Common use of REPORT OF INDEPENDENT ACCOUNTANTS Clause in Contracts

REPORT OF INDEPENDENT ACCOUNTANTS. In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Brazilian Investment Fund, Inc. (the "Fund") at December 31, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 4, 1991 (commencement of operations) through December 31, 1991, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000 February 9, 1996 FINANCIAL STATEMENTS --------- STATEMENT OF NET ASSETS --------- DECEMBER 31, 1994 VALUE SHARES (000) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND (98.7%) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS (96.8%) (Unless otherwise noted) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES (9.2%) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES (4.3%) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING (11.3%) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional (Common) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO (1.0%) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------

REPORT OF INDEPENDENT ACCOUNTANTS. To the Board of Directors and Shareholders of Orbitex Life Sciences & Biotechnology Fund, Inc. In our opinion, the accompanying statement of net assets and liabilities, including the schedule of investments, and the related statements of operations operations, of cash flows and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Brazilian Investment Orbitex Life Sciences & Biotechnology Fund, Inc. (the "Fund") at December October 31, 19952001, and the results of its operations for the year then endedoperations, its cash flows, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 4November 2, 1991 2000 (commencement of operations) through December October 31, 19912001, in conformity with accounting principles generally accepted accounting principlesin the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our auditsaudit. We conducted our audits audit of these financial statements in accordance with auditing standards generally accepted auditing standards in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our auditsaudit, which included confirmation of securities at December October 31, 1995 2001 by correspondence with the custodians custodian and brokers and the application of alternative auditing procedures where confirmations from brokers were not receivedbrokers, provide provides a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York December 20, 2001 -------------------------------------------------------------------------------- ORBITEX LIFE SCIENCES & BIOTECHNOLOGY FUND, INC. -------------------------------------------------------------------------------- SEMI-ANNUAL REPORT April 30, 2002 A PRODUCT OF THE ORBITEX FAMILY OF FUNDS -------------------------------------------------------------------------------- Dear Shareholder: The markets have continued to wrestle with economic weaknesses that developed prior to the opinion expressed aboveevents of September 11, 2001, as well as with subsequent events that have permeated the nation's psychology. PRICE WATERHOUSE LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx XxxxDuring the past 18 months investors have regarded the biotechnology sector as an extension of the broader technology sector, Xxx Xxxx 00000 February 9causing the biotech index (BTK) to mimic and directionally follow the NASDAQ index. As the markets in general and the technology sector specifically have continued to struggle, 1996 FINANCIAL STATEMENTS --------- STATEMENT OF NET ASSETS --------- DECEMBER 31investors' flight from uncertainty has spilled over to the biotech sector in 2002. While it was not surprising to see a 1Q2002 decline in the BTK (in 8 out of the 11 previous years, 1994 VALUE SHARES (000) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND (98.7%) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS (96.8%) (Unless otherwise the BTK had been down in 1Q), the weakness and selling pressure have continued into the second quarter. The current weakness in the sector can be the result of the combination of a variety of occurrences including: a weakness in the NASDAQ fueled by poor tech earnings, accounting problems and lack of investor confidence, as well as a large number of clinical failures and regulatory rejections compounding investors' fear of uncertainty in the sector. It should be noted) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES (9.2%) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES (4.3%) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING (11.3%) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional (Common) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO (1.0%) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia, though that the fundamentals of the industry are as strong as ever. The sector is very well capitalized, and a majority of companies have enough cash to sustain operations for the next 24-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------36 months without the need for additional financing from the equity markets. Companies are also making impressive gains in their clinical programs. Demographic trends and government policy are still very favorable and the industry has generally been spared accounting and research analyst scandals. The Fund continues to concentrate on the leading edge of healthcare innovation, as well by identifying those medical technologies that are likely to have the greatest impact on healthcare over the next several years. The lack of market visibility has not hampered the ability for healthcare companies to generate profits growth. A continued optimistic outlook, given solid fundamentals and pricing, also remains. The regulatory reimbursement environment also continues to be a positive. Stocks in healthcare services have largely seen positive price movements in their stocks given the good earnings growth and near-term outlook. However, valuations have not increased dramatically and are still quite attractive, as earnings growth has far outpaced price appreciation in the latest time period.

REPORT OF INDEPENDENT ACCOUNTANTS. In our opinion, the accompanying statement of net assets consolidated balance sheet and the related consolidated statements of operations and operations, of changes in net assets shareholders' equity and the financial highlights of cash flows present fairly, in all material respects, the financial position of The Brazilian Investment FundWorld Carpets, Inc. and its subsidiary (the "FundCompany") at December 31June 28, 19951998, and the results of its their operations and their cash flows for the year then endedended June 28, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 4, 1991 (commencement of operations) through December 31, 19911998, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the FundCompany's management; our responsibility is to express an opinion on these financial statements based on our auditsaudit. We conducted our audits audit of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide audit provides a reasonable basis for the opinion expressed above. PRICE WATERHOUSE /s/ PricewaterhouseCoopers LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx XxxxAtlanta, Xxx Xxxx 00000 February 9GA September 21, 1996 FINANCIAL STATEMENTS --------- 1998 WORLD CARPETS, INC. CONSOLIDATED BALANCE SHEET (IN THOUSANDS OF DOLLARS EXCEPT FOR SHARE AMOUNTS) ASSETS Current assets Cash and restricted cash........................................... $ 145 Accounts receivable, less allowance for doubtful accounts of $1,777............................................................ 53,918 Inventories 75,770 Prepaid expenses................................................... 355 Deferred income taxes 10,890 -------- Total current assets............................................. 141,078 Property, plant and equipment, net 71,283 Other assets......................................................... 8,867 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Book overdraft..................................................... $ 6,712 Current maturities of long-term debt............................... 5,570 Accounts payable 36,078 Accrued liabilities 15,133 Estimated product claims........................................... 4,658 -------- Total current liabilities 68,151 Long-term debt, less current maturities 78,971 Estimated product claims............................................. 968 Deferred income taxes................................................ 1,920 -------- 150,010 SHAREHOLDERS' EQUITY Class A Preferred Stock, voting, 8% cumulative, $100 par value, 1,000,000 shares authorized; 3,000 shares issued and outstanding.... 300 Class B Preferred Stock, nonvoting, 10% noncumulative, $100 par val- ue, 100,000,000 shares authorized; 190,080 shares issued; 151,280 shares outstanding 19,008 Class C Common Stock, nonvoting, no par value, $100 stated value, 100,000,000 shares authorized; 126,920 shares issued and outstand- ing 12,692 Retained earnings 43,098 -------- 75,098 Less treasury stock, 38,800 shares of Class B Preferred Stock, at cost (3,880) -------- 71,218 -------- Commitments and contingencies........................................ -- WORLD CARPETS, INC. CONSOLIDATED STATEMENT OF NET ASSETS --------- DECEMBER 31OPERATIONS YEAR ENDED JUNE 28, 1994 VALUE Net sales $430,932 Costs and expenses Cost of goods sold 337,849 Interest expense..................................................... (8,094) Other income, net.................................................... 2,209 The accompanying notes are an integral part of these financial statements. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (IN THOUSANDS OF DOLLARS EXCEPT FOR SHARE AMOUNTS) CLASS A CLASS B CLASS C PREFERRED STOCK PREFERRED STOCK COMMON STOCK ----------------- --------------- --------------- RETAINED TREASURY SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT EARNINGS STOCK TOTAL -------- ------- ------- ------- ------- ------- -------- -------- ------ Balance at June 29, 1997.................. 3,000 $ 300 190,080 $19,008 126,920 $12,692 31,835 (0003,880) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND 59,955 -------- ------- ------- ------- ------- ------- ------ ------ ------ Dividends paid......... (98.7%) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS (96.8%24) (Unless otherwise noted24) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES Net income............. Balance at June 28, -------- ------- ------- ------- ------- ------- 11,287 ------ ------ 11,287 ------ 1998.................. 3,000 $ 300 190,080 $19,008 126,920 $12,692 43,098 (9.2%3,880) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES 71,218 ======== ======= ======= ======= ======= ======= ====== ====== ====== The accompanying notes are an integral part of these financial statements. WORLD CARPETS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS Cash flows from operating activities Adjustments to reconcile net income to net cash provided by Depreciation..................................................... 8,059 Amortization..................................................... 1,030 Changes in operating assets and liabilities Accounts receivable............................................. 2,165 Inventories..................................................... 2,291 Accrued liabilities and estimated product claims................ 2,045 ------- Net cash provided by operating activities..................... 14,445 ------- Cash flows from investing activities Refund from business acquisition.................................. 1,859 Proceeds from sale of property, plant and equipment............... 1,109 Purchases of property, plant and equipment........................ (4.3%11,217) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING ------- Net cash used in investing activities......................... (11.3%7,354) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional ------- Cash flows from financing activities Proceeds from issuance of long-term debt.......................... 1,311 ------- Net cash used in financing activities (Common7,844) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO ------- Net decrease in cash................................................ (1.0%753) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------Cash and restricted cash, beginning of year......................... 898 ------- Cash and restricted cash, end of year............................... $ 145

REPORT OF INDEPENDENT ACCOUNTANTS. To the Board of Directors and Shareholders of XXXX.xxx In our opinion, the accompanying statement of net assets consolidated balance sheets and the related consolidated statements of operations operations, of shareholders' equity (deficit) and of changes cash flows expressed in net assets and the financial highlights U.S. dollars present fairly, in all material respects, the financial position of The Brazilian Investment FundXXXX.xxx and its subsidiaries at June 30, Inc. (the "Fund") at December 312000 and 1999, 1995, and the results of its their operations for the year then ended, the changes in its net assets and their cash flows for each of the two three years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 430, 1991 (commencement of operations) through December 31, 19912000, in conformity with accounting principles generally accepted accounting principlesin the United States. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the FundCompany's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted auditing standards in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE /s/ PRICEWATERHOUSECOOPERS LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx XxxxSan Jose, Xxx Xxxx 00000 February 9California July 17, 1996 FINANCIAL STATEMENTS --------- STATEMENT OF NET ASSETS --------- DECEMBER 312000 38 XXXX.XXX CONSOLIDATED BALANCE SHEET JUNE 30, 1994 VALUE SHARES 2000 1999 (000) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND (98.7%) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS (96.8%IN U.S. DOLLARS) (Unless otherwise notedIN THOUSANDS, EXCEPT PER SHARE AMOUNTS) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES ASSETS Current assets: Property and equipment, net................................. 7,737 2,194 Intangible assets, net...................................... 11,828 18,635 Investments in joint venture................................ 894 -- Receivable from related parties............................. 268 -- Other assets................................................ 223 351 $156,038 $47,582 ======== ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Minority interests.......................................... -- 119 9,221 2,464 Commitments and contingencies (9.2%Note 11) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES Mandatorily Redeemable Convertible Preference Shares........ -- 37,295 Mandatorily Redeemable Convertible Preference Share Shareholders' equity: Preference Shares: $1.00 par value; 3,750 and no shares authorized; no shares issued or outstanding............ -- -- Ordinary Shares: $0.133 par value; 75,000 and 45,000 outstanding............................................ 5,425 947 Additional paid-in capital................................ 221,399 38,055 Notes receivables from shareholders....................... (4.3%2,067) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B-- Deferred stock compensation............................... (15,057) (19,453) Accumulated deficit....................................... (62,950) (11,883) Accumulated other comprehensive income: Cumulative translation adjustment...................... 67 37 Total shareholders' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING equity........................ 146,817 7,703 $156,038======== $47,582======= ---------- (11.3%IN U.S. DOLLARS) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional --------- (CommonIN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO Net revenues: Advertising............................................... $ 11,013 $ 561 $ -- Software products......................................... 2,943 2,248 2,499 E-commerce................................................ 214 18 -- -------- ------- ------ 14,170 2,827 2,499 -------- ------- ------ Cost of revenues: Advertising(a)............................................ 8,950 1,156 -- Software products(a)...................................... 1,640 1,285 674 E-commerce................................................ 325 32 -- Stock-based compensation.................................. 605 32 -- -------- ------- ------ 11,520 2,505 674 -------- ------- ------ Gross profit................................................ 2,650 322 1,825 -------- ------- ------ Operating expenses: Sales and marketing(a).................................... 17,476 1,405 622 Product development(a).................................... 7,358 1,512 452 General and administrative(a)............................. 6,951 2,085 941 Stock-based compensation.................................. 18,460 3,360 -- Amortization of intangible assets......................... 6,807 1,745 43 -------- ------- ------ Total operating expenses.......................... 57,052 10,107 2,058 -------- ------- ------ Loss from operations........................................ (1.0%54,402) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%9,785) Rhodia(233) Interest income, net........................................ 3,801 442 40 -------- ------- ------ Loss before loss in equity investment and minority interest.................................................. (50,601) (9,343) (193) Loss on equity investment................................... (501) -- -- Minority interest in loss................................... 119 47 11 -------- ------- ------ Net loss (50,983) (9,296) (182) Accretion on Mandatorily Redeemable Convertible Preference Shares.................................................... (84) (98) (71) -------- ------- ------ Net loss attributable to ordinary shareholders $(51,067) $(9,394) $ (253) ======== ======= ====== Basic and diluted net loss per share attributable to ordinary shareholders..................................... $ (3.44) $ (1.72) $(0.05) ======== ======= ====== Shares used in computing basic and diluted net loss per share..................................................... 14,836 5,466 4,962 ======== ======= ====== Basic and diluted pro forma net loss per share (unaudited)............................................... $ (1.58) Shares used in computing pro forma basic and diluted net loss per share (unaudited)................................ 32,281 ======== --------------- (a) Excludes stock-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------based compensation. See Note 9.

REPORT OF INDEPENDENT ACCOUNTANTS. In our opinion, the accompanying statement of net assets consolidated balance sheets and the related consolidated statements of operations and stockholders' equity and of changes in net assets and the financial highlights cash flows present fairly, in all material respects, the financial position of The Brazilian Investment Fund, Harmonic Inc. (the "Fund") and its subsidiaries at December 31, 19951998 and 1997, and the results of its their operations for the year then ended, the changes in its net assets and their cash flows for each of the two three years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 4, 1991 (commencement of operations) through December 31, 1991, 1998 in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the FundCompany's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE /s/ PRICEWATERHOUSECOOPERS LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx-------------------------------------- PRICEWATERHOUSECOOPERS LLP San Jose, Xxx Xxxx 00000 February 9CA January 20, 1996 FINANCIAL STATEMENTS 1999, except as to Note 14, which is as of March 15, 1999 31 CONSOLIDATED BALANCE SHEETS --------------------- 1998 1997 --------- -------- (IN THOUSANDS, EXCEPT SHARE DATA) ASSETS Current assets: Cash and cash equivalents................................. $ 9,178 $13,670 Accounts receivable, net.................................. 17,646 16,458 Inventories............................................... 22,385 15,474 Prepaid expenses and other assets......................... Total current assets.............................. 1,175 -------- 50,384 1,774 ------- 47,376 Notes receivable............................................ -- 1,300 Property and equipment, net................................. 10,726 10,077 Intangibles and other assets................................ LIABILITIES AND STOCKHOLDERS' EQUITY 1,314 -------- $ 62,424 ======== 134 ------- $58,887 ======= Current liabilities: Long-term debt, less current portion........................ 400 -- Other non-current liabilities............................... 484 352 Commitments and Contingencies (Notes 11 and 13) Stockholders' equity: Preferred Stock, $.001 par value, 5,000,000 shares authorized; no shares issued or outstanding............ -- -- Common Stock, $.001 par value, 50,000,000 shares authorized; 11,725,844 and 10,414,297 shares issued and outstanding............................................ 12 10 Capital in excess of par value............................ 70,924 55,917 Accumulated deficit....................................... (27,472) (6,019) Accumulated other comprehensive income.................... 10 23 -------- ------- -------- ------- $ 62,424 $58,887 ======== ======= The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF NET ASSETS --------- OPERATIONS 1998 ----------- (IN THOUSANDS, 1997 1996 ---------- ---------- EXCEPT PER SHARE DATA) Net sales................................................... $ 83,857 $74,442 $60,894 Cost of sales............................................... Gross profit................................................ Operating expenses: 53,302 -------- 30,555 -------- 39,837 ------- 34,605 ------- 33,163 ------- 27,731 ------- Acquired in-process technology............................ Total operating expenses............................... Income (loss) from operations............................... 14,000 -------- 52,498 -------- (21,943) -- ------- 30,099 ------- 4,506 -- ------- 22,527 ------- 5,204 Interest and other income, net.............................. Income (loss) before income taxes........................... 490 -------- (21,453) 682 ------- 5,188 1,025 ------- 6,229 Provision for income taxes.................................. Net income (loss)........................................... Net income (loss) per share: -- -------- $(21,453) ======== 259 ------- $ 4,929 ======= 311 ------- $ 5,918 ======= Basic.................................................. Diluted................................................ Weighted average shares: $ (1.85) ======== $ (1.85) ======== $ 0.48 ======= $ 0.43 ======= $ 0.59 ======= $ 0.52 ======= Basic.................................................. Diluted................................................ 11,622 ======== 11,622 ======== 10,345 ======= 11,523 ======= 10,106 ======= 11,474 ======= The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY ACCUMULATED COMMON STOCK CAPITAL IN OTHER --------------- EXCESS OF ACCUMULATED COMPREHENSIVE STOCKHOLDERS' COMPREHENSIVE SHARES AMOUNT PAR VALUE DEFICIT INCOME EQUITY INCOME(LOSS) (IN THOUSANDS) Balance at December 31, 1995..................... 9,904 $10 $53,865 $(16,866) $ -- $ 37,009 Net income................. -- -- -- 5,918 -- 5,918 $ 5,918 Other comprehensive income................... $ 5,918 ======== Exercise of stock options.................. 208 -- 240 -- -- 240 Issuance of Common Stock under Stock Purchase Plan..................... 49 -- 474 -- -- 474 Balance at December 31, 1996..................... 10,161 10 54,579 (10,948) -- 43,641 Net income................. -- -- -- 4,929 -- 4,929 $ 4,929 Currency translation....... -- -- -- -- 23 23 23 Other comprehensive Exercise of stock options.................. 185 -- 612 -- -- 612 Issuance of Common Stock under Stock Purchase Plan..................... 68 -- 726 -- -- 726 Balance at December 31, 1997..................... 10,414 10 55,917 (6,019) 23 49,931 Net loss................... -- -- -- (21,453) -- (21,453) $(21,453) Currency translation....... -- -- -- -- (13) (13) (13) Other comprehensive loss... Exercise of stock $(21,466)======== options.................. 187 -- 784 -- -- 784 Issuance of Common Stock under Stock Purchase Plan..................... 87 -- 830 -- -- 830 Acquisition of New Media Communication Ltd........ 1,038 2 13,393 -- -- 13,395 1998..................... 11,726 $12 $70,924 $(27,472) $ 10 $ 43,474 ====== === ======= ======== ==== ======== Balance at December 31, The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 1994 VALUE SHARES 1998 1997 1996 (000IN THOUSANDS) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND Cash flows from operating activities: Net income (98.7%loss)......................................... $(21,453) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS $ 4,929 $ 5,918 Adjustments to reconcile net income (96.8%loss) to net cash (used in) provided by operating activities: Depreciation and amortization............................. 4,283 3,441 2,506 Acquired in-process technology............................ Changes in assets and liabilities, net of effects of acquisition: Accounts receivable.................................... 14,000 (1,040) -- (3,815) -- (6,841) Inventories............................................ (6,393) (Unless otherwise noted692) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES (9.2%5,606) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES Prepaid expenses and other assets...................... 1,697 139 (4.3%1,848) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING Accounts payable....................................... 3,187 (11.3%1,896) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional 3,403 Accrued and other liabilities.......................... 3,694 (Common140) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO 2,781 Net cash (1.0%used in) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS provided by operating activities........................................ (2.9%2,025) Rhodia1,966 313 Cash flows used in investing activities: Acquisition of property and equipment..................... Acquisition of New Media Communication Ltd., net of cash received............................................... (4,384) (280) (4,767) -- (6,743) -- Long-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES term advances........................................ -- (9.1%1,300) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS -- Net cash used in investing activities................ Cash flows from financing activities: (2.5%4,664) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%6,067) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------(6,743) Proceeds from issuance of Common Stock.................... 1,614 1,338 714 Borrowings under bank line and term loan.................. 1,377 -- -- Repayments under bank line and term loan.................. (800) -- -- Net cash provided by financing activities............ Effect of exchange rate changes on cash and cash equivalents............................................... 2,191 6 1,338 23 714 -- Net decrease in cash and cash equivalents................... (4,492) (2,740) (5,716) Cash and cash equivalents at beginning of period............ 13,670 16,410 22,126 Cash and cash equivalents at end of period.................. Supplemental disclosure of cash flow information: $ 9,178======== $13,670======= $16,410======= Interest paid during the period........................... $ 80 $ -- $ 21 Income taxes paid during the period....................... $ 146 $ 323 $ 285 The accompanying notes are an integral part of these consolidated financial statements. 35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Harmonic Inc. ("Harmonic" or the "Company") designs, manufactures and markets digital and fiber optic systems for delivering video, voice and data services over cable, satellite and wireless networks. Our advanced solutions enable cable television and other network operators to provide a range of broadcast and interactive broadband services that include high-speed Internet access, telephony and video on demand. We offer a broad range of fiber optic transmission and digital headend products for hybrid fiber coax, satellite and wireless networks, and our acquisition of New Media Communication Ltd. in January 1998 has allowed us to develop and expand our product offerings to include high-speed data delivery software and hardware.

REPORT OF INDEPENDENT ACCOUNTANTS. To the Shareholders of Avalon Cable of Michigan, Inc. In our opinion, the accompanying statement of net assets consolidated balance sheets and the related consolidated statements of operations and of changes in net assets shareholders' deficit and the financial highlights of cash flows present fairly, in all material respects, the financial position of The Brazilian Investment FundCable Michigan, Inc. and subsidiaries (collectively, the "FundCompany") at December 31, 19951996 and 1997 and November 5, 1998, and the results of its their operations for the year then ended, the changes in its net assets and their cash flows for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 4, 1991 (commencement of operations) through December 31, 19911996 and 1997 and the period from January 1, 1998 to November 5, 1998, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the FundCompany's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE /s/ PRICEWATERHOUSECOOPERS LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx XxxxNew York, Xxx Xxxx 00000 February 9New York March 30, 1996 FINANCIAL 1999 65 CABLE MICHIGAN, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS 1997 1998 ASSETS (DOLLARS IN THOUSANDS) LIABILITIES AND SHAREHOLDERS' DEFICIT Accounts payable............................................ 5,564 8,370 Advance xxxxxxxx and customer deposits...................... 2,242 1,486 Accrued taxes............................................... 167 1,035 Accrued cable programming expense........................... 2,720 5,098 Accrued expenses............................................ 4,378 2,052 Accounts payable to related parties......................... 1,560 343 Total current liabilities................................... 16,631 33,384 Long-term debt.............................................. 143,000 120,000 Deferred income taxes....................................... 22,197 27,011 Total liabilities........................................... 181,828 180,395 Minority interest........................................... 14,643 14,690 Commitments and contingencies (Note 11)..................... -- -- Preferred Stock............................................. -- -- Common stock................................................ -- -- Common shareholders' deficit................................ (53,874) (63,865) Total Liabilities and Shareholders' Deficit................. $142,597======== $131,220======== 66 CABLE MICHIGAN, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS --------- STATEMENT OF NET ASSETS --------- OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994 VALUE SHARES (000) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND (98.7%) -------------------------------------------------- FOR THE PERIOD FROM ------------------------ JANUARY 1, 1998 TO 1996 1997 NOVEMBER 5, 1998 ---------- BRAZILIAN PREFERRED STOCKS (96.8%) (Unless otherwise noted) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES (9.2%) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES (4.3%) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING (11.3%) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional (Common) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO (1.0%) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- --------------------------------

REPORT OF INDEPENDENT ACCOUNTANTS. In our opinion, the accompanying statement of net assets and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of The Brazilian Investment Fund, Inc. (the "Fund") at December 31, 19951996, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the four five years in the period then ended and for the period June 4, 1991 (commencement of operations) through December 31, 1991ended, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 1996 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, Xxx Xxxx 00000 February 910, 1996 FINANCIAL STATEMENTS --------- STATEMENT 1997 The Brazilian Investment Fund, Inc. Investment Summary as of December 31, 1995 ----------------------------------------------------------------- ------------ ----------------------------------------------------------------- ------------ HISTORICAL INFORMATION TOTAL RETURN (%) --------------------------------------- ----------- NET ASSET VALUE (2) INDEX (1)(3)** ----------------------- -------------- ----------- AVERAGE AVERAGE CUMULATIVE ANNUAL CUMULATIVE ANNUAL ----------------------- -------------- ----------- ONE YEAR -26.61% -26.61% -20.24% -20.24% SINCE INCEPTION* 135.61 20.59 180.44 25.20 PAST PERFORMANCE IS NOT PREDICTIVE OF NET ASSETS --------- FUTURE PERFORMANCE. ----------------------------------------------------------------- ------------ RETURNS AND PER SHARE INFORMATION XXXXX REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC YEARS ENDED DECEMBER 31, : 1991* 1992 1993 1994 VALUE SHARES 1995 Net Asset Value Per Share $ 63.31 $ 55.28 $ 83.58 $ 129.97 $ 64.14 Income Dividends - - - $ 1.80 - Capital Gains Distributions - - $ 7.06 $ 6.65 $ 37.73 Total Return (0002) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND 26.62% (98.712.68%) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS 72.52% 68.32% (96.826.61%) Index Total Return (Unless otherwise noted3) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES ** 3.48% 0.32% 99.45% 69.83% (9.220.24%) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES (4.3%) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING (11.3%) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional (Common) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO (1.0%) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------)

REPORT OF INDEPENDENT ACCOUNTANTS. To the Members of Deepwater Holdings, L.L.C. In our opinion, the accompanying statement of net assets consolidated balance sheets and the related consolidated statements of operations operations, of cash flows and of changes in net assets and the financial highlights members' equity present fairly, in all material respects, the financial position of The Brazilian Investment FundDeepwater Holdings, Inc. L.L.C. (a Delaware Limited Liability Company) and its subsidiaries (the "FundCompany") at December 31, 19952000 and 1999, and the results of its their operations and their cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 4, 1991 (commencement of operations) through December 31, 19912000 and the period from inception (September 30, 1999) to December 31, 1999, in conformity with accounting principles generally accepted accounting principlesin the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the FundCompany's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted auditing standards in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, audits provide a reasonable basis for the opinion expressed aboveour opinion. PRICE WATERHOUSE /s/ PricewaterhouseCoopers LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx XxxxHouston, Xxx Xxxx 00000 February 9Texas March 28, 1996 FINANCIAL 2001 76 2000 1999 Property, plant and equipment Property, plant and equipment............................. 929,211 890,833 Less: accumulated depreciation and amortization........... (695,976) (677,839) Property, plant and equipment, net................ 233,235 212,994 Other noncurrent assets..................................... 4,181 5,679 Total assets...................................... $ 283,544 $ 254,025 ========= ========= LIABILITIES AND MEMBERS' EQUITY Current liabilities Accounts payable, trade................................... $ 9,139 $ 3,477 Advances from affiliates.................................. 4,357 -- Gas imbalances............................................ 8,446 23,105 Commitments and contingencies ========= ========= See accompanying notes. 74 77 DEEPWATER HOLDINGS, L.L.C. AND SUBSIDIARIES (A LIMITED LIABILITY COMPANY) CONSOLIDATED STATEMENTS --------- STATEMENT OF NET ASSETS --------- OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 VALUE SHARES 2000 AND THE PERIOD FROM INCEPTION (000SEPTEMBER 30, 1999) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND TO DECEMBER 31, 1999 (98.7%IN THOUSANDS) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS (96.8%) (Unless otherwise noted) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES (9.2%) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES (4.3%) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING (11.3%) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional (Common) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO (1.0%) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------2000 -------- 1999 ------- Revenues Transportation services................................... $ 62,327 $13,461 Dehydration services...................................... Expenses 2,456 -------- 67,122 -------- 493 ------- 15,861 ------- Operations and maintenance................................ 25,377 8,185 Depreciation and amortization............................. 18,138 4,112

REPORT OF INDEPENDENT ACCOUNTANTS. To the Board of Directors and Stockholder of El Paso Energy Partners Company: In our opinion, the accompanying consolidated balance sheet presents fairly, in all material respects, the financial position of El Paso Energy Partners Company (the "Company") and its subsidiary at December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. This financial statement is the responsibility of net assets the Company's management; our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit of this statement in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet, assessing the accounting principles used and significant estimates made by management, and evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion. /s/ PRICEWATERHOUSECOOPERS LLP Houston, Texas April 18, 2002 EL PASO ENERGY PARTNERS FINANCE CORPORATION BALANCE SHEETS WITH REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2001 AND 2000 (A WHOLLY OWNED SUBSIDIARY OF EL PASO ENERGY PARTNERS, L.P.) BALANCE SHEETS DECEMBER 31, 2001 2000 Total assets...................................... $ -- $ -- ======= ======= STOCKHOLDER'S EQUITY Common stock, $1.00 par value, 1,000 shares authorized, issued and outstanding.................................... $ 1,000 $ 1,000 Contribution receivable from parent......................... (1,000) (1,000) Total stockholder's equity........................ $ -- $ -- ======= ======= See accompanying note. (A WHOLLY OWNED SUBSIDIARY OF EL PASO ENERGY PARTNERS, L.P.) NOTE TO BALANCE SHEETS NOTE 1 -- ORGANIZATION El Paso Energy Partners Finance Corporation, a Delaware corporation and wholly owned subsidiary of El Paso Energy Partners, L.P., was formed on April 30, 1999 for the sole purpose of co-issuing debt securities with El Paso Energy Partners, L.P. (the Partnership), a publicly held Delaware master limited partnership. The Partnership provides gathering, transportation, processing, fractionation, storage and other related statements activities for producers of natural gas, natural gas liquids and oil. The Partnership owns or has interests in natural gas and oil pipeline systems, offshore platforms, natural gas storage facilities, producing oil and natural gas properties, natural gas liquids gathering and transportation pipelines, fractionation plants and a natural gas processing plant. Our contribution receivable was generated from the initial capitalization of us. We have not conducted any operations and all activities have related to the co-issuance of changes in net assets the Partnership's senior subordinated notes. To the Board of Directors and Stockholder of El Paso Energy Partners Finance Corporation: In our opinion, the financial highlights accompanying balance sheets present fairly, in all material respects, the financial position of The Brazilian Investment Fund, Inc. El Paso Energy Partners Finance Corporation (the "FundCompany") at December 31, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended 2001 and the financial highlights for each of the four years in the period then ended and for the period June 4, 1991 (commencement of operations) through December 31, 1991, 2000 in conformity with accounting principles generally accepted accounting principlesin the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the FundCompany's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted auditing standards in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements balance sheets are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statementsbalance sheets, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement balance sheet presentation. We believe that our audits, which included confirmation audits of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, balance sheets provide a reasonable basis for the opinion expressed aboveour opinion. PRICE WATERHOUSE /s/ PRICEWATERHOUSECOOPERS LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx XxxxHouston, Xxx Xxxx 00000 February 9Texas April 15, 1996 FINANCIAL STATEMENTS --------- STATEMENT OF NET ASSETS --------- DECEMBER 312002 EL PASO ENERGY PARTNERS, 1994 VALUE SHARES (000) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND (98.7%) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS (96.8%) (Unless otherwise noted) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES (9.2%) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES (4.3%) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING (11.3%) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional (Common) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO (1.0%) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------L.P. EXHIBIT LIST Each exhibit identified below is filed as part of this report. EXHIBIT NUMBER DESCRIPTION -------------- -----------

REPORT OF INDEPENDENT ACCOUNTANTS. To the Stockholders and Board of Directors of Cypress Semiconductor Corporation: In our opinion, the accompanying statement of net assets consolidated balance sheets and the related consolidated statements of operations operations, stockholders' equity and of changes in net assets and the financial highlights cash flows present fairly, in all material respects, the financial position of The Brazilian Investment FundCypress Semiconductor Corporation and its subsidiaries at January 3, Inc. (the "Fund") at 1994 and December 3128, 19951992, and the results of its their operations for the year then ended, the changes in its net assets and their cash flows for each of the two three years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 4January 3, 1991 (commencement of operations) through December 31, 19911994, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the FundCompany's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx XxxxSan Jose, Xxx Xxxx 00000 February 9, 1996 FINANCIAL STATEMENTS --------- STATEMENT OF NET ASSETS --------- DECEMBER 31California January 25, 1994 VALUE SHARES 28 QUARTERLY FINANCIAL DATA JANUARY 3, SEPTEMBER 27, JUNE 28, MARCH 29, 1994 1993 1993 1993 ---------- (000IN THOUSANDS, ------------- EXCEPT PER SHARE -------- DATA) --------------------------------------------------------- --------- Revenues...................... $ 83,012 $77,037 $ 74,753 $69,710 Gross margin.................. 35,352 31,686 29,526 28,127 Net income (loss)............. (4,088) 6,077 3,605 2,449 Net income (loss) per share... $ (0.11) ---------- ---------- $ 0.16 ------------- ------------- $ 0.10 -------- -------- $ 0.07 --------- --------- 1992 1992 1992 1992 ------------- -------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Revenues.................... $ 67,386 $65,254 $ 65,793 $73,809 Gross margin................ 25,993 26,787 26,420 34,883 Net income (loss)........... (23,735) 472 (1,663) 3,916 Net income (loss) per share..................... $ (0.66) $ 0.01 $ (0.04) $ 0.10 ------------ BRAZILIAN INVESTMENT FUND (98.7%) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS (96.8%) (Unless otherwise noted) --------------------------------------------------------- ------------ ------------- APPLIANCES & HOUSEHOLD DURABLES (9.2%) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES (4.3%) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING (11.3%) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional (Common) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO (1.0%) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- --------------------- -------- --------- ---------

REPORT OF INDEPENDENT ACCOUNTANTS. In our opinion, the accompanying statement of net assets consolidated balance sheets and the related consolidated statements of operations and stockholders' equity and of changes in net assets and the financial highlights cash flows present fairly, in all material respects, the financial position of The Brazilian Investment Fund, Harmonic Inc. (the "Fund") and its subsidiaries at December 31, 19951998 and 1997, and the results of its their operations for the year then ended, the changes in its net assets and their cash flows for each of the two three years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period June 4, 1991 (commencement of operations) through December 31, 1991, 1998 in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the FundCompany's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 1995 by correspondence with the custodians and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, audits provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE /s/ PRICEWATERHOUSECOOPERS LLP 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx-------------------------------------- PRICEWATERHOUSECOOPERS LLP San Jose, Xxx Xxxx 00000 February 9CA January 20, 1996 FINANCIAL STATEMENTS 1999, except as to Note 14, which is as of March 15, 1999 and Note 5, which is as of October 14, 1999 31 CONSOLIDATED BALANCE SHEETS --------------------- 1998 1997 --------- -------- (IN THOUSANDS, EXCEPT SHARE DATA) ASSETS Current assets: Cash and cash equivalents................................. $ 9,178 $13,670 Accounts receivable, net.................................. 17,646 16,458 Inventories............................................... 22,385 15,474 Prepaid expenses and other assets......................... 1,175 1,774 -------- ------- Total current assets.............................. 50,384 47,376 Notes receivable............................................ -- 1,300 Property and equipment, net................................. 10,726 10,077 Intangibles and other assets................................ 1,314 134 -------- ------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: $ 62,424 $58,887 ======== ======= Accounts payable.......................................... $ 7,534 $ 3,708 Accrued liabilities....................................... 10,355 4,896 Current portion of long-term debt......................... 177 -- -------- ------- Other non-current liabilities............................... 484 352 Commitments and Contingencies (Notes 11 and 13) Stockholders' equity: Preferred Stock, $.001 par value, 5,000,000 shares authorized; no shares issued or outstanding............ -- -- Common Stock, $.001 par value, 50,000,000 shares authorized; 23,451,688 and 20,828,594 shares issued and outstanding............................................ 23 21 Capital in excess of par value............................ 70,913 55,906 Accumulated deficit....................................... (27,472) (6,019) Accumulated other comprehensive income.................... 10 23 -------- ------- -------- ------- $ 62,424 $58,887 ======== ======= The accompanying notes are an integral part of these consolidated financial statements. CONSOLIDATED STATEMENT OF NET ASSETS --------- DECEMBER 31OPERATIONS ---------- ---------- (IN THOUSANDS, 1994 VALUE SHARES (000) --------------------------------------------------------- ------------ BRAZILIAN INVESTMENT FUND (98.7%) -------------------------------------------------- ---------- BRAZILIAN PREFERRED STOCKS (96.8%) (Unless otherwise noted) --------------------------------------------------------- ------------- APPLIANCES & HOUSEHOLD DURABLES (9.2%) Brasmotor 4,441,800 U.S.$ 1,799 Continental 2001 7,600,000 205 Multibras 1,274,500 1,670 Refripar 1,143,557,920 3,780 ----------- 7,454 ----------- --------------------------------------------------------- ------------- AUTOMOBILES (4.3%) Iochpe Maxion 4,850,000 3,378 Xxxxxxxxx 'B' 500,000 134 ----------- 3,512 ----------- --------------------------------------------------------- ------------- BANKING (11.3%) Banco Bradesco 360,509,400 3,065 Banco do Brasil 115,000,000 2,267 Banco Nacional 45,653,664 1,159 Banco Nacional (Common) 11,801,600 311 Itaubanco 8,639,000 2,417 ----------- 9,219 ----------- --------------------------------------------------------- ------------- BEVERAGES & TOBACCO (1.0%) Brahma 2,385,700 785 ----------- --------------------------------------------------------- ------------- CHEMICALS (2.9%) Rhodia-Ster GDR 165,000 2,372 ----------- --------------------------------------------------------- ------------- ENERGY SOURCES (9.1%) Petrobras 58,477,320 7,387 ----------- --------------------------------------------------------- ------------- FOOD & HOUSEHOLD PRODUCTS (2.5%) Ceval Alimentos 12,000,000 177 +Xxxxx Lalekla 1,811,290 1,818 ----------- 1,995 ----------- --------------------------------------------------------- ------------- INDUSTRIAL COMPONENTS (1.0%) SECTIONS Xxxxxx 'B' 18,000,000 850 ----------- --------------------------------------------------------- -------------EXCEPT PER SHARE DATA)