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<PAGE>
Slide Graphics
The Creation of a Global Leader in
Internet, New Media and
Communications
Terra
Lycos
Telefonica
Bertelsmann
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2
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's 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's 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 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.
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3
Mission Statement
To be the leading global provider of
Access
Content
and Commerce
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4
Terra Lycos: a Four-Part
Value Creation Package
Merger between E2.2bn capital
Terra and injection
Lycos underwritten by
Telefonica
Mobile Portal
Alliance with Alliance with
Bertelsmann Telefonica Moviles
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5
Transaction Summary
Exchange Ratio: $97.55 dollars for every Lycos share
Collar: Symmetrical 20%
Structure: Tax free exchange of shares
Accounting: Purchase
Listing: Madrid, NASDAQ
Closing Conditions: Shareholder votes
Regulatory approval and other customary conditions
Expected Closing: Calendar 3Q `00
Telefonica Bertelsmann
Telefonica will underwrite a E2.2 Billion Bertelsmann commits to a broad
Terra rights offering at E62.00, to be world-wide alliance and enters
closed prior to the closing multi-year commerce agreement
Telefonica Moviles will form a joint
venture with Terra Lycos for a global
wireless unit.
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<TABLE>
<CAPTION>
Description of the Collar
Acquisition Amount Implied Implied
Terra Price per New Terra Lycos Terra
Average Lycos Exchange Shares to Market Market % Lycos/
Price(a) Share Ratio(b) be Issued(m) Cap(c) Cap(d) % Terra
<S> <C> <C> <C> <C> <C> <C> <C>
Above
Upper >$68.06 >$97.55 1.433x 191.8 >$13.1bn >$21.7bn 38%/62%
End
Upper $68.06 $97.55 1.433x 191.8 $13.1bn $21.7bn 38%/62%
End
Central $56.72 $97.55 1.720x 230.1 $13.1bn $18.1bn 42%/58%
Reference
Lower $45.37 $97.55 2.150x 287.7 $13.1bn $14.5bn 47%/53%
End
Below
Lower <$45.37 <$97.55 2.150x 287.7 <$13.1bn <$14.5bn 47%/53%
End
</TABLE>
o Average closing price of Terra shares for the ten days ending on the
tenth day prior to the closing date of the transaction
o Number of Terra shares per each Lycos share
o Assuming 133.8 million fully diluted Lycos shares
o Including the shares issued in the forthcoming $2bn rights issue (i.e.
35.6 million shares)
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Analysis of
Relative Contributions
Terra Lycos Combined
Proportion Terra/Lycos (%)
Upper End Collar $21.7bn 62.5 37.5% $13.1bn $34.8bn
Agreed Exchange Ratio $18.1bn 58.1% 41.9% $13.1bn $31.2bn
Lower End Collar $14.5bn 52.6% 47.4% $13.1bn $27.5bn
Revenues (US$M)
LTM 133 29.7% 70.3% 315 448
2000E(a) 155 32.6% 67.4% 321 476
20001E(a) 279 38.7% 61.3% 442 720
Unique Visitors ('000) 11,700 26.2% 73.8% 32,900 44,600
Daily Page View (M) 26 17.7% 82.3% 120 146
Market Capitalisation (US$M)
As of 15 May 2000 16,138 66.3% 22.7% 8,194 24,332
Max 90 Days 39,725 79.3% 20.7% 10,355 50,080
Min 90 Days 14,542 76.2% 23.8% 4,537 19,080
o Analyst consensus
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Terra Lycos Leadership
o Senior Management
- Chairman: Juan Villalonga Strong
- CEO: Bob Davis Incentive
- COO: Abel Linares Program to
- CFO: Ted Philip Retain Talent
o Board of Directors
- 14 Total (of which, 7 independent),
11 from Telefonica/Terra and 3
from Lycos
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Key Investment Highlights
o Creation of a unique global Internet player
o Valuable strategic partners: Telefonica and Bertelsmann
o Geographical complementarity
o Rebalanced revenue mix and complementary skills
o Access + Content: at the forefront of convergence
o Strong content base
o 49% of mobile multi-access portal
o A "must buy" network for advertisers and e-commerce partners
o Substantial synergy potential
o Strong management team
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Terra Lycos: A Global Leader
in Key Internet Regions
Canada #1 Western Europe #3
Japan #2
U.S. Hispanic #1
Total U.S. #4 Korea #1
Latin America #1 Asia Pacific # 2
o Global prescence in 37 countries
o 175 Million page views per day
o 3# Internet company in the world
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The Global Convergence Race
The only company with...
terra Lycos
Global Presence x
Content x
Fixed Telephony x At the forefront of
the convergence
Wireless x of media and
communications
ADSL x globally
Cable x
Satellite x
Multi Access Platform x
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The Terra Lycos
Value Proposition
Providing Aggregating Offering Rich Monetizing
Access Audience Content Traffic
Terra Libre terra Quote.com LYCOShop
Lycos Free LYCOS Gamesville WINGSPANbank.com
Commundo HotBot terra BARNES & NOBLE
Terra Angelfire SONIQUE BBVA
Premium
tripod invertia.com DeRemate.com
WIRED NEWS
BigBrother Amadeus
LYCOS ZONE
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Terra Lycos:
High Value-Added Content
terra
Telefonica Bertelsmann
Media LYCOS
o World's 3rd largest
o #1 Broadcast TV in Media Conglomerate
Spain & Argentina Present in 54
o #2 Pay TV in Spain Countries
& Argentina o Active in:
o Radio Endemol - New Media
- Book publishing
o Leading - Music
independent TV - TV broadcasting
producer in the - Periodicals
Netherlands, Spain
Italy, Portugal,
Poland &
Scandinavia
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A "Must Buy" Network for
Advertisers and
e-commerce Partners
o Global coverage and content
o Multi-national advertising platform
o Only leading global English and Spanish
Internet company
o Improved content will yield increased stickiness
o Sales staff of 300+
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Alliance with Telefonica
Terra Lycos: Multiple Access Through Strategic Alliance with Telefonica
Fixed Telephony
Cable
Wireles
Broadband
Telefonica Telefonica Telefonica Servicios
Media Moviles, S.A.
o 40 Mil. lines o 2.3 Mil. Subscribers o 20 Mil. Subscribers
o ADSL o Cable Broadband o Wireless Broadband
62.3 Mil. Total
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Creation of Wireless
Multi Access Portal (MAP)
o Joint Venture Terra Lycos
(49%) & Telefonica
Moviles (51%)
o Access through
wireless platform
o Content distribution to
20 million customers
Telefonica Servicios Moviles, S.A. terra LYCOS
o Realtime E-Commerce
o Anytime Anyplace
o Killer applications
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Alliance with Bertelsmann
Bertelsmann Strategic
Alliance terra LYCOS
o Bertelsmann commits to acquire advertising, placement and
integration services from Terra Lycos Worldwide
o Terra Lycos gain access to Bertelsmann's catalogue of books,
music, television, film and other media content, on preferred
terms
o Bertelsmann and Terra Lycos will also be working cooperatively
to develop platforms for digital delivery of both music and
books
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The Third Largest Media
Conglomerate Worldwide
Bertelsmann
o Presence in 54 countries worldwide
o #1 publishing house worldwide (Random House)
o #1 TV producer worldwide, #1 TV distributor in Europe
(CLT-UFA/Pearson TV)
o #1 magazine publisher in Europe (Gruner + Jahr)
o #4 music company in the world (BMG Entertainment)
o #1 professional information in Germany (Bertelsmann Springer)
o #1 in clubs worldwide and #2 in media e-commerce worldwide
(Bertelsmann Direct)
o #1 printing house in Europe and #1 in distribution/
services (Bertelsmann Arvato)
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Rebalanced Revenue Mix
(a)
terra
e-Commerce Other
2% 14%
Other
5%
Advertising Access
20% 68%
Access
23%
Advertising
48%
(b)
LYCOS
e-Commerce
24%
e-Commerce
35%
Advertising
65%
o 3 months ending 31st March 2000
o 3 months ending 31st January 2000
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Geographical
Complementarity
terra LYCOS terra LYCOS
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Terra Lycos Presence
in Growth Regions
1999-2003E CAGR (%) (a)
37%
31%
27% 23% 22%
World Latin Asia U.S. Europe
America
#3 #1 #2, #3 #1, #4 #3
(a) Number of Internet users.
Source: International Data Corporation
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Synergies and Value
Creation Potential
o Advertising revenues
o Cross fertilization of content
Revenue o e-commerce
Synergies o Bertelsmann alliance
o Lycos potential expansion into Spanish & Portuguese
Avoided world
Invest- o Terra's potential further expansion into the US
ments o Terra's potential expansion into Europe
Mobile o Potential access subscribers in 18 monts = 4m
Portal o Current value of Terra with 2 million access
subscribers = >$12bn
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The Creation of a Global Leader in
Internet, New Media and
Communications
Global presence 37 Countries
Scale(a) 175 Million page views per day
More than 40 Million unique visitors
$500 Million -- 2000 revenues
Strong Cash Position C2.2bn rights issue
Growth in Major Areas(b) Latin America 37%
Asia 31%
U.S. 23%
Europe 22%
Diversified Revenues Advertising 52%
ISP 26%
E-Commerce 22%
Strategic Alliances Telefonica
Bertelsmann
Broadband Access ADSL
Cable
Satellite
Wireless
o Pro-forma information
o # of Internet users
