<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ___________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[X] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
ECO SOIL SYSTEMS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN REGISTRANT)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1)Amount Previously Paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:
<PAGE>
On March 28, 2000 Eco Soil Systems, Inc. ("Eco Soil") announced that it
had entered into an Asset Purchase Agreement (the "Purchase Agreement") with the
J.R. Simplot Company ("Simplot") pursuant to which Eco Soil's
subsidiary, Turf Partners, Inc. ("Turf Partners") will sell to Simplot and
Simplot will purchase from Turf Partners substantially all of the assets of Turf
Partners.
Copies of Eco Soil's press release announcing results for the first
quarter of 2000, the scripts used by Eco Soil's chief executive officer and
chief financial officer during an analyst conference call regarding the first
quarter results and the slide presentation used by the chief financial officer
during the call are attached. Each of these documents refers to the anticipated
use of the proceeds of the Simplot transaction, and the chief executive
officer's script describes Eco Soil's business following the Simplot
transaction.
Eco Soil's shareholders will be asked to vote on the transaction because
Turf Partners' assets may be deemed to be "substantially all" of Eco Soil's
assets under Nebraska law. All shareholders should read the proxy statement
concerning the sale of Turf Partners' assets that will be filed with the SEC and
mailed to shareholders. The proxy statement will contain important information
that shareholders should consider before making any decision regarding the sale
of Turf Partners' assets. You will be able to obtain the proxy statement, as
well as other filings containing information about Eco Soil, without charge, at
the SEC's Internet site (http://www.sec.gov). Copies of the proxy statement will
also be available, without charge, from Eco Soil by mail to Eco Soil Systems,
Inc., 10740 Thornmint Road, San Diego, CA 92127, attention: Investor Relations,
telephone: (858) 675-1660.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Eco Soil and certain other persons named below may be deemed to be
participants in the solicitation of proxies from Eco Soil shareholders to
approve the sale of Turf Partners' assets. The participants in this
solicitation may include the directors of Eco Soil (William B. Adams, Max D.
Gelwix, S. Bartley Osborn, Robert O'Leary, Edward Steele and William Potter)
and the following executive officers of Eco Soil: William B. Adams, Chairman
and Chief Executive Officer, Max D. Gelwix, President and Chief Operating
Officer, and Dennis Sentz, Vice President and Chief Financial Officer. The
aforementioned directors and officers of Eco Soil together may be deemed to
beneficially own approximately 20% of Eco Soil's common stock.
Set forth below is the press release announcing first quarter results of
operations.
COMPANY PRESS RELEASE
ECO SOIL SYSTEMS, INC. REPORTS FIRST QUARTER 2000 RESULTS
RANCHO BERNARDO, Calif.--(BUSINESS WIRE)-- May 11, 2000--Eco Soil Systems,
Inc. (Nasdaq:ESSI - NEWS) announced revenues for the three months ended March
31, 2000 of $18.4 million, an increase of 7% over $17.3 million of revenues
for the same period in 1999, reflecting acceptance of the Company's
proprietary products in the marketplace. The first quarter of 2000 also
showed an improvement in operating results evidenced by a narrowing EBITDA
loss to $3.0 million compared to an EBITDA loss of $3.6 million in the first
quarter 1999. EBITDA is in reference to earnings before interest, taxes,
depreciation and amortization.
According to William B. Adams, Chairman and Chief Executive Officer, "The
Company reported a net loss for the quarter of $6.1 million, or $0.33 per share,
compared to a net loss of $4.8 million, or $0.28 per share, for the same quarter
in 1999. The loss is due in part to the significant increase in interest expense
with the additional $1.4 million of interest from Q1 1999 to Q1 2000."
Adams noted, the Company plans to use the proceeds of the Simplot transaction,
scheduled to close in July, to significantly reduce debt and any related
interest costs.
Adams continued, "Proprietary sales increased 138% to $1.3 million for the first
quarter of 2000 compared to $544,000 during the same period in 1999. The sales
were comprised of $352,000 from the Turf Partners subsidiary and $940,000 from
the Agricultural Supply subsidiary. Agricultural Supply's increased sales were
due primarily to the sale of RhizUp to the Cargill Corporation.
BioJect-Registered Trademark- installations are occurring in new areas of the
U.S., from California to New Mexico. We are entering new agricultural markets
such as pecans, wine grapes and lettuce in these
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<PAGE>
same areas. Additionally, we continue to catalog our portfolio of over 2,000
organisms from the Agrium acquisition and the hope for new gene discoveries is
very high."
Adams continued, "In a seasonal business such as Turf, we generally see lower
revenues and resulting losses in the first quarter because golf courses in the
Midwest and Northeast are closed for the winter. As golf courses begin to deploy
their irrigation and turf treatment systems, we historically see proprietary
sales ramp up in the second and third quarters. "Currently, early orders for
FreshPack are tracking our objective for FreshPack sales to reach levels three
times higher than 1999 sales. BioJect-Registered Trademark- installations are up
20% as well."
Dennis Sentz, Chief Financial Officer, stated, "Another notable aspect of the
improved operating results is that our gross profit increased to $4.9 million
from $3.9 million, as a result of gross margins increasing to 26.8% from 22.8% a
year ago. This is attributable to the increasing proportion of proprietary
products to distributed products in our revenue mix."
Sentz continued, "Management expects to see gross margin enhancement and
operating cost reductions to continue for the balance of the year. We are now
focusing on improving the capital structure of the company by reducing debt and
related level of interest expense."
Adams added, "Our first quarter results were on plan. Eco Soil is now in a
pivotal stage of its business plan as the groundwork has been laid to maximize
the sales growth in ESSI's proprietary products. For the past three years, we
have invested heavily in human and financial resources in completing the
consolidation of the Turf Partners distribution channel.
"Now management can, in contemplation of the Simplot transaction, focus its
resources on using the channel. Opportunities abound for biotech solutions that
do not involve genetic modification in both the turf and agricultural markets."
Eco Soil develops, markets and sells proprietary biological and traditional
chemical products that provide solutions for a wide variety of turf and crop
maintenance problems in the golf and agricultural industries. Their proprietary
products evolve from the BioJect, a patented and EPA approved device that
cultures and dispenses biological products through irrigation systems.
These products, along with standard turf maintenance products, are sold to
nearly 40% of America's golf courses through ESSI's Turf Partners subsidiary,
and are sold to the agricultural market, along with irrigation products, through
its Agricultural supply subsidiary. Eco Soil's Internet site address is
http://www.ecosoil.com. The statements contained in this release that are not
historical facts are forward-looking statements that involve risks and
uncertainties. Management wishes to caution the reader that these
forward-looking statements are only predictions; actual events or results may
differ materially as a result of risks facing the Company, including those
listed under the caption "factors that may affect future performance" in the
Company's Annual Report on Form 10-K filed April 13, 2000.
ECO SOIL SYSTEMS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
Revenues:
Turf Partners $ 12,527 $ 11,659
Agricultural Supply 5,864 5,593
Total revenues 18,391 17,252
Cost of revenues:
Turf Partners 9,222 9,252
Agricultural Supply 4,247 4,063
</TABLE>
3
<PAGE>
<TABLE>
<S> <C> <C>
Total cost of revenues 13,469 13,315
Gross profit 4,922 3,937
Operating expenses:
Selling, general and
administrative 8,561 7,768
Research and development 114 93
Amortization of intangibles 293 309
Income (loss) from operations (4,046) (4,233)
Interest expense 2,027 710
Interest income 17 143
Net income (loss) $ (6,056) $ (4,800)
Net loss per share,
basic and diluted $ (0.33) $ (0.28)
Shares used in calculating net
loss per share,
basic and diluted 18,535 17,182
</TABLE>
ECO SOIL SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Amounts)
<TABLE>
<CAPTION>
March 31, Dec. 31,
2000 1999
ASSETS (unaudited) (note)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 1,224 $ 1,228
Accounts receivable, net of allowance
for doubtful accounts of $1,893 and
$2,204 at March 31, 2000 and
Dec. 31, 1999, respectively 23,362 21,675
Finished goods inventory 15,881 16,360
Prepaid expenses and other
current assets 5,605 4,588
Total current assets 46,072 43,851
Equipment under construction 5,037 5,041
Property and equipment, net 14,180 14,450
Intangible assets, net 14,075 14,374
Other assets 7,559 4,839
Total assets $ 86,923 $ 82,555
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 26,364 $ 24,438
Accrued expenses 4,769 5,809
Current portion of
long-term obligations 40,384 34,276
Total current liabilities 71,517 64,523
Long-term obligations, net of
current portion 1,049 1,482
Deferred gain on sale/leaseback
of building 509 523
Other 672 --
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C>
Shareholders' equity:
Preferred stock $.005 par value;
5,000,000 shares authorized; none
issued and outstanding -- --
Common stock $.005 par value;
50,000,000 shares authorized at
March 31, 2000 and Dec. 31, 1999,
18,584,966 and 18,349,965 shares
issued and outstanding at March 31, 2000
and Dec. 31, 1999, respectively 93 92
Additional paid-in capital 57,389 55,578
Warrants 4,126 2,733
Accumulated deficit (48,432) (42,376)
Total shareholders' equity 13,176 16,027
Total liabilities and
shareholders' equity $ 86,923 $ 82,555
</TABLE>
See accompanying notes
Note: The Balance Sheet at December 31, 1999 is derived from the audited
financial statements at that date, but does not include all of the disclosures
required by generally accepted accounting principles.
CONTACT:
Eco Soil Systems, Inc., Rancho Bernardo
William B. Adams, 858/675-1660
or
The Financial Relations Board
Manager of Investor Relations
Ann R. Strobel, 858/675-1660
General Information
Karen Taylor, 310/442-0599
Analyst Contact
Jill Fukuhara/Rose Anunciacion, 310/442-0599
<PAGE>
Set forth below is the script used by the chief executive officer during the May
11, 2000 analyst conference call.
Q1 2000 CONFERENCE CALL
Thank you...
Today we are prepared to discuss the Q1 results and to give our shareholders a
glimpse of the Company that springs from the sale of our Turf Partners
distribution subsidiary to the J.R. Simplot Company. Our results were on plan
for Q1, and as Dennis will relate in a minute, operations throughout the company
are streamlining. Additionally, revenue from proprietary sales jumped,
principally as a result of our first shipment to the CARGILL COMPANY. All in all
we were pleased with the Quarter. After Dennis completes his review, I will
provide more insight on the impact that the Simplot transaction will have on
ESSI'S future. Dennis...
[DENNIS SPEAKS HERE]
Thank you Dennis.
For the last three years we have divided much of our time at the corporate
office between consolidating the distributors we acquired to form Turf Partners,
and commercializing our biotechnology. Both jobs have been costly and took
considerably longer than we had expected. The consolidation effort included
building a systems platform for inventory
1
<PAGE>
management, financial reporting, and human resource deployment. The
technology as reported last summer was slow to move through the channel, but
picked up this past fall. The FreshPack product line has accelerated in sales
with the release of "Recharge", our plant-growth promoting product. Our new
compensation plan has directly contributed to our proprietary product growth,
as salesmen are motivated through commissions from products carrying the
highest margins.
As we stated a few months ago, these two tasks are generally on plan, and
management now believes its principal task is to grow shareholder value through
increasing the flow of our technology through additional distribution channels.
The Simplot transaction advances this mission in the following ways:
1. New distribution channels are created.
2. Capital resources are increased to expand product development.
3. Current channels are strengthened and grown.
4. Profits are increased.
The Asset Purchase Agreement spells out a Simplot requirement to give us access
to their Soil Builder stores. Products contemplated for sale in this
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<PAGE>
channel encompass our "Fresh Delivery" product line. Growth in this category
will also come from other farm store companies such as Cargill.
Second, capital resources increase primarily from the flow of proceeds of the
sale. However, over the next year, as Dennis related earlier, operating profit
improvements and expense reductions effected as a result of the sale should
contribute close to $10 mm annually. These savings will be available to invest
in product development. ESSI Research & Development activities in the future are
expected to be funded from partners and aimed at gene discovery from our
existing microbial portfolio.
Third, growth in proprietary sales in Turf and Ag will be expanded as a result
of the investment in these channels. Simplot plans to expand the footprint of
Turf Partners, and to further grow market share in existing markets. Currently,
Turf Partners calls on 40% of the market and has captured roughly a 10% market
share throughout the U.S. Proprietary sales currently represent 10% of total
Turf Partners sales in 2000, and should sustain that relationship as the channel
grows.
3
<PAGE>
And the last benefit of the transaction, profitability of the resultant company,
should climb as each of the other benefits are realized. Combining the fact that
costs are declining, margins are increasing, and debt is being eliminated, with
the fact that the margin on proprietary sales from Turf Partners stays with the
Parent, Eco Soil, should accelerate profitability. Top line growth will decline
from 1999 to 2001, but earnings per share will turn profitable.
In short, we believe that the outlook for Eco Soil Systems is very good, and
that the risk of meeting forecasts in the future has been mitigated. We also
believe that, as evidenced by the results of the citrus trials announced earlier
this year, that the technology has never shined brighter. Our plan is to find
investors to fund our future research, taking much of the burden away from our P
& L and giving us marketing partners as well. We believe that our initial entry
into E-commerce in Turf, through our electronic order entry system, will help
grow that business and expand its market size and share. And finally, we believe
that our plan to set up ESSI as a technology engine, and our two subs as outside
investment candidates, will generate shareholder value that is not evident in
our share price today.
We appreciate your continued support and look forward to your questions.
4
<PAGE>
Set forth below is the script used by the chief financial officer during the May
11, 2000 analyst conference call.
Dennis Sentz:
Thank you, Bill.
For the quarter ended March 31, 2000 total revenues were $18.4 million, an
increase of 7% over the $17.3 million for the same period in 1999. The first
quarter of 2000 showed an improvement in operating results evidenced by a
narrowing EBITDA loss of $3.0 million compared to an EBITDA loss of $3.6 million
in the first quarter last year.
Non-operating expenses (interest, depreciation and amortization) contributed
$3.1 million to the net loss for the quarter compared to $1.2 million in 1999.
The total NET loss for the first quarter 2000 was $6.1 million ($0.33 per share)
compared to a total NET loss of $4.8 million ($0.28 per share) in the same
period in 1999.
Our first quarter revenues in the TURF business are adversely effected every
year by cold weather in the Midwest and Northeast, and this year by both
unfavorable weather and market conditions in the Agricultural business in
Mexico.
PLEASE REFER TO SLIDE 1 - IMPROVEMENTS IN OPERATIONS
Since there are so many numbers in these presentations I have included an item
reference next to the line that will key each comment to the appropriate line in
the slide. Notable improvements in operations for the first quarter this year vs
the same period last year are:
1A - PROPRIETARY REVENUE
The 1st quarter of 2000 continued to show significant improvement in Proprietary
revenues. The $1,292,000 in proprietary sales in the first quarter of 2000
represents an increase of 138% over the $544,000 in proprietary sales in the
same period in1999. The increase in proprietary sales included the first
deliveries of our new Rhizup product to The Cargill Corporation.
1B - GROSS PROFIT
High margin Proprietary revenue, combined with a new "Focus Products" Sales
Commission program in the TURF business that emphasizes high margin products,
have resulted in improved Gross Profit margins. For the first quarter 2000 the
Gross margin was $5,417,000, 29.5% of revenues, compared to $4,034,000, 23.4% of
revenues for the same period last year.
1
<PAGE>
1C - EBITDA
We feel the improvement in the OPERATING PROFILE - i.e. higher mix of
proprietary sales and increased distributed gross profit margins --- will have a
significant impact on EBITDA as the seasonal revenues in the TURF business begin
to be realized in the second quarter.
1D - INTEREST
On January 26, 2000 the company announced a $4.5 Million Convertible Debenture
financing. The interest expense related to this financing combined with the
higher level of all other working capital debt in 2000 resulted in "Interest,
Depreciation and Amortization" increasing by 156% from $1,206,000 in the first
quarter of 1999 to $3,091,000 in the same period in 2000. More specifically,
first quarter 2000 interest expense increased by $1.4M over first quarter 1999
and is the primary reason the net loss has increased over last year.
We will discuss actions to reduce interest expense in a moment, but first
PLEASE REFER TO SLIDE 2 - NEW WORKING CAPITAL COMMITMENTS
ECO SOIL management has been focused on developing new sources of working
capital financing. Slide 2 will detail these efforts and their expected results.
The first two items have already been announced, the last three are new
developments.
2A - CONVERTIBLE DEBENTURE
This financing was announced and fully funded in JANUARY, 2000. The registration
of shares has been completed and the debenture holders are now able to convert
to ECO SOIL common stock.
2B - ASSET SALE AGREEMENT
This agreement with the JR SIMPLOT Company to SELL THE NET ASSETS of the TURF
business was announced MARCH 28, 2000 and is expected to close in July pending
Hart-Scott-Rodino and Eco Soil shareholder approvals.
2C - SIMPLOT TERM LOAN
On APRIL 12, 2000 we signed a TERM LOAN agreement with the JR Simplot Company to
insure adequate working capital to meet the TURF business needs in the second
quarter of 2000. It is expected these funds will be utilized in June 2000.
2
<PAGE>
2D - TURF WORKING CAPITAL LOAN
On May 4, 2000 we executed an amendment to the existing TURF PARTNERS WORKING
CAPITAL facility that provides for an increased advance rate and loan limit on
inventory. This change is expected to produce additional working capital based
on normal increases in inventory levels needed to achieve the seasonal sales
growth during the second quarter of 2000.
2E - SIMPLOT LC
The Simplot LETTER OF CREDIT will be opened later this month. This LC enables
Eco Soil to utilize its Bioject assets as collateral under the existing working
capital facility supporting the AGRICULTURAL and ECO SOIL proprietary
businesses.
The combination of these new working capital programs total $32.5 million and
will position ECO SOIL SYSTEMS to continue to progress toward its BUSINESS
MISSION --- namely the COMMERCIALIZATION OF OUR CORE TECHNOLOGY.
PLEASE REFER TO SLIDE 3 - CHANGES IN CAPITAL STRUCTURE
The impact of the changes in the Capital Structure of ECO SOIL arising out of
the closing of the Simplot transaction in July 2000 are indicated on slide 3.
3A - SALE OF ASSETS
The minimum purchase price of the TP Assets is $37 million. Based on the actual
performance of the TURF Partners business there could be an additional "earnout"
paid in March 2001 that is not reflected in this presentation.
3B - DEBT ASSUMED BY SIMPLOT
As part of the price, Simplot will assume the TURF Partners working capital
facility, expected to be $17 million as of June 30, 2000.
The results of the sale of assets will have multiple effects on our capital
structure.
3C - RETIRE DEBT
The net "Cash from the Sale" in July 2000 will be used to retire ECO Soil debt.
The amount of the down payment in July is $20 million, subject to certain
"holdbacks" that could be recovered at the final closing in March, 2001.
3
<PAGE>
There are two NON CASH changes that will occur on the ECO SOIL Balance Sheet.
3D - GOODWILL
The sale of the TURF business will necessitate the write off of related goodwill
of $7.5 million as of July, 2000
3E - DEBT ISSUANCE COSTS
The retirement of debt will require the write off of the related debt issuance
costs totaling $4 million.
These non-cash items will also reduce the book gain on the transaction.
PLEASE REFER TO SLIDE 4 - COST SAVINGS
4A - SALE OF ASSETS
The sale of TP assets includes fixed assets that are being depreciated. The sale
will reduce the amount of Depreciation expense by $600,000 per year.
4B - ASSUMED DEBT
The impact of Simplot assuming the TURF Partners debt will be to reduced
interest expense estimated to be $1.7million over the next 12 months.
4C - RETIRE DEBT
The use of cash from the sale to retire other ECO SOIL debt will result in added
savings of at least $2.6 million over the next year and eliminate most of the
debt covenants that have cost additional interest charges in the past.
4D - GOODWILL
Amortization of TURF Partners goodwill of $600,000 per year will be eliminated.
4E - DEBT ISSUANCE COSTS
that are amortized to interest expense at a rate of $1.2million per year will
not occur after the debt is retired.
4F - COST REDUCTIONS
Significant cost reductions of SG&A have been implemented, savings will begin to
accrue in the second quarter and on an annualized basis beginning July we expect
to total $2.8million. In all, we estimate savings in expenses to be $9.5 million
annually well in excess of the
EBITDA generated by the TURF Partners distributed products business that is
being sold.
4
<PAGE>
The new ECO SOIL Proprietary and Agricultural business that continues after the
Simplot closing will be one with a significantly reduced cost burden and no long
term debt.
With that Bill, I will turn it back to you.
5
<PAGE>
Set forth below are copies of the slides the chief financial officer used
during his presentation.
ECO SOIL SYSTEMS INC.
May 11, 2000
<PAGE>
IMPROVEMENTS IN OPERATIONS
$(000)
===============================================================================
<TABLE>
<CAPTION>
ITEM 1Q 2000 1Q 1999
- ---------- ------------- -------------
<S> <C> <C> <C>
1A Proprietary 1,292 544
Distributed 17,099 16,708
------------- -------------
Total Revenue $ 18,391 $ 17,252
1B Gross Profit* 5,417 4,034
% to Revenues 29.5% 23.4%
1C EBITDA (2,964) (3,594)
1D Interest, Depr & Amor 3,091 1,206
------------- -------------
Net Loss (6,055) (4,800)
------------- -------------
EPS $ (0.33) $ (0.28)
</TABLE>
* Excludes Depreciation and Amortization
<PAGE>
NEW WORKING CAPITAL COMMITMENTS
===============================================================================
<TABLE>
<CAPTION>
ITEM SIGNED DESCRIPTION CASH
- -------- ---------- --------------- -----------
<S> <C> <C> <C>
2A January Convertible Debenture $ 4,500,000
2B March Asset Sale Agreement 20,000,000
2C April Simplot Term Loan 3,000,000
2D April Turf Working Capital Loan 3,000,000
2E May Simplot Letter of Credit 2,000,000
-----------
TOTAL NEW WORKING CAPITAL $32,500,000
===========
</TABLE>
<PAGE>
CHANGES IN CAPITAL STRUCTURE
AFTER CLOSING SIMPLOT TRANSACTION IN JULY 2000
===============================================================================
<TABLE>
<CAPTION>
ITEM SALES OF ASSETS AMOUNT
- -------- ------------------- ------------
<S> <C> <C>
3A Sales of TPI assets $ 37,000,000
3B TPI debt assumed by Simplot (17,000,000)
------------
Net cash in July 2000* $ 20,000,000
RESULTS OF SALE
--------------------
3C Retire debt $(20,000,000)
3D Write off TPI goodwill (7,500,000)
3E Write off debt issuance costs (4,000,000)
</TABLE>
* Subject to potential holdbacks
<PAGE>
COST SAVINGS ANTICIPATED
===============================================================================
<TABLE>
<CAPTION>
ITEM SALE OF ASSETS REDUCED EXPENSES / YEAR
- -------- ------------------ -----------------------------
<S> <C> <C>
4A Sales TPI assets $ 600,000 Depreciation
4B TPI debt assumed by Simplot 1,700,000 Interest Expense
RESULTS OF SALES
------------------
4C Retire debt $2,600,000 Interest Expense
4D Write off TPI goodwill 600,000 Amortization
4E Write off debt issuance costs 1,200,000 Interest Expense
4F Reduce costs in continuing
operations $2,800,000 SG&A
----------
ANNUAL COST SAVINGS $9,500,000
</TABLE>
