Exhibit 2

UVA-F-1351

DIAMOND CHEMICALS (A)

Frank Greystock's DCF Analysis of Merseyside Project

(Financial values in millions of British Pounds)

Assumptions
Annual Output (metric tons)
Output Gain/Original Output
Price/ton (pounds sterling)
Inflation Rate (prices and costs)
Gross Margin (ex. Deprec.)
Old Gross Margin
Tax Rate
Investment Outlay (mill.)
Energy Savings/Sales
Yr. 1-5
Yr. 6-10
Yr. 11-15

250,000
7.0%
541
3.0%
12.50%
11.5%
30.0%
9.00
1.25%
0.8%
0.0%

1
Year
Now
2001
1. Estimate of Incremental Gross Profit
New Output (tons)
267,500
Lost Output--Construction
(33,438)
New Sales (Millions)
126.63
New Gross Margin
13.8%
New Gross Profit
17.41
Old Output
Old Sales
Old Gross Profit

250,000
135.25
15.55

Lost sales in Rotterdam

Incremental Gross Profit

1.86

2. Estimate of Incremental Depreciation

New Depreciation
1.20
New Depreciation on tank cars
Old Depreciation on tank cars
3. Overhead
0.32
4. Prelim. Engineering Costs
0.50
5. Pretax Incremental Profit
-0.16
6. Tax Expense
-0.05

Discount rate
Depreciable Life (years)
Overhead/Investment
Salvage Value
WIP Inventory/Cost of Goods
Months Downtime, Construction
After-tax Scrap Proceeds
Preliminary Engineering Costs

2
2002
267,500
149.06
13.8%
20.50

3
2003
267,500
153.53
13.8%
21.11

4
2004
267,500
158.14
13.8%
21.74

5
2005
267,500
162.88
13.8%
22.40

10.0%
15
3.5%
0
3.0%
1.5
0
0.5

6
2006
267,500
167.77
13.3%
22.23

7
2007
267,500
172.80
13.3%
22.90

<== Note that discount rate should be set to 10 % for

exact comparability to case exhibit.

8
2008
267,500
177.98
13.3%
23.58

9
2009
267,500
183.32
13.3%
24.29

10
2010
267,500
188.82
13.3%
25.02

11
2011
267,500
194.49
12.5%
24.31

12
2012
267,500
200.32
12.5%
25.04

13
2013
267,500
206.33
12.5%
25.79

14
2014
267,500
212.52
12.5%
26.57

15
2015
267,500
218.90
12.5%
27.36

250,000
139.31
16.02

250,000
143.49
16.50

250,000
147.79
17.00

250,000
152.23
17.51

250,000
156.79
18.03

250,000
161.50
18.57

250,000
166.34
19.13

250,000
171.33
19.70

250,000
176.47
20.29

250,000
181.76
20.90

250,000
187.22
21.53

250,000
192.83
22.18

250,000
198.62
22.84

250,000
204.58
23.53

9.47

9.47

9.47

9.47

9.47

9.47

9.47

9.47

9.47

9.47

9.47

9.47

9.47

9.47

4.48

4.61

4.75

4.89

4.20

4.32

4.45

4.59

4.72

3.41

3.51

3.62

3.72

3.84

1.04

0.90

0.78
0.40

0.68
0.32

0.51
0.20
0.34
0.32

0.44
0.16
0.27
0.32

0.38
0.13
0.22
0.32

0.33
0.13
0.17
0.32

0.43
0.13
0.14
0.32

0.43
0.13
0.14
0.32

0.43
0.13
0.14
0.32

0.43

0.43

0.14
0.32

0.14
0.32

0.32

0.32

0.32

0.32

0.59
0.26
0.42
0.32

3.12
0.94

3.39
1.02

3.65
1.10

3.90
1.17

3.30
0.99

3.50
1.05

3.70
1.11

3.89
1.17

4.08
1.22

2.66
0.80

2.77
0.83

2.87
0.86

2.98
0.89

3.09
0.93

7. After-tax Profit
8. Cash Flow Adjustments
Less Capital Expenditures -9.00
Add back Depreciation
Less Added WIP inventory
Add inventory Rotterdam
After-tax Scrap Proceeds

-0.11

2.18

2.38
-2.00

2.56

2.73
2.12

2.31

2.45

2.59

2.72

2.86

1.86

1.94

2.01

2.09

2.16

1.20
0.31

1.04
-0.58

0.90
-0.12

0.78
0.00

0.68
0.00

0.59
0.00

0.51
0.00

0.44
0.00

0.38
0.00

0.33
0.00

0.43
0.00

0.43
0.00

0.43
0.00

0.43
0.00

0.43
-0.38

8. Free Cash Flow

-9.00

1.40

2.64

3.16

3.34

3.41

2.89

2.96

3.03

3.11

3.19

2.29

2.37

2.44

2.52

2.21

NPV =
IRR =

11.80
28.5%

0.00

Exhibit 1

UVA-F-1352

DIAMOND CHEMICALS (B)

ANALYSIS OF ROTTERDAM PROJECT

(Values in British Pounds)

Assumptions
Annual Output (metric tons)
250,000
Output Gain Per Year/Prior Year
2.0%
Maximum Possible Output
267,500
Price/ton (pounds sterling)
541
Inflation (prices and costs)
0.0%
Gross Margin Growth Rate/Year
0.80%
Maximum Possible Gross Margin
16.0%
Old Gross Margin
11.5%
Tax Rate
30.0%
Investment Outlay (millions)
Now
3.5
End, 2001
2.5
2002
1
2003
1

Setup and Labor Savings/Sales (yr.1)

Discount rate
Depreciable Life (years)
Overhead/Investment
Salvage Value
WIP Inventory/Cost of Goods Sold
Terminal Value of Right-of-Way
Months Downtime, Construction
2001
2002
2003
2004

0.0%
10.0%
15
3.5%
0
3.0%
35
5
4
3
0

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Year
Now
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
1. Estimate of Incremental Gross Profit
New Output
255,000 260,100 265,302 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500 267,500
Lost Output--Construction
(106,250) (86,700) (66,326)
0
New Sales (Millions)
80.47
93.81
107.65
144.72
144.72
144.72
144.72
144.72
144.72
144.72
144.72
144.72
144.72
144.72
144.72
New Gross Margin
11.6%
11.8%
12.1%
12.5%
13.0%
13.6%
14.4%
15.3%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
16.0%
New Gross Profit
9.33
11.05
12.99
18.02
18.76
19.67
20.80
22.17
23.15
23.15
23.15
23.15
23.15
23.15
23.15
Old Output
250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000
Old Sales
135.25
135.25
135.25
135.25
135.25
135.25
135.25
135.25
135.25
135.25
135.25
135.25
135.25
135.25
135.25
Old Gross Profit
15.55
15.55
15.55
15.55
15.55
15.55
15.55
15.55
15.55
15.55
15.55
15.55
15.55
15.55
15.55
Incremental Gross Profit
-6.23
-4.50
-2.57
2.47
3.20
4.12
5.25
6.62
7.60
7.60
7.60
7.60
7.60
7.60
7.60
2. Estimate of Incremental Depreciation
Yr. 1 Outlays
0.33
0.29
0.25
0.22
0.19
0.16
0.14
0.12
0.11
0.09
0.12
0.12
0.12
0.12
0.12
Yr. 2 Outlays
0.14
0.12
0.10
0.09
0.08
0.07
0.06
0.05
0.04
0.05
0.05
0.05
0.05
0.05
Yr. 3 Outlays
0.15
0.13
0.11
0.09
0.08
0.07
0.06
0.05
0.05
0.05
0.05
0.05
0.05
Total, New Depreciation
0.33
0.43
0.53
0.45
0.39
0.33
0.29
0.25
0.21
0.18
0.22
0.22
0.22
0.22
0.22
3. Overhead
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
4. Pretax Incremental Profit
-6.56
-4.94
-3.09
2.02
2.81
3.79
4.96
6.37
7.39
7.42
7.38
7.38
7.38
7.38
7.38
5. Tax Expense
-1.97
-1.48
-0.93
0.61
0.84
1.14
1.49
1.91
2.22
2.23
2.21
2.21
2.21
2.21
2.21
6. After-tax Profit
-4.59
-3.46
-2.17
1.41
1.97
2.65
3.47
4.46
5.17
5.19
5.17
5.17
5.17
5.17
5.17
7. Cash Flow Adjustments
Add back Depreciation
0.33
0.43
0.53
0.45
0.39
0.33
0.29
0.25
0.21
0.18
0.22
0.22
0.22
0.22
0.22
Less added WIP inventory
1.46
-0.35
-0.36
-0.96
0.02
0.03
0.03
0.04
0.03
0.00
0.00
0.00
0.00
0.00
0.00
Capital Spending
3.50
2.50
1.00
1.00
Terminal Value, land
35.00
8. Free Cash Flow
-3.50
-8.21
-3.68
-2.28
2.83
2.34
2.96
3.73
4.67
5.35
5.38
5.39
5.39
5.39
5.39
40.39
DCF, Rotterdam =
14.01
IR, Rotterdam =
17.9%
9. Adjustment for erosion in Merseyside volume:
Lost Merseyside Output
Lost Merseyside Revenue
Lost Merseyside Gross Profits
Lost Gross Profits after Taxes
Change in Merseyside Inventory
Total Effect on Free Cash Flow
DCF, Erosion Merseyside
(2.45)
DCF, Rotterdam Adjusted for Full
Erosion at Merseyside =
11.57

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)

17,500
9.47
1.09
0.76
0.28
(0.48)