<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
SCHEDULE 13E-3
(RULE 13e-100)
RULE 13E-3 TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE
SECURITIES EXCHANGE ACT OF 1934
SPIROS DEVELOPMENT CORPORATION II, INC.
(Name of the Issuer)
DURA PHARMACEUTICALS, INC.
(Name of Person(s) Filing Statement)
CALLABLE COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
848936 10 0
(CUSIP Number of Class of Securities)
CAM L. GARNER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
DURA PHARMACEUTICALS, INC.
7475 LUSK BOULEVARD
SAN DIEGO, CALIFORNIA 92121
(858) 457-2553
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications on
Behalf of Person(s) Filing Statement)
---------------------
Copies to:
FAYE H. RUSSELL JOSEPH J. GIUNTA
RICHARD S. CHERNICOFF SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
BROBECK, PHLEGER & HARRISON LLP 300 SOUTH GRAND AVENUE
12390 EL CAMINO REAL LOS ANGELES, CALIFORNIA 90071-3144
SAN DIEGO, CALIFORNIA 92130 (213) 687-5000
(858) 720-2500
This statement is filed in connection with (check the appropriate box):
a. / / The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. /X/ The filing of a registration statement under the Securities Act of
1933.
c. / / A tender offer.
d. / / None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: / /
CALCULATION OF FILING FEE
Transaction Valuation (1) $87,978,620 Amount of Filing Fee: $17,596
/X/ Check box if any part of the fee is offset as provided by Rule
11(a)(2) and identify the filing with which the offsetting fee was previously
paid.
Identify the previous filing by registration statement number or the
form or schedule and the date of its filing.
Amount Previously Paid: $16,391(2) Filing Parties: Dura
Pharmaceuticals, Inc.
Form or Registration No.: 333- Schedule Date Filed: April 25, 2000
---------------------
(1) Estimated solely for the purpose of determining the filing fee in
accordance with Exchange Act Rule 0-11(b), based on the average of the high and
low prices for shares of the Issuer as reported by The Nasdaq Stock Market on
April 18, 2000.
(2) Represents the fees paid by Dura Pharmaceuticals, Inc. in
connection with the filing of its registration statement on Form S-4 on
April 25, 2000.
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<PAGE>
INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 is being filed
with the Securities and Exchange Commission (the "SEC") by Dura Pharmaceuticals,
Inc. ("Dura") with respect to a proposed merger with Spiros Development
Corporation II, Inc. ("Sprios Corp. II").
ITEM 1. SUMMARY TERM SHEET.
Not applicable.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) NAME AND ADDRESS. The information set forth under the caption
"SUMMARY--The companies" in the Proxy Statement/Prospectus is incorporated
herein by reference pursuant to General Instruction F to Schedule 13E-3.
(b) SECURITIES. The information set forth under the caption "THE
SPECIAL MEETING" in the Proxy Statement/Prospectus is incorporated herein by
reference pursuant to General Instruction F to Schedule 13E-3.
(c) TRADING MARKET AND PRICE. The information set forth under the
caption "MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS" in the
Proxy Statement/Prospectus is incorporated herein by reference pursuant to
General Instruction F to Schedule 13E-3.
(d) DIVIDENDS. The information set forth under the caption
"SUMMARY--Market price and dividend information" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(e) PRIOR PUBLIC OFFERINGS. The information set forth under the
caption "DESCRIPTION OF OUR BUSINESS--Overview" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(f) PRIOR STOCK PURCHASES. Not applicable
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) NAME AND ADDRESS. The information set forth on the Form S-4
cover page to the Proxy Statement/Prospectus and under the captions "ELECTION
OF DIRECTORS", "SECURITY OWNERSHIP OF MANAGEMENT" and "EXECUTIVE OFFICERS" in
Dura's Proxy Statement on Schedule 14A dated April 19, 2000 incorporated by
reference in the Proxy Statement/Prospectus is incorporated herein by
reference pursuant to General Instruction F to Schedule 13E-3.
(b) BUSINESS AND BACKGROUND OF ENTITIES. The information set forth
under the caption "SUMMARY--The companies" in the Proxy Statement/Prospectus
is incorporated herein by reference pursuant to General Instruction F to
Schedule 13E-3.
(c) BUSINESS AND BACKGROUND OF NATURAL PERSONS. The information set
forth under the captions "ELECTION OF DIRECTORS" and "EXECUTIVE OFFICERS" in
Dura's Proxy Statement on Schedule 14A dated April 19, 2000 incorporated by
reference in the Proxy Statement/Prospectus is incorporated herein by
reference pursuant to General Instruction F to Schedule 13E-3.
ITEM 4. TERMS OF THE TRANSACTION.
(a)(1) Not applicable.
(a)(2) (i) The information set forth under the caption "SUMMARY--The
merger" in the Proxy Statement/Prospectus is incorporated herein by reference
pursuant to General Instruction F to Schedule 13E-3.
(ii) The information set forth under the caption
"SUMMARY--The merger" in the Proxy Statement/Prospectus is incorporated herein
by reference pursuant to General Instruction F to Schedule 13E-3.
2
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(iii) The information set forth under the captions "SPECIAL
FACTORS--Recommendation of our board of directors; our reasons for the
merger; fairness of the merger" and "SPECIAL FACTORS--Dura's reasons for the
merger" in the Proxy Statement/Prospectus is incorporated herein by reference
pursuant to General Instruction F to Schedule 13E-3.
(iv) The information set forth under the captions
"SUMMARY--Vote required of our stockholders" and "THE SPECIAL MEETING" in the
Proxy Statement/Prospectus is incorporated herein by reference pursuant to
General Instruction F to Schedule 13E-3.
(v) The information set forth under the captions
"SUMMARY--Comparison of rights of Dura's stockholders and our stockholders" and
"THE MERGER--Comparison of rights of Dura's stockholders and our stockholders"
in the Proxy Statement/Prospectus is incorporated herein by reference pursuant
to General Instruction F to Schedule 13E-3.
(vi) The information set forth under the captions
"SUMMARY--Accounting treatment" and "THE MERGER--Accounting treatment and future
reporting" in the Proxy Statement/Prospectus is incorporated herein by reference
pursuant to General Instruction F to Schedule 13E-3.
(vii) The information set forth under the captions
"SUMMARY--The merger will be a taxable transaction" and "THE MERGER
AGREEMENT--Federal income tax considerations" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(c) Not Applicable.
(d) The information set forth under the captions "SUMMARY--Dissenters'
rights" and "RIGHTS OF DISSENTING STOCKHOLDERS" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(e) The information set forth under the captions "THE SPECIAL
MEETING" in the Proxy Statement/Prospectus is incorporated herein by
reference pursuant to General Instruction F to Schedule 13E-3.
(f) The information set forth under the caption "SUMMARY--Stock
exchange listing" in the Proxy Statement/Prospectus is incorporated herein by
reference pursuant to General Instruction F to Schedule 13E-3
ITEM 5. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(a)(1) TRANSACTIONS. The information set forth under the captions
"THE MERGER--Relationship between us and Dura", "RELATED PARTY TRANSACTIONS"
and "INTERESTS OF CERTAIN PERSONS IN THE MERGER" in the Proxy/Statement
Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(a)(2)Not Applicable
(b)(1)-(6) The information set forth under the caption "SPECIAL
FACTORS--Background of the merger" in the Proxy Statement/Prospectus is
incorporated herein by reference pursuant to General Instruction F to
Schedule 13E-3.
3
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(c) The information set forth under the caption "SPECIAL
FACTORS--Background of the merger" in the Proxy Statement/Prospectus is
incorporated herein by reference pursuant to General Instruction F to
Schedule 13E-3.
(e) The information set forth under the captions "SUMMARY--The merger,"
"THE MERGER--Relationship between us and Dura," "THE MERGER AGREEMENT" and
"DESCRIPTION OF THE WARRANTS" in the Proxy Statement/Prospectus is incorporated
herein by reference pursuant to General Instruction F to Schedule 13E-3.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(b) The information set forth under the caption "THE MERGER" in the
Proxy Statement/Prospectus is incorporated herein by reference pursuant to
General Instruction F to Schedule 13E-3.
(c)(1) The information set forth under the caption "THE MERGER" in the
Proxy Statement/Prospectus is incorporated herein by reference pursuant to
General Instruction F to Schedule 13E-3.
(c)(2) Not applicable.
(c)(3) The information set forth under the caption
"SUMMARY--Unaudited pro forma condensed consolidated financial data" in the
Proxy Statement/Prospectus is incorporated herein by reference pursuant to
General Instruction F to Schedule 13E-3.
(c)(4) The information set forth under the caption "SPECIAL
FACTORS--Purposes of the merger and plans or proposals" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(c)(5) Not applicable.
(c)(6) The information set forth under the caption "SPECIAL
FACTORS--Purposes of the merger and plans or proposals" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(c)(7) The information set forth under the caption "SPECIAL
FACTORS--Purposes of the merger and plans or proposals" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(c)(8) The information set forth under the caption "SPECIAL
FACTORS--Purposes of the merger and plans or proposals" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS.
(a) The information set forth under the caption "SPECIAL
FACTORS--Purposes of the merger and plans or proposals" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(b) The information set forth under the caption "SPECIAL FACTORS" in
the Proxy Statement/Prospectus is incorporated herein by reference pursuant
to General Instruction F to Schedule 13E-3.
4
<PAGE>
(c) The information set forth under the caption "SPECIAL FACTORS" in
the Proxy Statement/Prospectus is incorporated herein by reference pursuant
to General Instruction F to Schedule 13E-3.
(d) The information set forth under the captions "THE MERGER
AGREEMENT" and "SUMMARY--Unaudited pro forma condensed consolidated financial
data" in the Proxy Statement/Prospectus is incorporated herein by reference
pursuant to General Instruction F to Schedule 13E-3
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) The information set forth under the caption
"SUMMARY--Recommendation of the special committee and our board of directors"
in the Proxy Statement/Prospectus is incorporated herein by reference
pursuant to General Instruction F to Schedule 13E-3.
(b) The information set forth under the caption "Special Factors" in
the Proxy Statement Prospectus is incorporated herein by reference pursuant
to General Instruction F to Schedule 13E-3
(c) The information set forth under the caption "SUMMARY--Vote
required of our stockholders" in the Proxy Statement/Prospectus is
incorporated herein by reference pursuant to General Instruction F to
Schedule 13E-3.
(d) The information set forth under the caption "SPECIAL FACTORS" in
the Proxy Statement/Prospectus is incorporated herein by reference pursuant
to General Instruction F to Schedule 13E-3.
(e) The information set forth under the caption
"SUMMARY--Recommendation of the special committee and our board of directors"
in the Proxy Statement/Prospectus is incorporated herein by reference
pursuant to General Instruction F to Schedule 13E-3.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.
(a) The information set forth under the captions "SUMMARY--Opinion
of our financial advisor," "SPECIAL FACTORS--Opinion of SG Cowen Securities
Corporation" and "SPECIAL FACTORS--Opinion of Merrill Lynch Pierce Fenner &
Smith Incorporated" in the Proxy Statement/Prospectus is incorporated herein
by reference pursuant to General Instruction F to Schedule 13E-3.
(b)(1)-(6) The information set forth under the caption "SPECIAL
FACTORS--Opinion of SG Cowen Securities Corporation" and "SPECIAL
FACTORS--Opinion of Merrill Lynch Pierce Fenner & Smith Incorporated" in the
Proxy Statement/Prospectus is incorporated herein by reference pursuant to
General Instruction F to Schedule 13E-3.
(c) The information set forth under the caption "WHERE YOU CAN FIND
MORE INFORMATION" in the Proxy Statement/Prospectus is incorporated herein by
reference pursuant to General Instruction F to Schedule 13E-3.
ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth under the caption "SUMMARY--The merger"
and "THE MERGER--Dura's funding of the merger" in the Proxy Statement/Prospectus
is incorporated herein by reference pursuant to General Instruction F to
Schedule 13E-3.
(b) The information set forth under the captions
"SUMMARY--Conditions to the merger" and "THE MERGER AGREEMENT--Conditions to
the merger" in the Proxy Statement/Prospectus is incorporated herein by
reference pursuant to General Instruction F to Schedule 13E-3.
(c) The information set forth under the caption "THE MERGER--Expenses"
in the Proxy Statement/Prospectus is incorporated herein by reference pursuant
to General Instruction F to Schedule 13E-3.
(d) Not applicable.
5
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ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth under the captions "OUR PRINCIPAL
STOCKHOLDERS" and "SECURITY OWNERSHIP OF OUR MANAGEMENT" in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(b) Not applicable.
ITEM 12. THE SOLICITATION OR RECOMMENDATION.
(d) The information set forth under the captions "THE SPECIAL
MEETING--Voting by our directors and executive officers and Dura" and
"RELATED AGREEMENTS" in the Proxy Statement/Prospectus is incorporated herein
by reference pursuant to General Instruction F to Schedule 13E-3.
(e) The information set forth under the captions "SPECIAL FACTORS"
in the Proxy Statement/Prospectus is incorporated herein by reference
pursuant to General Instruction F to Schedule 13E-3.
ITEM 13. FINANCIAL STATEMENTS.
(a) The information set forth under the caption "SUMMARY--Selected
historical financial data" and the information set forth under the caption
"FINANCIAL STATEMENTS--SPIROS DEVELOPMENT CORPORATION II, INC." in the Proxy
Statement/Prospectus is incorporated herein by reference pursuant to General
Instruction F to Schedule 13E-3.
(b) The information set forth under the caption "SUMMARY--Unaudited
pro forma condensed consolidated financial data" and the information set
forth under the caption "FINANCIAL STATEMENTS--UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION" in the Proxy Statement/Prospectus is
incorporated herein by reference pursuant to General Instruction F to
Schedule 13E-3.
ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) The information set forth under the caption "THE SPECIAL MEETING"
in the Proxy Statement/Prospectus is incorporated herein by reference pursuant
to General Instruction F to Schedule 13E-3.
(b) Not applicable.
ITEM 15. ADDITIONAL INFORMATION.
(b) Not applicable.
ITEM 16. EXHIBITS.
(a)(1)-(5) The Proxy Statement/Prospectus included within the SEC
Registration Statement on Form S-4 of Dura filed with the SEC on April 25,
2000 (incorporated herein by reference to Dura's Registration Statement on
Form S-4 filed with the SEC on April 25, 2000).
(b) Not applicable.
(c) Opinion of SG Cowen Securities Corporation dated March 20, 2000
(incorporated herein by reference to Annex B to the Proxy
Statement/Prospectus) and SG Cowen board presentation filed as exhibit 99.1
hereto and received by the special committee at its meeting on March 20, 2000
conformed to reflect comments made at or prior to the time of such meeting.
Opinion of Merrill Lynch Pierce Fenner & Smith Incorporated dated March 20,
2000 (incorporated herein by reference to Annex C to the Proxy
Statement/Prospectus) and Merrill Lynch board presentation filed as exhibit
99.2 hereto.
(d) Not applicable.
6
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(f) The Proxy Statement/Prospectus included within the Registration
Statement on Form S-4 of Dura filed with the SEC on April 25, 2000
(incorporated herein by reference to Dura's Registration Statement on Form
S-4 filed with the SEC on April 25, 2000).
(g) Not applicable.
7
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SIGNATURES
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
DURA PHARMACEUTICALS, INC.
By: /s/ John R. Cook
------------------------------------------------
Name: John R. Cook
Title: Vice President, Associate General Counsel
and Secretary
Dated: April 25, 2000
<PAGE>
CONFIDENTIAL
PROJECT SURF
FAIRNESS OPINION PRESENTATION TO THE
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS
March 20, 2000
SG COWEN SG
SG Cowen board presentation received by the special committee at its meeting
on March 20, 2000, conformed to reflect comments made at or prior to the time
of such meeting.
<PAGE>
PROJECT
SURF
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INTRODUCTION
THE FOLLOWING MATERIALS WERE PREPARED SOLELY FOR DISCUSSION
AT THE MEETING OF THE SPECIAL COMMITTEE OF THE BOARD OF
DIRECTORS OF SURF ("COMPANY") SCHEDULED FOR MARCH 20, 2000.
IN PREPARING THIS PRESENTATION, WE HAVE, WITH YOUR CONSENT,
RELIED UPON INFORMATION PROVIDED BY SURF, DUNE AND OTHER
PUBLICLY AVAILABLE INFORMATION. WE HAVE NOT INDEPENDENTLY
VERIFIED ANY OF SUCH INFORMATION, AND HAVE RELIED ON IT
BEING COMPLETE AND ACCURATE IN ALL MATERIAL RESPECTS.
PLEASE NOTE THAT THIS PRESENTATION IS BASED ON THE BUSINESS
AND OPERATIONS OF SURF AND DUNE AS REPRESENTED TO US AS OF
THE DATE HEREOF, AND DOES NOT PURPORT TO TAKE INTO
CONSIDERATION ANY INFORMATION OR EVENTS ARISING SUBSEQUENT
TO SUCH DATE. SG COWEN MAKES NO REPRESENTATION OR WARRANTY
THAT THERE HAS BEEN NO MATERIAL CHANGE IN THE INFORMATION
PROVIDED OR REVIEWED BY US IN CONNECTION HEREWITH.
THE INFORMATION CONTAINED HEREIN IS CONFIDENTIAL AND HAS
BEEN PREPARED EXCLUSIVELY FOR THE BENEFIT AND USE OF THE
SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF THE COMPANY
IN ITS CONSIDERATION OF THE PROPOSED TRANSACTION, AND MAY
NOT BE USED FOR ANY OTHER PURPOSE OR REPRODUCED,
DISSEMINATED, QUOTED OR REFERRED TO AT ANY TIME, IN ANY
MANNER OR FOR ANY PURPOSE WITHOUT OUR PRIOR WRITTEN CONSENT.
THIS PRESENTATION IS NOT FOR THE BENEFIT OF, AND DOES NOT
CONVEY ANY RIGHTS OR REMEDIES TO, ANY HOLDER OF SECURITIES
OF THE COMPANY OR ANY OTHER PERSON.
THIS PRESENTATION IS SUBJECT TO THE ASSUMPTIONS,
QUALIFICATIONS AND LIMITATIONS SET FORTH HEREIN AND IN THE
FORM OF OUR FAIRNESS OPINION LETTER, INCLUDED AS AN APPENDIX
TO THIS PRESENTATION, AND DOES NOT CONSTITUTE A
RECOMMENDATION BY SG COWEN TO THE SPECIAL COMMITTEE OF THE
BOARD OF DIRECTORS OR SHAREHOLDERS OF THE COMPANY ON HOW TO
VOTE WITH RESPECT TO THE PROPOSED TRANSACTION.
SG
<PAGE>
PROJECT
SURF
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TABLE OF CONTENTS
1. EXECUTIVE SUMMARY
2. SURF OVERVIEW
3. DUNE OVERVIEW
4. VALUATION CONSIDERATIONS
SG 1
<PAGE>
PROJECT
SURF
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EXECUTIVE SUMMARY
SG 2
<PAGE>
PROJECT
SURF
EXECUTIVE SUMMARY
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TRANSACTION SUMMARY
STRUCTURE - Proposed acquisition of Surf
Merger
Purchase method of accounting
CONSIDERATION - Dune to pay, in the aggregate, approximately $100.8
million(a) on a fully-diluted basis consisting of:
$13.25 per Surf Callable Common Share in cash
Warrant to purchase shares of Dune common stock
valued at $2.50
WARRANT VALUE - For each share of Surf Callable Common Stock,
shareholders will receive one warrant
("Warrant") representing the right to purchase a
certain fraction of a share of Dune common stock
Exercise price of Warrant will be calculated as the
average closing price of Dune common stock for the
10 consecutive trading days ending on and including
the day prior to the public announcement of the
transaction terms (the "Measurement Price")
multiplied by 1.25
Conversion ratio based on Black-Scholes Option
Valuation Model with a 65% volatility factor, a 60
month term, and a risk free rate which is equal to
the 5 year U.S. Treasury Note
A fixed exchange ratio collar of 20% around the
Measurement Price
- If the average closing price of Dune common
stock for the 10 consecutive trading days
ending on the day prior to closing (the "Closing
Price") is at least 20% greater than or at least
20% less than the Measurement Price (the "Collar
Range"), the warrant value will be fixed while
the exchange ratio will fluctuate
- As of March 16, 2000, this collar will allow the
warrant value to fluctuate between $1.81 and
$3.22
(a) Based on Treasury Method calculation which includes 6.325
million Surf Callable Common shares outstanding per Surf
Form 10-Q for the period ended September 30, 1999 and 0.737
million options outstanding at a weighted average exercise
price of $14.13 per Surf management as of March 14, 2000
SG 3
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PROJECT
SURF EXECUTIVE SUMMARY
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TRANSACTION SUMMARY (CONTINUED)
<TABLE>
<CAPTION>
ILLUSTRATIVE WARRANT WARRANT VALUATION (BLACK-SCHOLES METHODOLOGY)
VALUATION (Per share data in US$)
Parameter Value
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<S> <C>
Dune Stock Price (a) $14.53
Exercise Price (b) $18.16
Risk-free Rate (c) 6.457%
Assumed Volatility (d) 65.0%
Years to Expiration 5.0
Type of Option American Style
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WARRANT VALUE $8.08
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</TABLE>
<TABLE>
<CAPTION>
CONVERSION RATIO ANALYSIS
(Per share data in US$)
Item Value
------------------------------------------------------------
<S> <C>
Warrant Value $8.08
Value Offered $2.50
Conversion Ratio (e) 0.3096
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MAXIMUM DUNE SHARES ISSUED (f) 1.981
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PRO FORMA OWNERSHIP 4.169%
</TABLE>
ILLUSTRATIVE COLLAR
ANALYSIS
<TABLE>
<CAPTION>
COLLAR ANALYSIS
(Per share data in US$)
Dune Stock Price at Closing
-----------------------------------------------------------------------------------------------------
$6.00 $8.00 $10.00 $11.63 $13.08 $14.53 (a) $15.98 $17.44 $19.00 $21.00 $23.00
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Premium / (Discount) (58.7)% (44.9)% (31.2)% (20.0)% (10.0)% 0.0% 10.0% 20.0% 30.8% 44.5% 58.3%
Warrant Value per Dune Share $2.09 $3.32 $4.68 $5.85 $6.95 $8.08 $9.23 $10.42 $11.71 $13.40 $15.12
Conversion Ratio 0.8652 0.5454 0.3872 0.3096 0.3096 0.3096 0.3096 0.3096 0.2753 0.2406 0.2132
Warrant Value per Surf Share $1.81 $1.81 $1.81 $1.81 $2.15 $2.50 $2.86 $3.22 $3.22 $3.22 $3.22
</TABLE>
(a) Represents the average stock price for Dune Common Stock
for the last ten consecutive trading days, ending on and
including March 16, 2000
(b) Based on a 25% premium to the Dune Stock Price
(c) Source: Bloomberg as of March 16, 2000; represents yield
on 5 year U.S. Treasury Note
(d) The implied volatility for Dune as of March 16, 2000 as
per Bloomberg is 73.1% and the 5-year historical
volatility for Dune as of February 29, 2000 as per
Bloomberg is 59.8%; the 65% volatility in the warrant
valuation is as set forth in the Merger Agreement
(e) Determined by dividing $2.50 by $8.08; represents
the number of Dune Common Stock shares each warrant
is convertible into upon exercise
(f) Assumes all warrants are exercised and no effect from
the Treasury Method
SG 4
<PAGE>
PROJECT
SURF
EXECUTIVE SUMMARY
-----------------------------------------------------------
TRANSACTION SUMMARY (CONTINUED)
- Merger shall be terminated by:
Mutual written consent of both parties
By either party if:
- Merger has not closed on or before September 30, 2000
- One party breaches the Agreement and Plan of Merger
in a manner which would prevent it from satisfying
its closing conditions
- Any governmental entity prohibits the consummation
of the Transaction
By the Company if:
- Surf Board of Directors has received an offer which
is deemed by the Special Committee to constitute a
proposal that is superior, from a financial point of
view, and the Special Committee has promptly notified
Dune of such proposal
- Surf shall not initiate or solicit alternative acquisition
or merger proposals
Should the Company receive, on an unsolicited basis, a
written proposal which is deemed by the Special
Committee to be superior, from a financial point of
view, Surf shall promptly notify Dune of such proposal
SG 5
<PAGE>
PROJECT
SURF
EXECUTIVE SUMMARY
-------------------------------------------------------------
TRANSACTION SUMMARY (CONTINUED)
- Fees and Expenses
All costs and expenses incurred in connection with
this Agreement and the consummation of the
Transaction shall be paid by the party incurring
such expenses
- Farallon Capital Management LLC ("Farallon"), which
owns approximately 19.5%(a) of Surf's Callable Common
Shares outstanding, has agreed to vote in favor of the
transaction
- Proposed transaction conditional upon, among other
things:
Dune shall not have entered into any agreement for
an acquisition proposal, as defined in the Agreement
Warrants have been approved for listing on the Nasdaq
National Market
Expiration of HSR waiting period, if necessary
Surf shareholder approval of:
- Dune, as the sole holder of Surf Special Common
Stock; and
- At least 50% of the holders of the Company
outstanding callable common shares
(a) According to Form 13D filed January 11, 2000, Farallon
owns approximately 1.374 million Surf Callable Common
shares; for Surf, assumes 7.062 million fully-diluted
shares outstanding which is based on 6.325 million
Callable Common shares outstanding per Form 10-Q for
the period ended September 30, 1999, 0.737 million
options outstanding per Surf management as of March 14,
2000, and no effect from the Treasury Method
SG 6
<PAGE>
PROJECT
SURF
EXECUTIVE SUMMARY
-----------------------------------------------------------
TRANSACTION OVERVIEW
PRICE PER UNIT
IMPLIED PREMIUM / (DISCOUNT) ANALYSIS
PRICE PER SHARE OF (PER SHARE DATA IN US$)
CALLABLE COMMON
STOCK
<TABLE>
<CAPTION>
IMPLIED PREMIUM / (DISCOUNT)
---------------------------------------
SURF DUNE ORIGINAL DUNE NEGOTIATED
SHARE / UNIT PRICE OFFER OF $12.50 OFFER OF $15.75
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Initial Offering Price - Units (December 17, 1997) (a) $16.00 (21.9)% (1.6)%
Initial Offering Price Range - Callable Common Stock
(December 17, 1997) (b) $12.00 - $14.00 4.2% - (10.7)% 31.3% - 12.5%
Closing Price on February 11, 2000 - 1 Day Prior (c) $11.63 7.5% 35.5%
Closing Price on February 4, 2000 - 1 Week Prior (c) $11.00 13.6% 43.2%
Closing Price on January 14, 2000 - 1 Month Prior (c) $10.25 22.0% 53.7%
10-Day Average (d) $10.43 19.9% 51.1%
Last 20 Days High (c) $12.13 3.1% 29.9%
Last 20 Days Low (c) $8.94 39.9% 76.2%
Last 40 Days High (c) $12.13 3.1% 29.9%
Last 40 Days Low (c) $5.00 150.0% 215.0%
LTM High (e) $12.13 3.1% 29.9%
LTM Low (a)(e) $4.38 185.7% 260.0%
</TABLE>
(a) Represents combined price of Surf Callable Common Stock
and Dune Warrant
(b) Assumes a $12.00 to $14.00 offering price for the
Callable Common Stock of Surf, based on a warrant
valuation range of $2.00 to $4.00; $2.00 warrant
valuation derived from Note 6 of Dune's Annual Report
filed on Form 10-K which disclosed a fair market value
for the warrants of $12.7MM; $4.00 warrant valuation
provided by Surf management
(c) Represents closing price prior to Dune's announcement
on February 14, 2000 to acquire all the outstanding
shares of Surf Callable Common Stock for $12.50 per
share in cash
(d) Represents the average stock price for Surf Callable
Common Stock for the last ten consecutive trading days
prior to Dune's announcement on February 14, 2000 to
acquire all the outstanding Surf Callable Common Stock
for $12.50 per share in cash
(e) Last Twelve Months ended February 11, 2000, which was
the last trading day prior to Dune's announcement of
Dune's original offer to acquire all the outstanding
Surf Callable Common Stock for $12.50 per share in cash
SG 7
<PAGE>
PROJECT
SURF
EXECUTIVE SUMMARY
-------------------------------------------------------------
TRANSACTION OVERVIEW (CONTINUED)
<TABLE>
<CAPTION>
OVERVIEW OF DISCOUNTED CASH FLOW ANALYSIS (a)
(PER SHARE DATA IN US$)
RANGE OF DISCOUNT RATES
------------------------------------------------------------
25.0% 27.5% 30.0% 32.5% 35.0%
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Implied Equity Value per Share Based on: (b)
Discounted Cash Flow - Theoretical Analysis (c) $24.14 $18.62 $14.35 $11.00 $8.35
Discounted Cash Flow - Royalty Analysis (c)
20.0% $20.21 $17.65 $15.59 $13.92 $12.54
17.5% 18.12 15.85 14.03 12.56 11.35
15.0% 16.02 14.05 12.48 11.20 10.15
</TABLE>
(a) Projections provided by Surf management
(b) Implied equity value per share based on Treasury Method
calculation which includes 6.325 million Surf Callable
Common shares outstanding per Surf Form 10-Q for the
period ended September 30, 1999 and 0.737 million
options outstanding at a weighted average exercise
price of $14.13 per Surf management as of
March 14, 2000
(c) Cash flows discounted back to March 31, 2000; assumes
Surf receives benefit of NOL's
SG 8
<PAGE>
PROJECT
SURF
EXECUTIVE SUMMARY
-------------------------------------------------------------
TRANSACTION OVERVIEW (CONTINUED)
<TABLE>
<CAPTION>
IMPLIED PREMIUMS TO SURF STOCK PRICE (a)
<S><C>
1 DAY PRIOR (b)(c) 20-DAY AVERAGE (b)(c)
-------------------------------------------------------------
[GRAPH] [GRAPH]
Dune Offer ($15.75) 35.5% Dune Offer ($15.75) 56.0%
Global Median 7.2% Global Median 7.3%
Negotiated Median 58.2% Negotiated Median 60.9%
Global Mean 25.8% Global Mean 28.6%
Negotiated Mean 47.6% Negotiated Mean 52.8%
20-DAYS PRIOR (b)(c)
---------------------------
[GRAPH]
Dune Offer ($15.75) 53.7%
Global Median 8.3%
Negotiated Median 49.7%
Global Mean 31.4%
Negotiated Mean 56.7%
</TABLE>
(a) Premiums analysis for 1 Day Prior, 20-Day Average, and
20-Days Prior based on Surf's closing price on
February 11, 2000, the average of Surf's closing prices
from January 14, 2000 to February 11, 2000, and Surf's
closing price on January 14, 2000, respectively
(b) For precedent transactions, premiums analysis based on
the closing target company stock price one day prior to
announcement, the average of the closing target company
stock prices 20 trading days prior to announcement,
and the target company stock price 20 trading days prior
to announcement
(c) Premiums analysis excludes Centocor / Tocor transaction
announced June 20, 1991
SG 9
<PAGE>
PROJECT
SURF
EXECUTIVE SUMMARY
-------------------------------------------------------------
NEXT STEPS AND TIMING
NEXT STEPS AND TIMING
-------------------------------------------------------------
<TABLE>
<CAPTION>
APPROXIMATE TIMING
EVENT WEEK(S) OF
--------------------------------------------------------------------------------------------------------------
<S> <C>
Execute Definitive Agreement and Announcement March 20
Prepare Proxy Statement / Prospectus March 20
Results of Surf Audit to be Delivered to the
Special Committee of the Board of Directors March 27
File Proxy Statement / Prospectus April 2
Receive SEC Clearance Late April / Early May
Mail Proxy to Shareholders Mid May
Surf Special Meeting to Vote and Approve the Merger Late June
Closing Late June
</TABLE>
SG 10
<PAGE>
PROJECT
SURF
-----------------------------------------------------------
TRANSACTION CONSIDERATIONS
SG 11
<PAGE>
PROJECT
SURF
TRANSACTION CONSIDERATIONS
-----------------------------------------------------------
MANAGEMENT'S POTENTIAL RISKS FOR SURF STAND-ALONE
- Financing
According to management's proposed budget for FY2000,
the Company is projected to run out of money during
the fourth quarter of FY2000
In order to complete the development of its products,
Surf management estimates the Company will require
approximately $166 million of additional investment
capital
- Further delays in the Company's clinical timeline
Surf management believes commercialization of either
BECLOMETHASONE or BUDESONIDE could be further delayed
and increased investments could be incurred should
the FDA require Surf to perform additional
reliability studies on SURF-TM-
- Implementation of two piece cassette in SURF-TM-
There are no assurances that development of the two
piece cassette will be completed according to the
product launch schedule estimated in management's
current projections
- Dune Product Purchase Option
Under the terms of the ALBUTEROL AND PRODUCT OPTION
AGREEMENT, Dune has the option to acquire Surf's
rights to the use of SURF-TM- with either
BECLOMETHASONE or BUDESONIDE
SG 12
<PAGE>
PROJECT
SURF
TRANSACTION CONSIDERATIONS
-----------------------------------------------------------
EVALUATION OF PRODUCT PURCHASE OPTION
EVALUATION OF PRODUCT PURCHASE OPTION(a)
(US$ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 BECLOMETHASONE BUDESONIDE
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Product Specific Development Costs $21.6 $6.5
Platform Development and Clinical Supply Readiness 4.5 1.3
Project Management Fee 0.9 0.3
Market Development Research 2.9 0.9
Management Fee 6.9 2.1
--------------- --------------
36.7 11.1
Initial Investment $170.0 $170.0
Interest Income 13.8 13.8
--------------- --------------
Total Initial Investment 183.8 183.8
Buyback Ratio 20.0% 6.0%
Exercise Price at End of CY2001 (b) $36.76 $36.76
Buyback Price per Share $7.34 $2.21
Shares Outstanding (c) 6.401 6.401
--------------- --------------
TOTAL BUYBACK PRICE $47.0 $14.1
</TABLE>
(a) Source: Surf management
(b) Source: Surf IPO prospectus as of December 17, 1997
(c) Based on Treasury Method calculation which includes
6.325 million Surf Callable Common shares outstanding
per Surf Form 10-Q for the period ended
September 30, 1999 and 0.737 million options
outstanding at a weighted average exercise price of
$14.13 per Surf management as of March 14, 2000
SG 13
<PAGE>
PROJECT
SURF
TRANSACTION CONSIDERATIONS
-----------------------------------------------------------
SG 14
<PAGE>
PROJECT
SURF
-----------------------------------------------------------
SURF OVERVIEW
SG 15
<PAGE>
PROJECT SURF OVERVIEW
SURF -----------------------------------------------------------
BUSINESS OVERVIEW
- Surf went public in December 1997, and focuses on the
development of a dry powder pulmonary drug delivery
system (SURF-TM-) as well as certain specified asthma
and chronic obstructive pulmonary disease (COPD) drugs
for use with the system
- As of January 1, 2000, the Surf Units originally offered
to the public on December 17, 1997 split into two
publicly traded securities; a warrant to purchase one
quarter of one share of Dune Common Stock with an
exercise price of $54.84 and Surf Callable Common Stock
Through its ownership of Surf Special Shares, Dune
has the right to purchase the Surf Callable Common
Stock
- Range of exercise prices increases quarterly
beginning January 1, 2000 in which Dune may
purchase Surf Callable Common Stock for $25.26
per share
MARKET
- 1998 estimated US combined market for inhaled
therapeutic drugs to treat asthma and COPD was
$2.1 billion (a)
PRODUCTS
- Surf currently has two selected products in development
for use with the SURF DELIVERY SYSTEM:
BECLOMETHASONE - Steroid used to treat the
inflammatory component of asthma and certain symptoms
of COPD. Currently, management expects product launch
in Q4 2001
BUDESONIDE - Second generation steroid used to treat
the inflammatory component of asthma. Currently,
management expects product launch in Q4 2002
(a) Source: Surf Form 10-K for the period ended
December 31, 1998
SG 16
<PAGE>
PROJECT SURF OVERVIEW
SURF -----------------------------------------------------------
<TABLE>
<CAPTION>
MANAGEMENT AND BOARD OF DIRECTORS (a)
EXECUTIVE OFFICERS
NAME POSITION
-----------------------------------------------------------
<S> <C>
David S. Kabakoff Chairman of the Board of Directors, President, and Chief Executive Officer
Erle T. Mast Vice President and Chief Financial Officer
<CAPTION>
BOARD OF DIRECTORS (b)
NAME AGE POSITION
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SOL LIZERBRAM, RPH, D.O. 51 CHAIRMAN OF THE BOARD OF DIRECTORS OF HEALTHFUSION.COM
WILLIAM H. RASTETTER, PH.D 51 CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND CEO OF IDEC
PHARMACEUTICALS
ALAIN B. SCHREIBER, M.D. 43 PRESIDENT, CHIEF EXECUTIVE OFFICER, AND DIRECTOR OF VICAL, INC.
Cam L. Garner 50 Chairman of the Board of Directors and Chief Executive Officer of Dune
David S. Kabakoff 51 Chairman, President, Chief Executive Officer of Surf and President,
Dune Technologies
</TABLE>
(a) Source: Proxy statement mailed to shareholders on May 19, 1999
(b) Bold/italics denotes Special Committee member
SG 17
<PAGE>
PROJECT SURF OVERVIEW
SURF -----------------------------------------------------------
SUMMARY OWNERSHIP PROFILE
OWNERSHIP BY MAJOR CLASSIFICATION AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
OFFICER / DIRECTOR OWNERSHIP (a)
<S> <C> <C>
David S Kabakoff 81,660 1.2%
Erle T. Mast 22,000 0.3%
Cam L. Garner 13,250 0.2%
Sol Lizerbram 10,000 0.1%
William H. Rastetter 10,000 0.1%
Alan B. Schrelber 10,000 0.1%
---------- -------
146,910 2.1%
13F FILING INSITUTIONS
GREATER THAN 5% HOLDERS
Farallon Capital Management LLC(b) 1,374,400 19.5%
Elan International Services (c) 937,500 13.3%
HBK Investments LP (d) 935,400 13.2%
Lehman Brothers Holdings(e) 441,400 6.3%
---------- -------
3,688,700 52.2%
State Street Research and Management(f) 331,200 4.7%
TOTAL INSTITUTIONAL HOLDERS 4,019,900 56.9%
OTHER HOLDERS 2,894,690 41.0%
-----------------------------------------------------------------------
TOTAL SHARES OUTSTANDING (G) 7,061,500 100.0%
-----------------------------------------------------------------------
-----------------------------------------------------------------------
</TABLE>
[GRAPH]
<TABLE>
<S> <C>
Other Holders 41.0%
Total Officers & Directors 2.1%
Total Institutional Ownership 56.9%
</TABLE>
(a) Source: Proxy Statement mailed to shareholders on
May 19, 1999
(b) Source: Surf Form 13D filed January 11, 2000
(c) Source: Surf Form 13D/A filed March 12, 1998
(d) Source: Surf Form 13D filed February 16, 2000
(e) Source: Surf Form 13G/A filed February 12, 1999
(f) Source: Surf Form 13G filed February 9, 1999
(g) Based on 6.325 million Callable Common shares
outstanding per Form 10-Q for the period ended
September 30, 1999 and 0.737 million options
outstanding per Surf management as of March 14,
2000; excludes 1,000 Special Shares owned by Dune
SG 18
<PAGE>
PROJECT SURF OVERVIEW
SURF -----------------------------------------------------------
OVER THE LAST TWELVE MONTHS, THE SURF UNITS AND THE SHARES OF CALLABLE COMMON
STOCK HAVE TRADED TO A HIGH OF $13.00 ON FEBRUARY 18, 2000 (CALLABLE COMMON
STOCK), A LOW OF $4.38 ON NOVEMBER 2, 1999 (UNIT), AND ON MARCH 16, 2000,
SURF CALLABLE COMMON STOCK CLOSED AT $12.56
HISTORICAL STOCK PRICE PERFORMANCE (a)
LATEST TWELVE MONTHS (b)
[GRAPH]
(a) On January 1, 2000, Surf Units separated into two
publicly traded securities: one publicly-traded
security which represents Surf Callable Common Stock
and one publicly-traded security which represents a
warrant to purchase one quarter of one share of
Dune Common Stock; all stock price data prior to
January 1, 2000 represents the price per Surf Unit as
reported by Factset; on or after January 1, 2000, all
stock price data represents the price per Surf Callable
Common share as reported by Factset
(b) Stock price data as of March 16, 2000
(c) A Unit includes one share of Surf Callable Common
Stock and a warrant to purchase one-fourth of one share
of Dune Common Stock; after January 1, 2000 unit price
is based on price per Surf Callable Common share as
reported by Factset plus price of Dune warrant as
reported by Factset
19
SG
<PAGE>
PROJECT SURF OVERVIEW
SURF -----------------------------------------------------------
HISTORICAL STOCK PRICE PERFORMANCE (a)
SINCE THE COMPANY'S OFFERING OF UNITS ON DECEMBER 17, 1997, THE UNITS AND THE
SHARES OF CALLABLE COMMON STOCK HAVE TRADED TO A HIGH OF $19.00 ON JANUARY
22, 1998 (UNIT), A LOW OF $4.38 ON NOVEMBER 2, 1999 (UNIT), AND ON MARCH 16,
2000, SURF CALLABLE COMMON STOCK CLOSED AT $12.56
SINCE SURF INITIAL PUBLIC OFFERING (b)
(a) On January 1, 2000, Surf Units separated into two
publicly traded securities: one publicly-traded
security which represents Surf Callable Common Stock
and one publicly-traded security which represents a
warrant to purchase one quarter of one share of
Dune Common Stock; all stock price data prior to
January 1, 2000 represents the price per Surf Unit as
reported by Factset; on or after January 1, 2000, all
stock price data represents the price per Surf Callable
Common share as reported by Factset
(b) Stock price data as of March 16, 2000
(c) A Unit includes one share of Surf Callable Common
Stock and a warrant to purchase one-fourth of one share
of Dune Common Stock; after January 1, 2000 unit price
is based on price per Surf Callable Common share as
reported by Factset plus price of Dune warrant as
reported by Factset
SG 20
<PAGE>
PROJECT SURF OVERVIEW
SURF ------------------------------------------------------------------------
HISTORICAL STOCK PRICE PERFORMANCE
DURING THE LAST TWELVE MONTHS, SURF HAS UNDERPERFORMED ITS PEER GROUP AND THE
NASDAQ COMPOSITE
SURF VS. SELECTED INDICES--LATEST TWELVE MONTHS(a)
[GRAPH]
(a) Stock price data as of March 16, 2000; on January 1, 2000, Surf Units
separated into two publicly traded securities: one publicly-traded
security which represents Surf Callable Common Stock and one
publicly-traded security which represents a warrant to purchase one
quarter of one share of Dune Common Stock; all stock price data prior
to January 1, 2000 represents the price per Surf Unit as reported by
Factset; on or after January 1, 2000, all stock price data represents
the price per Surf Callable Common share as reported by Factset
(b) Emerging Drug Delivery Companies Index includes: ALKS, ARDM, CIMA,
EMIS, INHL, NOVN, NSTA
SG
22
<PAGE>
PROJECT SURF OVERVIEW
SURF ------------------------------------------------------------------------
FINANCIAL REVIEW
SG
23
<PAGE>
PROJECT SURF OVERVIEW
SURF ------------------------------------------------------------------------
PROJECTED REVENUE GROWTH(a)
[GRAPH]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
(US$ in millions)
2001P 2002P 2003P 2004P 2005P 2006P 2007P
Budesonide $12.9 $108.4 $168.4 $219.5 $271.5 $322.6
Beclomethasone $6.1 $30.3 $68.2 $88.9 $101.7 $116.4 $130.6
--------------------------------------------------------------
Total $6.1 $43.1 $176.6 $257.3 $321.2 $387.9 $453.2
</TABLE>
(a) Source: Surf management as of February 17, 2000
SG
24
<PAGE>
PROJECT SURF OVERVIEW
SURF ------------------------------------------------------------------------
FINANCIAL REVIEW
HISTORICAL AND PROJECTED FINANCIAL INFORMATION
(US$ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL(A) EST.(B) PROJECTED (B)
---------------- --------- -----------------------------------------------------------------------
FISCAL YEAR ENDING DECEMBER 31, 1997(C) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Beclomethasone $0.0 $0.0 $0.0 $0.0 $6.1 $30.3 $68.2 $88.9 $101.7 $116.4 $130.6
Budesonide 0.0 0.0 0.0 0.0 0.0 12.9 108.4 168.4 219.5 271.5 322.6
------- ------- ------- -------- -------- ------- ------ ------- ------- ------- -------
TOTAL REVENUES $0.0 $0.0 $0.0 $0.0 $6.1 $43.1 $176.6 $257.3 $321.2 $387.9 $453.2
TOTAL REVENUE GROWTH NM NM NM NM NM 611.6% 309.6% 45.7% 24.8% 20.8% 16.8%
GROSS PROFIT $0.0 $0.0 $0.0 $0.0 $4.6 $35.0 $149.2 $220.3 $276.4 $335.6 $394.0
GROSS MARGIN NM NM NM NM 75.9% 81.2% 84.5% 85.6% 86.1% 86.5% 86.9%
OPERATING EXPENSES
Selling, General and
Administrative 0.1 1.0 2.0 6.0 22.3 81.6 107.7 104.8 107.7 114.9 119.6
Research and Development (d) 7.0 50.8 39.5 45.6 48.1 7.6 0.0 0.0 0.0 0.0 0.0
Technology Licensing Fee 0.0 0.0 2.0 2.0 2.0 2.2 8.8 12.9 16.1 19.4 22.7
Other Operating Expenses 0.0 0.0 17.0 19.5 18.6 0.8 0.0 0.0 0.0 0.0 0.0
------- ------- ------- -------- -------- ------- ------ ------- ------- ------- -------
Operating Income (7.1) (51.8) (60.4) (73.2) (86.5) (57.1) 32.6 102.6 152.7 201.3 251.8
OPERATING INCOME MARGIN NM NM NM NM NM NM 18.5% 39.9% 47.5% 51.9% 55.6%
Interest and Other Income, Net (0.2) (8.2) (5.3) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- -------- -------- ------- ------ ------- ------- ------- -------
PRE-TAX INCOME (6.9) (43.6) (55.1) (73.2) (86.5) (57.1) 32.6 102.6 152.7 201.3 251.8
Provision for Taxes 0.0 0.2 0.0 0.0 0.0 0.0 11.4 35.9 53.4 70.4 88.1
------- ------- ------- -------- -------- ------- ------ ------- ------- ------- -------
NET INCOME ($6.9) ($43.8) ($55.1) ($73.2) ($86.5) ($57.1) $21.2 $66.7 $99.2 $130.8 $163.7
======= ======= ======= ======== ======== ======= ====== ======= ======= ======= =======
NET MARGIN NM NM NM NM NM NM 12.0% 25.9% 30.9% 33.7% 36.1%
Number of Shares Outstanding 6.325 6.325 6.325 6.325 6.325 6.325 6.325 6.325 6.325 6.325 6.325
Fully Diluted E.P.S. ($1.09) ($6.92) ($8.71) ($11.57) ($13.67) ($9.03) $3.35 $10.54 $15.69 $20.68 $25.87
</TABLE>
(a) Per Surf Form 10-K for the period ended December 31, 1998
(b) Source: Surf management
(c) Represents operating performance from September 23, 1997 (date of
inception) through December 31, 1997 per Surf Form 10-K for the
period ended December 31, 1998
(d) Projections exclude Albuterol Development Costs, New Project and
System Enhancements, and Market Development Research
SG
25
<PAGE>
PROJECT SURF OVERVIEW
SURF ------------------------------------------------------------------------
FINANCIAL REVIEW
VARIANCE ANALYSIS - PRODUCT REVENUES (a)
(US$ IN MILLIONS)
<TABLE>
<CAPTION>
Projected
----------------------------------------------------------
FISCAL YEARS ENDED DECEMBER 31, 1998 1999 2000 2001 2002 2003 2004 2005
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT
Albuterol $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Beclomethasone 0.0 0.0 0.0 6.1 30.3 68.2 88.9 101.7
Budesonide 0.0 0.0 0.0 0.0 12.9 108.4 168.4 219.5
Ipratropium 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Ipratropium / Albuterol Combination 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------- ------- ------- -------- -------- -------- -------- --------
TOTAL REVENUES $0.0 $0.0 $0.0 $6.1 $43.1 $176.6 $257.3 $321.2
======= ======= ======= ======== ======== ======== ======== ========
AT THE OFFERING
Albuterol $8.1 $28.8 $44.1 $62.8 $76.1 $99.9 $139.8 $170.3
Beclomethasone 0.0 7.0 41.9 60.6 65.9 71.7 78.0 84.8
Budesonide 0.0 0.0 0.0 24.7 67.7 95.9 136.8 154.9
Ipratropium 0.0 0.0 0.0 13.6 28.5 38.9 47.2 49.5
Ipratropium / Albuterol Combination 0.0 0.0 0.0 0.0 16.1 33.8 44.4 52.2
------- ------- ------- -------- -------- -------- -------- --------
TOTAL REVENUES $8.1 $35.8 $85.9 $161.6 $254.4 $340.2 $446.2 $511.8
======= ======= ======= ======== ======== ======== ======== ========
VARIANCE
Albuterol ($8.1) ($28.8) ($44.1) ($62.8) ($76.1) ($99.9) ($139.8) ($170.3)
Beclomethasone 0.0 (7.0) (41.9) (54.5) (35.7) (3.5) 10.8 16.9
Budesonide 0.0 0.0 0.0 (24.7) (54.9) 12.5 31.6 64.6
Ipratropium 0.0 0.0 0.0 (13.6) (28.5) (38.9) (47.2) (49.5)
Ipratropium / Albuterol Combination 0.0 0.0 0.0 0.0 (16.1) (33.8) (44.4) (52.2)
------- ------- ------- -------- -------- -------- -------- --------
TOTAL VARIANCE ($8.1) ($35.8) ($85.9) ($155.6) ($211.3) ($163.6) ($188.9) ($190.6)
======= ======= ======= ======== ======== ======== ======== ========
</TABLE>
- -----------
(a) Source: Surf management
SG
26
<PAGE>
PROJECT
SURF ------------------------------------------------------------------------
DUNE OVERVIEW
SG
27
<PAGE>
PROJECT DUNE OVERVIEW
SURF -------------------------------------------------------------------------
BUSINESS OVERVIEW
- - Dune develops and markets prescription pharmaceutical products for the
treatment of allergies, asthma, pneumonia, and related respiratory
conditions for the US respiratory market
MARKET
- - Estimated size of targeted market for antihistamines, asthma / rhinitis
therapies, cough / cold preparations and anti-infectives in 1998 was
approximately $14 billion (a)
- - Market size and fragmented nature as well as the identifiable base of
physician prescribers allows Dune to achieve significant market penetration
with a specialized sales force
- As of December 31, 1998, Dune had approximately 401 pharmaceuticals
sales representatives nationwide
PRODUCTS
- - Dune currently sells 11 prescription product lines and also owns a separate
mail service pharmacy, Health Script Pharmacy Services
- - SURF PULMONARY DRUG DELIVERY SYSTEM is currently under development which
aerosolizes pharmaceuticals in a powder formulation for pulmonary delivery
- On behalf of Surf, Dune is developing certain drug applications which
are currently used to treat respiratory conditions, including two
steroids, BECLOMETHASONE and BUDESONIDE
- In September 1998, Dune announced an agreement with Eli Lilly to
develop pulmonary delivery technology for insulin
(a) Source: Dune Form 10-K for the period ended December 31, 1998
SG
28
<PAGE>
PROJECT DUNE OVERVIEW
SURF -------------------------------------------------------------------------
BUSINESS OVERVIEW (CONTINUED)
OVERVIEW OF DUNE PRODUCT LINES (a)
<TABLE>
<CAPTION>
PRODUCT CATEGORY PRODUCT LINE COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Asthma and COPD - TORNALATE - APPLICATION: Bronchodilator for bronchial asthma and for reversible
bronchospasm
- DELIVERY MECHANISM: Metered dose inhaler, solution for inhalation
....................................................................................................................................
Allergy, Cough and Cold - ENTEX - APPLICATION: Symptomatic relief of sinusitis, bronchitis, pharyngitis, and
coryza when these conditions are associated with nasal congestion and viscous
mucus in the lower respiratory tract
- DELIVERY MECHANISM: Tablets and capsules
- Originated from Procter & Gamble
- NASALIDE / NASAREL - APPLICATION: Treatment of nasal symptoms of seasonal or perennial rhinitis
- DELIVERY MECHANISM: Nasal solution
- Originated from Syntex
....................................................................................................................................
Antibiotics - SEROMYCIN - APPLICATION: Treatment of active pulmonary and extrapulmonary tuberculosis
- DELIVERY MECHANISM: Capsules, USP
- FURADANTIN - APPLICATION: Treatment of urinary tract infections
- DELIVERY MECHANISM: Oral suspension
- CECLOR CD - APPLICATION: Treatment of mild / moderate bronchitis, pharyngitis and
tonsillitis infections
- DELIVERY MECHANISM: Extended release tablets
- Originated from Eli Lilly
- MAXIPIME - APPLICATION: Treatment of pneumonia, urinary tract, skin structure and
abdominal infections
- DELIVERY MECHANISM: Injection
- Originated from Bristol-Myers Squibb
- AZACTAM - APPLICATION: Treatment of urinary tract, lower respiratory, skin structure,
abdominal and gynecologic infections, and septicemia
- DELIVERY MECHANISM: Injection
- Originated from Bristol-Myers Squibb
SG
29
<PAGE>
- CAPASTAT - APPLICATION: Treatment of pulmonary infections
- DELIVERY MECHANISM: Injection
- Originated from Eli Lilly
- MYAMBUTOL - APPLICATION: Treatment of pulmonary tuberculosis
- DELIVERY MECHANISM: NA
- Originated from American Home Products
....................................................................................................................................
</TABLE>
(a) Source: Dune Form 10-K for the period ended December 31, 1998 and Dune
website as of March 2000
30
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
SUMMARY OWNERSHIP PROFILE
OWNERSHIP BY MAJOR CLASSIFICATION AS OF DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
OFFICER / DIRECTOR OWNERSHIP (a)
James C. Blair 270,900 0.6%
Cam L. Garner 133,784 0.3%
Joseph C. Cook, Jr. 72,999 0.2%
Charles G. Smith 63,000 0.1%
Gordon V. Ramseler 58,000 0.1%
Julia Brown 51,727 0.1%
Mitchel Woodbury 46,374 0.1%
Herbert J. Conrad 34,000 0.1%
David S. Kabakoff 27,809 0.1%
David F. Hale 26,000 0.1%
Charles W. Prettyman 15,896 0.0%
Other 76,142 0.2%
----------------- --------------
876,631 1.9%
13F FILING INSTITUTIONS (b)
Safeco Asset Management Co. 2,668,300 5.9%
American Intl Group Inc. 2,458,300 5.4%
----------------- --------------
5,126,600 11.3%
OTHER INSTITUTIONAL HOLDERS 25,432,715 55.8%
TOTAL INSTITUTIONAL HOLDERS 30,559,315 67.1%
OTHER HOLDERS 14,112,856 31.0%
- ------------------------------------------------------------------------------------
TOTAL SHARES OUTSTANDING (c) 45,548,802 100.0%
- ------------------------------------------------------------------------------------
</TABLE>
[Graph]
Other Holders 31.0%
Total Officers & Directors 1.9%
Total Institutional Ownership 67.1%
(a) Source: Proxy Statement as of May 20, 1999
(b) Source: CDA/Spectrum as of December 31, 1999
(c) Assumes 45,548,802 fully diluted shares outstanding for the three months
ended December 31, 1999 as reported in the Dune Form 10-Q for the three
month period ended September 30, 1999
31
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
HISTORICAL STOCK PRICE PERFORMANCE
DURING THE LAST TWELVE LATEST TWELVE MONTHS (a)
MONTHS, DUNE'S STOCK
PRICE HAS RANGED FROM A
HIGH OF $19.13 ON JANUARY [Graphic]
13, 2000 TO A LOW OF $9.75
ON JULY 26, 1999 AND
CLOSED AT $13.75 ON MARCH
16, 2000
(a) Stock price data as of March 16, 2000
32
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
HISTORICAL STOCK PRICE PERFORMANCE
SINCE SURF'S CALLABLE SINCE SURF INITIAL PUBLIC OFFERING (a)
COMMON STOCK OFFERING
ON DECEMBER 17, 1997,
DUNE'S STOCK PRICE HAS
TRADED TO A HIGH OF $48.63 [Graphic]
ON JANUARY 5, 1998, A LOW
OF $8.00 ON OCTOBER 9,
1998 AND CLOSED AT $13.75
ON MARCH 16, 2000
(a) Stock price data as of March 16, 2000
33
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
HISTORICAL STOCK PRICE PERFORMANCE
DURING THE LAST TWELVE DUNE VS. SELECTED INDICES - LATEST TWELVE MONTHS (a)
MONTHS, DUNE HAS
UNDERPERFORMED ITS PEER
GROUP AND THE NASDAQ [Graphic]
COMPOSITE
(a) Stock price data as of March 16, 2000
(b) Emerging Drug Delivery Companies Index
includes: ALKS, ARDM, CIMA, EMIS, INHL,
NOVN, NSTA
(c) Specialty Pharmaceutical Companies Index
includes: ADRX, ALZA, BVF, ELN, FRX, IVX,
JMED, MYL, SHPGY, WPI
34
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
HISTORICAL STOCK PRICE PERFORMANCE
SINCE SURF'S CALLABLE DUNE VS. SELECTED INDICES - SINCE SURF INITIAL
COMMON STOCK OFFERING PUBLIC OFFERING (a)
ON DECEMBER 17, 1997,
DUNE HAS UNDERPERFORMED
ITS PEER GROUP AND THE [Graphic]
NASDAQ COMPOSITE
(a) Stock price data as of March 16, 2000
(b) Emerging Drug Delivery Companies Index
includes: ALKS, ARDM, CIMA, EMIS, INHL,
NOVN, NSTA
(c) Specialty Pharmaceutical Companies Index
includes: ADRX, ALZA, BVF, ELN, FRX, IVX,
JMED, MYL, SHPGY, WPI
35
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
RESEARCH COMMUNITY SENTIMENT
SUMMARY OF RECENT ANALYST COMMENTARY
<TABLE>
<CAPTION>
EPS ESTIMATES (a)
DATE COMPANY RATING 2000E 2001E COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
03/08/00 Prudential Securities Hold $0.26 $0.35 - "Product revenue is growing at a healthy clip,
but earnings power has remained uncertain until
recently . . . if Dune is insistent on closing
the deal (Surf), it could potentially have to
sweeten its bid, using more cash and pushing out
the timeline. With the elimination of Surf, the
business model going forward will now reflect
Dune as a bona fide maker and marketer of drugs"
- -----------------------------------------------------------------------------------------------------------------------------------
02/29/00 Robertson Stephens Long-Term 0.91 1.25 - "Near term, we believe revenue will be driven by
Attractive base product growth and incremental revenue from
product acquisitions and co-promotion
agreements. We believe that Dune's innovative
dry powder inhaler will provide the catalyst for
accelerating revenue and earnings growth in
2001-2002"
- -----------------------------------------------------------------------------------------------------------------------------------
02/24/00 Hambrecht & Quist Buy 0.92 0.32 - "We continue to like Dune as a contrarian/value
play in the emerging pharma space. Using P/E is
meaningless in 2000 because of Surf, but our
number of $0.32 in 2001 is `real' and assumes no
Surf"
- "We feel very confident in our $0.92 EPS estimate
for 2000 with the caveat that Surf should run out
of its current $65 million in cash before the end
of the year . . . we are modeling a drop in EPS
to $0.32 in 2001, which assumes Dune does not
infuse more money into Surf"
- -----------------------------------------------------------------------------------------------------------------------------------
<PAGE>
02/23/00 Merrill Lynch Long-Term 0.30 0.35 - "Consolidation of Surf will eliminate most of
Accumulate Dune's contract revenue, while R&D expense will
be relatively unchanged. Our 2000 pro forma
estimate is being adjusted to $0.30 per share
to reflect the impact . . . our estimate also
assumes that development of Surf albuterol will
be discontinued"
- "Dune's four key in-line products, along with the
launch of Surf products in 2002 and 2003 should
result in a rapid recovery in the Company's
profitability"
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Source: First Call; otherwise, most recent analyst report
37
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
RESEARCH COMMUNITY SENTIMENT (CONTINUED)
SUMMARY OF RECENT ANALYST COMMENTARY
<TABLE>
<CAPTION>
EPS ESTIMATES (a)
------------------
DATE COMPANY RATING 2000E 2001E COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
02/14/00 Sutro & Co. Buy $0.31 $0.60 - "If accepted, without Surf's revenues, we believe
this year and next earnings will be reduced by
about $0.60 and $0.55 per share, respectively. At
the same time, management also announced that it
will discontinue developing albuterol in the Surf
delivery system, which should reduce its research
expenditures somewhat. Following the buyback,
however, the Company will be absorbing directly
the development of BECLOMETHASONE and BUDESONIDE
until the products are approved and launched in
2001 and 2002"
- -----------------------------------------------------------------------------------------------------------------------------------
01/25/00 CIBC World Markets Hold 0.90 1.00 - "Dune's 4Q99 results demonstrated continued
momentum in key franchise product lines, placing
the Company on target to meet management's stated
EPS growth objectives for 2000"
- -----------------------------------------------------------------------------------------------------------------------------------
FIRST CALL MEAN (b) $0.92 $0.52
===================================================================================================================================
</TABLE>
(a) Source: First Call; otherwise, most recent analyst report
(b) Source: First Call as of March 16, 2000
38
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
TRADING STATISTICS OF SELECTED PUBLICLY TRADED COMPANIES
<TABLE>
<CAPTION>
Price Enterprise Value
------------------------------ as a Multiple of:
Current 52 week 52 week Market Enterprise -----------------------
Company (FYE) (3/16/00) High Low Value Value(a) Sales EBITDA EBIT
- ----------------------------------------- --------- ------- ------- -------- ---------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED EMERGING DRUG DELIVERY COMPANIES
Alkermes, Inc. (3/31) $104.94 $197.00 $21.63 $2,758.4 $2,639.6 122.36x NM NM
Anesta Corp. (12/31) 20.13 27.63 7.38 267.7 198.4 30.45 NM NM
Aradigm Corp. (12/31) 27.38 46.75 5.63 432.3 412.5 24.53 NM NM
CIMA Labs, Inc. (21/31) 18.02 25.63 2.44 173.2 172.6 12.89 102.7x NM
Emisphere Technologies, Inc. (7/31) 61.69 84.50 6.50 1,319.1 1,124.8 155.66 NM NM
Inhale Therapeutic Systems (12/31) 80.38 141.50 22.88 2,022.3 1,884.2 45.56 NM NM
Noven Pharmaceuticals, Inc. (12/31) 12.13 27.25 4.25 271.7 263.2 8.32 43.8 67.5x
High 155.66x 102.7x 67.5x
Median 30.45 73.2 67.5
Mean 57.11 73.2 67.5
Low 8.32 43.8 67.5
Dune $13.75 $19.13 $9.75 $626.3 $651.0 2.16x 8.1x 13.3x
<CAPTION>
Price/Earnings Estimated CY2001 P/E/
----------------------------------- Long-term Estimated LT
Company (FYE) LTM 2000E(b) 2001E(b) EPS Growth(c) EPS Growth(c)
- ----------------------------------------- -------- ---------- --------- -------------- ---------------
<S> <C> <C> <C> <C>
SELECTED EMERGING DRUG DELIVERY COMPANIES
Alkermes, Inc. (3/31) NM NM NM 334.0% NA
Anesta Corp. (12/31) NM NM 36.6x NA NA
Aradigm Corp. (12/31) NM NM NM NA NA
CIMA Labs, Inc. (21/31) NM 69.3x 26.1 NA NA
Emisphere Technologies, Inc. (7/31) NM NM NA NA NA
Inhale Therapeutic Systems (12/31) NM NM NM NA NA
Noven Pharmaceuticals, Inc. (12/31) 25.4x 26.9 15.7 40.0 0.4x
High 25.4x 69.3x 36.6x 334.0% 0.4x
Median 25.4 48.1 26.1 187.0 0.4
Mean 25.4 48.1 26.1 187.0 0.4
Low 25.4 26.9 15.7 40.0 0.4
Dune 19.4x 14.9x 26.4x 32.3% 0.8x
</TABLE>
(a) Enterprise value defined as market value plus Total Debt less
Cash
(b) Estimates are calendar year end; all estimates are SG Cowen
when available; otherwise First Call
(c) Long-term growth rates are from IBES
39
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
TRADING STATISTICS OF SELECTED PUBLICLY TRADED COMPANIES (CONTINUED)
<TABLE>
<CAPTION>
Price Enterprise Value
------------------------------ as a Multiple of:
Current 52 week 52 week Market Enterprise -----------------------
Company (FYE) (3/16/00) High Low Value Value(a) Sales EBITDA EBIT
- ----------------------------------------- --------- ------- ------- -------- ---------- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SELECTED SPECIALTY PHARMACEUTICAL COMPANIES
Alza Laboratories (12/31) $38.19 $53.56 $26.50 $3,967.7 $4,681.7 5.88x 18.0x 24.0x
Andrx Corporation (12/31) 94.00 114.50 30.81 3,060.1 2,986.7 7.37 37.6 40.3
Blovall Corporation International (12/31) 50.56 71.50 16.19 2,953.2 2,846.7 16.13 33.2 37.7
Elan Corporatio, plc (12/31) 46.00 46.50 21.25 12,857.7 13,100.8 13.04 34.2 42.6
Forest Laboratories (3/31) 83.63 84.75 41.25 7,394.2 7,117.0 8.82 39.4 45.7
IVAX Corporation (12/31) 26.63 28.63 7.38 4,235.5 4,224.7 6.31 37.6 54.1
Jones Pharma, Inc. (12/31) 41.13 53.00 13.22 2,747.0 2,585.4 21.21 36.8 40.1
Mylan Laboratories (3/31) 30.00 30.94 17.06 3,903.8 3,610.8 4.71 14.4 16.8
Shire Pharmaceutical Group (12/31) 54.50 70.00 18.63 4,585.8 4,572.5 11.39 52.1 77.3
Watson Pharmaceuticals (12/31) 40.44 47.50 26.50 3,943.3 3,981.3 5.78 13.8 15.4
High 21.21x 52.1x 77.3x
Median 8.10 35.5 40.2
Mean 10.06 31.7 39.4
Low 4.71 13.8 15.4
Global High 155.66x 102.7x 77.3x
Global Median 12.89 37.2 40.3
Global Mean 29.44 38.6 42.0
Global Low 4.71 13.8 15.4
Dune $13.75 $19.13 $9.75 $626.3 $651.3 2.16x 8.1x 13.3x
<CAPTION>
Price/Earnings Estimated CY2001 P/E/
----------------------------------- Long-term Estimated LT
Company (FYE) LTM 2000E(b) 2001E(b) EPS Growth(c) EPS Growth(c)
- ----------------------------------------- -------- ---------- --------- -------------- ---------------
<S> <C> <C> <C> <C>
Alza Laboratories (12/31) 29.8x 24.6x 19.9x 20.8% 1.0x
Andrx Corporation (12/31) 61.1 72.9 38.5 51.5 0.7
Blovall Corporation International (12/31) 40.2 31.6 24.8 31.0 0.8
Elan Corporatio, plc (12/31) 37.1 30.7 25.3 23.3 1.1
Forest Laboratories (3/31) 59.0 55.4 36.4 27.6 1.3
IVAX Corporation (12/31) 63.9 42.3 34.6 31.7 1.1
Jones Pharma, Inc. (12/31) 62.7 46.7 39.5 25.5 1.6
Mylan Laboratories (3/31) 26.9 21.0 17.9 19.2 0.9
Shire Pharmaceutical Group (12/31) 110.5 56.2 41.6 32.5 1.3
Watson Pharmaceuticals (12/31) 24.2 19.9 16.6 21.0 0.8
High 110.5x 72.9x 41.6x 51.5% 1.6x
Median 49.6 36.9 29.9 26.5 1.0
Mean 51.5 40.1 29.5 28.4 1.1
Low 24.2 19.9 16.6 19.2 0.7
Global High 110.5x 72.9x 41.6x 334.0% 1.6x
Global Median 40.2 36.9 26.1 29.3 1.0
Global Mean 49.2 41.5 28.7 54.8 1.0
Global Low 24.2 19.9 15.7 19.2 0.4
Dune 19.4x 14.9x 26.4x 32.3% 0.8x
</TABLE>
(a) Enterprise value defined as market value plus Total Debt less Cash
(b) Estimates are calendar year end; all estimates are SG Cowen when
available; otherwise First Call
(c) Long-term growth rates are from IBES
40
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
FINANCIAL REVIEW
HISTORICAL AND PROJECTED FINANCIAL INFORMATION
(US$ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL(a) PROJECTED(b)
---------------------------- ----------------------------------------------- CAGR
FISCAL YEAR ENDING DECEMBER 31, 1997 1998 1999 2000 2001 2002 2003 2004 2000P-2004P
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $181.3 $199.2 $301.4 $344.1 $329.7 $395.6 $497.4 $597.1 14.8%
% GROWTH NM 9.8 51.4 14.2 (4.2) 20.0 25.7 20.0
Gross Profit 149.2 169.9 255.6 287.1 260.3 308.2 388.0 465.9 12.9
% OF REVENUE 82.3 85.3 84.8 83.4 79.0 77.9 78.0 78.0
EBITDA (c) 74.8 42.4 80.1 95.9 58.8 83.2 161.0 226.7 24.0
% OF REVENUE 41.3 21.3 26.6 27.9 17.8 21.0 32.4 38.0
EBIT 59.6 21.9 49.1 60.6 24.9 42.6 109.9 165.4 28.5
% OF REVENUE 32.9 11.0 16.3 17.6 7.6 10.8 22.1 27.7
Net Income 21.8 22.1 32.4 42.4 16.4 28.0 75.2 114.1 28.1
% OF REVENUE 12.0 11.1 10.8 12.3 5.0 7.1 15.1 19.1
Earnings Per Share $0.50 $0.46 $0.71 $0.92 $0.35 $0.60 $1.60 $2.40 27.0
% GROWTH NM (7.0) 53.6 30.1 (61.6) 69.6 165.7 50.1
-----------------------------------------------------------------------------------------------
Merrill Lynch Adjusted EPS(d) $0.30 $0.35 $0.70 $1.60 $2.40
-----------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------
First Call Mean Estimates(e) $0.92 $0.52 $0.68 NA NA
-----------------------------------------------------------------------------------------------
</TABLE>
(a) Per Dune Form 10-K for the period ended December 31, 1998 and Press release
dated January 24, 2000; excludes nonrecurring and extraordinary items
(b) Per Merrill Lynch Research Report as of February 7, 2000; assumes Dune
purchases Surf in FY 2001; excludes impact of multi-year Allergan agreement
announced February 23, 2000
(c) Assumes Depreciation and Amortization expense for the years FY 1999 to FY
2004 as a constant percentage of revenues as FY 1998
(d) Per Merrill Lynch Research Report as of February 23, 2000; assumes Dune
purchases Surf in FY 2000; includes impact of multi-year Allergan agreement
announced February 23, 2000
(e) First Call Mean Estimates as of March 13, 2000
41
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
SUMMARY CAPITALIZATION
SELECTED BALANCE SHEET ITEMS
(US $ IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
ACCOUNT 1999 (a) % OF TOTAL 1999 (b) % OF TOTAL
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and Equivalents $274.4 --- $266.7 ---
Current Portion of Long-Term Debt NA NA 3.9 0.5%
Long-Term Debt (c) 287.5 39.4% 287.5 39.8%
---------- ---------- -------- -------
Total Debt (c) 287.5 39.4% 291.4 40.4%
Stockholders' Equity 441.7 60.6% 430.3 59.6%
---------- ---------- -------- -------
Total Capitalization $729.2 100.0% $721.8 100.0%
========== ========== ======== =======
</TABLE>
(a) Source: Press release dated January 24, 2000
(b) Source: Form 10-Q for the period ended September 30, 1999
(c) Includes $287.5 million of convertible subordinated notes due July 15, 2002
42
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
VALUATION CONSIDERATIONS
43
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
HISTORICAL STOCK PRICE ANALYSIS
44
SG
<PAGE>
PROJECT DUNE OVERVIEW
SURF ----------------------------------------------------------------
HISTORICAL STOCK PRICE ANALYSIS
RELATIVE STOCK PRICE PERFORMANCE
[Graphic] Surf vs. Dune - Latest Twelve Months (a)
(a) Stock price data as of March 16, 2000; on January 1, 2000, Surf Units
separated into two publicly traded securities: one publicly-traded security
which represents Surf Callable Common Stock and one publicly-traded
security which represents a warrant to purchase one quarter of one share of
Dune Common Stock; all stock price data prior to January 1, 2000 represents
the price per Surf Unit as reported by Factset; on or after January 1,
2000, all stock price data represents the price per Surf Callable Common
share as reported by Factset
45
SG
<PAGE>
PROJECT HISTORICAL STOCK PRICE ANALYSIS
SURF ----------------------------------------------------------------
RELATIVE STOCK PRICE PERFORMANCE
SURF VS. DUNE - SINCE SURF INITIAL PUBLIC OFFERING (a)
SINCE SURF'S CALLABLE
COMMON STOCK OFFERING
ON DECEMBER 17, 1997,
DUNE HAS GENERALLY
UNDERPERFORMED SURF
46
SG
<PAGE>
PROJECT
SURF ----------------------------------------------------------------
PRECEDENT TRANSACTIONS
48
SG
<PAGE>
PROJECT PRECEDENT TRANSACTIONS
SURF ----------------------------------------------------------------
IMPLIED PREMIUMS PAID ANALYSIS
Implied Premiums to Surf Stock Price (a)
[GRAPH] [GRAPH]
1 Day Prior (b)(c) 20-Day Average (b)(c)
Dune Offer ($15.75) 35.5% Dune Offer ($15.75) 56.0%
Global Median 7.2% Global Median 7.3%
Negotiated Median 58.2% Negotiated Median 60.3%
Global Mean 25.8% Global Mean 28.6%
Negotiated Mean 47.6% Negotiated Mean 52.8%
[GRAPH]
20-Days Prior (b)(c)
Dune Offer ($15.75) 53.7%
Global Median 8.3%
Negotiated Median 49.7%
Global Mean 31.4%
Negotiated Mean 56.7%
(a) Premiums analysis for 1 Day Prior, 20-Day Average, and 20-Days Prior
based on Surf's closing price on February 11, 2000, the average of
Surf's closing prices from January 14, 2000 to February 11, 2000, and
Surf's closing price on January 14, 2000, respectively
(b) For precedent transactions, premiums analysis based on the closing
target company stock price one day prior to announcement, the average
of the closing target company stock prices 20 trading days prior to
announcement, and the target company stock price 20 trading days
prior to announcement
(c) Premiums analysis excludes Centocor / Tocor transactions; announced
June 20, 1991
49
SG
<PAGE>
PROJECT PRECEDENT TRANSACTIONS
SURF ----------------------------------------------------------------
PROFILE OF PRECEDENT TRANSACTIONS
PROFILE OF INITIAL OFFERINGS
(US$ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
EFFECTIVE OFFERING OFFER INITIAL INVESTOR CONTRIBUTION
DATE ENTITY FORMED PARENT COMPANY PRICE(a) VALUE(a) CAPITALIZATION(a) AS A % OF INITIAL CAP.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
06/18/98 CliniChem BioChem Pharma Inc. NA(b) NA(b) $150.0 0.0%
Development, Inc.
09/18/97 Crescendo ALZA Corp. NA(c) NA(c) 300.0 0.0
Pharmaceuticals Corp.
02/05/98 Neuralab Ltd. Elan Corp. $40.00 $50.0 50.0 100.0
11/20/96 Axogen Ltd. Elan Corp. 18.00 95.2 95.2 100.0
05/05/95 Allergan Ligand Retinoid Allergan / Ligand 10.00 32.5 100.0 32.5
Therapeutics
12/21/93 PerSeptive PerSeptive Biosystems Inc. 22.00 58.2 58.2 100.0
Technologies II Corp.
07/14/93 Advanced Therapeutics Elan Corp. 20.00 78.5 113.5 69.2
Systems Ltd.
05/21/93 Therapeutic Discovery Corp. ALZA Corp. NA(d) NA(d) 250.0 0.0
04/28/92 Neozyme II Corp. Genzyme Corp. 35.00 84.5 84.5 100.0
02/13/92 Cytorad Inc. Cytogen Corp. 10.00 40.3 40.3 100.0
01/21/92 Tocor I Inc. Centocor Inc. 40.00 90.0 90.0 100.0
11/27/91 Aramed Inc. Gensia Pharmaceuticals Inc. 20.00 57.5 57.5 100.0
05/23/91 SciGenics, Inc. Genetics Institute Inc. 22.00 46.0 46.0 100.0
11/14/90 Drug Research Corp. Elan Corporation 11.00 43.2 43.2 100.0
10/26/90 Neozyme Corp. Genzyme Corp. 23.00 46.0 46.0 100.0
11/17/89 Receptech Corp. Immunex Corp. 12.00 27.5 27.5 100.0
07/11/89 Tocor, Inc. Centocor Inc. 12.00 34.5 34.5 100.0
12/12/88 Bio-Electro Systems, Inc. ALZA Corp. 11.00 35.7 35.7 100.0
</TABLE>
50
SG
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
12/17/97 SURF DEVELOPMENT CORP. II DUNE $16.00 $101.2 $176.2 57.4%
10/29/95 SURF DEVELOPMENT CORP. DUNE $30.00 $28.0 $ 41.0 68.3
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Source: Initial Public Offering documents filed with the Securities and
Exchange Commission and Securities Data Corporation as of February 24,
2000
(b) Each holder of one BioChem Common Stock has the right to receive 40
Clinichem shares
(c) Each holder of ALZA Common Stock has the right to receive one Crescendo
share for every 20 shares of ALZA common stock owned; one Crescendo
share for every 36 shares of ALZA Common Stock into which the holder's
5% Debentures are convertible; and one Crescendo share for every 37
shares of ALZA common stock into which the holder's 5 1/4% Debentures
are convertible
(d) Each holder of ALZA Common Stock has the right to receive one
Therapeutic Discovery Corp. unit for every 10 shares of ALZA Common
Stock owned
51
<PAGE>
PROJECT PRECEDENT TRANSACTIONS
SURF -----------------------------------------------------------------
PROFILE OF PRECEDENT TRANSACTIONS - EXERCISED
- -------------------------------------------------------------------------------
PROFILE OF PURCHASE TRANSACTIONS - EXERCISED
(US$ IN MILLIONS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXERCISE PRICE PREMIUM ANALYSIS
ANNOUNCE EXERCISE AT TIME OF PURCHASE ---------------------------
DATE DATE TARGET ACQUIROR ANNOUNCEMENT PRICE 1-DAY 20-DAY AVG. 20-DAY
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
01/10/00 Pending CliniChem Development, Inc. BioChem Pharma Inc. NA NA NA NA NA
11/29/99 Pending Neuralab Ltd. Elan Corp. NA $61.01 NA NA NA
11/29/99 01/01/00 Axogen Ltd. Elan Corp. $34.56 34.56 5.5% 7.3% 7.6%
09/24/97 11/25/97 Allergan Ligand Retinoid
Therapeutics Allergan / Ligand 21.97 21.97 13.0 12.5 18.4
09/10/96 10/30/96 Advanced Therapeutics
Systems Ltd. Elan Corp. 36.00 36.00 5.1 5.7 6.7
08/26/97 09/30/97 Therapeutic Discovery Corp. ALZA Corp. 12.30 12.30 2.5 3.1 4.7
05/04/93 07/03/93 Drug Research Corp. Elan Corp. 21.00 21.00 12.8 13.5 18.3
10/18/93 12/22/93 Neozyme Corp. Genzyme Corp. 45.50 49.00 NA NA NA
12/15/92 02/19/93 Receptech Corp. Immunex Corp. 26.00 26.00 7.2 7.2 8.3
06/20/91 07/02/91 Tocor, Inc. Centocor Inc. 24.00 24.00 (60.5) (60.0) (56.8)
11/12/91 02/08/92 Bio-Electro Systems, Inc. ALZA Corp. 23.00 23.00 4.0 6.2 4.5
-------------------------------------------------------------------------------
EXERCISED MEDIAN (b) 5.5% 7.2% 7.6%
EXERCISED MEAN (b) 7.2% 7.9% 9.8%
-------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
2/14/00(c) PENDING SURF DEVELOPMENT CORP. II DUNE $25.26 $15.75 35.5% 56.0% 53.7%
10/10/97 12/19/97 SURF DEVELOPMENT CORP. DUNE $46.88 $48.97 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PRICE PERFORMANCE
SINCE TARGET IPO
ANNOUNCE EXERCISE PURCHASE PRICE/ --------------------
DATE DATE TARGET ACQUIROR IRR IPO PRICE TARGET(a) PARENT
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
01/10/00 Pending CliniChem Development, Inc. BioChem Pharma Inc. NA NA NA NA
11/29/99 Pending Neuralab Ltd. Elan Corp. NA NA NA NA
11/29/99 01/01/00 Axogen Ltd. Elan Corp. 23.3% 1.9x 81.9% 97.4%
09/24/97 11/25/97 Allergan Ligand Retinoid
Therapeutics Allergan / Ligand 36.0 2.2 94.4 26.3
09/10/96 10/30/96 Advanced Therapeutics
Systems Ltd. Elan Corp. 19.5 1.8 71.3 112.1
08/26/97 09/30/97 Therapeutic Discovery Corp. ALZA Corp. NA NA NA 4.4
05/04/93 07/03/93 Drug Research Corp. Elan Corp. 27.8 1.9 69.3 176.5
10/18/93 12/22/93 Neozyme Corp. Genzyme Corp. NA NA (33.7) 101.4
12/15/92 02/19/93 Receptech Corp. Immunex Corp. 26.8 2.2 102.1 141.9
06/20/91 07/02/91 Tocor, Inc. Centocor Inc. 42.0 2.0 406.3 273.0
11/12/91 02/08/92 Bio-Electro Systems, Inc. ALZA Corp. 26.3 2.1 101.1 261.5
-----------------------------------------------------------------------
EXERCISED MEDIAN (b) 26.8% 2.0X 88.2% 101.4%
EXERCISED MEAN (b) 28.8% 2.0X 111.6% 108.8%
-----------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
02/14/00(c) PENDING SURF DEVELOPMENT CORP. II DUNE (0.7)% 1.0X (17.0)% (68.5)%
10/10/97 12/19/97 SURF DEVELOPMENT CORP. DUNE 30.3% 1.6X NA 242.2%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) In cases where warrant(s) has not separated from common stock,
represents unit performance
(b) Premiums analysis excludes Centocor / Tocor transaction announced June
20, 1991
(c) Represents date Dune announced its offer to Surf Board of Directors to
purchase Surf Callable Common Stock for $12.50 per share in cash
52
SG
<PAGE>
PROJECT PRECEDENT TRANSACTIONS
SURF -----------------------------------------------------------------
PROFILE OF PRECEDENT TRANSACTIONS - NEGOTIATED
- -------------------------------------------------------------------------------
PROFILE OF PURCHASE TRANSACTIONS - NEGOTIATED
(US$ IN MILLIONS, EXCEPT PER SHARE DATA)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EX. PRICE DISCOUNT OF
ANNOUNCE EXERCISE AT TIME OF PUR. PUR. PRICE TO
DATE DATE TARGET ACQUIROR ANNOUNCE. PRICE EX. PRICE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
11/01/95 03/13/96 PerSeptive Tech. II PerSeptive Biosystems
Corp. Inc. $33.83 $13.96 (58.7)%
09/06/96 10/29/96 Neozyme II Corp. Genzyme Corp. 117.00 45.00 (61.5)
07/29/94 02/27/95 Cytorad Inc. Cytogen Corp. 19.50 8.81 (54.8)
12/10/93 03/11/94 Tocor II Inc. Centocor Inc. 58.00 40.00 (31.0)
06/16/95 11/22/95 Aramed Inc. Gensia Pharmaceuticals
Inc. 55.40 12.75 (77.0)
06/22/95(b)12/07/95 SciGenics, Inc. Genetics Institute Inc. 69.83 14.00 (80.0)
-----------------------------------------------------------
NEGOTIATED MEDIAN (60.1)%
NEGOTIATED MEAN (60.5)%
-----------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
02/14/00(c)PENDING SURF DEVELOPMENT CORP. II DUNE $25.26 $15.75 (37.6)%
10/10/97 12/19/97 SURF DEVELOPMENT CORP. DUNE $46.88 $48.97 4.5%
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
PRICE PERFORMANCE
PREMIUM ANALYSIS SINCE TARGET IPO
ANNOUNCE EXERCISE --------------------------- PUR. PRICE/ -----------------
DATE DATE TARGET ACQUIROR 1-DAY 20-DAY AVG. 20-DAY IRR IPO PRICE TARGET(a) PARENT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/01/95 03/13/96 PerSeptive Tech. PerSeptive
II Corp. Biosystems Inc. 64.2% 67.7% 64.2% (18.5)% 0.6x (61.4)% (61.4)%
09/06/96 10/29/96 Neozyme II Corp. Genzyme Corp. 2.1 1.8 2.9 5.7 1.3 25.9 20.0
07/29/94 02/27/95 Cytorad Inc. Cytogen Corp. 90.5 116.8 171.1 (4.1) 0.9 (53.8) (78.8)
12/10/93 03/11/94 Tocor II Inc. Centocor Inc. 73.9 72.8 61.6 0.0 1.0 (42.5) (76.4)
06/16/95 11/22/95 Aramed Inc. Gensia
Pharmaceuticals Inc. 52.2 54.1 37.8 (10.7) 0.6 (58.1) (82.4)
06/22/95(b)12/07/95 SciGenics, Inc. Genetics Institute 2.8 3.8 2.8 (9.5) 0.6 (38.1) (33.1)
Inc.
------------------------------------------------------------------------------------------
NEGOTIATED MEDIAN 58.2% 60.9% 49.7% (6.8)% 0.8X (48.1)% (68.9)%
NEGOTIATED MEAN 47.6% 52.8% 56.7% (6.2)% 0.8X (38.0)% (52.0)%
------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
02/14/00(c)PENDING SURF DEVELOPMENT DUNE 35.5% 56.0% 53.7% (0.7)% 1.0X (17.0)% (68.5)%
CORP. II
10/10/97 12/19/97 SURF DEVELOPMENT DUNE NA NA NA 30.3% 1.6X NA 242.2%
CORP.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) In cases where warrant(s) has not separated from callable common stock,
represents unit performance
(b) On June 22, 1995, Genetics Institute offered to purchase SciGenics for
$12.00 per share in cash; on September 7, 1995, SciGenics announced it
had entered into a Definitive Agreement with Genetics Institute for $14.00
per share in cash
(c) Represents date Dune announced its offer to Surf Board of Directors to
purchase Surf Callable Common Stock for $12.50 per share in cash
53
<PAGE>
PROJECT
SURF -------------------------------------------
DISCOUNTED CASH FLOW ANALYSIS
54
SG
<PAGE>
PROJECT DISCOUNTED CASH FLOW ANALYSIS
SURF -----------------------------------------------------------------
DISCOUNTED CASH FLOW - THEORETICAL ANALYSIS (WITH NOL) (a)
PROJECTED CASH FLOWS (b)
(US$ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Projected
---------------------------------------------------------------------------------------
Fiscal Year Ending December 31, 2000(c) 2001 2002 2003 2004 2005 2006 2007
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $ 0.0 $ 6.1 $ 43.1 $176.6 $257.3 $321.2 $387.9 $453.2
EBITDA (54.9) (86.3) (54.8) 35.3 105.4 156.1 204.9 255.6
Less: Depreciation and Amortization 0.0 (0.2) (2.3) (2.7) (2.8) (3.5) (3.6) (3.8)
---------- ---------- ---------- --------- --------- ---------- --------- ----------
EBIT (54.9) (86.5) (57.1) 32.6 102.6 152.7 201.3 251.8
Less: Income Taxes @ 35.0%(d) 0.0 0.0 0.0 0.0 0.0 0.0 (64.8) (88.1)
---------- ---------- ---------- --------- --------- ---------- --------- ----------
Unlevered After-Tax Income (54.9) (86.5) (57.1) 32.6 102.6 152.7 136.5 163.7
Plus: Depreciation and Amortization 0.0 0.2 2.3 2.7 2.8 3.5 3.6 3.8
Less: Capital Expenditures (3.8) (11.0) (10.5) (3.0) (2.5) (3.5) (6.5) (2.0)
Less: Working Capital Investment (0.1) 1.0 0.2 (13.7) (9.3) (7.0) (6.8) (6.7)
---------- ---------- ---------- --------- --------- ---------- --------- ----------
Free Cash Flow ($ 58.7) ($ 96.3) ($ 65.2) $ 18.6 $ 93.7 $145.7 $126.8 $158.8
========== ========== ========== ========= ========= ========== ========= ==========
</TABLE>
DISCOUNTED CASH FLOW VALUATION ANALYSIS
(US$ IN MILLIONS, EXCEPT EQUITY VALUE PER SHARE DATA)
<TABLE>
<CAPTION>
Range of Discount Rates
-----------------------------------------------------------
25.0% 27.5% 30.0% 32.5% 35.0%
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Present Value of Free Cash Flow ($ 12.9) ($ 23.4) ($ 32.2) ($ 39.5) ($ 45.6)
Present Value of Terminal Value(e) 112.7 87.9 69.3 55.2 44.3
--------- --------- --------- --------- ---------
Implied Enterprise Value 99.8 64.4 37.1 15.7 (1.3)
Plus: Net Cash(f) 54.7 54.7 54.7 54.7 54.7
--------- --------- --------- --------- ---------
Implied Equity Value $154.5 $119.2 $ 91.8 $ 70.4 $ 53.5
Implied Equity Value per Share(g) $ 24.14 $ 18.62 $ 14.35 $ 11.00 $ 8.35
========= ========= ========= ========= =========
</TABLE>
55
SG
(a) Cash flows discounted back to March 31, 2000; theoretical analysis may be
impacted by management's potential risks as discussed on page 12
(b) Source: Surf management as of February 18, 2000
(c) Represents estimates for the nine months from March 31, 2000 to December
31, 2000
(d) Assumes Surf does not receive benefit of NOL's
(e) Based on perpetual growth methodology assuming perpetual growth rate is
zero
(f) Source: Surf management; represents estimated cash as of February 29, 2000,
net payable to Dune
(g) Implied equity value per share based on Treasury Method calculation which
includes 6.325 million Surf Callable Common shares outstanding per Surf
Form 10-Q for the period ended September 30, 1999 and 0.737 million options
outstanding at a weighted average exercise price of $14.13 per Surf
management as of March 14, 2000
<PAGE>
PROJECT DISCOUNTED CASH FLOW ANALYSIS
SURF -------------------------------------------------
DISCOUNTED CASH FLOW - THEORETICAL ANALYSIS (WITHOUT NOL) (a)
PROJECTED CASH FLOWS (b)
(US$ IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PROJECTED
---------------------------------------------------------------------------------------------
FISCAL YEAR ENDING DECEMBER 31, 2000 (c) 2001 2002 2003 2004 2005 2006 2007
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $0.0 $6.1 $43.1 $176.6 $257.3 $321.2 $387.9 $453.2
EBITDA (54.9) (86.3) (54.8) 35.3 105.4 156.1 204.9 255.6
Less: Depreciation and Amortization 0.0 (0.2) (2.3) (2.7) (2.8) (3.5) (3.6) (3.8)
------- ------- ------- -------- ------- ------- ------- -------
EBIT (54.9) (86.5) (57.1) 32.6 102.6 152.7 201.3 251.8
Less: Income Taxes @ 35.0% (d) 0.0 0.0 0.0 (11.4) (35.9) (53.4) (70.4) (88.1)
------- ------- ------- -------- ------- ------- ------- -------
Unlevered After-Tax Income (54.9) (86.5) (57.1) 21.2 66.7 99.2 130.8 163.7
Plus: Depreciation and Amortization 0.0 0.2 2.3 2.7 2.8 3.5 3.6 3.8
Less: Capital Expenditures (3.8) (11.0) (10.5) (3.0) (2.5) (3.5) (6.5) (2.0)
Less: Working Capital Investment (0.1) 1.0 0.2 (13.7) (9.3) (7.0) (6.8) (6.7)
------- -------- ------- -------- ------- ------- ------- -------
Free Cash Flow ($58.7) ($96.3) ($65.2) $7.2 $57.8 $92.2 $121.1 $158.8
======= ======== ======= ======== ======= ======= ======= =======
</TABLE>
DISCOUNTED CASH FLOW VALUATION ANALYSIS
(US$ IN MILLIONS, EXCEPT EQUITY VALUE PER SHARE DATA)
<TABLE>
<CAPTION>
RANGE OF DISCOUNT RATES
----------------------------------------------------------------------------------
25.0% 27.5% 30.0% 32.5% 35.0%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Present Value of Free Cash Flow ($46.3) ($53.7) ($59.6) ($64.4) ($68.2)
Present Value of Terminal Value (e) 112.7 87.9 69.3 55.2 44.3
------ ------ ------ ----- -----
Implied Enterprise Value 66.3 34.2 9.7 (9.2) (23.9)
Plus: Net Cash (f) 54.7 54.7 54.7 54.7 54.7
------ ------ ------ ----- -----
Implied Equity Value $121.1 $89.0 $64.4 $45.6 $30.9
Implied Equity Value per Share (g) $18.92 $13.90 $10.07 $7.12 $4.82
====== ====== ====== ===== =====
</TABLE>
(a) Cash flows discounted back to March 31, 2000; theoretical analysis may be
impacted by management's potential risks as discussed on page 12
(b) Source: Surf management as of February 18, 2000
(c) Represents estimates for the nine months from March 31, 2000 to December
31, 2000
(d) Assumes Surf does not receive benefit of NOL's
(e) Based on perpetual growth methodology assuming perpetual growth rate is
zero
(f) Source: Surf management; represents estimated cash as of February 29, 2000,
net payable to Dune
(g) Implied equity value per share based on Treasury Method calculation which
includes 6.325 million Surf Callable Common shares outstanding per Surf
Form 10-Q for the period ended September 30, 1999 and 0.737 million options
outstanding at a weighted average exercise price of $14.13 per Surf
management as of March 14, 2000
57
SG
<PAGE>
PROJECT DISCOUNTED CASH FLOW ANALYSIS
SURF -------------------------------------------------
DISCOUNTED CASH FLOW - ROYALTY ANALYSIS (WITH NOL) (a)
PROJECTED CASH FLOWS (17.5% ROYALTY STREAM) (b)
(US$ IN MILLIONS)
<TABLE>
<CAPTION>
PROJECTED
-------------------------------------------------------------------------------------------
FISCAL YEAR ENDING DECEMBER 31, 2000(c) 2001 2002 2003 2004 2005 2006 2007
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $0.0 $1.1 $7.5 $30.9 $45.0 $56.2 $67.9 $79.3
EBITDA (50.9) 1.1 7.5 30.9 45.0 56.2 67.9 79.3
Less: Depreciation and Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
-------- -------- -------- -------- -------- -------- -------- -------
EBIT (50.9) 1.1 7.5 30.9 45.0 56.2 67.9 79.3
Less: Income Taxes @ 35.0% (d) 0.0 0.0 0.0 0.0 0.0 0.0 (11.8) (27.8)
-------- -------- -------- -------- -------- -------- -------- -------
Unlevered After-Tax Income (50.9) 1.1 7.5 30.9 45.0 56.2 56.0 51.6
Plus: Depreciation and Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Less: Capital Expenditures (3.8) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Less: Working Capital Investment (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
-------- -------- -------- -------- -------- -------- -------- -------
Free Cash Flow ($54.7) $1.1 $7.5 $30.9 $45.0 $56.2 $56.0 $51.6
======== ======== ======== ======== ======== ======== ======== =======
</TABLE>
ROYALTY ANALYSIS
(EQUITY VALUE PER SHARE IN US$)
<TABLE>
<CAPTION>
ASSUMED ROYALTY STREAM (e)
----------------------------------------------------------------------
RANGE OF DISCOUNT RATES 15.0% 17.5% 20.0%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
25.0% $16.02 $18.12 $20.21
27.5% 14.05 15.85 17.65
30.0% 12.48 14.03 15.59
32.5% 11.20 12.56 13.92
35.0% 10.15 11.35 12.54
</TABLE>
(a) Cash flows discounted back to March 31, 2000
(b) Based on projections provided by Surf management; assumes that Surf
licenses out all products to a third party in exchange for royalty payments
once the estimated net cash balance as of February 29, 2000 of
approximately $54.7 million is exhausted
(c) Represents estimated results for the nine months from March 31, 2000
through December 31, 2000; assumes Free Cash Flows do not exceed estimated
net cash as of February 29, 2000 of $54.7 million
(d) Assumes Surf begins to receive benefit of NOL's in FY2001
(e) Royalty ranges provided in consultation with the Company
58
SG
<PAGE>
PROJECT DISCOUNTED CASH FLOW ANALYSIS
SURF -------------------------------------------------
DISCOUNTED CASH FLOW - ROYALTY ANALYSIS (WITHOUT NOL) (a)
PROJECTED CASH FLOWS (17.5% ROYALTY STREAM) (b)
(US$ IN MILLIONS)
<TABLE>
<CAPTION>
PROJECTED
-------------------------------------------------------------------------------------------
FISCAL YEAR ENDING DECEMBER 31, 2000(c) 2001 2002 2003 2004 2005 2006 2007
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $0.0 $1.1 $7.5 $30.9 $45.0 $56.2 $67.9 $79.3
EBITDA (50.9) 1.1 7.5 30.9 45.0 56.2 67.9 79.3
Less: Depreciation and Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------ ----- ------
EBIT (50.9) 1.1 7.5 30.9 45.0 56.2 67.9 79.3
Less: Income Taxes @ 35.0% (d) 0.0 (0.4) (2.6) (10.8) (15.8) (19.7) (23.8) (27.8)
------ ------ ------ ------ ------ ------ ----- ------
Unlevered After-Tax Income (50.9) 0.7 4.9 20.1 29.3 36.5 44.1 51.6
Plus: Depreciation and Amortization 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Less: Capital Expenditures (3.8) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Less: Working Capital Investment (0.1) 0.0 0.0 0.0 0.0 0.0 0.0 0.0
------ ------ ------ ------ ------ ------ ----- ------
Free Cash Flow ($54.7) $0.7 $4.9 $20.1 $29.3 $36.5 $44.1 $51.6
====== ====== ====== ====== ====== ====== ===== ======
</TABLE>
ROYALTY ANALYSIS
(EQUITY VALUE PER SHARE IN US$)
<TABLE>
ASSUMED ROYALTY STREAM (e)
----------------------------------------------------------------------------------
RANGE OF DISCOUNT RATES 15.0% 17.5% 20.0%
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
25.0% $13.05 $15.00 $16.96
27.5% 11.37 13.02 14.68
30.0% 10.04 11.46 12.88
32.5% 8.99 10.21 11.44
35.0% 8.13 9.20 10.27
</TABLE>
(a) Cash flows discounted back to March 31, 2000
(b) Based on projections provided by Surf management; assumes that Surf
licenses out all products to a third party in exchange for royalty payments
once the estimated net cash balance as of February 29, 2000 of
approximately $54.7 million is exhausted
(c) Represents estimated results for the nine months from March 31, 2000
through December 31, 2000; assumes Free Cash Flows do not exceed estimated
net cash as of February 29, 2000 of $54.7 million
(d) Assumes Surf does not receive benefit of NOL's
(e) Royalty ranges provided in consultation with the Company
59
SG
<PAGE>
====================================================
CONFIDENTIAL PRESENTATION TO THE
BOARD OF DIRECTORS OF
---------------
DURA
PHARMACEUTICALS
REGARDING PROJECT OCEAN
MARCH 20, 2000
<PAGE>
TABLE OF CONTENTS
================================================================================
I. Summary of Proposed Transaction
II. Overview of Starfish
III. Starfish Valuation Analysis
<PAGE>
================================================================================
SUMMARY OF PROPOSED TRANSACTION
================================================================================
<PAGE>
SUMMARY OF PROPOSED TRANSACTION
================================================================================
KEY TRANSACTION TERMS
TRANSACTION: Dolphin to acquire 100% of the outstanding callable
common stock of Starfish for $15.75 per share, comprised
of (i) $13.25 per share in cash and (ii) $2.50 per share
in Dolphin warrants (based upon the Black-Scholes Option
Model, the valuation component of which is subject to a
collar arrangement)
- Represents 35.5% premium to Starfish
closing price immediately preceding
first announcement of offer (on February
14, 2000)
- Aggregate offer value of $101 million;
net cash outlay to Dolphin of $54
million (based on assumed 6/30/00 close)
- Consideration per share can range from
$15.06 to $16.48 at closing based on
value of warrant component of
consideration
KEY DATES: Expected requisite Dolphin and Starfish Board approvals:
March 20, 2000
Expected announcement of execution of definitive
agreement: after market close on March 20, 2000
STRUCTURE: Reverse merger of a wholly-owned subsidiary of Dolphin
with and into Starfish
ACCOUNTING TREATMENT: Purchase accounting
TAX TREATMENT: Taxable transaction to shareholders of Starfish
<PAGE>
SUMMARY OF PROPOSED TRANSACTION
================================================================================
WARRANT TERMS
SECURITY: Each Starfish share shall receive one warrant (the
"Warrant") to purchase a fraction of a share of Dolphin
common stock (subject to customary anti-dilution
adjustments), based on the Conversion Ratio described
below; Warrants exercisable at any time
EXERCISE PRICE PER
SHARE OF DOLPHIN
STOCK: The average closing price of Dolphin common stock for 10
consecutive trading days ending on the day prior to
public announcement of the transaction terms (the
"Measurement Price") multiplied by 1.25
TERM: Sixty-month term from date of closing of the transaction
CONVERSION RATIO: To be determined at time of public announcement based on
the Black-Scholes Option Valuation Model such that each
share of Starfish shall receive $2.50 in value (subject
to a collar). The Black-Scholes valuation shall use an
underlying asset value equal to the Measurement Price, a
volatility factor of 65%, a 60-month term from date of
calculation and a risk-free rate based on the interest
rate for a five-year Treasury Bill as reported by
Bloomberg on the date prior to pricing
COLLAR: A collar around the Measurement Price of PLUS OR MINUS
20% (the "Collar Range"). If the average closing price
of Dolphin common stock for 10 consecutive trading days
ending on the day prior to the date of the Starfish
special meeting of shareholders to approve the
transaction (the "Determination Price") is within the
Collar Range, then the Conversion Ratio shall not be
adjusted and shall be the same as determined above at
the time of the public announcement. If the
Determination Price is above or below the Collar Range,
then each share of Starfish shall receive that value
calculated for the Warrant at the high end of the Collar
Range or at the low end of the Collar Range,
respectively
LISTING: On NASDAQ National Market
<PAGE>
SUMMARY OF PROPOSED TRANSACTION
===============================================================================
ANALYSIS OF CONSIDERATION
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
IMPLIED WARRANT WARRANT VALUE TOTAL OFFER
DETERMINATION PRICE PER CONVERSION PER STARFISH SHARE VALUE PER SHARE
PRICE(a) ONE DOLPHIN SHARE(b) RATIO AT CLOSING AT CLOSING
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$10.00 $ 4.69 0.386x $ 1.81 $15.06
11.00 5.41 0.335x 1.81 15.06
---------------------------------------------------------------------------------------------------------------
11.48 5.76 0.315x 1.81 15.06
12.00 6.14 0.315x 1.93 15.18
13.00 6.90 0.315x 2.17 15.42
14.00 7.67 0.315x 2.41 15.66
14.35 (c) 7.95 0.315x 2.50 15.75
15.00 8.46 0.315x 2.66 15.91
16.00 9.26 0.315x 2.91 16.16
17.00 10.07 0.315x 3.17 16.42
17.22 10.25 0.315x 3.23 16.48
---------------------------------------------------------------------------------------------------------------
18.00 10.89 0.296x 3.23 16.48
19.00 11.73 0.275x 3.23 16.48
20.00 12.57 0.257x 3.23 16.48
</TABLE>
- -------------------------------
(a) 10-TRADING DAY AVERAGE THROUGH THE DAY PRIOR TO THE DATE OF THE STARFISH
SPECIAL MEETING OF SHAREHOLDERS TO APPROVE THE TRANSACTION.
(b) ASSUMES 65% VOLATILITY, 5 YEARS TO EXPIRATION, A 5-YEAR RISK FREE RATE
PER BLOOMBERG AND WARRANTS ISSUED AT $17.94 STRIKE PRICE PER DOLPHIN
SHARE.
(c) 10-TRADING DAY AVERAGE UP TO, AND INCLUDING, MARCH 17, 2000.
<PAGE>
SUMMARY OF PROPOSED TRANSACTION
================================================================================
DOLPHIN/STARFISH RELATIONSHIP
- --------------------------------------------------------------------------------
STARFISH FORMATION
- --------------------------------------------------------------------------------
- - Dolphin completed IPO of Starfish on December 16, 1997
- $94 million in net proceeds to Starfish from selling 6.325mm
units (each unit consisting of 1 common share and a 5-year
warrant to acquire 1/4 of a share of Dolphin for $55.84)
- - Dolphin contributed $75 million cash to fund Starfish operations in
return for 100% of Special Common Shares
- - Dolphin and Starfish enter into various agreements
- Technology License Agreement
- Development Agreement
- Manufacturing and Marketing Agreement
- Albuterol/Product Option Agreement
- Stock Purchase Option Agreement
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENTS BETWEEN DOLPHIN/STARFISH
- --------------------------------------------------------------------------------
- - Technology License Agreement: Agreement in which Dolphin granted
Starfish an exclusive, worldwide, perpetual, royalty-bearing license to
use the Starfish technology in research, development and
commercialization (except with respect to beclomethasone in Asia) of the
Starfish products
- $2 million annual technology access fee payable by Starfish to
Dolphin
- - Development Agreement: Agreement under which Dolphin agreed to use
commercially reasonable efforts to develop the Starfish products and to
make certain other expenditures. Dolphin will furnish all labor,
supervision, services, supplies, and materials necessary to perform the
development
- - Manufacturing and Marketing Agreement: Agreement under which Starfish
granted Dolphin an exclusive, worldwide license to manufacture and
market the Starfish products
- 7% royalty payable to Starfish
- - Albuterol and Product Option Agreement: Gives Dolphin the option to
acquire the Albuterol assets and the assets related to other Starfish
products under development
- - Stock Purchase Option: Gives Dolphin the right to purchase all of the
Starfish callable common shares at escalating purchase option exercise
prices
- Current purchase option exercise price of $25.26 per share
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CAPITAL STRUCTURE/OWNERSHIP
- --------------------------------------------------------------------------------
--------------------- ---------
Public Shareholders Dolphin
--------------------- ---------
100% of 100% of
Callable Special
Common Common
Stock Stock
Starfish
RIGHTS OF SPECIAL COMMON STOCKHOLDER
- - All 1,000 shares held by Dolphin
- - Entitles Dolphin to nominate 2 persons to Starfish Board of Directors
- - Veto rights with respect to certain significant corporate actions
- - No rights to profits of Starfish or ability to vote in regularly
scheduled Starfish shareholder meetings (except with respect to certain
significant corporate transactions)
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
OVERVIEW OF STARFISH
================================================================================
<PAGE>
OVERVIEW OF STARFISH
================================================================================
SUMMARY
Special Purpose Corp. offered to public on 12/16/97
- Holds proprietary drug delivery technology (Starfish
Cassette) for use with specific drug formulations
- Partial cash contribution by Dolphin ($75 million)
- Additional $101 mm raised from public investors
(6,325,000 Units sold @ $16 each)
Starfish traded as Units through 12/31/99, with each unit consisting of:
- Callable Starfish common share (callable by Dolphin)
- Warrant to purchase 1/4 Dolphin share at 25% premium
(exercise price=$55.84; expires 12/31/02)
Starfish pays Dolphin:
- Reimbursement of expenses incurred in connection with
Starfish-related development activities (on cost-plus
basis)
- Annual Technology Access Fee ($2 million per year)
<PAGE>
OVERVIEW OF STARFISH
================================================================================
SUMMARY (CONT'D)
Dolphin has option to buy Starfish at per share prices that escalate as
set forth in the Starfish charter
- Dolphin's Purchase Option expires upon earlier of
12/31/2002 or 90 days following Starfish reporting less
than $5 million cash (assuming Dolphin does not provide
it with additional funding)
Starfish has granted Dolphin an exclusive worldwide license to
manufacture and market Starfish products in exchange for a 7% royalty
- Dolphin has agreed to use diligent efforts to commence
sales of each Starfish product upon FDA approval
- Manufacturing and marketing agreement terminates upon
exercise or termination of Purchase Option
Initial focus on leading asthma drugs in combination with Starfish
delivery technology
- Beclomethasone--steroid (Phase III on-going)
- Budesonide--steroid (Phase II on-going)
- Albuterol--beta agonist (Dolphin intends to suspend
development upon consummation of transaction)
- Ipratropium--anticholinergic (work has been suspended)
- Ipratropium/Albuterol--combination (work has been
suspended)
<PAGE>
OVERVIEW OF STARFISH
================================================================================
TECHNOLOGY UNDERLYING STARFISH
Starfish system is designed to aerosolize pharmaceuticals in dry powder
formulations
NDA was submitted for Albuterol in the Starfish cassette system in 11/97
In 11/98, Starfish received complete response letter from FDA indicating
NDA would not be approved unless certain deficiencies were addressed
- Completion of additional clinical trials to ensure
reliability; System used in original clinical trials was
enhanced in commercial manuf. system
- Resolution of several chemistry, manufacturing, and
control issues, as well as certain electromechanical
reliability issues
In 2/99, Dolphin and Starfish determined requirements for Starfish
clinical trial program and announced priority development for steroid
products, based on market dynamics
Additional clinical studies initiated (through Starfish)
- Beclomethasone patient dosing for pivotal trial began in
October
- Budesonide patient dosing for dose targeting (Phase II)
began in October
Dolphin believes that if successful, these clinical studies should allow
for product launches in the 2001-2002 time frame, if each product is
approved by the FDA
Dolphin intends to suspend development of Albuterol upon consummation of
transaction
<PAGE>
OVERVIEW OF STARFISH
================================================================================
SUMMARY INCOME STATEMENT (a)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
2000F 2001F 2002F 2003F 2004F 2005F 2006F 2007F
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATISTICS
- ----------------------------
Sales $0.0 $6.1 $43.1 $176.6 $257.3 $321.2 $387.9 $453.2
EBIDTA (6.0) (17.5) (44.2) 44.1 118.3 172.2 224.3 278.3
Net Income (2.7) (11.9) (33.2) 23.0 72.9 111.1 149.2 190.0
CASH FLOW
- ----------------------------
Development Costs $27.4 $28.9 $4.6 $0.0 $0.0 $0.0 $0.0 $0.0
Capital Expenditures 5.0 11.0 10.5 3.0 2.5 3.5 6.5 2.0
</TABLE>
- ----------------------------
(a) PER DOLPHIN MANAGEMENT PROJECTIONS; ASSUMES CESSATION OF DEVELOPMENT WORK ON
STARFISH ALBUTEROL.
<PAGE>
OVERVIEW OF STARFISH
================================================================================
STARFISH TRADING ANALYSIS (12/22/97-PRESENT)
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
17-Dec-97 17.50 26.96 24.01
18-Dec-97 17.25 26.96 24.01
19-Dec-97 17.25 26.96 24.01
22-Dec-97 17.31 26.96 24.01
23-Dec-97 17.00 26.96 24.01
24-Dec-97 17.00 26.96 24.01
26-Dec-97 17.06 26.96 24.01
29-Dec-97 16.63 26.96 24.01
30-Dec-97 16.88 26.96 24.01
31-Dec-97 17.13 26.96 24.01
2-Jan-98 17.19 26.96 24.01
5-Jan-98 17.38 26.96 24.01
6-Jan-98 17.25 26.96 24.01
7-Jan-98 17.13 26.96 24.01
8-Jan-98 17.00 26.96 24.01
9-Jan-98 17.00 26.96 24.01
12-Jan-98 16.69 26.96 24.01
13-Jan-98 16.88 26.96 24.01
14-Jan-98 17.25 26.96 24.01
15-Jan-98 17.00 26.96 24.01
16-Jan-98 17.25 26.96 24.01
20-Jan-98 17.13 26.96 24.01
21-Jan-98 18.25 26.96 24.01
22-Jan-98 18.50 26.96 24.01
23-Jan-98 17.88 26.96 24.01
26-Jan-98 17.81 26.96 24.01
27-Jan-98 17.56 26.96 24.01
28-Jan-98 17.69 26.96 24.01
29-Jan-98 17.69 26.96 24.01
30-Jan-98 17.81 26.96 24.01
2-Feb-98 17.88 26.96 24.01
3-Feb-98 17.75 26.96 24.01
4-Feb-98 17.50 26.96 24.01
5-Feb-98 17.50 26.96 24.01
6-Feb-98 17.88 26.96 24.01
9-Feb-98 17.50 26.96 24.01
10-Feb-98 17.50 26.96 24.01
11-Feb-98 17.63 26.96 24.01
12-Feb-98 17.38 26.96 24.01
13-Feb-98 17.69 26.96 24.01
17-Feb-98 17.13 26.96 24.01
18-Feb-98 17.25 26.96 24.01
19-Feb-98 17.25 26.96 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
20-Feb-98 17.13 26.96 24.01
23-Feb-98 17.50 26.96 24.01
24-Feb-98 17.38 26.96 24.01
25-Feb-98 14.75 26.96 24.01
26-Feb-98 14.75 26.96 24.01
27-Feb-98 14.50 26.96 24.01
2-Mar-98 14.50 26.96 24.01
3-Mar-98 14.25 26.96 24.01
4-Mar-98 14.00 26.96 24.01
5-Mar-98 14.50 26.96 24.01
6-Mar-98 14.75 26.96 24.01
9-Mar-98 14.75 26.96 24.01
10-Mar-98 15.63 26.96 24.01
11-Mar-98 15.38 26.96 24.01
12-Mar-98 15.38 26.96 24.01
13-Mar-98 15.38 26.96 24.01
16-Mar-98 15.25 26.96 24.01
17-Mar-98 15.75 26.96 24.01
18-Mar-98 16.38 26.96 24.01
19-Mar-98 17.00 26.96 24.01
20-Mar-98 16.63 26.96 24.01
23-Mar-98 16.75 26.96 24.01
24-Mar-98 16.63 26.96 24.01
25-Mar-98 16.38 26.96 24.01
26-Mar-98 16.38 26.96 24.01
27-Mar-98 16.00 26.96 24.01
30-Mar-98 16.00 26.96 24.01
31-Mar-98 16.00 26.96 24.01
1-Apr-98 16.13 24.86 24.01
2-Apr-98 16.00 24.86 24.01
3-Apr-98 16.00 24.86 24.01
6-Apr-98 16.25 24.86 24.01
7-Apr-98 16.50 24.86 24.01
8-Apr-98 16.25 24.86 24.01
9-Apr-98 16.75 24.86 24.01
13-Apr-98 16.13 24.86 24.01
14-Apr-98 16.25 24.86 24.01
15-Apr-98 16.50 24.86 24.01
16-Apr-98 16.00 24.86 24.01
17-Apr-98 16.50 24.86 24.01
20-Apr-98 16.13 24.86 24.01
21-Apr-98 16.63 24.86 24.01
22-Apr-98 17.25 24.86 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
23-Apr-98 16.88 24.86 24.01
24-Apr-98 16.63 24.86 24.01
27-Apr-98 16.50 24.86 24.01
28-Apr-98 16.25 24.86 24.01
29-Apr-98 16.50 24.86 24.01
30-Apr-98 16.63 24.86 24.01
1-May-98 16.88 24.86 24.01
4-May-98 16.88 24.86 24.01
5-May-98 16.50 24.86 24.01
6-May-98 16.75 24.86 24.01
7-May-98 16.88 24.86 24.01
8-May-98 17.00 24.86 24.01
11-May-98 16.63 24.86 24.01
12-May-98 16.75 24.86 24.01
13-May-98 17.06 24.86 24.01
14-May-98 16.88 24.86 24.01
15-May-98 16.75 24.86 24.01
18-May-98 16.75 24.86 24.01
19-May-98 17.00 24.86 24.01
20-May-98 16.50 24.86 24.01
21-May-98 17.00 24.86 24.01
22-May-98 16.63 24.86 24.01
26-May-98 16.50 24.86 24.01
27-May-98 16.25 24.86 24.01
28-May-98 16.38 24.86 24.01
29-May-98 16.63 24.86 24.01
1-Jun-98 16.38 24.86 24.01
2-Jun-98 16.63 24.86 24.01
3-Jun-98 16.38 24.86 24.01
4-Jun-98 16.25 24.86 24.01
5-Jun-98 16.38 24.86 24.01
8-Jun-98 16.50 24.86 24.01
9-Jun-98 16.63 24.86 24.01
10-Jun-98 16.50 24.86 24.01
11-Jun-98 16.50 24.86 24.01
12-Jun-98 16.38 24.86 24.01
15-Jun-98 17.00 24.86 24.01
16-Jun-98 16.38 24.86 24.01
17-Jun-98 16.50 24.86 24.01
18-Jun-98 16.00 24.86 24.01
19-Jun-98 16.00 24.86 24.01
22-Jun-98 16.38 24.86 24.01
23-Jun-98 16.00 24.86 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
24-Jun-98 16.00 24.86 24.01
25-Jun-98 16.00 24.86 24.01
26-Jun-98 16.25 24.86 24.01
29-Jun-98 16.25 24.86 24.01
30-Jun-98 16.13 24.86 24.01
1-Jul-98 16.13 24.86 24.01
2-Jul-98 16.00 23.17 24.01
6-Jul-98 16.13 23.17 24.01
7-Jul-98 16.13 23.17 24.01
8-Jul-98 16.25 23.17 24.01
9-Jul-98 16.13 23.17 24.01
10-Jul-98 16.50 23.17 24.01
13-Jul-98 16.13 23.17 24.01
14-Jul-98 16.50 23.17 24.01
15-Jul-98 16.44 23.17 24.01
16-Jul-98 16.25 23.17 24.01
17-Jul-98 16.75 23.17 24.01
20-Jul-98 17.00 23.17 24.01
21-Jul-98 16.25 23.17 24.01
22-Jul-98 16.25 23.17 24.01
23-Jul-98 16.25 23.17 24.01
24-Jul-98 16.25 23.17 24.01
27-Jul-98 16.25 23.17 24.01
28-Jul-98 16.38 23.17 24.01
29-Jul-98 16.75 23.17 24.01
30-Jul-98 16.50 23.17 24.01
31-Jul-98 16.50 23.17 24.01
3-Aug-98 16.00 23.17 24.01
4-Aug-98 15.88 23.17 24.01
5-Aug-98 16.00 23.17 24.01
6-Aug-98 16.00 23.17 24.01
7-Aug-98 15.88 23.17 24.01
10-Aug-98 15.88 23.17 24.01
11-Aug-98 15.50 23.17 24.01
12-Aug-98 15.63 23.17 24.01
13-Aug-98 15.50 23.17 24.01
14-Aug-98 15.25 23.17 24.01
17-Aug-98 14.75 23.17 24.01
18-Aug-98 14.75 23.17 24.01
19-Aug-98 14.00 23.17 24.01
20-Aug-98 14.00 23.17 24.01
21-Aug-98 14.00 23.17 24.01
24-Aug-98 14.13 23.17 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
25-Aug-98 14.13 23.17 24.01
26-Aug-98 14.00 23.17 24.01
27-Aug-98 13.38 23.17 24.01
28-Aug-98 13.25 23.17 24.01
31-Aug-98 13.00 23.17 24.01
1-Sep-98 13.00 23.17 24.01
2-Sep-98 13.00 23.17 24.01
3-Sep-98 12.50 23.17 24.01
4-Sep-98 12.38 23.17 24.01
8-Sep-98 12.50 23.17 24.01
9-Sep-98 12.88 23.17 24.01
10-Sep-98 12.63 23.17 24.01
11-Sep-98 12.38 23.17 24.01
14-Sep-98 12.50 23.17 24.01
15-Sep-98 12.63 23.17 24.01
16-Sep-98 12.50 23.17 24.01
17-Sep-98 12.50 23.17 24.01
18-Sep-98 12.63 23.17 24.01
21-Sep-98 12.38 23.17 24.01
22-Sep-98 12.63 23.17 24.01
23-Sep-98 12.44 23.17 24.01
24-Sep-98 9.88 23.17 24.01
25-Sep-98 10.50 23.17 24.01
28-Sep-98 11.00 23.17 24.01
29-Sep-98 12.00 23.17 24.01
30-Sep-98 12.25 23.17 24.01
1-Oct-98 11.75 21.38 24.01
2-Oct-98 11.75 21.38 24.01
5-Oct-98 11.75 21.38 24.01
6-Oct-98 11.75 21.38 24.01
7-Oct-98 11.38 21.38 24.01
8-Oct-98 10.75 21.38 24.01
9-Oct-98 10.75 21.38 24.01
12-Oct-98 11.00 21.38 24.01
13-Oct-98 10.13 21.38 24.01
14-Oct-98 10.25 21.38 24.01
15-Oct-98 10.88 21.38 24.01
16-Oct-98 10.50 21.38 24.01
19-Oct-98 10.50 21.38 24.01
20-Oct-98 10.63 21.38 24.01
21-Oct-98 10.75 21.38 24.01
22-Oct-98 11.38 21.38 24.01
23-Oct-98 11.63 21.38 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
26-Oct-98 11.50 21.38 24.01
27-Oct-98 11.13 21.38 24.01
28-Oct-98 11.00 21.38 24.01
29-Oct-98 10.88 21.38 24.01
30-Oct-98 10.75 21.38 24.01
2-Nov-98 10.88 21.38 24.01
3-Nov-98 10.75 21.38 24.01
4-Nov-98 7.69 21.38 24.01
5-Nov-98 7.50 21.38 24.01
6-Nov-98 7.75 21.38 24.01
9-Nov-98 7.25 21.38 24.01
10-Nov-98 6.63 21.38 24.01
11-Nov-98 7.63 21.38 24.01
12-Nov-98 8.50 21.38 24.01
13-Nov-98 8.25 21.38 24.01
16-Nov-98 8.63 21.38 24.01
17-Nov-98 8.81 21.38 24.01
18-Nov-98 9.31 21.38 24.01
19-Nov-98 9.88 21.38 24.01
20-Nov-98 9.75 21.38 24.01
23-Nov-98 10.00 21.38 24.01
24-Nov-98 9.00 21.38 24.01
25-Nov-98 8.75 21.38 24.01
27-Nov-98 8.50 21.38 24.01
30-Nov-98 8.50 21.38 24.01
1-Dec-98 8.50 21.38 24.01
2-Dec-98 8.88 21.38 24.01
3-Dec-98 9.38 21.38 24.01
4-Dec-98 9.25 21.38 24.01
7-Dec-98 9.25 21.38 24.01
8-Dec-98 9.59 21.38 24.01
9-Dec-98 9.50 21.38 24.01
10-Dec-98 9.25 21.38 24.01
11-Dec-98 8.75 21.38 24.01
14-Dec-98 8.81 21.38 24.01
15-Dec-98 9.00 21.38 24.01
16-Dec-98 10.25 21.38 24.01
17-Dec-98 10.75 21.38 24.01
18-Dec-98 10.25 21.38 24.01
21-Dec-98 10.00 21.38 24.01
22-Dec-98 9.88 21.38 24.01
23-Dec-98 9.63 21.38 24.01
24-Dec-98 9.25 21.38 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
28-Dec-98 8.38 21.38 24.01
29-Dec-98 9.19 21.38 24.01
30-Dec-98 8.75 21.38 24.01
31-Dec-98 8.94 21.38 24.01
4-Jan-99 8.75 19.54 24.01
5-Jan-99 9.25 19.54 24.01
6-Jan-99 10.38 19.54 24.01
7-Jan-99 9.50 19.54 24.01
8-Jan-99 8.81 19.54 24.01
11-Jan-99 9.00 19.54 24.01
12-Jan-99 8.28 19.54 24.01
13-Jan-99 8.50 19.54 24.01
14-Jan-99 8.50 19.54 24.01
15-Jan-99 8.50 19.54 24.01
19-Jan-99 9.13 19.54 24.01
20-Jan-99 8.25 19.54 24.01
21-Jan-99 8.63 19.54 24.01
22-Jan-99 8.75 19.54 24.01
25-Jan-99 8.50 19.54 24.01
26-Jan-99 8.63 19.54 24.01
27-Jan-99 8.38 19.54 24.01
28-Jan-99 8.69 19.54 24.01
29-Jan-99 8.38 19.54 24.01
1-Feb-99 8.25 19.54 24.01
2-Feb-99 8.69 19.54 24.01
3-Feb-99 9.06 19.54 24.01
4-Feb-99 9.00 19.54 24.01
5-Feb-99 9.00 19.54 24.01
8-Feb-99 8.94 19.54 24.01
9-Feb-99 8.69 19.54 24.01
10-Feb-99 8.75 19.54 24.01
11-Feb-99 8.75 19.54 24.01
12-Feb-99 8.66 19.54 24.01
16-Feb-99 8.63 19.54 24.01
17-Feb-99 8.63 19.54 24.01
18-Feb-99 8.44 19.54 24.01
19-Feb-99 8.75 19.54 24.01
22-Feb-99 8.38 19.54 24.01
23-Feb-99 8.31 19.54 24.01
24-Feb-99 8.31 19.54 24.01
25-Feb-99 8.38 19.54 24.01
26-Feb-99 8.56 19.54 24.01
1-Mar-99 8.56 19.54 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
2-Mar-99 8.38 19.54 24.01
3-Mar-99 8.50 19.54 24.01
4-Mar-99 8.50 19.54 24.01
5-Mar-99 8.50 19.54 24.01
8-Mar-99 8.75 19.54 24.01
9-Mar-99 8.75 19.54 24.01
10-Mar-99 8.50 19.54 24.01
11-Mar-99 8.50 19.54 24.01
12-Mar-99 8.50 19.54 24.01
15-Mar-99 8.56 19.54 24.01
16-Mar-99 8.88 19.54 24.01
17-Mar-99 8.63 19.54 24.01
18-Mar-99 8.50 19.54 24.01
19-Mar-99 8.50 19.54 24.01
22-Mar-99 8.50 19.54 24.01
23-Mar-99 8.50 19.54 24.01
24-Mar-99 8.56 19.54 24.01
25-Mar-99 8.50 19.54 24.01
26-Mar-99 8.75 19.54 24.01
29-Mar-99 8.50 19.54 24.01
30-Mar-99 8.38 19.54 24.01
31-Mar-99 8.50 19.54 24.01
1-Apr-99 8.38 17.73 24.01
5-Apr-99 8.50 17.73 24.01
6-Apr-99 8.50 17.73 24.01
7-Apr-99 8.75 17.73 24.01
8-Apr-99 8.81 17.73 24.01
9-Apr-99 9.25 17.73 24.01
12-Apr-99 9.13 17.73 24.01
13-Apr-99 9.25 17.73 24.01
14-Apr-99 9.38 17.73 24.01
15-Apr-99 9.38 17.73 24.01
16-Apr-99 9.50 17.73 24.01
19-Apr-99 9.94 17.73 24.01
20-Apr-99 9.88 17.73 24.01
21-Apr-99 9.63 17.73 24.01
22-Apr-99 9.88 17.73 24.01
23-Apr-99 10.00 17.73 24.01
26-Apr-99 9.75 17.73 24.01
27-Apr-99 10.13 17.73 24.01
28-Apr-99 10.63 17.73 24.01
29-Apr-99 10.25 17.73 24.01
30-Apr-99 10.06 17.73 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
3-May-99 10.25 17.73 24.01
4-May-99 10.25 17.73 24.01
5-May-99 10.25 17.73 24.01
6-May-99 9.63 17.73 24.01
7-May-99 9.50 17.73 24.01
10-May-99 9.69 17.73 24.01
11-May-99 9.50 17.73 24.01
12-May-99 9.50 17.73 24.01
13-May-99 9.75 17.73 24.01
14-May-99 9.50 17.73 24.01
17-May-99 9.38 17.73 24.01
18-May-99 9.50 17.73 24.01
19-May-99 9.38 17.73 24.01
20-May-99 9.38 17.73 24.01
21-May-99 9.38 17.73 24.01
24-May-99 9.38 17.73 24.01
25-May-99 9.50 17.73 24.01
26-May-99 9.38 17.73 24.01
27-May-99 9.88 17.73 24.01
28-May-99 9.63 17.73 24.01
1-Jun-99 9.69 17.73 24.01
2-Jun-99 9.63 17.73 24.01
3-Jun-99 9.50 17.73 24.01
4-Jun-99 9.38 17.73 24.01
7-Jun-99 9.69 17.73 24.01
8-Jun-99 9.69 17.73 24.01
9-Jun-99 9.50 17.73 24.01
10-Jun-99 9.50 17.73 24.01
11-Jun-99 9.56 17.73 24.01
14-Jun-99 9.38 17.73 24.01
15-Jun-99 9.69 17.73 24.01
16-Jun-99 9.38 17.73 24.01
17-Jun-99 9.69 17.73 24.01
18-Jun-99 9.56 17.73 24.01
21-Jun-99 9.56 17.73 24.01
22-Jun-99 9.56 17.73 24.01
23-Jun-99 9.06 17.73 24.01
24-Jun-99 9.06 17.73 24.01
25-Jun-99 9.00 17.73 24.01
28-Jun-99 8.75 17.73 24.01
29-Jun-99 9.00 17.73 24.01
30-Jun-99 8.75 17.73 24.01
1-Jul-99 8.75 15.73 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
2-Jul-99 9.00 15.73 24.01
6-Jul-99 8.75 15.73 24.01
7-Jul-99 8.75 15.73 24.01
8-Jul-99 8.75 15.73 24.01
9-Jul-99 8.38 15.73 24.01
12-Jul-99 8.25 15.73 24.01
13-Jul-99 7.50 15.73 24.01
14-Jul-99 7.69 15.73 24.01
15-Jul-99 7.75 15.73 24.01
16-Jul-99 7.75 15.73 24.01
19-Jul-99 7.69 15.73 24.01
20-Jul-99 7.63 15.73 24.01
21-Jul-99 7.63 15.73 24.01
22-Jul-99 7.63 15.73 24.01
23-Jul-99 7.72 15.73 24.01
26-Jul-99 7.75 15.73 24.01
27-Jul-99 7.75 15.73 24.01
28-Jul-99 7.88 15.73 24.01
29-Jul-99 7.81 15.73 24.01
30-Jul-99 8.00 15.73 24.01
2-Aug-99 7.98 15.73 24.01
3-Aug-99 7.98 15.73 24.01
4-Aug-99 7.88 15.73 24.01
5-Aug-99 7.88 15.73 24.01
6-Aug-99 7.75 15.73 24.01
9-Aug-99 7.50 15.73 24.01
10-Aug-99 7.38 15.73 24.01
11-Aug-99 7.38 15.73 24.01
12-Aug-99 7.00 15.73 24.01
13-Aug-99 7.25 15.73 24.01
16-Aug-99 7.38 15.73 24.01
17-Aug-99 7.00 15.73 24.01
18-Aug-99 7.00 15.73 24.01
19-Aug-99 7.25 15.73 24.01
20-Aug-99 7.63 15.73 24.01
23-Aug-99 7.63 15.73 24.01
24-Aug-99 6.88 15.73 24.01
25-Aug-99 7.00 15.73 24.01
26-Aug-99 6.88 15.73 24.01
27-Aug-99 7.00 15.73 24.01
30-Aug-99 7.13 15.73 24.01
31-Aug-99 6.75 15.73 24.01
1-Sep-99 7.19 15.73 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
2-Sep-99 6.75 15.73 24.01
3-Sep-99 6.88 15.73 24.01
7-Sep-99 7.00 15.73 24.01
8-Sep-99 7.00 15.73 24.01
9-Sep-99 7.00 15.73 24.01
10-Sep-99 7.00 15.73 24.01
13-Sep-99 7.13 15.73 24.01
14-Sep-99 7.50 15.73 24.01
15-Sep-99 7.50 15.73 24.01
16-Sep-99 7.50 15.73 24.01
17-Sep-99 7.13 15.73 24.01
20-Sep-99 7.00 15.73 24.01
21-Sep-99 7.00 15.73 24.01
22-Sep-99 6.88 15.73 24.01
23-Sep-99 6.88 15.73 24.01
24-Sep-99 6.94 15.73 24.01
27-Sep-99 6.63 15.73 24.01
28-Sep-99 6.75 15.73 24.01
29-Sep-99 6.88 15.73 24.01
30-Sep-99 7.00 15.73 24.01
1-Oct-99 6.81 13.23 24.01
4-Oct-99 7.00 13.23 24.01
5-Oct-99 7.06 13.23 24.01
6-Oct-99 6.63 13.23 24.01
7-Oct-99 6.63 13.23 24.01
8-Oct-99 6.63 13.23 24.01
11-Oct-99 6.75 13.23 24.01
12-Oct-99 6.75 13.23 24.01
13-Oct-99 6.50 13.23 24.01
14-Oct-99 6.69 13.23 24.01
15-Oct-99 6.50 13.23 24.01
18-Oct-99 6.00 13.23 24.01
19-Oct-99 6.00 13.23 24.01
20-Oct-99 6.00 13.23 24.01
21-Oct-99 6.00 13.23 24.01
22-Oct-99 6.25 13.23 24.01
25-Oct-99 6.13 13.23 24.01
26-Oct-99 6.00 13.23 24.01
11-Nov-99 5.44 13.23 24.01
12-Nov-99 5.63 13.23 24.01
15-Nov-99 5.44 13.23 24.01
16-Nov-99 5.75 13.23 24.01
17-Nov-99 5.50 13.23 24.01
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
18-Nov-99 5.44 13.23 24.01
19-Nov-99 5.31 13.23 24.01
22-Nov-99 5.31 13.23 24.01
23-Nov-99 5.88 13.23 24.01
24-Nov-99 5.38 13.23 24.01
26-Nov-99 5.31 13.23 24.01
29-Nov-99 4.88 13.23 24.01
30-Nov-99 5.06 13.23 24.01
1-Dec-99 5.06 13.23 24.01
2-Dec-99 5.00 13.23 24.01
3-Dec-99 5.00 13.23 24.01
6-Dec-99 5.06 13.23 24.01
7-Dec-99 5.00 13.23 24.01
8-Dec-99 5.00 13.23 24.01
9-Dec-99 5.00 13.23 24.01
10-Dec-99 5.06 13.23 24.01
13-Dec-99 5.19 13.23 24.01
14-Dec-99 5.06 13.23 24.01
15-Dec-99 5.13 13.23 24.01
16-Dec-99 5.19 13.23 24.01
17-Dec-99 5.31 13.23 24.01
20-Dec-99 5.19 13.23 24.01
21-Dec-99 5.25 13.23 24.01
22-Dec-99 5.88 13.23 24.01
23-Dec-99 6.13 13.23 24.01
24-Dec-99 7.50 13.23 24.01
27-Dec-99 7.75 13.23 24.01
28-Dec-99 7.63 13.23 24.01
29-Dec-99 7.63 13.23 24.01
30-Dec-99 8.00 13.23 24.01
31-Dec-99 8.00 13.23 24.01
3-Jan-00 8.00 13.23 25.26
4-Jan-00 8.44 13.23 25.26
5-Jan-00 8.50 13.23 25.26
6-Jan-00 9.25 10.28 25.26
7-Jan-00 8.88 10.28 25.26
10-Jan-00 10.25 10.28 25.26
11-Jan-00 10.00 10.28 25.26
12-Jan-00 10.00 10.28 25.26
13-Jan-00 10.00 10.28 25.26
14-Jan-00 10.25 10.28 25.26
17-Jan-00 10.00 10.28 25.26
18-Jan-00 9.88 10.28 25.26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
19-Jan-00 9.81 10.28 25.26
20-Jan-00 10.25 10.28 25.26
21-Jan-00 10.00 10.28 25.26
24-Jan-00 10.00 10.28 25.26
25-Jan-00 9.38 10.28 25.26
26-Jan-00 9.13 10.28 25.26
27-Jan-00 8.94 10.28 25.26
28-Jan-00 9.00 10.28 25.26
31-Jan-00 9.25 10.28 25.26
1-Feb-00 9.25 10.28 25.26
2-Feb-00 9.63 10.28 25.26
3-Feb-00 11.00 10.28 25.26
4-Feb-00 10.50 10.28 25.26
7-Feb-00 10.50 10.28 25.26
8-Feb-00 11.50 10.28 25.26
9-Feb-00 12.00 10.28 25.26
10-Feb-00 11.63 10.28 25.26
11-Feb-00 11.50 10.28 25.26
14-Feb-00 12.00 10.28 25.26
15-Feb-00 12.19 10.28 25.26
16-Feb-00 12.06 10.28 25.26
17-Feb-00 12.31 10.28 25.26
18-Feb-00 12.13 10.28 25.26
21-Feb-00 12.25 10.28 25.26
22-Feb-00 12.13 10.28 25.26
23-Feb-00 12.06 10.28 25.26
24-Feb-00 12.13 10.28 25.26
25-Feb-00 12.00 10.28 25.26
28-Feb-00 12.50 10.28 25.26
29-Feb-00 12.13 10.28 25.26
1-Mar-00 12.50 8.74 25.26
2-Mar-00 12.13 8.74 25.26
3-Mar-00 12.06 8.74 25.26
6-Mar-00 12.06 8.74 25.26
7-Mar-00 12.06 8.74 25.26
8-Mar-00 12.13 8.74 25.26
9-Mar-00 12.00 8.74 25.26
10-Mar-00 12.06 8.74 25.26
13-Mar-00 12.06 8.74 25.26
14-Mar-00 12.88 8.74 25.26
15-Mar-00 12.56 8.74 25.26
16-Mar-00 12.56 8.74 25.26
17-Mar-00 12.56 8.74 25.26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
20-Mar-00 25.26
21-Mar-00 25.26
22-Mar-00 25.26
23-Mar-00 25.26
24-Mar-00 25.26
27-Mar-00 25.26
28-Mar-00 25.26
29-Mar-00 25.26
30-Mar-00 25.26
31-Mar-00 25.26
3-Apr-00 26.57
4-Apr-00 26.57
5-Apr-00 26.57
6-Apr-00 26.57
7-Apr-00 26.57
10-Apr-00 26.57
11-Apr-00 26.57
12-Apr-00 26.57
13-Apr-00 26.57
14-Apr-00 26.57
17-Apr-00 26.57
18-Apr-00 26.57
19-Apr-00 26.57
20-Apr-00 26.57
21-Apr-00 26.57
24-Apr-00 26.57
25-Apr-00 26.57
26-Apr-00 26.57
27-Apr-00 26.57
28-Apr-00 26.57
1-May-00 26.57
2-May-00 26.57
3-May-00 26.57
4-May-00 26.57
5-May-00 26.57
8-May-00 26.57
9-May-00 26.57
10-May-00 26.57
11-May-00 26.57
12-May-00 26.57
15-May-00 26.57
16-May-00 26.57
17-May-00 26.57
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
18-May-00 26.57
19-May-00 26.57
22-May-00 26.57
23-May-00 26.57
24-May-00 26.57
25-May-00 26.57
26-May-00 26.57
29-May-00 26.57
30-May-00 26.57
31-May-00 26.57
1-Jun-00 26.57
2-Jun-00 26.57
5-Jun-00 26.57
6-Jun-00 26.57
7-Jun-00 26.57
8-Jun-00 26.57
9-Jun-00 26.57
12-Jun-00 26.57
13-Jun-00 26.57
14-Jun-00 26.57
15-Jun-00 26.57
16-Jun-00 26.57
19-Jun-00 26.57
20-Jun-00 26.57
21-Jun-00 26.57
22-Jun-00 26.57
23-Jun-00 26.57
26-Jun-00 26.57
27-Jun-00 26.57
28-Jun-00 26.57
29-Jun-00 26.57
30-Jun-00 26.57
3-Jul-00 27.96
4-Jul-00 27.96
5-Jul-00 27.96
6-Jul-00 27.96
7-Jul-00 27.96
10-Jul-00 27.96
11-Jul-00 27.96
12-Jul-00 27.96
13-Jul-00 27.96
14-Jul-00 27.96
17-Jul-00 27.96
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
18-Jul-00 27.96
19-Jul-00 27.96
20-Jul-00 27.96
21-Jul-00 27.96
24-Jul-00 27.96
25-Jul-00 27.96
26-Jul-00 27.96
27-Jul-00 27.96
28-Jul-00 27.96
31-Jul-00 27.96
1-Aug-00 27.96
2-Aug-00 27.96
3-Aug-00 27.96
4-Aug-00 27.96
7-Aug-00 27.96
8-Aug-00 27.96
9-Aug-00 27.96
10-Aug-00 27.96
11-Aug-00 27.96
14-Aug-00 27.96
15-Aug-00 27.96
16-Aug-00 27.96
17-Aug-00 27.96
18-Aug-00 27.96
21-Aug-00 27.96
22-Aug-00 27.96
23-Aug-00 27.96
24-Aug-00 27.96
25-Aug-00 27.96
28-Aug-00 27.96
29-Aug-00 27.96
30-Aug-00 27.96
31-Aug-00 27.96
1-Sep-00 27.96
4-Sep-00 27.96
5-Sep-00 27.96
6-Sep-00 27.96
7-Sep-00 27.96
8-Sep-00 27.96
11-Sep-00 27.96
12-Sep-00 27.96
13-Sep-00 27.96
14-Sep-00 27.96
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
15-Sep-00 27.96
18-Sep-00 27.96
19-Sep-00 27.96
20-Sep-00 27.96
21-Sep-00 27.96
22-Sep-00 27.96
25-Sep-00 27.96
26-Sep-00 27.96
27-Sep-00 27.96
28-Sep-00 27.96
29-Sep-00 27.96
2-Oct-00 29.41
3-Oct-00 29.41
4-Oct-00 29.41
5-Oct-00 29.41
6-Oct-00 29.41
9-Oct-00 29.41
10-Oct-00 29.41
11-Oct-00 29.41
12-Oct-00 29.41
13-Oct-00 29.41
16-Oct-00 29.41
17-Oct-00 29.41
18-Oct-00 29.41
19-Oct-00 29.41
20-Oct-00 29.41
23-Oct-00 29.41
24-Oct-00 29.41
25-Oct-00 29.41
26-Oct-00 29.41
27-Oct-00 29.41
30-Oct-00 29.41
31-Oct-00 29.41
1-Nov-00 29.41
2-Nov-00 29.41
3-Nov-00 29.41
6-Nov-00 29.41
7-Nov-00 29.41
8-Nov-00 29.41
9-Nov-00 29.41
10-Nov-00 29.41
13-Nov-00 29.41
14-Nov-00 29.41
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHARE CASH PER PURCHASE OPTION
DATE PRICE SHARE EXERCISE PRICE
---- ----- ----- --------------
<S> <C> <C> <C>
15-Nov-00 29.41
16-Nov-00 29.41
17-Nov-00 29.41
20-Nov-00 29.41
21-Nov-00 29.41
22-Nov-00 29.41
23-Nov-00 29.41
24-Nov-00 29.41
27-Nov-00 29.41
28-Nov-00 29.41
29-Nov-00 29.41
30-Nov-00 29.41
1-Dec-00 29.41
4-Dec-00 29.41
5-Dec-00 29.41
6-Dec-00 29.41
7-Dec-00 29.41
8-Dec-00 29.41
11-Dec-00 29.41
12-Dec-00 29.41
13-Dec-00 29.41
14-Dec-00 29.41
15-Dec-00 29.41
18-Dec-00 29.41
19-Dec-00 29.41
20-Dec-00 29.41
21-Dec-00 29.41
22-Dec-00 29.41
25-Dec-00 29.41
26-Dec-00 29.41
27-Dec-00 29.41
28-Dec-00 29.41
29-Dec-00 29.41
</TABLE>
<PAGE>
================================================================================
STARFISH VALUATION ANALYSIS
================================================================================
<PAGE>
STARFISH VALUATION ANALYSIS
================================================================================
DOLPHIN STOCK PRICE PERFORMANCE - LATEST 12 MONTHS
<TABLE>
<CAPTION>
DATE PRICE
---- -----
<S> <C>
3/12/1999 16.00
3/15/1999 16.31
3/16/1999 15.94
3/17/1999 15.81
3/18/1999 13.88
3/19/1999 13.75
3/22/1999 13.44
3/23/1999 12.88
3/24/1999 12.63
3/25/1999 13.16
3/26/1999 14.38
3/29/1999 14.38
3/30/1999 14.44
3/31/1999 14.13
4/1/1999 13.94
4/5/1999 14.13
4/6/1999 13.81
4/7/1999 14.19
4/8/1999 14.06
4/9/1999 14.97
4/12/1999 14.81
4/13/1999 14.50
4/14/1999 13.88
4/15/1999 12.75
4/16/1999 12.94
4/19/1999 12.50
4/20/1999 12.63
4/21/1999 12.81
4/22/1999 12.38
4/23/1999 12.13
4/26/1999 12.44
4/27/1999 12.19
4/28/1999 11.88
4/29/1999 12.00
4/30/1999 12.00
5/3/1999 11.88
5/4/1999 11.69
5/5/1999 11.50
5/6/1999 11.38
5/7/1999 11.13
5/10/1999 11.06
5/11/1999 11.50
5/12/1999 11.44
5/13/1999 11.25
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE
---- -----
<S> <C>
5/14/1999 10.94
5/17/1999 10.69
5/18/1999 11.13
5/19/1999 11.00
5/20/1999 11.13
5/21/1999 11.88
5/24/1999 11.50
5/25/1999 11.00
5/26/1999 10.63
5/27/1999 10.19
5/28/1999 10.38
6/1/1999 10.56
6/2/1999 10.25
6/3/1999 10.50
6/4/1999 10.28
6/7/1999 10.28
6/8/1999 10.50
6/9/1999 11.00
6/10/1999 10.75
6/11/1999 10.81
6/14/1999 10.56
6/15/1999 10.69
6/16/1999 11.38
6/17/1999 11.50
6/18/1999 11.44
6/21/1999 11.25
6/22/1999 11.50
6/23/1999 11.38
6/24/1999 11.25
6/25/1999 11.13
6/28/1999 11.19
6/29/1999 11.06
6/30/1999 11.94
7/1/1999 11.69
7/2/1999 11.44
7/6/1999 11.19
7/7/1999 10.97
7/8/1999 11.19
7/9/1999 11.50
7/12/1999 11.00
7/13/1999 10.91
7/14/1999 10.88
7/15/1999 11.06
7/16/1999 10.81
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE
---- -----
<S> <C>
7/19/1999 10.31
7/20/1999 10.44
7/21/1999 10.13
7/22/1999 10.00
7/23/1999 9.95
7/26/1999 10.00
7/27/1999 10.00
7/28/1999 10.25
7/29/1999 10.25
7/30/1999 10.44
8/2/1999 10.56
8/3/1999 10.69
8/4/1999 10.38
8/5/1999 10.38
8/6/1999 10.25
8/9/1999 10.31
8/10/1999 10.25
8/11/1999 10.25
8/12/1999 10.31
8/13/1999 10.50
8/16/1999 11.00
8/17/1999 11.88
8/18/1999 12.19
8/19/1999 12.09
8/20/1999 12.50
8/23/1999 12.88
8/24/1999 12.88
8/25/1999 13.38
8/26/1999 13.88
8/27/1999 14.50
8/30/1999 13.38
8/31/1999 13.31
9/1/1999 13.19
9/2/1999 13.00
9/3/1999 13.88
9/7/1999 13.38
9/8/1999 13.25
9/9/1999 13.25
9/10/1999 13.25
9/13/1999 13.88
9/14/1999 13.19
9/15/1999 13.66
9/16/1999 13.50
9/17/1999 13.50
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE
---- -----
<S> <C>
9/20/1999 13.56
9/21/1999 13.50
9/22/1999 13.69
9/23/1999 13.06
9/24/1999 12.88
9/27/1999 13.25
9/28/1999 13.13
9/29/1999 13.19
9/30/1999 13.94
10/1/1999 13.50
10/4/1999 13.81
10/5/1999 13.53
10/6/1999 13.69
10/7/1999 13.81
10/8/1999 13.44
10/11/1999 13.50
10/12/1999 13.56
10/13/1999 13.44
10/14/1999 13.44
10/15/1999 12.88
10/18/1999 12.47
10/19/1999 12.88
10/20/1999 12.88
10/21/1999 13.06
10/22/1999 13.06
10/25/1999 12.94
10/26/1999 12.72
10/27/1999 12.44
10/28/1999 12.88
10/29/1999 12.78
11/1/1999 12.13
11/2/1999 12.25
11/3/1999 12.50
11/4/1999 12.75
11/5/1999 12.94
11/8/1999 13.00
11/9/1999 12.50
11/10/1999 12.63
11/11/1999 13.00
11/12/1999 13.19
11/15/1999 13.13
11/16/1999 13.44
11/17/1999 13.69
11/18/1999 13.56
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE
---- -----
<S> <C>
11/19/1999 13.69
11/22/1999 12.88
11/23/1999 12.63
11/24/1999 13.19
11/26/1999 12.88
11/29/1999 13.00
11/30/1999 13.03
12/1/1999 12.81
12/2/1999 12.69
12/3/1999 12.88
12/6/1999 12.81
12/7/1999 13.06
12/8/1999 12.75
12/9/1999 12.25
12/10/1999 12.13
12/13/1999 12.19
12/14/1999 12.25
12/15/1999 12.25
12/16/1999 12.38
12/17/1999 12.56
12/20/1999 12.13
12/21/1999 12.88
12/22/1999 13.06
12/23/1999 13.06
12/27/1999 12.56
12/28/1999 14.06
12/29/1999 14.50
12/30/1999 14.13
12/31/1999 13.94
1/3/2000 13.38
1/4/2000 13.03
1/5/2000 12.50
1/6/2000 13.19
1/7/2000 14.00
1/10/2000 15.63
1/11/2000 16.81
1/12/2000 18.28
1/13/2000 18.31
1/14/2000 18.41
1/18/2000 17.75
1/19/2000 17.06
1/20/2000 16.63
1/21/2000 17.94
1/24/2000 17.50
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE
---- -----
<S> <C>
1/25/2000 17.19
1/26/2000 15.00
1/27/2000 15.38
1/28/2000 15.13
1/31/2000 15.50
2/1/2000 15.75
2/2/2000 15.00
2/3/2000 14.63
2/4/2000 14.13
2/7/2000 15.00
2/8/2000 14.72
2/9/2000 14.19
2/10/2000 14.06
2/11/2000 13.81
2/14/2000 13.94
2/15/2000 15.75
2/16/2000 15.00
2/17/2000 15.97
2/18/2000 15.06
2/22/2000 15.16
2/23/2000 15.50
2/24/2000 14.88
2/25/2000 14.13
2/28/2000 13.81
2/29/2000 13.88
3/1/2000 15.06
3/2/2000 15.44
3/3/2000 15.56
3/6/2000 15.50
3/7/2000 14.88
3/8/2000 14.31
3/9/2000 14.69
3/10/2000 14.75
3/13/2000 14.25
3/14/2000 14.00
3/15/2000 13.63
3/16/2000 13.75
3/17/2000 13.75
</TABLE>
<PAGE>
STARFISH VALUATION ANALYSIS
================================================================================
STOCK PRICE PERFORMANCE AND TRADED VOLUME - LATEST 12 MONTHS
<TABLE>
<CAPTION>
DATE PRICE VOLUME
---- ----- ------
<S> <C> <C>
2/18/1999 8.44 27100
2/19/1999 8.75 27500
2/22/1999 8.38 300
2/23/1999 8.31 5600
2/24/1999 8.31 100
2/25/1999 8.38 77600
3/2/1999 8.38 5300
3/3/1999 8.50 2100
3/8/1999 8.75 400
3/9/1999 8.75 6900
3/10/1999 8.50 13400
3/11/1999 8.50 20900
3/12/1999 8.50 3000
3/14/1999 8.88 10100
3/16/1999 8.88 10100
3/17/1999 8.63 1600
3/18/1999 8.50 1000
3/19/1999 8.50 5300
3/22/1999 8.50 7500
3/23/1999 8.50 1200
3/25/1999 8.50 8900
3/26/1999 8.75 7100
3/29/1999 8.50 4100
3/30/1999 8.38 7400
3/31/1999 8.50 800
4/1/1999 8.38 3400
4/5/1999 8.50 9200
4/6/1999 8.50 1500
4/7/1999 8.75 34800
4/8/1999 8.81 15600
4/9/1999 9.25 1800
4/12/1999 9.13 400
4/13/1999 9.25 2700
4/14/1999 9.38 3500
4/15/1999 9.38 11100
4/16/1999 9.50 9700
4/20/1999 9.88 17800
4/21/1999 9.63 300
4/22/1999 9.88 4600
4/23/1999 10.00 1000
4/26/1999 9.75 2400
4/27/1999 10.13 23700
4/28/1999 10.63 5800
4/29/1999 10.25 1100
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE VOLUME
---- ----- ------
<S> <C> <C>
4/30/1999 10.06 1400
5/3/1999 10.25 5400
5/4/1999 10.25 500
5/5/1999 10.25 9700
5/6/1999 9.63 3500
5/7/1999 9.50 300
5/11/1999 9.50 3200
5/12/1999 9.50 4000
5/14/1999 9.50 100
5/17/1999 9.38 1000
5/18/1999 9.50 1000
5/19/1999 9.38 4600
5/20/1999 9.38 1000
5/21/1999 9.38 600
5/24/1999 9.38 5800
5/26/1999 9.38 1500
5/27/1999 9.88 1000
5/28/1999 9.63 100
6/3/1999 9.50 500
6/4/1999 9.38 200
6/9/1999 9.50 1700
6/10/1999 9.50 1100
6/14/1999 9.38 200
6/16/1999 9.38 1100
6/23/1999 9.06 22700
6/24/1999 9.06 300
6/25/1999 9.00 6100
6/28/1999 8.75 500
6/29/1999 9.00 200
6/30/1999 8.75 1900
7/1/1999 8.75 100
7/2/1999 9.00 200
7/6/1999 8.75 3300
7/7/1999 8.75 1500
7/8/1999 8.75 1700
7/9/1999 8.38 24900
7/12/1999 8.25 10500
7/13/1999 7.50 398300
7/14/1999 7.69 37100
7/15/1999 7.75 4800
7/16/1999 7.75 8100
7/19/1999 7.69 2200
7/20/1999 7.63 600
7/21/1999 7.63 1100
7/22/1999 7.63 700
7/26/1999 7.75 6000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE VOLUME
---- ----- ------
<S> <C> <C>
7/27/1999 7.75 300
7/28/1999 7.88 4000
7/29/1999 7.81 2200
7/30/1999 8.00 170400
8/4/1999 7.88 3700
8/5/1999 7.88 3400
8/6/1999 7.75 5000
8/9/1999 7.50 67500
8/10/1999 7.38 800
8/11/1999 7.38 2900
8/12/1999 7.00 35900
8/13/1999 7.25 129000
8/17/1999 7.00 1300
8/18/1999 7.00 1000
8/19/1999 7.25 1400
8/20/1999 7.63 1000
8/23/1999 7.63 2000
8/24/1999 6.88 4700
8/25/1999 7.00 300
8/26/1999 6.88 6200
8/27/1999 7.00 2500
8/30/1999 7.13 7400
8/31/1999 6.75 1300
9/2/1999 6.75 8000
9/3/1999 6.88 300
9/7/1999 7.00 5600
9/8/1999 7.00 12300
9/9/1999 7.00 4600
9/10/1999 7.00 4100
9/13/1999 7.13 100
9/14/1999 7.50 9300
9/15/1999 7.50 2700
9/16/1999 7.50 5700
9/17/1999 7.13 6000
9/20/1999 7.00 1400
9/21/1999 7.00 2100
9/22/1999 6.88 13600
9/23/1999 6.88 8600
9/27/1999 6.63 1700
9/28/1999 6.75 4200
9/29/1999 6.88 51600
9/30/1999 7.00 500
10/4/1999 7.00 1000
10/5/1999 7.06 1000
10/6/1999 6.63 52700
10/7/1999 6.63 9100
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE VOLUME
---- ----- ------
<S> <C> <C>
10/8/1999 6.63 800
10/11/1999 6.75 4100
10/12/1999 6.75 1800
10/13/1999 6.50 3400
10/14/1999 6.69 500
10/15/1999 6.50 5600
10/18/1999 6.00 7200
10/19/1999 6.00 2000
10/20/1999 6.00 1000
10/21/1999 6.00 1800
10/22/1999 6.25 53000
10/25/1999 6.13 2300
10/26/1999 6.00 6200
10/27/1999 6.00 1500
10/28/1999 5.75 8200
10/29/1999 5.69 13600
11/1/1999 5.63 4000
11/2/1999 5.06 147300
11/3/1999 5.75 22900
11/4/1999 5.38 32200
11/8/1999 5.25 8100
11/9/1999 5.06 6900
11/10/1999 5.13 34900
11/11/1999 5.44 15600
11/12/1999 5.63 54900
11/15/1999 5.44 2900
11/16/1999 5.75 7100
11/17/1999 5.50 72400
11/18/1999 5.44 63500
11/19/1999 5.31 6600
11/22/1999 5.31 2000
11/23/1999 5.88 24800
11/24/1999 5.38 41700
11/26/1999 5.31 3700
11/29/1999 4.88 71400
11/30/1999 5.06 33300
12/1/1999 5.06 14500
12/2/1999 5.00 100
12/3/1999 5.00 42500
12/6/1999 5.06 185700
12/7/1999 5.00 162700
12/8/1999 5.00 84800
12/9/1999 5.00 392800
12/10/1999 5.06 30200
12/13/1999 5.19 11700
12/14/1999 5.06 13100
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE VOLUME
---- ----- ------
<S> <C> <C>
12/15/1999 5.13 116600
12/16/1999 5.19 400
12/17/1999 5.31 64500
12/20/1999 5.19 46700
12/21/1999 5.25 6300
12/22/1999 5.88 23200
12/23/1999 6.13 36300
12/27/1999 7.50 96600
12/28/1999 7.75 19000
12/29/1999 7.63 6600
12/30/1999 7.63 35400
12/31/1999 8.00 50800
1/4/2000 8.44 4000
1/5/2000 8.50 1400
1/6/2000 9.25 62300
1/7/2000 8.88 17700
1/10/2000 10.25 59500
1/11/2000 10.00 28400
1/12/2000 10.00 21500
1/13/2000 10.00 32000
1/14/2000 10.25 4900
1/18/2000 10.00 7100
1/19/2000 9.88 19300
1/20/2000 9.81 20400
1/21/2000 10.25 87400
1/24/2000 10.00 15800
1/25/2000 10.00 46800
1/26/2000 9.38 22500
1/27/2000 9.13 12800
1/28/2000 8.94 48400
1/31/2000 9.00 14700
2/1/2000 9.25 54000
2/2/2000 9.25 30500
2/3/2000 9.63 4700
2/4/2000 11.00 19400
2/7/2000 10.50 20700
2/8/2000 10.50 328100
2/9/2000 11.50 224100
2/10/2000 12.00 13400
2/11/2000 11.63 35600
2/14/2000 11.50 109000
2/15/2000 12.00 34900
2/16/2000 12.19 57100
2/17/2000 12.06 151100
2/18/2000 12.31 7100
2/22/2000 12.13 57200
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DATE PRICE VOLUME
---- ----- ------
<S> <C> <C>
2/23/2000 12.25 46800
2/24/2000 12.13 53600
2/25/2000 12.06 26100
2/28/2000 12.13 56100
2/29/2000 12.00 64900
3/1/2000 12.50 35600
3/2/2000 12.13 6900
3/3/2000 12.06 30500
3/6/2000 12.06 8500
3/7/2000 12.06 5600
3/8/2000 12.13 17700
3/9/2000 12.00 31700
3/10/2000 12.06 43600
3/13/2000 12.06 7800
3/14/2000 12.88 13800
3/15/2000 12.56 44600
3/16/2000 12.56 49800
3/17/2000 12.56 28200
</TABLE>
<TABLE>
<CAPTION>
SHARE PRICE DATA
IMPLIED
OFFER PRICE
AVERAGE(a) PREMIUM
------------- -------
<S> <C> <C>
High $12.00 31.3%
30-Trading Days 9.76 61.4%
20-Trading Days 10.09 56.1%
10-Trading Days 10.43 51.0%
Pre-Announcement 11.63 35.5%
</TABLE>
- --------------------------------
(a) HIGH, LOW AND AVERAGES CALCULATED FOR THE RESPECTIVE PERIODS PRIOR TO
THE ANNOUNCEMENT DATE OF ORIGINAL OFFER (FEBRUARY 14, 2000).
<PAGE>
STARFISH VALUATION ANALYSIS
================================================================================
VALUATION MATRIX
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
PREM. OF OFFER PRICE TO:
------------------------ OFFER OFFER NET CASH (b) IMPLIED
PRE-ANN. CONTRACT CASH VALUE OFFER PRE-ANN. CASH VALUE PRICE AS % OF VALUE OUTLAY FOR TECHNOLOGY
COMPANY PRICE PRICE PER SHARE (a) PRICE PRICE PER SHARE CONTRACT PRICE ($MM) DOLPHIN ($MM) VALUE ($MM)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Starfish $ 11.63 $ 25.26 $ 8.74 $ 15.00 29% 72% 59% $ 95.5 $ 27.7 $ 39.6
15.25 31% 75% 60% 97.3 27.8 41.2
15.50 33% 77% 61% 99.0 28.0 42.8
----------------------------------------------------------------------------------
15.75 35% 80% 62% 100.8 28.2 44.4
==================================================================================
16.00 38% 83% 63% 102.6 28.4 45.9
16.25 40% 86% 64% 104.3 28.6 47.5
16.50 42% 89% 65% 106.1 28.8 49.1
16.75 44% 92% 66% 107.9 28.9 50.7
17.00 46% 95% 67% 109.6 29.1 52.3
</TABLE>
- --------------------------------
(a) NET OF CURRENT LIABILITIES.
(b) ASSUMES $13.25 PER SHARE IS THE CASH PORTION OF THE OFFER PRICE. BASED
ON ESTIMATED STARFISH CASH BALANCE AS OF FEBRUARY 2000 OF $8.74 PER
SHARE. INCLUDES $5.2 MILLION CASH TAX BENEFIT AND $3.7 MILLION OF
TRANSACTION EXPENSES.
<PAGE>
STARFISH VALUATION ANALYSIS
================================================================================
VALUATION ANALYSIS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Discounted
Discounted Cash Flow-
Cash Flow- Adjusted Base Comparable
Base Case (a) Case (a)(b) Comparable Buyback Transactions R&D Vehicles
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HIGH 20.54 18.15 20.34 20.10 19.67
LOW 11.16 8.50 15.69 13.98 3.50
METHODOLOGY Perpetuity Perpetuity Premium to Premium to Price to
Growth Growth Pre-Annc. Cash Value Cash
Post-2007 Post-2007 Price(c) per Share per Share
RANGE 0% - 5% 0% - 5% 35% - 75% 60% - 130% 40% - 225%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------------
(a) DCF VALUES ASSUME 0% TO 5% PERPETUAL GROWTH RATE POST-2007 AND A 30.0% -
35.0% DISCOUNT RATE ON OPERATING CASH FLOWS, 5.0% DISCOUNT RATE ON
DEVELOPMENT COSTS AND 10.0% DISCOUNT RATE ON CAPITAL EXPENDITURES; CASH
PER SHARE BASED ON ESTIMATED BALANCE AT END OF FEBRUARY 2000.
(b) INCLUDES (i) ANNUAL MANAGEMENT, ADMINISTRATIVE AND TECHNOLOGY ACCESS
FEES PAID BY STARFISH TO DOLPHIN, (ii) DIRECT COSTS INCURRED BY STARFISH
AND (iii) CASH TAX BENEFIT TO DOLPHIN OF $5.2 MILLION.
(c) AS OF FEBRUARY 11, 2000, THE TRADING DATE IMMEDIATELY PRECEDING THE
FIRST PUBLIC ANNOUNCEMENT OF THE OFFER TO ACQUIRE STARFISH.
NOTE: ANALYSIS BASED ON PROJECTIONS PROVIDED BY DOLPHIN MANAGEMENT.
<PAGE>
STARFISH VALUATION ANALYSIS
================================================================================
COMPARABLE DISCOUNTED UNIT/SHARE BUYBACK TRANSACTIONS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
R&D SPONSOR ADJ. PRE- CONTRACT CASH VALUE ADJ. OFFER
VEHICLE (ACQUIROR) ANN. PRICE(a) PRICE PER SHARE PRICE(a)
================================================================================
<S> <C> <C> <C> <C> <C>
SciGenics Genetics Institute $ 13.75 $ 69.83 $ 5.33 $ 14.00
Aramed Gensia 9.00 55.40 10.63 12.05
Tocor II Centocor 17.02 58.00 23.33 34.10
CytoRad Cytogen 3.62 19.50 3.78 6.06
Neozyme II Genzyme 28.91 108.50 5.72 29.85
PTC II PerSeptive Bio. 4.10 33.83 5.60 9.02
<CAPTION>
- ------------------------------------------------------------------------------------------
PREM. OF ADJ. OFFER PRICE TO: ADJ. OFFER ADJ. OFFER
----------------------------
R&D SPONSOR ADJ. PRE- CASH VALUE PRICE AS % OF VALUE(a)
VEHICLE (ACQUIROR) ANN. PRICE(a) PER SHARE CONTRACT PRICE ($MM)
==========================================================================================
<S> <C> <C> <C> <C> <C>
SciGenics Genetics Institute 2% 163% 20% $ 29.3
Aramed Gensia 34% 13% 22% 34.6
Tocor II Centocor 100% 46% 59% 76.7
CytoRad Cytogen 67% 61% 31% 24.4
Neozyme II Genzyme 3% 422% 28% 72.1
PTC II PerSeptive Bio. 120% 61% 27% 23.9
</TABLE>
<TABLE>
--------------------------------------------------------
<S> <C> <C> <C>
MINIMUM 2% 13% 20%
MEAN 54% 128% 31%
MEDIAN 51% 61% 27%
MAXIMUM 120% 422% 59%
--------------------------------------------------------
</TABLE>
- --------------------------
(a) ADJUSTED BY THEORETICAL VALUE OF ATTACHED WARRANTS IN THE CASE OF UNIT
BUYBACK TRANSACTIONS.
<PAGE>
STARFISH VALUATION ANALYSIS
================================================================================
COMPARABLE COMPANIES: OUTSTANDING R&D VEHICLES
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
STOCK PRICE MARKET VALUE/ SHARE PRICE/ AGGREGATE
SPONSOR R&D ENTITY 03/17/2000 CASH(a) IPO PRICE(b) TECH VALUE
- --------- -------------------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Alza Crescendo $18.00 104.2% 180.0% $27.5
Biovail Intelligent Polymers $34.00 538.9% 170.0% $101.0
Allergan Allergan Specialty $13.88 42.8% 154.2% ($59.9)
Therapeutics
- --------------------------------------------------------------------------------------------
MEAN 228.7% 168.1%
- --------------------------------------------------------------------------------------------
</TABLE>
- -------------------------------
(a) INCLUDING OTHER INVESTMENTS, IF ANY, AND WORKING CAPITAL.
(b) IPO PRICE FOR CRESCENDO AND ALLERGAN SPECIALTY THERAPEUTICS IS THE
CLOSING PRICE AS OF THE FIRST DAY OF TRADING.
<PAGE>
STARFISH VALUATION ANALYSIS
================================================================================
PRO FORMA ANALYSIS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA EPS (a) % ACCRETION/(DILUTION)(a)
OFFER PRICE OFFER ------------------------------------------ ----------------------------------------------
PER SHARE VALUE 2001F 2002F 2003F 2004F 2005F 2001F 2002F 2003F 2004F 2005F
- ----------- -------- ------- ------- ------- ------- ------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$15.75 $100.8 $0.11 $0.39 $1.80 $2.98 $3.99 -87.7% -14.8% 36.3% 19.0% 13.9%
</TABLE>
- --------------------------------
(a) BASED ON PROJECTIONS PROVIDED BY DOLPHIN MANAGEMENT.
