The Essential and Trusted Technology Partner
Leading the Way to Digital Transformation
July 2, 2018
Filed by Dell Technologies Inc.; Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934. Subject
Company: Dell Technologies Inc. (Commission File No. 001-37867)
Important Notices No Offer or Solicitation This communication does not constitute an offer to sell or a solicitation of an offer to sell or a solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended (the “Securities Act”), and otherwise in accordance with applicable law. Additional Information and Where to Find It This communication is being made in respect of the proposed merger of a wholly-owned subsidiary of Dell Technologies Inc. (“Dell Technologies”) with and into Dell Technologies, with Dell Technologies as the surviving entity, pursuant to which each share of Class V common stock of Dell Technologies will, at the election of the holder, convert into the right to receive shares of Class C common stock of Dell Technologies or cash, without interest, and each existing share of Class A common stock, Class B common stock and Class C common stock of Dell Technologies will be unaffected by the merger and remain outstanding. The proposed transaction requires the approval of a majority of the aggregate voting power of the outstanding shares of Class A common stock, Class B common stock, Class V common stock other than those held by affiliates of Dell Technologies, in each case, voting as a separate class, and all outstanding shares of common stock of Dell Technologies, voting together as a single class, and will be submitted to stockholders for their consideration. Dell Technologies will file a registration statement containing a preliminary proxy statement/prospectus regarding the proposed transaction with the Securities and Exchange Commission (“SEC”). After the registration statement has been declared effective by the SEC, a definitive proxy statement/prospectus will be mailed to each holder of Class A common stock, Class B common stock, Class C common stock and Class V common stock entitled to vote at the special meeting in connection with the proposed transaction. INVESTORS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER DOCUMENTS RELATING TO THE TRANSACTION TO BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may get these documents, when available, for free by visiting EDGAR on the SEC Website at www.sec.gov or by visiting Dell Technologies’ website at www.investors.delltechnologies.com.2
Important Notices (Cont’d) Participants in the Solicitation Dell Technologies and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from its stockholders in favor of the proposed merger and the other transactions contemplated by the merger agreement, including the exchange of shares of Class V common stock of Dell Technologies for shares of Class C common stock of Dell Technologies or cash. Information regarding Dell Technologies’ directors and executive officers is contained in Dell Technologies’ proxy statement for its 2018 annual meeting of stockholders, which was filed with the SEC on May 15, 2018. Additional information concerning persons who may be considered participants in such solicitation under the rules of the SEC, including a description of their direct or indirect interests, by security holdings or otherwise, will be set forth in the aforementioned proxy statement/prospectus to be filed with the SEC. Forward-Looking Statements These materials contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “may,” “will,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “aim,” “seek,” and similar expressions as they relate to Dell Technologies or its management are intended to identify these forward-looking statements. All statements by Dell Technologies regarding its expected financial position, revenues, cash flows and other operating results, business strategy, legal proceedings, and similar matters are forward-looking statements. The expectations expressed or implied in these forward-looking statements may not turn out to be correct. Dell Technologies’ results could be materially different from its expectations because of various risks, including but not limited to: (i) the failure to consummate or delay in consummating the proposed transaction, including the failure to obtain the requisite stockholder approvals or the failure of VMware to pay the special dividend or any inability of Dell Technologies to pay the cash consideration to Class V holders; (ii) the risk as to the trading price of Class C common stock to be issued by Dell Technologies in the proposed transaction relative to the trading price of shares of Class V common stock and VMware, Inc. common stock; and (iii) the risks discussed in the “Risk Factors” section of the registration statement containing a preliminary proxy statement/prospectus that will be filed with the SEC as well as its periodic and current reports filed with the SEC. Any forward-looking statement speaks only as of the date as of which such statement is made, and, except as required by law, Dell Technologies undertakes no obligation to update any forward-looking statement after the date as of which such statement was made, whether to reflect changes in circumstances or expectations, the occurrence of unanticipated events, or otherwise. Non-GAAP Financial Measures This presentation includes certain financial measures not presented in accordance with generally accepted accounting principles (“GAAP”) including, but not limited to, Non-GAAP Net Revenue, Non-GAAP Operating Income, Non-GAAP Net Income, Adjusted EBITDA, Free Cash Flow, Core Debt and Net Core Debt and certain ratios and other metrics derived therefrom. These non-GAAP financial measures are not measures of financial performance in accordance with GAAP and have important limitations as analytical tools and may exclude items that are significant in understanding and assessing Dell Technologies’ financial results. Therefore, these measures should not be considered in isolation or as an alternative to net income, cash flows from operations or other measures of profitability, liquidity or performance under GAAP. However, Dell Technologies presents these non-GAAP measures because it considers them to be useful supplemental measures of performance for investors, analysts and rating agencies. You should be aware that Dell Technologies’ presentation of these measures may not be comparable to similarly-titled measures used by other companies. See Appendix for reconciliations of Non-GAAP Net Revenue, Non-GAAP Operating Income, Non-GAAP Net Income, Adjusted EBITDA, Free Cash Flow, Core Debt and Net Core Debt to the most comparable GAAP metric. 3
Today’s Speakers Michael Dell Jeff Clarke Tom Sweet Chairman and Vice Chairman, Chief Financial Officer Chief Executive Officer Products and Operations4
Transaction Overview For each Class V share, existing stockholders can elect to receive: 1.3665 shares of Dell Technologies Class C common stock, or Class V $109 in cash per DVMT share (~29% premium to the Class V share closing price prior to announcement) Stockholder Final consideration mix subject to proration ($9 billion cap on aggregate cash consideration) ConsiderationPro forma for the transaction, DVMT stockholders will own 20.8% – 31.0% of Dell Technologies, depending on cash election amounts, implying a pro forma equity value of $61.1 – $70.1 billion for Dell Technologies In connection with this transaction, Dell Technologies plans to directly list its Class C common shares on the NYSEVMware’s board of directors, on the recommendation of a special committee of its directors, has voted to declare an $11 billion cash dividend pro rata to all VMware stockholders, contingent on satisfaction of the other conditions to the completion of the transaction. Dell Technologies’ share of such dividend will be approximately $9 billion VMware Special Dell Technologies plans to use the dividend proceeds to fund the cash consideration paid to Class V stockholders Dividend If Class V stockholders’ aggregate cash election is less than $9 billion, Dell plans to use the remaining dividend proceeds to repurchase shares of Class C common stock or to pay down debt VMware will remain well capitalized with $2+ billion of balance sheet cash / investments and strong cash flow ExpectedTransaction expected to close in Q4 CY2018, subject to Class V stockholder approval Timeline 5
Transaction Rationale Simplifies Dell Technologies capital and ownership structure Creates attractive public security in leading global end-to-end infrastructure provider Enables strategic and financial flexibility for future initiatives 6
What Has Changed Since Going Private Market Perception prior to What’s Changed? Today Take-Private in October 2013 Unmatched scale and breadth of IT solutions #1 Client1 revenue share(21 consecutive qtrs of YoY share gain) Client and Server Provider #1 x86 Server revenue share Essential and Trusted Technology Partner #1 External Storage revenue share Uncertainty regarding Complete portfolio of IT (leader across all key categories) client trajectory / solutions: software, hardware sustainability Strategic Software Defined Data and servicesLimited presence across Center (SDDC) capabilities At the forefront of the software-certain IT infrastructure defined IT infrastructure segments Leading public cloud application revolutionWeak position in cloud development platform Key enabler of transformative IT computing and software- trends, including multi-cloud Differentiated go-to-market approach defined solutions management, edge computing /and channel program IoT, digitization, and AI / 85% software engineers machine learning among engineering staff 7 1 Statistic calculated by Dell Technologies utilizing other PC OEMs’ financial information, including HP Inc.‘s Personal Systems operating segment and Lenovo International’s PC & Smart Device business group, from the companies’ respective public filings. 7
Company Overview The Most Complete Portfolio of Technology Solutions: Software, Hardware and Services DIGITAL IT WORKFORCE SECURITY Cloud Native SW Multi-cloud Server, Client, Software & Software Defined Managed Security Development Management Storage, HCI Peripherals Data Center Services 8
Dell Technologies in Numbers $83.5B $9.7B $7.7B+ $12B+ Non-GAAP Revenue Adjusted EBITDA (TTM) 1 Cash Flow from R&D Invested over (TTM)1 (11.6 % of Non-GAAP Revenue) Operations (TTM) Past 3 Fiscal Years2 #1 99% 40K+ 17% Virtualization, Storage, Sales Force Non-GAAP Revenue of Fortune 500 Served Servers, Client3 Growth YoY (Q1 FY2019)1 1 See appendix for reconciliation of GAAP to Non-GAAP measures. 2 Dell Technologies’ cumulative R&D investment includes EMC amounts prior to the merger transaction date on September 7, 2016. 9 3 Gartner, IDC market research, company filings; Client statistic calculated by Dell Technologies utilizing other PC OEMs’ financial information, including HP Inc.‘s Personal Systems operating segment and Lenovo International’s PC & Smart Device business group, from the companies’ respective public filings.
New Data Era Driving Significant Market Growth Unprecedented Data Growth is Driving Accelerating IT Spend Growth of 4.5% in 20181 Significant IT Investment Required to Leverage Transformational Technologies 1 Edge Computing / IoT 2 Connectivity 3 AI / Machine Learning Server x86 / Client Client Client Mainframe Client / Server Cloud Edge / IoT Dell Technologies is well-positioned to capture spend across software, compute, storage, and networking 10 1 Market Source: Gartner Worldwide IT Spending Forecast (January 2018).
Dell Technologies Provides a Comprehensive Solution Workforce Transformation Our Users Digital Transformation Security Transformation Applications IT Transformation Financial Global Services ServicesTM Infrastructure Services Consumption Enabled by Best-in-Class Go-To-Market and Channel Program with Industry-leading Supply Chain & Scale 11
Investment Highlights 1 Integrated, end-to-end technology provider at scale 2 Best-in-class go-to-market model 3 Unique portfolio of complementary solutions 4 Attractive financial model with accelerating momentum 5 Strong pro forma balance sheet and financial flexibility 6 World-class, founder-led management team 12
1 Integrated, End-to-End Technology Provider at Scale $84B $80B $56B $49B $45B $30B $6B Client Dell Technologies IBM HPQ Cisco Lenovo HPE NetApp Storage Server Networking Virtualization Cybersecurity Cloud Platform 13 Source: Company filings Note: TTM Non-GAAP revenue presented for all companies. Cisco’s Whiptail storage business considered immaterial.
2 Best-in-Class Go-to-Market Model Dell Technologies Go-To-Market Model Highlights Broad go-to market reach across geographies and DT Select customer segments ï® Direct sales force Group — Enables deeper customer relationships with Enterprise greater opportunity for peripheral and services Group attach in addition to solution cross-sell — 40K+ direct salesforce Solutions — Reach in 72 countries worldwide Commercial Solutions VMware Pivotal Dell EMC Partner Program Virtustream Secureworks — Trusted partner community that provides local proximity, deep and wide coverage, Client complementary consulting skills, abilities and Consumer & services Small Infrastructure — 150K partners worldwide Business — Serving 180 countries Strong Direct Salesforce Complemented by a World Class Partner Program 14
3 Unique Portfolio of Complementary Solutions Total Client Revenue / Revenue and Client1 Servers Profitability # Units # 1 Sector Size 1 Client Monitors Sector Size x86 Servers $189B Globally $76B External Storage PBBA / backup Server Storage All-flash Arrays Virtualization # Virtualization # 1 Sector Size 1 Software $26B Integrated Sector Size Infrastructure $31B Gartner Magic Leading Security Quadrant Cloud Managed Cloud, PaaS, and Big Sector Size Leader Sector Size $42B $80B Data Source: Gartner, IDC market research, Company filings; 1 Statistic calculated by Dell Technologies utilizing other PC OEMs’ financial information, including 15 HP Inc.‘s Personal Systems operating segment and Lenovo International’s PC & Smart Device business group, from the companies’ respective public filings.
3 Driving Outperformance vs. Market HYPERCONVERGED SYSTEMS EXTERNAL STORAGE REVENUE1 MAINSTREAM SERVER REVENUE2 REVENUE3 Forecast Forecast Forecast +44.6% +0.5% +16.3% +51% +142% +112% +42.5% +39.1% +21.7% +30.4% +76% +71% +77% YoY +19.3% +24.7% +9.4% +18.9% +18.8% ISG -17.3% -23.2% TOTAL CLIENT COMMERCIAL CONSUMER Forecast Forecast Forecast -1.5% +6.4% +1.2% +9.0% -4.5% 4 YoY +4.4% +6.4% +4.5% +4.3% +1.6% Units +0.1% +2.8% -0.2% -3.4% Client -2.9% -1.1% -3.9% -8.2% 1 External Storage Revenue Source: 1Q CY18 IDC External Storage data as of 05-Jun-2018. 2 Mainstream Server Revenue Source: 1Q CY18 IDC Mainstream Server data as of 30-May-2018. 3 Hyper Converged Systems Revenue Source: 1Q CY18 IDC Hyper Converged data as of 26-Jun-2018. 4 Client Unit Source: 1Q CY18 IDC Client data as of 09-May-2018. 16
4 Attractive Financial Model & High FCF Conversion Ex. Public Subs1 Publicly Traded Subsidiaries2 Consolidated Non-GAAP ($ in billions) TTM Q1 FY2019 Revenue $74.4 $8.1 $0.5 $0.5 $83.5 Operating Income $5.8 $2.7 $(0.1) $(0.0) $8.4 Op. Inc. Margin (%) 7.8% 33.6% N/A N/A 10.0% Net Income $2.7 $2.2 $(0.1) $(0.0) $4.8 Adjusted EBITDA $6.9 $2.9 $(0.1) $(0.0) $9.7 Adj. EBITDA Margin (%) 9.3% 36.3% NA NA 11.6% Free Cash Flow3 $3.0 $3.3 $(0.1) $(0.0) $6.1 FCF Conversion4 (%) 112% 145% N/A N/A 128% Source: Public filings. See appendix for reconciliation of GAAP to Non-GAAP measures. 1 Derived as Dell Technologies Consolidated less Publicly Traded Subsidiaries. 2 Financials derived from respective public filings and are different from the business unit financials as reflected in Dell Technologies’ public filings. 3 Cash flow from operations less capital expenditures and less capitalized software. 17 4 Free cash conversion calculation defined as Free Cash Flow / Net Income.
18 Significant Momentum Across Businesses Source: Dell Technologies Q1 FY2019 10-Q public filing. 1 See appendix for reconciliation of GAAP to Non-GAAP measures. Note: Financial metrics may not visually foot due to rounding. (Non-GAAP Revenue; $ in billions) Q1 FY2018 Q1 FY2019 % YoY Growth Infrastructure Solutions Group $ 7.0 $ 8.7 +25% Client Solutions Group $ 9.0 $ 10.3 +14% VMware $ 1.8 $ 2.0 +12% Other $ 0.5 $ 0.6 +9% Consolidated Non-GAAP Revenue1 $ 18.4 $ 21.5 +17% Consolidated Adjusted EBITDA1 $ 1.8 $2.4 +33% Adj. EBITDA Margin 9.8% 11.1% +130 bps Q2 FY2019 Non-GAAP Revenue expected to grow 11-16% YoY 4
5 Strong Balance Sheet and Financial Flexibility ~$13B gross debt paid down since the EMC transaction Dell Technologies Core Debt Trajectory Pro Forma Liquidity Profile ~$10.7B1 of cash and investments will remain on balance sheet $48.8 $8.1B1 of cash and investments excluding VMware $39.8 $37.8 ~$5B undrawn revolver capacity At EMC Close Q1 FY2019 June 2019 (during Q3 FY2017) Source: Dell Technologies Public Filings Note: Core Debt represents the total principal amount of our debt, less: (a) unrestricted subsidiary debt, (b) DFS related debt, and (c) other debt. See appendix for further information regarding capital structure. 19 1 Represents pro forma balance sheet amounts based on Q1 FY2019 reported results.
6 World-Class, Founder-Led Management Team Michael S. Dell Chairman of the Board & Chief Executive Officer Tom Sweet Jeff Clarke Marius Haas Bill Scannell CFO Vice Chairman, President and Chief President, Global Products and Ops. Commercial Officer Enterprise Sales Dell EMC Pat Gelsinger Rob Mee Mike Cote Howard Elias Alison Dew CEO CEO CEO President, Dell Svcs., Chief Marketing VMware Pivotal SecureWorks Digital and IT Officer 20
Financial Policy & Objectives Simplifies Dell Technologies’ Capital Structure While Maintaining VMware Independence Remaining committed to a disciplined financial policy as we re-emerge in the public equity markets Commitment to Deleveraging and Disciplined Investment Approach Achieving an IG Rating Targeted investment strategy focused on ~$13B gross debt paydown since the EMC transaction long-term sustained free cash flow growth and robust cash flow Prudent Capital Allocation Plan Gain Access to Public Markets Any potential future capital return program will reflect Exchange of DVMT for Dell Technologies Class C creates commitment to achieving and maintaining investment a newly publicly traded security with significant float grade metrics 21
Financial Guidance on Non-GAAP Revenue / Income FY2019 Guidance Long Term Targets 4 – 6% FY20-FY23 CAGR Total $86.5B - 88.5B at current market projections Non- ~5 – 7pts Mainstream Server growth premium vs. market GAAP ISG Growth 10% – 12% ~8 – 9pts External Storage growth premium vs. market Revenue CSG Growth 7% – 10% ~115 – 145bps annual Client unit share gain Non-GAAP Operating Income $8.1B – 8.4B ~12% of Revenue in FY23 $4.5B – 4.8B Net income to grow more quickly than Non-GAAP Net Income operating income Note: Client unit share expectations excluding Chrome; Mainstream Server revenue per CY17 IDC forecast reports and ISG internal analysis; Total External Storage per CY17 IDC performance and ISG internal analysis; Internal analysis directionally adjusts IDC reporting to Dell Technologies’ product taxonomy; All IDC reporting on a CY basis, not adjusted for Dell Technologies’ FY convention; Revenue and financials represented on a Non-GAAP basis. 22
Illustrative Value Framework ($ in billions) Free Cash TTM Non-GAAP Revenue Net Income Flow¹ Represents levered Dell Consolidated Dell Technologies $ 83.5 $ 4.8 $ 6.1 free cash flow after tax and debt service Technologies (-) VMware2 8.1 2.2 3.3 (Excluding (-) Pivotal2 0.5 (0.1) (0.1) Publicly Traded Subsidiaries) (-) Secureworks2 0.5 (0.0) (0.0) $4.7B FCF before increase in DFS Dell Tech. (excl. Public Subs) $ 74.4 $ 2.7 $ 3.0 financing receivables ~18%+ Q1 YoY Current Market Current Dell Technologies Capitalization Economic Stake Publicly $62B $49B (unadjusted for special dividend) $53B Traded Current Dell Tech. Subsidiaries $7.3B $3.2B Economic Stake in Public Subsidiaries $1.0B $0.9B Source: Public filings, Bloomberg market data as of 29-Jun-2018; reflects fully diluted market capitalization; Pivotal share price of $24.27, Secureworks share price of $12.45 and VMware share price of $146.97. See appendix for reconciliation of GAAP to Non-GAAP measures. 1 Cash flow from operations less capital expenditures and less capitalized software. 23 2 Financials derived from respective public filings and are different from the business unit financials as reflected in Dell Technologies’ public filings.
Illustrative Implied Valuation Multiple Max. Cash Zero Cash Election Election Illustrative Value of DVMT Per Share ($) (1) $109.00 $109.00 A (x) Total DVMT Shares (M) 199.4 199.4 B (=) Illustrative Value of Total DVMT Consideration ($B) $21.7 $21.7 C = A * B (-) Illustrative DVMT Cash Election ($B) $9.0 – D (=) Illustrative Value of DVMT Stock Consideration ($B) $12.7 $21.7 E = C – D (/) PF Ownership in Dell Technologies (Fully-Diluted) 21% 31% F (=) Implied PF Equity Value of Dell Technologies ($B) (1) $61.1 $70.1 G = E / F Value of Dell Technologies’ Equity Stake in VMware ($B) $48.6 $48.6 H Value of Dell Technologies’ Equity Stake in Pivotal ($B) 3.2 3.2 I Value of Dell Technologies’ Equity Stake in Secureworks ($B) 0.9 0.9 J (=) Value of Equity Ownership in Publicly Traded Subsidiaries ($B) $52.7 $52.7 K = H + I + J (-) VMware Dividend Paid to Dell Technologies (Reduction in Value of Publicly Traded Subsidiaries) ($B) $9.0 $9.0 L (=) Value of Equity Ownership in Publicly Traded Subsidiaries Pro Forma for Dividend ($B) $43.7 $43.7 M = K – L (-) Excess Cash from VMware Dividend at Dell Technologies (Assumes Used for Share Repurchase) ($B) (2) – $9.0 N (=) Implied PF Equity Value of Dell Technologies, excluding Public Subsidiaries ($B) $17.5 $17.5 O = G – M – N Implied Valuation Multiples (excluding public subsidiaries): Metric ($B) Implied Multiples LTM Non-GAAP Net Income (excluding public subsidiaries) (3) $2.7 (i) 6.5x 6.5x = O / (i) LTM Free Cash Flow (excluding public subsidiaries) (3) $3.0 (ii) 5.9x 5.9x = O / (ii) LTM Free Cash Flow Before Increase in DFS Financing Receivables (excluding public subsidiaries) (3) (4) $4.7 (iii) 3.7x 3.7x = O / (iii) Source: Public filings, Bloomberg market data as of 29-Jun-2018; reflects fully diluted market capitalization for publicly traded companies; see appendix for footnotes (1) For illustrative purposes only and assumes that each share of DVMT receives Class C shares with a value of $109, or $79.77 per Class C share, based on an exchange ratio per Class C common stock to DVMT share of 1.3665:1. We make no representation as to the actual trading value of the Class C shares as such value will be determined by the market and could be volatile. The opening price of the Class C common stock upon listing on the New York Stock Exchange and its trading price thereafter will depend on various factors, including, among others, general economic, market or political conditions, issuances of additional debt or equity securities by Dell Technologies, future operating results of Dell Technologies, failure to meet analysts’ earnings estimates, publication of research reports about our industry, litigation and government investigations, changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business, changes in market valuations of similar companies or speculation in the press or investment community, announcements by our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments, and adverse publicity about our industry or individual scandals. Many of these factors are not within Dell Technologies’ control. We cannot assure you that the Class C common stock will trade at $79.77 or above or, even if such trading price is achieved, that it will continue to trade at or above such price. (2) Assumes any excess cash is used for share repurchases. Dell Technologies may elect to use such excess cash for debt paydown instead. 24 (3) See appendix for reconciliation to nearest GAAP measure. (4) Reflects increase in DFS accounts receivables balance.
Committed Long-Term Stockholders Michael Dell will continue to serve as Chairman and CEO Michael remains a committed stockholder and will beneficially own ~47 – 54% of Dell Technologies on a fully diluted basis Michael’s shares will be subject to 180-day lockup period Silver Lake remains a committed long-term partner with Michael Dell and will beneficially own ~16 – 18% of Dell Technologies on a fully diluted basis Silver Lake shares will be subject to 180-day lockup period 25
Michael Dell Closing Thoughts 26
Appendix: Supplementary Materials 27
Capital Structure1 Q1 FY2019 ($ in billions) EMC Close 1Q’18 2Q’18 3Q’18 4Q’18 1Q’19 Cash & Short-Term Investments $ 15.5 $ 14.9 $ 15.2 $ 18.0 $ 20.3 $ 21.7 Cash & Short-Term Investments (excluding VMware) 6.8 6.0 6.0 6.1 8.3 8.1 Core Secured Debt 2 35.4 30.7 29.3 29.1 28.7 29.1 Core Unsecured Debt 13.4 11.2 11.2 11.2 11.2 10.7 Total Core Debt 3 $ 48.8 $ 41.9 $ 40.5 $ 40.3 $ 39.9 $ 39.8 Other Debt 4.0 3.6 3.6 2.1 2.1 2.1 DFS Related Debt 4.5 5.2 5.8 6.1 6.7 6.8 Total Debt, Excluding Unrestricted $ 57.3 $ 50.7 $ 49.9 $ 48.5 $ 48.7 $ 48.7 Subsidiaries Unrestricted Subsidiary Debt 4, 5 - - - 4.0 4.0 4.0 Total Debt, Including Unrestricted 5 $ 57.3 $ 50.7 $ 49.9 $ 52.5 $ 52.7 $ 52.7 Subsidiaries Net Core Debt 6 $ 42.0 $ 35.9 $ 34.5 $ 34.3 $ 31.6 $ 31.7 1 Amounts are based on underlying data and may not visually foot due to rounding. 2 Core Secured Debt represents Core Debt that is secured, i.e., term loans, secured investment grade notes, and secured revolver loans. It excludes DFS allocated debt based on a 7:1 leverage ratio of DFS financing receivables. 3 Core Debt represents the total principal amount of our debt, less: (a) unrestricted subsidiary debt, (b) DFS related debt, and (c) other debt. 4 Principal Face Value. 5 VMware, Pivotal, Secureworks, Boomi, Virtustream and their respective subsidiaries are considered unrestricted subsidiaries for purposes of the existing debt of Dell Technologies. 6 Net Core Debt represents Total Core Debt less Cash and Short-Term Investments (excluding VMware). 28
GAAP to Non-GAAP Reconciliation Summary Overview Ex. Public Subs VMW PVTL SCWX Dell Technologies Consolidated ($ in millions) Calculated Core Dell Q1 FY19 TTM Q1 FY19 TTM GAAP Net revenue 73,267 8,105 544 480 82,396 Impact of purchase accounting 1,101 - - - 1,101 Non-GAAP Net revenue 74,368 8,105 544 480 83,497 GAAP Operating income / (loss) (2,885) 1,823 (153) (82) (1,297) Amortization of intangibles 6,549 139 10 28 6,726 Impact of purchase accounting 1,343 - - 2 1,345 Transaction related 403 74 - - 477 Other corporate expenses 389 686 33 14 1,122 Non-GAAP Operating income / (loss) 5,799 2,722 (110) (38) 8,373 GAAP Net income / (loss) (3,444) 1,356 (144) (29) (2,261) Amortization of intangibles 6,549 139 10 28 6,726 Impact of purchase accounting 1,343 - - 2 1,345 Transaction related 1,225 (748) - - 477 Other corporate expenses 389 686 33 14 1,122 Aggregate adjustment for taxes (3,393) 809 - (42) (2,626) Non-GAAP Net income / (loss) 2,669 2,242 (101) (27) 4,783 GAAP Net income / (loss) (3,444) 1,356 (144) (29) (2,261) Interest and other, net 3,137 (885) (2) 1 2,251 Income tax (benefit) / expense (2,577) 1,352 (7) (55) (1,287) Depreciation and amortization 7,916 356 22 42 8,336 Stock-based compensation 99 686 33 15 833 Impact of purchase accounting 1,138 - - 1 1,139 Transaction-related expenses 403 74 - - 477 Other corporate expenses 234 - - - 234 Adjusted EBITDA 6,906 2,939 (98) (25) 9,722 CFOps 4,293 3,529 (108) 3 7,717 Capex (943) (275) (9) (13) (1,240) Cap SW expense (369) - - - (369) Free Cash Flow 2,981 3,254 (117) (10) 6,108 29 Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
GAAP to Non-GAAP Reconciliation (Cont’d) Dell Technologies Consolidated ($ in millions) FY18 + Q1 FY19 - Q1 FY18 TTM GAAP Net revenue 79,040 21,356 18,000 82,396 Impact of purchase accounting 1,269 187 355 1,101 Non-GAAP Net revenue 80,309 21,543 18,355 83,497 GAAP Operating income / (loss) (2,416) (153) (1,272) (1,297) Amortization of intangibles 6,980 1,522 1,776 6,726 Impact of purchase accounting 1,546 222 423 1,345 Transaction related 502 166 191 477 Other corporate expenses 1,160 269 307 1,122 Non-GAAP Operating income / (loss) 7,772 2,026 1,425 8,373 GAAP Net income / (loss) (2,926) (538) (1,203) (2,261) Amortization of intangibles 6,980 1,522 1,776 6,726 Impact of purchase accounting 1,546 222 423 1,345 Transaction related 502 166 191 477 Other corporate expenses 1,160 269 307 1,122 Aggregate adjustment for taxes (2,892) (467) (733) (2,626) Non-GAAP Net income / (loss) 4,370 1,174 761 4,783 GAAP Net income / (loss) (2,926) (538) (1,203) (2,261) Interest and other, net 2,353 470 572 2,251 Income tax (benefit) / expense (1,843) (85) (641) (1,287) Depreciation and amortization 8,634 1,914 2,212 8,336 Stock-based compensation 835 199 201 833 Impact of purchase accounting 1,274 222 357 1,139 Transaction-related expenses 502 166 191 477 Other corporate expenses 305 35 106 234 Adjusted EBITDA 9,134 2,383 1,795 9,722 CFOps 6,843 1,159 285 7,717 Capex (1,212) (273) (245) (1,240) Cap SW expense (369) (89) (89) (369) Free Cash Flow 5,262 797 (49) 6,108 30 Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
GAAP to Non-GAAP Reconciliation (Cont’d) Secureworks ($ in millions) FY18 + Q1 FY19 - Q1 FY18 TTM GAAP Net revenue 468 126 114 480 Impact of purchase accounting - - Non-GAAP Net revenue 468 126 114 480 GAAP Operating income / (loss) (83) (18) (19) (82) Amortization of intangibles 28 7 7 28 Impact of purchase accounting 2 - - 2 Transaction related - - - -Other corporate expenses 13 5 4 14 Non-GAAP Operating income / (loss) (40) (6) (8) (38) GAAP Net income / (loss) (28) (14) (13) (29) Amortization of intangibles 28 7 7 28 Impact of purchase accounting 2 - - 2 Transaction related - - - -Other corporate expenses 13 5 4 14 Aggregate adjustment for taxes (42) (2) (3) (42) Non-GAAP Net income / (loss) (27) (4) (5) (27) GAAP Net income / (loss) (28) (14) (13) (29) Interest and other, net 3 (1) 1 1 Income tax (benefit) / expense (58) (3) (6) (55) Depreciation and amortization 42 10 10 42 Stock-based compensation 14 5 4 15 Impact of purchase accounting 1 - - 1 Transaction-related expenses - - - -Other corporate expenses - Adjusted EBITDA (26) (3) (4) (25) CFOps 1 (18) (20) 3 Capex (14) (2) (3) (13) Cap SW expense - - - - Free Cash Flow (13) (20) (23) (10) 31 Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
GAAP to Non-GAAP Reconciliation (Cont’d) Pivotal ($ in millions) FY18 + Q1 FY19 - Q1 FY18 TTM GAAP Net revenue 509 156 121 544 Impact of purchase accounting - - - - Non-GAAP Net revenue 509 156 121 544 GAAP Operating income / (loss) (168) (34) (48) (153) Amortization of intangibles 11 2 3 10 Impact of purchase accounting - - - -Transaction related - - - -Other corporate expenses 29 11 6 33 Non-GAAP Operating income / (loss) (129) (21) (40) (110) GAAP Net income / (loss) (164) (33) (52) (144) Amortization of intangibles 11 2 3 10 Impact of purchase accounting - - - -Transaction related - - - -Other corporate expenses 29 11 6 33 Aggregate adjustment for taxes - - - - Non-GAAP Net income / (loss) (124) (20) (43) (101) GAAP Net income / (loss) (164) (33) (52) (144) Interest and other, net (2) (0) (1) (2) Income tax (benefit) / expense (3) (1) 4 (7) Depreciation and amortization 22 5 5 22 Stock-based compensation 29 11 6 33 Impact of purchase accounting - - - -Transaction-related expenses - - - -Other corporate expenses - - - - Adjusted EBITDA (117) (18) (37) (98) CFOps (116) 4 (4) (108) Capex (13) (2) (5) (9) Cap SW expense - - - - Free Cash Flow (129) 3 (10) (117) 32 Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
GAAP to Non-GAAP Reconciliation (Cont’d) VMware ($ in millions) FY18 + Q1 FY19 - Q1 FY18 TTM GAAP Net revenue 7,862 2,008 1,765 8,105 Impact of purchase accounting - - - - Non-GAAP Net revenue 7,862 2,008 1,765 8,105 GAAP Operating income / (loss) 1,702 382 261 1,823 Amortization of intangibles 132 38 31 139 Impact of purchase accounting - - - -Transaction related 132 15 73 74 Other corporate expenses 689 163 166 686 Non-GAAP Operating income / (loss) 2,655 598 531 2,722 GAAP Net income / (loss) 659 942 245 1,356 Amortization of intangibles 132 38 31 139 Impact of purchase accounting - - - -Transaction related 89 (761) 76 (748) Other corporate expenses 689 163 166 686 Aggregate adjustment for taxes 597 134 (78) 809 Non-GAAP Net income / (loss) 2,166 516 440 2,242 GAAP Net income / (loss) 659 942 245 1,356 Interest and other, net (112) (793) (20) (885) Income tax (benefit) / expense 1,155 233 36 1,352 Depreciation and amortization 336 156 136 356 Stock-based compensation 689 163 166 686 Impact of purchase accounting - - - -Transaction-related expenses 132 15 73 74 Other corporate expenses - - - - Adjusted EBITDA 2,859 716 636 2,939 CFOps 3,211 1,095 777 3,529 Capex (263) (61) (49) (275) Cap SW expense - - - - Free Cash Flow 2,948 1,034 728 3,254 33 Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.
GAAP to Non-GAAP Reconciliation (Cont’d) Derived “Core Dell” (Excluding Public Subsidiaries) ($ in millions) FY18 + Q1 FY19 - Q1 FY18 TTM GAAP Net revenue 70,201 19,066 16,000 73,267 Impact of purchase accounting 1,269 187 355 1,101 Non-GAAP Net revenue 71,470 19,253 16,355 74,368 GAAP Operating income / (loss) (3,867) (483) (1,466) (2,885) Amortization of intangibles 6,809 1,475 1,735 6,549 Impact of purchase accounting 1,544 222 423 1,343 Transaction related 370 151 118 403 Other corporate expenses 429 90 131 389 Non-GAAP Operating income / (loss) 5,286 1,455 942 5,799 GAAP Net income / (loss) (3,393) (1,433) (1,383) (3,444) Amortization of intangibles 6,809 1,475 1,735 6,549 Impact of purchase accounting 1,544 222 423 1,343 Transaction related 413 927 115 1,225 Other corporate expenses 429 90 131 389 Aggregate adjustment for taxes (3,447) (599) (652) (3,393) Non-GAAP Net income / (loss) 2,355 682 369 2,669 GAAP Net income / (loss) (3,393) (1,433) (1,383) (3,444) Interest and other, net 2,464 1,264 592 3,137 Income tax (benefit) / expense (2,937) (314) (675) (2,577) Depreciation and amortization 8,234 1,743 2,061 7,916 Stock-based compensation 103 20 25 99 Impact of purchase accounting 1,273 222 357 1,138 Transaction-related expenses 370 151 118 403 Other corporate expenses 305 35 106 234 Adjusted EBITDA 6,418 1,688 1,200 6,906 CFOps 3,747 78 (468) 4,293 Capex (922) (208) (188) (943) Cap SW expense (369) (89) (89) (369) Free Cash Flow 2,456 (220) (744) 2,981 DFS Financing Receivables 1,653 249 136 1,766 Free cash flow before increase in DFS Financing 4,109 29 (608) 4,747 Receivables 34 Note: Data sourced from public filings or derived from public filings. Results are based on underlying data and may not visually foot.