<PAGE>
Exhibit (c)(3)
CONFIDENTIAL
Project Titan
Preliminary discussion with the Special Committee of the Board of Directors
October 10, 2000
SG Cowen [LOGO]
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Project
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Titan
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INTRODUCTION
The following materials were prepared solely for discussion at
the meeting of the Special Committee of the Board of Directors
of Titan scheduled for October 10, 2000.
In preparing this presentation, we have, with your consent,
relied upon information provided by Titan and Poseidon
("Company") and other publicly available information. We have
not independently verified any of such information, and have
relied on it being complete and accurate in all material
respects.
Please note that this presentation is based on the business and
operations of Titan and Poseidon as represented to us as of the
date hereof, and does not purport to take into consideration any
information or events arising subsequent to such date. SG Cowen
makes no representation or warranty that there has been no
material change in the information provided or reviewed by us in
connection herewith.
The information contained herein is confidential and has been
prepared exclusively for the benefit and use of the Special
Committee of the Board of Directors of Titan, and may not be
used for any other purpose or be discussed, reproduced,
disseminated, quoted or referred to at any time, in any manner
or for any purpose without our prior written consent. This
presentation is not for the benefit of, and does not convey any
rights or remedies to, any holder of securities of Titan or any
other person.
This presentation is subject to the assumptions, qualifications
and limitations set forth herein and does not constitute a
recommendation by SG Cowen to the Special Committee of the Board
of Directors or shareholders of Titan.
[LOGO]
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Project
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Titan
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TABLE OF CONTENTS
<TABLE>
<S> <C>
1. EXECUTIVE SUMMARY
2. SITUATION OVERVIEW
3. FINANCIAL PROJECTIONS
4. REVIEW OF ALTERNATIVES
</TABLE>
[LOGO]
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Titan
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EXECUTIVE SUMMARY
[LOGO]
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Project EXECUTIVE SUMMARY
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Titan
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EXECUTIVE SUMMARY
. SG Cowen has met with Poseidon's senior management team and
discussed with them the Company's current business and strategy;
and reviewed its publicly filed information and financial
projections provided by Poseidon's management on October 3, 2000.
. SG Cowen believes that Poseidon's operations are substantially
impaired and face high near term risk. The Company:
. lacks effective executive leadership; it is unclear whether
the present senior management team can execute a turnaround
strategy
. has uncertain management tenure
. has no formal business plan which articulates Poseidon's
strategic direction
. has not signed a major new customer in approximately twelve
months
. is in the process of focusing its resources on enterprise
software applications; however, these products are still
under development and have not been fully deployed
. faces significant competition as numerous companies are
providing e-commerce solutions
. suffers from poor employee morale and a lack of confidence
in senior management
[LOGO]
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Project EXECUTIVE SUMMARY
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Titan
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EXECUTIVE SUMMARY
. SG Cowen has been engaged by the Special Committee of the Board
of Directors of Titan to provide financial advice with respect to
Titan's current majority investment in Poseidon
. Pursuant to its engagement, SG Cowen has evaluated four
alternatives:
. Status Quo/Do Nothing
. Execute Standalone Restructuring Program
. Acquire/Go Private
. Sell to a Third Party
[LOGO]
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Project EXECUTIVE SUMMARY
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Titan
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EXECUTIVE SUMMARY
Overview of Strategic Alternatives
<TABLE>
<CAPTION>
Execute Standalone
Status Quo/Do Nothing Restructuring Program Acquire/Go Private Sell to Third Party
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Description . Business as usual . Recruit crisis manager . Titan acquires Poseidon . Poseidon sold
. Execute workforce or Poseidon acquires to one or more
reduction public float third parties
-----------------------------------------------------------------------------------------------------------------------------------
Timing . Not applicable . 12-18 months . 60-90 days . 90+ days
-----------------------------------------------------------------------------------------------------------------------------------
Executive Management . No change . Replace Chairman and . Replace Chairman and CEO . Unknown
CEO
. Hire CFO . Hire CFO
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Employee Workforce . Low morale . Reduced to . Reduced to less than . Unknown
. Continued turnover 110 people 100 people
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</TABLE>
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Project EXECUTIVE SUMMARY
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Titan
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<TABLE>
<S> <C> <C> <C> <C>
Financial Impact . Slowing revenues . $4.1 million charges . $4.1 million charges . Unknown
. Ongoing operating . Unclear upside
losses
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
[LOGO]
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Project EXECUTIVE SUMMARY
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Titan
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EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
Overview of Strategic Alternatives
Execute Standalone
Status Quo/Do Nothing Restructuring Program Acquire/Go Private Sell to Third Party
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Content Business . Losing $2 million per . Transitioned to new . Unknown . Unknown
quarter strategy emphasizing
product content management
and order management
. Potential to sell
content business
------------------------------------------------------------------------------------------------------------------------
Impact on Key . No new significant . Could be negatively . Fewer transitional . Transitional
Customers customers signed in impacted issues with a issues; possible
the last 12 months . Could result in Titan deal loss of customers
. Poor reputation litigation
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</TABLE>
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Project EXECUTIVE SUMMARY
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Titan
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<TABLE>
<CAPTION>
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Disclosure . Not applicable . Not applicable . Requires highest level . Requires extensive
Requirements of disclosure as to disclosure (tender offer
fairness and terms of or proxy materials)
transaction
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
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Project EXECUTIVE SUMMARY
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Titan
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EXECUTIVE SUMMARY
<TABLE>
<CAPTION>
Overview of Strategic Alternatives
Execute Standalone
Status Quo/Do Nothing Restructuring Program Acquire/Go Private Sell to Third Party
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ability to Execute in a . Long shot . Unclear . Likely . Low probability
Defined Timeframe
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Other . Requires sorting out
inter-relationships
(intellectual property)
. Third parties are
likely to inquire about
Titan's views with
respect to:
. non-compete covenants
. form of consideration
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</TABLE>
[LOGO]
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Project EXECUTIVE SUMMARY
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Titan
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EXECUTIVE SUMMARY
. Status Quo/Do Nothing is not a viable long-term alternative given
the Company's "fragile" condition.
. In our opinion, given Poseidon's tenuous situation, it is in both
Titan's and Poseidon's best interests to take action as
expeditiously as possible.
. Accordingly, we believe that the Company must either pursue a
major restructuring plan or be sold either to Titan or a third
party.
. A restructuring plan will necessitate replacing the Chairman and
CEO significantly reducing head count and could negatively impact
the customer base.
. It is unclear whether the management team can execute a turn
around.
. Will likely take at least twelve months to execute.
. We believe that Titan is best positioned to execute a transaction
quickest and involves the least transitional issues.
. We believe that it is unlikely that Poseidon will attract many
interested parties at acceptable valuation levels given its
present state and would likely require more time to complete due
to the complexities of the inter-relationships with Titan.
[LOGO]
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Project EXECUTIVE SUMMARY
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Titan
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EXECUTIVE SUMMARY
. Having said that, we believe that in negotiating a deal with
Titan, Poseidon will want to minimize the following:
. stock and asset options
. bust-up fees
. no-shop and window-shop agreements
. In any event, we recommend that Poseidon's Special Committee try
and announce a course of action to coincide with the Company's
earnings release scheduled for the end of October.
. It is imperative to demonstrate leadership and communicate
with Poseidon's employees and stockholders.
[LOGO]
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Project SITUATION OVERVIEW
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Titan
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SITUATION OVERVIEW
[LOGO]
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SITUATION OVERVIEW
. SG cowen met with the following individuals of Poseidon's
management team:
Overview of Poseidon's Management Team
Name Position
----------------------- ---------------------------------------
Ross A. Cooley /(a)/ Chairman and Chief Executive Officer
Christina C. Jones President and Chief Operating Officer
Robert Beasley /(b)/ Vice President, Sales
Tim Dowling /(d)/ Vice President, Marketing
Richard Friedman Vice President and General Counsel
Greg Hood /(d)/ General Manager, Content Services
Satin Mirchandani /(c)/ Vice President, Business Development
Jeff Richey /(d)/ Vice President, Engineering
Tres Thompson /(c)/ Vice President, Finance
(a) By phone
(b) Acting
(c) Indicated leaving the Company in the near term
(d) Joined in 2000
[LOGO]
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Titan
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SITUATION OVERVIEW
. SG Cowen questioned the executives regarding:
. Their role in the Company's operations
. Perspective on the "State of the Business" and Operations
. Opinions on the proper growth strategy and new product
. Views on leadership
. Expected tenure with the Company
[LOGO]
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Project SITUATION OVERVIEW
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Titan
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SITUATION OVERVIEW
. Leadership
. Poseidon suffers from a lack of leadership, formal planning
and decisiveness.
. The Company has operated without an experienced Chief
Operating Officer (COO).
. Although Poseidon is actively searching for a COO, it is
unlikely that an individual will accept such position unless:
- the Company clearly formalizes its strategic direction;
and
- the individual is given full authority to execute the
Strategy
. Most executives agree that new leadership is required and
have little confidence in the Chairman or the President.
. Management
. Key executives have left during the past year including James
Luttenbacher (Vice President, Finance), Rod Varone (Vice
President, Sales), Satin Mirchandani (Vice President,
Business Development), the head of consulting.
. Most individuals expressed doubt that they will stay barring
"major" changes (reflecting a very strong job market).
. New members of the management team appear frustrated and
misled.
. Work force
. Very low morale.
. Experiencing high turnover across all departments.
[LOGO]
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Project SITUATION OVERVIEW
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Titan
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SITUATION OVERVIEW
. Operations
. No formal operating or business plan exists.
. Poseidon has consistently missed schedule deployment dates.
. Once deployed, software not stable.
. Reputation for poor customer service.
. Utilizes Titan software only in the information technology and
office products verticals.
. Sales
. Approximately 20 sales professionals, but can only field two
to three sales teams.
. 100% turnover in the sales force during the last year.
. Hope to close one or two new contracts in Q4 2000 and Q1 2001
($10 million/each).
. Last major contract signed in September 1999 ($6 million).
. Even if Poseidon closes a major contract, it cannot deliver
the software without significant assistance from Titan.
. Sales force does not like to provide prospective customers
with references.
[LOGO]
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Project SITUATION OVERVIEW
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Titan
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SITUATION OVERVIEW
. Customers
. No new customers were signed in Q2 and Q3.
. Poseidon's five largest customers comprise over 60% of its
revenues.
- Compaq will comprise 60%-80% of its projected 2001 revenues
(excluding the content business).
. The Company has experienced difficulties and delays in
deploying its products (low customer satisfaction).
. Financial Controls/Reporting
. Until early 2000, Poseidon did not have a budget, expense
controls or an ability to report meaningful operating financial
information on a timely manner. The acting Chief Financial
Officer has resolved these weaknesses.
. Company anticipates $2-$4 million burn rate per quarter in
2001.
[LOGO]
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Project SITUATION OVERVIEW
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Titan
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SITUATION OVERVIEW
. Content Business
. Currently losing approximately $2 million per quarter.
. Greg Hood believes content could be restructured to provide
value added services (data cleansing, video streaming, etc.)
and reach profitability in a year.
. Poseidon tried selling unit to CNET in June/July 2000.
- Other possible suitors: CMP, VerticalNet.
. Anticipates incurring $4.1 million of costs to exit business.
. Management believes content business could be worth $20-$24
million in 18 months and that it is worth half that amount
today.
. Poseidon manages Content for Compaq and selling the business
could negatively impact its long-term relationship with Compaq
(Poseidon could sub contract with an OEM to provide this
service during its transition strategy).
[LOGO]
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Project SITUATION OVERVIEW
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Titan
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SITUATION OVERVIEW
. Strategy
. Although lacking from a formal business plan, original Strategy
focused on e-commerce software, content database (catalogue)
and community services.
. Currently realigning resources to focus on enterprise software;
specifically, product content management and order management,
again with no formal business plan.
- Will focus on a core group of 8 customers including Compaq,
HP and Ingram.
- Could take 12 months to execute.
- Believes that it must exit the content and community
businesses in order to achieve profitability.
- Anticipates reducing head count to approximately 114 people
(currently 218).
. Future growth clearly dependent on a market which has not been
defined and products that have not been fully designed and
deployed.
. Poseidon faces significant competition from players with
greater resources and better reputations.
. The transition to be funded from operating cash flow ($75
million of cash on hand at the end of September 2000).
. Litigation
. No pending litigation.
[LOGO]
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Project SITUATION OVERVIEW
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Titan
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SITUATION OVERVIEW
. Recent Development: Microsoft
. During the week of October 3, 2000, a team from Poseidon,
including Christina Jones, Tim Dowling and Phil Gilbert, met
with Microsoft executives to discuss a possible partnership.
. Poseidon anticipates it would offer access to its content
database and enterprise software solutions via Microsoft.net
and biztalk servers; Also, Poseidon expects significant upside
from the opportunity to sell its product content management
solution to Microsoft's e-commerce customers.
. Poseidon anticipates delivery of a preliminary framework to
Microsoft during the week of October 9, 2000.
. Likelihood of success is unclear.
. Other: Two potential assets
. $38 million tax NOL carryforward.
. eci/2/ investment.
- On balance sheet for $3.2 million.
- Based on subsequent financing rounds, Poseidon management
believes that their investment may be worth as much as $8.0
million.
[LOGO]
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Project SITUATION OVERVIEW
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Titan
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HISTORICAL AND PROJECTED FINANCIAL PERFORMANCE
. Revenue growth stalled during fiscal 2000, as the Company
failed to acquire any new significant software customers.
. In addition, consulting revenue growth is slowing.
. Revenues are projected to decline in 2001.
Revenue Performance /(a)/
($ in millions)
FY97A $10.6
FY98A $21.7
FY99A $44.0
LTM $58.1
FY00E $52.1
FY01E $32.9
(a) Source: SEC Filings and Poseidon management as of October 3,
2000.
[LOGO]
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Titan
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HISTORICAL AND PROJECTED FINANCIAL PERFORMANCE
. The lack of new customers and slowdown in revenue growth will
translate into lower gross profit.
. In each fiscal year since inception, Poseidon has incurred
losses from operations, except for a small operating profit
in 1995. The Company expects operating losses to continue in
2001.
Gross Profit/(a)/
[BAR CHART]
plot points to come
Operating Income/(a)(b)/
[BAR CHART]
plot points to come
(a) Source: SEC filings and Poseidon management as of October 3,
2000.
(b) Excludes amortization of deferred stock and stock
compensation expense and extraordinary items.
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Titan
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SITUATION OVERVIEW
. Poseidon's stock price reflects its financial performance.
In millions, except Current price Poseidon Stock Performance since IPO/(a)/
Shares Outstanding /(b)/ 16.51
Current Price /(c)/ $ 3.69
Market cap $60.89
Less: Cash 73.23
-------
Enterprise Value ($12.35)
=======
(a) As of October 6, 2000.
(b) Includes impact of the treasury stock method. Based on 6.196
million Class A common shares, 10.317 million Class B shares,
1.818 million options at a weighed average exercise price of
$4.04 and 2.601 million options at a weighed average exercise
price of $20.62 per Poseidon management as of September 22,
2000.
(c) As of October 6, 2000.
(d) As of October 6, 2000, 30-day average stock price is $4.87.
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Titan
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[GRAPH]
plot points to come
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Project SITUATION OVERVIEW
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Titan
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HISTORICAL TRADING ANALYSIS -- LAST THREE MONTHS /(a)/
Avg. Close: $ 5.58
Avg. Volume: 192,217
Avg. $/Day: 1,085,087
Total Volume: 12,686,300
Shares O/S: 16,512,560
Float/(b)/: 5,016,790
Float Turnover: 2.53x
Shares Traded at Specific Prices
[CHART]
(Percent of Shares Traded)
plot points to come
Daily Closing Price Range
Cumulative Shares Traded at Specific Prices
[CHART]
(Percent of Shares Traded)
plot points to come
Daily Closing Price Range
(a) Stock price data as of October 6, 2000.
(b) Excludes 10.316620 million Class B common shares owned by
Titan.
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Project SITUATION OVERVIEW
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Titan
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ANALYSIS OF SELECTED PUBLICLY TRADED COMPANIES
. Although Poseidon achieved solid revenue growth in fiscal 1999
compared with its peer group.
. Revenue growth stalled in 2000.
Historical Revenue Growth -- LFY-1/LFY
[BAR CHART]
Poseidon 102.7%
CNET 95.5%
CLIC 66.4%
QRSI 35.7%
OMKT 28.6%
QADI 23.7%
LGTY 19.5%
INSO 7.6%
EXLN (2.5%)
CLRS (8.4%)
PVSW (10.3%)
Historical Revenue Growth -- LQ-1/LQ
[BAR CHART]
CLRS 43.9%
CNET 17.7%
EXLN 12.1%
CLIC 11.4%
OMKT 6.8%
QRSI 3.9%
QADI 3.2%
LGTY 1.0%
Poseidon 0.4%
PVSW (12.5%)
INSO (45.0%)
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Project SITUATION OVERVIEW
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Titan
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SELECTED PUBLIC COMPANY ANALYSIS -- TRADING ANALYSIS
<TABLE>
<CAPTION>
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Selected Company Analysis -- Trading Analysis
(US$ in millions, except per share data)
------------------------------------------------------------------------------------------------------------------------------------
Enterprise Value as a
Multiple of /(c)(d)(e)/ Estimated
--------------------------------------
Share % of 52 % of 52 Revenues 5yr EPS
Price Week Week Market Enterprise --------------------------------------
Company (FYE) 10/6/00 High Low Value Value /(a)/ LTM/(b)/ LQA CY00E/(c)/ CY01P/(c)/ Growth/(d)/
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calico Commerce Inc. (3/31) $ 3.88 5.1% 137.8% $ 135.9 $ 67.2 1.65 x 1.34 x 1.25 x NA NA%
Clarus Corp (12/31) 21.00 14.6% 224.0% 322.2 $ 119.9 3.68 2.97 2.42 0.85 x 84.3%
CNET Networks, Inc. (12/31) 23.19 29.0% 109.1% 2,017.0 $1,606.7 9.84 7.70 7.32 5.15 65.0%
eXcelon Corp. (12/31) 10.63 38.6% 320.8% 312.4 $ 291.3 4.21 3.82 3.83 2.92 50.0%
EBT International, Inc. (1/31) 4.00 9.5% 130.6% 69.9 (8.7) NM NM NA NA 30.0%
Logility, Inc. (4/30) 3.25 13.8% 118.2% 43.2 $ 25.6 0.83 0.92 NA NA 27.5%
Open Market, Inc. (12/31) 3.94 6.0% 105.0% 183.4 $ 156.1 1.61 1.47 1.44 1.07 44.4%
Pervasive Software Inc. (6/30) 2.13 5.7% 106.3% 37.8 $ 11.6 0.22 0.30 0.27 NA 28.3%
QAD Inc. (1/31) 2.69 14.9% 104.9% 89.9 $ 79.6 0.34 1.49 NA NA NA%
QRS Corporation (12/31) 12.13 10.1% 101.0% 184.5 $ 155.1 1.13 1.06 0.97 0.75 27.5%
---------------------------------------------------------------------------------------------------------------
High/(e)/ 38.6% 320.8% 4.21 x 3.82 x 3.83 x 2.92 x 84.3%
Median/(e)/ 10.1% 118.2% 1.37 1.40 1.34 0.96 30.0
Mean/(e)/ 13.2% 149.8% 1.71 1.67 1.70 1.40 41.7
Low/(e)/ 5.1% 101.0% 0.22 0.30 0.27 0.75 27.5
---------------------------------------------------------------------------------------------------------------
Poseidon (12/31) $ 3.69 4.9% 105.4% $ 60.9 ($12.3) NM NM NM NM 50.0%
</TABLE>
(a) Enterprise Value defined as Market Value plus Total Debt less Cash.
(b) Last Twelve Months as of last reported fiscal quarter.
(c) Estimates are calendar year end. All estimates are SG Cowen Research where
available; otherwise, First Call.
(d) Five Year Growth Rate Estimates are from First Call where available;
otherwise IBES, Zacks or S&P Earnings Report.
(e) Excludes CNET Networks, Inc.
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Titan
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SELECTED PUBLIC COMPANY ANALYSIS -- OPERATING STATISTICS
--------------------------------------------------------------------------------
Selected Company Analysis -- Operating Statistics
(US$ in millions, except per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Operating Results /(e)(f)/
Revenue ----------------------------------------
CAGR /(a)/ Revenue Growth Rate /(b)(c)(d)/ Revenues
-------------- --------------------------------------- ----------------------------------------
Company (FYE) FY-2 /LFY FY-1 /LFY LQ -1/LQ Cy /Cy+1 LTM LQA CY 00 E CY 01E
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Calico Commerce Inc. (3/31) 73.3% 66.4% 11.4% NA $ 40.8 $ 50.3 $ 53.7 NA
Clarus Corp (12/31) 21.1% (8.4%) 43.9% 186.1% 32.6 40.3 $ 49.5 $ 141.6
CNET Networks, Inc. (12/31) 82.7% 95.5% 17.7% 42.2% 163.3 208.8 219.5 312.1
eXcelon Corp. (12/31) 13.4% (2.5%) 12.1% 31.1% 69.1 76.3 76.1 99.8
EBT International, Inc. (1/31) (11.1%) 7.6% (45.0%) NA 48.8 22.6 NA NA
Logility, Inc. (4/30) (3.5%) 19.5% 1.0% NA 30.8 27.7 NA NA
Open Market, Inc. (12/31) 16.2% 28.6% 6.8% 33.9% 97.2 106.0 108.4 145.2
Pervasive Software Inc. (6/30) 19.1% (10.3%) (12.5%) NA 52.1 39.4 43.4 NA
QAD Inc. (1/31) 18.4% 23.7% 3.2% NA 232.5 53.2 NA NA
QRS Corporation (12/31) 31.9% 35.7% 3.9% 28.7% 137.4 146.0 159.8 205.6
---------------------------------------------------------------------------------------------------------------
High/(h)/ 73.3% 66.4% 43.9% 186.1%
Median/(h)/ 18.4% 19.5% 3.9% 32.5%
Mean/(h)/ 19.9% 17.8% 2.8% 69.9%
Low/(h)/ (11.1%) (10.3%) (45.0%) 28.7%
---------------------------------------------------------------------------------------------------------------
Poseidon (12/31) 103.9% 102.7% 0.4% (36.7%) $ 58.1 $ 61.5 $ 52.1 $ 32.9
<CAPTION>
Margins
LMT ------------------------ Book Debt/
EBIT Gross Operating Cash /(g)/ STD /(g)/ LTD /(g)/ Value /(g)/ Cap.
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Calico Commerce Inc. (3/31) ($25.7) 54.2% (63.1%) $ 71.8 $ 1.5 $ 1.6 $ 153.2 2.0%
Clarus Corp (12/31) (27.1) 67.0% (83.2%) 207.3 0.0 5.0 290.7 1.7%
CNET Networks, Inc. (12/31) (46.6) 63.8% (28.5%) 613.9 6.4 197.3 1,127.6 15.3%
eXcelon Corp. (12/31) (5.5) 74.0% (8.0%) 21.1 0.0 0.0 29.5 0.0%
EBT International, Inc. (1/31) (19.6) 68.2% (40.1%) 78.6 0.0 0.0 77.0 0.0%
Logility, Inc. (4/30) (0.3) 66.1% (1.1%) 17.7 0.0 0.0 30.5 0.0%
Open Market, Inc. (12/31) (14.1) 63.2% (14.5%) 39.4 9.4 2.6 58.0 17.2%
Pervasive Software Inc. (6/30) 4.3 82.9% 8.3% 26.1 0.0 0.0 32.6 0.0%
QAD Inc. (1/31) (9.8) 54.2% (4.2%) 27.2 1.2 15.7 57.4 22.8%
QRS Corporation (12/31) 16.1 46.9% 11.7% 30.6 0.0 1.2 223.3 0.5%
---------------------------------------------------------------------------------------------------------------
High/(h)/ 82.9% 11.7% 22.8%
Median/(h)/ 66.1% (8.0%) 0.5%
Mean/(h)/ 64.1% (21.6%) 4.9%
Low/(h)/ 46.9% (83.2%) 0.0%
---------------------------------------------------------------------------------------------------------------
Poseidon (12/31) ($10.4) 46.0% (17.9%) $ 73.2 $ 0.0 $ 0.0 $ 56.6 0.0%
</TABLE>
(a) Represents compound annual growth rate between latest
fiscal year and two years prior.
(b) Represents annual growth between the last reported
fiscal year and one fiscal year previous.
(c) Represents quarterly growth between the last reported
quarter and one quarter previous.
(d) Represents annual growth between current projected
calendar year and next projected calendar year.
(e) Last Twelve Months as of last reported fiscal quarter.
(f) Estimates are calendar year end. All estimates are SG
Cowen Research where available; otherwise, First Call.
(g) Book Value, Total Debt and Cash as of last reported
quarter.
(h) Excludes CNET Networks, Inc.
[LOGO]
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<PAGE>
--------
Project FINANCIAL PROJECTIONS
-------- =======================================================================
Titan
--------
FINANCIAL PROJECTIONS
[LOGO]
28
<PAGE>
--------
Project FINANCIAL PROJECTIONS
-------- ======================================================================
Titan
--------
FINANCIAL PROJECTIONS -- MANAGEMENT ASSUMPTIONS/(a)/
. Assumes that Poseidon implements a restructuring program October
31, 2000 whereby Poseidon significantly reduces its workforce and
achieves profitability by focusing on select enterprise software
customers.
. Approximately 109 employees are terminated; however,
Poseidon management indicated that it may eliminate
additional consultants.
. Customer base is paired down to eight, profitable customers:
- Compaq
- CompUSA
- Hewlett-Packard
- Ingram Micro
- OutPurchase.com
- Quantum
- Sarcom
- SGI
. Content and Community businesses are discontinued.
. Poseidon generates software bookings of $10.0 million per quarter,
beginning Q4 2000.
(a) Source: Poseidon management as of October 3, 2000.
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<PAGE>
------------
Project FINANCIAL PROJECTIONS
------------ ================================================================
Titan
------------
POSEIDON OPERATING MODEL - MANAGEMENT
Poseidon Statement of Operations
($US in Millions, except per share data)
<TABLE>
<CAPTION>
Historical /(a)/(b)/
--------------------------------------------------------------------------
Year Ending December 31, 1997 1998 1999 LTM /(d)/ Q1A Q2A
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
-------
Software & Subscriptions $ 6.5 $12.7 $ $21.1 $26.9 $ 6.9 $ 7.2
Content & Services 4.1 9.1 22.9 31.2 8.4 8.2
--------- --------- --------- --------- --------- ---------
Total Revenue $10.6 $21.7 $ $44.0 $58.1 $15.3 $15.4
Cost of Sales
-------------
Software & Subscriptions 1.0 3.2 5.4 5.8 1.5 1.2
Content & Services 2.6 7.1 17.0 25.6 6.6 8.0
--------- --------- --------- --------- --------- ---------
Total Cost of Sales 3.6 10.3 22.4 31.4 8.1 9.2
--------- --------- --------- --------- --------- ---------
Gross Profit 7.0 11.4 21.6 26.7 7.2 6.1
Operating Expenses
------------------
Sales & Marketing 4.8 12.2 17.8 16.5 4.2 3.2
General & Administrative 1.8 3.7 6.6 8.6 2.8 2.0
Research & Development 1.1 4.3 7.1 12.0 3.5 4.1
--------- --------- --------- --------- --------- ---------
Total Operating Expenses 7.7 20.1 31.6 37.1 10.5 9.3
Operating Income (0.7) (8.7) (10.0) (10.4) (3.3) (3.2)
Interest & Other Income, net - 0.2 2.6 4.2 1.2 1.2
--------- --------- --------- --------- --------- ---------
Profit Before Taxes (0.7) (8.6) (7.4) (6.2) (2.1) (1.9)
Income Taxes (Benefit) 0.4 (0.4) (0.3) (0.1) - -
--------- --------- --------- --------- --------- ---------
Net Income ($1.1) ($8.2) ($7.1) ($6.1) ($2.1) ($1.9)
========= ========= ========= ========= ========= =========
Weighted Avg. Shrs. Out. 12.800 12.861 15.292 16.669 16.823
Diluted EPS ($0.09) ($0.64) ($0.46) ($0.36) ($0.13) ($0.12)
Total Revenue Growth - 105.1% 102.7% - - 0.4%
Profitability Ratios:
---------------------
Gross Margin 66.2% 52.5% 49.0% 46.0% 46.9% 39.9%
Operating Margin NM NM NM NM NM NM
Net Margin NM NM NM NM NM NM
Operating Costs (% of Revenue):
-------------------------------
Sales & Marketing 45.3% 56.0% 40.5% 28.4% 27.3% 20.8%
General & Administrative 16.9% 17.0% 15.0% 14.8% 18.2% 13.0%
Research & Development 10.7% 19.8% 16.1% 20.7% 23.1% 26.9%
--------- --------- --------- --------- --------- ---------
Total Operating Expenses 72.8% 92.7% 71.7% 63.9% 68.6% 60.7%
<CAPTION>
Projected /(b)/(c)/
------------------------------------------------------------------------------------------
Year Ending December 31, Q3E Q4E/(e)/ 2000E Q1E Q2E Q3E Q4E 2001E
-----------------------------------------------------------------------------------------------------------------------------
Revenue
-------
Software & Subscriptions $ 6.5 $5.4 $25.9 $5.4 $6.2 $5.7 $6.5 $23.7
Content & Services 7.0 2.6 26.2 2.3 2.3 2.3 2.3 9.2
-------- --------- --------- --------- --------- --------- --------- ---------
Total Revenue $13.4 $8.0 $52.1 $7.7 $8.5 $8.0 $8.8 $32.9
Cost of Sales
-------------
Software & Subscriptions 1.1 0.9 4.7 0.7 0.7 0.8 0.8 3.0
Content & Services 6.4 3.6 24.7 2.3 2.2 2.3 2.2 9.1
-------- --------- --------- --------- --------- --------- --------- ---------
Total Cost of Sales 7.5 4.5 29.4 3.1 3.0 3.1 3.0 12.1
-------- --------- --------- --------- --------- --------- --------- ---------
Gross Profit 5.9 3.5 22.7 4.6 5.6 4.9 5.8 20.8
Operating Expenses
------------------
Sales & Marketing 2.2 1.8 11.4 1.9 1.9 2.1 2.3 8.2
General & Administrative 1.9 1.4 8.1 1.1 1.0 0.9 1.0 4.0
Research & Development 3.7 3.5 14.9 3.1 3.1 3.3 3.3 12.7
-------- --------- --------- --------- --------- --------- --------- ---------
Total Operating Expenses 7.7 6.8 34.4 6.1 6.0 6.3 6.6 25.0
Operating Income (1.8) (3.3) (11.7) (1.5) (0.4) (1.4) (0.8) (4.2)
Interest & Other Income, net 1.1 1.1 4.6 1.0 1.0 1.0 1.0 4.0
-------- --------- --------- --------- --------- --------- --------- ---------
Profit Before Taxes (0.7) (2.2) (7.1) (0.5) 0.6 (0.4) 0.2 (0.1)
Income Taxes (Benefit) - - - - - - - -
-------- --------- --------- --------- --------- --------- --------- ---------
Net Income ($0.7) ($2.2) ($7.1) ($0.5) $0.6 ($0.4) $0.2 ($0.1)
========== ========= ========= ========= ========= ========= ========= =========
Weighted Avg. Shrs. Out. 16.923 17.025 16.860 17.127 17.230 17.488 17.750 17.399
Diluted EPS ($0.04) ($0.13) ($0.42) ($0.03) $ 0.03 ($0.03) $0.01 ($0.01)
Total Revenue Growth (12.6%) (40.8%) 18.3% (3.5%) 10.8% (6.5%) 10.5% (36.7%)
Profitability Ratios:
--------------------
Gross Margin 43.9% 43.5% 43.5% 60.0% 65.3% 61.1% 65.8% 63.2%
Operating Margin NM NM NM NM NM NM NM NM
Net Margin NM NM NM NM 6.8% NM 1.8% NM
Operating Costs (% of Revenue):
------------------------------
Sales & Marketing 16.2% 23.0% 21.9% 24.6% 22.7% 26.4% 26.4% 25.0%
General & Administrative 14.1% 18.0% 15.6% 14.1% 11.4% 11.7% 11.4% 12.1%
Research & Development 27.3% 44.4% 28.6% 40.2% 36.1% 41.1% 37.5% 38.6%
-------- --------- --------- --------- --------- --------- --------- ---------
Total Operating Expenses 57.6% 85.3% 66.0% 78.9% 70.2% 79.2% 75.3% 75.8%
</TABLE>
(a) Source: SEC filings.
(b) Excludes amortization of deferred stock compensation expense.
(c) Source: Poseidon management as of October 3, 2000.
(d) Represents results for the last twelve months ended June 30, 2000.
(e) Excludes $4.2 million restructuring charge.
[LOGO]
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<PAGE>
----------
Project FINANCIAL PROJECTIONS
---------- ====================================================================
Titan
----------
POSEIDON -- ANALYSIS OF PROJECTED RESULTS
Overview of Projected Revenue
[BAR CHART]
(US$ in millions)
FY 2000E FY 2001E
$ 52.1 $ 32.9
$ 55.2 $ 58.7
Overview of Projected Gross Profit
[BAR CHART]
(US$ in millions)
FY 2000E FY 2001E
$ 22.7 $ 20.8
$ 24.4 $ 30.2
. Poseidon /(a)/ . Wall Street /(b)/
Overview of Projected Operating Income
[BAR CHART]
(US$ in millions)
FY 2000E FY 2001E
($11.7) ($4.2)
($12.5) ($10.6)
Overview of Projected Net Income
[BAR CHART]
(US$ in millions)
FY 2000E FY 2001E
($7.1) ($0.1)
($8.1) ($7.6)
. Poseidon /(a)/ . Wall Street /(b)/
(a) Source: Poseidon Management as of October 3, 2000.
(b) Source: Southwest Securities equity research as of July 27, 2000.
(c) Excludes amortization of deferred stock and stock compensation expense and
extraordinary items.
[LOGO]
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<PAGE>
--------
Project REVIEW OF ALTERNATIVES
-------- ======================================================================
Titan
--------
REVIEW OF ALTERNATIVES
[LOGO]
32
<PAGE>
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Project REVIEW OF ALTERNATIVES
---------- ====================================================================
Titan
----------
REVIEW OF ALTERNATIVES
------------------------
. Business as usual
STATUS QUO/ . Executive management team remains in place
DO NOTHING
------------------------
------------------------
. Recruit experienced CEO with significant industry
relationships
. Immediately retain crisis manager as COO
EXECUTE STANDALONE . Execute workforce reduction
RESTRUCTURING PROGRAM
. Carefully transition to strategy emphasizing
product content management and order management
------------------------
. Potentially sell content business and other assets
(eci/2/)
------------------------
. Titan acquires Poseidon
. Alternatively, Poseidon acquires remaining public
float (Go Private)
ACQUIRE/
GO PRIVATE . Titan controls Poseidon's repositioning strategy and
attempts to reestablish credibility with customers
and marketplace
------------------------
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<PAGE>
----------
Project REVIEW OF ALTERNATIVES
---------- =================================================================
Titan
----------
--------------------
. Poseidon sold to a third party
SELL TO
THIRD PARTY . Requires sorting out inter-relationships with Titan
(intellectual property)
--------------------
. Third parties may inquire as to Titan's views on
non-competes and form of consideration
[LOGO]
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<PAGE>
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Project REVIEW OF ALTERNATIVES
-------- ======================================================================
Titan
--------
STATUS QUO/DO NOTHING
<TABLE>
<CAPTION>
Advantages Issues
------------------------------------- ---------------------------------------------------------------
<S> <C>
. None noted . Historical lack of effective executive leadership
. Uncertain management tenure
. No formal business plan in place
. No new customers in past year
. Poor reputation for customer service
. New products are not fully completed
. Poor employee morale
. High turnover among workforce
. Content business losing approximately
$2 million per quarter
</TABLE>
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<PAGE>
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Project REVIEW OF ALTERNATIVES
-------- ======================================================================
Titan
--------
EXECUTE STANDALONE RESTRUCTURING PROGRAM
<TABLE>
<CAPTION>
Advantages Issues
---------------------------------------------- ------------------------------------------------------
<S> <C>
. "Save face" for current management . Will take time (12-18 months) to implement new strategy
. Unclear whether present management team can execute turn
around
. Uncertain management tenure
. Strategy calls for a core group of eight customers
. Poor reputation within industry
. New products are not fully completed and tested
. Poor morale
If sell content...
---------------------------------------------- ------------------------------------------------------
. Increase focus . Not many buyers
. Obtain more cash . May have to retain content employees during sales period
. Shut down unprofitable business . May adversely impact relationship with key customer (Compaq)
. Still does not solve most operating and business risk issues
</TABLE>
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<PAGE>
--------
Project REVIEW OF ALTERNATIVES
-------- ======================================================================
Titan
--------
ACQUIRE/GO PRIVATE
<TABLE>
<CAPTION>
Advantages Issues
------------------------------------------------ ------------------------------------------------------------
<S> <C>
. Establishes a reasonably defined timeframe . Last offering at $53.31 per share
. Can be initiated after or concurrent with a . Poseidon board may not sell for value offered by Titan
sale process
. Serves as a back stop to retain employees . Poseidon may wish to perform a market test/sale process
. Rule 13e-3 of the 1934 Act requires an issuer and its
affiliates to disclose extensive information about the
fairness and terms of the transaction. The information
must be included in a Schedule 13e-3 which is generally
filed simultaneously with the filing of the required
tender offer or proxy materials
. Titan involves the least transitional issues for
Poseidon's customers
</TABLE>
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<PAGE>
--------
Project REVIEW OF ALTERNATIVES
-------- ======================================================================
Titan
--------
SELL TO THIRD PARTY
<TABLE>
<CAPTION>
Advantages Issues
------------------------------------------------------ ----------------------------------------------------
<S> <C>
. Potentially puts business in hands of a different . Limited universe of interested parties
management team
. Serves as market test for a Titan acquisition . Interest likely to be luke warm at best
. Will likely take longer to complete (3 months
auction process) which increases business risk
. Limited receptiveness given narrow vertical
allowed in current Titan contracts
. Entire business may not fit with all buyers/ may
need sell to different parties making process
more complicated
. Requires formally sorting out Poseidon/Titan
inter-relationships (intellectual property)
. Third parties may inquire as to Titan's views as
to non-compete covenants and form of
consideration
. Impact on consumer base is unknown
</TABLE>
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38
<PAGE>
CONFIDENTIAL
Project Titan
Presentation to the Board of Directors of Titan
October 24, 2000
SG Cowen [LOGO]
<PAGE>
--------------
Project
-------------- =================================================================
Titan
--------------
INTRODUCTION
This presentation and the information contained herein is
confidential and has been prepared at the request of the Special
Committee of the Board of Directors of Titan (the "Company" or
"Titan") exclusively for the Board of Directors of Titan, and
does not convey any rights or remedies to any other person or
group.
The information contained herein is solely for the internal use
of such Board of Directors and may not be used for any other
purpose or reproduced, disseminated, quoted, or referred to at
any time, in any manner or for any purpose without our prior
written consent.
This presentation does not represent a fairness opinion,
recommendation, valuation or opinion of any kind. Any opinion,
recommendation or valuation will be subject to certain
limitations and assumptions, further due diligence and approval
of our internal committee. In preparing this presentation, we
have with your consent, assumed and relied, without independent
investigation, upon the accuracy and completeness of all
financial and other information provided to us by the management
of the Company or Poseidon or which is publicly available.
[LOGO]
1
<PAGE>
--------------
Project
-------------- =================================================================
Titan
--------------
TABLE OF CONTENTS
1. TRANSACTION OVERVIEW
2. POSEIDON OVERVIEW
APPENDIX
A. POSEIDON OPERATING MODELS
[LOGO]
<PAGE>
--------------
Project
-------------- =================================================================
Titan
--------------
TRANSACTION OVERVIEW
[LOGO]
1
<PAGE>
--------------
Project TRANSACTION OVERVIEW
-------------- =================================================================
Titan
--------------
TRANSACTION OVERVIEW
Structure . Proposed acquisition of Poseidon Class A shares of common
stock pursuant to a Tender Offer for all outstanding Poseidon
Class A shares
. If Titan owns at least 90% of Poseidon Class A shares of
common stock upon completion of the Tender Offer and
continues to hold at least 90% of Poseidon Class B shares
of common stock, the Tender Offer will be followed by a
short-form merger
. If, following the purchase of Poseidon Class A shares
pursuant to the Tender Offer, Titan owns less than 90% of
Poseidon's Class A shares outstanding, Titan agrees to
convert such number of Class B shares into Class A shares
to the extent that, after giving effect to such conversion,
Titan would own in the aggregate the number of Class A
shares necessary to effect a short-form merger
. If a short-form merger is not possible, the Merger will be
consummated through shareholder approval (Titan has agreed
to provide its approval)
. Titan shall contribute all shares of Poseidon common stock
and all shares of Poseidon Class B common stock to Merger
Sub in order to effect the Merger
. Purchase accounting treatment for Titan
Consideration . Titan will offer $6.375 per share in cash for 100% of Poseidon
Class A shares of common stock
Value . Based on Poseidon's fully-diluted shares outstanding, the
transaction equity value is approximately $111.9 million/(a)/
and the transaction enterprise value is approximately $34.0
million/(b)/
(a) Includes impacts of the treasury stock method assuming an
offer price of $6.375 per share. Based on 6.196 million Class
A common shares and 10.317 million Class B common shares per
Poseidon management as of September 22, 2000. Based on 1.818
million options at a weighted average exercise price of
$4.04, 2.601 million options at a weighted average exercise
price of $20.63 and 0.515 million options at a weighted
average exercise price of $4.99 per Poseidon management as of
October 20, 2000.
(b) Source: Poseidon management as of October 12, 2000. Net of
cash and cash equivalents as of September 30, 2000 of
approximately $78.0 million. Excludes intercompany payable of
approximately $5.3 million as of September 30, 2000.
[LOGO]
2
<PAGE>
--------------
Project TRANSACTION OVERVIEW
-------------- =================================================================
Titan
--------------
TRANSACTION SUMMARY
. Poseidon shall promptly give Titan verbal notice of all the
relevant details of any inquiry or proposal relating to the
disposition of Poseidon's business or assets, the acquisition
or disposition of any securities of Poseidon, the merger of
Poseidon with any company other than Titan or any similar
transaction
. Merger shall be terminated by:
. Mutual written consent of both parties
. By either party if:
- Titan has not purchased any of Poseidon's outstanding
Class A common shares pursuant to the Tender Offer on or
before January 30, 2001
- Any governmental entity prohibits the consummation of
the Transaction
. By Titan if:
- The Special Committee or the Board of Directors of
Poseidon withdraws or modifies in a manner adverse to
Titan its approval or recommendation of the Tender Offer
or the Merger
. By Poseidon (acting through the Special Committee) if:
- Titan fails to commence the Tender Offer within nine
business days of the date of the Agreement and Plan of
Merger (the "Agreement")
- Titan terminates the Tender Offer or permits the Tender
Offer to expire without purchasing Poseidon's
outstanding Class A common shares
- Prior to the purchase of any of Poseidon's outstanding
Class A common shares, Titan materially breaches any
covenant, representation, warranty and such breach
delays or impairs performance of the Tender Offer or the
Merger by Titan
- In exercising its business judgment after consulting its
independent legal and financial advisors, the Poseidon
Board of Directors, agreed to by its Special Committee,
determines that a competing offer is superior to Titan's
offer
[LOGO]
3
<PAGE>
--------------
Project TRANSACTION OVERVIEW
-------------- =================================================================
Titan
--------------
TRANSACTION SUMMARY
. A $1.25 million termination fee payable
. By Poseidon to Titan if Poseidon terminates the Agreement
pursuant to a superior offer
. Tender Offer is conditioned upon and may be terminated on or
after October 24, 2000, and prior to the time of payment for
any tendered Poseidon Class A common shares if any of the
following occurs, among others:
. Any governmental entity
- Prohibits the Tender Offer or the Merger
- Limits the ownership or operation by Poseidon, Titan or
any of their subsidiaries of all or any material portion
of the business or assets of Poseidon
- Imposes limitations on Titan's ability to exercise full
rights of ownership of any shares acquired by Titan
pursuant to the Tender Offer
- Compels Poseidon, Titan or any of Titan's subsidiaries
to dispose or hold separate all or a material portion of
the business or assets of Poseidon
. Poseidon breaches its representations and warranties
. Poseidon fails to perform its obligations or comply with
its covenants and agreements
. Based upon the recommendation of the Special Committee of
Poseidon, Poseidon's Board of Directors withdraws or
modifies, in a manner adverse to Titan, its approval of the
Tender Offer, Merger or Agreement
. Titan and Poseidon agree to terminate the Tender Offer
. If, in the reasonable and good faith judgment of Titan, it
is inadvisable to proceed with the Tender Offer, the
Agreement is terminated
[LOGO]
4
<PAGE>
--------------
Project TRANSACTION OVERVIEW
-------------- =================================================================
Titan
--------------
TRANSACTION SUMMARY
. Fees and Expenses
. All fees and expenses incurred in connection with this
Agreement and the consummation of the Transaction shall be
paid by the party incurring such expenses whether or not
the Tender Offer or the Merger shall be consummated
. Proposed Merger conditional upon, among other things:
. Agreement and Merger shall have been approved and adopted
by the requisite vote of stockholders, if required to
consummate the Merger
. No government prohibitions
. Titan shall have purchased Poseidon Class A common shares
pursuant to the Tender Offer
. Other significant contractual terms, among others
. Titan has the funds necessary for the completion of the
Tender Offer and Merger, without the need to use any of
Poseidon's cash or cash equivalents
. If Titan borrows any funds to finance the Tender Offer or
Merger, none of such borrowings will be incurred by, or
secured, directly or indirectly, by the assets of Poseidon
[LOGO]
5
<PAGE>
----------
PROJECT TRANSACTION OVERVIEW
---------- ====================================================================
Titan
----------
<TABLE>
<CAPTION>
TRANSACTION SUMMARY
Implied Multiples of Proposed Transaction
(US$ in millions, except per share data)
10/23/00
Closing Price/(a)/
Assumed Poseidon Offer Price per share $ 3.28 $ 5.00 $ 5.50 $ 6.00 $ 6.38
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Premium to Market Price as of October 23, 2000 0.0% 52.4% 67.6% 82.9% 94.3%
Options-Adjusted Shares Outstanding/(b)/ 16.640 17.122 17.306 17.460 17.560
Implied Value of Equity $ 54.6 $ 85.6 $ 95.2 $ 104.8 $ 111.9
Plus: Total Debt as of Sept. 30, 2000/(c)/ 0.0 0.0 0.0 0.0 0.0
Less: Cash and Cash Equivalents as of Sept. 30, 2000/(c)/ 78.0 78.0 78.0 78.0 78.0
-------- ---------- -------- -------- --------
Total Enterprise Value $ (23.4) $ 7.6 $ 17.2 $ 26.8 $ 34.0
======== ========== ======== ======== ========
Total Enterprise Value as a Multiple of
Statistic
-------------
Revenue LTM/(d)/ $58.5 NM 0.13 x 0.29 x 0.46 x 0.58 x
CY2000E/(e)/ 51.7 NM 0.15 0.33 0.52 0.66
CY2001E/(e)/ 28.3 NM 0.27 0.61 0.95 1.20
Memo:
Implied Value of Equity of Class A Common Shares/(f)/ $ 20.7 $ 34.0 $ 38.4 $ 42.9 $ 46.2
Titan Ownership/(b)/ 62.0% 60.3% 59.6% 59.1% 58.8%
</TABLE>
(a) Source: FactSet.
(b) Includes impacts of the treasury stock method. Based on 6.196
million Class A common shares and 10.317 million Class B common
shares per Poseidon management as of September 22, 2000. Based on
1.818 million options at a weighted average exercise price of
$4.04, 2.601 million options at a weighted average exercise price
of $20.63 and 0.515 million options at a weighted average exercise
price of $4.99 per Poseidon management as of October 20, 2000.
(c) Source: Poseidon management as of October 12, 2000. Debt excludes
$5.3 million intercompany payable as of September 30, 2000.
(d) Latest twelve months for the period ended September 30, 2000.
(e) Estimates per Poseidon management as of October 23, 2000.
(f) Includes impacts of the treasury stock method. Based on 6.196
million Class A common shares per Poseidon management as of
September 22, 2000. Based on 1.818 million options at a weighted
average exercise price of $4.04, 2.601 million options at a
weighted average exercise price of $20.63 and 0.515 million options
at a weighted average exercise price of $4.99 per Poseidon
management as of October 20, 2000.
[LOGO]
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<PAGE>
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Project TRANSACTION OVERVIEW
------- =======================================================================
Titan
-------
[LOGO]
7
<PAGE>
Project TRANSACTION OVERVIEW
--------- =====================================================================
Titan
---------
TRANSACTION PREMIUMS ANALYSIS/(a)/
[BAR CHART APPEARS HERE]
Cash per share (b) $ 4.44
Current Stock Price $ 3.28
5-Trading Days prior $ 3.19
10-Trading Days prior $ 3.38
20-Trading Days prior $ 4.25
July 27, 2000 Closing Price $ 4.69
Avg. Price 3 Months Prior $ 4.88
Avg. Price 6 months Prior $ 7.39
52-Week High $74.75
52-Week Low $ 3.06
$6.375 Offer Price 94.3% Premium to Current Stock Price
(a) Stock price data as of October 23, 2000.
(b) Includes impacts of the treasury stock method assuming an
offer price of $6.375 per share. Based on 6.196 million Class
A shares and 10.317 million Class B shares per Poseidon
management as of September 22, 2000. Based on 1.818 million
options at a weighted average exercise price of $4.04, 2.601
million options at a weighted average exercise price of $20.63
and 0.515 million options at a weighted average exercise price of
$4.99 per Poseidon management as of October 20, 2000.
[LOGO] 8
<PAGE>
-------
Project TRANSACTION OVERVIEW
------- =======================================================================
Titan
-------
ANTICIPATED TIMETABLE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Next Steps and Timing
------------------------------------------------------------------------------------------------
Approximate Timing
Event Week(s) of
------------------------------------------------------------------------------------------------
<S> <C>
Execute Definitive Agreement and Announcement October 24
Prepare and File Schedule TO Week of October 23 -
Week of October 30
Commence Tender Offer November 3/ November 6
Tender Offer Expires Week of December 4
Closing Mid December
</TABLE>
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<PAGE>
-------
Project
------- =======================================================================
Titan
-------
POSEIDON OVERVIEW
[LOGO]
10
<PAGE>
------------
Project POSEIDON OVERVIEW
------------ =================================================================
Titan
------------
POSEIDON'S FINANCIAL AND MARKET STATISTICS
<TABLE>
<CAPTION>
Capitalization and Financial Statistics
(US$ in millions, except per share data)
Capitalization Financial Statistics
------------------------------------------------------------- -----------------------------------------------
<S> <C> <C> <C>
Shares Outstanding /(a)/ 16.6 CY99A Revenue $44.0
Equity Market Capitalization $ 54.6 LQA Revenue /(b)/ 53.8
Plus Debt as of September 30, 2000 /(b)/ 0.0 LTM Revenue /(b)/ 58.5
Less Cash as of September 30, 2000 /(b)/ 78.0 CY00E Revenue /(c)/ 51.7
------
Enterprise Value ($23.4) CY01E Revenue /(c)/ 28.3
======
</TABLE>
<TABLE>
<CAPTION>
Trading Statistics and Multiples
(US$ in millions, except per share data)
Trading Statistics Enterprise Value as a Multiple of
---------------------------------------------------------- -----------------------------------------------
<S> <C> <C> <C>
Price as of 10/23/00 $ 3.28 CY99A Rev. NM
5-Trading day Average $ 3.16 LTM Rev. NM
10-Trading day Average $ 3.23 LQA Rev. NM
20-Trading day Average $ 3.62 CY00E Rev. NM
52-week High $74.75 CY01E Rev. NM
52-week Low $ 3.06
</TABLE>
(a) Includes impacts of the treasury stock method based on
Poseidon's stock price as of October 23, 2000. Based on 6.196
million Class A shares and 10.317 million Class B shares per
Poseidon management as of September 22, 2000. Based on 1.818
million options at a weighted average exercise price of
$4.04, 2.601 million options at a weighted average exercise
price of $20.63 and 0.515 million options at a weighted
average exercise price of $4.99 per Poseidon management as of
October 20, 2000.
(b) Source: Poseidon management as of October 12, 2000. Based on
preliminary actual results for the three months ended
September 30, 2000. Debt excludes intercompany payable of
approximately $5.3 million.
(c) Source: Poseidon management as of October 23, 2000.
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<PAGE>
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Project POSEIDON OVERVIEW
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Titan
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<PAGE>
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Project POSEIDON OVERVIEW
--------- =====================================================================
Titan
---------
POSEIDON STOCK PERFORMANCE LTM /(a)/
During the last twelve months, Poseidon's stock price has traded at a high of
$74.75 on December 22, 1999, a low of $3.06 on October 18, 2000 and closed at
$3.28 on October 23, 2000
[GRAPH]
plot points to come
(a) As of October 23, 2000.
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Project POSEIDON OVERVIEW
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Titan
--------------
POSEIDON STOCK PERFORMANCE -- JULY 26, 2000/(a)/
Since its close of $8.00 on July 26, 2000, Poseidon's stock price
has traded at a high of $7.19 on September 6, 2000, a low of
$3.06 on October 18, 2000 and closed at $3.28 on October 23, 2000
[GRAPH APPEARS HERE]
plot points to come
(a) As of October 23, 2000.
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<PAGE>
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Project POSEIDON OVERVIEW
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Titan
------------- POSEIDON CLOSING PRICE HISTORY SINCE JULY 26, 2000
Poseidon Closing Price History/(a)/
<TABLE>
<CAPTION>
Date Closing Price Date Closing Price Date Closing Price
-------------- --------------- -------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
10/23/00 $ 3.28 09/22/00 $ 4.84 08/23/00 $ 5.19
10/20/00 3.13 09/21/00 4.31 08/22/00 5.19
10/19/00 3.13 09/20/00 4.56 08/21/00 5.56
10/18/00 3.06 09/19/00 5.00 08/18/00 5.88
10/17/00 3.19 09/18/00 4.56 08/17/00 6.00
10/16/00 3.50 09/15/00 5.02 08/16/00 6.25
10/13/00 3.13 09/14/00 5.44 08/15/00 5.84
10/12/00 3.13 09/13/00 5.56 08/14/00 4.88
10/11/00 3.38 09/12/00 5.44 08/11/00 4.75
10/10/00 3.38 09/11/00 5.38 08/10/00 4.81
10/09/00 3.75 09/08/00 5.63 08/09/00 4.78
10/06/00 3.69 09/07/00 6.19 08/08/00 4.97
10/05/00 4.00 09/06/00 6.00 08/07/00 4.81
10/04/00 4.25 09/05/00 6.34 08/04/00 4.56
10/03/00 3.97 09/01/00 5.31 08/03/00 4.75
10/02/00 4.19 08/31/00 5.28 08/02/00 4.88
09/29/00 3.56 08/30/00 5.30 08/01/00 4.88
09/28/00 4.38 08/29/00 5.19 07/31/00 5.06
09/27/00 4.09 08/28/00 5.09 07/28/00 5.19
09/26/00 4.25 08/25/00 5.19 07/27/00 4.69
09/25/00 4.00 08/24/00 5.25 07/26/00 8.00
</TABLE>
(a) Source: FactSet.
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Project POSEIDON OVERVIEW
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Titan
--------------
POSEIDON STOCK PERFORMANCE -- SINCE IPO/(a)/
Since its IPO, Poseidon's stock price has traded at a high of $94.00 on April
13, 1999, a low of $3.06 on October 18, 2000 and closed at $3.28 on October 23,
2000
[CHART]
plot points to come
(a) As of October 23, 2000.
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Project POSEIDON OVERVIEW
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Titan
--------------
HISTORICAL TRADING ANALYSIS -- LAST THREE MONTHS/(a)/
Avg. Close: $4.88
Avg. Volume: 178,255
Avg. $/Day: 882,579
Total Volume: 11,764,800
Shares O/S/(b)/: 16,639,717
Float/(c)/: 6,323,097
Float Turnover/(c)/: 1.86x
Shares Traded at Specific Prices
[BAR CHART]
(Percent of Shares Traded)
plot points to come
Daily Closing Price Range
Cumulative Shares Traded at Specific Prices
[BAR CHART]
(Percent of Shares Traded)
plot points to come
Daily Closing Price Range
(a) Stock price data as of October 23, 2000.
(b) Includes impacts of the treasury stock method, based on Poseidon's
stock price as of October 23, 2000. Based on 6.196 million Class A
shares and 10.317 million Class B shares per Poseidon management as of
September 22, 2000. Based on 1.818 million options at a weighted
average exercise price of $4.04, 2.601 million options at a weighted
average exercise price of $20.63 and 0.515 million options at a
weighted average exercise price of $4.99 per Poseidon management as of
October 20, 2000.
(c) Excludes 10.317 million Class B common shares owned by Titan as of
September 22, 2000, per Poseidon management.
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Project POSEIDON OVERVIEW
-------------- =================================================================
Titan
--------------
HISTORICAL TRADING ANALYSIS -- LAST SIX MONTHS/(a)/
Avg. Close: $7.39
Avg. Volume: 161,578
Avg. $/Day: 1,197,257
Total Volume: 20,843,600
Shares O/S/(b)/: 16,639,717
Float/(c)/: 6,323,097
Float Turnover/(c)/: 3.30x
Shares Traded at Specific Prices
[BAR CHART]
(Percent of Shares Traded)
plot points to come
Daily Closing Price Range
Cumulative Shares Traded at Specific Prices
[BAR CHART]
(Percent of Shares Traded)
plot points to come
Daily Closing Price Range
(a) Stock price data as of October 23, 2000.
(b) Includes impacts of the treasury stock method, based on Poseidon's
stock price as of October 23, 2000. Based on 6.196 million Class A
shares and 10.317 million Class B shares per Poseidon management as of
September 22, 2000. Based on 1.818 million options at a weighted
average exercise price of $4.04, 2.601 million options at a weighted
average exercise price of $20.63 and 0.515 million options at a
weighted average exercise price of $4.99 per Poseidon management as of
October 20, 2000.
(c) Excludes 10.317 million Class B common shares owned by Titan as of
September 22, 2000, per Poseidon management.
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Project POSEIDON OVERVIEW
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Titan
--------------
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<PAGE>
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Project POSEIDON OVERVIEW
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Titan
---------
HISTORICAL TRADING ANALYSIS -- LAST TWELVE MONTHS /(a)/
Avg. Close: $24.97
Avg. Volume: 216,517
Avg. $/Day: 5,438,300
Total Volume: 54,995,200
Shares O/S /(b)/: 16,639,717
Float /(c)/: 6,323,097
Float Turnover /(c)/: 8.70x
Shares Traded at Specific Prices
[BAR CHART]
(Percent of Shares Traded)
Plot points to come
Daily Closing Price Range
Cumulative Shares Traded at Specific Prices
[BAR CHART]
(Percent of Shares Traded)
Plot points to come
Daily Closing Price Range
(a) Stock price data as of October 23, 2000.
(b) Includes impacts of the treasury stock method, based on
Poseidon's stock price as of October 23, 2000. Based on 6.196
million Class A shares and 10.317 million Class B shares per
Poseidon management as of September 22, 2000. Based on 1.818
million options at a weighted average exercise price of $4.04,
2.601 million options at a weighted average exercise price of
$20.63 and 0.515 million options at a weighted average exercise
price of $4.99 per Poseidon management as of October 20, 2000.
(c) Excludes 10.317 million Class B common shares owned by Titan as
of September 22, 2000, per Poseidon management.
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Project POSEIDON OVERVIEW
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Titan
---------
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<PAGE>
---------
Project POSEIDON OVERVIEW
--------- ====================================================================
Titan
---------
POSEIDON INSTITUTIONAL OWNERSHIP ANALYSIS /(a)/
Quarterly Institutional Ownership -- Top 25 June 30, 2000 Holders
(Number of Shares Held)
<TABLE>
<CAPTION>
Institution Sep-99 Dec-99 Mar-00 Jun-00
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
West Highland Capital, Inc. - - 500,000 1,215,500
Janus Capital Corporation 332,500 634,550 616,285 247,485
Principal Life Insurance Company - - - 160,000
Caxton Associates, LLC - - - 142,300
Weiss, Peck & Greer, LLC 58,200 114,300 391,000 125,500
Goldman Sachs & Company 21,515 144,995 33,620 102,220
Barclays Bank PLC 41,924 22,149 24,213 54,364
College Retire Equities 24,700 20,600 19,900 19,500
James C. Edwards & Co., Inc. - - 24,350 19,350
Vanguard Group 28,100 29,300 31,300 15,600
MSDW Advisors Inc. 17,914 22,646 18,101 15,503
Citigroup Investments Inc. 6,250 6,000 14,090 13,569
Taunus Corporation 6,225 26,804 44,004 12,246
UBS Warburg LLC - - - 10,000
Fidelity Management & Research 102,600 392,700 3,100 3,100
World Asset Management - 9,100 7,000 2,600
American General Corporation 1,700 4,850 1,700 1,700
Teachers Advisors Inc. 1,200 900 709 1,009
Bank One Corporation - - 340 340
Wilshire Assoc Inc. 100 200 - 100
Axa Financial, Inc. 59,000 58,195 95 95
Norwest Bank Minnesota 75 75 - 75
Aim Management Group, Inc. - 251,100 317,100 -
American Century - 130,600 - -
Amerindo Investment Advisors 2,500 - 2,500 -
------------ ----------- ----------- -----------
Total 704,503 1,869,064 2,049,407 2,162,156
============ =========== =========== ===========
% of Shares Outstanding /(b)/ 4.01% 10.64% 11.67% 12.31%
============ =========== =========== ===========
</TABLE>
(a) Source: CDA Spectrum as of October 13, 2000.
(b) Includes impact of the treasury stock method assuming an offer
price of $6.375 per share. Based on 6.196 million Class A common
shares and 10.317 million Class B shares per Poseidon management
as of September 22, 2000. Based on 1.818 million options at a
weighted average exercise price of $4.04, 2.601 million options
at a weighted average exercise price of $20.63 and 0.515 million
options at a weighted average exercise price of $4.99 per
Poseidon management as of October 20, 2000.
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<PAGE>
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Project POSEIDON OVERVIEW
-------- ======================================================================
Titan
--------
POSEIDON INSTITUTIONAL OWNERSHIP ANALYSIS/(a)/
Quarterly Institutional Ownership--Top 25 Sept. 30, 1999 Holders
(Number of Shares Held)
<TABLE>
<CAPTION>
Institution Sep-99 Dec-99 Mar-00 Jun-00
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Westfield Capital Management 453,200 400,790 198,940 -
Janus Capital Corporation 332,500 634,550 616,285 247,485
Fidelity Management & Research 102,600 392,700 3,100 3,100
Seb Asset Management America 102,450 146,700 152,550 -
Essex Investment Management Co. 86,800 37,400 - -
Strong Capital Management, Inc. 75,700 55,100 - -
Axa Financial, Inc. 59,000 58,195 95 95
Weiss, Peck & Greer, LLC 58,200 114,300 391,000 125,500
General American Investors 45,000 45,000 - -
Barclays Bank PLC 41,924 22,149 24,213 54,364
Westway Capital LLC 30,000 - - -
Vanguard Group 28,100 29,300 31,300 15,600
College Retire Equities 24,700 20,600 19,900 19,500
Goldman Sachs & Company 21,515 144,995 33,620 102,220
Pequot Capital Management Inc. 19,000 - - -
MSDW Advisors 17,914 22,646 18,101 15,503
Lasalle National Bank 8,150 7,300 - -
Citigroup Investments Inc. 6,250 6,000 14,090 13,569
Taunus Corporation 6,225 26,804 44,004 12,246
Mellon Private Asset Management 6,100 10,900 10,700 -
California State Teachers Retirement 5,300 5,300 5,300 -
Fleet Boston Corporation 3,000 3,000 - -
Smith Asset Management Group 2,600 - - -
Amerindo Investment Advisors 2,500 - 2,500 -
American General Corporation 1,700 4,850 1,700 1,700
---------- ---------- ---------- --------
Total 1,540,428 2,188,579 1,567,398 610,882
========== ========== ========== ========
% of Shares Outstanding/(b)/ 8.77% 12.46% 8.93% 3.48%
========== ========== ========== ========
</TABLE>
(a) Source: CDA Spectrum as of October 6, 2000.
(b) Includes impact of the treasury stock method assuming an
offer price of $6.375 per share. Based on 6.196 million Class
A common shares and 10.317 million Class B shares per
Poseidon management as of September 22, 2000. Based on 1.818
million options at a weighted average exercise price of
$4.04, 2.601 million options at a weighted average exercise
price of $20.63 and 0.515 million options at a weighted
average exercise price of $4.99 per Poseidon management as of
October 20, 2000
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Project POSEIDON OVERVIEW
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Titan
--------
HISTORICAL AND PROJECTED FINANCIAL PERFORMANCE /(a)/
Revenue Performance
FY 1997A - [BAR CHART]
FY 2001E
<TABLE>
<S> <C>
FY97A $10.6
FY98A $21.7
FY99A $44.0
LTM $58.5
FY00E $51.7
FY01E $28.3
</TABLE>
Gross Profit
[BAR CHART]
<TABLE>
<S> <C>
FY97A $ 7.0
FY98A $11.4
FY99A $21.6
LTM $26.4
FY00E $22.0
FY01E $16.0
</TABLE>
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Project POSEIDON OVERVIEW
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Titan
--------
Operating Income (b)
[BAR CHART]
($ in millions)
FY97A ($0.7)
FY98A ($8.7)
FY99A ($10.0)
LTM ($10.4)
FY00E ($12.1)
FY01E ($5.9)
Net Income (b)
[BAR CHART]
($ in millions)
FY97A ($1.1)
FY98A ($8.2)
FY99A ($7.1)
LTM ($5.7)
FY00E ($7.4)
FY01E ($2.9)
(a) Source: SEC filings and Poseidon management as of
October 23, 2000.
(b) Excludes amortization of deferred stock and stock
compensation expense and extraordinary items.
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Titan
--------
POSEIDON -- ANALYSIS OF PROJECTED RESULTS
<TABLE>
<CAPTION>
[BAR CHART] [BAR CHART]
Overview of Projected Revenue Overview of Projected Gross Profit
(US$ in millions) (US$ in millions)
<S> <C> <C> <C> <C> <C>
FY 2000E $51.7 $56.4 FY 2000E $22.0 $25.3
FY 2001E $28.3 $58.7 FY 2001E $16.0 $30.2
Poseidon/(a)/ Wall Street/(b)/
<CAPTION>
[BAR CHART] [BAR CHART]
Overview of Projected Operating Income/(c)/ Overview of Projected Net Income/(c)/
(US$ in millions) (US$ in millions)
<S> <C> <C> <C> <C> <C>
FY 2000E ($12.1) ($10.7) FY 2000E ($7.4) ($6.0)
FY 2001E ($5.9) ($10.6) FY 2001E ($2.9) ($7.6)
Poseidon/(a)/ Wall Street/(b)/
</TABLE>
(a) Source: Poseidon Management as of October 23, 2000.
(b) Source: Southwest Securities equity research as of July 27, 2000.
(c) Excludes amortization of deferred stock and stock compensation
expense and extraordinary items.
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<PAGE>
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Project POSEIDON OVERVIEW
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Titan
-------------
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<PAGE>
-------------
Project APPENDIX
------------- ==================================================================
Titan
-------------
APPENDIX
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<PAGE>
--------------
Project APPENDIX
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Titan
--------------
POSEIDON OPERATING MODEL - MANAGEMENT
<TABLE>
<CAPTION>
Poseidon Statement of Operations
($US in Millions, except per share data)
Historical/(a)(b)/
--------------------------------------------------------------------- ----------------------
Year Ending December 31, 1997 1998 1999 LTM/(d)/ Q1A Q2A Q3A/(c)/ Q4E/(e)/ 2000 E
--------------------------------------------------------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue
-------
Software & Subscriptions $ 6.5 $ 12.7 $ 21.1 $ 27.6 $ 6.9 $ 7.2 $ 6.9 $ 5.3 $ 26.3
Content & Services 4.1 9.1 22.9 30.9 8.4 8.2 6.5 2.2 25.4
------ ------- ------- -------- ------ ------ ------- ------ -------
Total Revenue $ 10.6 $ 21.7 $ 44.0 $ 58.5 $ 15.3 $ 15.4 $ 13.5 $ 7.5 $ 51.7
Cost of Sales
-------------
Software & Subscriptions 1.0 3.2 5.4 5.6 1.5 1.2 1.2 1.0 4.9
Content & Services 2.6 7.1 17.0 26.5 6.6 8.0 6.0 4.1 24.8
------ ------- ------- -------- ------ ------ ------- ------ -------
Total Cost of Sales 3.6 10.3 22.4 32.1 8.1 9.2 7.2 5.2 29.7
------ ------- ------- -------- ------ ------ ------- ------ -------
Gross Profit 7.0 11.4 21.6 26.4 7.2 6.1 6.3 2.4 22.0
Operating Expenses
------------------
Sales & Marketing 4.8 12.2 17.8 14.1 4.2 3.2 2.0 1.5 10.9
General & Administrative 1.8 3.7 6.6 8.9 2.8 2.0 1.8 1.5 8.1
Research & Development 1.1 4.3 7.1 13.8 3.5 4.1 3.8 3.7 15.1
------ ------- ------- -------- ------ ------ ------- ------ -------
Total Operating Expenses 7.7 20.1 31.6 36.8 10.5 9.3 7.6 6.7 34.1
Operating Income (0.7) (8.7) (10.0) (10.4) (3.3) (3.2) (1.3) (4.3) (12.1)
Interest & Other Income, net - 0.2 2.6 4.6 1.2 1.2 1.2 1.0 4.7
------ ------- ------- -------- ------ ------ ------- ------ -------
Profit Before Taxes (0.7) (8.6) (7.4) (5.8) (2.1) (1.9) (0.1) (3.3) (7.4)
Income Taxes (Benefit) 0.4 (0.4) (0.3) (0.1) - - - - -
------ ------- ------- -------- ------ ------ ------- ------ -------
Net Income ($1.1) ($8.2) ($7.1) ($5.7) ($2.1) ($1.9) ($0.1) ($3.3) ($7.4)
====== ======= ======= ======== ====== ====== ======= ====== =======
Weighted Avg. Shrs. Out. 12.800 12.861 15.292 16.669 16.823 16.714 16.798 16.751
Diluted EPS ($0.09) ($0.64) ($0.46) ($0.34) ($0.13) ($0.12) ($0.00) ($0.20) ($0.44)
Total Revenue Growth - 105.1% 102.7% - - 0.4% (12.5%) (44.0%) 17.4%
Profitability Ratios:
--------------------
Gross Margin 66.2% 52.5% 49.0% 45.2% 46.9% 39.9% 46.8% 31.4% 42.6%
Operating Margin NM NM NM NM NM NM NM NM NM
Net Margin NM NM NM NM NM NM NM NM NM
Operating Costs (% of Revenue):
------------------------------
Sales & Marketing 45.3% 56.0% 40.5% 24.1% 27.3% 20.8% 14.6% 20.1% 21.0%
General & Administrative 16.9% 17.0% 15.0% 15.3% 18.2% 13.0% 13.7% 19.8% 15.7%
Research & Development 10.7% 19.8% 16.1% 23.6% 23.1% 26.9% 27.9% 48.9% 29.2%
------ ------- ------- -------- ------ ------ ------- ------ -------
Total Operating Expenses 72.8% 92.7% 71.7% 62.9% 68.6% 60.7% 56.2% 88.7% 65.9%
<CAPTION>
Poseidon Statement of Operations
($US in Millions, except per share data)
Projected/(b)(c)/
------------------------------------------------
Year Ending December 31, Q1E Q2E Q3E Q4E 2001E
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue
-------
Software & Subscriptions $ 5.3 $ 5.3 $ 4.4 $ 4.8 $ 19.8
Content & Services 1.8 2.0 2.3 2.4 8.5
------ ------ ------ ------- -------
Total Revenue $ 7.1 $ 7.3 $ 6.7 $ 7.2 $ 28.3
Cost of Sales
-------------
Software & Subscriptions 1.0 0.9 0.7 0.7 3.4
Content & Services 2.2 2.1 2.3 2.2 8.9
------ ------ ------ ------- -------
Total Cost of Sales 3.2 3.1 3.0 2.9 12.3
------ ------ ------ ------- -------
Gross Profit 3.9 4.2 3.7 4.3 16.0
Operating Expenses
------------------
Sales & Marketing 1.6 1.8 1.9 2.0 7.3
General & Administrative 1.1 1.0 1.0 1.1 4.2
Research & Development 3.5 3.4 1.8 1.7 10.3
------ ------ ------ ------- -------
Total Operating Expenses 6.2 6.2 4.7 4.8 21.9
Operating Income (2.3) (2.0) (1.0) (0.6) (5.9)
Interest & Other Income, net 0.9 0.8 0.7 0.7 3.0
------ ------ ------ ------- -------
Profit Before Taxes (1.5) (1.2) (0.3) 0.1 (2.9)
Income Taxes (Benefit) - - - - -
------ ------ ------ ------- -------
Net Income ($1.5) ($1.2) ($0.3) $ 0.1 ($2.9)
====== ====== ====== ======= =======
Weighted Avg. Shrs. Out. 16.882 16.966 17.136 17.307 17.073
Diluted EPS ($0.09) ($0.07) ($0.02) $ 0.01 ($0.17)
Total Revenue Growth (6.0%) 3.5% (8.5%) 7.4% (45.2%)
Profitability Ratios:
--------------------
Gross Margin 54.4% 57.9% 54.7% 59.3% 56.6%
Operating Margin NM NM NM NM NM
Net Margin NM (16.1%) NM 1.8% NM
Operating Costs (% of Revenue):
------------------------------
Sales & Marketing 22.6% 24.5% 28.4% 28.5% 26.0%
General & Administrative 16.1% 14.1% 15.0% 14.8% 15.0%
Research & Development 48.8% 45.9% 26.3% 24.1% 36.5%
------ ------ ------ ------- -------
Total Operating Expenses 87.5% 84.6% 69.7% 67.3% 77.4%
</TABLE>
(a) Source: SEC filings.
(b) Excludes amortization of deferred stock compensation expense.
(c) Source: Poseidon management as of October 23, 2000.
(d) Represents results for the last twelve months ended September 30, 2000.
(e) Excludes $4.4 million restructuring charge.
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<PAGE>
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Project APPENDIX
--------- ======================================================================
Titan
---------
POSEIDON OPERATING MODEL - ANALYST COVERAGE
<TABLE>
<CAPTION>
Poseidon Statement of Operations
($US in Millions, except per share data)
Historical /(a)(b)/
--------------------------------------------------------------------------------------
Year Ending December 31, 1997 1998 1999 LTM /(d)/ Q1A Q2A Q3A/(e)/
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
-------
Software & Subscriptions $ 6.5 $12.7 $21.1 $27.6 $ 6.9 $ 7.2 $ 6.9
Content & Services 4.1 9.1 22.9 30.9 8.4 8.2 6.5
-------- -------- -------- -------- -------- -------- --------
Total Revenue $10.6 $21.7 $44.0 $58.5 $15.3 $15.4 $13.5
Cost of Sales
-------------
Software & Subscriptions 1.0 3.2 5.4 5.6 1.5 1.2 1.2
Content & Services 2.6 7.1 17.0 26.5 6.6 8.0 6.0
-------- -------- -------- -------- -------- -------- --------
Total Cost of Sales 3.6 10.3 22.4 32.1 8.1 9.2 7.2
-------- -------- -------- -------- -------- -------- --------
Gross Profit 7.0 11.4 21.6 26.4 7.2 6.1 6.3
Operating Expenses
------------------
Sales & Marketing 4.8 12.2 17.8 14.1 4.2 3.2 2.0
General & Administrative 1.8 3.7 6.6 8.9 2.8 2.0 1.8
Research & Development 1.1 4.3 7.1 13.8 3.5 4.1 3.8
-------- -------- -------- -------- -------- -------- --------
Total Operating Expenses 7.7 20.1 31.6 36.8 10.5 9.3 7.6
Operating Income (0.7) (8.7) (10.0) (10.4) (3.3) (3.2) (1.3)
Interest & Other Income, net - 0.2 2.6 4.6 1.2 1.2 1.2
-------- -------- -------- -------- -------- -------- --------
Profit Before Taxes (0.7) (8.6) (7.4) (5.8) (2.1) (1.9) (0.1)
Income Taxes (Benefit) 0.4 (0.4) (0.3) (0.1) - - -
-------- -------- -------- -------- -------- -------- --------
Net Income ($1.1) ($8.2) ($7.1) ($5.7) ($2.1) ($1.9) ($0.1)
======== ======== ======== ======== ======== ======== ========
Weighted Avg. Shrs. Out. 12.800 12.861 15.292 16.669 16.823 16.714
Diluted EPS ($0.09) ($0.64) ($0.46) ($0.34) ($0.13) ($0.12) ($0.00)
Total Revenue Growth - 105.1% 102.7% - - 0.4% (12.5%)
Profitability Ratios:
--------------------
Gross Margin 66.2% 52.5% 49.0% 45.2% 46.9% 39.9% 46.8%
Operating Margin NM NM NM NM NM NM (9.4%)
Net Margin NM NM NM NM NM NM (0.5%)
Operating Costs (% of Revenue):
-----------------------------
Sales & Marketing 45.3% 56.0% 40.5% 24.1% 27.3% 20.8% 14.6%
General & Administrative 16.9% 17.0% 15.0% 15.3% 18.2% 13.0% 13.7%
Research & Development 10.7% 19.8% 16.1% 23.6% 23.1% 26.9% 27.9%
-------- -------- -------- -------- -------- -------- --------
Total Operating Expenses 72.8% 92.7% 71.7% 62.9% 68.6% 60.7% 56.2%
</TABLE>
<TABLE>
Poseidon Statement of Operations
($US in Millions, except per share data)
Projected /(b)(c)/
------------------------------------------------------------------------------------------
Year Ending December 31, Q4E 2000E Q1E Q2E Q3E Q4E 2001E
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
-------
Software & Subscriptions $ 5.5 $26.5 $ 6.1 $ 6.4 $ 6.8 $ 7.2 $26.5
Content & Services 6.7 29.9 7.4 7.8 8.2 8.8 32.2
-------- -------- -------- -------- -------- -------- --------
Total Revenue $12.2 $56.4 $13.5 $14.1 $15.0 $16.0 $58.7
Cost of Sales
-------------
Software & Subscriptions 1.2 5.1 1.3 1.4 1.5 1.6 5.7
Content & Services 5.4 26.0 5.5 5.6 5.8 6.0 22.8
-------- -------- -------- -------- -------- -------- --------
Total Cost of Sales 6.6 31.1 6.8 7.0 7.2 7.5 28.5
-------- -------- -------- -------- -------- -------- --------
Gross Profit 5.7 25.3 6.7 7.2 7.8 8.5 30.2
Operating Expenses
------------------
Sales & Marketing 3.1 12.4 3.8 4.0 4.2 4.5 16.4
General & Administrative 1.5 8.1 1.8 1.8 1.8 1.8 7.2
Research & Development 4.0 15.4 4.0 4.2 4.3 4.6 17.1
-------- -------- -------- -------- -------- -------- --------
Total Operating Expenses 8.6 36.0 9.6 9.9 10.3 10.9 40.7
Operating Income (2.9) (10.7) (2.9) (2.7) (2.6) (2.4) (10.6)
Interest & Other Income, net 1.0 4.6 0.8 0.8 0.8 0.8 3.0
-------- -------- -------- -------- -------- -------- --------
Profit Before Taxes (1.9) (6.0) (2.1) (2.0) (1.8) (1.7) (7.6)
Income Taxes (Benefit) - - - - - - -
-------- -------- -------- -------- -------- -------- --------
Net Income ($1.9) ($6.0) ($2.1) ($2.0) ($1.8) ($1.7) ($7.6)
======== ======== ======== ======== ======== ======== ========
Weighted Avg. Shrs. Out. 17.000 16.802 17.100 17.200 17.300 17.400 17.250
Diluted EPS ($0.11) ($0.36) ($0.12) ($0.11) ($0.11) ($0.10) ($0.44)
Total Revenue Growth (9.0%) 28.1% 10.0% 5.0% 6.0% 7.0% 4.0%
Profitability Ratios:
--------------------
Gross Margin 46.4% 44.9% 49.7% 50.8% 51.9% 53.0% 51.4%
Operating Margin NM NM NM NM NM (15.0%) NM
Net Margin NM NM NM (13.9%) (12.1%) (10.4%) (12.9%)
Operating Costs (% of Revenue):
-----------------------------
Sales & Marketing 25.0% 22.0% 28.0% 28.0% 28.0% 28.0% 28.0%
General & Administrative 12.2% 14.4% 13.0% 12.5% 12.0% 11.5% 12.2%
Research & Development 32.7% 27.4% 30.0% 29.5% 29.0% 28.5% 29.2%
-------- -------- -------- -------- -------- -------- --------
Total Operating Expenses 69.9% 63.8% 71.0% 70.0% 69.0% 68.0% 69.4%
</TABLE>
(a) Source: SEC filings.
(b) Excludes amortization of deferred stock compensation expense.
(c) Source: Southwest Securities Report as of July 27, 2000.
(d) Represents results for the last twelve months ended September 30,
2000.
(e) Source: Poseidon management as of October 12, 2000.
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<PAGE>
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Project APPENDIX
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Titan
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31
