Filed by Terra Networks, S.A.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Lycos, Inc.
Commission File No. 0-27830
Terra Networks, S.A. Slide Presentation
[terra LYCOS Logo]
The Creation of a Global Leader in
Internet, New Media and
Communications
[Telefonica Logo] [Bertelsmann Logo]
<PAGE>
Safe-Harbor Statement
This presentation contains forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These statements are based on management's current expectations or
beliefs and are subject to a number of factors and uncertainties that could
cause actual results to differ materially from those described in the
forward-looking statements. The forward-looking statements contained in this
release address the following subjects: expected date of closing the merger;
future financial and operating results; and timing and benefits of the merger.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: the risk
that the Terra's and Lycos' businesses will not be integrated successfully;
costs related to the merger; failure of the Terra or Lycos stockholders to
approve the merger; inability to further identify, develop and achieve success
for new products, services and technologies; increase competition and its
effect on pricing, spending, third-party relationships and revenues; inability
to establish and maintain relationships with commerce, advertising, marketing,
technology, and content providers.
For a detailed discussion of these and other cautionary statements, please
refer to Terra's filings with the Securities and Exchange Commission, including
the Risk Factors section of Terra's F-1 filing that became effective in
November 1999, and Lycos' filings with the Securities and Exchange Commission,
including the section titled "Factors Affecting the Company's Business,
Operating Results and Financial Condition" of the Management's Discussion and
Analysis in its From 10-K for the year ended July 31, 1999 and the Risk Factors
section of Lycos' S-3 filing that became effective in March, 2000.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS REGARDING THE BUSINESS COMBINATION TRANSACTION REFERENCED
IN THE FOREGOING INFORMATION, WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION. THE JOINT PROXY STATEMENT/PROSPECTUS WILL BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BY TERRA AND LYCOS. INVESTORS
AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THE JOINT PROXY
STATEMENT/PROSPECTUS (WHEN IT IS AVAILABLE) AND OTHER DOCUMENTS FILED BY TERRA
AND LYCOS WITH THE COMMISSION AT THE COMMISSION'S WEB SITE AT WWW.SEC.GOV. THE
JOINT PROXY STATEMENT/PROSPECTUS AND THESE OTHER DOCUMENTS MAY ALSO BE OBTAINED
FOR FREE FROM TERRA.
<PAGE>
Transaction Summary
Exchange Ratio: $97.55 for every Lycos share
Collar: Symmetrical 20%
Structure: Tax free exchange of shares
Accounting: Purchase
Listing: Madrid, NASDAQ
Closing Conditions: Shareholder Vote
Regulatory approval and other customary conditions
Expected Closing: Calendar 3Q '00
[Telefonica Logo] [Bertelsmann Logo]
Telefonica will underwrite a $2 Bertelsmann commits to a broad
Billion Terra rights offering at world-wide alliance and enters
62 Euros, to be closed prior to the $1 Billion, 5-year commerce
closing agreement
Telefonica Moviles will form a joint
venture with Terra Lycos for a global
wireless unit.
<PAGE>
Description of the Collar
Terra
Average Exchange Implied
Price(a) Ratio(b) Lycos Price
-------------------------------------------------------------------------------
Upper End $68.06 1.433x $97.55
Central Reference $56.72 1.72% $97.55
Lower End $45.37 2.15% $97.55
(a) Average closing price of Terra shares for the ten days ending on the tenth
day prior to the closing date of the transaction
(b) Number of Terra shares per each Lycos share
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Terra Lycos Strategic Vision
Value for Consumers and Shareholders Will be Created by Leading
the Convergence of Media and Communications Globally
[GRAPHIC OMITTED]
Fixed Telephony Web TV/Media
Mobile Communication terra LYCOS Cable Modems
Multiple-Access Portal
(MAP
Wireless
PDA's
Web Phone
<PAGE>
Terra Networks
Terra Networks
The Leading Global
Spanish and Portuguese
[terra Logo] Language Internet
Access and Content
Company
o 2 million subscribers
o 14 cuntries
o Multiple access offerings
o Rich/compelling content
o Network model
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Commanding Market Position
[GRAPHIC OMITTED]
Spain
U.S.A. #1 #1
#1
Guatemala
Mexico #1 #1
#2 #1 Access Portal
Peru
#1 #1 Brazil
#2 #2
Chile
#1 #1 Argentina
#3
<PAGE>
Rapid Subscriber Growth Across
Latin America
Growth in Quarterly Subscribers
(In Thousands)
Growth - 522.5%
-------------------------------------------------------
320 485 681 1,317 1,992
Mar-99 Jun-99 Sep-99 Dec-99 Mar-00
<PAGE>
Rapid Subscriber Growth Across
Latin America
Paid Subscribers Free Subscribers
(In Thousands Per Month) (In Thousands Per Month)
----------------------------------- --------------------------------------
Growth = 189.1% Growth = 6,447.1%
----------------------------------- --------------------------------------
304 364 564 758 879 17 122 297 559 1,113
Mar-99 Jun-99 Sep-99 Dec-99 Mar-00 Mar-99 Jun-99 Sep-99 Dec-99 Mar-00
<PAGE>
Rapid Page View and Revenue Growth
Page Views Quarterly Revenues
(Per Month) ($ in Millions)
----------------------------------- ----------------------------------
Growth = 181.3% Growth = 164.8%
------------------------------- ------------------------------
251 290 464 706 $15.6 $20.0 $34.2 $41.3
June-99 Sep-99 Dec-99 Mar-00 Jun-99 Sep-99 Dec-99 Mar-00
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The Internet's Leading Network
[LYCOS Logo]
o 44% U.S. reach
o 148 Million page views per day worldwide
o Four of the world's top 20 internet sites
o $78MM in Q3 revenues with $25MM of cash flow
o An acquisition integration success story
o Earnings positive for 4 consecutive quarters
o Met or exceeded consensus for 16 straight quarters
<PAGE>
Lycos: Leadership in North America, Europe and Asia
[GRAPHIC OMITTED]
LYCOS
Canada LYCOS LYCOS
Europe LYCOS Korea
LYCOS Greater Asia
LYCOS
Japan
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The Leading Telecom Group in Spain and Latin America
[Telefonica Logo]
o #1 Telco in Spain and Latin America
o #6 Wireless service provider worldwide
o #1 TV broadcaster in Spain and Argentina
(#2 Pay TV)
o More than 62 million customers
<PAGE>
[Bertelsmann Logo]
Bertelsmann delivers leading content worldwide
as the premier content provider on Terra Lycos
Representative Brands
o Random House (#1 publishing house worldwide)
o CLT-UFA/Pearson TV (#1 TV producer worldwide, #1 TV distributor in Europe)
o Gruner + Jahr (#1 magazine publisher in Europe)
o BMG Entertainment (#4 music company in the world)
o Bertelsmann Direct (#1 in clubs worldwide,
#2 in media e-commerce worldwide)
o Bertelsmann Arvato (#1 Printing house in Europe,
o #1 in distribution/services)
o Bertelsmann is the most global media company in the world and the leading
media company on the Internet
o Bertelsmann occupies leading market positions worldwide with over 600
companies in 54 countries
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[terra LYCOS Logo]
The Creation of a Global Leader in Internet,
New Media and Communications
<PAGE>
Terra Lycos: Global Internet Leadership
o Internet's Largest Footprint with operations in 37 countries
o 175 Million page views per day
o Industry Leading Revenue Growth
o Over $3b in cash
o LTM Operating Margins of 30%
o Mobile Leadership
o Deep Alliances with Market Leaders:
Telefonica and Bertelsmann
<PAGE>
Terra Lycos: A Global Leader in Key Internet Regions
[GRAPHIC OMITTED]
Canada
#1 Western Europe
#3 Japan
#2
U.S. Hispanics United States
#1 #4 Korea
#1
Latin America
#1 Asia Pacific
#1
<PAGE>
Terra Lycos Management
Senior Management
o Chairman: Juan Villalonga
o CEO: Bob Davis
o COO: Abel Linares (present CEO Terra)
o CFO: Ted Philip (present CFO Lycos)
Board of Directors
o 14 Total, 7 Independents, 4 from Telefonica and 3 from Lycos
<PAGE>
The Terra Lycos Value Proposition
Providing Aggregating Offering Rich Monetizing
Access Audience Content Traffic
Terra Libre
Lycos Free
Commundo
Terra Line
Terra Premium
<PAGE>
The Terra Lycos Value Proposition
Providing Aggregating Offering Rich Monetizing
Access Audience Content Traffic
Terra Libre terra
Lycos Free LYCOS
Commundo HOTBOT
Terra Line Angelfire
Terra Premium tripod
<PAGE>
The Terra Lycos Value Proposition
Providing Aggregating Offering Rich Monetizing
Access Audience Content Traffic
Terra Libre terra QUOTE.COM
Lycos Free LYCOS Gamesville
Commundo HOTBOT terra
Terra Line Angelfire sonique
Terra Premium tripod invertia.com
Wired News
Big Brother
LYCOS Zone
<PAGE>
The Terra Lycos Value Proposition
Providing Aggregating Offering Rich Monetizing
Access Audience Content Traffic
Terra Libre terra QUOTE.COM Lyco Shop
Lycos Free LYCOS Gamesville WINGSPANBANK.COM
Commundo HOTBOT terra BARNES & NOBLE
Terra Line Angelfire sonique BBVA
Terra Premium tripod invertia.com DeRemate.com
Wired News Amadeus
Big Brother
LYCOS Zone
<PAGE>
Terra Lycos Operational Synergies
<TABLE>
Offering Monetizing
Providing Access Aggregating Audience Rich Content Traffic
---------------- -------------------- ------------ ----------
<S> <C> <C> <C>
o Lycos content and o Community is one of o Bertelsmann publishing o LycosSHOP is one of the most
services accelerate the hottest areas and music become the powerful platforms for
Terra's ability to of growth in Latin basis for further e-commerce--over 2,800
mine Telefonica's America--Lycos has community development merchants
40MM fixed line the #1 community in
subscribers Tripod and Angelfire o Exchange and translation o FairMarket auction relationship
of content and services married with DeRemate.com,
o Lycos Digital media o Lycos and Terra have between Lycos Terra the largest auction house in
offerings (Sonique, both pioneered the Latin America
MP3 Search) become a "network of brands"
draw for Telefonica's model--the network
2.3MM cable Subscribers becomes stronger as
new brands are added
o Quote.com, MailCity
and instant messaging
become killer
applications for
Telefonica Mobile 20MM
Subscribers
</TABLE>
<PAGE>
Revenue Synergies
o Lycos Sale of Latin American Inventory
o Bertelsmann $1bn Revenue Commitment
o New Content Page Views
o Mobile Portal Revenues
o Worldwide Placements
<PAGE>
Expense Synergies
o Lycos Avoids Latin American Market Development
o Terra Avoids US and Europe Market Development
o Sales and G&A Leverage
o Substantial Bandwidth Economies
o Content Costs Greatly Reduced
o Terra R&D eliminates search and community
o Lycos R&D eliminates mobile products
<PAGE>
Wireless Portal Joint Venture
o Access through wireless platform
o Content distribution to 20 million
customers
o Realtime E-Commerce
Telefonica Servicios Terra LYCOS [Logo]
Moviles, S.A.
o Anytime Anyplace
o Killer applications
<PAGE>
Wireless Internet is the Next Wave
Mass Market Internet Opportunities
o 1 Billion Users (2003)
o 13% CAGR (1998-2003)
o 330MM Subscribers (2003)
o 5% CAGR (1998-2003)
o 1 Billion Subscribers (2003)
o 28% CAGR (1998-2003)
<PAGE>
Telefonica Mobile Market Leadership
[GRAPHIC OMITTED]
Spain
El Salvador [pie] 59%
[pie] 33% [triangle] 79.5%
[triangle] 316.1%
Peru Brazil
[pie] 69% [pie] 70%
[triangle] 41.3% [triangle] 99.9%
Chile Argentina
[pie] 52% [pie] 25%
[triangle] 76.9% [triangle] 113.4%
Key
---
[pie] Market Share
[triangle] March 1999 -
March 2000
Annual Growth
Only included subsidiaries managed by Telefonica
Data as of March 31, 2000
<PAGE>
[terra LYCOS Logo] A Growth Engine Worldwide
Revenue
CAGR 2000-2001 Comparative Valuation Analysis
------------------------------ ----------------------------------------
Terra- 80.0% Aggr. Aggr.
Lycos Market 2001E Value
Value Revenue Multiple
Yahoo 36.6% ----------------------------------------
Yahoo $73,344 $1,377.0 53.3x
AOL 15.1%
AMERICA
ONLINE 126,352.4 10,797.9 11.4
Terra
LYCOS 22,020.5 900.0 24.5
1 Based on the value of Terra shares under the terms of the definitive merger
agreement
Note: Revenue estimates based on industry reports.
<PAGE>
Terra Lycos: Creation of Shareholder Value
o Global Leadership
o Large Scale and Diversified Revenues
o Unparalleled Depth and Breadth of Access Platforms
o Deep Telefonica and Bertelsmann Alliance
o The Most Complete Investment Vehicle for Convergence
o More than a $3bn cash position
o Revenue Growth of nearly 80%
o EBITDA Positive in Q4 2001
o Opportunity to fully exploit premium assigned to first mover
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[terra LYCOS Logo]
