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APPENDIX A


GLOSSARY balance sheet a financial report that shows the company's assets, liabilities, and shareholders' equity as of the close of a reporting period call an option that entitles the option holder to buy from the counter-party a commodity, financial instrument, or other asset at an exercise or strike price throughout the option term or at a fixed date in the future (the expiration date) collar a derivative transaction combining a put and a call (one written and one purchased) that effectively sets a limit on the gain and the loss that the holder of the contract will realize consolidated financial statement a financial statement that brings together all the assets, liabilities, and operating results of a parent company and its subsidiaries, as if the group were a single enterprise cost method of accounting an accounting method whereby an investor records an investment at the cost it paid, and does not record any gains or losses until receiving a distribution or disposing of that investment costless collar a collar in which the premiums payable on the put and the call equal one another, so neither party pays the other at the inception of the transaction credit capacity a counter-party's ability to meet its financial obligations derivative a contract whose value is based on the performance of an underlying financial asset, index, or other investment equity method of accounting an accounting method whereby an investor initially records an investment in an entity at cost and then, in contrast to the cost method of accounting, adjusts that amount to recognize its share of the entity's earnings or losses The investor does not recognize any gains or losses resulting from its transactions with the entity


fair value the amount at which an asset (liability) could be bought (incurred) or sold (settled) in a current transaction between willing parties fairness opinion professional judgment on the fairness of the price being offered in a transaction Form 10-K annual report filed with the Securities and Exchange Commission providing a comprehensive overview of the registrant's business and filed within 90 days after the end of the company's fiscal year Form 10-Q quarterly report filed with the Securities and Exchange Commission for each of the first three fiscal quarters of the company's fiscal year and due within 45 days of the close of the quarter forward contract a contract to purchase or sell a specific quantity of a commodity, currency, or financial instrument at a specified price with delivery and settlement at a specified future date hedge a strategy used to minimize price risk income statement a summary of the revenues, costs, and expenses of a company during an accounting period in the money a call option is in-the-money if the price of the underlying commodity, financial instrument, or other asset exceeds the strike or exercise price; a put option is in-the money if the strike or exercise price exceeds the price of the underlying commodity, financial instrument, or other asset joint venture an enterprise owned and operated by a limited number of parties (the joint venturers) as a separate and specific business or project for their mutual benefit merchant investment an investment in a public or private equity, debt security, loan, or an interest in a limited partnership that is carried at fair value


notional value or notional amount the face value of the underlying instrument on which a derivative is contracted option premium amount paid for the right to either buy or sell the underlying commodity, financial instrument, or other asset at a particular price within a certain time period promissory note written promise committing the party writing the note to pay the holder of the note a specified sum of money, either on demand or at a certain date, with or without interest proxy statement information that the Securities and Exchange Commission requires companies to provide to shareholders before they vote by proxy on company matters put an option that entitles the option holder to sell to the counter-party a commodity, financial instrument, or other asset at an exercise or strike price throughout the option tern or at a fixed date in the future (the expiration date) share-settled derivative a derivative contract in which the party with a loss delivers to the party with a gain shares or units of the underlying commodity, financial instrument, or other asset special purpose entity (or special purpose vehicle) typically an entity created for a limited purpose, with a limited life and limited activities, and designed to benefit a single company total return swap an arrangement whereby one party agrees to pay the other party the appreciation from an asset and receive payments from the other party for the depreciation of an asset warrant option to purchase a specified number of shares of stock at a stated price for a specific time period


APPENDIX B


Timeline June - December 1999 U) 4-1 6/30 - UM I Formed 10/20 - UM2 Formed LU 2nd QTR 1999 3rd QTR 1999 4th QTR 1999 April May June July TAugust Septem er October 7November December 466/30 9/30 12/30 RhythmsNet Investin Sell U) Yosemite C: Closes Cuiaba 0 Certificates 4-j U 40 12/29 fu Investin MEGS 49/23 12/14 Invest Sell 12/29 in Osprey Trust Osprey Trust Investin Certificates Certificates to Yosemite Chewco Certificates ~ 12/28 12/20 Investin $38 5MM Bob West Loan'from Treasure Whitewing 12/22 Investin ENA CLO Trust 4j 12/21 Investin Nowa Sarzyna (Poland)


Timeline January - June 2000 Ist QTR 2000 2nd QTR 2000 January -T Fe March April May June 1 5/11 1/6 -~3/29 Investin Sell - Nowa Option Premium - Cortez Sarzyna 5/9 Blue Dog 16/30 3/28 Extension Purchase - Investin Fee - Cuiaba Backbone Rawhide 6/29 3/23 ~4/28 Investin RhythmsNet - RhythmsNet Raptor II Loan Unwind 6/26 4/18 Invest Invest in Margaux in Raptor I 63/6 Sell - MEGS 6/2 Distribution - Bob West Treasure 2


T0 imeline July - December 2000 3rd QTR 2000 4th QTR 2000 July August September October November December 112/28 Sell -Backbone 4111/17 Final Payment - 9/27 Loan from 112/22 Invest Whitewing Investin 7/12 418/3 inRaptor III Fishtail Invest in Additional 41 9/22 Option Extension Osprey Trust Investment Additional Fee - Blue Dog 0 12/15 Certificates in Raptor I Investment in Option Exercised - (effective date) Raptor 11 10/10 Blue Dog Investin 7/10 68/3 4 9/22 Osprey Assoc. Invest $41MM $41MM Certificates 12/11 in TNPC Distribution - Distribution - Invest Raptor 1 0 9/11 Raptor II in JGB Trust (effective date) Investin (Avici) 47/7 Raptor IV Option Fee - 12/11 Invest Coyote Springs 10/5 in LAB Trust $39.5MM (Catalytica) Distribution - Raptor III 3


Timeline January - December 2001 10/16 - 31d Qtr 2001 Earnings Release Michael Kopper Buys Andrew 10/24 - Andrew Fastow U) Fastow's Interest in L3M2 Placed on Leave; Jeff 4-) C * 8/14 - Jeff Skilling Resigns McMahon Named CFO Q) 2/12 - Jeff Skilling Named CEO > Sherron Watkins Letter 11/8 - Restatement LU Sent to Ken Lay TAnnounced Ist QTR 2001 2nd QTR 2001 3rd QTR 2001 4th QTR 2001 January February March April May June July August September October November December 5/17 9/28 01 3/26 Sell - Raptor Raptor ENA CLO 0 Restructure Unwind t 9/18 U) 3/26 Tax C: Sell - Indemnity ro Chewco Interest Payment in JEDI 41 8/15 to Chewco iol/23 3/12 Sell - $40.5MM Sell - Cuiaba Distribution - LAB Trust Raptor IV (Catalytica) 4

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