High Yield Research

January 21, 2004

Best High Yield Picks for 2004

THIS MESSAGE CONTAINS INSUFFICIENT INFORMATION TO MAKE AN INVESTMENT DECISION. Please contact your Jefferies representative for copies of the most recent research reports on individual companies. Building Products / Food Companies / Restaurants / Consumer Products / Homebuilders Kenneth P. Bann kbann@jefco.com tel (973) 912-2790 fax (973) 912-2890 BUY 52 029309AL5 American Restaurant Group 11.5% Secured Notes due 11/1/2006 BUY 82 975377AD4 Brown Jordan 12.75% Senior Subordinated Notes due 8/15/2007 BUY 70 00758BAA7 Denny's (Advantica) 11.25% Senior Notes due 1/15/2008 BUY 103 00763HAA7 Denny's (Advantica) 12.75% Secured Notes due 9/30/2007 BUY 94 252435AF9 DiGiorgio 10% Senior Notes due 6/15/2007 BUY 85 306075AC6 Falcon Products 11.375% Senior Subordinated Notes due 6/15/2009 BUY 93 390064AH6 Great Atlantic and Pacific Tea Co 9.125% Senior Notes due 12/15/2011 BUY 95 390064AG8 Great Atlantic and Pacific Tea Co 7.75% Senior Notes due 4/15/2007 BUY 88 514666AE6 Land O'Lakes 8.75% Senior Notes due 11/15/2011 BUY 62 514665AA6 Land O'Lakes 7.45% Subordinated Notes due 3/15/2028 BUY 82 553090AC5 MMI Products 11.25% Secured Notes due 4/15/2007 BUY 97 649271AN3 New World Restaurant Group 13% Secured Notes due 7/1/2008 BUY 65 670688AA8 Nutritional Sourcing (Pueblo Xtra) 10.125% Senior Notes due 8/1/2009 BUY 62 .5 749195AC7 RAB Enterprises 10.5% Senior Notes due 5/1/2005 BUY 70 950761AC0 Werner 10% Senior Subordinated Notes due 11/15/2007 SELL 70 437305AC9 Home Products 9.625% Senior Subordinated Notes due 5/15/2008 SELL 79 52736RAM4 Levi Strauss 12.25% Senior Notes due 12/15/2012 SELL 81 52736RAJ1 Levi Strauss 11.625% Senior Notes due 1/15/2008 SELL 79 805844AC1 Sbarro 11% Senior Notes due 9/15/2009 Aerospace / Packaging / Miscellaneous Bradley K. Bryan bbryan@jefco.com tel (310) 575-5113 BUY 94 000361AC9 AAR Corp 6.875% Senior Notes due 2007 BUY 94 361695AC3 GFSI (Gear for Sports) 9.625% Senior Subordinated Notes due 2007 BUY 104 .5 428291AC2 Hexcel 9.75% Senior Subordinated Notes due 2009 Gaming / Ski Resort Operators / Timeshare Operators / Miscellaneous Raymond S. Cheesman rcheesma@jefco.com tel (970) 926-5309 fax (973) 926-5522 BUY 119 .625 983130AA3 Wynn Las Vegas 12% Mortgage Notes due 11/1/2010 BUY 99 .5 89816RAA5 Trump Holding & Funding 11.625% First Mortgage Notes due 3/15/2010 BUY 104 769627AF7 Riviera Holdings 11% Notes due 6/15/2010 BUY 110 679624AA4 Old Evangeline Downs 13% Notes due 3/1/2010 BUY 108 553769AA8 MTR Gaming 9.75% Notes due 4/1/2010 BUY 102 59862KAF5 Mikohn Gaming 11.875% Notes due 8/15/2008 BUY 107 56075RAD4 Majestic Star 9.5% Notes due 10/15/2010 BUY 105 .625 44075LAH4 Horseshoe Gaming 8.625% Notes due 5/15/2009 (as yield to call paper) Transportation / Financial Services / Movie Theaters Oliver Corlett ocorlett@jefco.com tel (310) 575-5110 BUY 12 025198AE2 ACL 11.25% Senior Notes due 1/1/2008 BUY 100 .5 824689AA1 Ship Finance International 8.5% Senior Notes due 12/15/2013
Prices shown are recent indications, not targets. Please contact your Jefferies representative or the relevant analyst for in-depth research. January 21, 2004 Page 1 of 3

Exploration & Production / Land & Offshore Drilling / Oil Services / Refining & Marketing / Seismic / Distribution / Tubulars, Retail & Other Energy / Power Greg Imbruce gimbruce@jefco.com tel (203) 708-5800 fax (203) 708-5820 BUY 100 077447AC4 Belden & Blake Corp 9.875% Senior Subordinated Notes due 6/2007 BUY 81 131347AW6 Calpine Corp 8.5% Senior Notes due 2/2011 BUY 101 212013AC0 Continental Resources 10.25% Senior Subordinated Notes due 8/2008 BUY 85 292660AC1 Energy Corp of America 9.5% Senior Subordinated Notes due 5/2007 BUY 102 .25 482434AD9 KCS Energy Inc 8.875% Senior Subordinated Notes due 1/2006 BUY 99 605109AA5 Mission Resources Corp 10.875% Senior Subordinated Notes due 4/2007 BUY 109 .5 716599AB1 Petroleum Geo-Services 10% Senior Notes due 11/2010 BUY 102 .25 716599AA3 Petroleum Geo-Services 8% Senior Notes due 11/2006 BUY 80 911358AC3 United Refining Co 10.75% Senior Notes due 6/2007 BUY 99 977284AC2 Wiser Oil Co 9.5% Senior Subordinated Notes due 5/2007 SELL 73 003830AF3 Abraxas Petroleum 11.5% Senior Secured Second Lien PIK Notes due 5/2007 SELL 101 .75 542312AB9 Lone Star Technologies 9% Senior Subordinated Notes due 6/2011 SELL 93 978093AC6 Wolverine Tube Inc 7.375% Senior Notes due 8/2008 SELL 103 .25 978093AE2 Wolverine Tube Inc 10.5% Senior Notes due 4/2009 Healthcare / Retail Elie J. Radinsky eradinsk@jefco.com tel (973) 912-2958 fax (973) 912-2890 Timothy J. Lepore, CFA tlepore@jefco.com tel (973) 912-2790 fax (973) 912-2890 BUY 104 421924AP6 HEALTHSOUTH 10.375% Senior Subordinated Notes due 10/1/2008 (We also like the rest of the HEALTHSOUTH capital structure.) BUY 96 04685RAA2 Elan 7.25% Athena Neuro Senior Notes due 2/21/2008 BUY 106 .5 778669AA9 Rotech 9.5% Senior Subordinated Notes due 4/1/2012 BUY 112 .5 767754AW4 Rite Aid 11.25% Senior Notes due 7/1/2008 BUY 111 .5 767754B68 Rite Aid 9.25% Senior Secured Notes due 2/15/2011 (We also like the rest of the Rite Aid capital structure.) BUY 100 068086AB3 Barneys New York 9% Senior Secured Notes due 4/1/2008 SELL 56 89708PAA0 Tropical Sportswear International 11% Senior Subordinated Notes due 6/15/08 Telecommunications Services Romeo A. Reyes rreyes@jefco.com tel (203) 708-5800 fax (203) 708-5820 Chak K. Gude cgude@jefco.com tel (203) 708-5803 fax (203) 708-5820 Stephen P. Sweeney, CFA ssweeney@jefco.com tel (203) 708-5805 fax (203) 708-5820 BUY 84 009367AA1 AirGate 0/13.5% Senior Subordinated Discount Notes due 10/1/2009 BUY 100 499183AA9 Knology 12% Senior Notes due 11/30/2009 BUY 17 .5 59501T502 Microcell 9% PIK First Preferreds (A) BUY 17 .5 59501T601 Microcell 9% PIK First Preferreds (B) BUY 17 .5 59501T700 Microcell 9% PIK Second Preferreds (C) BUY 17 .5 59501T809 Microcell 9% PIK Second Preferreds (D) BUY 45 803895AB7 SatMex 10.125% Senior Notes due 11/1/2004 BUY 75 90348AAC3 UbiquiTel 14% Senior Discount Notes (New) due 5/15/2010 BUY 75 UbiquiTel 14% Series B Discount Notes (New) due 12/31/2008 BUY 70 903473AC0 UbiquiTel 14% Senior Subordinated Discount Notes (Old) due 4/15/2010 BUY 83 90338RAC8 US Unwired 13.375% Senior Subordinated Discount Notes due 11/1/2009 SELL 40 01747TAC6 Allegiance 11.75% Senior Notes due 2/15/2008 SELL 40 01747TAF9 Allegiance 12.875% Senior Notes due 5/15/2008 SELL 8 .24 582266805 McLeodUSA 2.5% Series A Convertible Preferred ($17.50 Face, 10mm Shrs)
Prices shown are recent indications, not targets. Please contact your Jefferies representative or the relevant analyst for in-depth research. January 21, 2004 Page 2 of 3

Special Situations / Post-Bankruptcy Debt & Equity Joseph P. von Meister, CFA jvm@jefco.com tel (973) 912-2790 fax (973) 912-2890 Kyle D Smith ksmith@jefco.com tel (973) 912-2790 fax (973) 912-2890 BUY 90 172172AE8 Cincinnati Milacron Inc. 8.375% Senior Notes due 3/15/2004 current payer BUY 35 235773AB4 Dan River Inc 12.75% Senior Notes due 4/15/2009 current payer BUY 95 553758AJ2 MSX International Inc 11% Units due 10/15/2007 current payer BUY 65 553758AC7 MSX International Inc 11.375% Senior Sub Notes due 1/15/2008 current payer BUY 77 36229NAB4 GSI Group 10.25% Senior Subordinated Notes due 11/1/2007 current payer BUY 30 605288AA7 Mississippi Chemical 7.25% Senior Notes due 11/15/2007 in Chapter 11 NR* 90 780879AB8 Royster-Clark Inc 10.25% First Mortgage Notes due 4/1/2009 current payer NR* 118 88089PAB9 Terra Capital Inc 12.875% Secured Notes due 10/15/2008 current payer NR* 105 .875 88089PAD5 Terra Capital Inc 11.5% Secured Notes due 6/1/2010 current payer * Sector is recommended a BUY, not the specific bonds of the companies within the sector. Please see report. SELL 82 344126AG2 Foamex L.P. 9.875% Senior Subordinated Notes due 6/15/2007 current payer SELL 95 .5 344126AJ6 Foamex LP/Foamex Cap Crp 13.5% Sr Sub Notes due 8/15/05 current payer SELL 90 76115NAB7 Resolution Performance 13.5% Senior Sub Notes due 11/15/10 current payer We have one top pick that is a post-reorg stock idea. Please contact your Jefferies representative for details.
Please contact the relevant analyst for in-depth research supporting the recommendations outlined above.

2004 Jefferies & Company, Inc. All rights reserved. This material has been prepared by Jefferies & Company, Inc. ("Jefferies") a U.S.-registered broker-dealer, employing appropriate expertise, and in the belief that it is fair and not misleading. It is approved for distribution in the United Kingdom by Jefferies International Limited ("JIL") regulated by the Financial Services Authority ("FSA"). The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore except for any obligations under the rules of the FSA, we do not guarantee its accuracy. Additional and supporting information is available upon request. This is not an offer or solicitation of an offer to buy or sell any security or investment. Any opinion or estimates constitute our best judgment as of this date, and are subject to change without notice. Jefferies and JIL and their affiliates and their respective directors, officers and employees may buy or sell securities mentioned herein as agent or principal for their own account.This material is intended for use only by professional or institutional investors falling within articles 19 or 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001and not the general investing public. None of the investments or investment services mentioned or described herein are available to other persons in the U.K. and in particular are not available to "private customers" as defined by the rules of the FSA or to anyone in Canada who is not a "Designated Institution" as defined by the Securities Act (Ontario). In March 2003, Jefferies sole managed a senior secured note offering for Barney's New York. In March 2002, Jefferies acted as co-manager of a 144A Offering of $200 million Senior Secured Notes due 2012 for Foamex L.P. and Foamex Capital Corporation. Jefferies has also provided fairness opinions to the company. In September 2003, Jefferies acted as a financial advisor to GFSI, Inc. In November 2003, Jefferies acted as lead manager of an offering of common stock for KCS Energy, Inc. In September 2003, Jefferies acted as lead placement agent on a high yield debt financing for Majestic Star Casino, LLC and Majestic Investor Holdings, LLC. Concluding in April 2003, Jefferies acted as advisor to certain Noteholders of Microcell Telecommunications Inc. In September 2003, Jefferies acted as financial advisor to Mikohn Gaming Corporation in a private placement. In addition, Jefferies is the beneficial owner of more than 10% of MIKN common stock. Jefferies is acting as advisor to Mikohn Gaming Corp. In July 2003, Jefferies acted as sole manager of a 144A private placement of Senior Secured Notes for MSX International. In March 2003, Jefferies acted as sole placement agent in connection with a 144A placement of debt for MTR Gaming Group. In June 2003, Jefferies acted as sole placement agent in connection with an offering of Senior Secured Notes for New World Restaurant Group. In June 2003, Jefferies acted as financial advisor to bondholders in the restructuring of Nutritional Sourcing Corporation (Formerly Pueblo Xtra). In February 2003, Jefferies acted as sole placement agent in connection with a 144A placement of debt for Old Evangeline Downs. In March 2003, Jefferies acted as co-underwriter of a high yield debt offering for Trump Casino Funding, Inc. In March 2003, Jefferies acted as co-underwriter of a high yield debt offering for Trump Casino Holdings, LLC. Jefferies acted as financial advisor to Trump Hotels & Casino Resorts, Inc. in connection with a high yield debt offering.
Prices shown are recent indications, not targets. Please contact your Jefferies representative or the relevant analyst for in-depth research. January 21, 2004 Page 3 of 3