Exhibit 99.17(b)(4)
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PROJECT PRAIRIE
Presentation to the Board of Directors
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LAZARD FRERES & CO. LLC MARCH 2, 1999
PROJECT PRAIRIE
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Discussion Topics
o Valuation
o Merger Partners
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Valuation Methodologies
o Discounted Cash Flow
o Comparable Public Companies
o Comparable Precedent Transactions
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Prairie Valuation Analysis Summary(1)
(Dollars per share)
[GRAPH]
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Prairie Historical Performance
($ in millions, except per share)
1988 1989 1990 1991 1992 1993
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Sales $ 759 $ 867 $ 964 $1,125 $1,262 $1,343
% Growth -- 14.2% 11.2% 16.7% 12.2% 6.4%
EBITDA $ 196 $ 178 $ 189 $ 244 $ 304 $ 346
% Margin 25.8% 20.5% 19.6% 21.7% 24.1% 25.8%
EBIT $ 146 $ 128 $ 132 $ 189 $ 243 $ 279
% Margin 19.2% 14.7% 13.7% 16.8% 19.3% 20.8%
Earnings Per Share $ 0.29 $ 0.29 $ 0.26 $ 0.38 $ 0.56 $ 0.61
Market Share 35.2% 34.2% 35.5% 36.9% 39.6% 42.8%
Yield Advantage (bu/acre) 3.0 4.4 7.1 7.8 7.5 7.1
CAGR
1994 1995 1996 1997 1998 88-98
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Sales $1,479 $1,532 $1,721 $1,784 $1,835 9.2%
% Growth 10.1% 3.6% 12.3% 3.7% 2.9%
EBITDA $ 376 $ 355 $ 425 $ 455 $ 454 8.8%
% Margin 25.5% 23.2% 24.7% 25.5% 24.7%
EBIT $ 301 $ 280 $ 347 $ 363 $ 359 9.4%
% Margin 20.4% 18.3% 20.2% 20.3% 19.6%
Earnings Per Share $ 0.70 $ 0.72 $ 0.89 $ 0.98 $ 1.08 14.1%
Market Share 44.8% 44.7% 43.8% 41.5% 41.8%
Yield Advantage (bu/acre) 5.6 4.7 5.9 6.3 5.5
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Source: Company information.
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PROJECT PRAIRIE
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Summary of Projections
($ in millions, except per share)
2004
1998-2004 NA Corn
1998 Margin 1999 Margin 2000 Margin 2004 Margin CAGR Market Share
- ----------------------------------------- ------------------ ----------------- ---------------- -----------------------------
Sales
'99 Target $1,835 $1,995 $2,196 $3,300 10.3% 50.0%
Recent Historical Growth 1,835 1,995 2,189 3,034 8.7% 47.8%
Moderate Growth 1,835 1,995 2,133 2,722 6.8% 45.8%
Slow Growth 1,835 1,995 2,088 2,501 4.3% 43.8%
'99 Analyst(1) 1,914 2,026
EBIT (2)
'99 Target $365 20% $421 21% $522 24% $1,061 32% 19.5%
Recent Historical Growth 365 20% 421 21% 504 23% 771 25% 13.3%
Moderate Growth 365 20% 421 21% 476 22% 614 23% 9.1%
Slow Growth 365 20% 421 21% 448 21% 487 19% 4.9%
'99 Analyst(1) 453 23% 498 24%
EPS
'99 Target $1.08 $1.08 $1.41 $3.26 20.2%
Recent Historical Growth 1.08 1.08 1.36 2.29 13.3%
Moderate Growth 1.08 1.08 1.27 1.79 8.8%
Slow Growth 1.08 1.08 1.19 1.40 4.4%
'99 Analyst(1) 1.13 1.27
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(1) Based on Merrill Lynch (02/03/99), Salomon Smith Barney (01/08/99), Credit
Suisse First Boston (10/28/98), Morgan Stanley Dean Witter (10/27/1998)
research reports.
(2) Excludes Optimum.
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PROJECT PRAIRIE
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The Environment Post August 1997
o Asian/emerging market crisis
o Weakened farm economy
o Perceptions of value creation related to traits
o Competitive behavior
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Summary of Projections
($ in millions except per share)
%change %change %change %change
1998 to '97 Target 1999 to '97 Target 2000 to '97 Target 2001 to '97 Target 1998 - 2001 CAGR
--------------------- ---------------------- --------------------- ------------------- ------------------
Sales
'97 Target $2,038 $2,316 $2,642 $2,919 12.7%
'99 Target 1,835 (10%) 1,995 (14%) 2,196 (17%) 2,475 (15%) 10.5%
EBIT
'97 Target $480 640 $831 $1,022 28.6%
'99 Target(1) 365 (24%) 421 (34%) 522 (37%) 644 (37%) 20.8%
EPS
'97 Target $1.27 $1.77 $2.33 $2.91 39.2%
'99 Target 1.08 (15%) 1.08 (39%) 1.41 (39%) 1.86 (36%) 19.9%
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(1) Excludes Optimum.
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Discounted Cash Flow - Core Business
($ per share)
[GRAPH]
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Incremental Value to Base DCF from R&D Pipeline and Optimum
($ per share)
[GRAPH]
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Key Assumptions
o Value incremental to core business pro formas
o Probability adjusted for technical and commercial success
Project Probability
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Corn Rootworm 90%
Molds & Mycotoxins 80%
o Terminal value based on 1% growth in perpetuity in 2014 for R&D and
12x EBITDA multiples for Optimum.
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Summary Valuation
($ per share)
10% Discount Rate 12% Discount Rate
---------------------------- ----------------------------
EBITDA Exit Multiple EBITDA Exit Multiple
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10x 12x 14x 10x 12x 14x
------ ------ ------ ------ ------ ------
Core Business + R&D Pipeline & Optimum
`99 Target $39.14 $44.92 $50.70 $34.69 $39.89 $45.08
Recent Historical Growth 30.87 35.27 39.66 27.22 31.17 35.12
Moderate Growth 26.31 29.95 33.60 23.09 26.36 29.64
Slow Growth 22.58 25.62 28.66 19.72 22.45 25.18
Widening Yield Gap:
By one-half bushel per acre per year(1) 6.30 6.30 6.30 4.74 4.74 4.74
By incremental one-half bushel per acre per year(2) 3.97 3.97 3.97 3.10 3.10 3.10
Germplasm Royalty(3) 1.82 1.82 1.82 1.77 1.77 1.77
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(1) Value of widening the yield gap by .5 bushel/acre per year, capitalized
FY08 with 1% perpetuity growth rate, Yield adv. capped at 15.
(2) Incremental Value of widening the yield gap by additional incremental .5
bushel/acre per year capitalized FY08 with 1% perpetuity growth rate,
Yield adv. capped at 15.
(3) Probability weighted average of 10%, 25%, and 50% royalty on all
historical and projected contaminated sales, probability of 15%, 70%, 15%,
respectively.
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Public Comparable Trading Companies
($ in millions, except per share amounts)
Group Group
Median Mean AHP MONSANTO DIAMOND PRAIRIE NOVARTIS
------ ---- --- -------- ------- ------- --------
Current Market Information:
Share Price as of 03/01/99 $ 58.94 $ 45.31 $ 52.44 $ 22.50 SFr 2,515.0
Shares Outstanding 1,327.25 652.35 991.49 239.45 68.49
Equity Value $ 78,225.0 $ 29,559.5 $ 51,991.4 $ 5,387.6 SFr 172,241.1
Enterprise Value 80,669.4 34,019.5 56,306.4 5,624.6 164,263.1
I/B/E/S EPS Growth 12.7% 19.8% 9.9% 14.5% 12.3%
Calendarized Multiples:
Enterprise Value / Sales
1998E 4.8 x 4.9 x 5.9 x 4.0 x 2.3 x 3.0 x 5.1 x
1999E 4.3 4.1 5.5 3.2 2.1 2.7 5.0
2000E 3.4 3.6 5.0 2.9 2.0 2.5 4.6
Enterprise Value / EBITDA
1998E 19.3 x 21.1 x 20.0 x 18.7 x 9.8 x 12.1 x 17.8 x
1999E 16.0 16.0 18.5 15.5 9.3 10.5 16.5
2000E 13.4 12.9 16.4 14.1 8.3 8.6 14.7
Enterprise Value / EBITA
1998E 23.2 x 26.9 x 22.2 x 24.1 x NA NA 21.4 x
1999E 20.2 21.3 20.7 19.0 NA NA 19.8
2000E 17.4 17.3 18.4 17.2 NA NA 17.6
Enterprise Value / EBIT
1998E 23.4 x 26.7 x 24.3 x 29.8 x 13.1 x 15.1 x 21.8 x
1999E 21.3 20.8 22.5 26.9 12.4 12.9 20.1
2000E 16.9 16.4 19.7 23.2 10.6 10.2 17.9
Share Price/ EPS (Broker)
1998E 36.7 x 40.7 x 33.1 x 51.2 x 18.3 x 20.2 x 27.7 x
1999E 28.8 32.7 30.7 56.8 17.1 19.0 25.0
2000E 21.8 24.8 26.7 42.7 14.1 14.8 21.9
Share Price/ EPS (IBES)
1998E 42.2 x 42.8 x 33.1 x 51.2 x 18.3 x 19.8 x 27.7 x
1999E 27.8 32.5 30.7 53.2 18.4 18.7 24.9
2000E 24.7 27.2 27.1 39.9 16.7 16.7 22.2
60 Trading Days
Before Ann.
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ASTRA DELTA &
ZENECA PINE(1) DEKALB (1)
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Current Market Information:
Share Price as of 03/01/99 (P) 25.31 $ 32.81 $ 33.13
Shares Outstanding 1,779.01 38.04 34.61
Equity Value (P) 45,026.6 $ 1,248.3 $ 1,146.5
Enterprise Value 43,732.1 1,324.3 1,256.5
I/B/E/S EPS Growth 9.5% NA NA
Calendarized Multiples:
Enterprise Value / Sales
1998E 7.6 x 4.5 x 2.5 x
1999E 5.3 3.5 2.3
2000E 3.9 3.0 2.0
Enterprise Value / EBITDA
1998E 32.9 x 20.1 x 17.2 x
1999E 19.6 14.2 11.6
2000E 12.7 11.2 8.4
Enterprise Value / EBITA
1998E 39.8 x NA NA
1999E 25.6 NA NA
2000E 16.0 NA NA
Enterprise Value / EBIT
1998E 39.8 x 22.1 x 22.6 x
1999E 25.6 15.2 14.3
2000E 16.0 11.9 9.7
Share Price/ EPS (Broker)
1998E 59.0 x 39.2 x 34.1 x
1999E 35.2 26.9 21.7
2000E 21.6 21.1 14.7
Share Price/ EPS (IBES)
1998E 59.0 x NA NA
1999E 21.3 NA NA
2000E 19.4 NA NA
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(1) Assumes normalized price 60 days prior to Monsanto announcement.
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PROJECT PRAIRIE
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Public Comparable Pharmaceutical Trading Companies
Group Group GLAXO SCHERING BRISTOL
Median Mean ELI LILLY WELLCOME PLOUGH MYERS
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Current Market Information:
Share Price as of 03/01/99 $ 93.81 (P) 19.16 $ 55.00 $ 128.63
Shares Outstanding 1,124.67 3,630.00 1,478.22 1,013.12
Equity Value $ 105,508.2 (P) 69,550.8 $ 81,302.2 $ 130,312.5
Enterprise Value 106,718.1 71,273.8 80,549.2 130,599.5
I/B/E/S EPS Growth 16.5% 6.1% 15.4% 12.8%
Calendarized Multiples:
Enterprise Value / Sales
1998E 9.1 x 9.3 x 10.7 x 9.1 x 10.1 x 7.1 x
1999E 8.2 8.2 9.5 8.2 8.8 6.4
2000E 7.2 7.3 8.3 7.2 7.8 5.9
Enterprise Value / EBITDA
1998E 25.7 x 28.7 x 30.9 x 22.2 x 31.8 x 22.8 x
1999E 21.3 24.5 27.1 19.8 28.1 20.3
2000E 19.0 21.3 23.5 17.4 24.5 18.2
Enterprise Value / EBITA
1998E 28.8 x 32.2 x 35.2 x 25.3 x 34.3 x 25.7 x
1999E 23.4 27.3 30.6 22.5 30.3 22.7
2000E 20.7 23.6 26.3 19.7 26.4 20.4
Enterprise Value / EBIT
1998E 29.7 x 32.8 x 36.6 x 25.3 x 34.8 x 25.7 x
1999E 24.0 27.8 31.7 22.5 30.7 22.7
2000E 21.3 24.0 27.0 19.7 26.7 20.4
Share Price/ EPS (Broker)
1998E 45.5 x 46.5 x 48.6 x 37.6 x 46.4 x 35.8 x
1999E 34.5 38.8 41.2 33.5 40.8 31.6
2000E 29.5 33.2 34.8 29.5 35.1 28.3
Share Price/ EPS (IBES)
1998E 47.2 x 45.5 x 49.4 x 38.9 x 47.2 x 35.9 x
1999E 35.7 38.3 40.8 34.2 39.9 31.6
2000E 32.3 33.0 34.6 32.3 34.2 28.0
WARNER
MERCK LAMBERT PFIZER
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Current Market Information:
Share Price as of 03/01/99 $ 159.50 $ 68.88 $ 133.13
Shares Outstanding 1,191.06 826.96 1,400.23
Equity Value $ 189,974.5 $ 56,956.6 $ 186,405.3
Enterprise Value 193,195.3 57,833.0 186,630.3
I/B/E/S EPS Growth 13.4% 22.3% 18.8%
Calendarized Multiples:
Enterprise Value / Sales
1998E 7.3 x 5.7 x 14.9 x
1999E 6.5 4.9 13.1
2000E 5.9 4.4 11.7
Enterprise Value / EBITDA
1998E 25.6 x 25.7 x 42.3 x
1999E 21.3 21.0 33.9
2000E 19.0 18.2 28.3
Enterprise Value / EBITA
1998E 28.0 x 28.8 x 48.0 x
1999E 23.2 23.4 38.2
2000E 20.7 20.3 31.7
Enterprise Value / EBIT
1998E 29.1 x 29.7 x 48.8 x
1999E 24.0 24.0 38.7
2000E 21.3 20.7 32.0
Share Price/ EPS (Broker)
1998E 36.1 x 45.5 x 75.6 x
1999E 31.2 34.5 59.0
2000E 27.7 28.6 48.5
Share Price/ EPS (IBES)
1998E 37.1 x 47.2 x 62.8 x
1999E 32.5 35.7 53.8
2000E 28.7 29.1 44.1
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Precedent Transactions -- Multiples
($ in millions)
Ann.
Date Buyer / Target Business of Target
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9/28/98 AgrEvo Wholesale insect resistant seeds
Cargill Hybrid Seeds
7/15/98 Monsanto Company Manufacture and wholesale garden seeds, such as
Plant Breeding Intl Cambridge wheat, barley, oil seed rape, pulses and potato
6/29/98 Monsanto Company World's leading producer of corn-seed for tropical
Cargill Inc. National Seed climates.
Businesses (Cargill Inc.)
5/11/98 Monsanto Company(1) Researches and produces agricultural seed and
DeKalb (1998 100% gross-up) swine breeding stock
5/11/98 Monsanto Company(2) (3) Researches and produces agricultural seed and
DeKalb (Blended Value) swine breeding stock
5/11/98 Monsanto Company Breeds, produces, conditions and markets
Delta & Pine Land Company proprietary cotton planting varieties in the U.S. and
other cotton producing nations.
8/7/97 E.I. Du Pont de Nemours & Co. Provide agricultural genetic research, specializing
Pioneer Hi-Bred (20%) in seed biotechnology
1/6/97 Monsanto Company Corn-seed producer and two seed distributors.
Holdens Foundation Seeds Inc.,
1/15/96 DowElanco Agricultural biotechnology company that
Mycogen Corp. develops and markets technology-based products
and provides crop protection services.
Transaction Value / LTM
Equity vs. ----------------------------------------------- Price Per
Transaction Sales (x) EBITDA (x) EBIT (x) Share / One
Ann. Value ------------ ------------- ------------- LTM Month
Date Buyer / Target ($ millions) LTM LFY +1 LTM LFY +1 LTM LFY +1 EPS (x) Premium (%)
- ---- -------------- ---------- --- ------ --- ------ --- ------ ------- -----------
9/28/98 AgrEvo $650 6.0x na na na 186.0x na na na
Cargill Hybrid Seeds 650
7/15/98 Monsanto Company 523 19.8 na na na na na na na
Plant Breeding Intl Cambridge 523
6/29/98 Monsanto Company 1,400 5.7 na na na 60.0 na na na
Cargill Inc. National Seed 1,400
Businesses (Cargill Inc.)
5/11/98 Monsanto Company(1) 3,611 7.9 7.0 52.9 40.5 66.9 51.7 111.5 42.5
DeKalb (1998 100% gross-up) 3,721
5/11/98 Monsanto Company(2) (3) 2,352 5.3 4.6 35.0 26.8 44.3 34.2 72.6 na
DeKalb (Blended Value) 2,462
5/11/98 Monsanto Company 1,857 10.0 5.4 52.7 22.9 59.3 24.7 94.5 (1.8)
Delta & Pine Land Company 1,932
8/7/97 E.I. Du Pont de Nemours & Co. 1,700 4.7 4.2 17.5 14.9 21.3 17.7 72.7 43.0
Pioneer Hi-Bred (20%) 1,700
1/6/97 Monsanto Company 1,020 22.7 na na na na na na na
Holdens Foundation Seeds Inc., 1,020
1/15/96 DowElanco 403 3.7 3.4 nm 70.4 nm nm nm 17.6
Mycogen Corp. 422
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Mean: 9.5x 4.9x 39.5x 35.1x 73.0x 32.1x 87.8x 25.3%
Median: 6.0 4.6 43.9 26.8 59.7 29.4 83.6 30.0
High: 22.7 7.0 52.9 70.4 186.0 51.7 111.5 43.0
Low: 3.7 3.4 17.5 14.9 21.3 17.7 72.6 (1.8)
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(1) Assumes purchase price of approximately 60% of shares not owned by
Monsanto grossed up to 100% of Dekalb
(2) Total transaction value equals transaction value of 5/22/98 purchase of
approximately 60% of Dekalb plus transaction value of 2/1/96 purchase of
approximately 40% of Dekalb
(3) 40% purchased at $229m.
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PROJECT PRAIRIE
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Imputed Share Price Based on Precedent Transaction Premiums
($ per share)
Premiums Paid One Month Prior to Announcement
[GRAPH]
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Premiums Paid for Deals Over $500 Million
[GRAPH]
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Analysis at Various Prices
($ in millions, except per share amount)
Share Price $22.50 $30.00 $35.00 $40.00 $45.00 $50.00
Premium to Current Price 0.0% 33.3% 55.6% 77.8% 100.0% 122.2%
Equity Value $5,388 $7,184 $8,381 $9,578 $10,775 $11,973
Enterprise Value 5,638 7,434 8,631 9,828 11,025 12,223
Prairie (1)
----------
Enterprise Value as a Multiple of:
Revenues
1998E $1,835 3.1x 4.1x 4.7x 5.4x 6.0x 6.7x
1999E 1,995 2.8 3.7 4.3 4.9 5.5 6.1
EBITDA
1998E $449 12.6x 16.6x 19.2x 21.9x 24.6x 27.2x
1999E 498 11.3 14.9 17.3 19.7 22.1 24.5
EBIT
1998E $359 15.7x 20.7x 24.1x 27.4x 30.8x 34.1x
1999E 403 14.0 18.4 21.4 24.4 27.3 30.3
Equity Value as a Multiple of:
Net Income
1998E $270 19.9x 26.6x 31.0x 35.4x 39.9x 44.3x
1999E 260 20.8 27.7 32.3 36.9 41.5 46.1
Publicly Precedent Transactions
Prairie (1) Traded Comparables ------------------------------------------
---------- ------------------ AgrEvo/ Midas/ Midas/ Midas/
Enterprise Value as a Multiple of: Midas Avg. Cargill Cargill Dekalb(2) Delta
----- ---- ------- ------- --------- -----
Revenues
1998E $1,835 4.0x 4.9x 6.0x 5.7x 5.3x 10.0x
1999E 1,995 3.2 4.1 -- -- 4.6 5.4
EBITDA
1998E $449 18.7x 21.1x -- -- 35.0x 52.7x
1999E 498 15.5 16.0 -- -- 26.8 22.9
EBIT
1998E $359 29.8x 26.7x NM 60.0x 44.3x 59.3x
1999E 403 26.9 20.8 -- -- 34.2 24.7
Equity Value as a Multiple of:
Net Income
1998E $270 51.2x 40.7x -- -- 72.6x 94.5x
1999E 260 56.8 32.7 -- -- 54.5 44.5
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(1) Prairie Jan. '99 Target case.
(2) Represents blended value equal to transaction value of 5/22/98 purchase of
approximately 60% of Dekalb plus transaction value of 2/1/96 purchase of
approximately 40% of Dekalb.
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PROJECT PRAIRIE
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Transaction Considerations
o Valuation
o Type of consideration
- Cash versus stock
- Stock
o Exchange ratios: fixed vs. floating
o Collars vs. no collars
o Timing
- Public tender followed by merger versus merger
o Other potential interested parties
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PROJECT PRAIRIE
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Potential Interested Parties
($ in billion)
Market Strategic
Value (bn) Business Fit Feasibility Comments
---------- ------------ ----------- ------------------------------------------------
AHP $78.2 Low High o Prairie not as good a fit as Midas; fit with
current Ag product line
Astra Zeneca 72.4 Medium Medium o Focused on Astra merger; potential exit
from AgChem
Bayer 25.0 Medium Medium o Financial wherewithal and dilution
Dow Chemical 22.2 Medium Medium o Financial wherewithal and dilution
Hoechst/AgrEvo 26.5 High Medium o Focused on Rhone-Poulenc merger
Novartis 118.3 High High o Good fit; strong financial position
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PROJECT PRAIRIE
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Accretion/Dilution of Buyer Universe
($ in millions, except per share amount)
AHP(1) Astra Zeneca Bayer
--------------- --------------- ---------------
1999 2000 1999 2000 1999 2000
---- ---- ---- ---- ---- ----
Stand Alone EPS for
Acquiror Shareholders $1.92 $2.17 $1.90 $2.08 $2.37 $2.58
100% Stock
Pro Forma EPS $1.73 $1.98 $1.66 $1.84 $1.65 $1.84
$ Accretion/(Dilution) (0.19) (0.19) (0.25) (0.26) (0.71) (0.74)
% Accretion/(Dilution) (9.9%) (9.0%) (13.2%) (12.2%) (30.1%) (28.6%)
Pretax Synergies to Break-even 474 484 848 861 1,200 1,239
50/50 Cash and Stock
Pro Forma EPS $1.69 $1.95 $1.66 $1.85 $1.69 $1.90
$ Accretion/(Dilution) (0.23) (0.22) (0.26) (0.25) (0.68) (0.67)
% Accretion/(Dilution) (12.2%) (10.3%) (13.3%) (11.8%) (28.7%) (26.1%)
Pretax Synergies to Break-even 549 525 807 785 984 974
100% Cash
Pro Forma EPS $1.64 $1.92 $1.66 $1.86 $1.73 $1.99
$ Accretion/(Dilution) (0.28) (0.26) (0.26) (0.24) (0.63) (0.58)
% Accretion/(Dilution) (14.7%) (11.8%) (13.5%) (11.4%) (26.7%) (22.6%)
Pretax Synergies to Break-even 625 566 767 709 767 709
Dow Chemical(1) Diamond (1) Novartis
------------- ------------- --------------
1999 2000 1999 2000 1999 2000
---- ---- ---- ---- ---- ----
Stand Alone EPS for
Acquiror Shareholders $4.95 $5.51 $2.86 $3.14 $69.37 $77.89
100% Stock
Pro Forma EPS $3.55 $4.05 $2.47 $2.74 $63.30 $71.65
$ Accretion/(Dilution) (1.41) (1.47) (0.39) (0.40) (5.97) (6.13)
% Accretion/(Dilution) (28.4%) (26.6%) (13.6%) (12.9%) (8.6%) (7.9%)
Pretax Synergies to Break-even 753 785 735 768 737 757
50/50 Cash and Stock
Pro Forma EPS $3.44 $4.03 $2.49 $2.77 $62.94 $71.61
$ Accretion/(Dilution) (1.52) (1.49) (0.37) (0.37) (6.33) (6.17)
% Accretion/(Dilution) (30.6%) (27.0%) (12.9%) (11.7%) (9.1%) (7.9%)
Pretax Synergies to Break-even 689 676 656 653 752 733
100% Cash
Pro Forma EPS $3.28 $4.00 $2.51 $2.81 $62.55 $71.57
$ Accretion/(Dilution) (1.67) (1.51) (0.35) (0.33) (6.72) (6.21)
% Accretion/(Dilution) (33.7%) (27.5%) (12.2%) (10.4%) (9.7%) (8.0%)
Pretax Synergies to Break-even 625 566 576 539 767 709
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Note: Diamond Purchase accounting acquisition of Prairie with 100% stock at $40
per share. Goodwill per year: $342 million without write-off.
(1) 25% in process R&D write-down.
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PROJECT PRAIRIE
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Diamond/Prairie -- Remaining Public Float Outstanding 80%,
25% In-process R&D Write-off
($ in million, except per share amount)
For Year Ended December 31,
--------------------------------------------------------------------
At $35 per share At $40 per share At $45 per share
---------------- ---------------- ----------------
1999 2000 1999 2000 1999 2000
---- ---- ---- ---- ---- ----
o All Stock(1)(2)
Stand Alone EPS for Diamond Shareholders $2.86 $3.14 $2.86 $3.14 $2.86 $3.14
Pro forma EPS 2.53 2.81 2.47 2.74 2.40 2.67
- ------------------------------------------------------------------------------------------------------------------------
$ Accretion/(Dilution) (0.32) (0.33) (0.39) (0.40) (0.45) (0.47)
% Accretion/(Dilution) (11.3%) (10.6%) (13.6%) (12.9%) (15.8%) (15.1%)
Pretax Synergies to Break-even 599 623 735 768 871 912
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o 55 Stock/45 Cash(2)
Stand Alone EPS for Diamond Shareholders $2.86 $3.14 $2.86 $3.14 $2.86 $3.14
Pro forma EPS 2.55 2.84 2.48 2.77 2.42 2.70
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$ Accretion/(Dilution) (0.30) (0.30) (0.37) (0.37) (0.44) (0.44)
% Accretion/(Dilution) (10.6%) (9.6%) (13.0%) (11.8%) (15.4%) (14.1%)
Pretax Synergies to Break-even 537 533 664 665 791 797
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o All Cash(2)
Stand Alone EPS for Diamond Shareholders $2.86 $3.14 $2.86 $3.14 $2.86 $3.14
Pro forma EPS 2.58 2.89 2.51 2.81 2.44 2.74
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$ Accretion/(Dilution) (0.28) (0.26) (0.35) (0.33) (0.42) (0.40)
% Accretion/(Dilution) (9.8%) (8.1%) (12.2%) (10.4%) (14.7%) (12.6%)
Pretax Synergies to Break-even 460 423 576 539 693 655
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- ----------
(1) Assumes purchase accounting.
(2) Assumes goodwill amortized over 25 years.
-19-
PROJECT PRAIRIE
- --------------------------------------------------------------------------------
Diamond/Prairie -- Remaining Public Float Outstanding 80%,
50% In-process R&D Write-off
($ in million, except per share amount)
For Year Ended December 31,
--------------------------------------------------------------------
At $35 per share At $40 per share At $45 per share
---------------- ---------------- ----------------
1999 2000 1999 2000 1999 2000
---- ---- ---- ---- ---- ----
o All Stock(1)(2)
Stand Alone EPS for Diamond Shareholders $2.86 $3.14 $2.86 $3.14 $2.86 $3.14
Pro forma EPS 2.59 2.86 2.53 2.80 2.47 2.74
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$ Accretion/(Dilution) (0.27) (0.28) (0.33) (0.34) (0.38) (0.41)
% Accretion/(Dilution) (9.4%) (9.0%) (11.5%) (11.0%) (13.5%) (12.9%)
Pretax Synergies to Break-even 502 525 621 654 741 782
- ------------------------------------------------------------------------------------------------------------------------
o 55 Stock/45 Cash(2)
Stand Alone EPS for Diamond Shareholders $2.86 $3.14 $2.86 $3.14 $2.86 $3.14
Pro forma EPS 2.61 2.90 2.55 2.83 2.49 2.77
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$ Accretion/(Dilution) (0.25) (0.25) (0.31) (0.31) (0.37) (0.37)
% Accretion/(Dilution) (8.7%) (7.8%) (10.8%) (9.8%) (12.8%) (11.8%)
Pretax Synergies to Break-even 439 435 550 551 661 666
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o All Cash(2)
Stand Alone EPS for Diamond Shareholders $2.86 $3.14 $2.86 $3.14 $2.86 $3.14
Pro forma EPS 2.64 2.99 2.58 2.88 2.51 2.82
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$ Accretion/(Dilution) (0.22) (0.20) (0.28) (0.26) (0.34) (0.32)
% Accretion/(Dilution) (7.7%) (6.3%) (9.8%) (8.2%) (11.9%) (10.1%)
Pretax Synergies to Break-even 362 325 462 425 562 525
- ------------------------------------------------------------------------------------------------------------------------
- ----------
(1) Assumes purchase accounting.
(2) Assumes goodwill amortized over 25 years.
-20-
PROJECT PRAIRIE
- --------------------------------------------------------------------------------
Recent Stock Price Performance(1)
[GRAPH]
-21-