Common use of Total Liabilities Clause in Contracts

Total Liabilities. Commitments and contingencies (Note 4) 1,455 --------- 24,544 --------- 3 -------- 3,750 -------- Convertible preferred stock: $0.0001 par value; Authorized: 27,211 shares; Issued and outstanding: 25,788 and 16,253 shares at December 31, 2000 and 1999, respectively, (aggregate liquidation preference: $134,306 and $32,996 at December 31, 2000 and 1999, respectively)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- -------- 130,691 32,755 Stockholders' deficit: Common stock: $0.0001 par value; Authorized: 120,000 shares; Issued and outstanding: 9,622 and 5,644 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 Additional paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... (80,160) (1,780) Notes receivable from stockholders...................... (1,814) -- Accumulated other comprehensive income.................. 73 -- Accumulated deficit..................................... (108,602) (19,854) --------- -------- Total stockholders' deficit............................ (84,674) (19,414) Total liabilities, convertible preferred stock, --------- -------- warrants, and stockholders' deficit................... $ 70,561 $ 17,091 ========= ======== The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended December 31, ---------------------------- 2000 1999 1998 --------- -------- ------- Revenues: Revenue--Invisalign............................ $ 5,436 $ 98 $ -- Revenue--Ancillary products.................... 1,305 313 -- --------- -------- ------- Total revenues............................... 6,741 411 -- Cost of revenues: Cost of revenue and manufacturing costs-- --------- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... (13,510) (1,343) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General and administrative..................... 17,991 3,474 2,344 Research and development....................... 9,169 4,200 1,474 --------- -------- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. (81,115) (14,705) (3,951) Interest income................................ 2,306 362 185 Interest expense............................... (9,807) (986) -- Other expense.................................. (132) (86) (9) --------- -------- ------- Net loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature of preferred stock.............................. (53,516) -- -- --------- -------- ------- Net loss available to common stockholders........ $(142,264) $(15,415) $(3,775) ========= ======== ======= Net loss per share available to common stockholders, basic and diluted................. $ (25.64) $ (3.65) $ (1.33) ========= ======== ======= Shares used in computing net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 ========= ======== ======= The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT For the years ended December 31, 2000, 1999 and 1998 (in thousands) Notes Accumulated Common Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance at December 31,

Total Liabilities. 5,826 -------- 108,707 1,233 -------- 172,903 Commitments and contingencies (Note 4) 1,455 --------- 24,544 --------- 3 Minority interest........................................... 199 122 Owners' net investment...................................... Total liabilities and owners' net investment...... 752,754 -------- 3,750 -------- Convertible preferred stock: $0.0001 par value; Authorized: 27,211 shares; Issued and outstanding: 25,788 and 16,253 shares at December 31, 2000 and 1999, respectively, (aggregate liquidation preference: $134,306 and $32,996 at December 31, 2000 and 1999, respectively)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- -------- 130,691 32,755 Stockholders' deficit: Common stock: $0.0001 par value; Authorized: 120,000 shares; Issued and outstanding: 9,622 and 5,644 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 Additional paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... (80,160) (1,780) Notes receivable from stockholders...................... (1,814) -- Accumulated other comprehensive income.................. 73 -- Accumulated deficit..................................... (108,602) (19,854) --------- -------- Total stockholders' deficit............................ (84,674) (19,414) Total liabilities, convertible preferred stock, --------- -------- warrants, and stockholders' deficit................... $ 70,561 $ 17,091 =861,660 ======== 710,757 -------- $883,782 ======== The See accompanying notes are an integral part of these consolidated financial statementsnotes. ALIGN TECHNOLOGYEPGT TEXAS PIPELINE, INC. L.P. EL PASO GAS STORAGE COMPANY EL PASO HUB SERVICES COMPANY EL PASO FIELD SERVICES GATHERING AND SUBSIDIARY CONSOLIDATED PROCESSING BUSINESSES COMBINED STATEMENTS OF OPERATIONS INCOME (in thousands, except per share dataIN THOUSANDS) Year Ended December YEAR ENDED DECEMBER 31, ---------------------------- 2001 2000 1999 1998 --------- -------- ------- RevenuesOperating revenues Gathering and transportation services..................... $268,064 $123,998 $88,297 Processing services....................................... 33,386 19,227 -- Other revenue............................................. 43,239 19,425 137 Operating expenses 344,689 162,650 88,434 Cost of natural gas....................................... 188,582 99,190 44,028 Operations and maintenance................................ 59,417 20,389 17,856 Depreciation and amortization............................. 32,305 15,078 12,962 Taxes other than income................................... 7,198 2,491 2,581 287,502 137,148 77,427 Operating income............................................ 57,187 25,502 11,007 Other expense (income)...................................... 5,026 475 (35) Earnings before income taxes................................ 52,161 25,027 11,042 Income tax (benefit) expense................................ (24) 1,367 2,445 Net income.................................................. $ 52,185======== $ 23,660======== $ 8,597======= See accompanying notes. EPGT TEXAS PIPELINE, L.P. EL PASO GAS STORAGE COMPANY EL PASO HUB SERVICES COMPANY EL PASO FIELD SERVICES GATHERING AND PROCESSING BUSINESSES COMBINED STATEMENTS OF CASH FLOW (IN THOUSANDS) DECEMBER 31, 2001 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net income.................................................. $ 52,185 Adjustments to reconcile net income to cash provided by $ 23,660 $ 8,597 operating activities Depreciation and amortization............................. 32,305 15,078 12,962 Loss (gain) on disposition of assets...................... 186 466 (41) Deferred income tax (benefit) expense..................... -- (5,394) 4,626 Increase (decrease) in minority interest.................. 77 (4) (17) Working capital changes: Revenue--Invisalign............................ $ 5,436 $ 98 (Increase) decrease in accounts receivable............. (26,810) (5,666) (10,518) Increase in natural gas imbalance receivable........... (233) (7,787) (2,289) Decrease in inventories................................ 22,843 -- -- (Decrease) increase in accounts payable................ (8,053) 6,289 3,424 (Decrease) increase in natural gas imbalance payable... (25,904) 4,170 1,241 Decrease in other current assets....................... 2,836 907 2,305 Non-working capital changes: Decrease in noncurrent assets and liabilities.......... (15,280) 16,470 (1,433) Net cash provided by operating activities......... 34,152 48,189 18,857 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures........................................ (23,991) (15,021) (34,848) Proceeds from the sale of property, plant and equipment..... -- -- 52 Net cash used in investing activities............. (23,991) (15,021) (34,796) CASH FLOWS FROM FINANCING ACTIVITIES Net cash (distributions to) contributions from owners....... (10,188) (33,141) 15,939 Net cash provided by (used in) financing activities...................................... (10,188) (33,141) 15,939 Increase (decrease) in cash and cash equivalents............ (27) 27 -- Cash and cash equivalents Beginning of period....................................... 27 -- -- End of period............................................. $ -- Revenue--Ancillary products.................... 1,305 313 $ 27 $ -- --------- -------- ------- Total revenues............................... 6,741 411 -- Cost of revenues: Cost of revenue and manufacturing costs-- --------- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... (13,510) (1,343) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General and administrative..................... 17,991 3,474 2,344 Research and development....................... 9,169 4,200 1,474 --------- -------- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. (81,115) (14,705) (3,951) Interest income................................ 2,306 362 185 Interest expense............................... (9,807) (986) -- Other expense.................................. (132) (86) (9) --------- -------- ------- Net loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature of preferred stock.............................. (53,516) -- -- --------- -------- ------- Net loss available to common stockholders........ $(142,264) $(15,415) $(3,775) ========= ======== ======== Net loss per share available to common stockholders, basic and diluted................. SCHEDULE OF NONCASH ACTIVITIES: Noncash capital contribution of EPGT Texas................ $ (25.64) -- $391,110 $ (3.65) $ (1.33) -- ========= ======== ======== Shares used in computing net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 Noncash capital contribution of Indian Basin.............. $ -- $ 55,000 $ -- ========= ======== ======== The Noncash capital contribution of the TGP laterals.......... $ -- $ 3,461 $ -- ========= ======== ======== See accompanying notes are an integral part of these consolidated financial statementsnotes. ALIGN TECHNOLOGYEPGT TEXAS PIPELINE, INC. L.P. EL PASO GAS STORAGE COMPANY EL PASO HUB SERVICES COMPANY EL PASO FIELD SERVICES GATHERING AND SUBSIDIARY CONSOLIDATED PROCESSING BUSINESSES COMBINED STATEMENTS OF STOCKHOLDERSOWNERS' DEFICIT For the years ended December NET INVESTMENT (IN THOUSANDS) YEAR ENDED DECEMBER 31, 20002001 2000 1999 Balance, 1999 and 1998 at beginning of period............................. $ 710,757 $270,667 $246,131 Contribution of EPGT Texas.................................. -- 391,110 -- Contribution of Indian Basin................................ -- 55,000 -- Contribution of the TGP laterals............................ -- 3,461 -- Net income.................................................. 52,185 23,660 8,597 Net cash (in thousandsdistributions to) Notes Accumulated Common Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based contributions from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance owners....... (10,188) (33,141) 15,939 Balance, at December 31,end of period................................... $ 752,754 $710,757 $270,667 ========= ======== ======== See accompanying notes. EPGT TEXAS PIPELINE, L.P. EL PASO GAS STORAGE COMPANY EL PASO HUB SERVICES COMPANY EL PASO FIELD SERVICES GATHERING AND PROCESSING BUSINESSES NOTES TO COMBINED FINANCIAL STATEMENTS

Total Liabilities. Commitments and contingencies (Note 4) 1,455 --------- 24,544 --------- 3 -------- 3,750 -------- Convertible 67,064 ---------- 1,740,688 ---------- 77,213 ---------- 2,677,003 ---------- Minority interests.................................... 55,292 120,776 Redeemable preferred stock............................ Stockholders' equity: 422,923 437,891 Common stock, $0.0001 .01 par value; Authorized690,000,000 shares authorized: 27,211 sharesCommon Stock; Issued and outstandingshares issued: 25,788 and 16,253 shares at December 31, 2000 1999-- 146,074,905 and 1999June 30, respectively, (aggregate liquidation preference2000--166,199,290......... 1,461 1,662 Class A Common Stock; shares issued: $134,306 and $32,996 at December 31, 2000 1999--11,340,000 and 1999June 30, respectively)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- -------- 130,691 32,755 Stockholders' deficit: Common stock: $0.0001 par value; Authorized: 120,000 shares; Issued and outstanding: 9,622 and 5,644 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 2000--none........... 113 -- Additional paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... ........................... 1,805,053 1,952,341 Cumulative foreign currency translation adjustment... (80,1603,013) (1,78016,143) Notes receivable from stockholders...................... (1,814) -- Accumulated other comprehensive income.................. 73 -- Accumulated deficit..................................... .................................. (108,602185,867) (19,854301,870) --------- -------- ---------- ---------- Total stockholders' deficit............................ (84,674) (19,414) Total liabilities, convertible preferred stock, --------- -------- warrants, and stockholders' deficit................... $ 70,561 $ 17,091 equity........................ 1,617,747 1,635,990 ---------- ---------- $3,836,650 $4,871,660 ========== ========== The accompanying See condensed notes are an integral part of these to consolidated financial statements. ALIGN TECHNOLOGY, INCCROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARY SUBSIDIARIES CONSOLIDATED STATEMENTS STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS (in thousandsUnaudited) (In thousands of dollars, except per share dataamounts) Year Three Months Ended December 31Six Months Ended June 30, ---------------------------- ------------------ 1999 2000 -------- -------- June 30, ------------------- 1999 1998 2000 -------- --------- -------- ------- Revenues: Revenue--Invisalign............................ $ 5,436 $ 98 $ -- Revenue--Ancillary products.................... 1,305 313 -- --------- -------- ------- Total revenues............................... 6,741 411 -- Cost of Net revenues: Cost of revenue Site rental and manufacturing costs-- --------- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... (13,510) (1,343) -- broadcast transmission........................ $ 62,177 $109,503 $107,503 $ 203,244 Network services and other........... Operating expenses: Sales 15,350 -------- 77,527 -------- 38,856 -------- 148,359 -------- 25,133 -------- 132,636 -------- 69,359 --------- 272,603 --------- Costs of operations (exclusive of depreciation and marketing............................ 40,445 5,688 133 amortization): Site rental and broadcast transmission....................... 26,557 48,563 45,084 88,850 Network services and other.......... 8,175 20,007 15,157 35,908 General and administrative..................... 17,991 3,474 2,344 Research ........... 9,238 19,495 17,542 34,348 Corporate development................ 2,066 2,122 2,940 4,193 Restructuring charges................ -- -- 1,814 -- Non-cash compensation charges........ 504 350 1,171 811 Depreciation and development....................... 9,169 4,200 1,474 amortization........ 29,863 56,647 49,519 101,769 -------- -------- -------- --------- 76,403 147,184 133,227 265,879 -------- ------- Total operating expenses..................... 67,605 13,362 3,951 -------- -------- --------- -------- ------- Loss from operations............................. Operating income (81,115loss)............... 1,124 1,175 (591) 6,724 Other income (expense): Interest and other income (expense).. 4,539 6,665 4,879 12,369 Interest expense and amortization of deferred financing costs............ (26,556) (14,70566,728) (3,951) Interest income................................ 2,306 362 185 Interest expense............................... (9,80737,842) (986108,489) Loss before income taxes, minority interests, extraordinary item and cumulative effect of change in -------- -------- -------- --------- accounting principle................. (20,893) (58,888) (33,554) (89,396) Provision for income taxes............ (70) (25) (197) (36) Minority interests.................... 113 (317) (572) (1,858) Loss before extraordinary item and cumulative effect of change in -------- -------- -------- --------- accounting principle................. (20,850) (59,230) (34,323) (91,290) Extraordinary item--loss on early extinguishment of debt............... -- -- -- (1,495) Cumulative effect of change in accounting principle for costs of start-up activities.................. -- -- (2,414) -- Other expense.................................. -------- -------- -------- --------- Net loss.............................. (13220,850) (8659,230) (9) --------- -------- ------- Net loss......................................... (88,74836,737) (15,41592,785) Dividends on preferred stock.......... (6,614) (3,77511,725) Dividend related to beneficial conversion feature (13,022) (23,218) Net loss after deduction of dividends -------- -------- -------- --------- on preferred stock.............................. (53,516) -- -- --------- -------- ------- Net loss available to common stockholders........ ................... $(142,26427,464) $(15,41570,955) $(3,77549,759) =$(116,003) ======== ======== ======== ========= Net loss per share available to common stockholders, basic and diluted................. $ loss.............................. $(25.6420,850) $(59,230) $(36,737) $ (3.6592,785) $ Other comprehensive income (1.33loss): Foreign currency translation adjustments......................... (3,577) =(10,750) (8,320) (13,130) -------- -------- -------- --------- Comprehensive loss.................... $(24,427) $(69,980) $(45,057) $(105,915) ======== ======== ======== Shares used in computing net loss per share available to ========= Per common stockholders, share--basic and diluted......................................... 5,548 4,218 2,842 =: Loss before extraordinary item and cumulative effect of change in accounting principle................ $ (0.22) $ (0.43) $ (0.43) $ (0.71) Extraordinary item................... -- -- -- (0.01) Cumulative effect of change in accounting principle................ -- -- (0.02) -- -------- -------- -------- --------- Net loss............................. $ (0.22) $ (0.43) $ (0.45) $ (0.72) ======== ======== ======== The accompanying ========= Common shares outstanding--basic and diluted (in thousands)............... 124,849 165,625 109,791 162,095 ======== ======== ======== ========= See condensed notes are an integral part of these to consolidated financial statements. ALIGN TECHNOLOGY, INCCROWN CASTLE INTERNATIONAL CORP. AND SUBSIDIARY SUBSIDIARIES CONSOLIDATED STATEMENTS STATEMENT OF STOCKHOLDERS' DEFICIT For the years ended December 31CASH FLOWS (Unaudited) (In thousands of dollars) Six Months Ended June 30, 2000, ------------------------ 1999 and 1998 (in thousands) Notes Accumulated Common Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based 2000 ----------- ----------- Cash flows from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance at December 31,operating activities:

Total Liabilities. Commitments and contingencies (Note 4) 1,455 --------- 24,544 --------- 3 Stockholders' equity: 12,487 -------- 3,750 392,570 -------- Convertible preferred 11,290 -------- 497,908 -------- Preferred stock: , $0.0001 1.00 par value; Authorized: 27,211 authorized 10,000,000 shares; Issued issued and outstanding: 25,788 and 16,253 outstanding 1,602,998 shares at December 31, 2000 and 1999, respectively, in 1996 (aggregate liquidation preference: preference of $134,306 and $32,996 at December 31, 2000 and 1999, respectively160,300)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- -------- 130,691 32,755 Stockholders' deficit: .................... -- 1,603 Common stock: , $0.0001 0.01 par value; Authorized: 120,000 authorized 100,000,000 shares; Issued issued and outstanding: 9,622 outstanding 43,234,943 shares in 1997 and 5,644 7,291,308 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 in 1996 (Note 2)................... 432 73 Additional paid-in in-capital.............................. 105,828 2,219 Deferred stock-based ............................... 214,950 160,147 Unearned stock grant compensation....................... ........................ (80,160993) (1,7801,387) Notes receivable from stockholders...................... Retained earnings........................................ 77,942 16,836 Cumulative foreign currency translation adjustment....... (1,8144,042) -- Accumulated other comprehensive income.................. 73 -- Accumulated deficit..................................... (108,602) (19,854) --------- -------- 532 -------- Total stockholders' deficit............................ (84,674) (19,414) equity............................. 288,289 177,804 -------- -------- Total liabilities, convertible preferred stock, --------- -------- warrants, Liabilities and stockholdersStockholders' deficit................... $ 70,561 $ 17,091 =Equity............. $680,859 $675,712 ======== ======== The See accompanying notes are an integral part of these to the consolidated financial statements. ALIGN TECHNOLOGYXXXXX, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (in thousandsIN THOUSANDS, except per share data) Year Ended December 31, ---------------------------- 2000 1999 1998 --------- -------- ------- Revenues: Revenue--Invisalign............................ $ 5,436 $ 98 $ -- Revenue--Ancillary products.................... 1,305 313 -- --------- -------- ------- Total revenues............................... 6,741 411 -- Cost of revenues: Cost of revenue and manufacturing costs-- --------- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... (13,510EXCEPT PER SHARE DATE) (1,343UNAUDITED) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General and administrative..................... 17,991 3,474 2,344 Research and development....................... 9,169 4,200 1,474 --------- -------- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. (81,115) (14,705) (3,951) Interest income................................ 2,306 362 185 Interest expense............................... (9,807) (986) -- Other expense.................................. (132) (86) (9) --------- -------- ------- Net loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature of preferred stock.............................. (53,516) -- -- --------- -------- ------- Net loss available to common stockholders........ $(142,264) $(15,415) $(3,775) ========= ======== ======= Net loss per share available to common stockholders, basic and diluted................. $ (25.64) $ (3.65) $ (1.33) ========= ======== ======= Shares used in computing net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 ========= ======== ======= The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY| THE KNOLL GROUP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT For the years ended December SUPPLEMENTAL | (PREDECESSOR) PRO FORMA | ------------------------- YEAR DATA TEN MONTHS | TWO MONTHS YEAR ENDED YEAR ENDED ENDED | ENDED ENDED DECEMBER 31, 2000DECEMBER 31, 1999 and 1998 DECEMBER 31, | FEBRUARY 29, DECEMBER 31, 1997 1996 1996 | 1996 1995 ------------ ------------ ------------ | (in thousandsNOTE 3) Notes Accumulated Common Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance at December 31,| ------------ | ------------ Sales to customers...... $810,857 $651,766 $561,534 | Sales to related | parties................ -- -- -- | $ 89,933 299 $610,723 10,169 -------- -------- -------- | -------- --------

Total Liabilities. Commitments and contingencies (Note 4) 1,455 48,612 --------- 24,544 --------- 3 430,059 50,840 -------- 3,750 -------- Convertible 369,117 Shareholders' equity: Serial preferred stock: $0.0001 shares, without par value, 3,000 shares authorized; Authorized: 27,211 sharesno shares outstanding Common Shares, without par value, 300,000 shares authorized; Issued issued and outstanding: 25,788 and 16,253 outstanding shares of 67,956 at December March 31, 2000 1999 and 199968,021 at March 31, 1998, excluding 523 and 458 treasury shares, respectively, .............. 222,946 230,477 Retained earnings........................................... 219,863 135,009 Cumulative translation adjustment........................... (aggregate liquidation preference: $134,306 and $32,996 at December 31, 2000 and 1999, respectively)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- -------- 130,691 32,755 Stockholders' deficit: Common stock: $0.0001 par value; Authorized: 120,000 shares; Issued and outstanding: 9,622 and 5,644 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 Additional paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... (80,1606,872) (1,780) Notes receivable from stockholders...................... (1,814) -- Accumulated other comprehensive income.................. 73 -- Accumulated deficit..................................... (108,602) (19,8546,534) --------- -------- Total stockholdersTOTAL SHAREHOLDERS' deficit............................ (84,674) (19,414) Total liabilities, convertible preferred stock, EQUITY.................................. 435,937 358,952 --------- -------- warrants, and stockholdersTOTAL LIABILITIES AND SHAREHOLDERS' deficit................... EQUITY.................. $ 70,561 $ 17,091 865,996 $728,069 ========= ======== The accompanying See notes are an integral part of these to consolidated financial statements. ALIGN TECHNOLOGY, INC. STERIS CORPORATION AND SUBSIDIARY SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousandsIN THOUSANDS, except per share dataEXCEPT PER SHARE AMOUNTS) Year Ended December 31, ---------------------------- 2000 YEARS ENDED MARCH 31 1999 1998 --------- -------- ------- Revenues: Revenue--Invisalign............................ $ 5,436 $ 98 $ -- Revenue--Ancillary products.................... 1,305 313 -- --------- -------- ------- Total 1997 Net revenues............................... 6,741 411 -- ............................................... $797,611 $719,656 $587,852 Cost of revenues: products sold...................................... 429,020 395,098 356,007 GROSS PROFIT............................................... 368,591 324,558 231,845 Cost of revenue and manufacturing costs-- --------- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... (13,510) (1,343) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General Selling, informational, and administrative..................... 17,991 3,474 2,344 ............... 207,375 188,030 125,515 Research and development....................... 9,169 4,200 1,474 --------- -------- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. ................................. 24,837 23,914 21,986 Non-recurring items...................................... 90,831 232,212 211,944 238,332 INCOME (81,115LOSS) FROM OPERATIONS.............................. 136,379 112,614 (6,487) Interest expense........................................... (10,736) (14,7056,239) (3,9512,919) Interest income................................ 2,306 362 185 Interest expense............................... income and other.................................. 1,553 980 4,544 INCOME (9,807LOSS) BEFORE INCOME TAXES.......................... 127,196 107,355 (9864,862) Income taxes............................................... 42,342 41,859 25,744 NET INCOME (LOSS).......................................... NET INCOME (LOSS) PER SHARE -- Other expense.................................. BASIC....................... NET INCOME (132LOSS) (86) (9) --------- -------- ------- Net loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature of preferred stock.............................. (53,516) PER SHARE -- -- --------- -------- ------- Net loss available to common stockholders........ DILUTED..................... $ 84,854========$ 1.24========$ 1.20======== $ 65,496========$ 0.96========$ 0.93======== $(142,264) $30,606)========$ (15,415) $0.45)========$ (3,775) ========= ======== ======= Net loss per share available 0.45)======== See notes to common stockholders, basic and diluted................. $ (25.64) $ (3.65) $ (1.33) ========= ======== ======= Shares used in computing net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 ========= ======== ======= The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY, INC. STERIS CORPORATION AND SUBSIDIARY SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT For the years ended December 31CASH FLOWS (IN THOUSANDS) YEARS ENDED MARCH 31 ---------------------------------- OPERATING ACTIVITIES 1999 --------- 1998 --------- 1997 -------- Net income (loss)......................................... Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization........................... $ 84,854 33,279 $ 65,496 24,202 $(30,606) 18,681 Deferred income taxes................................... 14,000 7,446 (12,173) Non-recurring items..................................... 55,944 Other items............................................. (1,252) (5,577) (664) Changes in operating assets and liabilities: Accounts receivable.................................. (22,654) (31,945) (33,559) Inventories.......................................... (12,998) (11,311) 5,086 Other assets......................................... (5,229) 368 2,645 Accounts payable and accruals........................ (25,541) (36,686) 10,932 NET CASH PROVIDED BY OPERATING ACTIVITIES................. --------- 64,459 --------- 11,993 -------- 16,286 INVESTING ACTIVITIES Purchases of property, 2000plant, 1999 equipment, and 1998 patents...... (77,286) (39,181) (20,468) Proceeds from sales of assets............................. 43,084 Investment in thousandsbusinesses, net of cash acquired............ (41,457) Notes Accumulated Common (126,505) (82,586) Proceeds from notes receivable............................ 8,438 Purchases of marketable securities........................ (6,970) Proceeds from sales of marketable securities.............. --------- 2,977 --------- 13,231 -------- NET CASH USED IN INVESTING ACTIVITIES..................... (118,743) (119,625) (88,355) FINANCING ACTIVITIES Payments on long term obligations......................... (206,339) (4,512) (106,802) Borrowing under line of credit............................ 275,000 110,000 40,000 Purchase of treasury shares............................... (17,697) (10,051) (11,418) Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance at December 31,option and other equity transactions................ 10,166 --------- 9,250 --------- 32,945 --------

Total Liabilities. Commitments and contingencies Shareholders' Equity: 46,780 ----------- $ 5,290,770 ----------- 25,888 ---------- $3,609,332 ---------- Class A ordinary shares (Note 4) 1,455 --------- 24,544 --------- 3 -------- 3,750 -------- Convertible preferred stock: par value $0.0001 par value0.01; Authorized: 27,211 authorized, 999,990,000 shares including Class B shares; Issued issued and outstanding: 25,788 , 108,688,081 shares and 16,253 84,407,638 shares at December 31November 30, 2000 1998 and 1999, respectively, (aggregate liquidation preference: $134,306 and $32,996 at December 31, 2000 and 19991997, respectively)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 .. 1,087 844 Class B ordinary shares (par value $0.01; authorized, 999,990,000 shares including Class A shares; issued and outstanding, 3,115,873 shares and nil shares at November 30, 1998 and 1997 respectively)............. 31 -- Contributed surplus................................... 2,289,456 290,085 Net unrealized appreciation on investments............ 159,953 188,444 Deferred compensation................................. (18,104) (11,362) Retained earnings..................................... 2,385,457 2,011,119 ----------- ---------- Total shareholders' equity........................ $ 4,817,880 $2,479,130 ----------- ---------- Total liabilities and shareholders' equity........ $10,108,650 $6,088,462 =========== ========== See accompanying notes to Consolidated Financial Statements 35 XL CAPITAL LTD CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED NOVEMBER 30, 1998, 1997 AND 1996 (Expressed in thousands of U.S. dollars, except per share amounts) 1998 1997 1996 --------- --------- -------- 130,691 32,755 Stockholders' deficitRevenues: Common stock: Net premiums earned............................ $ 685,200 $ 540,653 $0.0001 par value; Authorized: 120,000 shares; Issued 517,892 Net investment income.......................... 279,375 216,552 198,598 Net realized gains on sales of investments..... 191,795 335,939 206,212 Equity in net income of affiliates............. 47,980 65,882 59,249 Fee and outstanding: 9,622 and 5,644 shares other income........................... 13,298 -- -- --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 Additional paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... (80,160) (1,780) Notes receivable from stockholders...................... (1,814) -- Accumulated other comprehensive income.................. 73 -- Accumulated deficit..................................... (108,602) (19,854) --------- -------- Total stockholders' deficit............................ (84,674) (19,414) Total liabilities, convertible preferred stock, revenues............................... 1,217,648 1,159,026 981,951 Expenses: --------- --------- -------- warrants, Losses and stockholders' deficit................... loss expenses....................... 390,483 365,325 405,357 Acquisition costs.............................. 88,596 46,108 35,556 Administration expenses........................ 109,268 52,557 43,920 Interest expense............................... 11,523 7,176 -- Amortization of intangible assets.............. 23,926 5,844 -- --------- --------- -------- Total expenses............................... 623,796 477,010 484,833 Income before minority interest and income tax --------- --------- -------- expense......................................... 593,852 682,016 497,118 Minority interest in net income of subsidiary.. 826 (30) -- Income tax expense............................. 5,363 5,085 2,805 --------- --------- -------- Net income....................................... $ 70,561 587,663 $ 17,091 676,961 $494,313 ========= ========= ======== The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per Weighted average ordinary shares and ordinary share data) Year Ended December 31, ---------------------------- 2000 1999 1998 --------- -------- ------- Revenues: Revenueequivalents outstanding--Invisalign............................ $ 5,436 $ 98 $ -- Revenue--Ancillary products.................... 1,305 313 -- --------- -------- ------- Total revenues............................... 6,741 411 -- Cost of revenues: Cost of revenue and manufacturing costs-- --------- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary productsbasic............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... (13,510) (1,343) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General and administrative..................... 17,991 3,474 2,344 Research and development....................... 9,169 4,200 1,474 --------- -------- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. (81,115) (14,705) (3,951) Interest income................................ 2,306 362 185 Interest expense............................... (9,807) (986) -- Other expense.................................. (132) (86) (9) --------- -------- ------- Net loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature of preferred stock.............................. (53,516) -- -- --------- -------- ------- Net loss available to common stockholders........ $(142,264) $(15,415) $(3,775) 92,975 85,120 90,734 ========= ========= ======== Weighted average ordinary shares and ordinary share equivalents outstanding--diluted.......... 94,785 86,314 91,328 ========= Net loss per share available to common stockholders, basic and diluted................. $ (25.64) $ (3.65) $ (1.33) ========= ======== Earnings per ordinary share and ordinary share equivalent--basic............................... $ 6.32 $ 7.95 $ 5.45 ========= Shares used in computing net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 ========= ======== Earnings per ordinary share and ordinary share equivalent--diluted............................. $ 6.20 $ 7.84 $ 5.41 ========= The ========= ======== See accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY to Consolidated Financial Statements 36 XL CAPITAL LTD CONSOLIDATED STATEMENTS OF STOCKHOLDERSSHAREHOLDERS' DEFICIT EQUITY AND COMPREHENSIVE INCOME FOR THE YEARS ENDED NOVEMBER 30, 1998, 1997 AND 1996 (Expressed in thousands of U.S. dollars) 1998 1997 1996 ---------- ---------- ---------- Ordinary Shares: Balance-beginning of year................ $ 844 $ 872 $ 473 Issue of shares.......................... 12 3 1 Issue of shares--Mid Ocean acquisition... 303 -- -- Stock dividend........................... -- -- 441 Exercise of stock options................ 3 3 4 Repurchase of treasury shares............ (44) (34) (47) ---------- ---------- ---------- Balance-end of year.................... 1,118 844 872 Contributed Surplus: ---------- ---------- ---------- Balance-beginning of year................ 290,085 282,980 295,209 Issue of shares.......................... 88,959 10,771 7,493 Issue of shares Mid Ocean acquisition.... 2,189,414 -- -- Exercise of stock options................ 9,147 6,277 6,045 Repurchase of treasury shares............ (288,149) (9,943) (25,767) ---------- ---------- ---------- Balance-end of year.................... 2,289,456 290,085 282,980 Net Unrealized Appreciation (Depreciation) on Investments: ---------- ---------- ---------- Balance-beginning of year................ 188,444 256,430 283,289 Net change in investment portfolio....... (24,194) (82,521) (26,621) Net change in investment portfolio of affiliate............................... (4,297) 14,535 (238) ---------- ---------- ---------- Balance-end of year.................... 159,953 188,444 256,430 Deferred Compensation: ---------- ---------- ---------- Balance-beginning of year................ (11,362) (4,169) (1,657) Issue of restricted shares............... (11,103) (10,387) (3,799) Amortization............................. 4,361 3,194 1,287 ---------- ---------- ---------- Balance-end of year.................... (18,104) (11,362) (4,169) Retained Earnings: ---------- ---------- ---------- Balance-beginning of year................ 2,011,119 1,579,925 1,428,819 Net income............................... 587,663 676,961 494,313 Cash dividends paid...................... (150,294) (115,372) (86,586) Repurchase of treasury shares............ (63,031) (130,395) (256,621) ---------- ---------- ---------- Balance-end of year.................... 2,385,457 2,011,119 1,579,925 ---------- ---------- ---------- Total shareholders' equity................. $4,817,880 $2,479,130 $2,116,038 ========== ========== ========== Comprehensive Income: Net income............................... 587,663 676,961 494,313 Change in net unrealized appreciation (depreciation) of investments........... (28,491) (67,986) (26,859) ---------- ---------- ---------- Comprehensive income................... $ 559,172 $ 608,975 $ 467,454 ========== ========== ========== See accompanying notes to Consolidated Financial Statements 37 XL CAPITAL LTD CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED NOVEMBER 30, 1998, 1997 AND 1996 (Expressed in thousands of U.S. dollars) 1998 1997 1996 ----------- ----------- ---------- Cash flows provided by operating activities: Net income before minority interest. $ 588,489 $ 676,961 $ 494,313 Adjustments to reconcile net income before minority interest to net cash provided by operating activities: Net realized gains on sales of ----------- ----------- ---------- investments.......................... (191,795) (335,939) (206,212) Amortization of (discounts) premium on fixed maturities..................... (12,953) (2,163) 7,021 Equity in net income of affiliates net of cash received..................... (23,585) (34,395) (44,329) Amortization of deferred compensation. 4,361 3,194 1,287 Amortization of intangible assets..... 23,926 5,844 -- Unpaid losses and loss expenses....... 179,075 208,565 178,596 Reinsurance balances receivable....... (144,910) (109,581) (45,442) Unearned premiums..................... (16,751) (178,584) 140,239 Prepaid reinsurance premiums.......... 2,973 (45,449) (61,029) Premiums received in advance.......... (21,539) 16,450 19,376 Deferred acquisition costs............ (3,818) 17,292 10,571 Premiums receivable................... 21,375 154,521 (111,054) Reinsurance premiums payable.......... 761 37,958 30,524 Accrued investment income............. 10,691 10,729 (2,580) Accounts payable and accrued liabilities.......................... 15,570 2,839 11,188 ----------- ----------- ---------- Total adjustments................... (156,619) (248,719) (71,844) Net cash provided by operating ----------- ----------- ---------- activities......................... 436,870 428,242 422,469 Cash flow used in investing activities: Proceeds from sale of fixed maturities ----------- ----------- ---------- and short-term investments........... 13,709,343 10,332,277 4,283,613 Proceeds from redemption of fixed maturities and short-term investments.......................... 530,415 108,220 119,706 Proceeds from sale of equity securities........................... 850,748 1,164,483 591,366 Purchases of fixed maturities and short-term investments............... (14,313,067) (10,078,481) (5,059,795) Purchases of equity securities........ (964,214) (999,384) (374,565) Deferred gains on forward contracts... (12,295) 7,049 418 Investments in affiliates............. (1,126) (43,184) (19,131) Purchase of GCR Holdings Limited...... -- (660,137) -- Cash acquired in purchase of Mid Ocean Limited.............................. 137,483 -- -- Other investments..................... 1,836 154 (13,736) Other assets.......................... (8,537) (24,185) (20,208) Net cash used in investing ----------- ----------- ---------- activities......................... (69,414) (193,188) (492,332) Cash flows used in financing activities: ----------- ----------- ---------- Issuance of restricted shares......... 514 387 695 Proceeds from exercise of share options.............................. 7,538 6,280 6,049 Repurchase of treasury shares......... (351,225) (140,372) (282,435) Dividends paid........................ (150,294) (115,372) (86,145) Proceeds from loans................... 655,000 530,000 11,000 Repayment of loans.................... (495,000) (400,000) -- Minority interest..................... 20,066 25,888 -- Net cash used in financing ----------- ----------- ---------- activities......................... (313,401) (93,189) (350,836) Increase (decrease) in cash and cash ----------- ----------- ---------- equivalents............................ 49,055 141,865 (420,699) Cash and cash equivalents--beginning of year................................... 394,599 252,734 673,433 ----------- ----------- ---------- Cash and cash equivalents--end of year.. $ 443,654 $ 394,599 $ 252,734 =========== =========== ========== Taxes paid.............................. $ 9,207 $ 2,622 $ 1,571 =========== =========== ========== Interest paid........................... $ 11,443 $ 5,824 $ -- =========== =========== ========== XL CAPITAL LTD NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the years ended December 31Years Ended November 30, 20001998, 1999 1997 and 1998 1996 (Expressed in thousands) Notes Accumulated Common Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance at December 31,U.S. dollars)

Total Liabilities. Commitments and contingencies (Note 4) 1,455 --------- 24,544 --------- 3 18,773 -------- 3,750 402,244 19,373 -------- Convertible preferred 416,882 Stockholders' equity: Preferred stock: $0.0001 , no par value, 1,000,000 shares authorized; Authorized: 27,211 sharesissued & outstanding -- none in 1998 and 1997................................................... -- -- Common stock, $.50 par value, 50,000,000 shares authorized; Issued 14,179,834 shares in 1998 and 14,050,411 shares in 1997 issued and outstanding: 25,788 and 16,253 shares at December 31, 2000 and 1999, respectively, (aggregate liquidation preference: $134,306 and $32,996 at December 31, 2000 and 1999, respectively)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- -------- 130,691 32,755 Stockholders' deficit: Common stock: $0.0001 par value; Authorized: 120,000 shares; Issued and outstanding: 9,622 and 5,644 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 .................. 7,090 7,025 Additional paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... ................................ 108,624 105,146 Retained earnings......................................... 156,278 156,528 Cumulative foreign currency translation adjustment........ 1,132 422 Adjustment for minimum pension liability.................. (80,1601,080) (1,780298) Notes receivable from stockholders...................... (1,814) -- Accumulated other comprehensive income.................. 73 -- Accumulated deficit..................................... (108,602) (19,854) --------- -------- -------- Total stockholders' deficit............................ (84,674) (19,414) Total liabilities, convertible preferred stock, --------- equity........................ 272,044 268,823 -------- warrants, and stockholders' deficit................... $ 70,561 $ 17,091 =-------- $674,288 $685,705 ======== ======== The accompanying See notes are an integral part of these to consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY Quanex Corporation CONSOLIDATED STATEMENTS OF OPERATIONS INCOME YEARS ENDED OCTOBER 31, 1998 1997 1996 - ------------------------------------------------------------------------------------------------------ (in In thousands, except per share dataamounts) Year Ended December 31, ---------------------------- 2000 1999 1998 --------- -------- ------- Revenues: Revenue--Invisalign............................ $ 5,436 $ 98 $ -- Revenue--Ancillary products.................... 1,305 313 -- --------- -------- ------- Total revenues............................... 6,741 411 -- Cost of revenuesNet sales................................................... $797,490 $746,093 $620,069 Costs and expenses: Cost of revenue sales............................................. 647,179 610,412 492,594 Selling, general and manufacturing costs-- --------- administrative....................... 47,713 43,375 44,959 Depreciation and amortization............................. 41,834 37,298 36,083 Restructuring charge...................................... 58,500 -- -- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... Operating income............................................ 2,264 55,008 46,433 Other income (13,510expense): Interest expense.......................................... (14,904) (1,343) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General and administrative..................... 17,991 3,474 2,344 Research and development....................... 9,169 4,200 1,474 --------- -------- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. (81,11517,541) (14,70511,929) Capitalized interest...................................... 4,398 3,539 569 Other, net................................................ 2,278 1,637 4,544 Income (loss) from continuing operations before income taxes -------- -------- -------- and extraordinary charge.................................. (5,964) 42,643 39,617 Income tax benefit (expense)................................ 2,087 (14,925) (3,95116,639) Interest income................................ 2,306 362 185 Interest expense............................... Income (9,807loss) from continuing operations and before -------- -------- -------- extraordinary charge...................................... (9863,877) 27,718 22,978 Income from discontinued operations, net of income taxes.... -- Other expense.................................. (132) (86) (9) --------- 5,176 9,912 Gain on sale of discontinued operations, net of income taxes..................................................... 13,046 36,290 -- -------- ------- Net loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature -------- -------- Income before extraordinary charge.......................... 9,169 69,184 32,890 Extraordinary charge -- early extinguishment of preferred stock.............................. (53,516) debt, net of income taxes.............................................. -- -- --------- (2,522) -------- ------- -------- -------- Net loss available income attributable to common stockholders........ $(142,264) $(15,415) $(3,775) =.............. $ 9,169 $ 69,184 $ 30,368 ======== ======== ======== Net loss Earnings per share available to common stockholders, basic and diluted................. share: Basic: Continuing operations.................................. $ (25.640.27) $ 2.01 $ 1.70 Discontinued operations................................ -- 0.37 0.73 Gain on sale of discontinued operations................ .92 2.63 -- Extraordinary charge................................... -- -- (3.650.19) -------- -------- -------- Total basic net earnings.......................... $ (1.33) =0.65 $ 5.01 $ 2.24 ======== ======== ======== Shares used in computing Diluted: Continuing operations.................................. $ (0.27) $ 1.90 $ 1.62 Discontinued operations................................ -- 0.31 0.61 Gain on sale of discontinued operations................ .92 2.17 -- Extraordinary charge................................... -- -- (0.15) -------- -------- -------- Total diluted net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 =earnings........................ $ 0.65 $ 4.38 $ 2.08 ======== ======== ======== The accompanying Weighted average number of shares outstanding Basic.................................................. 14,149 13,807 13,524 Diluted................................................ 14,149 16,725 16,354 See notes are an integral part of these to consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY Quanex Corporation CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT For the years ended December 31, 2000, 1999 and 1998 EQUITY (Dollar amounts in thousands) Notes Accumulated Total Common Stock Additional Deferred Receivable Other -------------- Stock- Years Ended October 31, 1998, -------------------- Paid-In Stock-based from Comprehensive Accumulated in Retained holders' 1997, and 1996 Shares Amount Capital Compensation Stockholders Income Deficit Total Earnings Other Equity - Balance at December October 31,, 1995...................... 13,485,312 $6,743 $ 92,406 $ 74,426 $(761) $172,814 Net income..................................... -- -- -- 30,368 30,368 Common dividends ($.60 per share).............. -- -- -- (8,115) -- (8,115) Adjustment for minimum pension liability....... -- -- -- -- (31) (31) Unearned compensation.......................... -- -- -- -- 132 132 Other.......................................... 105,088 52 1,845 (56) -- 1,841 Balance at October 31, 1996...................... 13,590,400 6,795 94,251 96,623 (660) 197,009 Net income..................................... -- -- -- 69,184 69,184 Common dividends ($.61 per share).............. -- -- -- (8,422) -- (8,422) Adjustment for minimum pension liability....... -- -- -- -- 177 177 Unearned compensation.......................... -- -- -- -- 185 185 Foreign currency translation adjustment........ 422 422 Other.......................................... 460,011 230 10,895 (857) -- 10,268 Balance at October 31, 1997...................... 14,050,411 $7,025 $105,146 $156,528 $ 124 $268,823 Net income..................................... 9,169 9,169 Common dividends ($.64 per share).............. (9,059) (9,059) Adjustment for minimum pension liability....... (782) (782) Foreign currency translation adjustment........ 710 710 Other.......................................... 129,423 65 3,478 (360) -- 3,183 Balance at October 31, 1998...................... 14,179,834 $7,090 $108,624 $156,278 $ 52 $272,044 ========== ====== ======== ======== ===== ======== See notes to consolidated financial statements. Quanex Corporation CONSOLIDATED STATEMENTS OF CASH FLOW YEARS ENDED OCTOBER 31, 1998 1997 1996 - ----------------------------------------------------------------------------------- (In thousands) OPERATING ACTIVITIES: Net Income................................................ $ 9,169 $ 69,184 $ 30,368 Adjustments to reconcile net income to cash provided by operating activities: Income from discontinued operations (net of taxes)... -- (5,176) (9,912) Gain on sale of discontinued operations (net of taxes).............................................. (13,046) (36,290) -- Restructuring charge (net of deferred taxes of $20,475)............................................ 38,025 -- -- Depreciation and amortization........................ 42,400 37,865 36,654 Deferred income taxes................................ 6,059 7,545 2,533 Deferred pension costs............................... (34) (183) 318 Deferred postretirement welfare benefits............. 257 376 417 -------- --------- -------- 82,830 73,321 60,378 Changes in assets and liabilities net of effects from acquisitions and dispositions: Decrease in accounts and notes receivable............ 3,664 2,957 7,798 Decrease (increase) in inventory..................... (10,994) 8,898 (17,568) Increase (decrease) in accounts payable.............. (2,262) 112 (4,848) Increase (decrease) in accrued expenses.............. (346) 2,919 2,907 Other, net........................................... (8,822) (8,868) 1,011 -------- --------- -------- Cash provided by continuing operations............ 64,070 79,339 49,678 Cash provided by discontinued operations.......... -- 89 16,073 -------- --------- -------- Cash provided by operating activities............. 64,070 79,428 65,751 INVESTMENT ACTIVITIES: Acquisition of Decatur Aluminum Corp., net of cash and equivalents acquired................................... (9,573) -- -- Acquisition of Advanced Metal Forming, C.V., net of cash and equivalents acquired............................... -- (33,584) -- Acquisition of Piper Impact, Inc., net of cash and equivalents acquired................................... -- (5,575) (123,264) Net proceeds from sale of LaSalle Steel Company........... 1,366 63,900 -- Net proceeds from sale of the Tubing Operations........... 30,068 -- -- Capital expenditures, net of retirements.................. (58,513) (68,916) (34,699) Capital expenditures of discontinued operations........... -- (3,868) (11,089) Other, net................................................ (3,168) (1,550) (5,120) -------- --------- -------- Cash (used) by investment activities.............. (39,820) (49,593) (174,172) Cash provided (used) by operating and investment -------- --------- -------- activities...................................... 24,250 29,835 (108,421) FINANCING ACTIVITIES: Bank borrowings (repayments), net......................... (17,124) (41,828) 160,000 Purchase of subordinated debentures....................... (1,500) -- -- Notes payable borrowings (repayments)..................... -- -- (10,000) Purchase of Senior Notes.................................. -- -- (44,667) Common dividends paid..................................... (9,059) (8,422) (8,115) Issuance of common stock, net............................. 3,183 10,453 1,973 Other, net................................................ (429) 429 0 -------- --------- -------- Cash provided (used) by financing activities...... (24,929) (39,368) 99,191 -------- --------- -------- Effect of exchange rate changes on cash and equivalents..... 107 422 -- -------- --------- -------- Decrease in cash and equivalents............................ (572) (9,111) (9,230) Cash and equivalents at beginning of period................. 26,851 35,962 45,192 -------- --------- -------- Cash and equivalents at end of period....................... $ 26,279 $ 26,851 $ 35,962 ======== ========= ======== See notes to consolidated financial statements. 27 Quanex Corporation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - --------------------------------------------------------------------------------

Total Liabilities. Commitments and contingencies (Note 4) 1,455 --------- 24,544 --------- 3 1,090 -------- 3,750 28,760 1,577 -------- Convertible preferred stock: $0.0001 par value; Authorized: 27,211 shares; Issued and outstanding: 25,788 and 16,253 shares at December 31, 2000 and 1999, respectively, (aggregate liquidation preference: $134,306 and $32,996 at December 31, 2000 and 1999, respectively)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- -------- 130,691 32,755 35,334 Stockholders' deficitequity: Preferred stock, 10,000,000 shares authorized at $0.01 par value (none issued)................................. -- -- Common stock: 50,000,000 shares authorized at $0.0001 0.01 par value; Authorized: 120,000 shares; Issued , 17,245,000 issued and outstanding: 9,622 and 5,644 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 ...................... 172 172 Additional paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... (80,160) (1,780) Notes receivable from stockholders...................... (1,814) -- Accumulated other comprehensive income............................... 63,291 63,291 Retained earnings........................................ 62,590 80,017 Foreign currency translation adjustment.................. 73 -- Accumulated deficit..................................... (108,602) (19,854) --------- -------- Total stockholders' deficit............................ (84,674) (19,414) equity............................. Total liabilities, convertible preferred stock, --------- -------- warrants, liabilities and stockholders' deficit................... $ 70,561 $ 17,091 equity............. (1,892) -------- 124,161 -------- $152,921 ======== (1,568) -------- 141,912 -------- $177,246 ======== The accompanying notes are an integral part of these statements. DRIL-QUIP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended December 31 ---------------------------- 1996 -------- 1997 1998 -------- -------- (In Thousands) Operating activities Net income...................................... $ 9,118 $ 12,938 $ 17,427 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization................. 4,388 4,989 5,650 Gain on sale of equipment..................... (82) (9) (6) Deferred income taxes......................... Changes in operating assets and liabilities: Trade receivables........................... (505) (4,553) (189) (2,822) 299 (16,994) Inventories................................. (10,815) (2,763) (2,743) Prepaids and other assets................... (144) 133 (641) Trade accounts payable and accrued expenses. Net cash provided by operating activities....... 7,778 -------- 5,185 (1,952) -------- 10,325 6,126 -------- 9,118 Investing activities Purchase of property, plant, and equipment...... (7,228) (10,375) (29,642) Proceeds from sale of equipment................. Net cash used in investing activities........... 222 -------- (7,006) 135 -------- (10,240) 192 -------- (29,450) Financing activities Proceeds from revolving line of credit and long- term borrowings................................ 4,564 4,373 0 Principal payments on long-term debt............ (3,203) (36,307) (203) Dividends paid.................................. (100) -- -- Proceeds from sale of stock..................... Net cash provided by (used in) financing -- -------- 63,320 -------- 0 -------- activities..................................... 1,261 31,386 (203) Effect of exchange rate changes on cash activities..................................... Increase (decrease) in cash..................... (658) -------- (1,218) (220) -------- 31,251 (208) -------- (20,743) Cash at beginning of period..................... Cash at end of period........................... 2,579 -------- $ 1,361 ======== 1,361 -------- $ 32,612 ======== 32,612 -------- $ 11,869 ======== The accompanying notes are an integral part of these statements. DRIL-QUIP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY Unrealized Common Paid-In Retained Translation Stock Capital Earnings Adjustment Total ------ ------- -------- ----------- -------- (In Thousands) Balance at December 31, 1995...... $144 $ -- $40,634 $(1,277) $ 39,501 -------- Translation adjustment.......... -- -- -- 2,363 2,363 Net income...................... -- -- 9,118 -- 9,118 -------- Comprehensive income............ -- -- -- -- 11,481 Dividends ($.007 per share)..... -- -- (100) -- (100) ---- ------- ------- ------- -------- Balance at December 31, 1996...... 144 -- 49,652 1,086 50,882 -------- Translation adjustment.......... -- -- -- (2,978) (2,978) Net income...................... -- -- 12,938 -- 12,938 -------- Comprehensive income............ -- -- -- -- 9,960 Common stock offering........... 28 63,291 -- -- 63,319 ---- ------- ------- ------- -------- Balance at December 31, 1997...... 172 63,291 62,590 (1,892) 124,161 -------- Translation adjustment.......... -- -- -- 324 324 Net income...................... -- -- 17,427 -- 17,427 -------- Comprehensive income............ -- -- -- -- 17,751 ---- ------- ------- ------- -------- Balance at December 31, 1998...... $172 $63,291 $80,017 $(1,568) $141,912 ==== ======= ======= ======= ======== The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGYDRIL-QUIP, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended December 31, ---------------------------- 2000 1999 1998 --------- -------- ------- Revenues: Revenue--Invisalign............................ $ 5,436 $ 98 $ -- Revenue--Ancillary products.................... 1,305 313 -- --------- -------- ------- Total revenues............................... 6,741 411 -- Cost of revenues: Cost of revenue and manufacturing costs-- --------- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... (13,510) (1,343) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General and administrative..................... 17,991 3,474 2,344 Research and development....................... 9,169 4,200 1,474 --------- -------- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. (81,115) (14,705) (3,951) Interest income................................ 2,306 362 185 Interest expense............................... (9,807) (986) -- Other expense.................................. (132) (86) (9) --------- -------- ------- Net loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature of preferred stock.............................. (53,516) -- -- --------- -------- ------- Net loss available to common stockholders........ $(142,264) $(15,415) $(3,775) ========= ======== ======= Net loss per share available to common stockholders, basic and diluted................. $ (25.64) $ (3.65) $ (1.33) ========= ======== ======= Shares used in computing net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 ========= ======== ======= The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT For the years ended December 31, 2000, 1999 and 1998 (in thousands) Notes Accumulated Common Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance at December 31,1998

Total Liabilities. Commitments and contingencies STOCKHOLDERS' EQUITY 57,129 ------- 82,462 ------- 42,988 ------- 81,150 ------- Preferred Stockholders' Equity...................... Common Stockholders' Equity 425 ------- 425 ------- Shares exchangeable into common stock............. Common stock (Note 4) 1,455 --------- 24,544 --------- 3 -------- 3,750 -------- Convertible preferred stockpar value $1.33 1/3 per share; 66 66 authorized: $0.0001 par value; Authorized: 27,211 1,000,000,000 shares; Issued and outstandingissued: 25,788 and 16,253 shares at December 31, 2000 and 1999, respectively, (aggregate liquidation preference: $134,306 and $32,996 at December 31, 2000 and 1999, respectively472,660,324 shares)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- -------- 130,691 32,755 Stockholders' deficit: Common stock: $0.0001 par value; Authorized: 120,000 shares; Issued and outstanding: 9,622 and 5,644 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 Additional paid.............................. 630 630 Paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... (80,160) (1,780) Notes receivable from stockholders...................... (1,814) -- ................................... 1,427 1,001 Accumulated other comprehensive income.................. 73 -- Accumulated deficit..................................... loss (108,602net of tax). (122) (19,85447) --------- -------- Total stockholders' deficit............................ (84,674) (19,414) Total liabilities, convertible preferred Retained earnings................................. 10,475 9,579 ------- ------- 12,476 11,229 Less: Treasury stock, --------- -------- warrants, and stockholders' deficit................... $ 70,561 $ 17,091 ========= ======== The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended December 31, ---------------------------- 2000 1999 1998 --------- -------- at cost: 1998--116,376,259 shares; 1997--133,400,971 shares......................................... 2,101 2,677 Employee stock transactions..................... 668 438 ------- Revenues: Revenue--Invisalign............................ $ 5,436 $ 98 $ -- Revenue--Ancillary products.................... 1,305 313 -- --------- -------- ------- Total revenues............................... 6,741 411 -- Cost of revenues: Cost of revenue and manufacturing costs-- --------- -------- Common Stockholders' Equity................... 9,707 8,114 ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- Stockholders' Equity.......................... 10,132 8,539 ------- Gross loss....................................... (13,510) (1,343) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General and administrative..................... 17,991 3,474 2,344 Research and development....................... 9,169 4,200 1,474 --------- -------- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. (81,115) (14,705) (3,951) Interest income................................ 2,306 362 185 Interest expense............................... (9,807) (986) -- Other expense.................................. (132) (86) (9) --------- -------- ------- Net loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature of preferred stock.............................. (53,516) -- -- --------- -------- ------- Net loss available to common stockholders........ Liabilities and Stockholders' Equity.......... $(142,264) 92,594 $(15,415) $(3,775) ========= =89,689 ======= ======= Net loss per share available See Notes to common stockholders, basic and diluted................. $ (25.64) $ (3.65) $ (1.33) ========= ======== ======= Shares used in computing net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 ========= ======== ======= The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY, INC. AND SUBSIDIARY CONSOLIDATED Condensed Financial Statements F-3 CONDENSED STATEMENTS OF STOCKHOLDERS' DEFICIT For the years ended CASH FLOWS (Parent Company Only) (dollars in millions) Year Ended Last Friday in December 31---------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES 1998 ----------- 1997 ----------- 1996 ----------- Net earnings........................... $ 1,259 $ 1,935 $ 1,648 Noncash items included in earnings: Equity in earnings of affiliates..... (1,727) (2,222) (1,878) Depreciation and amortization........ 30 30 31 Other................................ (183) 103 50 (Increase) decrease in operating assets, 2000net of operating liabilities.. -- (216) 907 Dividends and partnership distributions from affiliates ...................... 868 1,126 1,367 Cash Provided by Operating ----------- ----------- ----------- Activities.......................... CASH FLOWS FROM INVESTING ACTIVITIES 247 ----------- 756 ----------- 2,125 ----------- Proceeds from (payments for): Loans to affiliates, 1999 and 1998 net of payments............................ 774 (22,164) (17,299) Investments in thousandsaffiliates, net of dispositions........................ (436) Notes Accumulated Common Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance at December 31,(60) (129)

Total Liabilities. Commitments and contingencies (Note 4) 1,455 --------- 24,544 --------- 3 11)..................... 80,811 -------- 3,750 503,961 -------- Convertible preferred stock-- -- ---- 500 ---- -- Minority interest........................................... Stockholders equity: $0.0001 par value; Authorized: 27,211 shares; Issued and outstanding: 25,788 and 16,253 shares at December 31, 2000 and 1999, respectively, (aggregate liquidation preference: $134,306 and $32,996 at December 31, 2000 and 1999, respectively)................................ 128,873 31,713 Preferred stock warrants................................ 1,818 1,042 --------- 61,836 -------- 130,691 32,755 Stockholders' deficit: 4 ---- Common stock: $0.0001 par value; Authorized: 120,000 shares; Issued and outstanding: 9,622 and 5,644 shares --------- -------- at December 31, 2000 and 1999, respectively............ 1 1 ................................................ -- -- Additional paid-in capital.............................. 105,828 2,219 Deferred stock-based compensation....................... (80,160) (1,780) Notes receivable from stockholders...................... (1,814) -- Accumulated other comprehensive income.................. 73 .................................. 35,000 -- Accumulated deficit..................................... ......................................... Total shareholders' equity.................................. Total liabilities and shareholders' equity.................. (108,6028,918) (19,854) --------- -------- Total stockholders' deficit............................ (84,674) (19,414) Total liabilities, convertible preferred stock, --------- 26,082 -------- warrants, and stockholders' deficit................... $ 70,561 $ 17,091 =$591,879 ======== ====-- ---- -- ---- $504 ==== The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY48 AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARY SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIOD FROM FOR THE YEAR SEPTEMBER 4, 1997 ENDED (in thousands, except per share dataINCEPTION) Year Ended December THROUGH DECEMBER 31, ---------------------------- 2000 1999 1998 --------- -------- ------- RevenuesDECEMBER 31, 1997 ----------------- ------------------- (DOLLARS IN THOUSANDS) REVENUE: Revenue--Invisalign............................ $ 5,436 $ 98 Basic services............................................. $14,976 $ -- Revenue--Ancillary products.................... 1,305 313 Premium services........................................... 1,468 -- --------- -------- Other...................................................... 1,743 -- ------- Total revenues............................... 6,741 411 ------- 18,187 -- Cost of revenuesOPERATING EXPENSES: Cost of revenue and manufacturing costs-- --------- -------- ------- Invisalign.................................... 19,031 1,508 -- Cost of revenue--Ancillary products............ 1,220 246 -- --------- -------- ------- Total cost of revenues....................... 20,251 1,754 -- --------- -------- ------- Gross loss....................................... (13,510) (1,343) -- Operating expenses: Sales and marketing............................ 40,445 5,688 133 General Selling, general and administrative..................... 17,991 3,474 2,344 Research ........................ 4,207 -- Programming................................................ 4,564 -- Technical and development....................... 9,169 4,200 1,474 --------- -------- operations................................... 1,951 -- Depreciation and amortization.............................. 8,183 -- ------- Total operating expenses..................... 67,605 13,362 3,951 --------- -------- ------- Loss from operations............................. ....................................... (81,115718) (14,705) (3,951) -- Interest income................................ 2,306 362 185 ............................................ 173 4 Interest expense............................... ........................................... (9,807) (9868,223) -- Other expense.................................. , net......................................... (13265) -- ------- ------- Income (86loss) before income taxes.......................... (98,833) --------- -------- 4 (Benefit) from income taxes................................ (2,754) -- Income (loss) before minority interest and extraordinary ------- ------- item..................................................... (6,079) 4 Minority interest in income of consolidated entity......... 1,331 (4) ------- ------- Income (loss) before extraordinary item.................... (4,748) -- Extraordinary loss on extinguishment of debt (net of tax of $1,743).................................................. (4,170) -- ------- ------- Net income (loss......................................... (88,748) (15,415) (3,775) Dividend related to beneficial conversion feature of preferred stock.............................. (53,516) -- -- --------- -------- ------- Net loss available to common stockholders........ ).......................................... $(142,264) $(15,415) $(3,775) ========= ======== ======= Net loss per share available to common stockholders, basic and diluted................. $ (25.648,918) $ (3.65) $ (1.33) ========= ======== ======= Shares used in computing net loss per share available to common stockholders, basic and diluted......................................... 5,548 4,218 2,842 ========= =-- ======= ======= The accompanying notes are an integral part of these consolidated financial statements. ALIGN TECHNOLOGY49 AVALON CABLE OF MICHIGAN HOLDINGS, INC. AND SUBSIDIARY SUBSIDIARIES CONSOLIDATED STATEMENTS STATEMENT OF STOCKHOLDERSCHANGES IN SHAREHOLDERS' DEFICIT For the years ended December EQUITY FOR THE PERIOD FROM SEPTEMBER 4, 1997 (INCEPTION) THROUGH DECEMBER 31, 20001998 COMMON ADDITIONAL TOTAL SHARES COMMON PAID-IN ACCUMULATED SHAREHOLDERS' OUTSTANDING STOCK CAPITAL DEFICIT EQUITY ----------- ------ ---------- ----------- ------------- (IN THOUSANDS, 1999 and 1998 (in thousandsEXCEPT SHARE AMOUNTS) Notes Accumulated Common Stock Additional Deferred Receivable Other -------------- Paid-In Stock-based Net income from Comprehensive Accumulated Shares Amount Capital Compensation Stockholders Income Deficit Total Balance at December 31,date of inception