognized tax benefits of $3.1 billion and $3.0 billion as of January 29, 2016 and January 30, 2015, respectively. The unrecognized tax benefits in the table above do not include accrued interest and penalties. As of January 29, 2016 and January 30, 2015, accrued interest and penalties were $950 million and $858 million, respectively. These interest and penalties are offset by tax benefits from transfer pricing, interest deductions, and state income tax, which are also not included in the table above. As of January 29, 2016 and January 30, 2015, these benefits were $372 million and $336 million, respectively.

Interest and penalties related to income tax liabilities are included in income tax expense. The Company recorded interest and penalties of $63 million, $35 million, and $5 million for the successor periods ended January 29, 2016, January 30, 2015, and January 31, 2014, respectively, and $32 million for the predecessor period ended October 28, 2013.

F-49 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

During Fiscal 2014, the Internal Revenue Service (“IRS”) issued a revised Revenue Agent’s Report for fiscal years 2004 through 2006, proposing certain assessments primarily related to transfer pricing matters. The Company disagrees with certain of the proposed assessments in each report and is contesting them through the IRS administrative appeals procedures. In addition, the Company’s U.S. federal income tax returns for fiscal years 2007 through 2009 are currently under examination by the IRS.

The Company is currently under income tax audits in various state and foreign jurisdictions. The Company is undergoing negotiations, and in some cases contested proceedings, relating to tax matters with the taxing authorities in these jurisdictions. The Company believes that it has provided adequate reserves related to all matters contained in tax periods open to examination. Although the Company believes it has made adequate provisions for the uncertainties surrounding these audits, should the Company experience unfavorable outcomes, such outcomes could have a material impact on its results of operations, financial position, and cash flows. Although timing of resolution or closure of audits is not certain, the Company believes it is reasonably possible that tax audit resolutions could reduce its unrecognized tax benefits by an amount between $300 million to $750 million in the next twelve months. Such a reduction would not have a material effect on the Company’s effective tax rate. Net unrecognized tax benefits, if recognized, would favorably affect the Company’s effective tax rate. With respect to major U.S. state and foreign taxing jurisdictions, the Company is generally not subject to tax examinations for years prior to fiscal year 2000.

The Company takes certain non-income tax positions in the jurisdictions in which it operates and has received certain non-income tax assessments from various jurisdictions. The Company believes that a material loss in these matters is not probable and that it is not reasonably possible that a material loss exceeding amounts already accrued has been incurred. The Company believes its positions in these non-income tax litigation matters are supportable and that it ultimately will prevail. In the normal course of business, the Company’s positions and conclusions related to its non-income taxes could be challenged and assessments may be made. To the extent new information is obtained and the Company’s views on its positions, probable outcomes of assessments, or litigation change, changes in estimates to the Company’s accrued liabilities would be recorded in the period in which such a determination is made. In the resolution process for income tax and non-income tax audits, the Company may be required to provide collateral guarantees or indemnification to regulators and tax authorities until the matter is resolved.

NOTE 13—EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is based on the weighted-average effect of all common shares issued and outstanding and is calculated by dividing net income (loss) by the weighted-average shares outstanding during the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares used in the basic earnings (loss) per share calculation plus the number of common shares that would be issued assuming exercise or conversion of all potentially dilutive common shares outstanding. The Company excludes equity instruments from the calculation of diluted earnings (loss) per share if the effect of including such instruments is anti-dilutive. Accordingly, certain stock-based incentive awards have been excluded from the calculation of diluted earnings (loss) per share totaling 53 million shares for the fiscal year ended January 29, 2016, 55 million shares for the fiscal year ended January 30, 2015, 46 million shares for the successor period ended January 31, 2014, and 90 million shares for the predecessor period ended October 28, 2013.

The company has three classes of common stock, denominated as Series A, Series B, and Series C common stock. For purposes of calculating net earnings (loss) per share, the Company uses the two-class method. As all classes share the same rights in dividends, basic and diluted earnings (loss) per share are the same for all classes.

F-50 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the computation of basic and diluted earnings (loss) per share for each of the periods presented:

Successor Predecessor Fiscal Year Fiscal Year October 29, 2013 February 2, 2013 Ended January 29, Ended January 30, through January 31, through October 28, 2016 2015 2014 2013 (in millions, except per share amounts) Numerator: Net income (loss) ...... $(1,104) $(1,221) $(1,612) $ (93) Denominator: Weighted-average shares outstanding: Basic ...... 405 404 397 1,755 Effect of dilutive options, restricted stock units, restricted stock, and other ...... — — — — Diluted ...... 405 404 397 1,755 Earnings (loss) per share: Basic ...... $ (2.73) $ (3.02) $ (4.06) $ (0.05) Diluted ...... $ (2.73) $ (3.02) $ (4.06) $ (0.05)

NOTE 14—STOCK-BASED COMPENSATION AND BENEFIT PLANS Stock-based Compensation Going-Private Transaction In connection with the acquisition of Dell by Denali Holding on October 29, 2013, the board of directors of Denali Holding approved the Denali Holding Inc. 2013 Stock Incentive Plan (the “2013 Stock Incentive Plan”). Immediately prior to the completion of the going-private transaction, Dell had 78 million outstanding options, and subsequent to the going-private transaction, 75 million of these options were settled for a one-time cash payment. In accordance with authoritative guidance, the Company re-valued these options as of the transaction date using the lattice binomial valuation. The difference between the fair value of the canceled awards and the cash payment that pertained to services rendered prior to the transaction date was recognized as additional paid- in capital upon close of the transaction, while $67 million that pertained to services forgone subsequent to the transaction was immediately recognized as stock-based compensation expense in the successor period. In addition, immediately prior to the going-private transaction, Dell had 22 million unvested restricted stock units, 21 million of which were converted to deferred cash awards that continue to have a service period requirement after the completion of the going-private transaction.

Under terms of a new employment agreement effective as of close of the transaction, Michael S. Dell, Chief Executive Officer of the Company, was issued an option to purchase 11 million shares of Series A common stock of Denali Holding at an exercise price of $13.75 per share. The option is service-based and vests ratably over five years on each anniversary of the going-private transaction or will vest fully earlier, upon a change in control of Denali Holding. As of January 29, 2016, the Company expects to incur approximately $49 million of additional compensation-related expense through October 2018 for this option grant.

F-51 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Description of the 2013 Stock Incentive Plan The 2013 Stock Incentive Plan provides for the grant of stock-based incentive awards to aid in recruiting and the retention of employees. Denali Holding intends to continue to grant long-term cash incentive awards, but no other type of award, pursuant to the Dell Inc. 2012 Long-Term Incentive Plan (as renamed the Denali Holding Inc. 2012 Long-Term Incentive Plan).

Redeemable Shares—The 2013 Stock Incentive Plan provides for the grant of stock-based incentive awards to the Company’s employees, consultants, and non-employee directors. Equity awards available for issuance under the 2013 Stock Incentive Plan include stock options, stock appreciation rights, restricted stock units, and other equity-based awards. Those awards include certain rights that allow the holder to exercise a put feature for the underlying stock, requiring the Company to purchase the stock at its fair market value. The put feature is subject to a six-month holding period following the issuance of the common stock. Accordingly, these awards are subject to reclassification from equity to temporary equity, and the Company determines the amounts to be classified as temporary equity as follows: • For stock options subject to service requirements, the intrinsic value of the option is multiplied by the portion of the option that is vested. Upon exercise of the option, the amount in temporary equity represents the fair value of the Company’s common stock. • For stock appreciation rights and restricted stock units, the fair value of each share subject to such awards is multiplied by the portion of the share that is vested. • For share-based arrangements that are subject to the occurrence of a contingent event, those amounts are not reclassified as temporary equity until the contingency has been satisfied.

The amount of redeemable shares classified as temporary equity as of January 29, 2016 and January 30, 2015 was $106 million and $53 million, respectively. As of January 29, 2016, redeemable shares was comprised of 0.9 million issued and outstanding common shares, 0.1 million unvested restricted stock units, and 18.6 million outstanding stock options. As of January 30, 2015, redeemable shares was comprised of 0.5 million issued and outstanding common shares, 0.3 million unvested restricted stock units, and 18.8 million outstanding stock options.

As of January 29, 2016 and January 30, 2015, there were approximately 17 million shares of common stock of Denali Holding available for future grants under the 2013 Stock Incentive Plan.

Stock Option Agreements—Stock options granted under the 2013 Stock Incentive Plan include service- based awards and performance-based awards. Service-based stock options typically vest pro-rata at each anniversary of the grant date over a five year period. Performance-based stock options, with a market condition, become exercisable upon achievement of Return on Equity (ROE) metrics up to the seven year anniversary of the going-private transaction date, depending upon the achievement of the market condition. Both service-based and performance-based stock options are granted with option exercise prices equal to the grant date fair market value of Denali common stock, as determined by the Denali Holding board of directors. Generally, common stock issued under both service-based and performance-based awards are subject to liquidity events, such as an initial public offering, change in control, sales of common stock under an annual company liquidity program, and calls and puts resulting upon the occurrence of specified events. Stock options expire ten years after the date of grant. Compensation expense for service-based stock options is recognized on a straight-line basis over the requisite service period, while compensation expense for performance-based stock options, with a market condition, is recognized on a graded accelerated basis net of estimated forfeitures over the requisite service period.

F-52 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Stock Option Activity The following table summarizes stock option activity during the respective periods:

Weighted Weighted- Average Average Remaining Number of Exercise Contractual Options Price Term (in millions) (per share) (in years) Predecessor Options outstanding—February 1, 2013...... 118 $22.51 Granted and assumed through acquisitions ...... — — Exercised ...... (6) 7.59 Forfeited ...... (9) 8.03 Canceled/expired ...... (101) 24.46 Converted ...... (2) 29.67 Options outstanding—October 28, 2013 ...... — —

Successor Options outstanding—October 29, 2013 ...... — — Granted and assumed through the going-private transaction (a) ...... 60 14.32 Exercised ...... — — Forfeited ...... — — Canceled/expired ...... — — Options outstanding—January 31, 2014...... 60 14.32 Granted ...... 2 17.08 Exercised ...... — — Forfeited ...... (6) 13.75 Canceled/expired ...... (1) 32.22 Options outstanding—January 30, 2015...... 55 14.11 Granted ...... 2 24.05 Exercised ...... — — Forfeited ...... (3) 19.07 Canceled/expired ...... — — Options outstanding—January 29, 2016 (b) ...... 54 $14.30 Vested and expected to vest (net of estimated forfeitures)—January 29, 2016 49 $14.27 7.9 Exercisable—January 29, 2016 ...... 11 $13.99 7.6 (a) In connection with the going-private transaction, Denali Holding assumed 2 million stock options with a weighted-average exercise price per share of $29.67 that were outstanding under an existing Dell stock incentive plan. In addition, one-time awards totaling 58 million stock options with an exercise price of $13.75 per share were granted to certain members of the Company’s management under the 2013 Stock Incentive Plan. (b) Of the 54 million stock options outstanding on January 29, 2016, 24 million related to performance-based awards and 30 million related to service-based awards.

During the fiscal years ended January 29, 2016 and January 30, 2015 and the successor period ended January 31, 2014, the total fair value of options vested was $42 million, $41 million and immaterial, respectively.

F-53 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the predecessor period ended October 28, 2013, the total fair value of options vested was $74 million. As of January 29, 2016 and January 30, 2015, there was $183 million and $235 million, respectively, of total unrecognized stock-based compensation expense, net of estimated forfeitures, related to unvested stock options expected to be recognized over a weighted-average period of 3.6 years and 4.0 years, respectively.

Valuation of Service-Based Stock Option Awards For service-based stock options granted by the successor entity under the 2013 Stock Incentive Plan, Denali Holding utilized the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes option pricing model incorporates various assumptions, including leveraged adjusted volatility of a public peer group, expected term, risk-free interest rates, and dividend yields. The weighted assumptions utilized for valuation of options under this model as well as the weighted-average grant date fair value of stock options granted during the respective periods are presented below. There were no option grants by the predecessor entity in the predecessor period ended October 28, 2013 under previous Dell stock incentive plans.

The expected term of both the successor and predecessor periods shown below is based on historical experience and on the terms and conditions of the stock awards granted to employees. For the predecessor periods shown below, volatility was based on a blend of implied and historical volatility of Dell’s common stock over the most recent period commensurate with the estimated expected term of Dell’s predecessor stock options. For the successor period, option valuations used leverage-adjusted volatility of a peer group and the expected term was based on analysis of Dell historical option settlement experience and on the terms and conditions of the stock awards granted.

Valuation of Performance-Based Stock Option Awards For performance-based stock options granted under the 2013 Stock Incentive Plan, Denali Holding uses the Monte Carlo valuation model to simulate probabilities of achievement of the market condition and the grant date fair value. The valuation model for performance-based option grants in the fiscal year ended January 29, 2016 used a weighted-average leverage adjusted 7.66 year peer volatility and corresponding risk free interest rate. Upon fulfillment of a ROE condition, a specific portion of the performance options become exercisable. An embedded binomial lattice option pricing model was used to determine the value of these exercisable options using the assumption that each option will be exercised at the midpoint between the date of satisfaction of a ROE condition and the expiration date of such option.

F-54 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The assumptions utilized in this model as well as the weighted-average grant date fair value of stock options granted during the successor period are presented below.

Successor Service- Performance- Service- Performance- Service- Performance- Based Based Based Based Based Based Fiscal Year Fiscal Year Fiscal Year Fiscal Year October 29, October 29, Ended Ended Ended Ended 2013 through 2013 through January 29, January 29, January 30, January 30, January 31, January 31, 2016 2016 2015 2015 2014 (a) 2014 (a) Weighted-average grant date fair value of stock options granted per option ...... $10.05 $10.85 $8.75 $9.01 $7.02 $5.92 Expected term (in years) ..... 5.1 — 5.2 — 6.9 — Risk-free rate (U.S. Government Treasury Note) ...... 1.5% 2.0% 1.6% 2.4% 1.9% 2.5% Volatility ...... 46% 50% 62% 55% 49% 48% Dividend Yield ...... — % — % — % — % — % — % (a) The 11 million options granted to Michael S. Dell by Denali Holding, included in the service-based column for successor above, were valued using an expected term of 10 years and corresponding risk-free interest rate. This resulted in a grant date fair value of $8.22 per option.

Restricted Stock Unit Awards Non-vested restricted stock unit awards and activities for the respective periods are as follows:

Weighted- Number Average of Grant Date Shares Fair Value (in millions) (per share) Predecessor Non-vested restricted stock units: Non-vested restricted stock unit balance as of February 1, 2013 ..... 42 $15.95 Granted ...... — — Vested (a) ...... (16) 16.02 Forfeited ...... (4) 16.96 Converted ...... (22) 15.69 Non-vested restricted stock unit balance as of October 28, 2013 ..... — $ —

(a) Upon vesting of restricted stock units, some of the underlying shares were generally sold to cover the required withholding taxes. However, select participants could choose the net shares settlement method to cover withholding tax requirements. Total shares withheld were approximately 320,000 for the predecessor period ended October 28, 2013. Total payments for the employee’s tax obligations to the taxing authorities were $5 million for the predecessor period ended October 28, 2013 and are reflected as a financing activity within the Consolidated Statements of Cash Flows.

In connection with the going-private transaction, the successor entity assumed 0.8 million unvested restricted stock units with a re-measured grant date fair value of $13.75 per share. As of January 29, 2016 and

F-55 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

January 30, 2015 there was $1 million and $2 million, respectively, of unrecognized stock-based compensation expense, net of estimated forfeitures, related to these awards expected to be recognized over a weighted-average period of approximately 1.9 years and 2.6 years, respectively.

For the successor periods ended January 29, 2016, January 30, 2015, and January 31, 2014, the total estimated vest date fair value of restricted stock unit awards was not material.

Stock-based Compensation Expense Stock-based compensation expense was allocated as follows for the respective periods:

Successor Predecessor Fiscal Year Fiscal Year October 29, February 2, Ended Ended 2013 through 2013 through January 29, January 30, January 31, October 28, 2016 2015 2014 2013 (in millions) Stock-based compensation expense: Cost of net revenue ...... $10 $13 $ 5 $ 31 Operating expenses ...... 62 59 77 153 Stock-based compensation expense before taxes ...... 72 72 82 184 Income tax benefit ...... (26) (26) (24) (54) Stock-based compensation expense, net of income taxes ...... $46 $46 $58 $130

Employee Benefit Plans 401(k) Plan—The Company has a defined contribution retirement plan (the “401(k) Plan”) that complies with Section 401(k) of the Internal Revenue Code. Substantially all employees in the U.S. are eligible to participate in the 401(k) Plan. Effective January 1, 2008, the Company matches 100% of each participant’s voluntary contributions, subject to a maximum contribution of 5% of the participant’s eligible compensation, and participants vest immediately in all contributions to the 401(k) Plan. The Company’s contributions during the successor periods ended January 29, 2016, January 30, 2015, and January 31, 2014 were $169 million, $162 million, and $37 million, respectively, and Dell’s contributions for the predecessor period ended October 28, 2013 were $136 million. The Company’s matching contributions and participants voluntary contributions are invested according to each participant’s elections in the investment options provided under the Plan. Investment options included Dell common stock for a portion of the plan year before the going-private transaction, but neither participant nor Dell contributions were required to be invested in Dell common stock.

NOTE 15—SEGMENT INFORMATION The Company’s reportable segments are based on the following product and services business units: • Client Solutions • Enterprise Solutions Group (“ESG”) • Dell Software Group (“DSG”) • Dell Services

F-56 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

In the first quarter of the fiscal year ended January 29, 2016, Denali redefined the categories within Client Solutions and ESG to reflect the way the Company currently organizes products and services within these business units. None of these changes impacted the Company’s consolidated or total business unit results. Prior period amounts have been reclassified to conform to the current year presentation.

Client Solutions includes sales to commercial and consumer customers of desktops, thin client products, notebooks, and services and third-party software and peripherals closely tied to the sale of Client Solutions hardware. ESG includes servers, networking, and storage, as well as services and third-party software and peripherals that are closely tied to the sale of ESG hardware. DSG includes systems management, security software solutions, and information management software offerings. Dell Services includes a broad range of IT and business services, including infrastructure, cloud, applications, and business process services.

The reportable segments disclosed herein are based on information reviewed by the Company’s management to evaluate the business segment results. The Company’s measure of segment operating income for management reporting purposes excludes the impact of purchase accounting, amortization of intangible assets, unallocated corporate expenses, severance and facility action costs, acquisition-related charges, and costs related to the going-private transaction. See Note 3 of the Notes to the Audited Consolidated Financial Statements for more information on the going-private transaction. The Company does not allocate assets to the above reportable segments for internal reporting purposes.

F-57 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents a reconciliation of net revenue by Denali’s reportable segments to Denali’s consolidated net revenue as well as a reconciliation of consolidated segment operating income to Denali’s consolidated operating income:

Successor Predecessor Fiscal Year Fiscal Year October 29, February 2, Ended Ended 2013 through 2013 through January 29, January 30, January 31, October 28, 2016 2015 2014 2013 (in millions) Consolidated net revenue: Client Solutions ...... $35,877 $39,634 $ 9,839 $28,101 Enterprise Solutions Group ...... 14,978 14,714 3,500 10,875 Dell Software Group ...... 1,362 1,493 360 951 Dell Services ...... 2,842 2,982 739 2,219 Segment net revenue ...... 55,059 58,823 14,438 42,146 Corporate (a) ...... 333 272 61 156 Impact of purchase accounting (b) ...... (506) (976) (424) — Total net revenue ...... $54,886 $58,119 $14,075 $42,302 Consolidated operating income (loss): Client Solutions ...... $ 1,410 $ 2,051 $ 289 $ 1,070 Enterprise Solutions Group ...... 1,052 1,230 270 867 Dell Software Group ...... (1) (30) (52) (196) Dell Services ...... 152 124 2 (44) Segment operating income ...... 2,613 3,375 509 1,697 Impact of purchase accounting (b) ...... (616) (1,116) (1,252) — Amortization of intangible assets ...... (2,189) (2,299) (584) (594) Corporate (a) ...... 26 (182) 102 — Other (c) ...... (217) (200) (573) (585) Total operating income (loss) ...... $ (383) $ (422) $ (1,798) $ 518

(a) Corporate primarily consists of unallocated transactions and certain security offerings. (b) Impact of purchase accounting in the successor periods includes amortization of intangibles and costs related to the going-private transaction. (c) Other costs include severance, facility, acquisition, and compensation expenses and costs related to the going-private transaction.

F-58 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents net revenue by product and services categories:

Successor Predecessor Fiscal Year Fiscal Year October 29, February 2, Ended Ended 2013 through 2013 through January 29, January 30, January 31, October 28, 2016 2015 2014 2013 (in millions) Net revenue: Client Solutions: Commercial ...... $21,297 $23,988 $ 5,782 $16,172 Consumer ...... 9,167 9,886 2,568 7,350 Third-party software and after-point-of-sale peripherals ...... 5,413 5,760 1,489 4,579 Total Client Solutions net revenue ...... 35,877 39,634 9,839 28,101 Enterprise Solutions Group: Servers and networking ...... 12,761 12,368 2,888 9,013 Storage ...... 2,217 2,346 612 1,862 Total ESG net revenue ...... 14,978 14,714 3,500 10,875 Dell Software Group: Total Dell Software Group net revenue . . 1,362 1,493 360 951 Dell Services: Infrastructure and cloud services ...... 1,679 1,734 426 1,309 Applications and business process services . . . 1,163 1,248 313 910 Total Dell Services revenue ...... 2,842 2,982 739 2,219 Total segment net revenue ...... $55,059 $58,823 $14,438 $42,146

The following tables present net revenue and long-lived asset information allocated between the United States and foreign countries:

Successor Predecessor Fiscal Year Fiscal Year October 29, February 2, Ended Ended 2013 through 2013 through January 29, January 30, January 31, October 28, 2016 2015 2014 2013 (in millions) Net revenue: United States ...... $27,421 $28,079 $ 6,441 $21,370 Foreign countries ...... 27,465 30,040 7,634 20,932 Total net revenue ...... $54,886 $58,119 $14,075 $42,302

F-59 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Successor January 29, January 30, 2016 2015 (in millions) Long-lived assets: United States ...... $1,627 $1,838 Foreign countries ...... 643 792 Total long-lived assets ...... $2,270 $2,630

The allocation between domestic and foreign net revenue is based on the location of the customers. Net revenue from any single foreign country did not constitute more than 10% of Denali’s consolidated net revenues for the fiscal year ended January 29, 2016, the fiscal year ended January 30, 2015, the successor period ended January 31, 2014, or the predecessor period ended October 28, 2013. Long-lived assets from any single foreign country did not constitute more than 10% of Denali’s consolidated long-lived assets as of January 29, 2016 or January 30, 2015.

NOTE 16—SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION Supplemental Consolidated Statements of Financial Position Information The following table provides information on amounts included in accounts receivable, net, inventories, net, property, plant, and equipment, net, accrued and other liabilities, and other non-current liabilities, as well as prepaid expenses as of January 29, 2016 and January 30, 2015.

Successor January 29, January 30, 2016 2015 (in millions) Accounts receivable, net: Gross accounts receivable ...... $5,592 $6,126 Allowance for doubtful accounts ...... (57) (60) Total accounts receivable, net ...... $5,535 $6,066 Inventories, net: Production materials ...... $ 657 $ 511 Work-in-process ...... 189 296 Finished goods ...... 797 856 Total inventories, net ...... $1,643 $1,663 Prepaid expenses (a) ...... $ 560 $ 489 Property, plant, and equipment, net: Computer equipment ...... $1,484 $1,425 Land and buildings ...... 1,496 1,609 Machinery and other equipment ...... 306 322 Total property, plant, and equipment ...... 3,286 3,356 Accumulated depreciation and amortization ..... (1,016) (726) Total property, plant, and equipment, net .... $2,270 $2,630

(a) Prepaid expenses are included in other current assets in the Consolidated Statements of Financial Position.

F-60 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

During the fiscal years ended January 29, 2016 and January 30, 2015, the Company recognized $682 million and $678 million, respectively, in depreciation expense. During the successor period ended January 31, 2014 and the predecessor period ended October 28, 2013, the Company recognized $178 million and $396 million, respectively, in depreciation expense.

Successor January 29, January 30, 2016 2015 (in millions) Accrued and other current liabilities: Compensation ...... $1,203 $1,492 Warranty liability ...... 381 453 Income and other taxes ...... 1,210 1,238 Other ...... 1,762 1,857 Total accrued and other current liabilities ...... $4,556 $5,040 Other non-current liabilities: Warranty liability ...... $ 193 $ 226 Unrecognized tax benefits, net ...... 2,271 2,260 Deferred tax liabilities ...... 1,038 1,956 Other ...... 113 142 Total other non-current liabilities ...... $3,615 $4,584

Supplemental Consolidated Statements of Income (Loss) The table below provides details of interest and other, net for the fiscal years ended January 29, 2016 and January 30, 2015, the successor period ended January 31, 2014, and the predecessor period ended October 28, 2013:

Successor Predecessor Fiscal Year Fiscal Year October 29, February 2, Ended Ended 2013 through 2013 through January 29, January 30, January 31, October 28, 2016 2015 2014 2013 (in millions) Interest and other, net: Investment income, primarily interest ...... $ 39 $ 47 $ 9 $ 53 Gain (loss) on investments, net ...... (2) (29) 1 1 Interest expense ...... (680) (807) (235) (178) Foreign exchange ...... (122) (96) 27 (68) Other ...... (27) (39) (6) (6) Total interest and other, net ...... $(792) $(924) $(204) $(198)

F-61 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Valuation and Qualifying Accounts

Successor Predecessor Fiscal Year Fiscal Year October 29, February 2, Ended Ended 2013 through 2013 through January 29, January 30, January 31, October 28, 2016 2015 2014 2013 (in millions) Trade Receivables—Allowance for doubtful accounts Balance at beginning of period (a) ...... $ 60 $ 17 $— $ 72 Impact of purchase accounting (b) ...... — 34 11 — Charged to income ...... 67 69 36 63 Charged to allowance ...... 70 60 30 74 Balance at end of period ...... $ 57 $ 60 $ 17 $ 61

Trade Receivables—Allowance for customer returns Balance at beginning of period (a) ...... $132 $108 $— $112 Impact of purchase accounting (b) ...... — 56 42 — Charged to income ...... 411 454 88 299 Charged to allowance ...... 418 486 22 313 Balance at end of period ...... $125 $132 $108 $ 98

Customer Financing Receivables—Allowance for financing receivable losses Balance at beginning of period (a) ...... $194 $215 $— $192 Impact of purchase accounting (c) ...... — — 204 — Charged to income ...... 104 147 50 95 Charged to allowance (d) ...... 122 168 39 119 Balance at end of period ...... $176 $194 $215 $168

Tax Valuation Allowance Balance at beginning of period ...... $432 $399 $— $163 Charged to income tax provision ...... 384 33 — 237 Allowance acquired ...... — — 399 (1) Balance at end of period ...... $816 $432 $399 $399

(a) Due to purchase accounting for the going-private transaction, trade receivables and customer financing receivables were recognized at fair value as of the transaction date. Accordingly, the allowance for these receivables was adjusted to zero on day one of the successor period. (b) The impact of purchase accounting includes purchase accounting adjustments recorded under the acquisition method of accounting, related to the going-private transaction. (c) In connection with the going-private transaction, the Company recorded a provision for losses of $204 million on customer receivables to recognize an estimate of incurred losses on principal balances. (d) Charge-offs to the allowance for financing receivable losses for customer financing receivables includes principal and interest.

F-62 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated other comprehensive income (loss) is presented in stockholders’ equity in the Consolidated Statements of Financial Position and is comprised of amounts related to foreign currency translation adjustments and amounts related to the Company’s cash flow hedges.

The following table presents changes in accumulated other comprehensive income (loss), net of tax, by the following components for the periods indicated:

Foreign Accumulated Currency Other Translation Cash Flow Comprehensive Adjustments Hedges Income (in millions) Successor Balances at January 31, 2014 ...... $ (28) $ 1 $ (27) Other comprehensive income before reclassifications ...... (192) 427 235 Amounts reclassified from accumulated other comprehensive income . . — (179) (179) Total change for the period ...... (192) 248 56 Balances at January 30, 2015 ...... $(220) $ 249 $ 29 Balances at January 30, 2015 ...... $(220) $ 249 $ 29 Other comprehensive income before reclassifications ...... (138) 152 14 Amounts reclassified from accumulated other comprehensive income . . — (367) (367) Total change for the period ...... (138) (215) (353) Balances at January 29, 2016 ...... $(358) $ 34 $(324)

Amounts related to the Company’s cash flow hedges are reclassified to net income during the same period in which the items being hedged are recognized in earnings. In addition, any hedge ineffectiveness related to cash flow hedges is recognized currently in net income. See Note 7 of the Notes to the Audited Consolidated Financial Statements for more information on the Company’s derivative instruments. The following table presents gains and (losses) reclassified from accumulated other comprehensive loss, net of tax, to net income (loss) for the respective periods:

Successor Fiscal Year Ended Fiscal Year Ended January 29, 2016 January 30, 2015 Cash Total Cash Total Flow Reclassifications, Flow Reclassifications, Hedges net of tax Hedges net of tax (in millions) Net Revenue ...... $328 $328 $163 $163 Cost of net revenue ...... 40 40 15 15 Interest and other, net ...... (1) (1) 1 1 Total ...... $367 $367 $179 $179

F-63 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18—CAPITALIZATION Preferred Stock Authorized Shares—Denali Holding is authorized to issue 100 shares of preferred stock, par value $.01 per share. As of January 29, 2016 and January 30, 2015, no shares of preferred stock were issued or outstanding.

Common Stock Authorized Shares—As of January 29, 2016, Denali Holding was authorized to issue 350 million shares of Series A common stock, 150 million shares of Series B common stock, and 200 million shares of Series C common stock. The par value for all series of common stock is $.01 per share.

Issued and Outstanding Shares—As of both January 29, 2016 and January 30, 2015, 307 million shares of Series A common stock and 98 million shares of Series B common stock were issued and outstanding. As of both January 29, 2016 and January 30, 2015, the number of shares of Series C common stock issued and outstanding was not material.

The Series A common stock, the Series B common stock, and the Series C common stock share equally in dividends declared or accumulated and have equal participation rights in undistributed earnings. In the event of a liquidation, dissolution, distribution of assets or winding-up of the Company, the holders of all classes of common stock have equal rights to receive the assets of the Company after the rights of the holders of any outstanding preferred stock have been satisfied.

NOTE 19—CONDENSED FINANCIAL INFORMATION FOR PARENT COMPANY Denali Holding Inc. has no material assets or standalone operations other than its ownership in Dell Inc. and its consolidated subsidiaries.

There are restrictions under credit agreements and an indenture on the Company’s ability to obtain funds from any of its subsidiaries through dividends, loans, or advances. Although certain subsidiaries of Dell Inc. were designated unrestricted for all purposes of such credit agreements and indenture during the fiscal year ended January 29, 2016, substantially all of the net assets of Dell Inc. remain restricted as of January 29, 2016. Accordingly, this condensed financial information is presented on a “Parent-only” basis. Under a Parent-only presentation, Denali Holding Inc.’s investments in its consolidated subsidiaries are presented under the equity method of accounting.

F-64 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the financial position of Denali Holding Inc. (Parent) as of January 29, 2016 and January 30, 2015, and the results of its operations and cash flows for the fiscal years ended January 29, 2016 and January 30, 2015 and for the period from October 29, 2013 to January 29, 2014.

Successor January 29, January 30, Denali Holding Inc. (Parent) 2016 2015 (in millions) Assets: Investments in subsidiaries ...... $1,587 $ 2,982 Other current assets ...... 11 — Total assets ...... $1,598 $ 2,982 Long-term debt ...... $ 26 $ 26 Other non-current liabilities ...... — (1) Redeemable shares ...... 106 53 Stockholders’ equity: Common stock and capital in excess of $.01 par value; shares authorized: 700 (Series A: 350, Series B: 150, Series C: 200); shares issued and outstanding: 405 (Series A: 307, Series B: 98) and 405 (Series A: 307, Series B: 98), respectively ...... 5,727 5,708 Retained earnings (deficit) ...... (3,937) (2,833) Accumulated other comprehensive income (loss) ...... (324) 29 Total stockholders’ equity ...... 1,466 2,904 Total liabilities and stockholders’ equity ...... $1,598 $ 2,982

In connection with the acquisition of Dell by Denali Holding, Denali Holding issued a $2.0 billion subordinated note to Microsoft Global Finance, a subsidiary of Microsoft Corporation. As of January 29, 2016 and January 30, 2015, the outstanding principal amount of the Microsoft Note was $26 million, payable at maturity in October 2023.

Denali Holding Inc. (Parent) has not guaranteed the obligations of its subsidiaries. See Note 11 of the Notes to the Audited Consolidated Financial Statements for more information about the commitments and contingencies of the Company.

Successor Fiscal Year Fiscal Year October 29, Ended Ended 2013 through January 29, January 30, January 31, Denali Holding Inc. (Parent) 2016 2015 2014 (in millions) Equity in net loss of subsidiaries ...... $(1,113) $(1,162) $(1,589) Interest and other, net ...... 8 (89) (37) Income tax benefit ...... 1 30 14 Consolidated net loss ...... (1,104) (1,221) (1,612) Other comprehensive income (loss) of subsidiaries ...... (353) 56 (27) Consolidated comprehensive loss ...... $(1,457) $(1,165) $(1,639)

F-65 DENALI HOLDING INC. NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Successor Fiscal Year Fiscal Year October 29, Ended Ended 2013 through January 29, January 30, January 31, Denali Holding Inc. (Parent) 2016 2015 2014 (in millions) Change in cash from operating activities ...... $ (2) $ (64) $ (19) Cash flow from financing activities: Proceeds from equity issuance ...... — 28 2,096 Issuance of common stock under employee plans ...... 2 — — Proceeds from debt ...... — — 2,000 Repayments of debt ...... — (1,974) — Receipt of capital from subsidiaries ...... 2 2,001 19 Capital investment in subsidiaries ...... (2) — (4,087) Change in cash from financing activities ...... 2 55 28 Change in cash and cash equivalents ...... — (9) 9 Cash and cash equivalents at beginning of the period ..... — 9 — Cash and cash equivalents at end of the period ...... $— $ — $ 9

The results of operations and cash flow information of the Parent Company are not presented for the predecessor period ended October 28, 2013, as Denali Holding Inc. (Parent) did not exist in that period.

NOTE 20—SUBSEQUENT EVENTS There were no known events occurring after the balance sheet date and up until the date of the issuance of these financial statements that would materially affect the information presented herein. The Company evaluated subsequent events through March 11, 2016, the date of the issuance of these financial statements.

Sale of Dell Services (Unaudited) On March 28, 2016, Denali entered into a definitive agreement with NTT Data International L.L.C. to sell Dell Services, including the Dell Services Federal Government business (collectively, “Dell Services”), for cash consideration of approximately $3.1 billion. Dell Services includes process outsourcing, application management, and infrastructure services. The global support, deployment, and professional services businesses are not included in the pending transaction. Denali performed an assessment of Dell Services as of January 29, 2016 and determined that it did not meet held-for-sale criteria as of that date. Dell Services assets and liabilities will be classified as held-for-sale, and its historical financial results will be classified as discontinued operations beginning in the first quarter of the fiscal year ended February 3, 2017. There are no indications of potential impairment of assets.

Federal Income Taxes (Unaudited) The Company’s U.S. federal income tax returns for fiscal years 2007 through 2009 are currently under examination by the IRS and the IRS issued an RAR related to those years during the first quarter of Fiscal 2017. Similar to the audit for fiscal years 2004 through 2006, the IRS has proposed adjustments relating to certain tax positions taken on the return that the Company disagrees with and will contest through the IRS administrative appeals procedures. The Company believes it has valid positions supporting its tax returns and that it is adequately reserved.

F-66 Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of EMC Corporation: In our opinion, the consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements present fairly, in all material respects, the financial position of EMC Corporation and its subsidiaries at December 31, 2015 and December 31, 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying Index to Consolidated Financial Statements presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note A to the consolidated financial statements, the Company changed the manner in which it accounts for the classification of deferred taxes in the consolidated balance sheets in 2015.

/s/ PricewaterhouseCoopers LLP Boston, Massachusetts February 25, 2016

F-67 EMC CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except per share amounts)

December 31, 2015 2014 ASSETS Current assets: Cash and cash equivalents ...... $ 6,549 $ 6,343 Short-term investments ...... 2,726 1,978 Accounts and notes receivable, less allowance for doubtful accounts of $90 and $72 . . 3,977 4,413 Inventories ...... 1,245 1,276 Other current assets ...... 566 653 Total current assets ...... 15,063 14,663 Long-term investments ...... 5,508 6,334 Property, plant and equipment, net ...... 3,850 3,766 Intangible assets, net ...... 2,149 2,125 Goodwill ...... 17,090 16,134 Deferred income taxes ...... 1,164 952 Other assets, net ...... 1,788 1,611 Total assets ...... $46,612 $45,585 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable ...... $ 1,644 $ 1,696 Accrued expenses ...... 3,123 3,141 Income taxes payable ...... 609 852 Short-term debt ...... 1,299 — Deferred revenue ...... 6,210 6,021 Total current liabilities ...... 12,885 11,710 Income taxes payable ...... 461 306 Deferred revenue ...... 4,592 4,144 Long-term debt ...... 5,475 5,469 Other liabilities ...... 480 431 Total liabilities ...... 23,893 22,060 Commitments and contingencies (See Note M) Shareholders’ equity: Preferred stock, par value $0.01; authorized 25 shares; none outstanding ...... — — Common stock, par value $0.01; authorized 6,000 shares; issued and outstanding 1,943 and 1,985 shares ...... 19 20 Additional paid-in capital ...... — — Retained earnings ...... 21,700 22,242 Accumulated other comprehensive income (loss), net ...... (579) (366) Total EMC Corporation’s shareholders’ equity ...... 21,140 21,896 Non-controlling interests ...... 1,579 1,629 Total shareholders’ equity ...... 22,719 23,525 Total liabilities and shareholders’ equity ...... $46,612 $45,585

The accompanying notes are an integral part of the consolidated financial statements.

F-68 EMC CORPORATION CONSOLIDATED INCOME STATEMENTS (in millions, except per share amounts)

For the Year Ended December 31, 2015 2014 2013 Revenues: Product sales ...... $13,514 $14,051 $13,690 Services ...... 11,190 10,389 9,532 24,704 24,440 23,222 Costs and expenses: Cost of product sales ...... 5,809 5,738 5,650 Cost of services ...... 3,904 3,453 3,099 Research and development ...... 3,167 2,991 2,761 Selling, general and administrative ...... 8,533 7,982 7,338 Restructuring and acquisition-related charges ...... 450 239 224 Operating income ...... 2,841 4,037 4,150 Non-operating income (expense): Investment income ...... 94 123 128 Interest expense ...... (164) (147) (156) Other income (expense), net ...... 111 (251) (257) Total non-operating income (expense) ...... 41 (275) (285) Income before provision for income taxes ...... 2,882 3,762 3,865 Income tax provision ...... 710 868 772 Net income ...... 2,172 2,894 3,093 Less: Net income attributable to the non-controlling interests ...... (182) (180) (204) Net income attributable to EMC Corporation ...... $ 1,990 $ 2,714 $ 2,889 Net income per weighted average share, basic attributable to EMC Corporation common shareholders ...... $ 1.02 $ 1.34 $ 1.39 Net income per weighted average share, diluted attributable to EMC Corporation common shareholders ...... $ 1.01 $ 1.32 $ 1.33 Weighted average shares, basic ...... 1,944 2,028 2,074 Weighted average shares, diluted ...... 1,962 2,059 2,160 Cash dividends declared per common share ...... $ 0.46 $ 0.45 $ 0.30

The accompanying notes are an integral part of the consolidated financial statements.

F-69 EMC CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions)

For the Year Ended December 31, 2015 2014 2013 Net income ...... $2,172 $2,894 $3,093 Other comprehensive income (loss), net of taxes (benefits): Foreign currency translation adjustments ...... (169) (135) (44) Changes in market value of investments: Changes in unrealized gains (losses), net of taxes (benefits) of $(9), $36 and $(13) ...... (16) 57 (22) Reclassification adjustment for net gains realized in net income, net of taxes of $27, $23 and $6 ...... (43) (39) (11) Net change in market value of investments ...... (59) 18 (33) Changes in market value of derivatives: Changes in unrealized gains, net of taxes of $3, $2 and $3 ...... 21 24 13 Reclassification adjustment for net gains included in net income, net of benefits (taxes) of $5, $0 and $(2) ...... (11) (18) (10) Net change in the market value of derivatives ...... 10 6 3 Change in actuarial net gain (loss) from pension and other postretirement plans: Recognition of actuarial net gain (loss) from pension and other postretirement plans, net of taxes (benefits) of $(6), $(12) and $20 ...... (7) (22) 34 Reclassification adjustments for net losses from pension and other postretirement plans, net of benefits $5, $3 and $6 ...... 8 6 9 Net change in actuarial gain (loss) from pension and other postretirement plans ...... 1 (16) 43 Other comprehensive loss ...... (217) (127) (31) Comprehensive income ...... 1,955 2,767 3,062 Less: Net income attributable to the non-controlling interests ...... (182) (180) (204) Less: Other comprehensive loss attributable to the non-controlling interests ...... 4 — — Comprehensive income attributable to EMC Corporation ...... $1,777 $2,587 $2,858

The accompanying notes are an integral part of the consolidated financial statements.

F-70 EMC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions; continued on next page)

For the Year Ended December 31, 2015 2014 2013 Cash flows from operating activities: Cash received from customers ...... $25,737 $ 25,360 $ 24,319 Cash paid to suppliers and employees ...... (19,312) (17,893) (16,708) Dividends and interest received ...... 100 143 169 Interest paid ...... (138) (134) (96) Income taxes paid ...... (1,001) (953) (761) Net cash provided by operating activities ...... 5,386 6,523 6,923 Cash flows from investing activities: Additions to property, plant and equipment ...... (902) (979) (943) Capitalized software development costs ...... (567) (509) (465) Purchases of short- and long-term available-for-sale securities ...... (7,252) (9,982) (11,250) Sales of short- and long-term available-for-sale securities ...... 5,205 8,722 5,292 Maturities of short- and long-term available-for-sale securities ...... 1,970 2,651 2,845 Business acquisitions, net of cash acquired ...... (1,336) (1,973) (770) Purchases of strategic and other related investments ...... (182) (144) (131) Sales of strategic and other related investments ...... 235 101 35 Joint venture funding ...... — (360) (411) Proceeds from divestiture of business ...... — — 38 Decrease (increase) in restricted cash ...... 75 (78) — Net cash used in investing activities ...... (2,754) (2,551) (5,760) Cash flows from financing activities: Proceeds from the issuance of EMC’s common stock ...... 322 503 342 Proceeds from the issuance of VMware’s common stock ...... 126 164 197 EMC repurchase of EMC’s common stock ...... (2,063) (2,969) (3,015) EMC purchase of VMware’s common stock ...... — — (160) VMware repurchase of VMware’s common stock ...... (1,125) (700) (508) Excess tax benefits from stock-based compensation ...... 55 102 116 Payment of long-term and short-term obligations ...... — (1,665) (46) Net proceeds from the issuance of long-term and short-term obligations ...... 1,295 — 5,460 Contributions from non-controlling interests ...... 5 7 105 Dividend payment ...... (907) (879) (415) Net cash (used in) provided by financing activities ...... (2,292) (5,437) 2,076 Effect of exchange rate changes on cash and cash equivalents ...... (134) (83) (62) Net increase (decrease) in cash and cash equivalents ...... 206 (1,548) 3,177 Cash and cash equivalents at beginning of period ...... 6,343 7,891 4,714 Cash and cash equivalents at end of period ...... $ 6,549 $ 6,343 $ 7,891 Reconciliation of net income to net cash provided by operating activities: Net income ...... $ 2,172 $ 2,894 $ 3,093 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ...... 1,907 1,864 1,665 Non-cash interest expense on debt ...... — 1 62

The accompanying notes are an integral part of the consolidated financial statements.

F-71 EMC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (continued, in millions)

For the Year Ended December 31, 2015 2014 2013 Non-cash restructuring and other special charges ...... 40 19 8 Stock-based compensation expense ...... 1,091 1,031 935 Provision for (recovery of) doubtful accounts ...... 55 10 (1) Deferred income taxes, net ...... (235) (396) (202) Excess tax benefits from stock-based compensation ...... (55) (102) (116) Gain on previously held interests in strategic investments and joint venture ...... — (101) — Impairment of strategic investment ...... — 33 — Other, net ...... 6 20 40 Changes in assets and liabilities, net of acquisitions: Accounts and notes receivable ...... 385 (309) (377) Inventories ...... (196) (149) (408) Other assets ...... 47 345 269 Accounts payable ...... (75) 167 380 Accrued expenses ...... (333) (286) (162) Income taxes payable ...... (53) 314 222 Deferred revenue ...... 596 1,126 1,475 Other liabilities ...... 34 42 40 Net cash provided by operating activities ...... $5,386 $6,523 $6,923 Non-cash investing and financing activity: Issuance of common stock and stock options exchanged in business acquisitions ...... $ — $ 35 $ 1 Dividends declared ...... $ 230 $ 242 $ 213 Interest rate swap losses ...... $ 22 $ 11 $ —

The accompanying notes are an integral part of the consolidated financial statements.

F-72 EMC CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in millions; continued on next page)

Common Accumulated Stock Additional Other Par Paid-in Retained Comprehensive Non-controlling Shareholders’ Shares Value Capital Earnings Loss Interests Equity Balance, January 1, 2013 ...... 2,107 $ 21 $ 3,691 $18,853 $(208) $1,167 $23,524 Stock issued through stock option and stock purchase plans ...... 24 — 342 — — — 342 Tax benefit from stock options exercised ...... — — 90 — — — 90 Restricted stock grants, cancellations and withholdings, net ...... 11 — (126) — — — (126) Repurchase of common stock ...... (122) (1) (2,999) — — — (3,000) EMC purchase of VMware stock ..... — — (124) — — (26) (150) Stock options issued in business acquisitions ...... — — 1 — — — 1 Stock-based compensation ...... — — 946 — — — 946 Cash dividends declared ...... — — — (628) — — (628) Impact from equity transactions of non- controlling interests ...... — — (473) — — 140 (333) Actuarial loss on pension plan ...... — — — — 43 — 43 Change in market value of investments ...... — — — — (33) — (33) Change in market value of derivatives ...... — — — — 3 — 3 Translation adjustment ...... — — — — (44) — (44) Reclassification of convertible debt from mezzanine ...... — — 58 — — — 58 Net income ...... — — — 2,889 — 204 3,093 Balance, December 31, 2013 ...... 2,020 20 1,406 21,114 (239) 1,485 23,786 Stock issued through stock option and stock purchase plans ...... 33 — 503 — — — 503 Tax benefit from stock options exercised ...... — — 98 — — — 98 Restricted stock grants, cancellations and withholdings, net ...... 10 — (110) — — — (110) Repurchase of common stock ...... (107) — (2,333) (667) — — (3,000) Stock options issued in business acquisitions ...... — — 35 — — — 35 Stock-based compensation ...... — — 1,055 — — — 1,055 Cash dividends declared ...... — — — (919) — — (919) Impact from equity transactions of non- controlling interests ...... — — (654) — — (36) (690) Actuarial gain on pension plan ...... — — — — (16) — (16) Change in market value of investments ...... — — — — 18 — 18 Change in market value of derivatives ...... — — — — 6 — 6 Translation adjustment ...... — — — — (135) — (135) Convertible debt conversions and warrant settlement ...... 29 — — — — — — Net income ...... — — — 2,714 — 180 2,894 Balance, December 31, 2014 ...... 1,985 20 — 22,242 (366) 1,629 23,525 Stock issued through stock option and stock purchase plans ...... 21 — 322 — — — 322 Tax benefit from stock options exercised ...... — — 32 — — — 32

The accompanying notes are an integral part of the consolidated financial statements.

F-73 EMC CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (continued, in millions)

Common Accumulated Stock Additional Other Par Paid-in Retained Comprehensive Non-controlling Shareholders’ Shares Value Capital Earnings Loss Interests Equity Restricted stock grants, cancellations and withholdings, net ...... 13 — (150) — — — (150) Repurchase of common stock ...... (76) (1) (409) (1,623) — — (2,033) Stock-based compensation ...... — — 1,145 — — — 1,145 Cash dividends declared ...... — — — (909) — — (909) Impact from equity transactions of non- controlling interests ...... — — (940) — — (228) (1,168) Actuarial loss on pension plan ...... — — — — 1 — 1 Change in market value of investments ...... — — — — (55) (4) (59) Change in market value of derivatives ...... — — — — 10 — 10 Translation adjustment ...... — — — — (169) — (169) Net income ...... — — — 1,990 — 182 2,172 Balance, December 31, 2015 ...... 1,943 $ 19 $ — $21,700 $(579) $1,579 $22,719

The accompanying notes are an integral part of the consolidated financial statements.

F-74 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. Summary of Significant Accounting Policies Company EMC Corporation (“EMC” or “the Company”) and its subsidiaries develop, deliver and support the information technology (“IT”) industry’s broadest range of information infrastructure and virtual infrastructure technologies, solutions and services. EMC manages the Company as part of a federation of businesses: EMC Information Infrastructure, VMware Virtual Infrastructure, Pivotal and Virtustream.

EMC’s Information Infrastructure business provides a foundation for organizations to store, manage, protect, analyze and secure ever-increasing quantities of information, while at the same time improving business agility, lowering cost, and enhancing competitive advantage. EMC’s Information Infrastructure business comprises three segments—Information Storage, Enterprise Content Division and RSA Information Security. The results of Virtustream are currently reported within our Information Storage segment.

EMC’s VMware Virtual Infrastructure business, which is represented by EMC’s majority equity stake in VMware, Inc. (“VMware”), is a leader in virtualization and cloud infrastructure solutions that enable businesses to help transform the way they build, deliver and consume IT resources in a manner that is based on their specific needs. VMware’s virtualization infrastructure solutions, which include a suite of products and services designed to deliver a software-defined data center, run on industry-standard desktop computers, servers and mobile devices and support a wide range of operating system and application environments, as well as networking and storage infrastructures.

EMC’s Pivotal business (“Pivotal”) unites strategic technology, people and programs from EMC and VMware and has built a new platform comprised of next-generation data, agile development practices and a cloud independent platform-as-a-service (“PaaS”). These capabilities are made available through Pivotal’s three primary offerings: Pivotal Cloud Foundry, the Pivotal Big Data Suite and Pivotal Labs.

Proposed Transaction with Dell On October 12, 2015, EMC entered into an Agreement and Plan of Merger (the “Merger Agreement”) among EMC, Denali Holding Inc., a Delaware corporation (“Denali”), Dell Inc., a Delaware corporation (“Dell”), and Universal Acquisition Co., a Delaware corporation and direct wholly owned subsidiary of Denali (“Merger Sub”), pursuant to which, among other things and subject to the conditions set forth therein, Merger Sub will merge with and into EMC (the “Merger”), with EMC continuing as the surviving corporation and a wholly owned subsidiary of Denali.

At the effective time of the Merger (“Effective Time”), each share of EMC common stock issued and outstanding will be canceled and converted into the right to receive (i) $24.05 in cash and (ii) a number of shares of common stock of Denali designated as Class V Common Stock, par value $0.01 per share (the “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. The aggregate number of shares of Class V Common Stock issued as Merger Consideration in the transaction is intended to represent 65% of EMC’s economic interest in the approximately 81% of the outstanding shares of VMware currently owned by the EMC, reflecting approximately 53% of the total economic interest in the outstanding shares of VMware. Upon completion of the transaction, Denali will retain the remaining 28% of the total economic interest in the outstanding shares of VMware. Based on the estimated number of shares of EMC common stock at the closing of the transaction, EMC shareholders are expected to receive approximately 0.111 shares of Class V Common Stock for each share of EMC common stock.

The Merger Agreement contains specified termination rights for both Denali and EMC, including that, in general, either party may terminate if the Merger is not consummated on or before December 16, 2016. If EMC

F-75 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS terminates the Merger Agreement, EMC is required to pay Denali a termination fee of $2.5 billion. If Denali terminates the Merger Agreement, they are required to pay a termination fee of $4 billion under specified circumstances, and in certain instances, an alternative termination fee of $6 billion.

The transaction is expected to close in mid-2016. The completion of the Merger is subject to certain conditions including EMC shareholder approval, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the receipt of certain other regulatory approvals in various jurisdictions and the effectiveness of the registration statement on Form S-4 to be filed by Denali in connection with the registration of shares of Class V Common Stock issuable in connection with the Merger.

The Merger Agreement contains representations and warranties customary for transactions of this nature. EMC has agreed to various customary covenants and agreements, including, among others, agreements to conduct its business in the ordinary course during the period between the execution of the Merger Agreement and the effective time of the Merger. In addition, without the consent of Denali, EMC may not take, authorize, agree or commit to do certain actions outside of the ordinary course of business, including acquiring businesses or incurring capital expenditures above specified thresholds, issuing additional debt facilities and repurchasing outstanding EMC common stock.

Other than transaction expenses associated with the proposed Merger, the terms of the Merger Agreement did not impact EMC’s consolidated financial statements as of and for the year ended December 31, 2015.

Accounting Principles The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Principles of Consolidation These consolidated financial statements include the accounts of EMC, its wholly-owned subsidiaries, and Pivotal and VMware, companies which are majority-owned by EMC. All intercompany transactions have been eliminated.

EMC’s interest in VMware was approximately 81% and 80% at December 31, 2015 and 2014, respectively. VMware’s financial results have been consolidated with that of EMC for all periods presented as EMC is VMware’s controlling stockholder. The portion of the results of operations of VMware allocable to its other owners is shown as net income attributable to the non-controlling interests on EMC’s consolidated income statements. Additionally, the cumulative portion of the results of operations of VMware allocable to its other owners, along with the interest in the net assets of VMware attributable to those other owners, is shown as a component of non-controlling interests on EMC’s consolidated balance sheets and as a reduction of net income attributable to EMC shareholders.

F-76 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMC’s economic interest in Pivotal was approximately 83% and 84% at December 31, 2015 and 2014, respectively. Pivotal’s financial results have been consolidated with that of EMC for all periods presented as EMC is Pivotal’s controlling stockholder. Because the GE non-controlling interest in Pivotal is in the form of a preferred equity instrument, there is no net income attributable to GE’s non-controlling interest on EMC’s consolidated income statements. The portion of the results of operations of Pivotal allocable to its other owners, along with the interest in the net assets of Pivotal attributable to those other owners are shown as a component of non-controlling interests on EMC’s consolidated balance sheets and as a reduction of net income attributable to EMC shareholders.

Use of Accounting Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, the reported amounts of revenues and expenses during the reporting period and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.

Revenue Recognition We derive revenue from sales of systems, software licenses and services. We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. This policy is applicable to all sales, including sales to resellers and end- users. Delivery is achieved when our product has been physically shipped or made available for use by electronic delivery and the risk of loss has been transferred which, for most of our product sales, occurs upon shipment. The following summarizes the major terms of our contractual relationships with our customers and the manner in which we account for sales transactions.

• Product revenue Product revenue consists of systems and software licenses sales that are delivered, sold as a subscription or sold on a consumption basis. System sales include storage hardware, required system software and other hardware-related devices. Software license sales include optional, stand-alone software applications. Our software applications provide customers with resource management, backup and archiving, information security, information management and intelligence, data analytics and server virtualization capabilities. Depending on the nature of the arrangement, revenue for system and software license sales is generally recognized upon shipment or electronic delivery. For certain arrangements, revenue is recognized based on usage or ratably over the term of the arrangement. License revenue from royalty arrangements is recognized upon either receipt of royalty reports or payments from third parties.

• Services revenue Services revenue consists of installation services, professional services, software maintenance, hardware maintenance, training and software sold as a service.

We recognize revenue from fixed-price support or maintenance contracts sold for both hardware and software, including extended warranty contracts, ratably over the contract period and recognize the costs associated with these contracts as incurred. Generally, installation and professional services are not considered essential to the functionality of our products as these services do not alter the product capabilities and may be performed by our customers or other vendors. Installation services revenues are recognized as the services are being performed. Professional services revenues on engagements for which reasonably dependable estimates of

F-77 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS progress toward completion are capable of being made are recognized using the proportional performance method, which recognizes revenue based on labor costs incurred in proportion to total expected labor costs to perform the service. Where services are considered essential to the functionality of our products, revenue for the products and services is recorded over the service period. Professional services engagements that are sold on a time and materials basis are recognized based upon the labor costs incurred. Revenues from software sold as a service is recognized based on usage or ratably over the term of the service period depending upon the nature of the arrangement. Revenues on all other professional services engagements are recognized upon completion.

• Multiple element arrangements When more than one element, such as hardware, software and services are contained in a single arrangement, we first allocate revenue based upon the relative selling price into two categories: (1) non-software components, such as hardware and any hardware-related items, such as required system software that functions with the hardware to deliver the essential functionality of the hardware and related post-contract customer support, software as a service subscriptions and other services and (2) software components, such as optional software applications and related items, such as post-contract customer support and other services. We then allocate revenue within the non-software category to each element based upon their relative selling price using a hierarchy of vendor-specific objective evidence (“VSOE”), third-party evidence of selling price (“TPE”) or estimated selling prices (“ESP”), if VSOE or TPE does not exist. We allocate revenue within the software category to the undelivered elements based upon their fair value using VSOE with the residual revenue allocated to the delivered elements. If we cannot objectively determine the VSOE of the fair value of any undelivered software element, we defer revenue for all software components until all elements are delivered and services have been performed, until fair value can objectively be determined for any remaining undelivered elements, or until software maintenance is the only undelivered element in which case revenue is recognized over the maintenance term for all software elements.

We allocate the amount of revenue recognized for delivered elements to the amount that is not subject to forfeiture or refund or contingent on the future delivery of products or services.

Customers under software maintenance agreements are entitled to receive updates and upgrades on a when- and-if-available basis, and various types of technical support based on the level of support purchased. In the event specific features, functionality, entitlements, or the release version of an upgrade or new product have been announced but not delivered, and customers will receive that upgrade or new product as part of a current software maintenance contract, a specified upgrade is deemed created and product revenues are deferred on purchases made after the announcement date until delivery of the upgrade or new product. The amount and elements to be deferred are dependent on whether we have established VSOE of fair value for the upgrade or new product.

• Indirect channel sales We market and sell our products through our direct sales force and indirect channels such as independent distributors and value-added resellers. For substantially all of our indirect sales, we recognize revenues on products sold to resellers and distributors on a sell through basis. These product sales are evidenced by a master distribution agreement, together with evidence of an end-user arrangement, on a transaction-by-transaction basis.

We offer rebates to certain channel partners. We generally recognize the amount of the rebates as a reduction of revenues when the underlying revenue is recognized. We also offer marketing development funds to certain channel partners. We generally record the amount of the marketing development funds, based on the maximum potential liability, as a marketing expense as the funds are earned by the channel partners.

F-78 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Shipping terms Our sales contracts generally provide for the customer to accept risk of loss when the product leaves our facilities. When shipping terms or local laws do not allow for passage of risk of loss at shipping point, we defer recognizing revenue until risk of loss transfers to the customer.

• Leases Revenue from sales-type leases is recognized at the net present value of future lease payments. Revenue from operating leases is recognized over the lease period.

• Other We accrue for the estimated costs of systems’ warranty at the time of sale. We reduce revenue for estimated sales returns at the time of sale. Systems’ warranty costs are estimated based upon our historical experience and specific identification of systems’ requirements. Sales returns are estimated based upon our historical experience and specific identification of probable returns.

Deferred Revenue Our deferred revenue consists primarily of deferred hardware and software maintenance and unearned license fees, which are recognized ratably over the contract term as either product or services revenue depending on the nature of the item, and deferred professional services, including education and training, which are recognized in services revenue as the services are provided.

Shipping and Handling Shipping and handling reimbursements from our customers are included in product sales revenues with the associated costs included in cost of product sales.

Foreign Currency Translation The local currency is the functional currency of the majority of our subsidiaries. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense items are translated at daily rates.

Gains and losses from foreign currency transactions are included in other income (expense), net, and consist of net gains of $18 million in 2015 and net losses of $30 million and $2 million in 2014 and 2013, respectively. Foreign currency translation adjustments are included in other comprehensive income (loss).

Derivatives We use derivatives to hedge foreign currency exposures related to foreign currency denominated assets and liabilities and forecasted revenue and expense transactions.

We hedge our exposure in foreign currency denominated monetary assets and liabilities with foreign currency forward and option contracts. Since these derivatives hedge existing exposures that are denominated in foreign currencies, the contracts do not qualify for hedge accounting. Accordingly, these outstanding non- designated derivatives are recognized on the consolidated balance sheet at fair value and the changes in fair value from these contracts are recorded in other income (expense), net, in the consolidated income statements. These derivative contracts mature in less than one year.

F-79 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We also use foreign currency forward and option contracts to hedge our exposure on a portion of our forecasted revenue and expense transactions. These derivatives are designated as cash flow hedges. We did not have any derivatives designated as fair value hedges as of December 31, 2015. All outstanding cash flow hedges are recognized on the consolidated balance sheets at fair value with changes in their fair value recorded in accumulated other comprehensive income (loss) until the underlying forecasted transactions occur. To achieve hedge accounting, certain criteria must be met, which includes (i) ensuring at the inception of the hedge that formal documentation exists for both the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge, and (ii) at the inception of the hedge and on an ongoing basis, the hedging relationship is expected to be highly effective in achieving offsetting changes in fair value attributed to the hedged risk during the period that the hedge is designated. Further, an assessment of effectiveness is required at a minimum on a quarterly basis. Absent meeting these criteria, changes in fair value are recognized currently in other income (expense), net, in the consolidated income statements. Once the underlying forecasted transaction occurs, the gain or loss from the derivative designated as a hedge of the transaction is reclassified from accumulated other comprehensive income (loss) to the consolidated income statements, in the related revenue or expense caption, as appropriate. In the event the underlying forecasted transaction does not occur, the amount recorded in accumulated other comprehensive income (loss) will be reclassified to other income (expense), net, in the consolidated income statements in the then-current period. Any ineffective portion of the derivatives designated as cash flow hedges is recognized in current earnings. The ineffective portion of the derivatives includes gains or losses associated with differences between actual and forecasted amounts. Our cash flow hedges generally mature within six months or less. The notional amount of cash flow hedges outstanding as of December 31, 2015, 2014 and 2013 were $473 million, $245 million and $384 million, respectively.

We do not engage in currency speculation. For purposes of presentation within the consolidated statement of cash flows, derivative gains and losses are presented within net cash provided by operating activities.

Our derivatives and their related activities are not material to our consolidated balance sheets or consolidated income statements.

Cash and Cash Equivalents Cash and cash equivalents include highly liquid investments with a maturity of ninety days or less at the time of purchase. Cash equivalents consist primarily of money market securities, U.S. Treasury bills, U.S. Agency discount notes and commercial paper. Cash equivalents are stated at fair value. See Note F.

Allowance for Doubtful Accounts We maintain an allowance for doubtful accounts for the estimated probable losses on uncollectible accounts and notes receivable. The allowance is based upon the creditworthiness of our customers, our historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account. The allowance for doubtful accounts is maintained against both our current and non-current accounts and notes receivable balances. The balances in the allowance accounts at December 31, 2015 and 2014 were as follows (table in millions):

December 31, 2015 2014 Current ...... $90 $72 Non-current (included in other assets, net) ...... 2 2 $92 $74

F-80 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Investments Unrealized gains and temporary loss positions on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to investment income. Realized gains and losses and other-than-temporary impairments are reflected in the consolidated income statement in investment income. For investments accounted for utilizing the fair value option, changes to fair value are recognized in the consolidated income statement in other income (expense), net.

Inventories Inventories are stated at the lower of cost (first-in, first-out) or market, not in excess of net realizable value.

Property, Plant and Equipment Property, plant and equipment are recorded at cost. Buildings under development are included in building construction in progress. Depreciation commences upon placing the asset in service and is recognized on a straight-line basis over the estimated useful lives of the assets, as follows:

Furniture and fixtures ...... 5-10 years Equipment and software ...... 2-10 years Improvements ...... 5-31 years Buildings ...... 15-51 years

Upon retirement or disposition, the asset cost and related accumulated depreciation are removed with any gain or loss recognized in the consolidated income statements. Repair and maintenance costs, including planned maintenance, are expensed as incurred.

Research and Development and Capitalized Software Development Costs Research and development (“R&D”) costs are expensed as incurred. R&D costs include salaries and benefits, stock-based compensation and other personnel-related costs associated with product development. Also included in R&D expenses are infrastructure costs, which consist of equipment and material costs, facilities- related costs, depreciation expense and intangible asset amortization. Material software development costs incurred subsequent to establishing technological feasibility through the general release of the software products are capitalized. Technological feasibility is demonstrated by the completion of a detailed program design or working model, if no program design is completed. GAAP requires that annual amortization expense of the capitalized software development costs be the greater of the amounts computed using the ratio of gross revenue to a products’ total current and anticipated revenues, or the straight-line method over the products’ remaining estimated economic life. Capitalized costs are amortized over periods ranging from eighteen months to two years which represents the products’ estimated economic life.

Unamortized software development costs were $934 million and $829 million at December 31, 2015 and 2014, respectively, and are included in other assets, net. Amortization expense was $514 million, $482 million and $427 million in 2015, 2014 and 2013, respectively. Amounts capitalized were $619 million, $549 million and $487 million in 2015, 2014 and 2013, respectively. The amounts capitalized include stock-based compensation which is not reflected in the consolidated statements of cash flows as it is a non-cash item.

Long-lived Assets Purchased intangible assets, other than goodwill, are amortized over their estimated useful lives which range from one to twenty years. Intangible assets include purchased technology, trademarks and tradenames, customer

F-81 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS relationships and customer lists, software licenses, patents, leasehold interest and other intangible assets, which include backlog, non-competition agreements and non-solicitation agreements. Most of our intangible assets are amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized; the remainder are amortized on a straight-line basis. Goodwill is not amortized; it is carried at its historical cost.

We periodically review our long-lived assets for impairment. We initiate reviews for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test, other than goodwill, is based on a comparison of the un-discounted cash flows to the recorded value of the asset. If an impairment is indicated, the asset is written down to its estimated fair value.

We test goodwill for impairment in the fourth quarter of each year or more frequently if events or changes in circumstances indicate that the asset might be impaired. The test is based on a comparison of the reporting unit’s book value to its estimated fair market value. We perform both qualitative and quantitative tests of our goodwill.

Investments in Joint Ventures We make investments in joint ventures. For each joint venture investment, we consider the facts and circumstances in order to determine whether it qualifies for cost, equity or fair value method accounting or whether it should be consolidated.

In 2009, Cisco and EMC formed VCE Company LLC (“VCE”), with investments from VMware and Intel. In December 2014, EMC acquired the controlling interest in VCE and, since the date of acquisition, has consolidated VCE’s financial position and results of operations as part of EMC’s consolidated financial statements.

Prior to the acquisition of the controlling interest in VCE, we considered VCE a variable interest entity and accounted for the investment under the equity method with our portion of the gains and losses recognized in other income (expense), net in the consolidated income statements for the majority of 2014 and all of 2013. Our consolidated share of VCE’s losses, based upon our portion of the overall funding, was approximately 64% and 63% for the years ended December 31, 2014 and 2013, respectively. During the years ended December 31, 2014 and 2013, we recorded $357 million and $298 million, respectively, in net losses from VCE and $803 million and $439 million, respectively, in revenue from sales of product and services to VCE.

Advertising Advertising costs are expensed as incurred. Advertising expense was $29 million, $25 million and $23 million in 2015, 2014 and 2013, respectively.

Legal Costs Legal costs incurred in connection with loss contingencies are recognized when the costs are probable of occurrence and can be reasonably estimated.

Income Taxes Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the tax basis of assets and liabilities and their reported amounts using enacted

F-82 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS tax rates in effect for the year in which the differences are expected to reverse. Tax credits are generally recognized as reductions of income tax provisions in the year in which the credits arise. The measurement of deferred tax assets is reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Accounting for uncertainty in income taxes recognized in the financial statements is in accordance with accounting authoritative guidance, which prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement.

We do not provide for a U.S. income tax liability on undistributed earnings of our foreign subsidiaries. The earnings of non-U.S. subsidiaries, which reflect full provision for non-U.S. income taxes, are currently indefinitely reinvested in non-U.S. operations or are expected to be remitted substantially free of additional tax. Under the terms of the Merger Agreement, EMC is required to provide Denali with access to EMC’s cash to help fund the Merger consideration. At this time, EMC has not finalized its plan to access such cash and has not determined if there would be a need to repatriate cash to meet the requirements of the Merger. If these overseas funds are required to be repatriated to the U.S. in accordance with the Merger Agreement, we may be required to accrue and pay U.S. taxes to repatriate these funds.

Sales Taxes Sales and other taxes collected from customers and subsequently remitted to government authorities are recorded as cash or accounts receivable with a corresponding offset recorded to sales taxes payable. These balances are removed from the consolidated balance sheet as cash is collected from the customers and remitted to the tax authority.

Earnings Per Share Basic net income per share is computed using the weighted-average number of shares of our common stock outstanding during the period. Diluted net income per share is computed using the weighted-average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of stock options, unvested restricted stock and restricted stock units, the shares issuable under our $1.725 billion 1.75% convertible senior notes due 2013 (the “2013 Notes”) and the associated warrants. See Note E for further information regarding the 2013 Notes and the associated warrants and Note N for further information regarding the calculation of diluted net income per weighted-average share. Additionally, for purposes of calculating diluted net income per common share, net income is adjusted for the difference between VMware’s reported diluted and basic earnings per share, if any, multiplied by the number of shares of VMware held by EMC.

Retirement Benefits Pension cost for our domestic defined benefit pension plan is funded to the extent that the current pension cost is deductible for U.S. Federal tax purposes and to comply with the Employee Retirement Income Security Act and the General Agreement on Tariff and Trade Bureau additional minimum funding requirements. Net pension cost for our international defined benefit pension plans are generally funded as accrued.

F-83 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentrations of Risks Financial instruments that potentially subject us to concentration of credit risk consist principally of bank deposits, money market investments, short- and long-term investments, accounts and notes receivable, and foreign currency exchange contracts. Deposits held with banks in the United States may exceed the amount of FDIC insurance provided on such deposits. Deposits held with banks outside the United States generally do not benefit from FDIC insurance. The majority of our day-to-day banking operations globally are maintained with Citibank. We believe that Citibank’s position as a primary clearing bank, coupled with the substantial monitoring of their daily liquidity, both by their internal processes and by the Federal Reserve and the FDIC, mitigate some of our risk.

Our money market investments are placed with money market funds that are 2a-7 qualified. Rule 2a-7, adopted by the United States Securities and Exchange Commission (the “SEC”) under the Investment Company Act of 1940, establishes strict standards for quality, diversity and maturity, the objective of which is to maintain a constant net asset value of a dollar. We limit our investments in money market funds to those that are primarily associated with large, money center financial institutions and limit our exposure to Prime funds. Our short- and long-term investments are invested primarily in investment grade securities, and we limit the amount of our investment in any single issuer.

We provide credit to customers in the normal course of business. Credit is extended to new customers based on checks of credit references, credit scores and industry reputation. Credit is extended to existing customers based on prior payment history and demonstrated financial stability. The credit risk associated with accounts and notes receivables is generally limited due to the large number of customers and their broad dispersion over many different industries and geographic areas. We establish an allowance for the estimated uncollectible portion of our accounts and notes receivable. We customarily sell the notes receivable we derive from our leasing activity. Generally, we do not retain any recourse on the sale of these notes. Our sales are generally dispersed among a large number of customers, minimizing the reliance on any particular customer or group of customers.

The counterparties to our foreign currency exchange contracts consist of a number of major financial institutions. In addition to limiting the amount of contracts we enter into with any one party, we monitor the credit quality of the counterparties on an ongoing basis.

We purchase or license many sophisticated components and products from one or a limited number of qualified suppliers. If any of our suppliers were to cancel or materially change contracts or commitments with us or fail to meet the quality or delivery requirements needed to satisfy customer orders for our products, we could lose customer orders. We attempt to minimize this risk by finding alternative suppliers or maintaining adequate inventory levels to meet our forecasted needs.

Accounting for Stock-Based Compensation We have selected the Black-Scholes option-pricing model to determine the fair value of our stock option awards. For stock options, restricted stock and restricted stock units, we recognize compensation cost on a straight-line basis over the awards’ vesting periods for those awards which contain only a service vesting feature. For awards with a performance condition vesting feature, when achievement of the performance condition is deemed probable, we recognize compensation cost on a graded-vesting basis over the awards’ expected vesting periods.

Reclassifications Certain prior year amounts have been reclassified to conform with the current year’s presentation.

F-84 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In November 2015, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on the balance sheet classification of deferred taxes which requires that all deferred taxes be presented as non- current. We elected to early adopt this new accounting guidance for the year ended December 31, 2015 and applied it retrospectively to all years presented in these financial statements. As a result of adopting this guidance, we reclassified current deferred income tax assets and liabilities to non-current deferred income tax assets and liabilities. This resulted in $1,070 million being reclassified from deferred income taxes (current asset), $156 million being reclassified from other assets, net and $274 million being reclassified from deferred income taxes (non-current liability) to deferred income taxes (non-current asset) on the consolidated balance sheets for the year ended December 31, 2014. There was no impact to our consolidated income statements or statements of cash flows for any of the periods presented.

In April 2015, the FASB issued updated guidance to clarify the required presentation of debt issuance costs. The amended guidance requires that debt issuance costs be presented in the balance sheet as a direct reduction from the carrying amount of the related debt liability rather than as an asset. We adopted the guidance during the second quarter of 2015, and accordingly, reclassified the debt issuance costs on our consolidated balance sheets. There was no impact to our consolidated income statements or statements of cash flows for any of the periods presented.

Recent Accounting Pronouncements In September 2015, the FASB issued updated guidance related to simplifying the accounting for measurement period adjustments related to business combinations. The amended guidance eliminates the requirement to retrospectively account for adjustments made during the measurement period. The standard is effective beginning January 1, 2016, with early adoption permitted. We do not expect it to have a material impact on our consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued guidance to customers about whether a cloud computing arrangement includes software and how to account for that software license. The new guidance does not change the accounting for a customer’s accounting for service contracts. The standard is effective beginning January 1, 2016, with early adoption permitted, and may be applied prospectively or retrospectively. We do not expect it to have a material impact on our consolidated financial position, results of operations or cash flows.

In May 2014, the FASB issued a standard on revenue recognition providing a single, comprehensive revenue recognition model for all contracts with customers. The revenue standard is based on the principle that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard, as amended, is effective beginning January 1, 2018, with early adoption permitted but not earlier than the original effective date of January 1, 2017. The principles may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of initial application. We are currently evaluating the adoption method options and the impact of the new guidance on our consolidated financial statements.

B. Non-controlling Interests The non-controlling interests’ share of equity in VMware is reflected as a component of the non-controlling interests in the accompanying consolidated balance sheets and was $1,481 million and $1,524 million as of December 31, 2015 and 2014, respectively. At December 31, 2015, EMC held approximately 97% of the combined voting power of VMware’s outstanding common stock and approximately 81% of the economic interest in VMware.

The non-controlling interests’ share of equity in Pivotal is reflected as a component of the non-controlling interests in the accompanying consolidated balance sheets as $98 million at December 31, 2015 and $105 million at December 31, 2014. At December 31, 2015 and 2014, EMC consolidated held approximately 83% and 84%, respectively, of the economic interest in Pivotal.

F-85 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GE’s interest in Pivotal is in the form of a preferred equity instrument. Consequently, there is no net income attributable to the GE non-controlling interest related to Pivotal on the consolidated income statements. Additionally, due to the terms of the preferred instrument, GE’s non-controlling interest on the consolidated balance sheets is generally not impacted by Pivotal’s equity related activity. The preferred equity instrument is convertible into common shares at GE’s election at any time.

The effect of changes in our ownership interest in VMware and Pivotal on our equity was as follows (table in millions):

For the Year Ended December 31, December 31, 2015 2014 Net income attributable to EMC Corporation ...... $1,990 $2,714 Transfers (to) from the non-controlling interests: Increase in EMC Corporation’s additional paid-in-capital for VMware and Pivotal equity issuances ...... 60 87 Decrease in EMC Corporation’s additional paid-in-capital for VMware’s and Pivotal’s other equity activity ...... (1,000) (741) Net transfers (to) from non-controlling interests ...... (940) (654) Change from net income attributable to EMC Corporation and transfers from the non-controlling interests ...... $ 1,050 $2,060

C. Acquisitions 2015 Acquisitions Acquisition of Virtustream On July 9, 2015, EMC acquired all of the outstanding capital stock of Virtustream Group Holdings, Inc. (“Virtustream”), a cloud software and services company that delivers mission-critical enterprise applications in the cloud. This acquisition represents a key element of EMC’s strategy to help customers move applications to cloud-based IT environments. The consideration paid for Virtustream was $1,220 million, net of cash acquired.

The following table summarizes the allocation of the consideration to the fair value of the assets acquired and net liabilities assumed, net of cash acquired (table in millions):

Current assets ...... $ 20 Property, plant and equipment, net ...... 14 Intangible assets: Purchased technology (weighted-average useful life of 8.6 years) ...... 302 Customer relationships and customer lists (weighted-average useful life of 12.3 years) ...... 50 Trademarks and tradenames (weighted-average useful life of 7.6 years) ...... 27 Total intangible assets, net, excluding goodwill ...... 379 Goodwill ...... 873 Other assets, net ...... 12 Total assets acquired ...... 1,298 Current liabilities ...... (28) Deferred income taxes ...... (41) Other liabilities ...... (9) Total liabilities assumed ...... (78) Fair value of assets acquired and net liabilities assumed ...... $1,220

F-86 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The total weighted-average amortization period for the intangible assets is 9.0 years. The intangible assets are being amortized over the pattern in which the economic benefits of the intangible assets are being utilized, which in general reflects the cash flows generated from such assets. Goodwill is calculated as the excess of the consideration over the fair value of the net assets, including intangible assets, recognized and is primarily related to expected synergies from the transaction, including complementary products that will enhance our overall product portfolio, which we believe will result in incremental revenue and profitability. The goodwill associated with this acquisition is currently reported within our Information Storage segment. None of the goodwill is deductible for tax purposes. The results of this acquisition have been included in the consolidated financial statements from the date of purchase. Pro forma results of operations have not been presented as the results of the acquired company were not material to our consolidated results of operations for the years ended 2015 or 2014.

Other 2015 Acquisitions During the year ended December 31, 2015, EMC acquired seven businesses, excluding Virtustream, which were not material either individually or in the aggregate to our December 31, 2015 results. Complementing the Information Storage segment, we acquired all of the outstanding capital stock of Renasar Technologies, Inc., a provider of extensible physical middleware, CloudLink, a provider of cloud data security software and Graphite Systems, a developer of server-side flash storage. Complementing our Pivotal segment, we acquired all of the outstanding capital stock of Quickstep Technologies, LLC, a query execution technology developer and CloudCredo, a provider of CloudFoundry. VMware acquired all of the outstanding capital stock of Immidio B.V. and Boxer, Inc.

The aggregate consideration for these seven acquisitions, excluding Virtustream, was $120 million which represents cash consideration, net of cash acquired during 2015. The consideration was allocated to the fair value of the assets acquired and liabilities assumed based on estimated fair values as of the respective acquisition dates. The aggregate allocation to goodwill, intangibles, and net liabilities was approximately $89 million, $39 million and $8 million, respectively. EMC did not issue common stock for any of its acquisitions during 2015.

The following represents the aggregate allocation of the purchase price for all of the aforementioned acquisitions, excluding Virtustream, to intangible assets (table in millions):

Purchased technology (weighted-average useful life of 3.7 years) ...... $37 Non-compete agreement (weighted-average useful life of 2.1 years) ...... 2 Total intangible assets ...... $39

The total weighted-average amortization period for the intangible assets is 3.7 years. Most of our intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized; the remainder is amortized on a straight-line basis. Goodwill is calculated as the excess of the consideration over the fair value of the net assets, including intangible assets, and is primarily related to expected synergies from the transaction. The goodwill is not deductible for U.S. federal income tax purposes. The results of these acquisitions have been included in the consolidated financial statements from the date of purchase. Pro forma results of operations have not been presented as the results of the acquired companies were not material to our consolidated results of operations for the years ended 2015 or 2014.

2014 Acquisitions Acquisition of AirWatch During the year ended December 31, 2014, VMware acquired all of the outstanding capital stock of A.W.S. Holding, LLC (“AirWatch Holding”), the sole member and equity holder of AirWatch LLC (“AirWatch”). AirWatch is a leader in enterprise mobile management and security solutions. VMware acquired AirWatch to

F-87 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS expand its solutions within the enterprise mobile and security space. The aggregate consideration paid for AirWatch was $1,128 million, net of cash acquired, including cash of $1,104 million and the fair value of assumed unvested equity attributed to pre-combination services totaling $24 million.

Merger consideration totaling $300 million is payable to certain employees of AirWatch subject to specified future employment conditions and will be recognized as expense over the requisite service period. Compensation expense totaling $145 million and $141 million was recognized during the years ended December 31, 2015 and 2014, respectively.

The following table summarizes the allocation of the consideration to the fair value of the assets acquired and net liabilities assumed, net of cash acquired (table in millions):

Other current assets ...... $ 61 Intangible assets: Purchased technology (weighted-average useful life of 6 years) ...... 118 Customer relationships and customer lists (weighted-average useful life of 8 years) .... 78 Trademarks and tradenames (weighted-average useful life of 8 years) ...... 40 Other (weighted-average useful life of 3 years) ...... 14 Total intangible assets, net, excluding goodwill ...... 250 Goodwill ...... 868 Other assets ...... 30 Total assets acquired ...... 1,209 Unearned revenue ...... (45) Other assumed liabilities, net of acquired assets ...... (72) Total net liabilities assumed ...... (117) Fair value of assets acquired and net liabilities assumed ...... $1,092

Other 2014 Acquisitions During the year ended December 31, 2014, EMC acquired seven businesses which were not material either individually or in the aggregate to our 2014 results. Complementing the Information Storage segment, we acquired the controlling interest in VCE, a joint venture with Cisco, which delivers through Vblock infrastructure platforms an integrated IT offering that combines network, computing, storage, management, security and virtualization technologies for converged infrastructures and cloud based computing models; all of the outstanding capital stock of DSSD, Inc., a developer of an innovative new rack-scale flash storage architecture for I/O-intensive in-memory databases and Big Data workloads; and TwinStrata, Inc., a provider of advanced tiering cloud technology. We also acquired all of the outstanding capital stock of the Cloudscaling Group, Inc., a leading provider of OpenStack Powered Infrastructure-as-a-Service (“IaaS”) for private and hybrid cloud solutions; Maginatics, Inc., a cloud technology provider offering a highly consistent global namespace accessible from any device or location; and Spanning Cloud Apps, Inc., a leading provider of subscription-based backup and recovery for cloud based applications and data.

Complementing our RSA Information Security segment, we acquired Symplified, Inc., a provider of a comprehensive cloud identity solution that helps service-oriented IT organizations simplify user access, regain visibility and control over application usage and meet security and compliance requirements.

In addition to the acquisition of AirWatch, during the year ended December 31, 2014, VMware completed three business combinations which were not material either individually or in the aggregate. VMware acquired

F-88 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS all of the outstanding common stock of CloudVolumes, Inc., a provider of real-time application delivery technology that enables enterprises to deliver native applications to virtualized environments on-demand, and two other immaterial business combinations.

The aggregate consideration for these ten acquisitions, excluding AirWatch, was $1,515 million, which consisted of $1,404 million of cash consideration, net of cash acquired and $10 million for the fair value of assumed unvested equity attributed to pre-combination services. In connection with these acquisitions, we recognized a $101 million gain on previously held interests in strategic investments and joint ventures which was recognized in other income (expense), net in the consolidated income statements in 2014. The consideration was allocated to the fair value of the assets acquired and liabilities assumed based on estimated fair values as of the respective acquisition dates. The aggregate allocation to goodwill, intangibles, and net liabilities was approximately $847 million, $484 million and $184 million, respectively.

The fair value of our stock options for all of the aforementioned acquisitions, excluding AirWatch, in 2014 was estimated using the following weighted-average assumptions:

Expected term (in years) ...... 2.6 Expected volatility ...... 27.3% Risk-free interest rate ...... 0.7% Dividend yield ...... 1.7%

The following represents the aggregate allocation of the purchase price for all of the aforementioned acquisitions, excluding AirWatch, to intangible assets (table in millions):

Purchased technology (weighted-average useful life of 6 years) ...... $460 Customer relationships (weighted-average useful life of 5 years) ...... 10 Trademarks and tradenames (weighted-average useful life of 4 years) .... 14 Total intangible assets ...... $484

The total weighted-average amortization period for the intangible assets is 6 years. Most of our intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized; the remainder are amortized on a straight-line basis.

2013 Acquisitions During the year ended December 31, 2013, EMC acquired eight businesses. Complementing the Information Storage segment, we acquired substantially all of the assets of Adaptivity, Inc., a provider of software solutions that automate and accelerate enterprise IT migration to the cloud and all of the outstanding capital stock of ScaleIO, a provider of server-side storage software. A member of our board of directors is an investor in a limited partnership which held an equity interest in ScaleIO. The director did not participate in any votes of the board of directors or any committee thereof approving the acquisition, and the terms of the acquisition were negotiated at arms’ length.

Complementing the Enterprise Content Division segment, we also acquired all of the outstanding capital stock of Sitrof Technologies, a document management consultancy provider. Complementing the RSA Information Security segment, we acquired all of the outstanding common stock of Aveksa, Inc., a provider of cloud-based identity and access management solutions and PassBan Corporation, a developer of mobile and cloud-based multi-factor authentication technology. Complementing the Pivotal segment, Pivotal acquired all of the outstanding common stock of Xtreme Labs, a provider of mobile strategy and product development.

F-89 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additionally, during the year ended December 31, 2013, VMware acquired all of the outstanding common stock of two companies, which were not material either individually or in the aggregate, including Virsto Software, a provider of software that optimizes storage performance and utilization in virtual environments and Desktone, Inc., a provider of desktop-as-a-service for delivering Windows desktops and applications as a cloud service.

The aggregate consideration for these eight acquisitions was $771 million, which consisted of $770 million of cash consideration, net of cash acquired. The consideration paid was allocated to the fair value of the assets acquired and liabilities assumed based on estimated fair values as of the respective acquisition dates. The aggregate allocation to goodwill, intangibles and net liabilities was approximately $596 million, $182 million and $8 million, respectively. The results of these acquisitions have been included in the consolidated financial statements from the date of purchase.

The fair value of our stock options for all of the aforementioned acquisitions in 2013 was estimated using the following weighted-average assumptions:

Expected term (in years) ...... 1.8 Expected volatility ...... 26.4% Risk-free interest rate ...... 0.3% Dividend yield ...... 1.5%

The following represents the aggregate allocation of the purchase price for all of the aforementioned acquisitions to intangible assets (table in millions):

Developed technology (weighted-average useful life of 5 years) ...... $138 Customer relationships (weighted-average useful life of 4 years) ...... 34 In-process research and development ...... 10 Total intangible assets ...... $182

The total weighted-average amortization period for the intangible assets is 4 years. Most of our intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are estimated to be utilized and the remainder are amortized on a straight-line basis.

D. Intangibles and Goodwill Intangible Assets Intangible assets, excluding goodwill, as of December 31, 2015 and 2014 consist of (tables in millions):

December 31, 2015 Gross Carrying Accumulated Amount Amortization Net Book Value Purchased technology ...... $3,272 $(1,903) $1,369 Patents ...... 225 (132) 93 Software licenses ...... 112 (94) 18 Trademarks and tradenames ...... 254 (157) 97 Customer relationships and customer lists ...... 1,523 (1,087) 436 Leasehold interest ...... 152 (20) 132 Other ...... 46 (42) 4 Total intangible assets, excluding goodwill ..... $5,584 $(3,435) $2,149

F-90 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 Gross Carrying Accumulated Amount Amortization Net Book Value Purchased technology ...... $2,935 $(1,668) $1,267 Patents ...... 225 (117) 108 Software licenses ...... 108 (93) 15 Trademarks and tradenames ...... 226 (136) 90 Customer relationships and customer lists ...... 1,473 (974) 499 Leasehold interest ...... 152 (16) 136 Other ...... 44 (34) 10 Total intangible assets, excluding goodwill ..... $5,163 $(3,038) $2,125

Amortization expense on intangibles was $395 million, $402 million and $389 million in 2015, 2014 and 2013, respectively. As of December 31, 2015, amortization expense on intangible assets for the next five years is expected to be as follows (table in millions):

2016 ...... $ 350 2017 ...... 329 2018 ...... 317 2019 ...... 274 2020 ...... 193 Total ...... $1,463

Goodwill Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment, for the years ended December 31, 2015 and 2014 consists of the following (table in millions):

Enterprise RSA VMware Information Content Information Virtual Storage Division Security Pivotal Infrastructure Total Balance, January 1, 2014 ...... $7,486 $1,487 $2,203 $177 $3,071 $14,424 Goodwill resulting from acquisitions ...... 774 — — — 941 1,715 Finalization of purchase price allocations and other, net ...... — (1) — — (4) (5) Goodwill transferred in formation of Pivotal ..... 6 — — (6) — — Balance, December 31, 2014 ...... $8,266 $1,486 $2,203 $171 $4,008 $16,134 Goodwill resulting from acquisitions ...... 917 — — 16 29 962 Finalization of purchase price allocations and other, net ...... 2 (8) — — — (6) Balance, December 31, 2015 ...... $9,185 $1,478 $2,203 $187 $4,037 $17,090

The transfer of goodwill pursuant to the Information Storage segment acquisition of the Data Computing Appliance and implementation services businesses from the Pivotal segment is shown above for the year ended December 31, 2014. The amount of transferred goodwill was determined using the relative fair value method.

F-91 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Valuation of Goodwill and Intangibles We perform an assessment of the recoverability of goodwill, at least annually, in the fourth quarter of each year. Our assessment is performed at the reporting unit level which, for certain of our operating segments, is one step below our reporting segment level. We employ both qualitative and quantitative tests of our goodwill. For some of our reporting units, we performed a qualitative assessment on goodwill to determine whether a quantitative assessment was necessary and determined there were no indicators of potential impairment. For other reporting units we evaluated goodwill using a quantitative model. For all of our goodwill assessments, we concluded that there was sufficient market value above the carrying value of those reporting units so that we would not expect any near term changes in the operating results that would trigger an impairment. Accordingly, there was no impairment in 2015, 2014 or 2013.

The determination of relevant comparable industry companies impacts our assessment of fair value. Should the operating performance of our reporting units change in comparison to these companies or should the valuation of these companies change, this could impact our assessment of the fair value of the reporting units. Our discounted cash flow analyses factor in assumptions on revenue and expense growth rates. These estimates are based upon our historical experience and projections of future activity, factoring in customer demand, changes in technology and a cost structure necessary to achieve the related revenues. Additionally, these discounted cash flow analyses factor in expected amounts of working capital and weighted average cost of capital. Changes in judgments on any of these factors could materially impact the value of the reporting unit.

E. Debt Short-Term Debt On February 27, 2015, we entered into a credit agreement with the lenders named therein, Citibank, N.A., as Administrative Agent, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Syndication Agents, and Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Bookrunners (the “Credit Agreement”). The Credit Agreement provides for a $2.5 billion unsecured revolving credit facility to be used for general corporate purposes that is scheduled to mature on February 27, 2020. At our option, subject to certain conditions, any loan under the Credit Agreement will bear interest at a rate equal to, either (i) the LIBOR Rate or (ii) the Base Rate (defined as the highest of (a) the Federal Funds rate plus 0.50%, (b) Citibank, N.A.’s “prime rate” as announced from time to time, or (c) one- month LIBOR plus 1.00%), plus, in each case the Applicable Margin, as defined in the Credit Agreement. The Credit Agreement contains customary representations and warranties, covenants and events of default. We may also, upon the agreement of the existing lenders and/or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $1.0 billion. In addition, we may request to extend the maturity date of the credit facility, subject to certain conditions, for additional one-year periods. As of December 31, 2015, we were in compliance with customary required covenants. At December 31, 2015, we had $600 million outstanding under the credit facility, with a weighted-average interest rate of 1.08%. Amounts outstanding under the credit facility are presented in short-term debt in the consolidated balance sheets with the issuances and proceeds presented on a net basis in the consolidated statement of cash flows due to their short term nature. At February 24, 2016, we had no amounts borrowed under the credit facility.

F-92 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS outstanding at any time not to exceed $2.5 billion. The Commercial Paper will have maturities of up to 397 days from the date of issue. The net proceeds from the issuance of the Commercial Paper are expected to be used for general corporate purposes. As of December 31, 2015, we were in compliance with customary required covenants. At December 31, 2015, we had $699 million of Commercial Paper outstanding, with a weighted- average interest rate of 0.73% and maturities ranging from 26 days to 97 days at the time of issuance. Commercial Paper outstanding is presented in short-term debt in the consolidated balance sheets, and the issuances and proceeds of the Commercial Paper are presented on a net basis in the consolidated statement of cash flows due to their short term nature. At February 24, 2016, we had $967 million of Commercial Paper outstanding.

Long-Term Debt During 2013, we issued $5.5 billion aggregate principal amount of senior notes (collectively, the “Notes”) which pay a fixed rate of interest semi-annually in arrears. The first interest payment occurred on December 2, 2013. The proceeds from the Notes have been used to satisfy the cash payment obligation of the converted 2013 Notes as well as for general corporate purposes including stock repurchases, dividend payments, business acquisitions, working capital needs and other business opportunities. The Notes of each series are senior, unsecured obligations of EMC and are not convertible or exchangeable. Unless previously purchased and canceled, we will repay the Notes of each series at 100% of the principal amount, together with accrued and unpaid interest thereon, at maturity. However, EMC has the right to redeem any or all of the Notes at specified redemption prices. As of December 31, 2015, we were in compliance with all debt covenants, which are customary in nature.

Our long-term debt as of December 31, 2015 and December 31, 2014 was as follows (dollars in millions):

Carrying Value Issued at Discount December 31, December 31, Senior Notes to Par 2015 2014 $2.5 billion 1.875% Notes due 2018 ...... 99.943% $2,499 $2,499 $2.0 billion 2.650% Notes due 2020 ...... 99.760% 1,996 1,996 $1.0 billion 3.375% Notes due 2023 ...... 99.925% 1,000 1,000 $5,495 $5,495 Debt issuance costs ...... (20) (26) Net long-term debt ...... $5,475 $5,469

The unamortized discount on the Notes consists of $4 million, which will be fully amortized by June 1, 2023. The effective interest rate on the Notes was 2.55% for the year ended December 31, 2015.

Convertible Debt During 2006, we issued the 2013 Notes. These 2013 Notes matured and a majority of the noteholders exercised their rights to convert the outstanding 2013 Notes as of December 31, 2013. Pursuant to the settlement terms, the majority of the converted 2013 Notes were settled on January 7, 2014. At that time, we paid the noteholders $1.7 billion in cash for the outstanding principal and 35 million shares for the $858 million excess of the conversion value over the principal amount, as prescribed in the terms of the 2013 Notes.

With respect to the conversion value in excess of the principal amount of the 2013 Notes converted, we elected to settle the excess with shares of our common stock based on a daily conversion value, determined in accordance with the indenture, calculated on a proportionate basis for each day of the relevant 20-day

F-93 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS observation period. The actual conversion rate for the 2013 Notes was 62.6978 shares of our common stock per one thousand dollars of principal amount of 2013 Notes, which represents a 26.5% conversion premium from the date the 2013 Notes were issued and is equivalent to a conversion price of approximately $15.95 per share of our common stock.

The 2013 Notes paid interest in cash at a rate of 1.75% semi-annually in arrears on December 1 and June 1 of each year. The effective interest rate on the 2013 Notes was 5.6% for the year ended December 31, 2013. The following table represents the key components of interest expense on the convertible debt (table in millions):

For the year ended December 31, 2013 Contractual interest expense on the coupon ...... $27 Amortization of the discount component recognized as interest expense ...... 58 Total interest expense on the convertible debt ...... $85

In connection with the issuance of the 2013 Notes, we entered into separate convertible note hedge transactions with respect to our common stock (the “Purchased Options”). The Purchased Options allowed us to receive shares of our common stock and/or cash related to the excess conversion value that we would pay to the holders of the 2013 Notes upon conversion. We exercised 108 million of the Purchased Options in conjunction with the planned settlements of the 2013 Notes and received 35 million shares of net settlement on January 7, 2014, representing the excess conversion value of the options.

We also entered into separate transactions in which we sold warrants to acquire, subject to customary anti- dilution adjustments, approximately 215 million shares of our common stock at an exercise price of approximately $19.55 per share of our common stock. We received aggregate proceeds of $391 million from the sale of the associated warrants. Upon exercise, the value of the warrants was required to be settled in shares. The remaining 109 million associated warrants were exercised between February 18, 2014 and March 17, 2014 and were settled with 29 million shares of our common stock.

The Purchased Options and associated warrants had the effect of increasing the conversion price of the 2013 Notes to approximately $19.31 per share of our common stock, representing an approximate 53% conversion premium based on the closing price of $12.61 per share of our common stock on November 13, 2006, the issuance date of the 2013 Notes.

Interest Rate Swap Contracts In 2010, EMC entered into interest rate swap contracts with an aggregate notional amount of approximately $900 million. These swaps were designated as cash flow hedges of the semi-annual interest payments of the forecasted issuance of debt in 2011. In 2012, the interest rate swap contracts were settled and accumulated losses of $176 million were deferred as they were expected to be realized over the life of the new debt issued under the related interest rate swap contracts. The accumulated realized losses related to the settled swaps included in accumulated other comprehensive income are being realized over the remaining life of the ten year Notes. During the year ended 2015 and 2014, $22 million and $11 million, respectively, in losses were reclassified from other comprehensive income and recognized as interest expense in the consolidated income statements.

F. Fair Value of Financial Assets and Liabilities Our fixed income and equity investments are classified as available for sale and recorded at their fair market values. We determine fair value using the following hierarchy: • Level 1 – Quoted prices in active markets for identical assets or liabilities.

F-94 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Most of our fixed income securities are classified as Level 2, with the exception of some of our U.S. government and agency obligations and our investments in publicly traded equity securities, which are classified as Level 1, and all of our auction rate securities, which are classified as Level 3. In addition, our strategic investments held at cost are classified as Level 3. At December 31, 2015 and 2014, the vast majority of our Level 2 securities were priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities. In the event observable inputs are not available, we assess other factors to determine the security’s market value, including broker quotes or model valuations. Each month, we perform independent price verifications of all of our fixed income holdings. In the event a price fails a pre-established tolerance check, it is researched so that we can assess the cause of the variance to determine what we believe is the appropriate fair market value.

In general, investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. Our publicly traded equity securities are classified as long-term investments and our strategic investments held at cost are classified as other assets. As a result of the lack of liquidity for auction rate securities, we have classified these as long-term investments as of December 31, 2015 and 2014. At December 31, 2015 and 2014, all of our short- and long-term investments, excluding auction rate securities, were recognized at fair value, which was determined based upon observable inputs from our pricing vendors for identical or similar assets. At December 31, 2015 and 2014, auction rate securities were valued using a discounted cash flow model.

The following tables summarize the composition of our short- and long-term investments at December 31, 2015 and 2014 (tables in millions):

December 31, 2015 Aggregate Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value U.S. government and agency obligations ...... $2,449 $— $ (8) $2,441 U.S. corporate debt securities ...... 2,257 1 (10) 2,248 High yield corporate debt securities ...... 307 2 (22) 287 Asset-backed securities ...... 20 — — 20 Municipal obligations ...... 731 1 — 732 Auction rate securities ...... 27 — (2) 25 Foreign debt securities ...... 2,332 — (9) 2,323 Total fixed income securities ...... 8,123 4 (51) 8,076 Publicly traded equity securities ...... 126 40 (8) 158 Total ...... $8,249 $ 44 $ (59) $8,234

F-95 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 Aggregate Amortized Unrealized Unrealized Fair Cost Gains (Losses) Value U.S. government and agency obligations ...... $1,951 $ 2 $ (2) $1,951 U.S. corporate debt securities ...... 1,998 1 (4) 1,995 High yield corporate debt securities ...... 570 9 (16) 563 Asset-backed securities ...... 53 — — 53 Municipal obligations ...... 948 2 — 950 Auction rate securities ...... 29 — (2) 27 Foreign debt securities ...... 2,566 2 (4) 2,564 Total fixed income securities ...... 8,115 16 (28) 8,103 Publicly traded equity securities ...... 117 103 (11) 209 Total ...... $8,232 $119 $ (39) $8,312

We held approximately $2,323 million in foreign debt securities at December 31, 2015. These securities have an average credit rating of A+, and approximately 4% of these securities are deemed sovereign debt with an average credit rating of AA+. None of the securities deemed sovereign debt are from Argentina, Greece, Italy, Ireland, Portugal, Spain, Cyprus or Puerto Rico.

The following tables represent our fair value hierarchy for our financial assets and liabilities measured at fair value as of December 31, 2015 and 2014 (tables in millions):

December 31, 2015 Level 1 Level 2 Level 3 Total Cash ...... $2,095 $ — $ — $ 2,095 Cash equivalents ...... 3,861 593 — 4,454 U.S. government and agency obligations ...... 1,495 946 — 2,441 U.S. corporate debt securities ...... — 2,248 — 2,248 High yield corporate debt securities ...... — 287 — 287 Asset-backed securities ...... — 20 — 20 Municipal obligations ...... — 732 — 732 Auction rate securities ...... — — 25 25 Foreign debt securities ...... — 2,323 — 2,323 Publicly traded equity securities ...... 158 — — 158 Total cash and investments ...... $7,609 $ 7,149 $ 25 $14,783 Other items: Strategic investments carried at cost ...... $ — $ — $384 $ 384 Investment in joint venture ...... — — 39 39 Long-term debt carried at discounted issuance cost ...... — (4,999) — (4,999) Foreign exchange derivative assets ...... — 39 — 39 Foreign exchange derivative liabilities ...... — (78) — (78) Commodity derivative liabilities ...... — (4) — (4)

F-96 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2014 Level 1 Level 2 Level 3 Total Cash ...... $2,022 $ — $ — $ 2,022 Cash equivalents ...... 3,710 611 — 4,321 U.S. government and agency obligations ...... 1,141 810 — 1,951 U.S. corporate debt securities ...... — 1,995 — 1,995 High yield corporate debt securities ...... — 563 — 563 Asset-backed securities ...... — 53 — 53 Municipal obligations ...... — 950 — 950 Auction rate securities ...... — — 27 27 Foreign debt securities ...... — 2,564 — 2,564 Publicly traded equity securities ...... 209 — — 209 Total cash and investments ...... $7,082 $ 7,546 $ 27 $14,655 Other items: Strategic investments carried at cost ...... $ — $ — $333 $ 333 Investment in joint venture ...... — — 37 37 Long-term debt carried at discounted issuance cost ...... — (5,544) — (5,544) Foreign exchange derivative assets ...... — 44 — 44 Foreign exchange derivative liabilities ...... — (71) — (71) Commodity derivative assets ...... — 12 — 12

Our auction rate securities are predominantly rated investment grade and are primarily collateralized by student loans. The underlying loans of all but one of our auction rate securities, with a market value of $6 million, have partial guarantees by the U.S. government as part of the Federal Family Education Loan Program (“FFELP”) through the U.S. Department of Education. FFELP guarantees at least 95% of the loans which collateralize the auction rate securities. We believe the quality of the collateral underlying most of our auction rate securities will enable us to recover our principal balance.

To determine the estimated fair value of our investment in auction rate securities, we used a discounted cash flow model using a five year time horizon. As of December 31, 2015, the coupon rates used ranged from 1% to 3% and the discount rate was 1%, which rate represents the rate at which similar FFELP backed securities with a five year time horizon outside of the auction rate securities market were trading at December 31, 2015. The assumptions used in preparing the discounted cash flow model include an incremental discount rate for the lack of liquidity in the market (“liquidity discount margin”) for an estimated period of time. The discount rate we selected was based on AA—rated banks as the majority of our portfolio is invested in student loans where EMC acts as a financier to these lenders. The liquidity discount margin represents an estimate of the additional return an investor would require for the lack of liquidity of these securities over an estimated five -year holding period. The rate used for the discount margin was 1% at both December 31, 2015 and 2014, due to narrow credit spreads on AA—rated banks during the years ended December 31, 2015 and 2014.

Significant changes in the unobservable inputs discussed above could result in a significantly lower or higher fair value measurement. Generally, an increase in the discount rate, liquidity discount margin or coupon rate results in a decrease in our fair value measurement and a decrease in the discount rate, liquidity discount margin or coupon rate results in an increase in our fair value measurement.

During the year ended December 31, 2015, there were no material changes to the fair value of our auction rate securities. During the year ended December 31, 2014, we had $34 million of our auction rate securities called.

F-97 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMC has a 49% ownership percentage of LenovoEMC Limited, a joint venture with Lenovo that was formed in 2012. We account for our LenovoEMC joint venture using the fair value method of accounting. To determine the estimated fair value at inception of our investment, we used a discounted cash flow model using a three year time horizon, and utilized a discount rate of 6%, which represented the incremental borrowing rate for a market participant. The assumptions used in preparing the discounted cash flow model include an analysis of estimated Lenovo NAS revenue against a prescribed target as well as consideration of the purchase price put and call features included in the joint venture agreement. The put and call features create a floor and a cap on the fair value of the investment. As such, there is a limit to the impact on the fair value that would result from significant changes in the unobservable inputs. We had no changes to the assumptions utilized in the fair value calculation in the fourth quarter of 2015. There was no material change to the fair value of this joint venture during the years ended December 31, 2015 and 2014.

The carrying value of the strategic investments held at cost were accounted for under the cost method. As part of our quarterly impairment review, we perform a fair value calculation of our strategic investments held at cost using the most currently available information. To determine the estimated fair value of private strategic investments held at cost, we use a combination of several valuation techniques including discounted cash flow models, acquisition and trading comparables. In addition, we evaluate the impact of pre- and post-money valuations of recent financing events and the impact of those on our fully diluted ownership percentages, and we consider any available information regarding the issuer’s historical and forecasted performance as well as market comparables and conditions. The fair value of these investments is considered in our review for impairment if any events and changes in circumstances occur that might have a significant adverse effect on their value.

Investment Losses Unrealized losses on investments at December 31, 2015 and 2014 by investment category and length of time the investment has been in a continuous unrealized loss position are as follows (tables in millions):

Less Than 12 Months 12 Months or Greater Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2015 Value Losses Value Losses Value Losses U.S. government and agency obligations ...... $1,921 $ (8) $ — $ — $1,921 $ (8) U.S. corporate debt securities ...... 1,818 (10) — — 1,818 (10) High yield corporate debt securities ...... 181 (14) 33 (8) 214 (22) Asset-backed securities ...... — — — — — — Auction rate securities ...... — — 25 (2) 25 (2) Foreign debt securities ...... 1,753 (8) 86 (1) 1,839 (9) Publicly traded equity securities ...... 3 — 2 (8) 5 (8) Total ...... $5,676 $ (40) $ 146 $ (19) $5,822 $ (59)

Less Than 12 Months 12 Months or Greater Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2014 Value Losses Value Losses Value Losses U.S. government and agency obligations ...... $1,168 $ (2) $ — $ — $1,168 $ (2) U.S. corporate debt securities ...... 1,383 (4) — — 1,383 (4) High yield corporate debt securities ...... 244 (16) — — 244 (16) Auction rate securities ...... — — 27 (2) 27 (2) Foreign debt securities ...... 1,563 (4) — — 1,563 (4) Publicly traded equity securities ...... 17 (9) 3 (2) 20 (11) Total ...... $4,375 $ (35) $ 30 $ (4) $4,405 $ (39)

F-98 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the terms of the Merger Agreement, EMC is required to provide Denali with access to EMC’s cash to help fund the Merger consideration. At this time, EMC has not finalized its plan to access such cash and has not determined if there would be a need to liquidate our investment portfolio based on the likelihood of the Merger closing. For all of our securities for which the amortized cost basis was greater than the fair value at December 31, 2015, we currently have the ability and intent to hold until maturity or anticipated recovery. In making the determination as to whether the unrealized losses are other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.

During 2014, net realized gains of $101 million were recorded in other income (expense), net on the consolidated income statements for gains related to previously held interests in strategic investments and joint venture.

Contractual Maturities The contractual maturities of fixed income securities held at December 31, 2015 are as follows (table in millions):

December 31, 2015 Amortized Aggregate Cost Basis Fair Value Due within one year ...... $2,722 $2,721 Due after 1 year through 5 years ...... 4,726 4,704 Due after 5 years through 10 years ...... 413 393 Due after 10 years ...... 262 258 Total ...... $8,123 $8,076

Short-term investments on the consolidated balance sheet include $5 million in variable rate notes which have contractual maturities in 2016, and are not classified within investments due within one year above.

G. Inventories Inventories consist of (table in millions):

December 31, December 31, 2015 2014 Work-in-process ...... $ 592 $ 627 Finished goods ...... 653 649 $1,245 $1,276

H. Accounts and Notes Receivable and Allowance for Credit Losses Accounts and notes receivable are recorded at cost. The portion of our notes receivable due in one year or less are included in accounts and notes receivable and the long-term portion is included in other assets, net on the consolidated balance sheets. Lease receivables arise from sales-type leases of products. We typically sell, without recourse, the contractual right to the lease payment stream and assets under lease to third parties. For certain customers, we retain the lease.

F-99 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The contractual amounts due under the leases we retained as of December 31, 2015 were as follows (table in millions):

Contractual Amounts Year Due Under Leases Due within one year ...... $ 69 Due within two years ...... 46 Due within three years ...... 35 Thereafter ...... 4 Total ...... 154 Less amounts representing interest ...... (7) Present value ...... 147 Current portion (included in accounts and notes receivable) ...... 64 Long-term portion (included in other assets, net) ...... $ 83

Subsequent to December 31, 2015, we sold $35 million of these notes to third parties without recourse.

We maintain an allowance for credit losses on our accounts and notes receivable. The allowance is based on the credit worthiness of our customers, including an assessment of the customer’s financial position, operating performance and their ability to meet their contractual obligation. We assess the creditworthiness for our customers each quarter. In addition, we consider our historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account.

In the event we determine that a lease may not be paid, we include in our allowance an amount for the outstanding balance related to the lease receivable. As of December 31, 2015, amounts from lease receivables past due for more than 90 days were not significant.

During the years ended December 31, 2015 and 2014, there were no material changes to our allowance for credit losses related to lease receivables. Gross lease receivables totaled $154 million and $233 million in 2015 and 2014, respectively, before the allowance. The components of these balances were individually evaluated for impairment and included in our allowance determination as necessary.

I. Property, Plant and Equipment Property, plant and equipment consist of (table in millions):

December 31, December 31, 2015 2014 Furniture and fixtures ...... $ 283 $ 255 Equipment and software ...... 7,378 6,684 Buildings and improvements ...... 2,373 2,308 Land ...... 171 162 Building construction in progress ...... 83 134 10,288 9,543 Accumulated depreciation ...... (6,438) (5,777) $ 3,850 $ 3,766

F-100 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Depreciation expense was $1,019 million, $998 million and $867 million in 2015, 2014 and 2013, respectively. Building construction in progress at December 31, 2015 includes $44 million for facilities not yet placed in service that we are holding for future use.

J. Accrued Expenses Accrued expenses consist of (table in millions):

December 31, December 31, 2015 2014 Salaries and benefits ...... $1,189 $1,260 Product warranties ...... 172 207 Dividends payable (see Note N) ...... 234 237 Partner rebates ...... 221 235 Restructuring, current (See Note P) ...... 333 115 Derivatives ...... 82 75 Other ...... 892 1,012 $3,123 $3,141

Product Warranties Systems sales include a standard product warranty. At the time of the sale, we accrue for systems’ warranty costs. The initial systems’ warranty accrual is based upon our historical experience, expected future costs and specific identification of systems’ requirements. Upon sale or expiration of the initial warranty, we may sell additional maintenance contracts to our customers. Revenue from these additional maintenance contracts is included in deferred revenue and recognized ratably over the service period. The following represents the activity in our warranty accrual for the years ended December 31, 2015, 2014 and 2013 (table in millions):

Year Ended December 31, 2015 2014 2013 Balance, beginning of the period ...... $207 $286 $270 Provision ...... 148 146 179 Amounts charged to the accrual ...... (183) (225) (163) Balance, end of the period ...... $172 $207 $286

The provision includes amounts accrued for systems at the time of shipment, adjustments for changes in estimated costs for warranties on systems shipped in the period and changes in estimated costs for warranties on systems shipped in prior periods. It is not practicable to determine the amounts applicable to each of the components.

F-101 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

K. Income Taxes Our provision (benefit) for income taxes consists of (table in millions):

2015 2014 2013 Federal: Current ...... $673 $955 $698 Deferred ...... (152) (308) (163) 521 647 535 State: Current ...... 65 81 84 Deferred ...... (58) (70) (23) 71161 Foreign: Current ...... 206 228 192 Deferred ...... (24) (18) (16) 182 210 176 Total provision for income taxes ...... $710 $868 $772

In 2015, 2014 and 2013, we were able to utilize net operating loss carryforwards and tax credit carryforwards to reduce the current portion of our tax provision by $57 million, $34 million and $54 million, respectively.

The effective income tax rate is based upon income for the year, composition of the income in different countries and adjustments, if any, for potential tax consequences, benefits and/or resolutions of tax audits or other tax contingencies. A reconciliation of our income tax provision to the statutory federal tax rate is as follows:

2015 2014 2013 Statutory federal tax rate ...... 35.0% 35.0% 35.0% State taxes, net of federal taxes ...... 0.6% 1.2% 0.7% Accounting for historical uncertain tax positions ...... (0.1)% 1.1% (0.4)% Tax rate differential for international jurisdictions and other international related tax items ...... (12.8)% (11.6)% (15.3)% U.S. tax credits ...... (2.7)% (1.9)% (3.8)% Change in valuation allowance ...... 0.6% (2.3)% 0.7% U.S. domestic production activities deduction ...... (1.4)% (1.8)% (1.5)% International reorganization of acquired companies ...... — % — % 0.6% Permanent items ...... 4.3% 3.9% 3.8% Other ...... 1.1% (0.5)% 0.2% 24.6% 23.1% 20.0%

Substantially all the tax rate differential for international jurisdictions was driven by earnings of our Irish subsidiaries. Changes in valuation allowance are due to our assessment of the realizability of deferred tax assets related to certain state tax credit carryforwards and foreign net operating loss carryforwards. Based on our 2014 assessment, we released our partial valuation allowance against deferred tax assets for certain state tax credit carryforwards provided in prior years in 2014.

F-102 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On December 18, 2015, the Consolidated Appropriations Act, 2016 was signed into law. Some of the provisions were retroactive to January 1, 2015 including a permanent extension of the U.S. federal tax credit for increasing research activities. Our 2015 effective income tax rate reflects our estimated 2015 federal tax credit for increasing research activities.

On December 19, 2014, the Tax Increase Prevention Act was signed into law. Some of the provisions were retroactive to January 1, 2014 including an extension of the U.S. federal tax credit for increasing research activities through December 31, 2014. Our 2014 effective income tax rate reflects our estimated 2014 federal tax credit for increasing research activities.

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law. Some of the provisions were retroactive to January 1, 2012 including an extension of the U.S. federal tax credit for increasing research activities through December 31, 2013. Because the extension was enacted after December 31, 2012, our 2013 income tax provision included the federal tax credit for increasing research activities for 2012 as well as for 2013, which reduced our 2013 effective income tax rate by 3.5%.

The components of the deferred tax assets and liabilities are as follows (table in millions):

December 31, 2015 December 31, 2014 Deferred Deferred Deferred Deferred Tax Tax Tax Tax Asset Liability Asset Liability Accounts and notes receivable ...... $ 55 $— $ 58 $— Inventory ...... 70 — 73 — Accrued expenses ...... 295 — 275 — Deferred revenue ...... 987 — 833 — Property, plant and equipment, net ...... — (325) — (322) Intangible and other assets, net ...... — (569) — (597) Equity ...... 252 — 257 — Other non-current liabilities ...... — (8) 27 — Credit carryforwards ...... 281 — 256 — Net operating losses ...... 137 — 115 — Other comprehensive loss ...... 133 — 103 — Gross deferred tax assets and liabilities ...... 2,210 (902) 1,997 (919) Valuation allowance ...... (144) — (126) — Total deferred tax assets and liabilities ...... $2,066 $(902) $1,871 $(919)

In November 2015, the FASB issued new accounting guidance on the balance sheet classification of deferred taxes which requires that all deferred taxes be presented as non-current. We elected to early adopt this new accounting guidance for the year ended December 31, 2015 and applied it retrospectively to all years presented in this document. As a result of adopting this guidance, we reclassified current deferred income tax assets and liabilities to non-current deferred income tax assets and liabilities. This resulted in $1,070 million being reclassified from deferred income taxes (current asset), $156 million being reclassified from other assets, net and $274 million being reclassified from deferred income taxes (non-current liability) to deferred income taxes (non-current asset) on the consolidated balance sheets for the year ended December 31, 2014.

We have gross federal, state and foreign net operating loss carryforwards of $250 million, $250 million and $224 million, respectively, at December 31, 2015. Portions of these carryforwards are subject to annual limitations, including Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended, for U.S. tax

F-103 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS purposes and similar provisions under other countries’ tax laws. Certain of these net operating loss carryforwards will begin to expire in 2016 if not utilized, while others have an unlimited carryforward period. We have provided a valuation allowance of $3 million and $30 million for deferred tax assets related to state and foreign net operating loss carryforwards, respectively, that are not expected to be realized.

We have federal, state and foreign tax credit carryforwards of $4 million, $413 million and $8 million, respectively, at December 31, 2015. Portions of these carryforwards are subject to annual limitations, including Section 382 of the Code, as amended, for U.S. tax purposes and similar provisions under other countries’ tax laws. Certain of these credit carryforwards will begin to expire in 2019 if not utilized, while others have an unlimited carryforward period. We have provided a full valuation allowance of $111 million for deferred tax assets related to Massachusetts research and development tax credit carryforwards that are not expected to be realized.

Deferred income taxes have not been provided on basis differences related to investments in foreign subsidiaries. These basis differences were approximately $11.8 billion at December 31, 2015 and consisted primarily of undistributed earnings permanently invested in these entities. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. Income before income taxes from foreign operations for 2015, 2014 and 2013 was $1.6 billion, $1.8 billion and $2.3 billion, respectively. Income before income taxes from domestic operations for 2015, 2014 and 2013 was $1.2 billion, $2.0 billion and $1.6 billion, respectively.

At December 31, 2015, our total cash, cash equivalents, and short-term and long-term investments were $14.8 billion. This balance includes approximately $7.5 billion held by VMware, of which $5.8 billion is held outside of the U.S., and $6.1 billion held by EMC in entities outside of the U.S. If these overseas funds are needed for our operations in the U.S., we would be required to accrue and pay U.S. taxes to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate them to fund our U.S. operations. Under the terms of the Merger Agreement, EMC is required to provide Denali with access to EMC’s cash to help fund the Merger consideration. At this time, EMC has not finalized its plan to access such cash and has not determined if there would be a need to repatriate cash to meet the requirements of the Merger. If these overseas funds are required to be repatriated to the U.S. in accordance with the Merger Agreement, we may be required to accrue and pay U.S. taxes to repatriate these funds.

The following is a rollforward of our gross consolidated liability for unrecognized income tax benefits for the three years ended December 31 (table in millions):

2015 2014 2013 Unrecognized tax benefits, beginning of year ...... $383 $266 $270 Tax positions related to current year: Additions ...... 104 63 37 Reductions ...... — — — Tax positions related to prior years: Additions ...... 128 91 10 Reductions ...... (54) (31) (33) Settlements ...... (13) (1) (5) Lapses in statutes of limitations ...... (20) (5) (13) Unrecognized tax benefits, end of year ...... $528 $383 $266

As a result of new information obtained during 2015, we have recorded additional unrecognized tax benefits for uncertain taxation of intercompany transactions on the consolidated balance sheet. These additional

F-104 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS unrecognized tax benefits do not have a significant impact on the consolidated results of operations of the current accounting period and are not expected to have a significant impact on the consolidated results of operations of future accounting periods.

As of December 31, 2015, 2014 and 2013, $350 million, $316 million and $261 million, respectively, of the unrecognized tax benefits, if recognized, would have been recorded as a reduction to income tax expense. The remainder would be an adjustment to shareholders’ equity.

We are routinely under audit by the Internal Revenue Service (the “IRS”). We have concluded all U.S. federal income tax matters for years through 2008. The IRS commenced a federal income tax audit for the tax years 2009 and 2010 in the third quarter of 2012, which is expected to be completed in early 2016. In the first quarter of 2015, the IRS commenced a federal income tax audit for the tax year 2011, which is still ongoing. We also have income tax audits in process in numerous state, local and international jurisdictions. In our international jurisdictions that comprise a significant portion of our operations, the years that may be examined vary, with the earliest year being 2004. Based on the timing and outcome of examinations of EMC, the result of the expiration of statutes of limitations for specific jurisdictions or the timing and result of ruling requests from taxing authorities, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in our consolidated balance sheets. We anticipate that several of these audits may be finalized within the next twelve months. While we expect the amount of unrecognized tax benefits to change in the next twelve months, we do not expect the change to have a significant impact on our consolidated results of operations or financial position.

We recognize interest expense and penalties related to income tax matters in income tax expense. For 2015, 2014 and 2013, $11 million, $9 million and $9 million, respectively, in interest expense was recognized. In addition to the unrecognized tax benefits noted above, the gross balance of the accrued interest and penalties were $54 million, $51 million and $42 million as of December 31, 2015, 2014 and 2013, respectively.

L. Retirement Plan Benefits 401(k) Plan EMC’s Information Infrastructure business has a defined contribution program for certain employees that is qualified under Section 401(k) of the Code. EMC matches pre-tax employee contributions up to 6% of eligible compensation during each pay period (subject to a $750 maximum match each quarter). During 2015, EMC instituted a supplemental matching contribution up to an additional $3,000 following the end of each calendar year payable in EMC common stock. During the year ended December 31, 2015, EMC recognized $47 million in stock-based compensation related to this additional matching contribution. All participants vest in Company matching contributions based on the number of years of continuous service over a three year vesting period. VMware also has a defined contribution program for certain employees that is qualified under Section 401(k) of the Code. Our combined cash contributions amounted to $107 million, $105 million and $91 million in 2015, 2014 and 2013, respectively.

Employees may elect to invest their contributions in a variety of funds, including an EMC stock fund. The program limits an employee’s maximum investment allocation in the EMC stock fund to 30% of their total contribution. EMC matching contribution mirrors the investment allocation of the employee’s contribution.

Defined Benefit Pension Plan We have a noncontributory defined benefit pension plan which was assumed as part of the Data General acquisition, which covers substantially all former Data General employees located in the U.S. In addition, certain of our foreign subsidiaries also have a defined benefit pension plan.

F-105 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Benefits under these plans are generally based on either career average or final average salaries and creditable years of service as defined in the plans. The annual cost for these plans is determined using the projected unit credit actuarial cost method that includes actuarial assumptions and estimates which are subject to change. The measurement date for the plans is December 31.

The Data General U.S. pension plan’s (the “Pension Plan”) investment policy provides that no security, except issues of the U.S. Government, shall comprise more than 5% of total plan assets, measured at market.

The Pension Plan is summarized in the following tables. The other pension plans are not presented because they do not have a material impact on our consolidated financial statements.

The components of the change in benefit obligation of the Pension Plan is as follows (table in millions): December 31, December 31, 2015 2014 Benefit obligation, at beginning of year ...... $554 $495 Interest cost ...... 21 22 Benefits paid ...... (21) (19) Actuarial loss (gain) ...... (29) 56 Benefit obligation, at end of year ...... $525 $554

The reconciliation of the beginning and ending balances of the fair value of the assets of the Pension Plan is as follows (table in millions): December 31, December 31, 2015 2014 Fair value of plan assets, at beginning of year ...... $486 $449 Actual return on plan assets ...... (12) 56 Benefits paid ...... (21) (19) Fair value of plan assets, at end of year ...... $453 $486

We did not make any significant contributions to the Pension Plan in 2015 or 2014 and we do not expect to make a contribution to the Pension Plan in 2016. The under-funded status of the Pension Plan at December 31, 2015 and 2014 was $72 million and $68 million, respectively. This amount is classified as a component of other long-term liabilities on the consolidated balance sheets.

During 2015, $12 million of the accumulated actuarial loss and prior services cost associated with the Pension Plan was reclassified from accumulated comprehensive loss to a component of net periodic benefit cost. Additionally, the Pension Plan had net losses of $14 million that are included in accumulated other comprehensive income (loss), which were primarily the result of a decrease in the discount rate at the end of 2015, changes to the mortality table and a lower rate of return on plan assets. We expect that $13 million of the total balance included in accumulated other comprehensive income (loss) at December 31, 2015 will be recognized as a component of net periodic benefit costs in 2016.

The components of net periodic expense of the Pension Plan are as follows (table in millions): 2015 2014 Interest cost ...... $21 $22 Expected return on plan assets ...... (31) (29) Recognized actuarial loss ...... 12 9 Net periodic expense ...... $ 2 $ 2

F-106 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The weighted-average assumptions used in the Pension Plan to determine benefit obligations at December 31 are as follows:

December 31, December 31, December 31, 2015 2014 2013 Discount rate ...... 4.2% 3.9% 4.7% Rate of compensation increase ...... N/A N/A N/A

The weighted-average assumptions used in the Pension Plan to determine periodic benefit cost for the years ended December 31 are as follows:

December 31, December 31, December 31, 2015 2014 2013 Discount rate ...... 3.9% 4.7% 3.7% Expected long-term rate of return on plan assets . . . 6.50% 6.75% 6.75% Rate of compensation increase ...... N/A N/A N/A

The benefit payments are expected to be paid in the following years (table in millions):

2016 ...... $ 22 2017 ...... 23 2018 ...... 25 2019 ...... 27 2020 ...... 29 2021-2025 ...... 165

Fair Value of Plan Assets Following is a description of the valuation methodologies used for assets measured at fair value at December 31, 2015 : Common Collective Trusts—valued at the net asset value calculated by the fund manager based on the underlying investments and are all classified within Level 2 of the valuation hierarchy. These include: EB Daily Valued Large Cap Growth Stock Index Fund, EB Daily Valued Large Cap Value Stock Index Fund, EB Daily Valued Stock Index Fund, EB Daily Valued Small Cap Stock Index Fund, EB Daily Valued International Stock Index Fund, EB Daily Valued Emerging Markets Stock Index Fund, Custom Long Duration Fixed Income, Collective Trust High Yield Fund, EB Long Term Credit Bond Index, EB Long Term Government Bond Index Fund and EB Temporary Investment Fund.

Corporate Debt Securities—valued daily at the closing price reported in active U.S. financial markets and are classified within Level 2 of the valuation hierarchy.

F-107 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth, by level within the fair value hierarchy, the Pension Plan’s assets at fair value as of December 31, 2015 and 2014 (table in millions):

December 31, 2015 Level 1 Level 2 Level 3 Total Common collective trusts ...... $— $324 $— $324 U.S. Treasury securities ...... 5 — — 5 Corporate debt securities ...... — 123 — 123 Total ...... $ 5 $447 $— 452 Plan payables, net of accrued interest and dividends ...... 1 Total ...... $453

December 31, 2014 Level 1 Level 2 Level 3 Total Common collective trusts ...... $— $350 $— $350 U.S. Treasury securities ...... 2 — — 2 Corporate debt securities ...... — 132 — 132 Total ...... $ 2 $482 $— 484 Plan payables, net of accrued interest and dividends ...... 2 Total ...... $486

Dividends, accrued interest and net plan payables are not material to the plan assets. Accordingly, we have not classified these into the fair value hierarchy above at December 31, 2015 and 2014.

Concentration of Risks Pension Plan investments at fair value as of December 31, 2015 and 2014 which represented 5% or more of the Pension Plan’s net assets were as follows (table in millions):

2015 2014 EB Daily Valued Small Cap Stock Index Fund ...... $ 26 $ 30 EB Daily Valued Stock Index Fund ...... 91 103 EB Daily Valued International Stock Index Fund ...... 26 27 EB Long Term Government Bond Index ...... 49 50 EB Long Term Credit Bond Index ...... 71 74 Custom Long Duration Fixed Income ...... 130 137 $393 $421

Investment Strategy The Pension Plan’s assets are managed by outside investment managers. Our investment strategy with respect to pension assets is to achieve a long-term growth of capital, consistent with an appropriate level of risk.

The expected long-term rate of return on the Pension Plan assets considers the current level of expected returns on risk free investments (primarily government bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset

F-108 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS class. The expected return for each asset class was weighted based on the target asset allocation to develop the expected long-term rate of return on assets. As market conditions permit, we expect to shift the asset allocation to lower the percentage of investments in equities and increase the percentage of investments in long-duration fixed-income securities. The changes could result in a reduction in the long-term rate of return on the Pension Plan assets and increase future pension expense. The long-term weighted average target asset allocations are as follows:

December 31, 2015 U.S. large capitalization equities ...... 17% U.S. small capitalization equities ...... 4 International equities ...... 4 U.S. long-duration fixed income ...... 75 Total ...... 100%

The actual allocation of the assets in the Pension Plan at December 31, 2015 and 2014 were as follows:

December 31,2015 December 31, 2014 U.S. large capitalization equities ...... 29% 30% U.S. small capitalization equities ...... 6 6 International equities ...... 7 7 U.S. long-duration fixed income ...... 55 54 Below Investment Grade Corporate Fixed Income . . . 3 3 Total ...... 100% 100%

M. Commitments and Contingencies Operating Lease Commitments We lease office and warehouse facilities and equipment under various operating leases. Facility leases generally include renewal options. Rent expense was as follows (table in millions):

2015 2014 2013 Rent expense ...... $451 $361 $328 Sublease proceeds ...... (4) (2) (2) Net rent expense ...... $447 $359 $326

Our future operating lease commitments as of December 31, 2015 are as follows (table in millions):

2016 ...... $ 338 2017 ...... 287 2018 ...... 223 2019 ...... 172 2020 ...... 136 Thereafter ...... 852 Total minimum lease payments ...... $2,008

F-109 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We sublet certain of our office facilities. Expected future non-cancelable sublease proceeds range from approximately $1 million to $5 million per year for the next four years with total sublease proceeds of $11 million as of December 31, 2015.

Outstanding Purchase Orders At December 31, 2015, we had outstanding purchase orders aggregating approximately $3.2 billion. The purchase orders are for manufacturing and non-manufacturing related goods and services. While the purchase orders are generally cancelable without penalty, certain vendor agreements provide for percentage-based cancellation fees or minimum restocking charges based on the nature of the product or service.

Guarantees and Indemnification Obligations EMC’s subsidiaries have entered into arrangements with financial institutions for such institutions to provide guarantees for rent, taxes, insurance, leases, performance bonds, bid bonds and customs duties aggregating approximately $150 million as of December 31, 2015. The guarantees vary in length of time. In connection with these arrangements, we have agreed to guarantee substantially all of the guarantees provided by these financial institutions. EMC and certain of its subsidiaries have also entered into arrangements with financial institutions in order to facilitate the management of currency risk. EMC has agreed to guarantee the obligations of its subsidiaries under these arrangements.

We enter into agreements in the ordinary course of business with, among others, customers, resellers, original equipment manufacturers (“OEMs”), systems integrators and distributors. Most of these agreements require us to indemnify the other party against third-party claims alleging that an EMC product infringes a patent and/or copyright. Certain agreements in which we grant limited licenses to specific EMC-trademarks require us to indemnify the other party against third-party claims alleging that the use of the licensed trademark infringes a third-party trademark. Certain of these agreements require us to indemnify the other party against certain claims relating to the loss or processing of data, to real or tangible personal property damage, personal injury or the acts or omissions of EMC, its employees, agents or representatives. In addition, from time to time, we have made certain guarantees regarding the performance of our systems to our customers. We have also made certain guarantees for obligations of our subsidiaries.

We have agreements with certain vendors, financial institutions, lessors and service providers pursuant to which we have agreed to indemnify the other party for specified matters, such as acts and omissions of EMC, its employees, agents or representatives.

We have procurement or license agreements with respect to technology that is used in our products and agreements in which we obtain rights to a product from an OEM. Under some of these agreements, we have agreed to indemnify the supplier for certain claims that may be brought against such party with respect to our acts or omissions relating to the supplied products or technologies.

We have agreed to indemnify the directors, executive officers and certain other officers of EMC and our subsidiaries, to the extent legally permissible, against all liabilities reasonably incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or officer.

In connection with certain acquisitions, we have agreed to indemnify the current and former directors, officers and employees of the acquired company in accordance with the acquired company’s by-laws and charter in effect immediately prior to the acquisition or in accordance with indemnification or similar agreements entered into by the acquired company and such persons. In a substantial majority of instances, we have maintained the acquired company’s directors’ and officers’ insurance, which should enable us to recover a portion of any future amounts paid. These indemnities vary in length of time.

F-110 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Based upon our historical experience and information known as of December 31, 2015, we believe our liability on the above guarantees and indemnities at December 31, 2015 is not material.

Litigation We are involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of our business, including actions with respect to contracts, intellectual property, product liability, employment, benefits and securities matters. As required by authoritative guidance, we have estimated the amount of probable losses that may result from all currently pending matters, and such amounts are reflected in our consolidated financial statements. These recorded amounts are not material to our consolidated financial position or results of operations and no additional material losses related to these pending matters are reasonably possible. While it is not possible to predict the outcome of these matters with certainty, we do not expect the results of any of these actions to have a material adverse effect on our business, results of operations or financial condition. Because litigation is inherently unpredictable, however, the actual amounts of loss may prove to be larger or smaller than the amounts reflected in our consolidated financial statements, and we could incur judgments or enter into settlements of claims that could adversely affect our operating results or cash flows in a particular period.

Merger-Related Litigation As of February 23, 2016, fifteen putative shareholder class action lawsuits challenging the Merger have been filed, of which thirteen were filed purportedly on behalf of Company shareholders and two purportedly on behalf of VMware shareholders. The lawsuits name various combinations of the Company, its current and former directors, VMware, certain of VMware’s directors, Denali, Dell and Merger Sub, among others, as defendants. The fifteen lawsuits seek, among other things, injunctive relief enjoining the Merger, rescission of the Merger if consummated, an award of fees and costs and/or an award of monetary damages. The suits are captioned as follows:

F-111 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Case Court Filing Date 11. Stull v. EMC Corp., U.S. District Court, 10/30/2015 Civ. No. 15-13692 District of Massachusetts 12. Jacobs v. EMC Corp., Mass. Superior Court, Middlesex 11/12/2015 Civ. No. 15-6318-H County 13. Ford v. VMware, Inc., Delaware Chancery Court 11/17/2015 C.A. No. 11714-VCL 14. Pancake v. EMC Corp., U.S. District Court, 1/11/2016 Civ. No. 16-10040 District of Massachusetts 15. Booth Family Trust v. EMC Corp., U.S. District Court, 1/26/2016 Civ. No. 16-10114 District of Massachusetts

Of the thirteen lawsuits filed purportedly on behalf of Company shareholders, nine were filed in Massachusetts state court, and four in the United States District Court for the District of Massachusetts. Eleven of the lawsuits initially advanced substantially the same allegations that the Merger Agreement was adopted in violation of the fiduciary duties of the Company’s directors. Certain of those lawsuits also alleged that the Company, Denali, Dell, Merger Sub, Silver Lake Partners, LLC, and/or MSD Partners, LLC aided and abetted the alleged breaches of fiduciary duty by the directors.

On November 5, 2015, pursuant to a motion made by the Company and its directors, the nine lawsuits then pending in state court in Massachusetts were consolidated with and into the first-filed of those actions, IBEW Local No. 129 Benefit Fund v. Joseph M. Tucci, et al. That action, brought in the Business Litigation Session of the Suffolk County Superior Court, named as defendants the Company and each member of its Board of Directors (as constituted as of October 12, 2015), Denali, Dell and Merger Sub.

The Company and its directors moved to dismiss the amended complaint in the IBEW matter pursuant to provisions of the Massachusetts Business Corporation Act, M.G.L. c. 156D, § 7.40 et seq., and Rules 12(b)(6) and 23.1 of the Massachusetts Rules of Civil Procedure, on the basis that the complaint asserts a derivative action on behalf of the Company and should be dismissed for failure to make the requisite pre-suit demand on the Company. On December 7, 2015 the Court granted this motion and on December 24, 2015 the court entered judgment dismissing each of the consolidated actions. On January 21, 2016, three of the plaintiffs served notice that they will appeal this judgment. The appeal has not yet been docketed.

On January 11, 2016, following the state court judgment and a motion by the Company and its directors to stay or dismiss the two lawsuits then pending in the United States District Court for the District of Massachusetts, the plaintiffs in those cases amended their complaints to eliminate the initial claims based on Massachusetts state law and substitute allegations that the preliminary proxy statement/prospectus dated December 14, 2015 omits and/or misrepresents material information and that such omissions and misrepresentations constitute violations of Section 14(a) of, and Rule 14a-9 under, the Securities Exchange Act of 1934. Two additional lawsuits have since been filed in the same court advancing substantially the same proxy- disclosure-based allegations.

Of the two lawsuits filed purportedly on behalf of VMware shareholders, one was filed in Middlesex County Superior Court in Massachusetts, and the other in Delaware Chancery Court. Both generally allege that the Company, in its capacity as the majority shareholder of VMware, and individual defendants who are directors of the Company, VMware, or both, breached their fiduciary duties to minority shareholders of VMware in connection with the Merger. Both further allege that various combinations of defendants aided and abetted these alleged breaches of fiduciary duties.

F-112 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The outcome of these lawsuits is uncertain, and additional lawsuits may be brought or additional claims advanced concerning the Merger. An adverse judgment for monetary damages could have an adverse effect on the Company’s operations. A preliminary injunction could delay or jeopardize the completion of the Merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin completion of the Merger.

N. Shareholders’ Equity Net Income Per Share The reconciliation from basic to diluted earnings per share for both the numerators and denominators is as follows (table in millions):

2015 2014 2013 Numerator: Net income attributable to EMC Corporation ...... $1,990 $2,714 $2,889 Incremental dilution from VMware ...... (5) (7) (8) Net income—dilution attributable to EMC Corporation ...... $1,985 $2,707 $2,881 Denominator: Weighted average shares, basic ...... 1,944 2,028 2,074 Weighted average common stock equivalents ...... 18 26 28 Assumed conversion of the 2013 Notes and associated warrants . . — 5 58 Weighted average shares, diluted ...... 1,962 2,059 2,160

Restricted stock awards, restricted stock units and options to acquire 6 million, 2 million and 4 million shares of our common stock for the years ended December 31, 2015, 2014 and 2013, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive. The incremental dilution from VMware represents the impact of VMware’s dilutive securities on EMC’s consolidated diluted net income per share and is calculated by multiplying the difference between VMware’s basic and diluted earnings per share by the number of VMware shares owned by EMC.

Due to the cash settlement feature of the principal amount of the 2013 Notes, we only included the impact of the premium feature in our diluted earnings per share calculation when the 2013 Notes were convertible due to maturity or when the average stock price exceeded the conversion price of the 2013 Notes.

Concurrent with the issuance of the 2013 Notes, we also entered into separate transactions in which we sold warrants to acquire, subject to customary anti-dilution adjustments, approximately 215 million shares of our common stock at an exercise price of approximately $19.55 per share of our common stock. Approximately half of the associated warrants were exercised in 2012 and the remaining 109 million warrants were exercised between February 18, 2014 and March 17, 2014 and were settled with 29 million shares of our common stock. As such, we included the impact of the remaining outstanding sold warrants in our diluted earnings per share calculation during the years ended December 31, 2014 and 2013.

EMC Repurchases of Common Stock We utilize both authorized and unissued shares (including repurchased shares) for all issuances under our equity plans. Our Board of Directors authorized the repurchase of 250 million shares of our common stock in February 2013 and an additional 250 million shares of our common stock in December 2014. For the year ended December 31, 2015, we spent $2.0 billion to repurchase 76 million shares of our common stock. Of the 500 million shares authorized for repurchase, we have repurchased 277 million shares at a total cost of $7.4 billion, leaving a remaining balance of 223 million shares authorized for future repurchases. We spent approximately $3.0 billion in both the years ended December 31, 2014 and December 31, 2013 on the repurchase of stock.

F-113 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

VMware Repurchase of Common Stock The following table summarizes stock repurchase authorizations in the years ended December 31, 2015, 2014 and 2013 (amounts in table in millions):

Amount Expiration Month Authorized Authorized Date Status January 2015 ...... $1,000 End of 2017 Open August 2014 ...... 1,000 End of 2016 Completed in Q3’15 August 2013 ...... 700 Endof2015 Completed in Q4’14 November 2012 ...... 250 Endof2014 Completed in Q4’13 February 2012 ...... 600 Endof2013 Completed in Q2’13

From time to time, VMware repurchases stock pursuant to the January 2015 authorizations in open market transactions or privately negotiated transactions as permitted by securities laws and other legal requirements. All shares repurchased under VMware’s stock repurchase programs are retired.

The following table summarizes stock repurchase activity in the years ended December 31, 2015, 2014 and 2013 (table in millions, except per share amounts):

For the Year Ended December 31, 2015 2014 2013 Aggregate purchase price ...... $1,125 $ 700 $ 508 Class A common shares repurchased ...... 13 8 7 Weighted-average price per share ...... $83.36 $91.61 $76.58

The amount of repurchased shares includes commissions and was classified as a reduction to additional paid-in capital. As of December 31, 2015, the cumulative authorized amount remaining for repurchase was $835 million.

Cash Dividend on Common Stock During 2013, our Board of Directors approved the initiation of a quarterly cash dividend to EMC shareholders of $0.10 per share of common stock and in the second quarter of 2014, our Board of Directors approved an increase of the dividend to $0.115 per share of common stock.

Our Board of Directors declared the following dividends during the periods presented:

Dividend Per Total Amount Declaration Date Share Record Date (in millions) Payment Date Fiscal Year 2015: February 27, 2015 ...... $0.115 April 1, 2015 $229 April 23, 2015 May 20, 2015 ...... $0.115 July 1, 2015 $226 July 23, 2015 July 30, 2015 ...... $0.115 October 1, 2015 $229 October 23, 2015 December 17, 2015 ...... $0.115 January 4, 2016 $230 January 22, 2016 Fiscal Year 2014: February 6, 2014 ...... $ 0.10 April 1, 2014 $209 April 23, 2014 April 17, 2014 ...... $0.115 July 1, 2014 $237 July 23, 2014 July 30, 2014 ...... $0.115 October 1, 2014 $239 October 23, 2014 December 10, 2014 ...... $0.115 January 2, 2015 $234 January 23, 2015 Fiscal Year 2013: May 28, 2013 ...... $ 0.10 July 1, 2013 $212 July 23, 2013 August 1, 2013 ...... $ 0.10 October 1, 2013 $210 October 23, 2013 December 12, 2013 ...... $ 0.10 January 8, 2014 $206 January 23, 2014

F-114 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On February 11, 2016, EMC declared a quarterly dividend of $0.115 per share to shareholders of record on April 1, 2016, payable on April 22, 2016.

Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss), which is presented net of tax, for the years ended December 31, 2015 and 2014 consist of the following (table in millions):

Recognition of Accumulated Other Foreign Actuarial Net Loss Comprehensive Income Currency Unrealized Net Unrealized Net from Pension and Attributable to the Translation Gains (Losses) Losses on Other Postretirement Non-controlling Adjustments on Investments Derivatives Plans Interests Total Balance as of January 1, 2014 (a) ...... $ (52) $ 31 $(105) $(110) $ (3) $(239) Other comprehensive income (loss) before reclassifications ..... (135) 57 24 (22) — (76) Net losses (gains) reclassified from accumulated other comprehensive income ...... — (39) (18) 6 — (51) Net current period other comprehensive income (loss) ...... (135) 18 6 (16) — (127) Balance as of December 31, 2014 (b)...... (187) 49 (99) (126) (3) (366) Other comprehensive income (loss) before reclassifications ..... (169) (16) 21 (7) 4 (167) Net losses (gains) reclassified from accumulated other comprehensive income ...... — (43) (11) 8 — (46) Net current period other comprehensive income (loss) ...... (169) (59) 10 1 4 (213) Balance as of December 31, 2015 (c)...... $(356) $(10) $ (89) $(125) $ 1 $(579)

(a) Net of taxes (benefits) of $18 million for unrealized net gains on investments, $(66) million for unrealized net losses on derivatives and $(61) million for actuarial net loss on pension plans. (b) Net of taxes (benefits) of $31 million for unrealized net gains on investments, $(64) million for unrealized net losses on derivatives and $(70) million for actuarial net loss on pension plans. (c) Net of taxes (benefits) of $(5) million for unrealized net gains on investments, $(56) million for unrealized net losses on derivatives and $(71) million for actuarial net loss on pension plans.

F-115 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amounts reclassified out of accumulated other comprehensive income (loss) for the years ended December 31, 2015 and 2014 is as follows (table in millions):

For the Year Ended Impacted Line Item on Accumulated Other Comprehensive Income Components December 31, 2015 December 31, 2014 Consolidated Income Statements Net gain on investments: ...... $70 $ 62 Investment income (27) (23) Provision for income tax Netoftax...... $43 $ 39 Net gain on derivatives: Foreign exchange contracts ...... $30 $ 39 Product sales revenue Foreign exchange contracts ...... (2) (10) Cost of product sales Interest rate swap ...... (22) (11) Other interest expense Total net gain on derivatives before tax ...... 6 18 5 — Provision for income tax Netoftax...... $11 $ 18 Net loss from pension and other postretirement plans . . $(13) $ (9) Selling, general and administrative expense 5 3 Provision for income tax Netoftax...... $ (8) $ (6)

EMC Preferred Stock Our preferred stock may be issued from time to time in one or more series, with such terms as our Board of Directors may determine, without further action by our shareholders.

O. Stock-Based Compensation EMC Equity Plans The EMC Corporation Amended and Restated 2003 Stock Plan (the “2003 Plan”) provides for the grant of stock options, stock appreciation rights, restricted stock and restricted stock units. The exercise price for a stock option shall not be less than 100% of the fair market value of our common stock on the date of grant. Options generally become exercisable in annual installments over a period of five years after the date of grant and expire ten years after the date of grant. Incentive stock options will expire no later than ten years after the date of grant. Restricted stock is common stock that is subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Restricted stock units represent the right to receive shares of common stock in the future, with the right to future delivery of the shares subject to a risk of forfeiture or other restrictions that will lapse upon satisfaction of specified conditions. Grants of restricted stock awards or restricted stock units that vest only by the passage of time will not vest fully in less than two years after the date of grant, except for grants to non-employee Directors that are not subject to this minimum two -year vesting requirement. The 2003 Plan allows us to grant up to 460 million shares of common stock. We recognize restricted stock awards and restricted stock units against the 2003 Plan share reserve as two shares for every one share issued in connection with such awards.

In addition to the 2003 Plan, we have four other stock option plans (the “1985 Plan,” the “1993 Plan,” the “2001 Plan” and the “1992 Directors Plan”). In May 2007, these four plans were consolidated into the 2003 Plan such that all future grants will be granted under the 2003 Plan and shares that are not issued as a result of cancellations, expirations or forfeitures, will become available for grant under the 2003 Plan.

F-116 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A total of 1,022 million shares of common stock have been reserved for issuance under the 2003 Plan. At December 31, 2015, there were an aggregate of 53 million shares of common stock available for issuance pursuant to future grants under the 2003 Plan.

We have, in connection with the acquisition of various companies, assumed the stock option plans of these companies. We do not intend to make future grants under any of such plans.

EMC Employee Stock Purchase Plan Under our Amended and Restated 1989 Employee Stock Purchase Plan (the “1989 Plan”), eligible employees may purchase shares of common stock through payroll deductions at 85% of the fair market value at the time of exercise. During the year ended December 31, 2013, EMC amended the Plan to adjust the grant and exercise dates. Options to purchase shares are granted twice yearly, on February 1 and August 1, and are exercisable on the succeeding July 31 and January 31, respectively, each year. Pursuant to the terms of the Merger Agreement, the last ESPP purchase was in January 2016. A total of 183 million shares of common stock have been reserved for issuance under the 1989 Plan. The following table summarizes the 1989 Plan activity in the years ended December 31, 2015, 2014 and 2013 (table in millions, except per share amounts):

For the Year Ended December 31, 2015 December 31, 2014 December 31, 2013 Cash proceeds ...... $ 180 $ 186 $ 82 Common shares purchased ...... 8 8 4 Weighted-average price per share ...... $22.44 $22.44 $20.08

As of December 31, 2015, $80 million of ESPP withholdings were recorded as a liability on the consolidated balance sheet for the purchase that occurred in January 2016.

EMC Stock Options The following table summarizes our option activity under all equity plans since January 1, 2013 (shares in millions):

Weighted Average Number of Exercise Price Shares (per share) Outstanding, January 1, 2013 ...... 77 $14.39 Options granted relating to business acquisitions ...... 1 3.29 Forfeited ...... (1) 13.36 Exercised ...... (20) 13.10 Outstanding, December 31, 2013 ...... 57 14.56 Options granted relating to business acquisitions ...... 8 0.62 Forfeited ...... (1) 13.55 Exercised ...... (24) 13.19 Outstanding, December 31, 2014 ...... 40 12.68 Exercised ...... (13) 11.38 Outstanding, December 31, 2015 ...... 27 13.20 Exercisable, December 31, 2015 ...... 22 15.75 Vested and expected to vest, December 31, 2015 ...... 26 $13.50

F-117 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Apart from options issued through business acquisitions which are discussed in Note C, there were no stock options granted during the years ended December 31, 2015, 2014 and 2013. At December 31, 2015, the weighted-average remaining contractual term was 2.8 years and the aggregate intrinsic value was $215 million for the 22 million exercisable shares. For the 26 million shares vested and expected to vest at December 31, 2015, the weighted-average remaining contractual term was 2.6 years and the aggregate intrinsic value was $323 million. The intrinsic value is based on our closing stock price of $25.68 as of December 31, 2015, which would have been received by the option holders had all in-the-money options been exercised as of that date. The total pre-tax intrinsic values of options exercised in 2015, 2014 and 2013 were $203 million, $353 million and $240 million, respectively. Cash proceeds from the exercise of stock options were $142 million, $317 million and $260 million in 2015, 2014 and 2013, respectively. Income tax benefits realized from the exercise of stock options in 2015, 2014 and 2013 were $28 million, $61 million and $45 million, respectively. Pursuant to the terms of the Merger Agreement, all outstanding stock options will vest at least 20 days prior to the close of the transaction.

EMC Restricted Stock and Restricted Stock Units Our restricted stock awards and units are valued based on our stock price on the grant date. Our restricted stock awards and units have various vesting terms from the date of grant, including pro rated vesting over three or four years, cliff vesting at the end of three or five years with acceleration for achieving specified performance criteria and vesting on various dates contingent on achieving specified performance criteria. For awards with non-market performance conditions, management evaluates the criteria for each grant to determine the probability that the performance condition will be achieved.

The following table summarizes our restricted stock and restricted stock unit activity since January 1, 2013 (shares in millions):

Weighted Average Number of Grant Date Shares Fair Value Restricted stock and restricted stock units at January 1, 2013 ...... 47 $24.39 Granted ...... 20 25.55 Vested ...... (15) 22.61 Forfeited ...... (4) 24.80 Outstanding, December 31, 2013 ...... 48 25.43 Granted ...... 23 27.65 Vested ...... (14) 24.89 Forfeited ...... (4) 25.63 Outstanding, December 31, 2014 ...... 53 26.50 Granted ...... 33 25.89 Vested ...... (19) 25.13 Forfeited ...... (6) 26.72 Restricted stock and restricted stock units at December 31, 2015 ..... 61 $26.70

The total intrinsic values of restricted stock and restricted stock units that vested in 2015, 2014 and 2013 were $514 million, $388 million and $404 million, respectively. As of December 31, 2015, restricted stock and restricted stock units representing 61 million shares were outstanding and unvested, with an aggregate intrinsic value of $1,554 million. These shares and units are scheduled to vest through 2019. Of the total shares of restricted stock and restricted stock units outstanding, 49 million shares and units will vest upon fulfilling service

F-118 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS conditions, of which vesting for 4 million shares and units will accelerate upon achieving performance conditions. The remaining 11 million shares and units will vest only if certain performance conditions are achieved. Pursuant to the terms of the Merger Agreement, all eligible outstanding restricted stock and restricted stock units will vest upon the close of the transaction.

VMware Equity Plans In June 2007, VMware adopted its 2007 Equity and Incentive Plan (the “2007 Plan”). As of December 31, 2015, the number of authorized shares under the 2007 Plan was 122 million. The number of shares underlying outstanding equity awards that VMware assumes in the course of business acquisitions are also added to the 2007 Plan reserve on an as-converted basis. VMware has assumed 4 million shares, which accordingly have been added to the authorized shares under the 2007 Plan reserve.

Awards under the 2007 Plan may be in the form of stock-based awards such as restricted stock units or stock options. Generally, restricted stock grants made under the 2007 Plan have a three-year to four-year period over which they vest and vest 25% the first year and semi-annually thereafter. VMware’s Compensation and Corporate Governance Committee determines the vesting schedule for all equity awards. The exercise price for a stock option awarded under the 2007 Plan shall not be less than 100% of the fair market value of VMware Class A common stock on the date of grant. Most options granted under the 2007 Plan vest 25% after the first year and monthly thereafter over the following three years and expire between six and seven years from the date of grant. VMware utilizes both authorized and unissued shares to satisfy all shares issued under the 2007 Plan. At December 31, 2015, there were an aggregate of 18 million shares of common stock available for issuance pursuant to future grants under the 2007 Plan.

VMware Employee Stock Purchase Plan In June 2007, VMware adopted its 2007 Employee Stock Purchase Plan (the “ESPP”), which is intended to be qualified under Section 423 of the Internal Revenue Code. As of December 31, 2015, the number of authorized shares under the ESPP was 14 million shares. Under the ESPP, eligible VMware employees are granted options to purchase shares at the lower of 85% of the fair market value of the stock at the time of grant or 85% of the fair market value at the time of exercise. Options to purchase shares are generally granted twice yearly on February 1 and August 1 and exercisable on the succeeding July 31 and January 31, respectively, of each year. As of December 31, 2015, there were 5 million shares of VMware Class A common stock available for issuance pursuant to future grants under the ESPP.

The following table summarizes ESPP activity in the years ended December 31, 2015, 2014 and 2013 (table in millions, except per share amounts):

For the Year Ended December 31, 2015 December 31, 2014 December 31, 2013 Cash proceeds ...... $ 98 $ 80 $ 76 Class A common shares purchased ..... 1 1 1 Weighted-average price per share ...... $65.54 $73.21 $65.97

As of December 31, 2015, $48 million of ESPP withholdings were recorded as a liability on the consolidated balance sheet for the purchase that occurred in January 2016.

F-119 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

VMware Stock Options The following table summarizes stock option activity since January 1, 2013 for VMware employees in VMware stock options (shares in millions):

Weighted Average Number of Exercise Price Shares (per share) Outstanding, January 1, 2013 ...... 10 $34.36 Granted ...... 1 71.53 Exercised ...... (5) 28.12 Outstanding, December 31, 2013 ...... 6 44.12 Granted ...... 2 50.91 Exercised ...... (2) 35.58 Outstanding, December 31, 2014 ...... 6 50.54 Exercised ...... (3) 29.44 Outstanding, December 31, 2015 ...... 3 64.56 Exercisable, December 31, 2015 ...... 2 59.31 Vested and expected to vest ...... 3 $63.89

The above table includes stock options granted in conjunction with unvested stock options assumed in business combinations. As a result, the weighted-average exercise price per share may vary from the VMware stock price at time of grant.

As of December 31, 2015, for the VMware stock options, the weighted-average remaining contractual term was 4.5 years and the aggregate intrinsic value was $26 million for the 2 million exercisable shares. For the 3 million options vested and expected to vest at December 31, 2015, the weighted-average remaining contractual term was 4.9 years and the aggregate intrinsic value was $43 million. These aggregate intrinsic values represent the total pre-tax intrinsic values based on VMware’s closing stock price of $56.57 as of December 31, 2015, which would have been received by the option holders had all in-the-money options been exercised as of that date. The options exercised in 2015, 2014 and 2013 had a pre-tax intrinsic value of $136 million, $147 million and $256 million, respectively. The total fair value of VMware stock options that vested during the years ended December 31, 2015, 2014 and 2013 was $60 million, $64 million and $60 million, respectively.

F-120 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

VMware Restricted Stock The following table summarizes restricted stock activity since January 1, 2013 (shares in millions):

Weighted Average Grant Date Number of Fair Value Units (per unit) Restricted stock at January 1, 2013 ...... 12 $91.93 Granted ...... 7 76.20 Vested ...... (4) 83.21 Forfeited ...... (2) 90.55 Outstanding, December 31, 2013 ...... 13 85.85 Granted ...... 6 92.82 Vested ...... (5) 86.27 Forfeited ...... (1) 88.03 Outstanding, December 31, 2014 ...... 13 88.88 Granted ...... 13 72.42 Vested ...... (5) 90.72 Forfeited ...... (2) 87.39 Outstanding, December 31, 2015 ...... 19 $77.29

As of December 31, 2015, restricted stock representing 19 million shares of VMware’s Class A common stock were outstanding, with an aggregate intrinsic value of $1,057 million based on VMware’s closing price as of December 31, 2015. The total fair value of VMware restricted stock awards that vested during the years ended December 31, 2015, 2014 and 2013 was $379 million, $480 million and $340 million, respectively.

Stock-Based Compensation Expense The following tables summarize the components of total stock-based compensation expense included in our consolidated income statements in 2015, 2014 and 2013 (in millions):

Year Ended December 31, 2015 Restricted Retirement Benefit Total Stock-Based Stock Options Stock Stock Match Compensation Cost of product sales ...... $ 13 $ 24 $ 3 $ 40 Cost of services ...... 16 86 14 116 Research and development ...... 71 313 11 395 Selling, general and administrative ...... 70 453 19 542 Stock-based compensation expense before income taxes ...... 170 876 47 1,093 Income tax benefit ...... 38 192 18 248 Total stock-based compensation, net of tax ...... $132 $684 $29 $ 845

F-121 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended December 31, 2014 Stock Restricted Total Stock-Based Options Stock Compensation Cost of product sales ...... $ 16 $ 38 $ 54 Cost of services ...... 20 72 92 Research and development ...... 79 303 382 Selling, general and administrative ...... 78 415 493 Stock-based compensation expense before income taxes .... 193 828 1,021 Income tax benefit ...... 45 179 224 Total stock-based compensation, net of tax ...... $148 $649 $ 797

Year Ended December 31, 2013 Stock Restricted Total Stock-Based Options Stock Compensation Cost of product sales ...... $ 19 $ 29 $ 48 Cost of services ...... 15 61 76 Research and development ...... 75 282 357 Selling, general and administrative ...... 82 372 454 Stock-based compensation expense before income taxes .... 191 744 935 Income tax benefit ...... 56 170 226 Total stock-based compensation, net of tax ...... $135 $574 $ 709

Stock-based compensation expense includes $59 million, $57 million and $54 million of expense associated with our employee stock purchase plans for 2015, 2014 and 2013, respectively. During the year ended December 31, 2015, stock-based compensation expense also includes $47 million related to EMC’s supplemental 401(k) matching contribution as discussed in footnote L.

The table below presents the net change in amounts capitalized or accrued in 2015 and 2014 for the following items (in millions):

Increased (decreased) Increased (decreased) during the year ended during the year ended December 31, 2015 December 31, 2014 Accrued expenses (accrued warranty expenses) ...... $(13) $— Other assets ...... (24) (19)

As of December 31, 2015, the total unrecognized after-tax compensation cost for stock options, restricted stock and restricted stock units was $1,811 million. This non-cash expense is scheduled to be recognized through 2019 with a weighted-average remaining period of 1.4 years.

F-122 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of VMware Options The fair value of each option to acquire VMware Class A common stock granted during the years ended December 31, 2015, 2014 and 2013 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

For the Year Ended December 31, VMware Stock Options 2015 2014 2013 Dividend yield ...... None None None Expected volatility ...... 32.0% 36.2% 38.5% Risk-free interest rate ...... 1.1% 0.9% 0.9% Expected term (in years) ...... 3.3 3.2 3.6 Weighted-average fair value at grant date ...... $27.16 $48.47 $29.47

For the Year Ended December 31, VMware Employee Stock Purchase Plan 2015 2014 2013 Dividend yield ...... None None None Expected volatility ...... 30.1% 32.3% 32.9% Risk-free interest rate ...... 0.1% 0.1% 0.1% Expected term (in years) ...... 0.5 0.5 0.5 Weighted-average fair value at grant date ...... $20.59 $20.71 $20.45

The weighted-average grant date fair value of VMware stock options can fluctuate from period to period primarily due to higher valued options assumed through business combinations with exercise prices lower than the fair market value of VMware’s stock on the date of grant.

For all equity awards granted during the years ended 2015, 2014 and 2013, volatility was based on an analysis of historical stock prices and implied volatilities of VMware’s Class A common stock. The expected term is based on historical exercise patterns and post-vesting termination behavior, the term of the purchase period for grants made under the ESPP, or the weighted-average remaining term for options assumed in acquisitions. VMware’s expected dividend yield input was zero as it has not historically paid, nor expects in the future to pay, cash dividends on its common stock. The risk-free interest rate was based on a U.S. Treasury instrument whose term is consistent with the expected term of the stock options.

P. Restructuring and Acquisition-Related Charges In 2015, 2014 and 2013, we incurred restructuring and acquisition-related charges of $450 million, $239 million and $224 million, respectively. In 2015, EMC incurred $420 million of restructuring charges, primarily related to our current year restructuring programs, and $4 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. In 2014, EMC incurred $210 million of restructuring charges, primarily related to our 2014 restructuring programs, and $6 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. In 2013, EMC incurred $139 million of restructuring charges, primarily related to our 2013 restructuring program, and $8 million of charges in connection with acquisitions for financial, advisory, legal and accounting services.

F-123 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS with acquisitions for financial, advisory, legal and accounting services. In 2013, VMware incurred $54 million of restructuring charges related to workforce reductions as part of its 2013 restructuring program and $5 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. In addition, VMware incurred a benefit of $2 million and a charge of $18 million primarily related to impairment charges related to its business realignments in 2014 and 2013, respectively.

During 2015, we initiated a cost reduction and business transformation program to better align our expenses and improve the operations of our federation of businesses. In the fourth quarter of 2015, as part of the previously announced program to reduce our existing cost base by $850 million annually, and consistent with prior restructuring actions to keep pace with changes in the industry, we approved a restructuring plan which consists of a reduction in force which will be substantially completed by the end of the first quarter of 2016 and fully completed by the end of 2016. The total charge resulting from this plan is expected to be approximately $250 million, with total cash payments associated with the plan expected to be $220 million. Charges related to this restructuring action are included in the 2015 charges. During 2015, 2014 and 2013, EMC implemented restructuring programs to create further operational efficiencies which will result or have resulted in workforce reductions of approximately 4,600, 2,100 and 1,900 positions, respectively. The actions impact positions around the globe covering our Information Storage, RSA Information Security, Enterprise Content Division and Pivotal segments. All of these actions are expected to be completed or were completed within a year of the start of each program.

During 2015, 2014 and 2013, we recognized $18 million in each year, respectively, of lease termination costs for facilities vacated in the period in accordance with our plan as part of all of our restructuring programs and for costs associated with terminating other contractual obligations. These costs are expected to be utilized by the end of 2017. The remaining cash portion owed for these programs in 2016 is approximately $4 million, plus an additional $7 million over the period from 2017 and beyond.

On January 22, 2016, VMware approved, subject to compliance with all applicable local legal obligations, a plan to streamline its operations, with plans to reinvest the associated savings in field, technical and support resources associated with growth products. The total charge resulting from this plan is estimated to be between $55 million and $65 million, consisting principally of employee-related charges to be paid in cash for the elimination of approximately 800 positions and personnel which are expected to be completed by June 30, 2016.

The activity for the restructuring programs is presented below (tables in millions):

Year Ended, December 31, 2015: 2015 EMC Programs

Balance as of Balance as of December 31, December 31, Category 2014 2015 Charges Utilization 2015 Workforce reductions ...... $— $409 $(104) $305 Consolidation of excess facilities and other contractual obligations ...... — 26 (9) 17 Total ...... $— $435 $(113) $322

F-124 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other EMC Programs

Balance as of Adjustments Balance as of December 31, to the December 31, Category 2014 Provision Utilization 2015 Workforce reductions ...... $102 $ (7) $(78) $17 Consolidation of excess facilities and other contractual obligations ...... 19 (8) (8) 3 Total ...... $121 $(15) $(86) $20

VMware Programs

Balance as of Balance as of December 31, December 31, Category 2014 2015 Charges Utilization 2015 Workforce reductions ...... $ 8 $ 23 $(28) $ 3 Consolidation of excess facilities and other contractual obligations ...... — — — — Total ...... $ 8 $ 23 $(28) $ 3

Year Ended, December 31, 2014: EMC Programs

Balance as of Balance as of December 31, December 31, Category 2013 2014 Charges Utilization 2014 Workforce reductions ...... $66 $192 $(156) $102 Consolidation of excess facilities and other contractual obligations ...... 24 18 (23) 19 Total ...... $90 $210 $(179) $121

VMware Programs

Balance as of Balance as of December 31, December 31, Category 2013 2014 Charges Utilization 2014 Workforce reductions ...... $— $ 18 $(10) $ 8 Consolidation of excess facilities and other contractual obligations ...... — — — — Total ...... $— $ 18 $(10) $ 8

F-125 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Year Ended, December 31, 2013: EMC Programs

Balance as of Balance as of December 31, December 31, Category 2012 2013 Charges Utilization 2013 Workforce reductions ...... $63 $121 $(118) $66 Consolidation of excess facilities and other contractual obligations ...... 28 18 (22) 24 Total ...... $91 $139 $(140) $90

VMware Programs

Balance as of Balance as of December 31, December 31, Category 2012 2013 Charges Utilization 2013 Workforce reductions ...... $— $ 54 $(54) $— Consolidation of excess facilities and other contractual obligations ...... — — — — Total ...... $— $ 54 $(54) $—

During the year ended December 31, 2013, in connection with VMware’s business realignment plan, VMware recognized cumulative pre-tax gains of $44 million relating to the disposition of certain lines of business that were no longer aligned with VMware’s core business priorities. The gains recognized in connection with this disposition was recorded to other income (expense), net on the consolidated income statements for the year ended December 31, 2013.

Q. Related Party Transactions In 2014 and 2013, we leased certain real estate from a company owned by a member of our Board of Directors and such Director’s siblings, for which payments aggregated approximately $3 million and $5 million, respectively. Such lease was initially assumed by us as a result of our acquisition of Data General in 1999 and renewed in 2003 for a ten -year term. The lease expired in 2014 and EMC vacated the facility. In accordance with its written policy and procedures relating to related person transactions, EMC’s Audit Committee approved the transaction.

EMC is a large global organization which engages in thousands of purchase, sales and other transactions annually. We enter into purchase and sales transactions with other publicly-traded and privately-held companies, universities, hospitals and not-for-profit organizations with which members of our Board of Directors or executive officers are affiliated. We enter into these arrangements in the ordinary course of our business.

From time to time, we make strategic investments in publicly-traded and privately-held companies that develop software, hardware and other technologies or provide services supporting our technologies. We may purchase from or make sales to these organizations.

We believe that the terms of each of these arrangements described above were fair and not less favorable to us than could have been obtained from unaffiliated parties.

F-126 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

R. Segment Information We manage the Company as a federation of businesses: EMC Information Infrastructure, VMware Virtual Infrastructure, Pivotal and Virtustream. EMC Information Infrastructure operates in three segments: Information Storage, Enterprise Content Division and RSA Information Security, while VMware Virtual Infrastructure and Pivotal each operate as single segments. The results of Virtustream are currently reported within our Information Storage segment.

Our management measures are designed to assess performance of these reporting segments excluding certain items. As a result, the corporate reconciling items are used to capture the items excluded from the segment operating performance measures, including stock-based compensation expense, intangible asset amortization expense, restructuring charges and acquisition and other related charges. Additionally, in certain instances, infrequently occurring items are also excluded or included from the measures used by management in assessing segment performance. Research and development expenses, selling, general and administrative expenses and restructuring and acquisition-related charges associated with the EMC Information Infrastructure business are not allocated to the segments within the EMC Information Infrastructure business, as they are managed centrally at the EMC Information Infrastructure business level. EMC Information Infrastructure and Pivotal have not been allocated non-operating income (expense), net and income tax provision as these costs are managed centrally at the EMC corporate level. Accordingly, for the three segments within the EMC Information Infrastructure business, gross profit is the segment operating performance measure, while for Pivotal, operating income is the operating performance measure. The VMware Virtual Infrastructure within EMC amounts represent the revenues and expenses of VMware as reflected within EMC’s consolidated financial statements.

Our segment information for the years ended 2015, 2014 and 2013 are as follows (tables in millions, except percentages):

EMC Information Infrastructure EMC Enterprise RSA EMC Information Information Content Information Information Infrastructure Storage Division Security Infrastructure Pivotal plus Pivotal 2015 Revenues: Product revenues ...... $10,200 $ 156 $ 424 $10,780 $ 87 $10,867 Services revenues ...... 6,101 443 564 7,108 180 7,288 Total consolidated revenues ...... 16,301 599 988 17,888 267 18,155 Gross profit ...... $ 8,518 $ 407 $ 660 $ 9,585 $ 104 $ 9,689 Gross profit percentage ...... 52.3% 67.9% 66.8% 53.6% 39.0% 53.4% Research and development ...... 1,593 109 1,702 Selling, general and administrative ...... 4,834 216 5,050 Restructuring and acquisition-related charges ...... — — — Total operating expenses ...... 6,427 325 6,752 Operating income (expense) ...... $ 3,158 $(221) $ 2,937

F-127 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMC VMware Information Virtual Corp Infrastructure Infrastructure Reconciling plus Pivotal within EMC Items Consolidated 2015 Revenues: Product revenues ...... $10,867 $2,723 $ (76) $13,514 Services revenues ...... 7,288 3,902 — 11,190 Total consolidated revenues ...... 18,155 6,625 (76) 24,704 Gross profit ...... $ 9,689 $5,780 $ (478) $14,991 Gross profit percentage ...... 53.4% 87.3% — 60.7% Research and development ...... 1,702 1,066 399 3,167 Selling, general and administrative ...... 5,050 2,606 877 8,533 Restructuring and acquisition-related charges ...... — — 450 450 Total operating expenses ...... 6,752 3,672 1,726 12,150 Operating income (expense) ...... 2,937 2,108 (2,204) 2,841 Non-operating income (expense), net ...... 27 34 (20) 41 Income tax provision (benefit) ...... 819 398 (507) 710 Net income ...... 2,145 1,744 (1,717) 2,172 Net income attributable to the non-controlling interests ...... 7 (324) 135 (182) Net income attributable to EMC Corporation ...... $ 2,152 $1,420 $(1,582) $ 1,990

EMC Information Infrastructure Enterprise RSA EMC EMC Information Information Content Information Information Infrastructure plus Storage Division Security Infrastructure Pivotal Pivotal 2014 Revenues: Product revenues ...... $10,785 $ 164 $ 462 $11,411 $ 65 $11,476 Services revenues ...... 5,757 476 573 6,806 162 6,968 Total consolidated revenues ...... 16,542 640 1,035 18,217 227 18,444 Gross profit ...... $ 9,180 $ 417 $ 698 $10,295 $ 106 $10,401 Gross profit percentage ...... 55.5% 65.2% 67.4% 56.5% 46.5% 56.4% Research and development ...... 1,489 128 1,617 Selling, general and administrative ..... 4,583 183 4,766 Restructuring and acquisition-related charges ...... — — — Total operating expenses ...... 6,072 311 6,383

Operating income (expense) ...... $ 4,223 $(205) $ 4,018

F-128 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMC VMware Information Virtual Corp Infrastructure Infrastructure Reconciling plus Pivotal within EMC Items Consolidated 2014 Revenues: Product revenues ...... $11,476 $2,575 $ — $14,051 Services revenues ...... 6,968 3,421 — 10,389 Total consolidated revenues ...... 18,444 5,996 — 24,440 Gross profit ...... $10,401 $5,241 $ (393) $15,249 Gross profit percentage ...... 56.4% 87.4% — 62.4% Research and development ...... 1,617 987 387 2,991 Selling, general and administrative ...... 4,766 2,390 826 7,982 Restructuring and acquisition-related charges ...... — — 239 239 Total operating expenses ...... 6,383 3,377 1,452 11,212 Operating income (expense) ...... 4,018 1,864 (1,845) 4,037 Non-operating income (expense), net ...... (362) 34 53 (275) Income tax provision (benefit) ...... 942 385 (459) 868 Net income ...... 2,714 1,513 (1,333) 2,894 Net income attributable to the non-controlling interests ...... — (308) 128 (180) Net income attributable to EMC Corporation ...... $ 2,714 $1,205 $(1,205) $ 2,714

EMC Information Infrastructure EMC Enterprise RSA EMC Information Information Content Information Information Infrastructure Storage Division Security Infrastructure Pivotal plus Pivotal 2013 Revenues: Product revenues ...... $10,738 $ 180 $ 453 $11,371 $ 66 $11,437 Services revenues ...... 5,524 467 534 6,525 113 6,638 Total consolidated revenues ...... 16,262 647 987 17,896 179 18,075 Gross profit ...... $ 9,109 $ 419 $ 655 $10,183 $ 91 $10,274 Gross profit percentage ...... 56.0% 64.8% 66.4% 56.9% 50.7% 56.8% Research and development ...... 1,461 109 1,570 Selling, general and administrative . . 4,571 161 4,732 Restructuring and acquisition-related charges ...... — — — Total operating expenses ...... 6,032 270 6,302 Operating income (expense) ...... $ 4,151 $(179) $ 3,972

F-129 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMC VMware Information Virtual Corp Infrastructure Infrastructure Reconciling plus Pivotal within EMC Items Consolidated 2013 Revenues: Product revenues ...... $11,437 $2,253 $ — $13,690 Services revenues ...... 6,638 2,894 — 9,532 Total consolidated revenues ...... 18,075 5,147 — 23,222 Gross profit ...... $10,274 $4,589 $ (390) $14,473 Gross profit percentage ...... 56.8% 89.2% — 62.3% Research and development ...... 1,570 826 365 2,761 Selling, general and administrative ...... 4,732 2,003 603 7,338 Restructuring and acquisition-related charges ...... — — 224 224 Total operating expenses ...... 6,302 2,829 1,192 10,323 Operating income (expense) ...... 3,972 1,760 (1,582) 4,150 Non-operating income (expense), net ...... (337) 22 30 (285) Income tax provision (benefit) ...... 911 317 (456) 772 Net income ...... 2,724 1,465 (1,096) 3,093 Net income attributable to the non-controlling interests ...... — (295) 91 (204) Net income attributable to EMC Corporation ...... $ 2,724 $1,170 $(1,005) $ 2,889

Our revenues are attributed to the geographic areas according to the location of the customers. Revenues by geographic area are included in the following table (table in millions):

2015 2014 2013 United States ...... $13,361 $12,835 $12,230 Europe, Middle East and Africa ...... 6,845 6,981 6,355 Asia Pacific and Japan ...... 3,157 3,191 3,193 Latin America, Mexico and Canada ...... 1,341 1,433 1,444 Total ...... $24,704 $24,440 $23,222

No country other than the United States accounted for 10% or more of revenues in 2015, 2014 or 2013.

Long-lived assets, excluding financial instruments, deferred tax assets, goodwill and intangible assets, in the United States were $4,584 million at December 31, 2015 and $4,355 million at December 31, 2014. Internationally, long-lived assets, excluding financial instruments, deferred tax assets, goodwill and intangible assets, were $1,053 million at December 31, 2015 and $1,021 million at December 31, 2014. No country other than the United States accounted for 10% or more of total long-lived assets, excluding financial instruments and deferred tax assets, at December 31, 2015 or 2014.

F-130 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

S. Selected Quarterly Financial Data (unaudited) Quarterly financial data for 2015 and 2014 is as follows (tables in millions, except per share amounts):

2015 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Revenues ...... $5,613 $5,997 $6,079 $7,014 Gross profit ...... 3,339 3,587 3,705 4,360 Net income attributable to EMC Corporation ...... 252 487 480 771 Net income per weighted average share, diluted: common shareholders ...... $ 0.13 $ 0.25 $ 0.25 $ 0.39

2014 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Revenues ...... $5,479 $5,880 $6,032 $7,048 Gross profit ...... 3,347 3,654 3,743 4,505 Net income attributable to EMC Corporation ...... 392 589 587 1,147 Net income per weighted average share, diluted: common shareholders ...... $ 0.19 $ 0.28 $ 0.28 $ 0.56

The second quarter of 2015 includes a VMware GSA settlement charge which was recorded as a reduction of revenue of $42 million, or $0.02 per diluted share, and a fair value adjustment on an asset held for sale of $12 million, or $0.01 per diluted share. The fourth quarter of 2015 includes merger-related costs of $14 million, or $0.01 per diluted share, special tax items of $39 million, or $0.02 per diluted share and a tax benefit related to the expected R&D tax credit for 2015 of $61 million, or $0.03 per diluted share.

The second and fourth quarters of 2014 include a gain on previously held interests in strategic investments and joint venture of $45 million, or $0.02 per diluted share and $33 million, or $0.02 per diluted share, respectively. The second quarter of 2014 also includes an impairment of strategic investment of $24 million, or $0.01 per diluted share. The fourth quarter of 2014 includes a tax benefit related to the expected R&D tax credit for 2014 of $ 62 million, or $0.03 per diluted share.

T. Subsequent Events On January 22, 2016, VMware approved, subject to compliance with all applicable local legal obligations, a plan to streamline its operations, with plans to reinvest the associated savings in field, technical and support resources associated with growth products. The total charge resulting from this plan is estimated to be between $55 million and $65 million, consisting principally of employee-related charges to be paid in cash for the elimination of approximately 800 positions and personnel. Any such proposals in countries outside the United States will be subject to local law and consultation requirements.

Actions associated with the plan are expected to be completed by June 30, 2016. Finalization of the plan will be subject to local information and consultation processes with employees or their representatives if required by law.

F-131 PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

EMC CORPORATION CONSOLIDATED BALANCE SHEETS (in millions, except per share amounts) (unaudited)

March 31, December 31, 2016 2015 ASSETS Current assets: Cash and cash equivalents ...... $ 7,224 $ 6,549 Short-term investments ...... 2,577 2,726 Accounts and notes receivable, less allowance for doubtful accounts of $83 and $90 ..... 2,941 3,977 Inventories ...... 1,233 1,245 Other current assets ...... 625 566 Total current assets ...... 14,600 15,063 Long-term investments ...... 5,169 5,508 Property, plant and equipment, net ...... 3,806 3,850 Intangible assets, net ...... 2,059 2,149 Goodwill ...... 17,099 17,090 Deferred income taxes ...... 1,173 1,164 Other assets, net ...... 1,797 1,788 Total assets ...... $45,703 $46,612 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable ...... $ 1,038 $ 1,644 Accrued expenses ...... 2,722 3,123 Income taxes payable ...... 124 609 Short-term debt (See Note 3) ...... 925 1,299 Deferred revenue ...... 6,477 6,210 Total current liabilities ...... 11,286 12,885 Income taxes payable ...... 466 461 Deferred revenue ...... 4,741 4,592 Long-term debt (See Note 3) ...... 5,477 5,475 Other liabilities ...... 483 480 Total liabilities ...... 22,453 23,893 Commitments and contingencies (See Note 12) Shareholders’ equity: Preferred stock, par value $0.01; authorized 25 shares; none outstanding ...... — — Common stock, par value $0.01; authorized 6,000 shares; issued and outstanding 1,953 and 1,943 shares ...... 20 19 Additional paid-in capital ...... — — Retained earnings ...... 22,111 21,700 Accumulated other comprehensive loss, net ...... (558) (579) Total EMC Corporation’s shareholders’ equity ...... 21,573 21,140 Non-controlling interests ...... 1,677 1,579 Total shareholders’ equity ...... 23,250 22,719 Total liabilities and shareholders’ equity ...... $45,703 $46,612

The accompanying notes are an integral part of the consolidated financial statements.

F-132 EMC CORPORATION CONSOLIDATED INCOME STATEMENTS (in millions, except per share amounts) (unaudited)

For the Three Months Ended March 31, March 31, 2016 2015 Revenues: Product sales ...... $2,682 $2,905 Services ...... 2,793 2,708 5,475 5,613 Costs and expenses: Cost of product sales ...... 1,251 1,329 Cost of services ...... 964 945 Research and development ...... 814 788 Selling, general and administrative ...... 1,987 2,037 Restructuring and acquisition-related charges ...... 49 135 Operating income ...... 410 379 Non-operating income (expense): Investment income ...... 13 24 Interest expense ...... (41) (40) Other income, net ...... 4 10 Total non-operating income (expense) ...... (24) (6) Income before provision for income taxes ...... 386 373 Income tax provision ...... 89 82 Net income ...... 297 291 Less: Net income attributable to the non-controlling interests ...... (29) (39) Net income attributable to EMC Corporation ...... $ 268 $ 252 Net income per weighted average share, basic attributable to EMC Corporation common shareholders ...... $ 0.14 $ 0.13 Net income per weighted average share, diluted attributable to EMC Corporation common shareholders ...... $ 0.14 $ 0.13 Weighted average shares, basic ...... 1,949 1,974 Weighted average shares, diluted ...... 1,965 1,996 Cash dividends declared per common share ...... $ 0.12 $ 0.12

The accompanying notes are an integral part of the consolidated financial statements.

F-133 EMC CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited)

For the Three Months Ended March 31, March 31, 2016 2015 Net income ...... $297 $ 291 Other comprehensive income (loss), net of taxes (benefits): Foreign currency translation adjustments ...... 3 (104) Changes in market value of investments: Changes in unrealized gains, net of taxes of $12 and $13 ...... 20 19 Reclassification adjustment for net losses (gains) realized in net income, net of benefits (taxes) of $0 and $(6) ...... 2 (8) Net change in market value of investments ...... 22 11 Changes in market value of derivatives: Changes in unrealized gains (losses), net of taxes (benefits) of $(1) and $3 . . . (4) 14 Reclassification adjustment for net losses (gains) included in net income, net of benefits (taxes) of $2 and $0 ...... 4 (11) Net change in the market value of derivatives ...... — 3 Change in actuarial net gain (loss) from pension and other postretirement plans: Other comprehensive income (loss) ...... 25 (90) Comprehensive income ...... 322 201 Less: Net income attributable to the non-controlling interests ...... (29) (39) Less: Other comprehensive income attributable to the non-controlling interests ...... (4) (1) Comprehensive income attributable to EMC Corporation ...... $289 $ 161

The accompanying notes are an integral part of the consolidated financial statements.

F-134 EMC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited)

For the Three Months Ended March 31, March 31, 2016 2015 Cash flows from operating activities: Cash received from customers ...... $6,878 $ 7,495 Cash paid to suppliers and employees ...... (5,373) (5,584) Dividends and interest received ...... 21 24 Interest paid ...... (3) — Income taxes paid ...... (591) (855) Net cash provided by operating activities ...... 932 1,080 Cash flows from investing activities: Additions to property, plant and equipment ...... (188) (197) Capitalized software development costs ...... (156) (128) Purchases of short- and long-term available-for-sale securities ...... (1,361) (2,421) Sales of short- and long-term available-for-sale securities ...... 887 1,311 Maturities of short- and long-term available-for-sale securities ...... 965 422 Business acquisitions, net of cash acquired ...... (10) (49) Purchases of strategic and other related investments ...... (11) (106) Sales of strategic and other related investments ...... 28 57 Decrease in restricted cash ...... 2 — Net cash provided by (used in) investing activities ...... 156 (1,111) Cash flows from financing activities: Proceeds from the issuance of EMC’s common stock ...... 105 121 Proceeds from the issuance of VMware’s common stock ...... 52 54 EMC repurchase of EMC’s common stock ...... — (1,346) VMware repurchase of VMware’s common stock ...... — (438) Excess tax benefits from stock-based compensation ...... 2 20 Net payments for the issuance of short-term obligations ...... (376) — Dividend payment ...... (227) (232) Net cash used in financing activities ...... (444) (1,821) Effect of exchange rate changes on cash and cash equivalents ...... 31 (103) Net increase (decrease) in cash and cash equivalents ...... 675 (1,955) Cash and cash equivalents at beginning of period ...... 6,549 6,343 Cash and cash equivalents at end of period ...... $7,224 $ 4,388 Reconciliation of net income to net cash provided by operating activities: Net income ...... $ 297 $ 291 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ...... 483 470 Non-cash restructuring and other special charges ...... 3 11 Stock-based compensation expense ...... 304 245 Provision for (recovery of) doubtful accounts ...... (2) 16 Deferred income taxes, net ...... (19) (20) Excess tax benefits from stock-based compensation ...... (2) (20) Other, net ...... 7 — Changes in assets and liabilities, net of acquisitions: Accounts and notes receivable ...... 1,019 1,420 Inventories ...... (40) (69) Other assets ...... (38) (45) Accounts payable ...... (580) (575) Accrued expenses ...... (421) (376) Income taxes payable ...... (500) (754) Deferred revenue ...... 415 494 Other liabilities ...... 6 (8) Net cash provided by operating activities ...... $ 932 $1,080

The accompanying notes are an integral part of the consolidated financial statements.

F-135 EMC CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in millions) (unaudited)

For the three months ended March 31, 2016:

For the three months ended March 31, 2015:

The accompanying notes are an integral part of the consolidated financial statements.

F-136 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation Company EMC Corporation (“EMC” or “the Company”) and its subsidiaries develop, deliver and support the information technology (“IT”) industry’s broadest range of information infrastructure and virtual infrastructure technologies, solutions and services. EMC manages the Company as part of a federation of businesses: EMC Information Infrastructure, VMware Virtual Infrastructure, Pivotal and Virtustream.

EMC’s Pivotal business (“Pivotal”) unites strategic technology, people and programs from EMC and VMware and has built a new platform comprised of next-generation data fabrics, application fabrics and a cloud independent platform-as-a-service (“PaaS”) to support Big and Fast Data applications. On top of this platform is the Company’s agile development services business. These capabilities are made available through Pivotal’s three primary offerings: Pivotal Cloud Foundry, the Pivotal Big Data Suite and Pivotal Labs.

At the effective time of the Merger (“Effective Time”), each share of EMC common stock issued and outstanding will be canceled and converted into the right to receive (i) $24.05 in cash and (ii) a number of shares of common stock of Denali designated as Class V Common Stock, par value $0.01 per share (the “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. The aggregate number of shares of Class V Common Stock issued as Merger Consideration in the transaction is intended to represent 65% of EMC’s economic interest in the approximately 81% of the outstanding shares of VMware currently owned by EMC, reflecting approximately 53% of the total economic interest in the outstanding shares of VMware. Upon completion of the transaction, Denali will retain the remaining 28% of the total economic interest in the outstanding shares of VMware. Based on the estimated number of shares of EMC common stock outstanding at the closing of the transaction, EMC shareholders are expected to receive approximately 0.111 shares of Class V Common Stock for each share of EMC common stock.

F-137 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Merger Agreement contains specified termination rights for both Denali and EMC, including that, in general, either party may terminate the agreement if the Merger is not consummated on or before December 16, 2016. If EMC terminates the Merger Agreement, EMC is required to pay Denali a termination fee of $2.5 billion. If Denali terminates the Merger Agreement, they are required to pay a termination fee of $4 billion under specified circumstances, and in certain instances, an alternative termination fee of $6 billion.

The transaction is expected to close in mid-2016. The completion of the Merger is subject to certain conditions including EMC shareholder approval, the receipt of certain other regulatory approvals in various jurisdictions and the effectiveness of the registration statement on Form S-4 to be filed by Denali in connection with the registration of shares of Class V Common Stock issuable in connection with the Merger.

Under the terms of the Merger Agreement, EMC is required to provide Denali with access to EMC’s cash to help fund the Merger consideration. At this time, EMC has not finalized its plan to access such cash and has not determined if there would be a need to repatriate cash to meet the requirements of the Merger. To date, EMC has asserted overseas cash as indefinitely reinvested; however if these overseas funds are required to be repatriated to the U.S. in accordance with the Merger Agreement, EMC may be required to accrue and pay U.S. taxes to repatriate these funds.

Other than transaction expenses associated with the proposed Merger, the terms of the Merger Agreement did not impact EMC’s consolidated financial statements as of and for the three months ended March 31, 2016.

General The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. These consolidated financial statements include the accounts of EMC, its wholly owned subsidiaries, as well as VMware and Pivotal, companies majority-owned by EMC. All intercompany transactions have been eliminated.

Certain information and footnote disclosures normally included in our annual consolidated financial statements have been condensed or omitted. Accordingly, these interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2015 which are contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2016.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for any future period or the entire fiscal year. The interim consolidated financial statements, in the opinion of management, reflect all adjustments necessary to fairly state the results as of and for the three -month periods ended March 31, 2016 and 2015.

F-138 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net Income Per Share Basic net income per weighted average share has been computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per weighted average share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the period. Common equivalent shares consist of stock options, restricted stock and restricted stock units. Additionally, for purposes of calculating diluted net income per weighted average share, net income is adjusted for the difference between VMware’s reported diluted and basic net income per weighted average share, if any, multiplied by the number of shares of VMware held by EMC.

Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance related to stock-based compensation which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This standard is effective beginning January 1, 2017, with early application permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued a standard on leases which amends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of the lease payments. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires modified retrospective adoption and is effective beginning January 1, 2019, with early adoption permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.

2. Non-controlling Interests The non-controlling interests’ share of equity in VMware is reflected as a component of the non-controlling interests in the accompanying consolidated balance sheets and was $1,581 million and $1,481 million as of March 31, 2016 and December 31, 2015, respectively. At March 31, 2016, EMC held approximately 97% of the combined voting power of VMware’s outstanding common stock and approximately 81% of the economic interest in VMware.

F-139 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The portion of the results of operations of Pivotal allocable to its other owners, along with the interest in the net assets of Pivotal attributable to those other owners are shown as a component of non-controlling interests on EMC’s consolidated balance sheets and as a reduction of net income attributable to EMC shareholders.

The non-controlling interests’ share of equity in Pivotal is reflected as a component of the non-controlling interests in the accompanying consolidated balance sheets as $96 million and $98 million as of March 31, 2016 and December 31, 2015, respectively. At March 31, 2016, EMC consolidated held approximately 83% of the economic interest in Pivotal.

The effect of changes in our ownership interest in VMware and Pivotal on our equity was as follows (table in millions):

For the Three Months Ended March 31, March 31, 2016 2015 Net income attributable to EMC Corporation ...... $268 $ 252 Transfers (to) from the non-controlling interests: Increase in EMC Corporation’s additional paid-in-capital for VMware and Pivotal equity issuances ...... 21 30 Decrease in EMC Corporation’s additional paid-in-capital for VMware’s and Pivotal’s other equity activity ...... (57) (331) Net transfers (to) from non-controlling interest ...... (36) (301) Change from net income attributable to EMC Corporation and transfers from the non-controlling interest in VMware, Inc...... $232 $ (49)

3. Debt Short-Term Debt On February 27, 2015, we entered into a credit agreement with the lenders named therein, Citibank, N.A., as Administrative Agent, Bank of America, N.A. and JPMorgan Chase Bank, N.A., as Syndication Agents, and Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Bookrunners (the “Credit Agreement”). The Credit Agreement provides for a $2.5 billion unsecured revolving credit facility to be used for general corporate purposes that is scheduled to mature on February 27, 2020. At our option, subject to certain conditions, any loan under the Credit Agreement will bear interest at a rate equal to, either (i) the LIBOR Rate or (ii) the Base Rate (defined as the highest of (a) the Federal Funds rate plus 0.50%, (b) Citibank, N.A.’s “prime rate” as announced from time to time, or (c) one-month LIBOR plus 1.00%), plus, in each case the Applicable Margin, as defined in the Credit Agreement. The Credit Agreement contains customary representations and warranties, covenants and events of default. We may also, upon the agreement of the existing lenders and/or additional lenders not currently parties to the agreement, increase the commitments under the credit facility by up to an additional $1.0 billion. In addition, we may request to extend the maturity date of the credit facility, subject to certain conditions, for additional one-year periods. As of March 31, 2016, we were in compliance with customary required covenants. At March 31, 2016, we had no funds borrowed and at December 31, 2015, we had $600 million outstanding under the credit facility. Amounts outstanding under the credit facility are presented in short-term debt in the consolidated balance sheets with the issuances and proceeds presented on a net basis in the consolidated statement of cash flows due to their short term nature.

F-140 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On March 23, 2015, we established a short-term debt financing program whereby we may issue short-term unsecured commercial paper notes (“Commercial Paper”). Amounts available under the program may be borrowed, repaid and re-borrowed from time to time, with the aggregate face or principal amount of the notes outstanding at any time not to exceed $2.5 billion. The Commercial Paper will have maturities of up to 397 days from the date of issue. The net proceeds from the issuance of the Commercial Paper are expected to be used for general corporate purposes. As of March 31, 2016, we were in compliance with customary required covenants. At March 31, 2016, we had $ 925 million of Commercial Paper outstanding, with a weighted-average interest rate of 0.95% and maturities ranging from 13 days to 30 days at the time of issuance. At December 31, 2015, we had $ 699 million of Commercial Paper outstanding. Commercial Paper outstanding is presented in short-term debt in the consolidated balance sheets, and the issuances and proceeds of the Commercial Paper are presented on a net basis in the consolidated statement of cash flows due to their short term nature. At May 5, 2016, we had $1,285 million of Commercial Paper outstanding.

Long-Term Debt During 2013, we issued $5.5 billion of Notes which pay a fixed rate of interest semi-annually in arrears. The proceeds from the Notes were used to satisfy the cash payment obligation of the $1,725 billion 1.75% convertible senior notes due 2013 as well as for general corporate purposes including stock repurchases, dividend payments, business acquisitions, working capital needs and other business opportunities. The Notes of each series are senior, unsecured obligations of EMC and are not convertible or exchangeable. Unless previously purchased and canceled, we will repay the Notes of each series at 100% of the principal amount, together with accrued and unpaid interest thereon, at maturity. However, EMC has the right to redeem any or all of the Notes at specified redemption prices. As of March 31, 2016, we were in compliance with all debt covenants, which are customary in nature.

Our long-term debt as of March 31, 2016 was as follows (dollars in millions):

Issued at Discount Carrying Senior Notes to Par Value $2.5 billion 1.875% Notes due 2018 ...... 99.943% $2,499 $2.0 billion 2.650% Notes due 2020 ...... 99.760% 1,997 $1.0 billion 3.375% Notes due 2023 ...... 99.925% 1,000 $5,496 Debt issuance costs ...... (19) Net long-term debt ...... $5,477

The unamortized discount on the Notes consists of $4 million, which will be fully amortized by June 1, 2023. The effective interest rate on the Notes was 2.55% for the three months ended March 31, 2016.

4. Fair Value of Financial Assets and Liabilities Our fixed income and equity investments are classified as available for sale and recorded at their fair market values. We determine fair value using the following hierarchy: • Level 1 – Quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

F-141 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Most of our fixed income securities are classified as Level 2, with the exception of some of our U.S. government and agency obligations and our investments in publicly traded equity securities, which are classified as Level 1, and all of our auction rate securities, which are classified as Level 3. In addition, our strategic investments held at cost are classified as Level 3. At March 31, 2016, the vast majority of our Level 2 securities were priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities. In the event observable inputs are not available, we assess other factors to determine the security’s market value, including broker quotes or model valuations. Each month, we perform independent price verifications of all of our fixed income holdings. In the event a price fails a pre-established tolerance check, it is researched so that we can assess the cause of the variance to determine what we believe is the appropriate fair market value.

In general, investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. Our publicly traded equity securities are classified as long-term investments and our strategic investments held at cost are classified as other assets. As a result of the lack of liquidity for auction rate securities, we have classified these as long-term investments as of March 31, 2016 and December 31, 2015. At March 31, 2016 and December 31, 2015, all of our short- and long-term investments, excluding auction rate securities, were recognized at fair value, which was determined based upon observable inputs from our pricing vendors for identical or similar assets. At March 31, 2016 and December 31, 2015, auction rate securities were valued using a discounted cash flow model.

The following tables summarize the composition of our short- and long-term investments at March 31, 2016 and December 31, 2015 (tables in millions):

March 31, 2016 Amortized Unrealized Unrealized Aggregate Cost Gains (Losses) Fair Value U.S. government and agency obligations ...... $2,054 $ 5 $ (1) $2,058 U.S. corporate debt securities ...... 2,364 11 (2) 2,373 High yield corporate debt securities ...... 220 3 (8) 215 Asset-backed securities ...... 13 — — 13 Municipal obligations ...... 640 — — 640 Auction rate securities ...... 25 — (2) 23 Foreign debt securities ...... 2,298 6 (2) 2,302 Total fixed income securities ...... 7,614 25 (15) 7,624 Publicly traded equity securities ...... 113 18 (9) 122 Total ...... $7,727 $ 43 $ (24) $7,746

F-142 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 Amortized Unrealized Unrealized Aggregate Cost Gains (Losses) Fair Value U.S. government and agency obligations ...... $2,449 $— $ (8) $2,441 U.S. corporate debt securities ...... 2,257 1 (10) 2,248 High yield corporate debt securities ...... 307 2 (22) 287 Asset-backed securities ...... 20 — — 20 Municipal obligations ...... 731 1 — 732 Auction rate securities ...... 27 — (2) 25 Foreign debt securities ...... 2,332 — (9) 2,323 Total fixed income securities ...... 8,123 4 (51) 8,076 Publicly traded equity securities ...... 126 40 (8) 158 Total ...... $8,249 $ 44 $ (59) $8,234

We held approximately $2,302 million in foreign debt securities at March 31, 2016. These securities have an average credit rating of A+, and approximately 4% of these securities are deemed sovereign debt with an average credit rating of AA+. None of the securities deemed sovereign debt are from Argentina, Greece, Italy, Ireland, Portugal, Spain, Cyprus or Puerto Rico.

The following tables represent our fair value hierarchy for our financial assets and liabilities measured at fair value as of March 31, 2016 and December 31, 2015 (tables in millions):

March 31, 2016 Level 1 Level 2 Level 3 Total Cash ...... $2,305 $ — $— $ 2,305 Cash equivalents ...... 4,025 894 — 4,919 U.S. government and agency obligations ...... 1,258 800 — 2,058 U.S. corporate debt securities ...... — 2,373 — 2,373 High yield corporate debt securities ...... — 215 — 215 Asset-backed securities ...... — 13 — 13 Municipal obligations ...... — 640 — 640 Auction rate securities ...... — — 23 23 Foreign debt securities ...... — 2,302 — 2,302 Publicly traded equity securities ...... 122 — — 122 Total cash and investments ...... $7,710 $ 7,237 $ 23 $14,970 Other items: Strategic investments held at cost ...... $ — $ — $385 $ 385 Investment in joint venture ...... — — 39 39 Long-term debt carried at discounted cost ...... — (5,186) — (5,186) Foreign exchange derivative assets ...... — 74 — 74 Foreign exchange derivative liabilities ...... — (79) — (79) Commodity derivative liabilities ...... — (6) — (6)

F-143 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2015 Level 1 Level 2 Level 3 Total Cash ...... $2,095 $ — $— $ 2,095 Cash equivalents ...... 3,861 593 — 4,454 U.S. government and agency obligations ...... 1,495 946 — 2,441 U.S. corporate debt securities ...... — 2,248 — 2,248 High yield corporate debt securities ...... — 287 — 287 Asset-backed securities ...... — 20 — 20 Municipal obligations ...... — 732 — 732 Auction rate securities ...... — — 25 25 Foreign debt securities ...... — 2,323 — 2,323 Publicly traded equity securities ...... 158 — — 158 Total cash and investments ...... $7,609 $ 7,149 $ 25 $14,783 Other items: Strategic investments held at cost ...... $ — $ — $384 $ 384 Investment in joint venture ...... — — 39 39 Long-term debt carried at discounted cost ...... — (4,999) — (4,999) Foreign exchange derivative assets ...... — 39 — 39 Foreign exchange derivative liabilities ...... — (78) — (78) Commodity derivative liabilities ...... — (4) — (4)

Our auction rate securities are predominantly rated investment grade and are primarily collateralized by student loans. The underlying loans of all but one of our auction rate securities, with a market value of $4 million, have partial guarantees by the U.S. government as part of the Federal Family Education Loan Program (“FFELP”) through the U.S. Department of Education. FFELP guarantees at least 95% of the loans which collateralize the auction rate securities. We believe the quality of the collateral underlying most of our auction rate securities will enable us to recover our principal balance.

To determine the estimated fair value of our investment in auction rate securities, we use a discounted cash flow model using a five year time horizon. As of March 31, 2016, the coupon rates used ranged from 1% to 3% and the discount rate was 1%, which rate represents the rate at which similar FFELP backed securities with a five year time horizon outside of the auction rate securities market were trading at March 31, 2016. The assumptions used in preparing the discounted cash flow model include an incremental discount rate for the lack of liquidity in the market (“liquidity discount margin”) for an estimated period of time. The discount rate we selected was based on AA -rated banks as the majority of our portfolio is invested in student loans where EMC acts as a financier to these lenders. The liquidity discount margin represents an estimate of the additional return an investor would require for the lack of liquidity of these securities over an estimated five year holding period. The rate used for the discount margin was 1% at both March 31, 2016 and December 31, 2015 due to the narrowing of credit spreads on AA -rated banks during 2015 and into 2016.

During the three months ended March 31, 2016 and 2015, there were no material changes to the fair value of our auction rate securities.

F-144 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMC has a 49% ownership percentage of LenovoEMC Limited, a joint venture with Lenovo that was formed in 2012. We account for our LenovoEMC joint venture using the fair value method of accounting. To determine the estimated fair value at inception of our investment, we used a discounted cash flow model using a three year time horizon, and utilized a discount rate of 6%, which represented the incremental borrowing rate for a market participant. The assumptions used in preparing the discounted cash flow model include an analysis of estimated Lenovo NAS revenue against a prescribed target as well as consideration of the purchase price put and call features included in the joint venture agreement. The put and call features create a floor and a cap on the fair value of the investment. As such, there is a limit to the impact on the fair value that would result from significant changes in the unobservable inputs. There were no material changes to the fair value of this joint venture during the three months ended March 31, 2016 or 2015.

Investment Losses Unrealized losses on investments at March 31, 2016 by investment category and length of time the investment has been in a continuous unrealized loss position are as follows (table in millions):

Less Than 12 Months 12 Months or Greater Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses U.S. government and agency obligations .... $ 466 $ (1) $— $— $ 466 $ (1) U.S. corporate debt securities ...... 485 (2) — — 485 (2) High yield corporate debt securities ...... 99 (6) 23 (2) 122 (8) Auction rate securities ...... — — 23 (2) 23 (2) Foreign debt securities ...... 721 (1) 81 (1) 802 (2) Publicly traded equity securities ...... 2 (1) 2 (8) 4 (9) Total ...... $1,773 $ (11) $129 $ (13) $1,902 $(24)

For all of our securities for which the amortized cost basis was greater than the fair value at March 31, 2016, we have concluded that currently we neither plan to sell the security nor is it more likely than not that we would be required to sell the security before its anticipated recovery. In making the determination as to whether the unrealized loss is other-than-temporary, we considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.

F-145 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contractual Maturities The contractual maturities of fixed income securities held at March 31, 2016 are as follows (table in millions):

March 31, 2016 Amortized Aggregate Cost Basis Fair Value Due within one year ...... $2,542 $2,543 Due after 1 year through 5 years ...... 4,496 4,509 Due after 5 years through 10 years ...... 332 330 Due after 10 years ...... 244 242 Total ...... $7,614 $7,624

Short-term investments on the consolidated balance sheet include $34 million in variable rate notes which have contractual maturities in 2016, and are not classified within investments due within one year above.

5. Inventories Inventories consist of (table in millions):

March 31, December 31, 2016 2015 Work-in-process ...... $ 590 $ 592 Finished goods ...... 643 653 $1,233 $1,245

6. Accounts and Notes Receivable and Allowance for Credit Losses Accounts and notes receivable are recorded at cost. The portion of our notes receivable due in one year or less are included in accounts and notes receivable and the long-term portion is included in other assets, net on the consolidated balance sheets. Lease receivables arise from sales-type leases of products. We typically sell, without recourse, the contractual right to the lease payment stream and assets under lease to third parties. For certain customers, we retain the lease.

The contractual amounts due under the leases we retained as of March 31, 2016 were as follows (table in millions):

Contractual Amounts Year Due Under Leases Due within one year ...... $ 50 Due within two years ...... 37 Due within three years ...... 26 Thereafter ...... 3 Total ...... 116 Less: Amounts representing interest ...... 7 Present value ...... 109 Current portion (included in accounts and notes receivable) ...... 46 Long-term portion (included in other assets, net) .... $ 63

F-146 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Subsequent to March 31, 2016, we sold $19 million of these notes to third parties without recourse.

We maintain an allowance for credit losses on our accounts and notes receivable. The allowance is based on the credit worthiness of our customers, including an assessment of the customer’s financial position, operating performance and their ability to meet their contractual obligation. We assess the credit scores for our customers each quarter. In addition, we consider our historical experience, the age of the receivable and current market and economic conditions. Uncollectible amounts are charged against the allowance account.

In the event we determine that a lease may not be paid, we include in our allowance an amount for the outstanding balance related to the lease receivable. As of March 31, 2016, amounts from lease receivables past due for more than 90 days were not significant.

During the three months ended March 31, 2016 and 2015, there were no material changes to our allowance for credit losses related to lease receivables. Gross lease receivables totaled $116 million and $154 million as of March 31, 2016 and December 31, 2015, respectively, before the allowance. The components of these balances were individually evaluated for impairment and included in our allowance determination as necessary.

7. Property, Plant and Equipment Property, plant and equipment consist of (table in millions):

March 31, December 31, 2016 2015 Furniture and fixtures ...... $ 286 $ 283 Equipment and software ...... 7,474 7,378 Buildings and improvements ...... 2,382 2,373 Land ...... 172 171 Building construction in progress ...... 97 83 10,411 10,288 Accumulated depreciation ...... (6,605) (6,438) $ 3,806 $ 3,850

Property, plant and equipment at March 31, 2016 includes $52 million for facilities not yet placed in service that we are holding for future use.

8. Accrued Expenses Accrued expenses consist of (table in millions):

March 31, December 31, 2016 2015 Salaries and benefits ...... $ 957 $1,189 Product warranties ...... 151 172 Dividends payable (see Note 10) ...... 239 234 Partner rebates ...... 181 221 Restructuring, current (See Note 11) ...... 250 333 Derivatives ...... 85 82 Other ...... 859 892 $2,722 $3,123

F-147 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Product Warranties

Systems sales include a standard product warranty. At the time of the sale, we accrue for systems’ warranty costs. The initial systems’ warranty accrual is based upon our historical experience, expected future costs and specific identification of systems’ requirements. Upon sale or expiration of the initial warranty, we may sell additional maintenance contracts to our customers. Revenue from these additional maintenance contracts is included in deferred revenue and recognized ratably over the service period. The following represents the activity in our warranty accrual for the three months ended March 31, 2016 and 2015 (table in millions):

For the Three Months Ended March 31, March 31, 2016 2015 Balance, beginning of the period ...... $172 $207 Provision ...... 25 33 Amounts charged against the accrual ...... (46) (52) Balance, end of the period ...... $151 $188

9. Income Taxes Our effective income tax rates were 23.1% and 22.0% for the three months ended March 31, 2016 and 2015, respectively. Our effective income tax rate is based upon estimated income before provision for income taxes for the year, composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for potential tax consequences, benefits and/or resolutions of tax audits or other tax contingencies. For the three months ended March 31, 2016, the effective income tax rate varied from the statutory income tax rate principally as a result of the mix of income attributable to foreign versus domestic jurisdictions and federal tax credit for increasing research activities. Our aggregate income tax rate in foreign jurisdictions is lower than our income tax rate in the United States; substantially all of our income before provision for income taxes from foreign operations has been earned by our Irish subsidiaries. For the three months ended March 31, 2015, the effective income tax rate varied from the statutory income tax rate principally as a result of the mix of income attributable to foreign versus domestic jurisdictions. On December 18, 2015, the Consolidated Appropriations Act, 2016 was signed into law. Some of the provisions were retroactive to January 1, 2015 including a permanent extension of the U.S. federal tax credit for increasing research activities.

Our effective income tax rate increased in the three months ended March 31, 2016 from the three months ended March 31, 2015 due primarily to higher state taxes. There were also differences in the mix of income attributable to foreign versus domestic jurisdictions, change in tax contingency reserves and discrete items, the net impact of which is immaterial.

We are routinely under audit by the Internal Revenue Service (the “IRS”). We have concluded all U.S. federal income tax matters for years through 2008. In the third quarter of 2012, the IRS commenced a federal income tax audit for the tax years 2009 and 2010. The IRS completed their field audit for the tax years 2009 and 2010 and issued Revenue Agent Reports (“RARs”) in the first quarter of 2016. We disagree with certain proposed adjustments and have filed a formal protest to the IRS Appeals Division. In the first quarter of 2015,

F-148 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the IRS commenced a federal income tax audit for the tax year 2011, which is still ongoing. We also have income tax audits in process in numerous state, local and international jurisdictions. In our international jurisdictions that comprise a significant portion of our operations, the years that may be examined vary, with the earliest year being 2004. Based on the timing and outcome of examinations of EMC, the result of the expiration of statutes of limitations for specific jurisdictions or the timing and result of ruling requests from taxing authorities, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in our consolidated balance sheets. We anticipate that several of these audits may be finalized within the next twelve months. While we expect the amount of unrecognized tax benefits to change in the next twelve months, we do not expect the change to have a significant impact on our consolidated results of operations or financial position.

10. Shareholders’ Equity The reconciliation from basic to diluted earnings per share for both the numerators and denominators is as follows (table in millions):

For the Three Months Ended March 31, March 31, 2016 2015 Numerator: Net income attributable to EMC Corporation ...... $ 268 $ 252 Incremental dilution from VMware ...... — (1) Net income—dilution attributable to EMC Corporation ...... $ 268 $ 251 Denominator: Weighted average shares, basic ...... 1,949 1,974 Weighted common stock equivalents ...... 16 22 Weighted average shares, diluted ...... 1,965 1,996

Restricted stock awards, restricted stock units and options to acquire shares of our common stock in the amount of 2 million and 1 million for the three months ended March 31, 2016 and 2015, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive. The incremental dilution from VMware represents the impact of VMware’s dilutive securities on EMC’s consolidated diluted net income per share and is calculated by multiplying the difference between VMware’s basic and diluted earnings per share by the number of VMware shares owned by EMC.

Repurchase of Common Stock We utilize both authorized and unissued shares (including repurchased shares) for all issuances under our equity plans. Our Board of Directors authorized the repurchase of 250 million shares of our common stock in December 2014. For the three months ended March 31, 2016, we did not repurchase any shares of our common stock. Of the 250 million shares authorized for repurchase, we have repurchased 27 million shares to-date at a total cost of $715 million, leaving a remaining balance of 223 million shares authorized for future repurchases.

During April 2016, VMware’s Board of Directors authorized the repurchase of up to an aggregate of $1.2 billion of VMware’s Class A common stock through the end of 2016, which includes the amount remaining from VMware’s previous stock repurchase authorization announced on January 27, 2015, which was $835 million as of March 31, 2016. All shares repurchased under VMware’s stock repurchase programs are retired. For the three

F-149 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS months ended March 31, 2016, VMware did not repurchase any shares of its Class A common stock as it is currently subject to a number of legal and regulatory constraints resulting from the Merger Agreement which impacts the timing and ability to execute repurchases of VMware’s shares.

Cash Dividend on Common Stock EMC pays a quarterly dividend of $0.115 per share of common stock to EMC shareholders, subject to the approval of our Board of Directors. Our Board of Directors declared the following dividends during 2016 and 2015:

Accumulated Other Comprehensive Income (Loss) Changes in accumulated other comprehensive income (loss), which is presented net of tax, for the three months ended March 31, 2016 and 2015 consist of the following (tables in millions):

Recognition of Accumulated Other Foreign Actuarial Net Loss Comprehensive Income Currency Unrealized Net Unrealized Net from Pension and Attributable to the Non- Translation Gains on Losses on Other Postretirement controlling Interest in Adjustments Investments Derivatives Plans VMware, Inc. Total Balance as of December, 31 2015 (a) ...... $(356) $(10) $ (89) $(125) $ 1 $(579) Other comprehensive income (loss) before reclassifications ...... 3 20 (4) — (4) 15 Net losses (gains) reclassified from accumulated other comprehensive income ...... — 2 4 — — 6 Net current period other comprehensive income (loss) . . . 3 22 — — (4) 21 Balance as of March 31, 2016 (b) ...... $(353) $ 12 $ (89) $(125) $ (3) $(558)

(a) Net of taxes (benefits) of $(5) million for unrealized net gains on investments, $(56) million for unrealized net losses on derivatives and $(71) million for actuarial net loss on pension plans. (b) Net of taxes (benefits) of $7 million for unrealized net gains on investments, $(55) million for unrealized net losses on derivatives and $(71) million for actuarial net loss on pension plans.

F-150 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Recognition of Other Actuarial Net Comprehensive Loss from Income Foreign Unrealized Unrealized Pension and Attributable to the Currency Net Net Other Non-controlling Translation Gains on Losses on Postretirement Interest in Adjustments Investments Derivatives Plans VMware, Inc. Total Balance as of December, 31 2014 (a) . . $(187) $49 $(99) $(126) $ (3) $(366) Other comprehensive income (loss) before reclassifications ...... (104) 19 14 — (1) (72) Net losses (gains) reclassified from accumulated other comprehensive income ...... — (8) (11) — — (19) Net current period other comprehensive income (loss) ...... (104) 11 3 — (1) (91) Balance as of March 31, 2015 (b) .... $(291) $60 $(96) $(126) $ (4) $(457)

(a) Net of taxes (benefits) of $31 million for unrealized net gains on investments, $(64) million for unrealized net losses on derivatives and $(70) million for actuarial net loss on pension plans. (b) Net of taxes (benefits) of $38 million for unrealized net gains on investments, $(61) million for unrealized net losses on derivatives and $(70) million for actuarial net loss on pension plans.

The amounts reclassified out of accumulated other comprehensive income (loss) for the three months ended March 31, 2016 and 2015 are as follows (table in millions):

For the Three Months Ended Accumulated Other Comprehensive Income Impacted Line Item on Components March 31, 2016 March 31, 2015 Consolidated Income Statements Net (loss) gain on investments: ...... $ (2) $ 14 Investment income — (6) Provision for income tax Netoftax ...... $ (2) $ 8 Net (loss) gain on derivatives: ...... Foreign exchange contracts ...... $— $ 20 Product sales revenue Foreign exchange contracts ...... — (3) Cost of product sales Interest rate swap ...... (6) (6) Other interest expense Total net (loss) gain on derivatives before tax...... (6) 11 2 — Provision for income tax Netoftax ...... $ (4) $ 11

11. Restructuring and Acquisition-Related Charges For the three months ended March 31, 2016 and 2015, we incurred restructuring and acquisition-related charges of $49 million and $135 million, respectively. For the three months ended March 31, 2016, EMC incurred a $5 million credit related to our prior restructuring programs. For the three months ended March 31, 2016, VMware incurred $53 million of restructuring charges, primarily related to its current year restructuring program, and $1 million of charges in connection with acquisitions for financial, advisory, legal and accounting services.

F-151 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2015, EMC incurred $111 million of restructuring charges, primarily related to our 2015 restructuring programs, and $1 million of charges in connection with acquisitions for financial, advisory, legal and accounting services. For the three months ended March 31, 2015, VMware incurred $22 million of restructuring charges, primarily related to its 2015 restructuring programs, and $1 million of charges in connection with acquisitions for financial, advisory, legal and accounting services.

In the first quarter of 2015, EMC implemented restructuring programs to create further operational efficiencies which resulted in a workforce reduction of approximately 1,320 positions. The actions impacted positions around the globe covering our Information Storage, RSA Information Security and Enterprise Content Division segments. All of these actions were completed within a year of the start of the program. In the first quarter of 2015, VMware eliminated approximately 350 positions across all major functional groups and geographies to streamline its operations. All of these actions were completed within a year of the start of the program.

For the three months ended March 31, 2016 and 2015, we recognized $5 million and $6 million, respectively, of lease termination costs for facilities vacated in the period in accordance with our plan as part of all of our restructuring programs and for costs associated with terminating other contractual obligations. These accruals are expected to be utilized by the end of 2018.

The activity for the restructuring programs is presented below (tables in millions):

Three Months Ended March 31, 2016: Other EMC Programs

Balance as of Balance as of December 31, 2016 March 31, Category 2015 Charges Utilization 2016 Workforce reductions ...... $322 $(10) $ (99) $213 Consolidation of excess facilities and other contractual obligations ...... 20 5 (3) 22 Total ...... $342 $ (5) $(102) $235

VMware Programs

Balance as of Balance as of December 31, 2016 March 31, Category 2015 Charges Utilization 2016 Workforce reductions ...... $ 3 $50 $(26) $27 Consolidation of excess facilities and other contractual obligations ...... — 3 — 3 Total ...... $ 3 $53 $(26) $30

F-152 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31, 2015: 2015 EMC Programs Balance as of Balance as of December 31, 2015 March 31, Category 2014 Charges Utilization 2015 Workforce reductions ...... $— $107 $ (11) $ 96 Consolidation of excess facilities and other contractual obligations ...... — 6 — 6 Total ...... $— $113 $ (11) $102

Other EMC Programs

Balance as of Balance as of December 31, Adjustments to the March 31, Category 2014 Provision Utilization 2015 Workforce reductions ...... $102 $ (2) $(39) $61 Consolidation of excess facilities and other contractual obligations ...... 19 — (5) 14 Total ...... $121 $ (2) $(44) $75

VMware Programs

Balance as of Balance as of December 31, 2015 March 31, Category 2014 Charges Utilization 2015 Workforce reductions ...... $ 8 $ 22 $(14) $ 16 Consolidation of excess facilities and other contractual obligations ...... — — — — Total ...... $ 8 $ 22 $(14) $ 16

12. Commitments and Contingencies Litigation We are involved in a variety of claims, demands, suits, investigations and proceedings that arise from time to time relating to matters incidental to the ordinary course of our business, including actions with respect to contracts, intellectual property, product liability, employment, benefits and securities matters. As required by authoritative guidance, we have estimated the amount of probable losses that may result from all currently pending matters, and such amounts are reflected in our consolidated financial statements. These recorded amounts are not material to our consolidated financial position or results of operations and no additional material losses related to these pending matters are reasonably possible. While it is not possible to predict the outcome of these matters with certainty, we do not expect the results of any of these actions to have a material adverse effect on our business, results of operations or financial condition. Because litigation is inherently unpredictable, however, the actual amounts of loss may prove to be larger or smaller than the amounts reflected in our consolidated financial statements, and we could incur judgments or enter into settlements of claims that could adversely affect our operating results or cash flows in a particular period.

F-153 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Merger-Related Litigation

As of May 5, 2016, fifteen putative shareholder class action lawsuits challenging the Merger have been filed, of which thirteen were filed purportedly on behalf of Company shareholders and two purportedly on behalf of VMware shareholders. The lawsuits name various combinations of the Company, its current and former directors, VMware, certain of VMware’s directors, Denali, Dell and Merger Sub, among others, as defendants. The fifteen lawsuits seek, among other things, injunctive relief enjoining the Merger, rescission of the Merger if consummated, an award of fees and costs and/or an award of monetary damages. The suits are captioned as follows:

Case Court Filing Date 1. IBEW Local No. 129 Benefit Fund v. Tucci, Mass. Superior Court, Suffolk 10/15/2015 Civ. No. 1584-3130-BLS1 County 2. Barrett v. Tucci, Mass. Superior Court, Middlesex 10/16/2015 Civ. No. 15-6023-A County 3. Graulich v. Tucci, Mass. Superior Court, Suffolk 10/19/2015 Civ. No. 1584-3169-BLS1 County 4. Vassallo v. EMC Corp., Mass. Superior Court, Suffolk 10/19/2015 Civ. No. 1584-3173-BLS1 County 5. City of Miami Police Relief & Pension Fund v. Tucci, Mass. Superior Court, Suffolk 10/19/2015 Civ. No. 1584-3174-BLS1 County 6. Lasker v. EMC Corp., Mass. Superior Court, Suffolk 10/23/2015 Civ. No. 1584-3214-BLS1 County 7. Walsh v. EMC Corp., U.S. District Court, 10/27/2015 Civ. No. 15-13654 District of Massachusetts 8. Local Union No. 373 U.A. Pension Plan v. EMC Corp., Mass. Superior Court, Suffolk 10/28/2015 Civ. No. 1584-3253-BLS1 County 9. City of Lakeland Emps.’ Pension & Ret. Fund v. Tucci, Mass. Superior Court, Suffolk 10/28/2015 Civ. No. 1584-3269-BLS1 County 10. Ma v. Tucci, Mass. Superior Court, Suffolk 10/29/2015 Civ. No. 1584-3281-BLS1 County 11. Stull v. EMC Corp., U.S. District Court, 10/30/2015 Civ. No. 15-13692 District of Massachusetts 12. Jacobs v. EMC Corp., Mass. Superior Court, Middlesex 11/12/2015 Civ. No. 15-6318-H County 13. Ford v. VMware, Inc., Delaware Chancery Court 11/17/2015 C.A. No. 11714-VCL 14. Pancake v. EMC Corp., U.S. District Court, 1/11/2016 Civ. No. 16-10040 District of Massachusetts 15. Booth Family Trust v. EMC Corp., U.S. District Court, 1/26/2016 Civ. No. 16-10114 District of Massachusetts

F-154 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. Segment Information We manage the Company as a federation of businesses: EMC Information Infrastructure, VMware Virtual Infrastructure, Pivotal and Virtustream. EMC Information Infrastructure operates in three segments: Information Storage, Enterprise Content Division and RSA Information Security, while VMware Virtual Infrastructure and Pivotal each operate as single segments. The results of Virtustream are currently reported within our Information Storage segment.

F-155 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS amortization expense, restructuring charges and acquisition and other related charges. Additionally, in certain instances, infrequently occurring items are also excluded or included from the measures used by management in assessing segment performance. Research and development expenses, selling, general and administrative expenses and restructuring and acquisition-related charges associated with the EMC Information Infrastructure business are not allocated to the segments within the EMC Information Infrastructure business, as they are managed centrally at the EMC Information Infrastructure business level. EMC Information Infrastructure and Pivotal have not been allocated non-operating income (expense), net and income tax provision as these costs are managed centrally at the EMC corporate level. Accordingly, for the three segments within the EMC Information Infrastructure business, gross profit is the segment operating performance measure, while for Pivotal, operating income is the operating performance measure. The VMware Virtual Infrastructure within EMC amounts represent the revenues and expenses of VMware as reflected within EMC’s consolidated financial statements.

Our segment information for the three months ended March 31, 2016 and 2015 is as follows (tables in millions, except percentages):

EMC Information Infrastructure EMC Enterprise RSA EMC Information Information Content Information Information Infrastructure Storage Division Security Infrastructure Pivotal plus Pivotal Three Months Ended March 31, 2016 Revenues: Product revenues ...... $1,960 $ 29 $ 95 $2,084 $ 27 $2,111 Services revenues ...... 1,487 105 133 1,725 56 1,781 Total consolidated revenues ...... 3,447 134 228 3,809 83 3,892 Gross profit ...... $1,711 $ 91 $ 151 $1,953 $ 34 $1,987 Gross profit percentage ...... 49.6% 68.0% 66.4% 51.3% 41.2% 51.1% Research and development ...... 378 34 412 Selling, general and administrative ...... 1,084 58 1,142 Restructuring and acquisition-related charges ...... —— — Total operating expenses ...... 1,462 92 1,554 Operating income (expense) ...... $ 491 $ (58) $ 433

EMC Information VMware Corp Infrastructure Virtual Reconciling plus Pivotal Infrastructure Items Consolidated Three Months Ended March 31, 2016 Revenues: Product revenues ...... $2,111 $ 571 $ — $2,682 Services revenues ...... 1,781 1,012 — 2,793 Total consolidated revenues ...... 3,892 1,583 — 5,475 Gross profit ...... $1,987 $1,373 $(100) $3,260 Gross profit percentage ...... 51.1% 86.7% — % 59.5% Research and development ...... 412 283 119 814 Selling, general and administrative ...... 1,142 644 201 1,987 Restructuring and acquisition-related charges ...... — — 49 49 Total operating expenses ...... 1,554 927 369 2,850

F-156 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMC Information VMware Corp Infrastructure Virtual Reconciling plus Pivotal Infrastructure Items Consolidated Operating income (expense) ...... 433 446 (469) 410 Non-operating income (expense), net ...... (15) 9 (18) (24) Income tax provision (benefit) ...... 75 128 (114) 89 Net income ...... 343 327 (373) 297 Net income attributable to the non-controlling interests ...... 1 (68) 38 (29) Net income attributable to EMC Corporation ...... $344 $259 $(335) $268

EMC Information Infrastructure EMC Enterprise RSA EMC Information Information Content Information Information Infrastructure Storage Division Security Infrastructure Pivotal plus Pivotal Three Months Ended March 31, 2015 Revenues: Product revenues ...... $2,179 $ 27 $ 100 $2,306 $ 16 $2,322 Services revenues ...... 1,484 111 148 1,743 38 1,781 Total consolidated revenues ...... 3,663 138 248 4,049 54 4,103 Gross profit ...... $1,850 $ 90 $ 165 $2,105 $ 22 $2,127 Gross profit percentage ...... 50.5% 65.2% 66.6% 52.0% 40.3% 51.9% Research and development ...... 424 27 451 Selling, general and administrative ...... 1,169 49 1,218 Restructuring and acquisition-related charges ...... — — — Total operating expenses ...... 1,593 76 1,669 Operating income (expense) ...... $ 512 $(54) $ 458

EMC Information VMware Corp Infrastructure Virtual Reconciling plus Pivotal Infrastructure Items Consolidated Three Months Ended March 31, 2015 Revenues: Product revenues ...... $2,322 $ 583 $ — $2,905 Services revenues ...... 1,781 927 — 2,708 Total consolidated revenues ...... 4,103 1,510 — 5,613 Gross profit ...... $2,127 $1,311 $(99) $3,339 Gross profit percentage ...... 51.9% 86.8% — % 59.5% Research and development ...... 451 247 90 788 Selling, general and administrative ...... 1,218 604 215 2,037 Restructuring and acquisition-related charges ...... — — 135 135 Total operating expenses ...... 1,669 851 440 2,960

F-157 EMC CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

EMC Information VMware Corp Infrastructure Virtual Reconciling plus Pivotal Infrastructure Items Consolidated Operating income (expense) ...... 458 460 (539) 379 Non-operating income (expense), net ...... (14) 8 — (6) Income tax provision (benefit) ...... 126 89 (133) 82 Net income ...... 318 379 (406) 291 Net income attributable to the non-controlling interests ...... — (74) 35 (39) Net income attributable to EMC Corporation ...... $318 $305 $(371) $252

Our revenues are attributed to the geographic areas according to the location of the customers. Revenues by geographic area are included in the following table (table in millions):

For the Three Months Ended March 31, March 31, 2016 2015 United States ...... $2,897 $3,013 Europe, Middle East and Africa ...... 1,537 1,559 Asia Pacific and Japan ...... 740 729 Latin America, Mexico and Canada ...... 301 312 Total ...... $5,475 $5,613

No country other than the United States accounted for 10% or more of revenues during the three months ended March 31, 2016 or 2015.

Long-lived assets, excluding financial instruments, deferred tax assets, goodwill and intangible assets, in the United States were $4,566 million at March 31, 2016 and $4,584 million at December 31, 2015. Internationally, long-lived assets, excluding financial instruments, deferred tax assets, goodwill and intangible assets, were $1,037 million at March 31, 2016 and $1,053 million at December 31, 2015. No country other than the United States accounted for 10% or more of total long-lived assets, excluding financial instruments and deferred tax assets, at March 31, 2016 or December 31, 2015.

F-158 EMC CORPORATION AND SUBSIDIARIES SCHEDULE II–VALUATION AND QUALIFYING ACCOUNTS (in millions)

Allowance for Bad Debts Charged to Selling, General Balance at Beginning of and Administrative Bad Debts Balance at Allowance for Bad Debts Period Expenses Write-Offs End of Period Description Year ended December 31, 2015 allowance for doubtful accounts . . . $74 $33 $(15) $92 Year ended December 31, 2014 allowance for doubtful accounts . . . 65 10 (1) 74 Year ended December 31, 2013 allowance for doubtful accounts . . . 72 (1) (6) 65

Note: The allowance for doubtful accounts includes both current and non-current portions.

Allowance for Sales Returns Accounted for Balance at Beginning of as a Reduction in Balance at Allowance for Sales Returns Period Revenue Sales Returns End of Period Description Year ended December 31, 2015 allowance for sales returns ...... $70 $128 $(104) $94 Year ended December 31, 2014 allowance for sales returns ...... 76 89 (95) 70 Year ended December 31, 2013 allowance for sales returns ...... 86 55 (65) 76

Tax Valuation Tax Valuation Balance at Beginning of Allowance Charged to Allowance Credited to Balance at Tax Valuation Allowance Period Income Tax Provision Income Tax Provision End of Period Description Year ended December 31, 2015 income tax valuation allowance ...... $126 $43 $(25) $144 Year ended December 31, 2014 income tax valuation allowance ...... 211 1 (86) 126 Year ended December 31, 2013 income tax valuation allowance ...... 183 32 (4) 211

S-1