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Previous: SAFEGUARD HEALTH ENTERPRISES INC, 10-Q, 1998-11-23 |
Next: LIFE TECHNOLOGIES INC, SC 13E3/A, 1998-11-23 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
(PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. 3)
LIFE TECHNOLOGIES, INC.
(NAME OF SUBJECT COMPANY)
DEXTER CORPORATION
DEXTER ACQUISITION DELAWARE, INC.
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
532177201
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
BRUCE H. BEATT, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
DEXTER CORPORATION
ONE ELM STREET
WINDSOR LOCKS, CT 06096
(860) 292-7675
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
----------------
COPY TO:
JERE R. THOMSON, ESQ.
JONES, DAY, REAVIS & POGUE
599 LEXINGTON AVENUE
NEW YORK, NEW YORK 10022
(212) 326-3939
<PAGE> 2
Dexter Acquisition Delaware, Inc., a Delaware corporation ("Purchaser")
and a wholly-owned subsidiary of Dexter Corporation, a Connecticut corporation
("Parent") and Parent hereby amend and supplement their Tender Offer Statement
on Schedule 14D-1 filed with the Securities and Exchange Commission (the
"Commission") on November 2, 1998, as amended by Amendments No. 1 and No. 2
thereto filed with the Commission on November 5, 1998 and November 12, 1998,
respectively (as so amended, the "Schedule 14D-1"). Capitalized terms not
defined herein have the meaning ascribed to them in the Schedule 14D-1.
ITEM 10. ADDITIONAL INFORMATION.
(a) Item 10(f) is hereby amended by the addition of the following paragraph as
the new fourth paragraph under "SPECIAL FACTORS--Background of the Offer" in the
Offer to Purchase:
The presentation of Merrill Lynch at such meetings (the "June
Presentation") was based solely on publicly-available information and
estimates of future financial results published by First Call
Corporation and selected brokerage firms and was used to assist Parent
in determining the appropriate price for the Proposal. Such
presentation analyzed the pro forma effect on Parent of a transaction
involving a hypothetical offer price of $38.00 per share and a
sensitivity analysis of plus or minus $1.00 per share (the
"Hypothetical Range"). The presentation also included analyses similar
to those analyses described below under "--Analysis of Financial
Advisor to Parent-Analyses of Selected Comparable Publicly Traded
Companies" and "-Analysis of Change of Control Acquisitions". For
purposes of comparing implied multiples, Merrill Lynch used the
mid-point of the Hypothetical Range, which represented a premium of
19.2% over the Company's closing price on NASDAQ (as defined below) of
$31.88 per share on June 22, 1998. The full text of the June
Presentation has been included as Exhibit (g)(6) to the Schedule 13E-3
and the Schedule 14D-1 and the foregoing summary is qualified in its
entirety by reference to such Exhibit. See the last five paragraphs
under "--Analysis of Financial Advisor to Parent" for qualifying
statements as to the October 23, 1998 presentation of Merrill Lynch
which qualifying statements apply to its June Presentation as well,
including as to any projections included therein.
(b) Item 10(f) is hereby amended by amending and restating in its entirety the
fifth paragraph under "SPECIAL FACTORS--Background of the Offer" in the Offer to
Purchase:
On July 6, 1998, in a special meeting of the Parent Board, the
Parent Board authorized Mr. Walker to make a proposal on behalf of
Parent to acquire all of the shares of the Company not currently owned
by Parent for $37.00 in cash. Such price represented a premium of 20.1%
over the Company's closing price on NASDAQ of $30.81 per share on July
2, 1998.
(c) Item 10(f) is hereby amended by amending and restating in its entirety the
twenty-sixth paragraph under "SPECIAL FACTORS-Background of the Offer" in the
Offer to Purchase:
On October 14, 1998, the Parent Board held a special
telephonic meeting to receive reports on the Proposal from Parent's
management and its financial advisor on the Special Committee's
response to the Proposal and related matters. The presentation of
Merrill Lynch set forth in its October 14, 1998 presentation contained
analyses similar to those set forth in its October 23, 1998
presentation and described under "--Analyses of Financial Advisor to
Parent". Such presentation also analyzed the pro forma impact of the
transaction on Parent. All such analyses used the Offer Price. The full
text of Merrill Lynch's written presentation delivered to the Parent
Board on October 14, 1998 has been included as Exhibit (g)(7) to the
Schedule 13E-3 and the Schedule 14D-1 and the foregoing summary is
qualified in its entirety by reference to such Exhibit. See the last
five paragraphs under "--Analysis of Financial Advisor to Parent" for
qualifying statements as to the October 23, 1998 presentation of
Merrill Lynch which qualifying statements apply to its October 14, 1998
presentation as well, including as to any projections included therein.
(d) Item 10(f) is hereby amended by amending and restating in its entirety the
second sentence in the twenty-ninth paragraph under "SPECIAL FACTORS--Background
of the Offer" in the Offer to Purchase as follows:
See "CERTAIN FACTORS--Fairness of the Offer" and "--Analysis
of Financial Advisor to Parent".
(e) Item 10(f) is hereby amended by amending and restating in their entirety the
third and fourth full paragraphs under "THE TENDER OFFER--Certain Information
Concerning the Company--Projections" in the Offer to Purchase as follows:
THE PROJECTIONS SET FORTH ABOVE WERE NOT PREPARED BY PARENT OR
PURCHASER. THE PROJECTIONS ARE INCLUDED HEREIN SOLELY BECAUSE SUCH
INFORMATION WAS FURNISHED TO PARENT ON BEHALF OF THE SPECIAL COMMITTEE.
FOR THE REASONS SET FORTH AND REFERRED TO UNDER THE HEADINGS, "SPECIAL
FACTORS--BACKGROUND OF THE OFFER", "--FAIRNESS OF THE OFFER" AND
"--ANALYSIS OF FINANCIAL ADVISOR TO PARENT", PARENT DISAGREES WITH
CERTAIN IMPORTANT ASPECTS OF THE PROJECTIONS AND THE INCLUSION OF THE
PROJECTIONS IN THIS OFFER TO PURCHASE SHOULD NOT BE REGARDED AS AN
INDICATION THAT PARENT, PURCHASER OR PARENT'S FINANCIAL ADVISOR, OR
PARENT'S OR PURCHASER'S OFFICERS AND DIRECTORS, CONSIDER SUCH
INFORMATION TO BE ACCURATE OR RELIABLE. NONE OF SUCH PERSONS OR
ENTITIES ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY THEREOF.
IN ADDITION, THE MATTERS DISCUSSED ABOVE UNDER THIS HEADING,
"THE TENDER OFFER --CERTAIN INFORMATION CONCERNING THE COMPANY
--PROJECTIONS" TOGETHER WITH OTHER MATTERS SET FORTH UNDER THE HEADING,
"SPECIAL FACTORS --BACKGROUND OF THE OFFER", "--FAIRNESS OF THE OFFER"
AND "--ANALYSIS OF FINANCIAL ADVISOR TO PARENT" ARE FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. STOCKHOLDERS ARE
CAUTIONED THAT, IN ADDITION TO OTHER FACTORS SET FORTH UNDER "SPECIAL
FACTORS --BACKGROUND OF THE OFFER", "--FAIRNESS OF THE OFFER" AND
"--ANALYSIS OF FINANCIAL ADVISOR TO PARENT", THE FOLLOWING FACTORS MAY
CAUSE THE COMPANY'S ACTUAL FINANCIAL PERFORMANCE TO DIFFER MATERIALLY
FROM THOSE EXPRESSED IN SUCH FORWARD-LOOKING STATEMENTS; PRESSURE ON
GROWTH RATES FROM COMPETITION AND REDIRECTED FOCUS FROM CORE BUSINESS;
CURRENT ECONOMIC CONDITIONS; HISTORICALLY LOWER R&D PRODUCTIVITY THAN
THAT PROJECTED IN THE R&D PROJECTIONS UTILIZED BY GOLDMAN SACHS;
ABSENCE OF HISTORY OF COMPANY'S SUCCESSFUL COMMERCIALIZATION OF THE
SIGNIFICANT NUMBER OF MAJOR NEW PRODUCTS REFLECTED IN SUCH R&D
PROJECTIONS; TECHNOLOGICAL RISKS INHERENT IN R&D PIPELINE; AND ABSENCE
OF HISTORY OF REVENUE AND PROFIT CONTRIBUTION FROM NEW PROJECTS
COMPARABLE TO THAT PROJECTED IN THE R&D PROJECTIONS.
THE PROTECTION OF THE DISCLOSURE LIABILITY SAFE HARBOR FOR
FORWARD-LOOKING STATEMENTS CONTAINED IN THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 IS NOT APPLICABLE TO PROJECTIONS OR OTHER
FORWARD-LOOKING INFORMATION CONTAINED IN THIS OFFER TO PURCHASE.
(f) Item 10(f) is hereby amended by amending and restating in its entirety
"THE TENDER OFFER--Certain Conditions of the Offer" in the Offer to Purchase as
follows:
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term or provision of the Offer,
Purchaser shall not be required to accept for payment, or, subject to
any applicable rules and regulations of the Commission, including Rule
14e- 1(c) under the Exchange Act (relating to Purchaser's obligation to
pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), accept for payment, purchase or pay for any
Shares of the Company tendered, and may terminate or amend the Offer
and may postpone the acceptance for payment of and payment for any
Shares, if (i) the Minimum Condition has not been satisfied prior to
the Expiration Date, or (ii) at any time prior to the Expiration Date,
any of the following shall occur or exist:
(a) there shall have been threatened, instituted or be pending
any action, proceeding, application, claim or counterclaim by any
government or governmental authority or agency, domestic or
foreign, or by any other person, domestic or foreign, before any
court or governmental regulatory or administrative agency,
authority or tribunal, domestic or foreign, (i) challenging the
acquisition by Parent or Purchaser of the Shares or seeking to
restrain or prohibit the making or consummation of the Offer or
the Second Step Merger; (ii) seeking to obtain from Parent or
Purchaser any damages, fines or legal sanctions relating to the
Offer or the Second Step Merger; (iii) seeking to prohibit or
limit the ownership or operation by Parent or Purchaser or any of
their affiliates of any portion of the business or assets of the
Company or to compel Parent or Purchaser or any of their
affiliates to dispose of or hold separate all or any portion of
the business or assets of the Company or seeking to impose any
limitation on the ability of Parent or Purchaser or any of their
affiliates to conduct such business or own such assets; (iv)
seeking to impose or confirm limitations on the ability of Parent
or Purchaser or any of their affiliates effectively to exercise
full rights of ownership of the Shares, including, without
limitation, the right to vote any Shares acquired or owned by
Parent or Purchaser or any of their affiliates on all matters
properly presented to the Company's stockholders; (v) seeking to
require divestiture by Parent or Purchaser or any of their
affiliates of any Shares; or (vi) which would otherwise in the
judgment of Purchaser or Parent (which shall be reasonably
exercised), materially adversely affect the Company or adversely
affect the benefits which Purchaser or Parent expects to derive
from the successful completion of the Offer and/or the Second Step
Merger; or
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction proposed, enacted,
promulgated, entered, enforced, issued or deemed applicable to the
Offer, the Second Step Merger, or other similar business
combination by Purchaser or any affiliate of Parent with the
Company, or any other action shall have been taken by any
government, governmental authority or agency or court with respect
to a proceeding described in paragraph (a) above, domestic or
foreign, that has, or, in Parent's discretion (which shall be
reasonably exercised), could be expected to result in, any of the
consequences referred to in paragraph (a) above; or
(c) any approval, permit, authorization, favorable review or
consent of any court or governmental entity shall not have been
obtained on terms satisfactory to Parent or Purchaser in their
discretion (which shall be reasonably exercised) or Parent or
Purchaser is advised, or otherwise has reason to believe, that any
such approval, permit, authorization, review or consent will be
denied or substantially delayed, or will not be given other than
upon terms or conditions that would, in Parent's or Purchaser's
judgment (which shall be reasonably exercised), make it
impracticable to proceed with the Offer; or
(d) any change shall have occurred or been threatened (or any
condition, event or development shall have occurred or been
threatened involving a prospective change) in the business,
properties, assets, liabilities, capitalization, stockholder's
equity, condition (financial or otherwise), operations, licenses
or franchises, results of operations or prospects of the Company
that, in the judgment of Parent(which shall be reasonably
exercised), is or may be materially adverse to the Company or to
the value of the Shares to Purchaser, Parent or any other
affiliate of Parent or Purchaser, or Parent or Purchaser shall
have become aware of any facts that, in the judgment of Parent or
Purchaser (which shall be reasonably exercised), have or may have
material adverse significance with respect to either the value of
the Company or the value of the Shares to Purchaser, Parent or any
other affiliate of Parent; or
(e) there shall have occurred or been threatened (i) any
general suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange, Inc., any other
national securities exchange or in the over-the-counter market in
the United States; (ii) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United
States (whether or not mandatory); (iii) any extraordinary or
material adverse change in the financial markets or major stock
exchange indices in the United States or abroad or in the market
price of Shares; (iv) any material change in United States
currency exchange rates or any other currency exchange rates or a
suspension of, or limitation on, the markets therefor; (v) the
commencement of a war or armed hostilities or other international
calamity directly or indirectly involving the United States; or
(vi) in the case of any of the foregoing existing at the time of
the commencement of the Offer, a material acceleration or
worsening thereof; or
(f) unless Parent shall have consented in writing, the Company
shall have (i) split, combined or otherwise changed, or authorized
or proposed a split, combination or other change of, the Shares or
its capitalization; (ii) issued, distributed, pledged or sold, or
authorized, proposed or announced the issuance, distribution,
pledge or sale of (A) any shares of capital stock (including,
without limitation, the Shares), or securities convertible into
any such shares, or any rights, warrants or options to acquire any
such shares or convertible securities, or (B) any other securities
in respect of, in lieu of, or in substitution for Shares; (iii)
purchased or otherwise acquired or caused a reduction in the
number of, or proposed or offered to purchase or otherwise acquire
or cause a reduction in the number of, any outstanding Shares or
other securities of the Company; (iv) declared or paid any
dividend or distribution on any shares of capital stock or issued,
or authorized, recommended or proposed the issuance of, any other
distribution in respect of the Shares, whether payable in cash,
securities or other property, or altered or proposed to alter any
material term of any outstanding security; (v) issued, or
announced its intention to issue, any debt securities or any
rights, warrants or options entitling the holder thereof to
purchase or otherwise acquire any debt securities, or incurred, or
announced its intention to incur, any debt other than in the
ordinary course of business and consistent with its past practice;
(vi) authorized, recommended, proposed or publicly announced its
intention to enter into (A) any merger, consolidation,
liquidation, dissolution, business combination, acquisition of
assets or securities or disposition of assets or securities other
than in the ordinary course of business, (B) any material change
in its capitalization, (C) any release or relinquishment of any
material contract rights, or (D) any comparable event not in the
ordinary course of business; (vii) authorized, recommended or
proposed or announced its intention to authorize, recommend or
propose any transaction which could adversely affect the value of
the Shares; (viii) proposed, adopted or authorized any amendment
to its Certificate of Incorporation or Bylaws or similar
organizational documents or Purchaser or Parent shall have learned
about any such proposal or amendment which shall not have been
previously disclosed; (ix) entered into any new material contracts
or canceled or substantially changed the terms of any existing
material contracts; or (x) agreed in writing or otherwise to take
any of the foregoing actions; or
(g) the Company shall have (i) entered into any employment,
severance or similar agreement, arrangement or plan with any of
its employees other than in the ordinary course of business; (ii)
entered into or amended any agreements, arrangements or plans so
as to provide for increased or accelerated benefits to any
employee as a result of or in connection with the transactions
contemplated by the Offer, the Second Step Merger or other
business combination; or (iii) except as may be required by law,
taken any action to terminate or amend any employee benefit plan
(as defined in Section 3(2) of the Employee Retirement and Income
Security Act of 1974, as amended) of the Company, or Purchaser
shall have become aware of any such action that was not disclosed
in publicly available filings prior to the date of this Offer to
Purchase; or
(h) Purchaser, Parent or another affiliate of Parent and the
Company shall have entered into an agreement that the Offer be
terminated or amended or Purchaser, Parent or another affiliate of
Parent shall have entered into an agreement with the Company
providing for a merger or other business combination with the
Company,
which, in the judgment of Parent or Purchaser (which shall be
reasonably exercised) in any such case, and regardless of the
circumstances (including any action or inaction by Purchaser, Parent or
any affiliate of Parent) giving rise to any such condition, makes it
inadvisable to proceed with the Offer and/or with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of Parent and
Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by
Parent or Purchaser, in whole or in part, at any time and from time to
time, in its discretion. The failure by Parent or Purchaser at any time
to exercise any of the foregoing rights will not be deemed a waiver of
any such right, and the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with
respect to any other facts or circumstances, and each such right will
be deemed an ongoing right which may be asserted at any time and from
time to time. Any determination by Parent or Purchaser concerning the
events described above will be final and binding upon all parties.
Should the Offer be terminated pursuant to the foregoing
provisions, all tendered Shares not theretofore accepted for payment
shall forthwith be returned by the Depositary to the tendering
stockholders.
<PAGE> 3
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 is hereby amended to add the
following exhibits:
(g)(6) Presentation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Board of Directors of Dexter
Corporation, dated June 25, 1998.
(g)(7) Presentation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Board of Directors of Dexter
Corporation, dated October 14, 1998.
(g)(8) Financial projections of Goldman, Sachs & Co. presented
at September 17, 1998 meeting between financial
advisors of Parent and Special Committee; Project and
Product names have been coded by the filing person.
<PAGE> 4
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: November 23, 1998 DEXTER ACQUISITION DELAWARE, INC.
By: /s/ KATHLEEN BURDETT
-------------------------------
Name: Kathleen Burdett
Title: Treasurer
DEXTER CORPORATION
By: /s/ BRUCE H. BEATT
-------------------------------
Name: Bruce H. Beatt
Title: Vice President, General
Counsel and Secretary
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
<S> <C> <C>
(g)(6) Presentation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Board of Directors of Dexter
Corporation, dated June 25, 1998.
(g)(7) Presentation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated to the Board of Directors of Dexter
Corporation, dated October 14, 1998.
(g)(8) Financial projections of Goldman, Sachs & Co. presented at
September 17, 1998 meeting between financial advisors of
Parent and Special Committee; Project and Product names have
been coded by the filing person.
</TABLE>
<PAGE> 1
Presentation to the Board of Directors
Husky
Regarding Project Terrapin
June 25, 1998
<PAGE> 2
Project Terrapin
Transaction Overview
<TABLE>
<CAPTION>
Transaction: Acquisition of minority interest in Terrapin
<S> <C>
Hypothetical Offer Price per Share: $38.00
Premium to Market: 19.2%
Total Offer Value for Minority Interest: (1) $462.4 million
Consideration: Cash
Accounting Treatment: Purchase Accounting
Annual Goodwill Charge: $10.2 million
Cost of Acquisition Financing: 7.25%
</TABLE>
(1) Assumes purchase of 11.5 million shares of Terrapin not currently owned by
Husky and the in-the-money spread on all outstanding options.
[MERRILL LYNCH LOGO]
<PAGE> 3
Project Terrapin
Summary of Terrapin Trading Multiples (1)
(U.S. dollars in millions, except per share data)
<TABLE>
<S> <C>
Share Price (6/22/98) $ 31.88
52 Week High 39.50
52 Week Low 26.31
Shares Outstanding (in millions) (2) 23.572
Equity Market Value $ 751.4
Less: Net Cash (2) 16.5
Plus: Minority Interest (2) 3.2
--------
Enterprise Value $ 738.0
========
</TABLE>
<TABLE>
<CAPTION>
Share Price
Enterprise Value as a Multiple of as a Multiple of
-------------------------------------------------------- ----------------
Year Sales EBITDA EBIT EPS
- --------------------- ------- -------- ------ ----------------
<S> <C> <C> <C> <C>
LTM 2.18x 11.3x 14.2x 23.1x
12/98E 2.06 10.2 12.7 21.1
12/99E 1.89 9.1 11.2 18.4
</TABLE>
<TABLE>
<CAPTION>
Financial Results
--------------------------------------------------------
<S> <C> <C> <C> <C>
LTM $339.2 $65.3 $52.0 $1.38
12/98E (3) 359.1 72.2 57.9 1.51
12/99E (3) 389.6 80.7 65.7 1.74
</TABLE>
(1) Multiple as of 6/22/98 based on Terrapin share price of $31.88.
(2) Source: Forms 10Q, dated 3/31/98.
(3) Projections based on First Call earnings estimates and secular growth
rate as of 6/22/98.
[MERRILL LYNCH LOGO]
<PAGE> 4
Project Terrapin
Terrapin Stock Price Performance - 6/15/97 to Present
<TABLE>
<CAPTION>
Composite
of Terrapin
Date Terrapin S&P 500 Comparables (1)
- -------- ---------- -------- ---------------
<S> <C> <C> <C>
6/9/97 100.0% 100.0% 100.0%
6/10/97 100.4% 100.3% 100.4%
6/11/97 100.4% 100.8% 99.0%
6/12/97 101.3% 102.4% 100.3%
6/13/97 103.1% 103.5% 100.9%
6/16/97 102.2% 103.6% 101.1%
6/17/97 99.6% 103.7% 101.3%
6/18/97 101.3% 103.0% 101.6%
6/19/97 96.9% 104.1% 102.7%
6/20/97 100.2% 104.1% 102.4%
6/23/97 103.1% 101.8% 101.4%
6/24/97 100.4% 103.9% 102.0%
6/25/97 96.0% 103.0% 101.7%
6/26/97 94.2% 102.4% 101.3%
6/27/97 95.1% 102.8% 102.2%
6/30/97 98.7% 102.6% 103.3%
7/1/97 101.3% 103.3% 103.7%
7/2/97 99.6% 104.8% 103.5%
7/3/97 100.4% 106.3% 104.3%
7/7/97 99.1% 105.7% 103.9%
7/8/97 102.2% 106.5% 105.2%
7/9/97 98.7% 105.2% 104.5%
7/10/97 96.9% 105.9% 104.6%
7/11/97 96.4% 106.2% 105.0%
7/14/97 95.6% 106.4% 105.3%
7/15/97 98.7% 107.3% 105.0%
7/16/97 98.2% 108.5% 105.7%
7/17/97 99.1% 108.0% 105.3%
7/18/97 99.6% 106.1% 104.3%
7/21/97 100.0% 105.8% 103.5%
7/22/97 100.4% 108.2% 103.5%
7/23/97 96.9% 108.5% 103.5%
7/24/97 98.7% 109.0% 103.8%
7/25/97 96.9% 108.8% 103.8%
7/28/97 97.8% 108.5% 103.9%
7/29/97 97.8% 109.2% 103.6%
7/30/97 99.6% 110.4% 104.1%
7/31/97 98.7% 110.6% 105.0%
8/1/97 101.3% 109.8% 104.2%
8/4/97 100.9% 110.1% 103.7%
8/5/97 103.1% 110.4% 104.3%
8/6/97 102.2% 111.3% 105.2%
8/7/97 103.1% 110.2% 104.8%
8/8/97 98.7% 108.2% 103.7%
8/11/97 98.7% 108.6% 103.4%
</TABLE>
<TABLE>
<CAPTION>
Composite
of Terrapin
Date Terrapin S&P 500 Comparables (1)
- -------- ---------- -------- ---------------
<S> <C> <C> <C>
8/12/97 98.7% 107.4% 103.1%
8/13/97 102.2% 106.9% 102.7%
8/14/97 100.4% 107.2% 103.3%
8/15/97 98.7% 104.4% 102.6%
8/18/97 101.8% 105.7% 102.8%
8/19/97 98.7% 107.3% 103.7%
8/20/97 99.1% 108.9% 104.5%
8/21/97 101.8% 107.2% 103.6%
8/22/97 100.4% 107.0% 103.2%
8/25/97 99.6% 106.6% 103.2%
8/26/97 102.2% 105.8% 102.7%
8/27/97 99.6% 105.9% 102.5%
8/28/97 99.6% 104.7% 102.6%
8/29/97 99.6% 104.2% 102.3%
9/2/97 101.3% 107.5% 103.1%
9/3/97 101.3% 107.5% 102.4%
9/4/97 101.8% 107.9% 103.0%
9/5/97 101.3% 107.7% 103.2%
9/8/97 103.1% 107.9% 104.1%
9/9/97 102.7% 108.2% 104.5%
9/10/97 104.0% 106.5% 105.6%
9/11/97 104.9% 105.8% 103.9%
9/12/97 104.9% 107.1% 106.2%
9/15/97 104.9% 106.6% 107.0%
9/16/97 104.0% 109.6% 109.0%
9/17/97 105.8% 109.3% 108.6%
9/18/97 106.7% 109.8% 108.8%
9/19/97 107.1% 110.2% 109.2%
9/22/97 107.6% 110.7% 108.9%
9/23/97 107.6% 110.3% 107.9%
9/24/97 110.9% 109.5% 107.9%
9/25/97 110.2% 108.7% 107.5%
9/26/97 108.4% 109.5% 107.6%
9/29/97 110.2% 110.5% 109.1%
9/30/97 107.6% 109.8% 109.4%
10/1/97 114.2% 110.7% 109.6%
10/2/97 115.6% 111.3% 110.7%
10/3/97 117.3% 111.8% 110.8%
10/6/97 117.3% 112.7% 108.8%
10/7/97 120.9% 113.9% 110.6%
10/8/97 127.1% 112.9% 109.8%
10/9/97 127.6% 112.5% 110.0%
10/10/97 126.2% 112.1% 109.7%
10/13/97 124.4% 112.2% 110.0%
10/14/97 123.6% 112.4% 110.1%
</TABLE>
<TABLE>
<CAPTION>
Composite
of Terrapin
Date Terrapin S&P 500 Comparables (1)
- -------- ---------- -------- ---------------
<S> <C> <C> <C>
10/15/97 120.9% 111.9% 110.4%
10/16/97 114.7% 110.7% 108.0%
10/17/97 110.2% 109.4% 106.8%
10/20/97 112.9% 110.7% 106.6%
10/21/97 115.6% 112.7% 107.8%
10/22/97 114.7% 112.2% 107.3%
10/23/97 113.8% 110.2% 104.7%
10/24/97 112.4% 109.1% 104.4%
10/27/97 109.3% 101.6% 99.4%
10/28/97 108.9% 106.8% 100.3%
10/29/97 112.9% 106.5% 101.0%
10/30/97 106.7% 104.7% 99.5%
10/31/97 109.3% 106.0% 100.2%
11/3/97 108.0% 108.8% 101.9%
11/4/97 110.2% 109.0% 101.5%
11/5/97 107.6% 109.3% 103.0%
11/6/97 107.6% 108.7% 101.9%
11/7/97 106.7% 107.5% 100.6%
11/10/97 106.7% 106.7% 100.4%
11/11/97 110.2% 107.1% 100.3%
11/12/97 107.6% 105.0% 99.0%
11/13/97 109.3% 106.2% 98.6%
11/14/97 112.0% 107.6% 99.9%
11/17/97 111.6% 109.7% 100.9%
11/18/97 110.2% 108.7% 100.2%
11/19/97 111.1% 109.5% 101.7%
11/20/97 112.9% 111.1% 103.5%
11/21/97 105.8% 111.6% 104.3%
11/24/97 107.1% 109.7% 102.5%
11/25/97 106.2% 110.2% 103.0%
11/26/97 108.9% 110.3% 104.1%
11/28/97 108.9% 110.7% 104.2%
12/1/97 109.6% 113.0% 105.1%
12/2/97 112.9% 112.6% 104.4%
12/3/97 108.4% 113.2% 105.2%
12/4/97 108.4% 112.8% 105.0%
12/5/97 108.7% 114.0% 106.2%
12/8/97 109.3% 113.8% 106.8%
12/9/97 110.7% 113.1% 105.9%
12/10/97 109.8% 112.4% 105.0%
12/11/97 110.7% 110.7% 104.3%
12/12/97 112.9% 110.5% 103.4%
12/15/97 111.6% 111.6% 103.1%
12/16/97 112.4% 112.2% 103.7%
12/17/97 114.7% 111.9% 103.7%
</TABLE>
[MERRILL LYNCH LOGO]
<PAGE> 5
Project Terrapin
Terrapin Stock Price Performance - 6/15/97 to Present (cont'd)
<TABLE>
<CAPTION>
Composite
of Terrapin
Date Terrapin S&P 500 Comparables (1)
- -------- ---------- -------- ---------------
<S> <C> <C> <C>
12/18/97 116.0% 110.7% 103.1%
12/19/97 114.7% 109.7% 102.3%
12/22/97 115.6% 110.5% 103.2%
12/23/97 119.3% 108.8% 103.3%
12/24/97 119.6% 108.1% 102.4%
12/26/97 120.0% 108.5% 102.8%
12/29/97 119.6% 110.5% 103.6%
12/30/97 121.8% 112.5% 104.9%
12/31/97 118.2% 112.5% 105.1%
1/2/98 119.6% 113.0% 105.2%
1/5/98 118.2% 113.2% 104.1%
1/6/98 119.1% 112.0% 104.7%
1/7/98 120.9% 111.7% 104.2%
1/8/98 119.6% 110.8% 104.5%
1/9/98 125.3% 107.5% 101.8%
1/12/98 117.8% 108.8% 102.0%
1/13/98 118.2% 110.3% 103.1%
1/14/98 117.3% 111.0% 103.6%
1/15/98 117.3% 110.2% 104.6%
1/16/98 119.1% 111.4% 105.3%
1/20/98 121.3% 113.4% 106.9%
1/21/98 121.8% 112.5% 106.6%
1/22/98 120.9% 111.6% 106.1%
1/23/98 113.8% 111.0% 106.3%
1/26/98 110.2% 110.9% 105.6%
1/27/98 113.3% 112.3% 106.5%
1/28/98 113.8% 113.3% 108.2%
1/29/98 113.8% 114.2% 108.5%
1/30/98 115.6% 113.6% 107.9%
2/2/98 112.7% 116.0% 110.0%
2/3/98 120.0% 116.6% 109.7%
2/4/98 119.1% 116.7% 110.3%
2/5/98 116.4% 116.3% 111.6%
2/6/98 113.8% 117.3% 111.9%
2/9/98 112.9% 117.1% 113.3%
2/10/98 112.4% 118.1% 114.6%
2/11/98 113.8% 118.2% 114.9%
2/12/98 112.4% 118.7% 115.1%
2/13/98 111.1% 118.2% 116.2%
2/17/98 111.1% 118.5% 115.2%
2/18/98 110.7% 119.6% 116.0%
</TABLE>
<TABLE>
<CAPTION>
Composite
of Terrapin
Date Terrapin S&P 500 Comparables (1)
- -------- ---------- -------- ---------------
<S> <C> <C> <C>
2/19/98 110.2% 119.2% 114.9%
2/20/98 113.8% 119.8% 116.3%
2/23/98 113.8% 120.3% 116.7%
2/24/98 112.4% 119.4% 117.1%
2/25/98 112.0% 120.9% 117.3%
2/26/98 110.2% 121.5% 117.7%
2/27/98 108.4% 121.6% 117.9%
3/2/98 107.1% 121.4% 116.9%
3/3/98 113.8% 121.9% 116.8%
3/4/98 113.3% 121.4% 117.1%
3/5/98 112.9% 120.0% 115.8%
3/6/98 113.8% 122.3% 117.2%
3/9/98 116.0% 121.9% 115.5%
3/10/98 117.8% 123.3% 116.6%
3/11/98 117.3% 123.8% 116.6%
3/12/98 117.3% 124.0% 117.0%
3/13/98 121.8% 123.8% 116.9%
3/16/98 125.3% 125.1% 117.4%
3/17/98 124.4% 125.2% 117.5%
3/18/98 124.4% 125.8% 117.0%
3/19/98 126.2% 126.3% 117.5%
3/20/98 124.4% 127.4% 117.4%
3/23/98 124.2% 127.0% 117.8%
3/24/98 123.1% 128.1% 119.5%
3/25/98 123.6% 127.7% 120.3%
3/26/98 124.9% 127.6% 119.7%
3/27/98 128.0% 126.9% 118.2%
3/30/98 127.6% 126.7% 118.4%
3/31/98 136.9% 127.7% 120.0%
4/1/98 131.6% 128.4% 120.5%
4/2/98 133.3% 129.8% 120.4%
4/3/98 131.6% 130.1% 120.6%
4/6/98 128.0% 130.0% 119.8%
4/7/98 128.9% 128.6% 118.7%
4/8/98 129.8% 127.7% 118.5%
4/9/98 131.6% 128.7% 119.0%
4/13/98 134.0% 128.6% 118.6%
4/14/98 136.0% 129.3% 120.5%
4/15/98 129.9% 129.7% 119.5%
4/16/98 132.9% 128.4% 118.5%
4/17/98 129.3% 130.1% 119.6%
</TABLE>
<TABLE>
<CAPTION>
Composite
of Terrapin
Date Terrapin S&P 500 Comparables (1)
- -------- ---------- -------- ---------------
<S> <C> <C> <C>
4/20/98 131.8% 130.2% 119.1%
4/21/98 129.3% 130.6% 120.0%
4/22/98 128.0% 131.0% 120.3%
4/23/98 122.7% 129.7% 119.0%
4/24/98 119.1% 128.4% 118.1%
4/27/98 120.0% 125.9% 115.6%
4/28/98 117.3% 125.8% 116.5%
4/29/98 124.4% 126.9% 118.8%
4/30/98 124.4% 128.8% 119.2%
5/1/98 124.4% 129.9% 120.6%
5/4/98 124.4% 130.0% 121.4%
5/5/98 126.7% 129.3% 121.4%
5/6/98 124.0% 128.0% 121.3%
5/7/98 123.6% 126.9% 120.3%
5/8/98 124.4% 128.4% 120.9%
5/11/98 124.4% 128.2% 121.9%
5/12/98 123.6% 129.3% 121.3%
5/13/98 124.0% 129.7% 121.2%
5/14/98 123.8% 129.5% 120.6%
5/15/98 123.6% 128.5% 120.9%
5/18/98 122.7% 128.1% 120.1%
5/19/98 122.2% 128.6% 121.2%
5/20/98 122.2% 129.7% 121.5%
5/21/98 122.4% 129.2% 120.4%
5/22/98 121.8% 128.7% 120.7%
5/26/98 122.0% 126.8% 119.3%
5/27/98 119.1% 126.6% 118.1%
5/28/98 120.9% 127.2% 118.9%
5/29/98 121.6% 126.4% 117.6%
6/1/98 121.3% 126.4% 115.9%
6/2/98 118.0% 126.7% 115.5%
6/3/98 118.2% 125.5% 115.1%
6/4/98 118.2% 126.9% 115.7%
6/5/98 120.9% 129.1% 116.1%
6/8/98 118.7% 129.3% 115.4%
6/9/98 116.9% 129.6% 115.6%
6/10/98 113.1% 124.5% 113.3%
6/11/98 112.5% 122.5% 111.3%
6/12/98 113.8% 123.0% 110.5%
6/15/98 110.3% 120.6% 109.5%
</TABLE>
(1) Includes: Beckman Coulter, Bio Rad Labs, C.R. Bard, Diagnostic
Products, Dionex, Millipore, Perkin-Elmer, Sigma Aldrich, VWR
Scientific Products and Waters.
[MERRILL LYNCH LOGO]
<PAGE> 6
Project Terrapin
Terrapin Trading Volume - 6/15/97 to Present
<TABLE>
<CAPTION>
Terrapin
Date Trading Volume
- -------- --------------
<S> <C>
6/16/97 15400
6/17/97 14200
6/18/97 2500
6/19/97 21800
6/20/97 23100
6/23/97 2800
6/24/97 6300
6/25/97 30800
6/26/97 9300
6/27/97 15800
6/30/97 24500
7/1/97 17400
7/2/97 2400
7/3/97 11400
7/7/97 1300
7/8/97 1800
7/9/97 500
7/10/97 26300
7/11/97 94300
7/14/97 2700
7/15/97 14900
7/16/97 45900
7/17/97 59900
7/18/97 4400
7/21/97 263300
7/22/97 29800
7/23/97 43800
7/24/97 22200
7/25/97 9100
7/28/97 23100
7/29/97 56600
7/30/97 24500
7/31/97 33500
8/1/97 2400
8/4/97 12400
8/5/97 8200
</TABLE>
<TABLE>
<CAPTION>
Terrapin
Date Trading Volume
- -------- --------------
<S> <C>
8/6/97 10000
8/7/97 2000
8/8/97 2700
8/11/97 2400
8/12/97 29600
8/13/97 300
8/14/97 54700
8/15/97 3200
8/18/97 1200
8/19/97 900
8/20/97 46400
8/21/97 40600
8/22/97 46200
8/25/97 8800
8/26/97 3300
8/27/97 2200
8/28/97 10900
8/29/97 28600
9/2/97 7500
9/3/97 22900
9/4/97 116100
9/5/97 6400
9/8/97 12500
9/9/97 7000
9/10/97 1600
9/11/97 16800
9/12/97 5700
9/15/97 5700
9/16/97 16800
9/17/97 3200
9/18/97 3300
9/19/97 8000
9/22/97 1400
9/23/97 11400
9/24/97 13600
9/25/97 6100
</TABLE>
<TABLE>
<CAPTION>
Terrapin
Date Trading Volume
- -------- --------------
<S> <C>
9/26/97 2100
9/29/97 2500
9/30/97 33300
10/1/97 16400
10/2/97 11100
10/3/97 43400
10/6/97 4200
10/7/97 10400
10/8/97 37800
10/9/97 12500
10/10/97 8400
10/13/97 6200
10/14/97 10000
10/15/97 2900
10/16/97 15800
10/17/97 20500
10/20/97 6500
10/21/97 2200
10/22/97 23400
10/23/97 4300
10/24/97 8600
10/27/97 7000
10/28/97 8600
10/29/97 26100
10/30/97 14800
10/31/97 45200
11/3/97 25300
11/4/97 15500
11/5/97 11400
11/6/97 34300
11/7/97 11200
11/10/97 25100
11/11/97 2600
11/12/97 3900
11/13/97 1400
11/14/97 12900
</TABLE>
<TABLE>
<CAPTION>
Terrapin
Date Trading Volume
- -------- --------------
<S> <C>
11/17/97 23600
11/18/97 16400
11/19/97 3800
11/20/97 1500
11/21/97 37000
11/24/97 6000
11/25/97 42700
11/26/97 300
11/28/97 200
12/1/97 2100
12/2/97 186700
12/3/97 42000
12/4/97 14500
12/5/97 2200
12/8/97 3800
12/9/97 1600
12/10/97 4100
12/11/97 38500
12/12/97 27800
12/15/97 19200
12/16/97 17300
12/17/97 15900
12/18/97 8100
12/19/97 62000
12/22/97 6400
12/23/97 6600
12/24/97 15500
12/26/97 400
12/29/97 21300
12/30/97 64400
12/31/97 13900
1/2/98 13800
1/5/98 1700
1/6/98 22500
1/7/98 31900
1/8/98 21300
</TABLE>
[MERRILL LYNCH LOGO]
<PAGE> 7
Project Terrapin
Terrapin Trading Volume - 6/15/97 to Present (cont'd)
<TABLE>
<CAPTION>
Terrapin
Date Trading Volume
- -------- --------------
<S> <C>
1/9/98 214200
1/12/98 42400
1/13/98 64900
1/14/98 7900
1/15/98 23500
1/16/98 7400
1/20/98 4600
1/21/98 35700
1/22/98 11300
1/23/98 20900
1/26/98 11400
1/27/98 5600
1/28/98 9300
1/29/98 70300
1/30/98 3000
2/2/98 16000
2/3/98 7900
2/4/98 1300
2/5/98 42100
2/6/98 58500
2/9/98 6000
2/10/98 10600
2/11/98 22900
2/12/98 17600
2/13/98 12200
2/17/98 44200
2/18/98 121800
2/19/98 4700
2/20/98 2500
2/23/98 1500
2/24/98 18400
2/25/98 3800
2/26/98 12400
2/27/98 17800
3/2/98 232400
3/3/98 73400
</TABLE>
<TABLE>
<CAPTION>
Terrapin
Date Trading Volume
- -------- --------------
<S> <C>
3/4/98 32100
3/5/98 3200
3/6/98 35700
3/9/98 164400
3/10/98 20500
3/11/98 5100
3/12/98 1600
3/13/98 27000
3/16/98 16100
3/17/98 14800
3/18/98 20500
3/19/98 2700
3/20/98 43700
3/23/98 11900
3/24/98 1300
3/25/98 1900
3/26/98 1500
3/27/98 130100
3/30/98 7200
3/31/98 24700
4/1/98 23000
4/2/98 14700
4/3/98 6800
4/6/98 1200
4/7/98 5400
4/8/98 8200
4/9/98 13500
4/13/98 11500
4/14/98 5700
4/15/98 23100
4/16/98 8700
4/17/98 3200
4/20/98 700
4/21/98 3900
4/22/98 2600
4/23/98 3100
</TABLE>
<TABLE>
<CAPTION>
Terrapin
Date Trading Volume
- -------- --------------
<S> <C>
4/24/98 4900
4/27/98 12900
4/28/98 2500
4/29/98 700
4/30/98 11200
5/1/98 17700
5/4/98 19500
5/5/98 3600
5/6/98 7700
5/7/98 5600
5/8/98 13000
5/11/98 18900
5/12/98 6300
5/13/98 22000
5/14/98 9600
5/15/98 11200
5/18/98 19300
5/19/98 15400
5/20/98 19200
5/21/98 17700
5/22/98 1500
5/26/98 27200
5/27/98 29200
5/28/98 20600
5/29/98 4400
6/1/98 40500
6/2/98 39500
6/3/98 9100
6/4/98 4000
6/5/98 2900
6/8/98 12400
6/9/98 24900
6/10/98 2900
6/11/98 1900
6/12/98 2300
6/15/98 3400
</TABLE>
[MERRILL LYNCH LOGO]
<PAGE> 8
PROJECT TERRAPIN
Analysis of Terrapin Trading Volume - 6/15/97 to Present
(Shares in thousands)
<TABLE>
<CAPTION>
TOTAL VOLUME TRADED IN THIS RANGE (1)
CLOSING STOCK SHARES
PRICE RANGE TRADED % TRADED
------------- ------ --------
<S> <C> <C>
$26-50 - $28.50 1,268 23.52%
$28.50 - $30.50 840 15.57%
$30.50 - $32.50 1,355 25.44%
$32.50 - $34.50 1,061 19.69%
$34.50 - $36.50 727 13.47%
$36.50 - $38.50 116 2.15%
$38.50 - $39.50 25 0.46%
</TABLE>
<TABLE>
<CAPTION>
TOTAL VOLUME TRADED AT OR BELOW THIS RANGE (1)
CLOSING STOCK SHARES
PRICE TRADED % TRADED
------------- ------ --------
<S> <C> <C>
$28.50 1,268 23.52%
$30.50 2,108 39.09%
$32.50 3,463 64.23%
$34.50 4,525 83.92%
$36.50 5,251 97.39%
$38.50 5,367 99.54%
$39.50 5,392 100.00%
</TABLE>
(1) Terrapin share price 52 week high of $39.50 and 52 week low of $26.31.
[MERRILL LYNCH LOGO]
<PAGE> 9
PROJECT TERRAPIN
Historical & Projected Financial Results
(U.S. dollars in million, except per share data)
<TABLE>
<CAPTION>
HISTORICAL (1) PROJECTED (2)
------------------------------------------------------------------------------------ -------------
1993 1994 1995 1996 1997 1998E 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES $ 204.9 $ 235.2 $ 272.2 $ 309.5 $ 331.0 $ 359.1 $ 389.6
% Growth -- 14.8% 15.7% 13.7% 7.0% 8.5% 8.5%
EBITDA $ 31.7 $ 34.5 $ 41.9 $ 54.1 $ 63.7 $ 72.2 $ 80.7
%Margin 15.5% 14.7% 15.4% 17.5% 19.2% 20.1% 20.7%
EBIT $ 25.9 $ 28.0 $ 34.2 $ 43.5 $ 50.9 $ 57.9 $ 65.7
% Margin 12.6% 11.9% 12.5% 14.1% 15.4% 16.1% 16.9%
NET INCOME $ 16.8 $ 18.2 $ 22.3 $ 27.1 $ 32.2 $ 36.5 $ 42.0
% Margin 8.2% 7.7% 8.2% 8.7% 9.7% 10.2% 10.8%
EPS (DILUTED) $ 0.74 $ 0.81 $ 0.97 $ 1.15 $ 1.35 $ 1.51 $ 1.74
% Growth -- 8.3% 20.6% 18.5%` 16.9% 12.1% 15.0%
</TABLE>
<TABLE>
<CAPTION>
PROJECTED (2) 1993-1998 1998-2001
-------------------------- --------- ---------
2000 2001 5 YR CAGR 3 YR CAGR
---- ---- --------- ---------
<S> <C> <C> <C> <C>
NET SALES $ 422.7 $ 458.7 11.9% 8.5%
% Growth 8.5% 8.5%
EBITDA $ 90.2 $ 100.8 17.9% 11.8%
%Margin 21.3% 22.0%
EBIT $ 75.0 $ 85.4 17.4% 13.8%
% Margin 17.7% 18.6%
NET INCOME $ 48.7 $ 56.1 16.8% 15.4%
% Margin 11.5% 12.2%
EPS (DILUTED) $ 2.01 $ 2.32 15.2% 15.4%
% Growth 15.8% 15.3%
</TABLE>
(1) Excludes extraordinary and non-recurring charges.
(2) Projections based on First Call earnings estimates and secular growth rate
as of 6/22/98.
[MERRILL LYNCH LOGO]
<PAGE> 10
PROJECT TERRAPIN
Selected Publicly Traded Companies (1)
1999 PE TO 5-YR GROWTH (2)
<TABLE>
<S> <C>
Sigma-Aldrich 1.58x
C.R. Bard 1.35x
Terrapin 1.22x
Dionex 1.21x
Waters 1.03x
Bio Rad Labs 0.98x
Millipore 0.98x
Perkin Elmer 0.95x
Beckman Coulter 0.76x
Diagnostic Products 0.74x
VWR Scientific Products 0.72x
Offer Value (3) 1.54x
Mean (4) 1.03x
Median (4) 0.98x
</TABLE>
ENTERPRISE VALUE AS A MULTIPLE
OF 1998E EBITDA (2)
<TABLE>
<S> <C>
Waters 14.6x
Perkin Elmer 12.1x
Sigma-Aldrich 11.7x
Dionex 11.5x
Millipore 10.6x
Terrapin 10.3x
C.R. Bard 10.2x
Beckman Coulter 9.8x
Diagnostic Products 9.2x
VWR Scientific Products 8.2x
Bio Rad Labs 7.3x
Offer Value (3) 12.7x
Mean (4) 10.5x
Median (4) 10.4x
</TABLE>
EQUITY VALUE AS A MULTIPLE OF 1999E EPS
<TABLE>
<S> <C>
Waters 20.7x
Sigma-Aldrich 18.9x
Terrapin 18.3x
Diagnostic Products 18.1x
Dionex 18.1x
Perkin Elmer 18.1x
C.R. Bard 16.2x
Bio Rad Labs 15.7x
Millipore 15.7x
VWR Scientific Products 14.4x
Beckman Coulter 13.6x
Offer Value (3) 23.1x
Mean (4) 17.0x
Median (4) 17.2x
</TABLE>
(1) Earnings projections are calendarized and based upon First Call estimates
as of 6/22/98.
(2) Enterprise value is market value of equity plus long-term debt, short-term
debt, market value of preferred stock and minority interest, less cash and
cash equivalents.
(3) Represents offer multiple at an offer price of $38.00 per Terrapin share.
(4) Excludes Terrapin multiple from calculation.
[MERRILL LYNCH LOGO]
<PAGE> 11
PROJECT TERRAPIN
Analysis of Comparable Acquisitions
LIFE SCIENCES INDUSTRY
TRANSACTION VALUE TO LTM EBITDA
<TABLE>
<S> <C>
Gull Lab./Fresenius 23.1x
(5/5/94)
Amicom/Millipore 19.4x
(11/18/96)
HemcCoe/Imcera Grp. 17.0x
(9/28/92)
Coulter/Beckman 15.8x
(9/2/97)
Andros/Genstar Capt. 13.5x
(8/14/96)
Synectics Med./Meditronic 12.6x
(3/8/96)
App. Bio sys./Perkin-Elmer 11.5x
(10/6/92)
Nycomed/Amersham 10.7x
(7/1/97)
Bio Whittaker/Cambrex 9.2x
(8/25/97)
Life Sci. Int./Thermo Instr. 8.3x
(1/21/97)
Offer Value (1) 14.0x
Mean 14.2x
Median 13.1x
</TABLE>
CHEMICAL INDUSTRY
TRANSACTION VALUE TO LTM EBITDA
<TABLE>
<S> <C>
Allied Colloids/Ciba Specialty 14.4x
(1/20/98)
Loctite/Henkel 13.2x
(10/28/96)
Petrolite/Baker Hughes 12.3x
(2/25/97)
Unilever/Specialty Chem. Imperial 10.4x
(5/7/97)
Thompson Minwax/The Sherwin 10.3x
Williams Co. (11/22/96)
CPS Chem Co./Allied Colloids 10.1x
(11/19/96)
Offer Value (1) 14.0x
Mean 11.8x
Median 11.4x
</TABLE>
(1) Represents offer multiple at an offer price of $38.00 per Terrapin Share.
[MERRILL LYNCH LOGO]
<PAGE> 12
PROJECT TERRAPIN
Pro Forma EPS Analysis (1)
(U.S. dollars)
<TABLE>
<CAPTION>
1999 2000 2001
---- ---- ----
<S> <C> <C> <C> <C>
HUSKY STATUS QUO EPS (2) $2.73 $3.07 $3.46
</TABLE>
<TABLE>
<CAPTION>
HYPOTHETICAL
OFFER PRICE
PER SHARE OFFER PREMIUM (3) HUSKY PRO FORMA EPS FOR TERRAPIN ACQUISITION
------------ ----------------- -----------------------------------------------
<S> <C> <C> <C> <C>
$38.00 19.2% $2.30 $2.79 $3.36
+ $1 3.1% (0.05) (0.05) (0.05)
- $1 -3.1% 0.05 0.05 0.05
</TABLE>
<TABLE>
<CAPTION>
ACCRETION/(DILUTION)
-----------------------------------------------
<S> <C> <C> <C> <C>
$38.00 19.2% -15.6% -9.1% -2.9%
+ $1 3.1% -1.9% -1.7% -1.6%
- $1 -3.1% 1.9% 1.7% 1.6%
</TABLE>
(1) Projections for Terrapin based on First Call earnings estimates and secular
growth rate as of 6/22/98.
(2) Projections based on First Call earnings estimates and secular growth rate
as of 6/22/98.
(3) Based on current Terrapin share price of $31.88.
[MERRILL LYNCH LOGO]
<PAGE> 13
PROJECT TERRAPIN
Pro Forma Cash Analysis (1)
(U.S. dollars)
<TABLE>
<CAPTION>
1999 2000 2001
---- ---- ----
<S> <C> <C> <C> <C>
HUSKY STATUS QUO EPS (2) $2.73 $3.07 $3.46
</TABLE>
<TABLE>
<CAPTION>
HYPOTHETICAL
OFFER PRICE
PER SHARE OFFER PREMIUM (3) HUSKY PRO FORMA EPS FOR TERRAPIN ACQUISITION
------------ ----------------- -----------------------------------------------
<S> <C> <C> <C> <C>
$38.00 19.2% $2.74 $3.23 $3.80
+ $1 3.1% (0.03) (0.03) (0.03)
- $1 -3.1% 0.03 0.03 0.03
</TABLE>
<TABLE>
<CAPTION>
ACCRETION/(DILUTION)
-----------------------------------------------
<S> <C> <C> <C> <C>
$38.00 19.2% 0.5% 5.2% 9.8%
+ $1 3.1% -1.1% -1.0% -0.9%
- $1 -3.1% 1.1% 1.0% 0.9%
</TABLE>
(1) Pro Forma cash EPS excludes the goodwill amortization charge associated
with the Terrapin transaction.
(2) Projections based on First Call earnings estimates and secular growth rate
as of 6/22/98.
(3) Based on current Terrapin share price of $31.88.
[MERRILL LYNCH LOGO]
<PAGE> 14
PROJECT TERRAPIN
Analysis of Dilutive Strategic Transactions
<TABLE>
<CAPTION>
Acquirer Transaction Market View Reaction to Acquirer's Stock Price
---------------------------------------
Date Target Value Consideration of Dilution (1) 1 week 1 month 6 months 1 year
- ---- --------- ----------- ------------- -------------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
May-98 Monsanto $2,300 Cash 20% 4% -- -- --
DEKALB Genetics
Nov-97 McClatchy Newspapers 1,400 Cash & Stock 35% -14% -13% -8% --
Cowles Media Co.
Nov-97 Merrill Lynch 5,260 Cash 6% 4% 10% 32% --
Mercury Asset
Management
Sep-97 Beckman Instruments 1,200 Cash 42% -12% -8% 5% 27%
Coulter
Sep-96 AH Belo 1,500 Cash & Stock 44% -8% 2% 0% 33%
Providence Journal
Co.
Aug-96 WorldCom 12,400 Stock 67% -22% -24% 3% 20%
MFS
Apr-96 Aetna Life & Casualty 8,150 Cash & Stock 19% -3% -6% 12% 14%
U.S. Healthcare
Mar-96 Betz Laboratories 632 Cash 30% 9% 4% 37% 54%
Dearborn
</TABLE>
<TABLE>
<CAPTION>
Date Rationale
- ---- ---------------------------------------
<S> <C>
May-98 Attempt to capture market share and
compete with Pioneer in the acquisitive
domestic and global seed market.
Nov-97 Strategic merger and concurrent
sale of non core assets.
Nov-97 Strategic move toward long-term
growth and necessary entrance into
fee related asset management
business.
Sep-97 Expects to generate cash flows
which will pay down debt and
establish an investment grade
rating by 1999.
Sep-96 Strategic acquisition expanding
media presence in the northeast and
reposition company as a broadcaster.
Aug-96 The transaction is necessary for
WorldCom to fully penetrate the
local market. Large synergies.
Apr-96 Provide size needed to negotiate
favorable contracts. The new
company expects to realize
synergies of $300 million within 18
months.
Mar-96 Expansion into international
markets in an attempt to compete
against Nalco chemical. Long term
future growth through rapid
integration of the two businesses
is expected.
</TABLE>
(1) IBES mean 1 year forward earnings estimates.
[MERRILL LYNCH LOGO]
<PAGE> 15
PROJECT TERRAPIN
Selected Publicly Traded Companies (1)
EQUITY VALUE AS A MULTIPLE OF 1999E EPS
<TABLE>
<S> <C>
Ecolab Inc. 23.7x
Sigma Aldrich 18.9x
International Flav/Frag 18.2x
Great Lakes Chemical 14.8x
Morton International 13.6x
Nalco Chemical 13.6x
Husky 12.0x
Hercules, Inc. 11.5x
Grace (W.R.) & Co. 11.2x
Mean (2) 15.7x
Median (2) 14.2x
</TABLE>
1999 PE MULTIPLE TO 5-YR GROWTH
<TABLE>
<S> <C>
International Flav/Frag 1.82x
Great Lakes Chemical 1.64x
Ecolab Inc. 1.58x
Sigma Aldrich 1.58x
Nalco Chemical 1.23x
Hercules, Inc. 1.15x
Morton International 1.04x
Husky 1.00x
Grace (W.R.) & Co. 0.93x
Mean (2) 1.37x
Median (2) 1.40x
</TABLE>
(1) Earnings estimates and 5 year growth rates based on First Call date
6/22/98.
(2) Excludes Husky multiple from calculation.
[MERRILL LYNCH LOGO]
<PAGE> 16
PROJECT TERRAPIN
Terrapin Contribution to Husky
<TABLE>
<CAPTION>
HISTORICAL PROJECTED
5 YEAR CAGR (1) 3 YEAR CAGR (1)
1993-1998 1998-2001
--------------- ---------------
<S> <C> <C>
NET SALES
Husky without Terrapin 3.8% 6.0%
Terrapin 11.9% 8.5%
Total 5.9% 6.8%
EBIT
Husky without Terrapin 4.5% 4.1%
Terrapin 17.4% 13.8%
Total 9.1% 8.6%
NET INCOME
Husky without Terrapin 9.0% 9.8%
Terrapin 16.8% 15.4%
Total (3) 10.9% 11.8%
PRO FORMA (4) -- 20.8%
</TABLE>
(1) Excludes extraordinary and non-recurring items. Includes general corporate
expenses and other income and is before minority interest.
(2) Projections for Husky and Terrapin based on First Call earnings estimates
and secular growth rates as of 6/22/98.
(3) Total net income based on Husky's current ownership of Terrapin.
(4) Pro Forma for the acquisition of Terrapin based on net income growth from
1999 to 2001.
[MERRILL LYNCH LOGO]
<PAGE> 17
PROJECT TERRAPIN
Impact of Growth on Multiples
<TABLE>
<CAPTION>
1999 P/E 5 YEAR
COMPANY MULTIPLE TOTAL RETURN
- ----------------------------- -------- ------------
<S> <C> <C>
Air Products & Chemicals Inc. 16.2x 13.70%
Airgas 19.3 15.00%
Applied Extrusun 12.5 12.00%
Avery Dennison Corp. 20.6 15.60%
Betzdearborn 13.4 15.50%
Bio Rad Labs Inc 15.7 16.00%
Cambrex 14.6 15.40%
Crompton & Knowles Corp. 12.6 20.20%
Cytec Inds 12.3 16.00%
Husky 12.0 15.20%
Ecolab Inc. 23.7 16.20%
Ethyl Corp. 8.1 11.20%
Ferro Corp. 13.0 13.90%
Great Lakes Chemical Corp 14.8 9.80%
H.B. Fuller Co. 14.0 13.50%
Hanna Co. 10.3 15.50%
Hanna Co. 10.3x 15.50%
Hercules 11.5 12.60%
Intl Flav and Frag 18.2 13.40%
Intl Specialty Products 14.3 15.00%
Learonal 13.0 21.40%
Terrapin 18.3 15.60%
Lubrizol Corp. 11.8 13.20%
Mineral Technology 17.6 15.20%
Morton Intl 13.6 14.90%
Nalco Chem Co. 13.6 13.90%
OM Group 16.0 15.90%
Praxair 14.2 15.00%
RPM Inc 17.1 17.80%
Schulman Inc. 11.8 14.40%
Valspar Corp. 19.9 16.10%
W.R. Grace & Co. 11.2 12.00%
Husky Total Return Status Quo 15.2%
Terrapin Total Return Status Quo 15.6%
Husky Total Return Pro Forma 24.0%
</TABLE>
(1) Estimated 5 year total return equals the sum of First Call secular growth
rates plus the current dividend yield as of 6/22/98.
[MERRILL LYNCH LOGO]
<PAGE> 18
PROJECT TERRAPIN
Analysis of Hypothetical Shareholder Value Over Time
(U.S. dollars in millions, except per share data)
<TABLE>
<CAPTION>
KEY ASSUMPTIONS
<S> <C>
Current Husky Share Price $32.63
Husky Status Quo Forward (1999) EPS 2.73
Husky Status Quo Forward P/E 12.0x
Terrapin Forward P/E 18.4
</TABLE>
<TABLE>
<CAPTION>
1998 1999 2000
---- ---- ----
<S> <C> <C> <C> <C>
HUSKY STATUS QUO HYPOTHETICAL SHAREHOLDER VALUE
Husky Status Quo Forward EPS (1) $ 2.73 $ 3.07 $ 3.46
Husky Status Quo Valuation (2) $32.63 $36.70 $41.39
PRO FORMA HYPOTHETICAL SHAREHOLDER VALUE
Pro Forma Husky Forward EPS (3) $ 2.30 $ 2.79 $ 3.36
Pro Forma Husky Forward P/E Multiple: 13.0x $29.95 $36.25 $43.70
15.5 35.71 43.22 52.11
18.0 41.47 50.19 60.51
VALUE ACCRETION/DILUTION
Pro Forma Husky Forward P/E Multiple: 13.0x -8.2% -1.2% 5.6%
15.5 9.4% 17.8% 25.9%
18.0 27.1% 36.8% 46.2%
Pro Forma P/E to Breakeven Value 14.2x 13.2x 12.3x
</TABLE>
(1) Projections based on First Call earnings estimates and secular growth rate
as of 6/22/98.
(2) Husky Standalone valuation based on 1999 EPS and Husky current 1999 P/E
(e.g., 1998 valuation equals 12.0x multiplied by 1999 Standalone EPS of
$2.73).
(3) Assumes offer price of Terrapin of $38.00 per share.
[MERRILL LYNCH LOGO]
<PAGE> 1
PRESENTATION TO THE BOARD OF DIRECTORS OF HUSKY
REGARDING PROJECT TERRAPIN
UPDATE ON PROCESS AND REBUTTAL TO GOLDMAN
SACH'S ANALYSIS
October 14, 1998
<PAGE> 2
PROJECT TERRAPIN
Overview
- - The following materials were prepared to provide Husky's Board of
Directors with a background to determine its alternatives with respect
to the acquisition of the minority interest in Terrapin
- Review of transaction process
- Preliminary rebuttal to Goldman Sachs' preliminary valuation
analysis
- Determine Husky's negotiating strategy
- Next steps
- - It is important to note that the Goldman Sachs presentation to Merrill
Lynch was not characterized as a full range of valuation methodologies
or as reflecting the complete analysis shared with the Special
Committee
[MERRILL LYNCH LOGO]
<PAGE> 3
PROJECT TERRAPIN
Transaction Overview
<TABLE>
<CAPTION>
<S> <C>
TRANSACTION: Acquisition of minority interest in Terrapin
OFFER PRICE PER SHARE: $37.00
PREMIUM TO MARKET: (1) 19.4%
TOTAL OFFER VALUE FOR MINORITY INTEREST: (2) $444.9 million
CONSIDERATION: Cash
ACCOUNTING TREATMENT: Purchase Accounting
ANNUAL GOODWILL CHARGE: $9.5 million
COST OF ACQUISITION FINANCING: 7.25%
</TABLE>
(1) Terrapin's share price was $31.00 as of the announcement date (July 7,
1998).
(2) Assumes purchase of 11.4 million shares of Terrapin not currently owned
by Husky and the in-the-money spread on all outstanding options.
[MERRILL LYNCH LOGO]
<PAGE> 4
PROJECT TERRAPIN
Overview of Process Since Offer
JULY 7 Husky publicly announced proposal to acquire the 48%
of Terrapin it does not already own for $37.00 per
share in cash
JULY 7 Terrapin establishes Special Committee of independent
directors to review Husky's offer
AUGUST 3 Special Committee retains Wachtell Lipton and Goldman
Sachs as advisors
AUGUST 3 - SEPTEMBER 13 Goldman Sachs conducts due diligence with Terrapin
management and meets with Special Committee
SEPTEMBER 14 Husky management and Special Committee discuss next
steps leading to meeting between financial advisors
SEPTEMBER 17 Goldman Sachs shares preliminary valuation views and
methodology with Merrill Lynch in initial meeting
between financial advisors
OCTOBER 1 Husky management, Merrill Lynch and Jones Day conduct
due diligence on Terrapin pipeline in Rockville.
Attendees include Terrapin management, Special
Committee Chairman, Goldman Sachs and Wachtell Lipton
OCTOBER 8 Husky management and Merrill Lynch conduct due
diligence on Terrapin base projections. Attendees
include Terrapin management, Special Committee
Chairman and Goldman Sachs
OCTOBER 14 Husky telephonic board meeting
[MERRILL LYNCH LOGO]
<PAGE> 5
PROJECT TERRAPIN
Comparative Stock Price Performance - 7/8/98 to Present (2)
<TABLE>
<CAPTION>
COMPOSITE OF
TERRAPIN
DATE TERRAPIN COMPARABLES S&P 500
---- -------- ----------- -------
<S> <C> <C> <C> <C>
7/8/98 100.0% 100.0% 100.0%
7/9/98 100.0% 99.3% 99.2%
7/10/98 100.0% 99.8% 99.2%
7/13/98 100.8% 99.9% 99.3%
7/14/98 100.0% 101.0% 99.7%
7/15/98 100.0% 100.7% 100.1%
7/16/98 99.8% 101.5% 102.5%
7/17/98 99.0% 101.7% 102.1%
7/20/98 99.4% 101.5% 101.5%
7/21/98 99.0% 99.9% 101.1%
7/22/98 99.0% 99.8% 100.6%
7/23/98 98.9% 97.7% 98.9%
7/24/98 98.7% 97.8% 97.8%
7/27/98 98.2% 98.4% 97.1%
7/28/98 98.1% 96.9% 96.3%
7/29/98 98.4% 96.5% 96.6%
7/30/98 98.1% 98.0% 97.2%
7/31/98 98.2% 96.1% 95.9%
8/3/98 98.7% 95.4% 94.0%
8/4/98 96.8% 91.9% 92.8%
8/5/98 100.6% 92.7% 92.1%
8/6/98 98.1% 93.4% 93.8%
8/7/98 98.5% 93.4% 96.4%
8/10/98 98.9% 92.9% 96.4%
8/11/98 96.8% 91.7% 93.9%
8/12/98 96.4% 93.0% 95.3%
8/13/98 96.8% 92.2% 95.5%
8/14/98 96.1% 91.1% 95.3%
8/17/98 96.1% 92.9% 95.9%
8/18/98 95.9% 94.4% 97.4%
8/19/98 95.5% 94.1% 96.5%
8/20/98 94.8% 93.6% 96.4%
8/21/98 94.8% 92.7% 95.0%
8/24/98 95.5% 93.3% 95.8%
</TABLE>
<TABLE>
<CAPTION>
COMPOSITE OF
TERRAPIN
DATE TERRAPIN COMPARABLES S&P 500
---- -------- ----------- -------
<S> <C> <C> <C> <C>
8/25/98 94.2% 93.7% 95.1%
8/26/98 90.6% 93.0% 93.6%
8/27/98 88.3% 89.4% 91.3%
8/28/98 86.4% 88.1% 89.9%
8/31/98 86.0% 82.1% 84.4%
9/1/98 88.3% 85.2% 87.1%
9/2/98 89.8% 84.9% 88.8%
9/3/98 88.6% 84.2% 87.7%
9/4/98 89.3% 83.5% 87.0%
9/8/98 92.2% 87.7% 89.1%
9/9/98 91.6% 86.3% 87.1%
9/10/98 90.9% 84.0% 85.8%
9/11/98 89.0% 86.5% 88.0%
9/14/98 88.3% 88.3% 87.4%
9/15/98 89.9% 89.0% 87.7%
9/16/98 90.9% 89.6% 89.2%
9/17/98 92.9% 87.4% 87.3%
9/18/98 94.6% 87.5% 88.7%
9/21/98 94.2% 87.8% 88.6%
9/22/98 92.9% 88.3% 89.8%
9/23/98 92.9% 91.4% 91.5%
9/24/98 90.9% 89.4% 89.3%
9/25/98 90.7% 89.6% 88.5%
9/28/98 90.9% 89.9% 88.1%
9/29/98 85.7% 89.9% 88.3%
9/30/98 86.7% 87.2% 87.6%
10/1/98 86.2% 84.6% 85.3%
10/2/98 87.3% 86.0% 85.5%
10/5/98 86.4% 84.8% 84.1%
10/6/98 86.0% 84.4% 83.6%
10/7/98 81.2% 83.2% 81.8%
10/8/98 79.2% 82.3% 80.5%
10/9/98 84.4% 84.4% 82.1%
</TABLE>
(1) Includes: Beckman Coulter, Bio Rad Labs, C.R. Bard, Cambrex, Dionex,
Millipore, Nycomed Amersham, Perkin Elmer, Sigma Aldrich, Techne,
Thermo BioAnalysis, VWR Scientific Products and Waters.
(2) Source: One Source Information Services, Inc.
[MERRILL LYNCH LOGO]
<PAGE> 6
PROJECT TERRAPIN
Terrapin Stock Price Performance - 7/8/98 to Present (1)
<TABLE>
<CAPTION>
DATE TERRAPIN S&P 500 TERRAPIN
---- -------- ------- --------
<S> <C> <C> <C> <C>
7/8/98 $38.50 $1,166.38 2,651,800
7/9/98 38.50 1,158.56 392,700
7/10/98 38.50 1,164.31 179,900
7/13/98 38.81 1,165.19 20,100
7/14/98 38.50 1,177.56 114,900
7/15/98 38.50 1,174.81 20,200
7/16/98 38.44 1,184.00 116,300
7/17/98 38.13 1,186.75 169,500
7/20/98 38.25 1,184.13 39,900
7/21/98 38.13 1,165.06 23,600
7/22/98 38.13 1,164.06 132,700
7/23/98 38.06 1,139.75 88,200
7/24/98 38.00 1,140.81 29,800
7/27/98 37.81 1,147.25 25,700
7/28/98 37.75 1,130.25 8,200
7/29/98 37.88 1,125.19 19,800
7/30/98 37.75 1,142.94 3,100
7/31/98 37.81 1,120.69 27,400
8/3/98 38.00 1,112.44 25,300
8/4/98 37.25 1,072.13 57,500
8/5/98 38.75 1,081.44 47,800
8/6/98 37.75 1,089.63 56,900
8/7/98 37.94 1,089.44 37,700
8/10/98 38.06 1,083.13 194,300
8/11/98 37.25 1,069.00 82,900
8/12/98 37.13 1,084.25 2,900
8/13/98 37.25 1,074.94 63,200
8/14/98 37.00 1,062.75 51,400
8/17/98 37.00 1,083.69 49,400
8/18/98 36.91 1,101.19 110,600
8/19/98 36.75 1,098.06 39,100
8/20/98 36.50 1,091.63 6,900
8/21/98 36.50 1,081.25 3,800
8/24/98 36.78 1,088.13 2,400
</TABLE>
<TABLE>
<CAPTION>
DATE TERRAPIN S&P 500 TERRAPIN
---- -------- ------- --------
<S> <C> <C> <C> <C>
8/25/98 $36.25 $1,092.88 85,200
8/26/98 34.88 1,084.19 27,400
8/27/98 34.00 1,042.56 35,800
8/28/98 33.25 1,027.00 64,000
8/31/98 33.13 957.25 153,600
9/1/98 34.00 994.25 244,100
9/2/98 34.56 990.47 1,900
9/3/98 34.13 982.25 71,400
9/4/98 34.38 973.88 6,300
9/8/98 35.50 1,023.47 12,400
9/9/98 35.25 1,006.19 11,800
9/10/98 35.00 980.19 67,200
9/11/98 34.25 1,009.06 31,300
9/14/98 34.00 1,029.75 191,200
9/15/98 34.63 1,037.69 5,800
9/16/98 35.00 1,045.50 20,300
9/17/98 35.75 1,018.88 1,000
9/18/98 36.44 1,020.09 21,900
9/21/98 36.25 1,023.88 4,600
9/22/98 35.75 1,029.63 5,500
9/23/98 35.75 1,066.06 24,900
9/24/98 35.00 1,042.75 9,500
9/25/98 34.94 1,044.75 112,400
9/28/98 35.00 1,048.69 7,600
9/29/98 33.00 1,049.00 81,500
9/30/98 33.38 1,017.00 478,800
10/1/98 33.19 986.38 216,300
10/2/98 33.63 1,002.59 13,700
10/5/98 33.25 988.56 7,800
10/6/98 33.13 984.59 27,800
10/7/98 31.25 970.69 130,300
10/8/98 30.50 959.44 108,000
10/9/98 32.50 984.38 89,300
</TABLE>
(1) Source: One Source Information Services, Inc.
[MERRILL LYNCH LOGO]
<PAGE> 7
PROJECT TERRAPIN
Terrapin Trading Volume Analysis, 7/8/98 to Present (1)
(Shares in thousands)
TOTAL VOLUME TRADED IN THIS RANGE
<TABLE>
<CAPTION>
CLOSING STOCK PRICE RANGE SHARES TRADED PERCENT TRADED
------------------------- ------------- --------------
<S> <C> <C> <C>
$30.50-$31.50 238 3.28%
$31.50-$32.50 0 0.00
$32.50-$33.50 1,119 15.40
$33.50-$34.50 594 8.17
$34.50-$35.50 264 3.63
$35.50-$36.50 156 2.14
$36.50-$37.50 470 6.47
$37.50-$38.50 998 13.74
$38.50-$39.50 3,427 47.17
</TABLE>
TOTAL VOLUME TRADED AT OR BELOW THIS RANGE
<TABLE>
<CAPTION>
CLOSING STOCK PRICE CUMULATIVE PERCENT OF TOTAL
AT OR BELOW THIS RANGE SHARES TRADED VOLUME TRADED
---------------------- ------------- -------------
<S> <C> <C> <C>
$31.50 238 3.28%
$32.50 238 3.28
$33.50 1,357 18.68
$34.50 1,951 26.85
$35.50 2,215 30.48
$36.50 2,371 32.62
$37.50 2,841 39.09
$38.50 3,839 52.83
$39.50 7,267 100.00
</TABLE>
(1) Source: One Source Information Services, Inc; Based on closing price of
Terrapin.
[MERRILL LYNCH LOGO]
<PAGE> 8
PROJECT TERRAPIN
Transaction Rationale
- - Terrapin continues to represent a unique acquisition opportunity for
Husky
- Intimate knowledge of businesses and prospects reduces risk
- Terrapin has been an attractive investment
- Good working relationship with management
- - Terrapin possesses many attributes of a successful acquisition
candidate
- Strong market shares in core products
- Solid historical track record of delivering plan results
- Good management team
- - In addition, Husky continues to believe in Terrapin's long term plan
- 9.5% revenue growth fueled by strong pipeline
- 15.0% profit growth
- - Additionally, a Terrapin acquisition has strong strategic rationale
- Provides catalyst to "transform" Husky into a higher growth,
specialty business
- Allows Husky to focus on three, wholly-owned core businesses
- Combined with the sale of packaging coatings, sends a clear
signal of Husky's focus in growth businesses
- - As a result, Husky management continues to support the transaction at
$37.00 per Terrapin share
[MERRILL LYNCH LOGO]
<PAGE> 9
PROJECT TERRAPIN
Valuation Methodology Used By Financial Advisor To Special Committee
- - Goldman Sachs presented preliminary "negotiating" views on value to
Merrill Lynch
- - The presentation was not characterized as a full range of valuation
methodologies or as reflecting the complete analysis shared with the
Special Committee
- - Goldman Sachs valued two discreet sets of cash flows
- Base strategic plan
- "Incremental" pipeline
<TABLE>
<CAPTION>
BASE BUSINESS PIPELINE
------------- --------
FORECAST:
<S> <C>
- Significant revenue growth with mature products and - Significant "incremental" pipeline revenue and profits
carve-out of pipeline revenue and profits - Ability to commercialize technology on a large scale
- No reduction due to global macroeconomic crises without proven track record
- Projected market share gains with minimal impact on - Significant market penetration at attractive gross
pricing margins
- Minor competitor response
- Limited, if any, technological obsolescence
- Shift in R&D focus away from core businesses
- High probability of success weightings
EXIT MULTIPLES:
- Exit multiple range of 14x to 16x EBIT - Exit multiple range of 17x to 18x EBIT
- Implied perpetuity growth rate of 6% to 7% on stable - Implied perpetuity growth rate of 21% to 26% on a
core lab products business at an 11% discount rate discreet set of products
</TABLE>
[MERRILL LYNCH LOGO]
<PAGE> 10
PROJECT TERRAPIN
Terrapin Management Projections
(U.S. dollars in millions, except per share data)
<TABLE>
<CAPTION>
PROJECTED (1) 1998-2002
TERRAPIN BASE 1998E 1999 2000 2001 2002 4 YR. CAGR
<S> <C> <C> <C> <C> <C> <C>
REVENUES $361.4 $395.7 $433.3 $474.4 $519.5 9.5%
% Growth -- 9.5% 9.5% 9.5% 9.5%
EBIT $59.7 $67.6 $76.8 $87.5 $99.8 13.7%
% Margin 16.5% 17.1% 17.7% 18.4% 19.2%
TERRAPIN PIPELINE
RISK ADJUSTED REVENUES $1.6 $25.2 $64.6 $116.2 $164.5 217.2%
% Growth -- 1448.2% 156.6% 80.1% 41.6%
EBIT $0.5 $3.8 $12.5 $27.7 $46.7 208.5%
% Margin 31.7% 15.0% 19.4% 23.9% 28.4%
BASE + PIPELINE
NET SALES $363.0 $420.9 $497.9 $590.7 $684.0 17.2%
% Growth -- 15.9% 18.3% 18.6% 15.8%
EBIT $60.2 $71.4 $89.3 $115.2 $146.5 24.9%
% Margin 16.6% 17.0% 17.9% 19.5% 21.4%
</TABLE>
(1) Projections provided by financial advisor to the Special Committee.
[MERRILL LYNCH LOGO]
<PAGE> 11
PROJECT TERRAPIN
Valuation of Base Business by the Financial Advisor to Special Committee
- - The Goldman Sachs valuation was based only on discounted cash flows and was
not portrayed as complete or as reflecting the complete analysis shared
with the Special Committee
- - Husky believes the valuation is very aggressive
- Aggressive projections of base business due to separate valuation of
pipeline and no consideration of current macroeconomics events
- Aggressive exit multiples
- Husky believes that the proper methodology for terminal values is to
utilize perpetuity growth rates
GOLDMAN SACHS
BASE BUSINESS VALUATION
Forecast:
- Essentially Terrapin's 1998-2000 strategic plan extrapolated to 2002
(9.5% revenue growth, constant gross margins); strategic plan based on
detailed 1998 profit plan and extrapolated for 1999 and 2000 based on
historical growth rates
Exit Multiples:
- 14x to 16x EBIT
Based on "comparable" companies trading multiples some of which
possess significantly higher growth prospects and margins
Perpetuity Growth:
- Implied perpetuity growth rate of 6% to 7% at an
11% discount rate
Discount Rate:
- 10% to 12%
Based on inherent stability of base business
HUSKY REBUTTAL
Forecast:
- Terrapin's 1998-2000 strategic plan sensitized for the following
reasons:
- Revenue Growth Reductions
- carve-out of key pipeline revenues
- continued pricing pressure
- focus redirected away from core business
- global market growth reduction (short term)
Exit Multiples:
- Implies 9x to 13x EBIT
Consistent with similar "lab product" companies trading multiples
Perpetuity Growth:
- Perpetuity growth rate of 4% to 6%
Discount Rate:
- 10% to 12%
Based on WACC of comparable companies and characteristics of the
business
[MERRILL LYNCH LOGO]
<PAGE> 12
PROJECT TERRAPIN
Hypothetical Sensitivity Analysis - Base Business
<TABLE>
<CAPTION>
VALUATION
PERPETUITY DIFFERENTIAL
EBIT MULTIPLES GROWTH RATES PER SHARE (1)
-------------- ------------ -------------
<S> <C> <C> <C>
GOLDMAN SACHS' IMPLIED VALUATION
PER TERRAPIN SHARE 14x - 16x 6% - 7% --
SENSITIVITY TO TERMINAL VALUATION (2) 9x -13x 4% - 6% $ (14) - $ (9)
INCREMENTAL SENSITIVITY TO PROJECTIONS (3) 9x - 13x 4% - 6% $ (1) - $ (1)
-------------
TOTAL VALUATION DIFFERENTIAL PER TERRAPIN SHARE $(15) - $(10)
=============
</TABLE>
(1) Based on an 11% discount rate.
(2) Valuation differential per Terrapin share due to a change in the
prescribed terminal valuation methodology.
(3) Valuation differential per Terrapin share due to a 1.0 percentage point
decrease in annual revenue growth over the projection period.
[MERRILL LYNCH LOGO]
<PAGE> 13
PROJECT TERRAPIN
Valuation Of Pipeline By The Financial Advisor To Special Committee
- The Goldman Sachs valuation was based only on discounted cash flows
and was not portrayed as complete or as reflecting the complete
analysis shared with the Special Committee
- Husky believes the valuation is very aggressive
- Aggressive forecast due to high probability rates
- Lack of historical precedent for commercializing new products on
a large scale
- Aggressive exit multiples
- Husky believes that the proper methodology on terminal values is
to utilize perpetuity growth rates
GOLDMAN SACHS
PIPELINE FORECAST VALUATION
Forecast:
- Probability adjusted pipeline forecast developed with Terrapin
management
Probability
Assessment:
- Ranges of 40% to 90% with weighted average probability of 73% (1)
Exit Multiples:
- 17x to 18x EBIT
(Implied perpetual growth rate of 21% to 26%)
Discount Rate:
- 25% to 30%
HUSKY REBUTTAL
Forecast:
- Goldman Sachs pipeline forecast taken as given with adjustments
made to probability weightings
Probability
Assessment:
- Sensitized on average by approximately 30 percentage points;
weighted average probability of 43% (1)
Exit Multiples:
- Perpetuity growth rates on the discreet pipeline of 6% to 8% to
reflect market saturation, new competition and risk of technical
obsolescence
Discount Rate:
- 25% to 30%
(1) Weighted average based on 2002 revenue contribution.
[MERRILL LYNCH LOGO]
<PAGE> 14
PROJECT TERRAPIN
Hypothetical Sensitivity Analysis - Pipeline
<TABLE>
<CAPTION>
PERPETUITY VALUATION
GROWTH RATES PER SHARE (1)
------------- --------------
<S> <C> <C>
GOLDMAN SACHS' IMPLIED VALUATION
PER TERRAPIN SHARE 21% - 26% (1) --
SENSITIVITY TO TERMINAL VALUATION (2) 6% - 8% $(10) - $(11)
INCREMENTAL SENSITIVITY TO PROBABILITY WEIGHTINGS (3) 6% - 8% $(1) - $(2)
TOTAL VALUATION DIFFERENTIAL PER TERRAPIN SHARE $(11) - $(13)
CUMULATIVE VALUATION DIFFERENTIAL FOR
BASE BUSINESS & PIPELINE PER TERRAPIN SHARE $(26) - $(23)
</TABLE>
(1) Based on 20%-25% discount rates.
(2) Implied perpetuity growth rates based on 17x-18x EBIT exit multiple.
(3) Valuation differential per Terrapin share due to a change in the prescribed
terminal value methodology.
(4) Valuation differential per Terrapin share due to a 30 percentage point
decrease in probability weighting.
[MERRILL LYNCH LOGO]
<PAGE> 15
PROJECT TERRAPIN
Selected Comparable Publicly Traded Companies to Terrapin (1)
1999PE TO 5-YR. GROWTH
<TABLE>
<S> <C>
C.R. Bard 1.58x
Sigma-Aldrich 1.40x
Waters 1.13x
Perkin Elmer 1.09x
Dionex 0.94x
Techne 0.91x
Cambrex 0.85x
Beckman Coulter 0.77x
Bio Rad Labs 0.66x
VWR Scientific Products 0.64x
Millipore 0.58x
Thermo BioAnalysis 0.33x
</TABLE>
<TABLE>
<S> <C>
Offer Value (3) = 1.39x
Mean = 0.91x
Median = 0.88x
</TABLE>
ENTERPRISE VALUE AS A MULTIPLE OF 1998E EBIT
<TABLE>
<S> <C>
Waters 17.1x
Beckman Coulter 16.9x
C.R. Bard 15.8x
Perkin Elmer 15.8x
Millipore 15.4x
Sigma-Aldrich 11.9x
Nycomed Amersham 11.2x
Dionex 10.2x
Bio Rad Labs 9.9x
VWR Scientific Products 9.9x
Cambrex 9.8x
Thermo BioAnalysis 5.3x
</TABLE>
<TABLE>
<S> <C>
Offer Value (3) = 15.0x
Mean = 12.1x
Median = 10.9x
</TABLE>
EQUITY VALUE AS A MULTIPLE OF 1999E EPS
<TABLE>
<S> <C>
Techne 20.0x
Perkin Elmer 19.7x
Waters 19.2x
C.R. Bard 17.4x
Sigma-Aldrich 16.8x
Nycomed Amersham 15.6x
Millipore 15.1x
Dionex 14.1x
VWR Scientific Products 14.0x
Beckman Coulter 13.1x
Cambrex 11.1x
Bio Rad Labs 10.6x
Thermo BioAnalysis 8.3x
</TABLE>
<TABLE>
<S> <C>
Offer Value (3) = 20.8x
Mean = 15.0x
Median = 15.1x
</TABLE>
(1) Share price and earnings projections (calendarized and based upon First
Call estimates) are as of 10/9/98.
(2) Enterprise value is market value of equity plus long-term debt, short-term
debt, market value of preferred stock and minority interest, less cash and
cash equivalents.
(3) Represents offer multiple at an offer price of $37.00 per Terrapin share.
[MERRILL LYNCH LOGO]
<PAGE> 16
PROJECT TERRAPIN
Analysis of Comparable Acquisitions - LTM EBITDA (1)
LIFE SCIENCES INDUSTRY TRANSACTION VALUE TO LTM EBITDA
<TABLE>
<CAPTION>
DATE TARGET ACQUIRER MULTIPLE
---- ------- -------- --------
<S> <C> <C> <C>
11/18/96 Amicom Millipore 23.1x
9/28/92 HemoCue Imcera Grp. 21.5x
9/2/97 Coulter Beckman 19.8x
3/8/96 Synectics Med. Meditronic 13.0x
10/6/92 App. Bio sys. Perkin-Elmer 12.2x
7/1/97 Nycomed Amersham 10.8x
8/25/97 Bio Whittaker Cambrex 9.3x
1/21/97 Life Sci. Int. Thermo Instr. 8.9x
</TABLE>
<TABLE>
<S> <C>
Offer Value = 13.2x
Mean = 14.8x
Median = 12.6x
</TABLE>
CHEMICAL INDUSTRY TRANSACTION VALUE TO LTM EBITDA
<TABLE>
<CAPTION>
DATE TARGET ACQUIRER MULTIPLE
<S> <C> <C> <C>
1/20/98 Allied Colloids Ciba Specialty 14.4x
10/28/96 Loctite Henkel 13.2x
2/25/97 Petrolite Baker Hughes 12.3x
5/7/97 Unilever Specialty Chem. Imperial 10.4x
11/22/96 Thompson Minwax The Sherwin Williams Co. 10.3x
11/19/96 CPS Chem Co. Allied Colloids 10.1x
</TABLE>
<TABLE>
<S> <C>
Offer Value = 13.2x
Mean = 11.8x
Median = 11.4x
</TABLE>
(1) Transactions represent acquisition of control which may not be directly
comparable to the acquisition of a minority stake.
(2) Represents offer multiple at an offer price of $37.00 per Terrapin share.
[MERRILL LYNCH LOGO]
<PAGE> 17
PROJECT TERRAPIN
Pro Forma Accretion/(Dilution) Analysis - Terrapin Acquisition
(U.S. Dollars)
<TABLE>
<CAPTION>
1999 2000 2001
---- ---- ----
OFFER PRICE PER SHARE OFFER PREMIUM (1) PRO FORMA EPS ACCRETION/(DILUTION) (2)
--------------------- ----------------- --------------------------------------
<S> <C> <C> <C> <C>
$37.00 19.4% (12.0%) (6.1%) (0.4%)
PRO FORMA CASH EPS ACCRETION/(DILUTION) (3)
-------------------------------------------
<S> <C> <C> <C> <C>
$37.00 19.4% 3.1% 7.3% 11.5%
</TABLE>
(1) Based on Terrapin share price of $31.00 as of the announcement date
(7/7/98).
(2) Projections for Husky based on First Call earnings estimates and secular
growth rate as of 6/22/98; Base business projections for Terrapin provided
by the financial advisor to the Special Committee.
(3) Pro Forma cash EPS excludes the goodwill amortization charge associated
with the Terrapin transaction.
[MERRILL LYNCH LOGO]
<PAGE> 18
PROJECT TERRAPIN
Pro Forma Accretion/(Dilution) Analysis - Terrapin Acquisition and Michigan Sale
(U.S. Dollars)
<TABLE>
<CAPTION>
1999 2000 2001
---- ---- ----
OFFER PRICE PER SHARE OFFER PREMIUM (1) PRO FORMA EPS ACCRETION/(DILUTION) (2)
--------------------- ----------------- --------------------------------------
<S> <C> <C> <C> <C>
$37.00 19.4% (14.5%) (9.7%) (4.7%)
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA CASH EPS ACCRETION/(DILUTION) (3)
-------------------------------------------
<S> <C> <C> <C> <C>
$37.00 19.4% 0.6% 3.7% 7.1%
</TABLE>
(1) Based on Terrapin share price of $31.00 as of the announcement date
(7/7/98).
(2) Projections for Husky based on First Call earnings estimates and secular
growth rate as of 6/22/98; Michigan projections as per June 25, 1998 Board
of Directors presentation; Base business projections for Terrapin provided
by the financial advisor to the Special Committee.
(3) Pro Forma cash EPS excludes the goodwill amortization charge associated
with the Terrapin transaction.
[MERRILL LYNCH LOGO]
<PAGE> 1
LAB
PROJECTED INCOME STATEMENTS - BASE CASE
($ IN MILLIONS)
<TABLE>
<CAPTION>
Year ended December 31, 1998E - 2002E
----------------------------------------------------------------------
1998E 1999E 2000E 2001E 2002E CAGR
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $361.4 $395.7 $433.3 $474.4 $519.5 9.5%
Cost of Goods Sold 161.2 176.0 192.4 210.6 230.7 9.4%
------ ------ ------ ------ ------
Gross Profit 200.2 219.7 240.9 263.8 288.8 9.6%
Operating Expenses:
Selling, General & Administrative 112.3 121.0 130.3 139.2 148.5 7.2%
Research & Development 21.7 23.7 26.0 28.4 31.1 9.5%
Other Operating 6.5 7.5 7.9 8.6 9.4 9.7%
------ ------ ------ ------ ------
Total Operating Expenses 140.5 152.1 164.1 176.2 189.0 7.7%
EBIT 59.7 67.6 76.8 87.5 99.8 13.7%
Interest Expense (0.1) (0.1) (0.1) (0.1) (0.1) 4.6%
Other Non-Operating Expense 0.2 1.0 1.7 1.8 2.0 90.0%
------ ------ ------ ------ ------
Income Before Taxes 59.8 68.5 78.4 89.3 101.7 14.2%
Income Taxes 20.9 24.0 27.4 31.2 35.6 14.2%
------ ------ ------ ------ ------
Income Before Minority Interest 38.9 44.5 50.9 58.0 66.1 14.2%
Minority Interest (0.8) (0.8) (0.9) (1.0) (1.1) 9.5%
------ ------ ------ ------ ------
Net Income $ 38.1 $ 43.7 $ 50.0 $ 57.0 $ 65.0 14.3%
------ ------ ------ ------ ------
Margins:
Gross Margin 55.4% 55.5% 55.6% 55.6% 55.6%
Research & Development 6.0% 6.0% 6.0% 6.0% 6.0%
Operating Margin 16.5% 17.1% 17.7% 18.5% 19.2%
Net Margin 10.5% 11.0% 11.5% 12.0% 12.5%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Company projections.
-1-
<PAGE> 2
LAB
PROJECTED CASH FLOWS - BASE CASE
($ IN MILLIONS)
<TABLE>
<CAPTION>
Year ended December 31, 1998E - 2002E
--------------------------------------------------------------------
1998E 1999E 2000E 2001E 2002E CAGR
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues $361.4 $395.7 $433.3 $474.4 $519.5 9.5%
Growth 8.6% 9.5% 9.5% 9.5% 9.5%
EBIT 59.7 67.6 76.8 87.5 99.8 13.7%
Margin 16.5% 17.1% 17.7% 18.5% 19.2%
Income Taxes 20.9 23.7 26.9 30.6 34.9 13.7%
------ ------ ------ ------ ------
Rate 35.0% 35.0% 35.0% 35.0% 35.0%
EBIAT 38.8 43.9 49.9 56.9 64.9 13.7%
Margin 10.7% 11.1% 11.5% 12.0% 12.5%
Plus:
Depreciation & Amortization 14.3 15.5 16.0 16.5 18.0 5.9%
Less:
Change in Working Capital (9.4) (10.3) (11.2) (14.3) (13.5) 9.5%
Capital Expenditures (30.0) (20.0) (17.0) (19.0) (20.8) -8.8%
------ ------ ------ ------ ------
Free Cash Flow $ 13.7 $ 29.2 $ 37.7 $ 40.1 $ 48.6 37.1%
------ ------ ------ ------ ------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Company projections.
-2-
<PAGE> 3
COMPANY ASSUMPTIONS REGARDING R&D PIPELINE
- - Revenue numbers (1998 - 2002) from Company R&D projections and
associated probability assessments
- - Contributions Margins vary between 40% and 90%
- - Incremental R&D = $500,000 in 1998 and 25%, 15%, 10% and 6% of sales in
1999, 2000, 2001, and 2002 respectively
- - SG&A = 32% of Sales
- - Tax rate = 35%
- - Working capital = 29.9% of probability-weighted sales
- - Capital expenditures = 4.5% of probability-weighted sales
- - Depreciation and amortization = 75% of capital expenditures
-3-
<PAGE> 4
ASSUMPTIONS FOR R&D PIPELINE*
PRODUCT REVENUES
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002
-------- -------- -------- -------- --------
PROJECT I
Product IA
<S> <C> <C> <C> <C> <C>
Estimated Total Market $ 80.0 $ 88.0 $ 96.8 $ 106.5 $ 117.1
Estimated Growth 10.0% 10.0% 10.0% 10.0% 10.0%
Lab Share 1.5% 4.4% 13.6% 21.0% 23.0%
Revenue Potential $ 1.20 $ 3.88 $ 13.20 $ 22.36 $ 26.94
Gross Margin 44.0% 44.0% 65.0% 65.0% 65.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 85.0% 85.0% 85.0% 85.0% 85.0%
Risk-Adjusted Revenue $ 1.02 $ 3.30 $ 11.22 $ 19.01 $ 22.90
Product IB
Estimated Total Market $ 10.0 $ 10.0 $ 12.0 $ 14.0 $ 17.0
Estimated Growth 20.0% 20.0% 20.0% 20.0% 25.0%
Lab Share 0.0% 5.0% 8.0% 10.0% 12.0%
Revenue Potential $ 0.00 $ 0.50 $ 0.96 $ 1.40 $ 2.04
Gross Margin 65.0% 65.0% 65.0% 65.0% 65.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 50.0% 50.0% 50.0% 50.0% 50.0%
Risk-Adjusted Revenue $ 0.00 $ 0.25 $ 0.48 $ 0.70 $ 1.02
</TABLE>
* Project and Product names have been coded by the filing person.
-4-
<PAGE> 5
ASSUMPTIONS FOR R&D PIPELINE*
PRODUCT REVENUES
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002
-------- -------- -------- -------- --------
Product IC
<S> <C> <C> <C> <C> <C>
Estimated Total Market $ 25.0 $ 26.0 $ 28.0 $ 29.0 $ 32.0
Estimated Growth 5.0% 5.0% 5.0% 10.0% 15.0%
Lab Share 0.0% 0.0% 5.0% 10.0% 15.0%
Revenue Potential $ 0.00 $ 0.00 $ 1.40 $ 2.90 $ 4.80
Gross Margin 55.0% 55.0% 55.0% 55.0% 55.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 50.0% 50.0% 50.0% 50.0% 50.0%
Risk-Adjusted Revenue $ 0.00 $ 0.00 $ 0.70 $ 1.45 $ 2.40
TOTAL PROJECT I $ 1.02 $ 3.55 $ 12.40 $ 21.16 $ 26.32
PROJECT II
Product IIA
Estimated Total Market $ 116.0 $ 145.0 $ 181.3 $ 226.6 $ 283.2
Estimated Growth 25.0% 25.0% 25.0% 25.0% 25.0%
Lab Share 12.0% 14.0% 17.0% 20.0% 22.0%
Revenue Potential $ 13.92 $ 20.30 $ 30.81 $ 45.31 $ 62.30
Incremental Revenue $ 0.00 $ 2.90 $ 9.06 $ 18.13 $ 28.32
Gross Margin 45.0% 45.0% 45.0% 45.0% 45.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 85.0% 85.0% 85.0% 85.0% 85.0%
Risk-Adjusted Revenue $ 0.00 $ 2.47 $ 7.70 $ 15.41 $ 24.07
</TABLE>
* Project and Product names have been coded by the filing person.
-5-
<PAGE> 6
ASSUMPTIONS FOR R&D PIPELINE*
PRODUCT REVENUES
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002
-------- -------- -------- -------- --------
Product IIB
<S> <C> <C> <C> <C> <C>
Estimated Total Market $ 17.0 $ 18.0 $ 19.0 $ 21.0 $ 23.0
Estimated Growth 5.0% 5.0% 10.0% 10.0% 12.0%
Lab Share 0.0% 8.0% 10.0% 10.0% 14.0%
Revenue Potential $ 0.00 $ 1.44 $ 1.90 $ 2.52 $ 3.22
Gross Margin 45.0% 45.0% 45.0% 60.0% 60.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 85.0% 85.0% 85.0% 85.0% 85.0%
Risk-Adjusted Revenue $ 0.00 $ 1.22 $ 1.62 $ 2.14 $ 2.74
Product IIC
Estimated Total Market $ 60.0 $ 67.8 $ 76.6 $ 86.6 $ 97.8
Estimated Growth 13.0% 13.0% 13.0% 13.0% 13.0%
Lab Share 0.0% 2.0% 10.0% 18.0% 25.0%
Revenue Potential for Reagents $ 0.00 $ 1.36 $ 7.66 $ 15.58 $ 24.46
Revenue for LTI Instruments $ 0.00 $ 1.60 $ 5.60 $ 7.50 $ 8.10
Gross Margin - Reagents 50.0% 45.0% 45.0% 45.0% 45.0%
Gross Margin - Instruments 40.0% 40.0% 40.0% 40.0% 40.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 65.0% 65.0% 65.0% 65.0% 65.0%
Risk-Adjusted Revenue $ 0.00 $ 0.88 $ 4.98 $ 10.13 $ 15.90
Risk-Adjusted Revenue-Instruments $ 0.00 $ 1.04 $ 3.64 $ 4.88 $ 5.27
</TABLE>
* Project and Product names have been coded by the filing person.
-6-
<PAGE> 7
ASSUMPTIONS FOR R&D PIPELINE*
PRODUCT REVENUES
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002
-------- -------- -------- -------- --------
Product IID
<S> <C> <C> <C> <C> <C>
Estimated Total Market $ 15.0 $ 17.0 $ 19.0 $ 23.0 $ 28.0
Estimated Growth 10.0% 15.0% 20.0% 25.0% 30.0%
Lab Share 0.0% 5.0% 10.0% 16.3% 20.0%
Revenue Potential $ 0.00 $ 0.85 $ 1.90 $ 3.75 $ 5.60
Gross Margin 60.0% 60.0% 60.0% 60.0% 60.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 60.0% 60.0% 60.0% 60.0% 60.0%
Risk-Adjusted Revenue $ 0.00 $ 0.51 $ 1.14 $ 2.25 $ 3.36
TOTAL PROJECT II $ 0.00 $ 6.12 $ 19.08 $ 34.80 $ 51.33
PROJECT III
Product IIIA
Estimated Total Market $ 90.0 $ 99.0 $ 108.9 $ 119.8 $ 131.8
Estimated Growth 10.0% 10.0% 10.0% 10.0% 10.0%
Lab Share 17.0% 18.0% 19.0% 20.0% 21.0%
Revenue Potential $ 15.30 $ 17.82 $ 20.69 $ 23.96 $ 27.67
Incremental Revenue $ 0.00 $ 1.00 $ 2.20 $ 3.60 $ 5.30
Gross Margin 60.0% 60.0% 60.0% 60.0% 60.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 80.0% 80.0% 80.0% 80.0% 80.0%
Risk-Adjusted Revenue $ 0.00 $ 0.80 $ 1.76 $ 2.88 $ 4.24
</TABLE>
*Project and Product names have been coded by the filing person.
-7-
<PAGE> 8
ASSUMPTIONS FOR R&D PIPELINE*
<TABLE>
<CAPTION>
PRODUCT REVENUES
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Product IIIB
Estimated Total Market $ 40.0 $ 44.0 $ 50.0 $ 57.0 $ 67.0
Estimated Growth 10.0% 13.0% 15.0% 17.0% 20.0%
Lab Share 1.0% 3.0% 5.0% 7.0% 9.0%
Revenue Potential $ 0.40 $ 1.32 $ 2.50 $ 3.99 $ 6.03
Incremental Revenue $ 0.00 $ 0.50 $ 1.00 $ 1.50 $ 2.20
Gross Margin 60.0% 60.0% 60.0% 60.0% 60.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 75.0% 75.0% 75.0% 75.0% 75.0%
Risk-Adjusted Revenue $ 0.00 $ 0.38 $ 0.75 $ 1.13 $ 1.65
Product IIIC
Estimated Total Market $ 60.0 $ 66.0 $ 72.6 $ 79.9 $ 87.8
Estimated Growth 10.0% 10.0% 10.0% 10.0% 10.0%
Lab Share 0.0% 1.0% 3.0% 5.0% 7.0%
Revenue Potential $ 0.00 $ 0.66 $ 2.18 $ 3.99 $ 8.15
Licensing Revenue Potential $ 0.00 $ 0.00 $ 0.30 $ 0.35 $ 0.45
Gross Margin - Product 40.0% 40.0% 40.0% 40.0% 40.0%
Gross Margin - Licensing 100.0% 100.0% 100.0% 100.0% 100.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 40.0% 40.0% 40.0% 40.0% 40.0%
Risk-Adjusted Revenue - Product $ 0.00 $ 0.26 $ 0.99 $ 1.74 $ 2.64
Risk-Adjusted Revenue - Licensing $ 0.00 $ 0.00 $ 0.12 $ 0.14 $ 0.18
TOTAL PROJECT III $ 0.00 $ 1.44 $ 3.62 $ 5.88 $ 8.71
</TABLE>
*Project and Product names have been coded by the filing person.
- 8 -
<PAGE> 9
ASSUMPTIONS FOR R&D PIPELINE*
<TABLE>
<CAPTION>
PRODUCT REVENUES
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PROJECT IV
Product IVA
Estimated Total Market $ 100.0 $ 110.0 $ 121.0 $ 133.1 $ 146.4
Estimated Growth 10.0% 10.0% 10.0% 10.0% 10.0%
Lab Share 20.0% 23.0% 26.0% 29.0% 32.0%
Revenue Potential $ 20.00 $ 25.30 $ 31.46 $ 38.60 $ 46.85
Incremental Revenue $ 0.00 $ 1.10 $ 4.80 $ 9.30 $ 10.20
Gross Margin 55.0% 55.0% 55.0% 55.0% 55.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 80.0% 80.0% 80.0% 80.0% 80.0%
Risk-Adjusted Revenue $ 0.00 $ 0.88 $ 3.84 $ 7.44 $ 8.16
Product IVB
Estimated Total Market $ 100.0 $ 110.0 $ 121.0 $ 133.1 $ 146.4
Estimated Growth 10.0% 10.0% 10.0% 10.0% 10.0%
Lab Share 0.0% 1.0% 1.0% 5.0% 10.0%
Revenue Potential $ 0.00 $ 0.00 $ 1.21 $ 6.66 $ 14.64
Gross Margin - Product 55.0% 55.0% 55.0% 55.0% 55.0%
SG&A% of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D% of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 50.0% 50.0% 50.0% 50.0% 50.0%
Risk-Adjusted Revenue $ 0.00 $ 0.00 $ 0.61 $ 3.33 $ 7.32
TOTAL PROJECT IV $ 0.00 $ 0.88 $ 4.45 $ 10.77 $ 15.48
</TABLE>
*Project and Product names have been coded by the filing person.
- 9 -
<PAGE> 10
ASSUMPTIONS FOR R&D PIPELINE*
<TABLE>
<CAPTION>
PRODUCT REVENUES
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PROJECT V
Product VA
Revenue Potential $ 0.0 $ 0.5 $ 1.2 $ 2.0 $ 3.0
Gross Margin - Product 90.0% 90.0% 90.0% 90.0% 90.0%
SG&A % of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D % of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 90.0% 90.0% 90.0% 90.0% 90.0%
Risk Adjusted Revenue - Product $ 0.0 $ 0.5 $ 1.1 $ 1.8 $ 2.7
Product VB
Licensing Revenue $ 0.0 $ 5.0 $ 10.0 $ 10.0 $ 10.0
Gross Margin $ 100.0% 100.0% 100.0% 100.0% 100.0%
SG&A % of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D % of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 60.0% 60.0% 60.0% 60.0% 60.0%
Risk-Adjusted Revenue $ 0.0 $ 3.0 $ 6.0 $ 6.0 $ 6.0
</TABLE>
* Project and Product names have been coded by the filing person.
- 10 -
<PAGE> 11
ASSUMPTIONS FOR R&D PIPELINE*
<TABLE>
<CAPTION>
PRODUCT REVENUES
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Product VC
Service Revenue $ 0.0 $ 0.5 $ 0.8 $ 1.0 $ 1.0
Gross Margin - Product 60.0% 60.0% 60.0% 60.0% 60.0%
SG&A of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 80.0% 80.0% 80.0% 80.0% 80.0%
Risk Adjusted Revenue - Service $ 0.0 $ 0.4 $ 0.6 $ 0.8 $ 0.8
Product VD
Service Revenue $ 0.1 $ 0.3 $ 0.5 $ 0.8 $ 1.0
Gross Margin - Service 60.0% 60.0% 60.0% 60.0% 60.0%
SG&A % of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D % of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 90.0% 90.0% 90.0% 90.0% 90.0%
Risk-Adjusted Revenue - Service $ 0.0 $ 0.2 $ 0.5 $ 0.7 $ 0.9
</TABLE>
* Project and Product names have been coded by the filing person.
- 11 -
<PAGE> 12
ASSUMPTIONS FOR R&D PIPELINE*
<TABLE>
<CAPTION>
PRODUCT REVENUES
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Product
Revenue Potential $ 0.0 $ 4.8 $ 9.6 $ 18.4 $ 26.6
XX Incremental $ 0.0 $ 1.5 $ 3.0 $ 6.0 $ 9.0
Licensing Revenue $ 0.0 $ 3.0 $ 6.0 $ 12.0 $ 18.0
Gross Margin - Product 90.0% 90.0% 90.0% 90.0% 90.0%
Gross Margin - XX Inc 75.0% 75.0% 75.0% 75.0% 75.0%
Gross Margin - Licensing 100.0% 100.0% 100.0% 100.0% 100.0%
SG&A % of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D % of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 70.0% 70.0% 70.0% 70.0% 70.0%
Risk-Adjusted Revenue - Product $ 0.0 $ 3.4 $ 6.7 $ 12.9 $ 18.6
Risk-Adjusted Revenue - XX Inc $ 0.0 $ 1.1 $ 2.1 $ 4.2 $ 6.3
Risk-Adjusted Revenue - Licensing $ 0.0 $ 2.1 $ 4.2 $ 8.4 $ 12.6
Product VF
Revenue Potential $ 0.0 $ 0.3 $ 0.5 $ 1.0 $ 2.0
Licensing Revenue $ 0.0 $ 0.3 $ 0.8 $ 1.0 $ 3.0
Gross Margin - Product 75.0% 75.0% 75.0% 75.0% 75.0%
Gross Margin- Licensing 100.0% 100.0% 100.0% 100.0% 100.0%
SG&A % of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D % of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 50.0% 50.0% 50.0% 50.0% 50.0%
Risk-Adjusted Revenue - Product $ 0.0 $ 0.1 $ 0.3 $ 0.5 $ 1.0
Risk-Adjusted Revenue - Licensing $ 0.0 $ 0.1 $ 0.4 $ 0.5 $ 1.5
</TABLE>
- -----------
* Project and Product names have been coded by the filing person.
- 12 -
<PAGE> 13
ASSUMPTIONS FOR R&D PIPELINE*
<TABLE>
<CAPTION>
c PRODUCT REVENUES
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Product VG
Revenue Potential
Reverse $ 0.0 $ 0.1 $ 0.5 $ 1.0 $ 1.5
Licensing Revenue
Reverse $ 0.0 $ 0.3 $ 1.0 $ 2.0 $ 4.0
Gross Margin - Product 90.0% 90.0% 90.0% 90.0% 90.0%
Gross Margin - Licensing 100.0% 100.0% 100.0% 100.0% 100.0%
SG&A % of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D % of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) - Reverse 50.0% 50.0% 50.0% 50.0% 50.0%
Risk Adjusted Revenue - Product $ 0.0 $ 0.1 $ 0.3 $ 0.5 $ 0.8
Risk Adjusted Revenue- Licensing $ 0.0 $ 0.1 $ 0.5 $ 1.0 $ 2.0
TOTAL PROJECT V $ 0.0 $ 11.0 $ 22.5 $ 37.3 $ 53.2
PROJECT VI
Product VIA
Revenue Potential $ 0.0 $ 1.5 $ 2.5 $ 7.0 $ 10.0
Gross Margin 50.0% 50.0% 50.0% 50.0% 50.0%
SG&A % of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D % of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 80.0% 80.0% 80.0% 80.0% 80.0%
Risk-Adjusted Revenue $ 0.0 $ 1.2 $ 2.0 $ 5.6 $ 8.0
TOTAL PROJECT VI $ 0.0 $ 1.2 $ 2.0 $ 5.6 $ 8.0
</TABLE>
- -----------
* Project and Product names have been coded by the filing person.
- 13 -
<PAGE> 14
ASSUMPTIONS FOR R&D PIPELINE*
<TABLE>
<CAPTION>
PRODUCT REVENUES
- -----------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PROJECT VII
Product VIIA
Revenue Potential $ 0.7 $ 1.2 $ 0.6 $ 0.9 $ 1.9
Gross Margin 100.0% 100.0% 100.0% 100.0% 100.0%
SG&A % of Sales 32.0% 32.0% 32.0% 32.0% 32.0%
R&D % of Sales 0.0% 25.0% 15.0% 10.0% 6.0%
Probability (Risk) 80.0% 80.0% 80.0% 80.0% 80.0%
Risk-Adjusted Revenue $ 0.6 $ 1.0 $ 0.5 $ 0.7 $ 1.5
</TABLE>
- -----------
* Project and Product names have been coded by the filing person.
- 14 -
<PAGE> 15
RISK-ADJUSTED R&D PIPELINE PROJECTIONS*
($ IN MILLIONS)
<TABLE>
<CAPTION>
LINE PROBABILITY STANDARD
PRODUCT EXTENSION ESTIMATE DEVIATION 1998E 1999E 2000E 2001E 2002E
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PROJECT I
Product IA
Revenue Y (90%) 85.0% 10.0% $ 1.0 $ 3.3 $11.2 $19.0 $22.9
EBIT 0.1 (0.4) 2.0 4.4 6.2
EBIT Margin 12.0% -13.0% 18.0% 23.0% 27.0%
Product IB
Revenue N 80.0% 10.0% $ 0.0 $ 0.3 $ 0.5 $ 0.7 $ 1.0
EBIT 0.0 0.0 0.1 0.2 0.3
EBIT Margin N.M. 6.0% 18.0% 23.0% 27.0%
Product IC
Revenue N 80.0% 10.0% $ 0.0 $ 0.0 $ 0.7 $ 1.5 $ 2.4
EBIT 0.0 0.0 0.1 0.2 0.4
EBIT Margin N.M. N.M. 8.0% 13.0% 17.0%
PROJECT II
Product IIA
Revenue Y 85.0% 10.0% $ 0.0 $ 2.5 $ 7.7 $15.4 $24.1
EBIT 0.0 (0.3) (0.2) 0.5 1.7
EBIT Margin N.M. -12.0% -2.0% 3.0% 7.0%
Product IIB
Revenue Y 85.0% 10.0% $ 0.0 $ 1.2 $ 1.6 $ 2.1 $ 2.7
EBIT 0.0 (0.1) (0.0) 0.4 0.6
EBIT Margin N.M. -12.0% -2.0% 18.0% 22.0%
Product IIC
Revenue - Reagents N 65.0% 15.0% $ 0.0 $ 0.9 $ 5.0 $10.1 $15.9
Revenue - Instruments 0.0 1.0 3.6 4.9 5.3
EBIT 0.0 (0.2) (0.1) 0.7 2.8
EBIT Margin N.M. -12.4% -1.2% 4.6% 13.3%
Product IID
Revenue N 60.0% 20.0% $ 0.0 $ 0.5 $ 1.1 $ 2.3 $ 3.4
EBIT 0.0 0.0 0.1 0.4 0.7
EBIT Margin N.M. 3.0% 13.0% 18.0% 22.0%
</TABLE>
- -----------
Source: Per the Company as of September 1, 1998.
* Project and Product names have been coded by the filing person.
-15-
<PAGE> 16
RISK-ADJUSTED R&D PIPELINE PROJECTIONS*
($ IN MILLIONS)
<TABLE>
<CAPTION>
LINE PROBABILITY STANDARD
PRODUCT EXTENSION ESTIMATE DEVIATION 1998E 1999E 2000E 2001E 2002E
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PROJECT III
Product IIIA
Revenue Y 80.0% 10.0% $ 0.0 $ 0.5 $ 1.8 $ 2.9 $ 4.2
EBIT 0.0 0.0 0.2 0.5 0.9
EBIT Margin N.M. 3.0% 13.0% 18.0% 22.0%
Product IIIB
Revenue Y 75.0% 10.0% $ 0.0 $ 0.4 $ 0.6 $ 1.1 $ 1.7
EBIT 0.0 0.0 0.1 0.2 0.4
EBIT Margin N.M. 3.0% 13.0% 18.0% 22.0%
Product IIIC
Revenue - Product N 40.0% 10.0% $ 0.0 $ 0.3 $ 1.0 $ 1.7 $ 2.8
Revenue - Licensing 0.0 0.0 0.1 0.1 0.2
EBIT 0.0 (0.0) (0.0) 0.0 0.2
EBIT Margin N.M. -17.0% -0.5% 2.5% 5.8%
PROJECT IV
Product IVA
Revenue Y 80.0% 10.0% $ 0.0 $ 0.9 $ 3.8 $ 7.4 $ 8.2
EBIT 0.0 (0.0) 0.3 1.0 1.4
EBIT Margin N.M. -2.0% 8.0% 13.0% 17.0%
Product IVB
Revenue N 50.0% 10.0% $ 0.0 $ 0.0 $ 0.6 $ 3.3 $ 7.3
EBIT 0.0 0.0 0.0 0.4 1.2
EBIT Margin N.M. -12.0% 6.0% 13.0% 17.0%
</TABLE>
Source: Per the Company as of September 1, 1998.
* Project and Product names have been coded by the filing person.
-16-
<PAGE> 17
RISK-ADJUSTED R&D PIPELINE PROJECTIONS*
($ IN MILLIONS)
<TABLE>
<CAPTION>
LINE PROBABILITY STANDARD
PRODUCT EXTENSION ESTIMATE DEVIATION 1998E 1999E 2000E 2001E 2002E
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PROJECT V
Product VA
Revenue - Product Y 90.0% 10.0% $ 0.0 $ 0.5 $ 1.1 $ 1.5 $ 2.7
EBIT 0.0 0.1 0.5 0.9 1.4
EBIT Margin N.M. 33.0% 43.0% 48.0% 52.0%
Product VB
Revenue - Licensing N 60.0% 20.0% $ 0.0 $ 3.0 $ 6.0 $ 5.0 $ 6.0
EBIT 0.0 2.0 2.8 3.2 3.5
EBIT Margin N.M. 68.0% 43.0% 53.0% 58.0%
Product VC
Revenue - Service Y 80.0% 10.0% $ 0.0 $ 0.4 $ 0.6 $ 0.8 $ 0.6
EBIT 0.0 0.0 0.1 0.1 0.2
EBIT Margin N.M. 3.0% 13.0% 18.0% 22.0%
Product VD
Revenue - Service Y 90.0% 10.0% $ 0.0 $ 0.2 $ 0.5 $ 0.7 $ 0.9
EBIT 0.0 0.0 0.1 0.1 0.2
EBIT Margin 26.0% 3.0% 13.0% 16.0% 22.0%
Product VE
Revenue - Product Y 70.0% 20.0% $ 0.0 $ 3.4 $ 6.7 $ 12.9 $ 15.6
Revenue - XX Incremental 0.0 1.1 2.1 4.2 6.3
Revenue - Licensing 0.0 2.1 4.2 8.4 12.6
EBIT 0.0 2.2 5.7 12.4 19.8
EBIT Margin N.M. 33.8% 43.8% 48.8% 52.3%
Product VF
Revenue - Product N 50.0% 10.0% $ 0.0 $ 0.1 $ 0.3 $ 0.5 $ 1.0
Revenue - Licensing 0.0 0.1 0.4 0.5 1.5
EBIT 0.0 0.1 0.3 0.5 1.3
EBIT Margin N.M. 30.5% 43.0% 45.5% 52.0%
Product VG
Revenue - Product Reverse 10.0% $ 0.0 $ 0.1 $ 0.3 $ 0.5 $ 0.6
Revenue - Licensing 50.0% 0.0 0.1 0.5 1.0 2.0
EBIT 0.0 0.1 0.4 0.8 1.6
EBIT Margin N.M. 40.1% 49.7% 54.7% 59.3%
</TABLE>
Source: Per the Company as of September 1, 1998.
* Project and Product names have been coded by the filing person.
-17-
<PAGE> 18
RISK-ADJUSTED R&D PIPELINE PROJECTIONS*
($ IN MILLIONS)
<TABLE>
<CAPTION>
LINE PROBABILITY STANDARD
PRODUCT EXTENSION ESTIMATE DEVIATION 1998E 1999E 2000E 2001E 2002E
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PROJECT VI
Product VIA
Revenue Y(75%) 80.0% 10.0% $ 0.0 $ 1.2 $ 2.0 $ 5.6 $ 8.0
EBIT 0.0 (0.1) 0.1 0.4 1.0
EBIT Margin N.M. -7.0% 3.0% 3.0% 12.0%
Project VII
Product VIIA
Revenue N 80.0% 10.0% $ 0.5 $ 1.0 $ 0.5 $ 0.7 $ 1.5
EBIT 0.4 0.4 0.3 0.4 1.0
EBIT Margin N.M. 43.0% 53.0% 56.0% 62.0%
Total
Revenue Y $ 1.6 $25.2 $64.6 $116.2 $164.6
EBIT 0.5 3.8 12.5 27.7 46.7
EBIT Margin 32.1% 15.0% 19.4% 23.9% 28.4%
</TABLE>
Source: Per the Company as of September 1, 1998.
* Project and Product names have been coded by the filing person.
-18-
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