Equity Capital Markets Overview

1. Equity Capital Markets Overview April 3, 2001

2. Equity Capital Markets Overview Market Commentary - Equity Market The major equity indices experienced substantial volatility and declines in 2000... Performance of Major Indices in 2000 Substantial Volatility and Declines for Major Indices in 2000 • Nasdaq plunged 39.3% - worst year since its inception in 1971 • Nasdaq peak-to-trough 53.8% plunge represented $3.3 trillion paper loss • S&P 500 down 10.1% - worst year since 1977 • S&P 500 down approximately 0.3% excluding Tech and M&T sectors • Stock selection critical - median appreciation of S&P 1500 stock was 17.7% … and 2001 has continued to be volatile as Greenspan indicates economic growth at present is “close to zero” Performance of Major Indices 2001 YTD Earnings and Multiples are Key Drivers for Equities in 2001 • Almost all tech market bellwethers (Cisco, Sun, Nortel, Dell, Oracle, EMC, Yahoo!, etc.) have missed earnings and/or issued cautious comments • Consumer spending and business investment have faded due to slumping consumer confidence and near-term revenue uncertainties • “Profits recession” - S&P 500 2001E EPS of (8.5)% in Q1; (7.0)% in Q2; (5.0)% in Q3 and 12.0% in Q4(1); economic recession possible • S&P P/E ratio increased from 14x in 1990 to 31x in 1999 and is currently 21x • All major indices negative in 2001 despite three cuts in the Fed Funds rate (1) Banc of America Securities estimates for S&P 500 earnings growth in 2001. S&P 500 earnings growth for calendar year 2001 is (2.7%).

3. Equity Capital Markets Overview Market Commentary - New Issue Market New equity issuance in 2000 was a record for total equity capital raised as 864 transactions raised $272.2 billion in net proceeds... New Equity Issuance 2000 by Month ($ Billions) Record Year for Capital Raising in 2000 • New issue volume of $272.2 billion through 864 transactions driven by Technology, Telecommunications and Health Care sectors • 431 IPOs raising $112.6 billion • 433 Follow-ons raising $159.6 billion • 339 withdrawn deals anticipated to raise $41.6 billion, representing a “failure rate” of approximately 27% • Average of $22.7 billion of equity capital raised per month …however, the new issue market has recently been characterized by extreme narrowness and limited “windows of opportunity” Recent New Equity Issuance ($ Billions) Limited Number of New Issues given Current Market Volatility • 96 transactions raising over $27.3 billion completed thus far in 2001 • New issue volume down 68% (#) and 72% ($) in Q1 2001 • 92 transactions expected to raise over $9.4 billion postponed in 2001 • Increasing focus on traditional valuation benchmarks (e.g. earnings) • Modest backlog - $21 billion in 97 transactions, including 79 IPOs Source: CommScan as of 4/1/01. Excludes all offerings less than $20mm and includes ADRs.

4. Equity Capital Markets Overview Market Commentary - Technology Equity Market Major technology indices experienced substantial volatility and declines in 2000... Performance of Technology Indices in 2000 Substantial Volatility and Declines for Technology Indices in 2000 • Nasdaq plunged 39.3% - worst year since its inception in 1971 • Nasdaq peak-to-trough 53.8% plunge represented $3.3 trillion paper loss • S & P Technology Index off 40.1% • S & P Technology Index off 32.5% in Q4 • S & P Technology peak-to-trough plunge of 52.2% … and 2001 has continued to be volatile as investors brace for what appears to be another difficult year Performance of Technology Indices in 2001 Technology Earnings Continue to Plummet • Disappointing earnings in Q4 00, Q1 01 and lower guidance for Q2 - Q4 01: • Almost all market bellwethers (Cisco, Sun, Nortel, Dell, Oracle, EMC, Yahoo!, etc.) have missed earnings and/or issued cautious comments • Estimated tech earnings of -31%, -29% and -17% for Q1 - Q3 01; Q4 01 forecasted “recovery” of 8% earnings vs. 15% one week ago • Limited visibility created by capital expenditure deceleration, excess inventories and slowing end-market demand • The S & P Technology sector is trading at 1.21x its earning growth rate (EGR) of 21.9% while non-techs trade at 1.35x their EGR of 13.5% Source: BAS research estimates, FirstCall and Factset as of 4/1/01.

5. Equity Capital Markets Overview Market Commentary - Technology New Issue Market Technology equity issuance in 2000 represented about 1/3 of this record-year in terms of total equity capital raised... New Tech Equity Issuance in 2000 ($ Bns) Record Year for Capital Raising in 2000 • New issue volume of $85.2 billion through 345 transactions representing 31.3% and 39.9%, respectively, of the total equity market • 183 IPOs raising $28.1 billion - 25.0% of all IPO dollars • 162 Follow-ons raising $57.1 billion - 35.8% of all follow-on dollars • 143 withdrawn deals anticipated to raise over $10 billion, representing a “failure rate” of approximately 29% • Average of $7.1 billion of equity capital raised per month but only $4.4 billion if Q1 2000 is excluded …however, the tech new issue market has recently been characterized by extreme narrowness and minimal “windows of opportunity” New Tech Equity Issuance in 2001 ($ Bns) Limited Number of New Issues given Current Market Volatility • New issue volume in Q1 2001 down 87% (#) and 79% ($) vs. Q1 2000 • New issue volume of $9.5 billion through 18 transactions in 2001 • Median price change from f/o: (22.2%) IPOs; (19.1%) SECs • Median price change from o/c: (4.7%) IPOs; (26.6%) SECs • Virtually no appetite for smaller, non-bellwether issues • Backlog of 33 transactions expected to raise ~$3 billion • 20 transactions expected to raise over $4.4 billion filed in 2001 • 49 transactions expected to raise over $3.9 billion postponed in 2001 Source: CommScan as of 4/1/01. Includes ADRs, excludes offerings less than $20mm.

6. Equity Capital Markets Overview Historical Market Drivers and Performance of Major Indices and Sectors in 2001 The equity market has been driven by strong corporate earnings, expanding P/E multiples and positive fund flows S&P 500 Forward P/E vs Forward EPS Growth(1) Expanding Domestic Net Equity Flows ($Billions) Following a difficult 2000, all major indices and sectors in BAS’ universe are in negative territory in 2001 2001 Returns of Major Indices 2001 Performance by Sector (BAS Universe) (1) Forward P/E multiples and forward EPS growth based on average IBES estimates. (2) Includes Strong Buy and Buy rated stocks. Source: CommScan, Factset 4/1/01.

7. Equity Capital Markets Overview Increasing Market Volatility and Decreasing Breadth for Nasdaq Stocks Increasing market volatility and a decrease in breadth has had an impact on the new issue market... Increasing Nasdaq Volatility(1) (Monthly Analysis) Very Selective Markets …however, the Nasdaq has historically increased during rate cuts by the Federal Reserve despite negative movement since the three cuts thus far in 2001 % of Nasdaq Stocks Above 150-day Moving Avg. Fed Easings Typically Catalyze Nasdaq Gains(2) No. of cuts: 24 Total decrease: 680 bp from 9.8% Duration: 39 months No. of cuts: 3 Total decrease: 75 bp from 6% Duration: 7 months No. of cuts: 3 Total decrease: 75 bp from 5.5% Duration: 2 months No. of cuts: >3 Total decrease: 150 bp from 6.5% Duration: ??? 1996 1997 1998 1999 2000 2001 (1) Defined as greater than a 3% change. (2) Source: Factset, Reuters, Ned Davis Research, Datastream, Wall Street Journal 1/4/01.

8. Equity Capital Markets Overview Market Overview for Initial Public Offerings The market for initial public offerings in 2000 was dominated by Technology and Telecommunica- tions companies 2000 IPO $ Volume Driven by Tech/Telecom Sectors Historical IPO Activity Summary Market volatility and poor performance of many prior IPOs has contributed to a difficult pricing environment and a decline in IPO volume IPO Pricing Relative to Original Filing Range Percent Change (Offer to Current) for Recent IPOs(1) (1) Based on median % performance. Source: CommScan 4/1/01, excludes all offerings less than $20mm and includes ADRs.

9. Equity Capital Markets Overview Market Overview for Follow-On Offerings Dollar volume of equity capital raised through follow-on offerings realized record levels in 2000, though aftermarket performance suffered Historical Follow-On Activity Summary 2001 Follow-On Market ($Vol) Follow-On Pricing Relative to Original Filing Price Percent Change (Offer to Current) for Recent Follow-Ons(1) Market volatility and price declines have created a difficult pricing environment for follow-ons (1) Based on median % performance. Source: CommScan 4/1/01, excludes all offerings less than $20mm and includes ADRs.

10. The New Issue Environment - Current Backlog Equity Capital Markets Overview New issue backlog of$21 billion is moderate given recent investor demand Number of Deals Dollar Volume ($Billions) IPO Backlog by Sector (by $ Volume) Follow-On Backlog by Sector (by $ Volume) The majority of equity backlog is from Technology, Health Care, Energy and Consumer companies Source: CommScan 4/1/01, completed transactions exclude offerings less than $20mm and includes ADRs.

11. The Technology New Issue Environment - Current Backlog by Sector Equity Capital Markets Overview The technology backlog (by dollar volume) represents less than 15% of the total equity backlog Number of Deals Dollar Volume ($Billions) Currently, the technology backlog is dominated by Telecom/ Optical companies Total Backlog by Sector based on # of Deals Total Backlog by Sector based on $ Volume Source: CommScan 4/1/01, completed transactions exclude offerings less than $20mm and includes ADRs.

12. Equity Capital Markets Overview Summary of Mutual Fund Flows Domestic Equity Fund Flows Domestic equity fund flows for the last five months have seen smaller net inflows than those in comparable prior periods Technology fund flows have been relatively weak since April 2000 Technology Fund Flows Source: AMG Data Services.