Вы находитесь на странице: 1из 65

EXPERT VALUATION REPORT

Updated as of October 22, 2004 Co-Authors


Bill Derrough, Managing Director and Co-Head of the Recapitalization and Restructuring Group Michael Henkin, Senior Vice President, Recapitalization and Restructuring Group

EXPERT REPORT
The following pages contain a valuation analysis of Federal-Mogul Corporation (Federal-Mogul or the Company) prepared by Jefferies & Company, Inc. (Jefferies). The information contained in this presentation was based upon publicly available information obtained by Jefferies or information furnished by the Company. Jefferies has relied, without independent investigation or verification, on the accuracy, completeness and fair presentation of all such information, and the conclusions contained herein are conditioned upon such information (whether written or oral) being accurate, complete and fair in all respects. All budgets, projections, financial analyses, reports and other information with respect to Federal-Mogul and its respective subsidiaries operations contained herein have been prepared by the management of Federal-Mogul or are derived from such budgets, projections, financial analyses, reports and other information of Federal-Mogul which involves numerous and significant subjective determinations made by the management of Federal-Mogul. The estimates, budgets and projections contained herein may or may not be achieved and differences between projected results and those actually achieved may be material. With respect to Federal-Moguls financial projections examined by Jefferies, Jefferies assumed that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Federal-Mogul as to the future performance of Federal-Mogul. Jefferies valuation analysis assumes that operating results projected by the Company will be achieved in all material respects. To the extent that the valuation is dependent upon the Companys achievement of its projections, the valuation must be considered speculative. It should be understood that, although subsequent developments may affect Jefferies conclusions, Jefferies does not have any obligation to update, revise or reaffirm its estimates. Neither Jefferies nor any of its advisors or accountants take any responsibility for the accuracy or completeness of any of the accompanying material. Jefferies has not been requested to, and did not make an independent evaluation or appraisal of the assets or liabilities (contingent or otherwise), solvency or financial condition of Federal-Mogul or any of its respective subsidiaries or affiliates, nor has Jefferies been furnished with any such evaluations or appraisals. The preparation of the material contained herein involves various determinations as to the most appropriate and relevant methods of financial analyses and the application of those methods to particular circumstances and, therefore, such an opinion is not readily susceptible to summary description. Furthermore, Jefferies did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Jefferies analyses must be considered as a whole. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying the conclusions expressed herein. In its analyses, Jefferies made many assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Federal-Mogul. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth herein. Based on Jefferies' work in this case and the accuracy of Federal-Mogul management's recent projections, Jefferies believes there is no valid reason to question the reasonableness of Federal-Mogul's budgets, projections and other financial analyses relied upon herein.

TABLE OF CONTENTS
TAB
Jefferies Qualifications....................................................................................................................... 1 Executive Summary ........................................................................................................................... 2 Valuation Analysis.............................................................................................................................. 3 Appendix ............................................................................................................................................ 4 Comparable Company Valuation Analysis ................................................................................A Comparable M&A Transaction Valuation Analysis....................................................................B Discounted Cash Flow Valuation Analysis ................................................................................C Restructured Debt Discount Analysis ........................................................................................D

ii

JEFFERIES QUALIFICATIONS

JEFFERIES QUALIFICATIONS
Background
Jefferies is optimally positioned to opine on Federal-Moguls value due to the depth and breadth of its knowledge of securities valuation, restructuring and the public markets
SECURITIES AND VALUATION CREDENTIALS Jefferies is one of the leading traders / market makers of equities in the United States #1 volume trader of NASDAQ stocks(1) Trader of 13% of NYSE(1) Jefferies has led or co-managed over $5.1 billion in 39 separate IPOs and secondary equity offerings YTD 2004 #10 in mergers and acquisitions (M&A) transactions under $500 million(2) #1 ranked underwriter in 2002 to first half 2004 domestic single B new issues under $150 million POST-RESTRUCTURING EQUITIES CREDENTIALS #1 trader of post restructuring equities One of the only firms to have dedicated equity research analysts for post-restructuring sector One of the only firms to have dedicated, integrated end-to-end post-restructured equities trading and market making capabilities
(1) (2)

Source: Autex. For the period July 1, 2003 June 30, 2004. Source: Mergerstat. All announced U.S. based deals with transaction value of less than $500 million for 2003. Excludes certain transactions such as privatizations, buybacks, open market purchases, joint ventures, litigations, alliances and collars; full credit to each advisor. 2

JEFFERIES QUALIFICATIONS
Jefferies is an industry expert at trading and valuing post-reorganization equity securities
Jefferies powerful sales and trading platform and distribution are key to its capabilities 125 account execs cover over 2,000 institutional accounts, among largest on the Street Ranked #1 in the trading and execution of small cap stocks according to 2001 Reuters Survey Jefferies Execution Services handles approximately 13% of the reported trading volume on the NYSE Makes markets in nearly 3,000 stocks Top 5 trader in over 2,000 Nasdaq stocks (AutEx, LTM June 30, 2004) Over 100 research professionals follow more than 750 companies, including Federal-Moguls sector Jefferies is an industry expert at trading and valuing post-reorganization equity securities The firm has strong standing in special situations and Bulletin Board trading A leading trader of distressed and post Chapter 11 debt and equity securities Farukh Z. Farooqi, Post-Reorganization Equity Analyst, and Joseph Von Meister, Senior Analyst of Distressed and Special Situations, specialize in sector

JEFFERIES QUALIFICATIONS
Jefferies dominates the trading of post-Chapter 11 equity securities
Company
Alderwoods Group Anacomp Arch Wireless Assisted Living Carmike Cinemas Chiquita Brands Dade Behring Factory Card Outlet Genesis Health Joy Global Kindred Health Kmart Holding Corp McLeodUSA Motient Corp. Pathmark Stores Pillowtex Corp. Sun Healthcare Washington Grp.

Ticker
AWGI ANCPA AWIN ASLC CKEC CQB DADE FCPO GHVI JOYG KIND KMRT MCLD MNCP PTMK PWTXQ SUNH WGII

Date of First Trade


01/03/02 02/05/02 5/30/02 01/09/02 02/01/02 03/20/02 10/17/02 05/07/02 10/15/01 06/08/01 04/26/01 04/30/03 04/18/02 05/15/02 09/28/00 06/07/02 03/08/02 04/10/02

Jefferies Trading Rank (First year from first trade)


1 No trades(1) 1 2 3 1 1 No trades(1) 2 1 6 1 4 2 4 1 1 1

Jefferies Trading Rank (Date of First Trade through September 30, 2004)
2 1 1 2 2 4 1 3 1 1 3 1 6 1 1 2 4 2

(1)

Only two brokers made a trade in these securities. Source: AutEx. 4

JEFFERIES QUALIFICATIONS
Bill Derrough Biography
William Q. Derrough is Managing Director, Co-head of Jefferies Recapitalization and Restructuring Group and Head of the firms New York investment banking office where he oversees all investment banking activities. At Jefferies, Mr. Derrough works with a diverse group of clients and investors in a wide range of industries. Since joining Jefferies in early 1998, Mr. Derrough has been actively involved in over 40 restructurings, recapitalizations, financings, M&A and other transactions Prior Professional Experience Doyle & Boissiere, Principal (1997 1998) Chanin and Company, Senior Vice President (1991 1997) Salomon Brothers, Financial Analyst (1988 1991) Education and Affiliations BA from University of California, Berkeley Co-Chair, American Bankruptcy Institutes Investment Banker Program Securities Licenses and Memberships NASD Series 7 General Securities Representative Series 63 State Agent Series 24 General Securities Principal Philadelphia Stock Exchange, Pacific Stock Exchange General Securities Representative

JEFFERIES QUALIFICATIONS
Bill Derrough Biography (Contd)
Mr. Derrough has served as investment banker in a number of restructurings, financings and M&A transactions, including:
Jefferies & Company, Inc. (1998 present)
AmeriServe Food Distribution Co. (food distributor) Anacomp, Inc. (data management) CHS Electronics (computer distributor) Cone Mills Corporation (textile manufacturing) pending CyberCash (online bill payment) Decora Industries, Inc. (consumer products) Einstein/Noahs Bagel Corp. (restaurants) Electronic Retailing Solutions, Inc. (wireless retail shelf labeling; self-checkout) Enterprises Shipholding Corporation (refrigerated and container ships) Envirosource Corp. (steel services and waste management) Ermis Maritime Holdings (shipping) Farrell Lines, Inc. (U.S. flag container shipping) Federal-Mogul Corporation (automotive parts manufacturer) pending Fitzgeralds Gaming Corporation (casino hotels) Formica Corporation (building materials) Ft. Worth Tower (communications tower manufacturing) Globalstar (satellite telecommunications) Golden Books Family Entertainment (childrens publishing and media) Golden Ocean Group, LTD. (oil tankers) Heartland Wireless Communications (broadband wireless TV and internet) Hvide Marine (maritime) ICO Global Communications Ltd. (satellite communications) ICO Teledesic Global Ltd. (satellite communications) International Wireless Communications (developing country wireless telephony) Kellstrom Industries (aviation parts) LLS Corporation (injection molded closures and containers) Long Distance International (international long distance network) Loral Space & Communications, Ltd. (satellite manufacturer and service provider) pending MobileMedia Corporation (wireless messaging) Net2000 (CLEC) NextWave Communications (PCS wireless telephony) Orbital Sciences Corporation (satellite manufacturer and services provider) Orius Corp. (telecom infrastructure) Pliant Systems (telecom equipment manufacturer) Russell-Stanley (plastic and steel containers) Specialty Foods Corporation (bakery and meat products) Startec Communications (international long-distance telecom provider) Sunterra (timeshare/real estate) Trans Texas Corporation (oil & gas exploration, gas distribution and oil refining) TSR Wireless Communications (paging and wireless telephony) Vlasic Foods (branded food manufacturer) XO Communications (CLEC)

JEFFERIES QUALIFICATIONS
Bill Derrough Biography (Contd)
Chanin and Company (1991 1997)
Ames Department Stores (retailer) Anacomp (data storage and imaging) Angeles Corp. (real estate) Angeles Participating Mortgage Trust (mortgage REIT) Angeles Mortgage Investment Trust (mortgage REIT) Burlington Motor Holding (trucking) Carter Hawley Hale Stores (department stores) C&R Clothiers (mens apparel) Cherokee (casual apparel manufacturer) Evergreen International Aviation (air cargo) International Paging Corporation (paging) KDI Corporation (manufacturing) Kerr Group (plastic closure manufacturing) Morrison Knudsen Corporation (engineering and construction) Northern Automotive Corporation (auto parts retailer) Orange County, California (municipality) Resorts International (casino-hotels) Scott Cable Communications (rural cable television systems) Sea Life Park (marine mammal amusement park) Strategic Partners (medical uniforms)

Salomon Brothers (1988 1991)


Almacs Supermarkets (supermarkets) ARCO (integrated oil) Avalon Marketing (consumer products) Circus Circus Enterprises (casino-hotels) First Capital Holdings (life insurance) Mirage Resorts (casino-hotel) Occidental Petroleum (integrated oil) Ralphs (supermarkets) Pacific Enterprises (holding company) Unocal Corporation (integrated oil) Unocal Exploration Partners (oil & gas exploration and production) Vons Companies (supermarkets)

JEFFERIES QUALIFICATIONS
Bill Derrough Expert Testimony
Cases in which Mr. Derrough testified as an expert at trial:
Company Cherokee, Inc. MobileMedia Corporation Heartland Wireless Communications, Inc. VF Brands, Inc. (Vlasic Foods) Cych, Inc., et al. (Cybercash) Pliant Systems, Inc. Golden Books Family Entertainment, Inc. Globalstar L.P. Formica Corporation Exide Technologies Filing Date 4/23/93 1/30/97 12/4/98 1/29/01 3/2/01 5/1/01 6/4/01 2/15/02 3/5/02 4/15/02 Case Number 93-00467-HSB 97-00175-PJW 98-02692-PJW 01-00285-MFW 01-00622-MFW 01-01264 01-01920-MFW 02-10504-PJW 02-10969-BRL 02-11125-KJC Judge Helen S. Balick Peter J. Walsh Peter J. Walsh Mary F. Walrath Mary F. Walrath A. Thomas Small Mary F. Walrath Peter J. Walsh Burton R. Lifland Kevin J. Carey Court U.S. Bankruptcy Court - Delaware U.S. Bankruptcy Court - Delaware U.S. Bankruptcy Court - Delaware U.S. Bankruptcy Court - Delaware U.S. Bankruptcy Court - Delaware U.S. Bankruptcy Court - Eastern District of North Carolina U.S. Bankruptcy Court - Delaware U.S. Bankruptcy Court - Delaware U.S. Bankruptcy Court - Southern District of New York (Manhattan) U.S. Bankruptcy Court - Delaware

JEFFERIES QUALIFICATIONS
Michael Henkin Biography
Michael Henkin is Senior Vice President of Jefferies Investment Banking Department with over 12 years of investment banking and operational experience. Mr. Henkin has significant expertise in restructuring advisory with distressed companies, representing both debtors and creditors in a wide range of industries, including communications, technology, manufacturing, services and consumer. Mr. Henkin has been with Jefferies for over six years (1991 1994, 2001 present) and has executed and closed over 30 transactions, including more than ten Chapter 11 cases (and foreign equivalents) and numerous public / private financings, M&A and other corporate finance assignments Prior Professional Experience NextEngine, President and Chief Operating Officer (1999 2001) Loral Space & Communications, Senior Vice President, Business Development and Director, Operations Planning (1998 1999) News Corporation, Vice President, Business Development (1995 1998) Education Stanford Graduate School of Business, MBA and Global Management Certificate (1996) University of California, Los Angeles, BA in Economics / Business, Summa Cum Laude, Phi Beta Kappa (1990) Musicians Institute, Guitar Institute of Technology (1991) Securities Licenses NASD Series 7 General Securities Representative Series 63 State Agent

JEFFERIES QUALIFICATIONS
Michael Henkin Biography (Contd)
Mr. Henkin has served as investment banker in a number of restructurings, financings and M&A transactions, including:
Jefferies & Company, Inc. (1991 1994, 2001 Present)

Ballys Park Place, Inc. (casino / lodging operator) BTI Telecom Corporation (telecommunications services company) CHC Helicopter Corporation (commercial helicopter operator) Cherokee, Inc. (apparel marketer and licenser) DDI Corp. (electronics developer and manufacturer) Earthlink, Inc. / OmniSky Corp. (internet and wireless services) Exide Technologies (battery manufacturer) Federal-Mogul Corporation (automotive parts manufacturer) pending Jordon Industries, Inc. (multiple-industry holding company) Kash n Karry Food Stores, Inc. (supermarket operator) Liggett Group Inc. (tobacco distributor) Loral Space & Communications Ltd. (satellite manufacturer and service provider) pending

Microcell Telecommunications, Inc. (wireless services provider) Mpower Holding Corp. (telecommunications service provider) Orbital Sciences Corp. / Orbital Imaging Corp. (satellite manufacturer and service provider) Orchard Supply Hardware Stores Corporation (retailer) Philip Services Corp. (environmental and metal services) Rhythms NetConnections, Inc. (telecommunications service provider) Seattle Lighting (lighting distributor and retailer) Terex Corporation (heavy equipment manufacturer) Transeastern Properties, Inc. (homebuilder) Trans-Resources, Inc. (agricultural and industrial chemicals manufacturer) Wilrig AS (offshore oil rig operator)

10

JEFFERIES QUALIFICATIONS
Michael Henkin Expert Testimony
Cases in which Mr. Henkin testified as an expert at trial:
Company Philip Services Corp. Loral Space & Communications Ltd. Filing Date 6/2/2003 7/15/2003 Case Number 03-37718-H2-11 03-41710 Judge Court Wesley W. Steen U.S. Bankruptcy Court - Southern District of Texas, Houston Division Robert D. Drain U.S. Bankruptcy Court - Southern District of New York

11

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY
Introduction
This presentation, among other things, analyzes various valuation and comparison methodologies using public data including: Comparable Company Analysis Comparable M&A Transaction Analysis Discounted Cash Flow Analysis Jefferies used methodologies in each analysis substantially similar in approach to those used throughout Jefferies Investment Banking Department for pricing equity transactions, valuing transactions for fairness opinions, advising in mergers and acquisitions and other similar transactions The valuation analysis in this presentation is based upon the Companys business plan and other financial information provided by the Company and its financial advisor By using supporting data from various analyses, we conclude that there is substantial value for unsecured claims as of December 31, 2004, the projected bankruptcy exit date (the Effective Date) Yields and securities pricing presented herein are as of September 30, 2004, unless otherwise indicated The valuation analysis and conclusions contained herein have been presented to the Jefferies Restructuring Valuation Committee (the Jefferies Committee) and reflects the unanimous consent of the Jefferies Committee

13

EXECUTIVE SUMMARY
Objective and Scope
Jefferies prepared a valuation analysis of the business enterprise of Federal-Mogul and its operating subsidiaries assuming an exit from bankruptcy as of the Effective Date In determining its opinion as to the estimated range of value for Federal-Mogul, Jefferies performed the following due diligence: Review of the operations of Federal-Moguls key business units Review of managements financial forecast for fiscal years 2004E to 2007P including various supporting schedules and information Review of the assumptions underlying managements four-year plan, as well as risk factors and opportunities that could impact expected performance Discussions with various senior managers with respect to the business operations and the four-year plan Analysis of the industry, the Companys key competitors, and trends in the environment in which Federal-Mogul operates Analysis of financial information of key competitors and/or similar publicly-traded companies to determine appropriate valuation multiples Analysis of the performance and market position of the Company relative to its key competitors and/or similar publicly-traded companies Analysis of precedent transactions in the industry to determine prices paid for assets, business lines and/or companies similar to Federal-Mogul to determine appropriate valuation multiples; and Preparation of such other analyses as Jefferies deemed appropriate

14

EXECUTIVE SUMMARY
Valuation Conclusions as of the Effective Date
Based on Jefferies' valuation analysis, we have concluded that the range of Enterprise Value is $4.1 billion to $4.3 billion, as set forth herein Based on Jefferies' valuation analysis, we have concluded that the range of Equity Value to Noteholders is $0.9 billion to $1.0 billion, as set forth herein

Jefferies & Company, Inc.

Michael Henkin, Senior Vice President, Recapitalization and Restructuring Group

15

EXECUTIVE SUMMARY
Summary Enterprise Valuation Analysis as of the Effective Date
($ in Millions)

Comparable Company Analysis $3,121 Comparable M&A Transaction Analysis $4,183 Discounted Cash Flow Analysis $4,624 Concluded Range of Valuation $4,054 $3,000 $3,500 $4,000 $4,336 $4,500 $5,000 $5,500 $4,962 $4,449 $3,320

Based on Jefferies weighting of 55% for the Discounted Cash Flow Analysis, 35% for the Comparable Company Analysis and 10% for the Comparable M&A Analysis, we believe the range of Enterprise Value for Federal-Mogul is $4.1 to $4.3 billion

16

EXECUTIVE SUMMARY
Conclusion of Value as of the Effective Date
($ in Millions)

Jefferies analyses produced enterprise values ranging from $4.1 billion to $4.3 billion Pro forma capitalization is based on current estimates from Federal-Mogul and other Plan Proponents(1)
Estimated as of December 31, 2004 Low High

Estimated Enterprise Value Pro Forma Capitalization New Exit Revolver New Exit Term Loan New Tranche A Senior Secured Term Loans, net of discount New Junior Secured PIK Notes, net of discount Reduction in Equity Value Arising from Proposed UK Settlement(2) Vendor Note Foreign Debt Total Debt Plus: Excess Cash(3) RESIDUAL EQUITY VALUE
(1) (2)

$ $

4,054 -828 1,263 224 200 60 24 2,599 382 1,837

$ $

4,336 -828 1,263 224 200 60 24 2,599 382 2,119

(3)

The Plan Proponents consist of the Company, the Official Committee of Unsecured Creditors, the Asbestos Claimants Committee, JP Morgan Chase Bank as the administrative agent for the holders of pre-petition bank claims, the Future Claimants Representative and the Official Committee of Equity Security Holders. Pursuant to the terms of the recently proposed UK settlement, the T&N Pension Scheme would be assumed by the Company and conditions would apply related to the funding of the T&N Pension Scheme (the "Proposed UK Settlement"). For purposes of this valuation, we have assumed the Proposed UK Settlement is implemented, and we estimate an equity valuation impact of the Proposed UK Settlement as it relates to the T&N Pension Scheme to be approximately $200 million. Net of $160 million minimum operational cash balance and includes approximately $40 million note receivable from the Trust. 17

EXECUTIVE SUMMARY
Equity Value to Noteholders as of the Effective Date
($ in Millions)

Estimated as of December 31, 2004 Low High

Residual Equity Value Black Scholes Warrant Valuation Equity Value, net of Warrant Value Equity Value to Noteholders (49.9%)

1,837 21 1,816

2,119 30 2,089

906

1,042

18

EXECUTIVE SUMMARY
Valuation of Warrants for Pre-Petition Equity Holders
($ in Millions, Except Per Share Data)

Black Scholes Warrant Valuation Low High

Concluded Equity Value Aggregate Common Stock Value Stock Price Shares Outstanding Warrant Strike Price Risk-Free Rate (Seven-year Treasury) Volatility per Annum Term of Warrants Price of a Call Number of Warrants Total Value of Warrants

$ $ $

1,837 1,816 18.16 45.815 3.79% 35% 7 years

$ $ $

2,119 2,089 20.89 45.815 3.79% 35% 7 years

100,000,000

100,000,000

$ $

3.08 6,951,872 21

$ $

4.26 6,951,872 30

19

EXECUTIVE SUMMARY
Recovery to Non-Noteholder U.S. Unsecured Claims
($ in Millions)

Cap on Non-Noteholder U.S. Unsecured Claims Recovery Maximum Cash Payout

$ $

258.0 35% 90.3

Assuming the maximum amount of allowed claims, the Non-Noteholder U.S. Unsecured claim holders will receive $30.1 million on the Effective Date, $30.1 million one year after the Effective Date and the remaining $30.1 million two years after the Effective Date

20

EXECUTIVE SUMMARY
Selected Historical and Projected Financial Data(1)(2)
($ in Millions)

2002A Sales % Growth of Sales Gross Margin % of Sales Selling, General and Admin. Expenses % of Sales Other Expenses / (Income) Amortization EBIT(3) % of Sales EBITDA(4) % of Sales Capital Expenditures
(1) (2)

2003A $ 5,546 7.0% 1,175 21.2% 872 15.7% (44) 17 329 5.9% 637 11.5% 301 $

2004E 5,886 6.1% 1,214 20.6% 903 15.3% (41) 17 335 5.7% 664 11.3% 298 $

2005P 5,935 0.8% 1,246 21.0% 898 15.1% (40) 17 372 6.3% 683 11.5% 297 $

2006P 6,089 2.6% 1,404 23.1% 879 14.4% (42) 17 550 9.0% 860 14.1% 299 $

2007P 6,230 2.3% 1,450 23.3% 859 13.8% (43) 17 617 9.9% 929 14.9% 292

5,184 1.8% 1,048 20.2% 817 15.8% (21) 14 238 4.6% 512 9.9% 339

(3) (4)

Financial projections assume the Proposed UK Settlement and related assumption of the T&N Pension Scheme by T&N and certain of its subsidiaries. 2002A-2004E results are presented pro forma for certain fresh start accounting adjustments relating to pension expense. Excluding these adjustments, EBITDA for 2002A, 2003A and 2004E would be $485 million, $549 million and $585 million, respectively. 2005P-2007P results are presented with fresh start accounting adjustments relating to pension expense, inventory and health insurance (FAS 106) and assume the Proposed UK Settlement and related assumption of the T&N Pension Scheme by T&N and certain of its subsidiaries. EBIT is defined as earnings before interest, income taxes, extraordinary items and certain nonrecurring items such as restructuring and impairment charges, Chapter 11 and Administration related reorganization expenses and gains or losses on the sales of businesses. EBITDA is defined as EBIT plus depreciation and amortization.

21

VALUATION ANALYSIS

VALUATION ANALYSIS
Valuation Methodology
While several generally accepted valuation techniques for estimating enterprise value were considered, Jefferies primarily considered three methodologies: Comparable Company Analysis, Comparable M&A Transaction Analysis and Discounted Cash Flow Analysis Comparable Company Analysis Evaluates the current multiples of comparable public companies and applies those multiples to the operating results of the subject company Comparable M&A Transaction Analysis Evaluates the trading multiples of comparable public company merger and acquisition transactions and applies those multiples to the operating results of the subject company Discounted Cash Flow Analysis Evaluates the projected operating results of the subject company and discounts its future cash flows to present value at a required rate of return Jefferies believes the EBITDA multiple is the most appropriate measure in determining the multiple-based valuation analyses because EBITDA is used as an approximation of unlevered operating cash flow and is an operating metric commonly used by the market to value companies in this industry sector Jefferies used adjusted operating data for 2004E-2007P to: Account for the impact of certain fresh start adjustments related to inventory, pension expense and health insurance (FAS 106); and Reflect the Proposed UK Settlement and related assumption of the T&N Pension Scheme by T&N and certain of its subsidiaries

23

VALUATION ANALYSIS
Weighting Methodology
Jefferies believes weighting the Discounted Cash Flow Analysis at 55% of the concluded valuation range is appropriate because this analysis reflects the Company's expected improvement in future performance after realizing further benefits of the restructuring initiatives implemented during the Companys Chapter 11 proceedings Jefferies believes the Company's current financial performance is impacted by the reorganization. Since the Comparable Company Analysis values Federal-Mogul based upon current financial performance, Jefferies believes a 35% weighting of the Comparable Company Analysis in the concluded valuation range appropriately takes into consideration the effects of the Companys restructuring initiatives Jefferies believes weighting the Comparable M&A Transaction Analysis at 10% is appropriate because of the limited number of recent comparable M&A transactions and the inclusion of older transactions since 1998

24

VALUATION ANALYSIS
Comparable Company Valuation Analysis
($ in Millions)

Comparable companies operating data have been adjusted to exclude unusual or non-recurring charges and actuarial gain/loss and amortization of prior service cost relating to pension expense to ensure consistency with Federal-Moguls fresh start adjusted operating data The following multiples were chosen for comparison on a latest twelve month period (LTM) ended June 30, 2004 basis Enterprise values are calculated using mean and median multiples applied to Federal-Moguls estimated 2004 results Jefferies attributes a 35% weighting for the Comparable Company Analysis in the Concluded Range of Valuation
Enterprise Value / LTM Revenue EBITDA EBIT Free Cash Flow(1)

High Low Trimmed Mean(2) Mean Median Projected Bankruptcy Exit Date As of 12/31/04 2004E Operating Data Implied Enterprise Value Mean(3) Implied Enterprise Value Median(3)
(1) (2) (3)

1.3x 0.1x 0.4x 0.5x 0.4x $ $ $ 5,886 2,943 2,354 $ $ $

9.5x 2.9x 4.8x 5.0x 4.7x 664 3,320 3,121 $ $ $

15.7x 4.9x 9.0x 9.2x 8.5x 335 3,082 2,848 $ $ $

14.2x 5.8x 8.8x 9.0x 7.7x 366 3,294 2,818

Free cash flow is defined as EBITDA minus capital expenditures. Trimmed mean is defined as the average of the values, excluding the highest and lowest values. If enterprise value was calculated using an estimate of excess cash for the comparable companies, the Enterprise Value / LTM EBITDA median and mean multiples would be 4.9x and 5.2x, respectively. Implied enterprise value based upon the Enterprise Value / LTM EBITDA median and mean multiples assuming an adjustment for excess cash would be $3.3 billion and $3.5 billion, respectively. These calculations use a definition of excess cash as book value cash less minimum required cash. Minimum required cash equals the lessor of: book value cash as of prior year end, current book value cash or 1.5% of sales.

Applying EBITDA multiples as of the Projected Bankruptcy Exit Date, the Comparable Company Analysis suggests an Enterprise Value range of $3.1 to $3.3 billion
25

VALUATION ANALYSIS
Comparable M&A Transaction Valuation Analysis
($ in Millions)

The following multiples were chosen for comparison based on the LTM period prior to the announcement of each of the selected transactions Enterprise values are calculated using mean and median multiples applied to Federal-Moguls estimated 2004 results Jefferies attributes a 10% weighting for the Comparable M&A Transaction Analysis in the Concluded Range of Valuation
Enterprise Value / LTM Revenue EBITDA EBIT Free Cash Flow(1)

High Low Trimmed Mean(2) Mean Median Projected Bankruptcy Exit Date As of 12/31/04 2004E Operating Data Implied Enterprise Value Mean Implied Enterprise Value Median
(1) (2)

1.2x 0.3x 0.7x 0.7x 0.7x $ $ $ 5,886 4,120 4,120 $ $ $

7.8x 3.7x 6.5x 6.3x 6.7x 664 4,183 4,449 $ $ $

13.6x 6.0x 9.9x 9.9x 9.3x 335 3,317 3,116 $ $ $

23.1x 6.8x 11.0x 12.0x 9.7x 366 4,392 3,550

Free cash flow is defined as EBITDA minus capital expenditures. Trimmed mean is defined as the average of the values, excluding the highest and lowest values.

Applying EBITDA multiples as of the Projected Bankruptcy Exit Date, the Comparable M&A Transaction Analysis suggests an Enterprise Value range of $4.2 to $4.4 billion

26

VALUATION ANALYSIS
Discounted Cash Flow Valuation Analysis Overview of Calculation
Enterprise Value was estimated by adding the following: The discounted value of the Companys annual projected distributable cash flows (cash flows available to all investors), and The discounted terminal value for the Company (the value of the Company beyond the definitive time period) Distributable Cash Flows Calculated using projected annual operating income plus depreciation and amortization plus net changes in working capital less projected capital expenditures less restructuring payments plus the net impact of pensions and other assets/liabilities Terminal Value The terminal value was calculated by using EBITDA multiples ranging from 6.0x to 6.5x Jefferies utilized this EBITDA multiple range after taking into consideration the results of both the Comparable Company Analysis and the Comparable M&A Transaction Analysis Discount Rate The Companys cash flows and terminal value were discounted to present values at a weighted average cost of capital (WACC) of 11.0 % to determine enterprise value

27

VALUATION ANALYSIS
Discounted Cash Flow Valuation Analysis
The following enterprise values were determined based on a Discounted Cash Flow Analysis Jefferies attributes a 55% weighting for the Discounted Cash Flow Analysis in the Concluded Range of Valuation
Terminal EBITDA Multiple Projected Bankruptcy Exit Date 12/31/2004 6.0x 6.5x

Weighted Average Cost of Capital

10.0% 11.0% 12.0%

$ $ $

4,747 4,624 4,506

$ $ $

5,094 4,962 4,835

Applying a discount rate range of 11.0% and a terminal multiple range of 6.0x to 6.5x, the Discounted Cash Flow Analysis suggests an Enterprise Value range of $4.6 to $5.0 billion

28

APPENDIX

COMPARABLE COMPANY VALUATION ANALYSIS

COMPARABLE COMPANY VALUATION ANALYSIS


Selection of Comparable Companies
The following table summarizes the criteria Jefferies used in selecting comparable companies:
Resulting Companies(1)

Criteria

Relevant Industry Sector(2) Sales Greater Than Or Equal to $1.0 Billion Relevant Product Focus Excludes Bankruptcy / No Operations Relevant Customer Concentration / Mix(3) Public Companies
(1) (2)

74 28 20 18 16 14

Reflects cumulative number of companies that satisfy criteria including criteria on previous lines. Reflects companies within the following SIC codes: 3465: Automotive Stampings 2396: Automotive Trimmings, Apparel Findings and Related Parties 3594: Fluid Power Pumps and Motors 3714: Motor Vehicle Parts and Accessories 5013: Motor Vehicle Supplies and New Parts

(3)

Excludes companies with major customers outside automotive industry.

31

COMPARABLE COMPANY VALUATION ANALYSIS


Comparable Company Descriptions
Comparable Companies Description

American Axle & Manufacturing Holdings, Inc.

American Axle & Manufacturing Holdings, Inc. is a global Tier I supplier to the automotive industry. The Company manufactures, engineers, designs and validates driveline systems and related powertrain components and modules for light trucks, sport utility vehicles (SUVs) and passenger cars. Driveline systems include components that transfer power from the transmission and deliver it to the drive wheels. The Company's driveline and related powertrain products include axles, modules, driveshafts, chassis and steering components, driving heads, crankshafts, transmission parts and forged products. The Company is the principal supplier of driveline components to General Motors Corporation (GM) for its rear-wheel drive light trucks and SUVs manufactured in North America, supplying substantially all of GM's rear axle and front four-wheel-drive/all-wheel-drive axle requirements for these vehicle platforms in 2003. ArvinMeritor, Inc. is a global supplier of a range of integrated systems, modules and components serving light vehicle, commercial truck, trailer and specialty original equipment manufacturers (OEMs) and certain aftermarkets. The Company also provides coil-coating applications to the transportation, appliance, construction, heating, ventilation and air conditioning, and doors industries. ArvinMeritor serves OEM customers worldwide, including truck OEMs, light vehicle OEMs, trailer producers and specialty vehicle manufacturers and certain aftermarkets. BorgWarner, Inc. is a global Tier I supplier of highly engineered systems and components, primarily for vehicle powertrain applications. The Company's products fall into five operating segments: Morse TEC, Air/Fluid Systems, Cooling Systems, TorqTransfer Systems and Transmission Systems. These products are manufactured and sold worldwide, primarily to OEMs of passenger cars, sport utility vehicles, trucks and commercial transportation products. The Company operates manufacturing and technical facilities in 43 locations in 14 countries serving customers in North America, South America, Europe and Asia, and is an original equipment supplier to major automotive OEMs worldwide. Collins & Aikman Corporation is engaged in the design, engineering and manufacturing of automotive interior components, including instrument panels, fully assembled cockpit modules, floor and acoustic systems, automotive fabric, interior trim and convertible top systems. Sales are diversified among all North American OEMs, transplants such as Toyota, Honda and Nissan and major Tier I integrators. The Company has more than 115 plants and facilities worldwide and conducts all of its operating activities through its wholly owned subsidiary, Collins & Aikman Products Co. The Company markets the majority of its products to customers through a single global commercial operations group that supplies products from four primary categories: plastic components and cockpits, carpet and acoustics, automotive fabrics and convertible top systems. Dana Corporation is an independent supplier of modules, systems and components for light, commercial and off-highway vehicle OEMs globally and for related OEM service customers. Its products are used in passenger cars and vans, sport-utility vehicles, light, medium and heavy trucks and a wide range of off-highway vehicles. In addition, Dana is an aftermarket supplier in the North American market. Nearly all of its aftermarket operations have been conducted through the Automotive Aftermarket Group (AAG). In December 2003, the Company announced its intention to sell substantially all of the AAG. The remaining portion of the AAG, which distributes engine hard parts, has become a part of Dana's engine and fluid management operations. The Company's continuing operations are organized into three market-focused strategic business units: Automotive Systems Group, Engine and Fluid Management Group and Heavy Vehicle Technologies and Systems Group. On July 9, 2004, Cypress Group agreed to purchase the AAG from the Company for approximately $1.1 billion. The transaction is currently pending. Operating results present the AAG as a discontinued operation.

ArvinMeritor, Inc.

BorgWarner, Inc.

Collins & Aikman Corporation

Dana Corporation

32

COMPARABLE COMPANY VALUATION ANALYSIS


Comparable Company Descriptions (Contd)
Comparable Companies Delphi Corporation Description Delphi Corporation is a global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology to vehicle manufacturers. During 2003, the Company operated its business along three segments: the Dynamics, Propulsion and Thermal Sector; the Electrical, Electronics, Safety and Interior Sector; and the Automotive Holdings Group. The Dynamics, Propulsion and Thermal Sector include selected businesses from Delphi's energy and engine management systems, chassis, steering and thermal systems product lines. The Electrical, Electronics, Safety and Interior Sector include selected businesses from the Company's automotive electronics, audio, consumer and aftermarket products, communication systems, safety and power, and signal distribution systems product lines. The Automotive Holdings Group is responsible for the production of halfshafts, condensers, batteries, filters, spark plugs, generators and compressors. Dura Automotive Systems, Inc., incorporated in 1994, is an independent designer and manufacturer of driver control systems for the global automotive industry. Dura is also a global supplier of seating control systems, engineered assemblies, structural door modules and integrated glass systems. Although a portion of Dura's products are sold directly to OEMs as finished components, Dura uses most of its products to produce systems or subsystems, which are groups of component parts located throughout the vehicle that operate together to provide a specific vehicle function. Systems produced by Dura include glass, door, pedal, parking brake, transmission shift, seat adjusting and latch. Dura's principal product categories are driver control systems, seating control systems, engineered assemblies, structural door modules, exterior trim systems and mobile products. Eaton Corporation is a global diversified industrial manufacturer of fluid power systems; electrical power quality, distribution and control systems; automotive engine air management and fuel economy systems, and intelligent drivetrain systems for fuel economy and safety in trucks. Eatons principal markets for its fluid power, automotive and truck products are OEMs and aftermarket customers of aerospace products and systems, offhighway agricultural and construction vehicles, industrial equipment, passenger cars and heavy-, medium- and light-duty trucks. The principal markets for Eaton's industrial and commercial controls products are industrial, construction, commercial, automotive and government customers. Lear Corporation is an automotive interior systems supplier. It has capabilities in all five principal segments of the automotive interior market: seat systems, flooring and acoustic systems, door panels, instrument panels and cockpit systems, and overhead systems. The Company is also a global supplier of automotive electronic and electrical distribution systems. As a result of these capabilities, Lear can offer its customers fully integrated automotive interiors, including electronic and electrical distribution systems. As a total interior integrator, the Company works closely with the customer on the design and is responsible for the engineering, component/module sourcing, manufacturing and delivery of automotive interiors. The Company's customers include automotive manufacturers such as General Motors, Ford, DaimlerChrysler, BMW, Fiat, PSA, Volkswagen, Renault/Nissan, Toyota and Subaru. Magna International, Inc. designs, engineers and manufactures a complete range of automotive components, assemblies, modules and systems, and engineers and assembles complete vehicles. Its products and services are sold primarily to manufacturers of cars and light trucks in North America, Europe, South America and Asia. The Company's automotive operations are conducted through six automotive systems groups, further segmented between public and wholly owned automotive systems groups. In addition to its automotive operations, Magna conducts certain nonautomotive operations through its subsidiary, Magna Entertainment Corp., which owns and operates thoroughbred racetracks, and supplies, via simulcasting, live racing content to the growing inter-track, off-track and account wagering markets.

Dura Automotive Systems, Inc.

Eaton Corporation

Lear Corporation, Inc.

Magna International, Inc.

33

COMPARABLE COMPANY VALUATION ANALYSIS


Comparable Company Descriptions (Contd)
Comparable Companies Tenneco Automotive, Inc. Description Tenneco Automotive, Inc. is primarily engaged in the manufacture of automotive emissions control and ride control products and systems for both the original equipment market and the replacement market or aftermarket. As an automotive parts supplier, the Company designs, markets and sells individual component parts for vehicles, as well as groups of components that are combined as modules or systems within vehicles. These parts, modules and systems are sold globally to the vast majority of vehicle manufacturers and throughout all aftermarket distribution channels. Monroe ride control products and Walker exhaust products are two of Tenneco's brand names. It also offers other brands such as Monroe SensaTrac and Reflex (shock absorbers and struts), Quiet-Flow (mufflers), DynoMax (performance exhaust products), Rancho (ride control products for the high-performance, light-truck market) and Clevite (elastomeric vibration control components). Tower Automotive, Inc. is engaged in the design and production of structural components and assemblies used by automotive OEMs. The Company's current products include automotive body structural stampings and assemblies, including exposed sheet metal (Class A) components, lower vehicle structural stampings and assemblies, suspension components, modules and systems. The Company's products generally can be classified into four categories: body structures and assemblies, lower vehicle structures, suspension and powertrain modules and suspension components. TRW Automotive Holdings Corp. is a United States-based international business providing advanced technology products and services for the automotive markets. The Company designs, manufactures and sells a range of steering, suspension and braking products, seat belts, airbags, steering wheels, safety electronics, engine valves, engineered fastening body control systems and other components and systems. These products are primarily used in the manufacture of light vehicles, consisting of passenger cars and light trucks. The principal customers for the Company's automotive products are the North and South American, European and Asian vehicle manufacturers (VMs). Among its largest customers are Ford Motor Company, DaimlerChrysler AG, Volkswagen AG, General Motors Corporation and Renault-Nissan BV. TRW conducts substantially all of its operations through its subsidiaries and along three operating segments: Chassis Systems, Occupant Safety Systems and Automotive Components. Visteon Corporation is a global supplier of automotive systems, modules and components to vehicle manufacturers and the automotive aftermarket. The Company operates in two business segments: Automotive Operations and Glass Operations. The Automotive Operations segment provides automotive systems, modules and components in the following product areas: climate control, interior, exterior, powertrain, chassis and electronics. Its products are featured on vehicles built by many automotive manufacturers, including Ford Motor Company, General Motors, Toyota, DaimlerChrysler, Volkswagen, Honda, Renault, Nissan, Hyundai, Peugeot, Mazda and BMW. The Automotive Operations segment accounted for 97% of the Company's 2003 total sales. The Glass Operations segment designs, produces and distributes automotive glass products for Ford and aftermarket customers, and float glass for commercial architectural and automotive applications. Glass Operations accounted for 3% of 2003 total sales.

Tower Automotive, Inc.

TRW Automotive, Inc.

Visteon Corporation

34

COMPARABLE COMPANY VALUATION ANALYSIS


Enterprise Value
($ in Millions, Except Per Share Data)
Share Price 9/30/04 American Axle & Manufacturing Holdings, Inc. Arvinmeritor, Inc. BorgWarner, Inc. Collins & Aikman Corp. Dana Corporation Delphi Corporation Dura Automotive Systems, Inc. Eaton Corporation Lear Corporation, Inc. Magna International, Inc. Tenneco Automotive, Inc. Tower Automotive, Inc. TRW Automotive, Inc. Visteon Corporation $ 29.26 $ 18.75 43.29 4.18 17.69 9.29 7.10 63.41 54.45 74.08 13.10 2.09 18.85 7.99 Market Capitalization 1,519.2 $ 1,300.9 2,416.2 349.6 2,641.5 5,213.5 131.8 9,606.6 3,736.1 7,181.4 550.3 121.6 1,864.6 1,035.3 Total Debt 502.2 $ 1,590.0 582.9 1,350.2 2,263.0 2,952.5 1,084.7 1,861.9 1,909.5 595.0 1,419.0 1,189.8 3,178.0 1,908.1 Preferred Stock 182.1 $ Cash
(1)

Enterprise Value(2) 6.6 $ 2,014.7 2,768.9 2,855.1 1,870.9 4,406.5 7,499.9 1,082.1 11,179.6 5,496.8 5,818.3 1,803.3 1,118.4 4,508.6 1,933.4

122.0 144.0 11.0 498.0 666.0 134.4 289.0 148.8 1,958.0 166.0 192.9 534.0 1,010.0

(1) Represents book value of cash. If an assumption for estimating the amount of excess cash on hand for the comparable companies were made, enterprise values would be higher by the amount of the implied minimum required cash. See page 25, footnote 3. (2) Enterprise Value is defined as market capitalization plus total debt plus preferred stock less book value cash. Where available, market values of debt (if less than par) and equity securities have been used.

35

COMPARABLE COMPANY VALUATION ANALYSIS


LTM Operating Data(1)
($ in Millions)
LTM Revenue American Axle & Manufacturing Holdings, Inc. Arvinmeritor, Inc. BorgWarner, Inc. Collins & Aikman Corp. Dana Corporation Delphi Corporation Dura Automotive Systems, Inc. Eaton Corporation Lear Corporation, Inc. Magna International, Inc. Tenneco Automotive, Inc. Tower Automotive, Inc. TRW Automotive, Inc. Visteon Corporation $ 3,676.2 $ 8,799.0 3,320.2 4,017.8 8,572.0 28,780.0 2,474.9 8,750.0 16,522.9 18,405.0 3,995.0 2,904.4 11,518.0 18,185.0 EBITDA 487.4 $ 542.0 475.2 335.8 612.0 1,941.0 218.3 1,182.0 1,137.6 1,731.0 390.0 241.2 1,228.0 658.9 EBIT 322.7 $ 325.0 302.6 189.7 281.0 845.0 134.9 791.0 797.8 1,189.0 218.0 87.3 736.0 (17.1) Mean Median Trimmed Mean (3) High Low FCF(2) 273.0 360.0 241.4 153.7 311.0 995.0 141.2 889.0 706.7 921.0 260.0 (21.2) 781.0 (187.1) EBITDA Margin 13.3% 6.2% 14.3% 8.4% 7.1% 6.7% 8.8% 13.5% 6.9% 9.4% 9.8% 8.3% 10.7% 3.6% 9.1% 8.6% 9.1% 14.3% 3.6% EBIT Margin 8.8% 3.7% 9.1% 4.7% 3.3% 2.9% 5.4% 9.0% 4.8% 6.5% 5.5% 3.0% 6.4% -0.1% 5.2% 5.1% 5.3% 9.1% -0.1% FCF Margin 7.4% 4.1% 7.3% 3.8% 3.6% 3.5% 5.7% 10.2% 4.3% 5.0% 6.5% -0.7% 6.8% -1.0% 4.7% 4.6% 4.8% 10.2% -1.0%

(1) LTM is defined as the latest twelve months ended June 30, 2004. Operating data excludes unusual or non-recurring charges and actuarial gain/loss and amortization of prior service cost relating to pension expense to ensure consistency with Federal-Mogul's "fresh start" adjusted operating data. (2) Free cash flow is defined as EBITDA minus capital expenditures. (3) Trimmed mean is defined as the average of the values, excluding the high and low values.

36

COMPARABLE COMPANY VALUATION ANALYSIS


LTM Trading Multiples(1)
($ in Millions)
Enterprise Value / LTM(2) Revenue American Axle & Manufacturing Holdings, Inc. Arvinmeritor, Inc. BorgWarner, Inc. Collins & Aikman Corp. Dana Corporation Delphi Corporation Dura Automotive Systems, Inc. Eaton Corporation Lear Corporation, Inc. Magna International, Inc. Tenneco Automotive, Inc. Tower Automotive, Inc. TRW Automotive, Inc. Visteon Corporation Mean Median Trimmed Mean (4) High Low 0.5x 0.3x 0.9x 0.5x 0.5x 0.3x 0.4x 1.3x 0.3x 0.3x 0.5x 0.4x 0.4x 0.1x 0.5x 0.4x 0.4x 1.3x 0.1x EBITDA 4.1x 5.1x 6.0x 5.6x 7.2x 3.9x 5.0x 9.5x 4.8x 3.4x 4.6x 4.6x 3.7x 2.9x 5.0x 4.7x 4.8x 9.5x 2.9x EBIT 6.2x 8.5x 9.4x 9.9x 15.7x 8.9x 8.0x 14.1x 6.9x 4.9x 8.3x 12.8x 6.1x NM 9.2x 8.5x 9.0x 15.7x 4.9x FCF(3) 7.4x 7.7x 11.8x 12.2x 14.2x 7.5x 7.7x 12.6x 7.8x 6.3x 6.9x NM 5.8x NM 9.0x 7.7x 8.8x 14.2x 5.8x

(1) LTM is defined as the latest twelve months ended June 30, 2004. Operating data excludes unusual or non-recurring charges and actuarial gain/loss and amortization of prior service cost relating to pension expense to ensure consistency with Federal-Mogul's "fresh start" adjusted operating data. (2) Free cash flow is defined as EBITDA minus capital expenditures. (3) Trimmed mean is defined as the average of the values, excluding the high and low values.

37

COMPARABLE M&A TRANSACTION VALUATION ANALYSIS

COMPARABLE M&A TRANSACTION VALUATION ANALYSIS


LTM Operating Data(1)
($ in Millions)

Criteria for selecting transactions include: Relevant industry sector: SIC codes 2396, 5013, 3465, 3594 and 3714 Announced on or after June 30, 1998 Domestic transactions Target company sales greater than or equal to $1 billion Majority stake acquired
LTM at Time of Acquisition Cooper Automotive Aeroquip-Vickers United Technologies Automotive Arvin Industries, Inc. MascoTech, Inc. Textron Automotive Trim The Torrington Company TRW, Inc. - Automotive Parts (4) Dana Corporation (Automotive Aftermarket Group) $ Revenue 1,850.2 2,149.5 2,962.0 3,220.3 1,696.2 1,622.8 1,196.3 10,433.0 2,070.0 $ EBITDA 290.7 271.0 295.0 301.5 304.8 174.4 147.9 989.0 145.1 EBIT $ 206.7 191.4 169.0 186.0 221.5 102.9 98.9 511.0 96.7 $ FCF
(2)

227.3 128.8 100.0 163.6 187.4 78.9 107.1 576.0 NA

EBITDA Margin 15.7% 12.6% 10.0% 9.4% 18.0% 10.7% 12.4% 9.5% 7.0%

EBIT Margin 11.2% 8.9% 5.7% 5.8% 13.1% 6.3% 8.3% 4.9% 4.7%

FCF Margin 12.3% 6.0% 3.4% 5.1% 11.0% 4.9% 8.9% 5.5% NA

Mean Median (3) Trimmed Mean High Low

11.7% 10.7% 11.5% 18.0% 7.0%

7.6% 6.3% 7.3% 13.1% 4.7%

7.1% 5.8% 6.9% 12.3% 3.4%

(1) Reflects LTM data available at time of acquisition. Excludes unusual or non-recurring charges. (2) Free cash flow is defined as EBITDA minus capital expenditures. (3) Trimmed mean is defined as the average of the values, excluding the high and low values. (4) Transaction is still pending.

39

COMPARABLE M&A TRANSACTION VALUATION ANALYSIS


Transaction Value Multiples
($ in Millions)

Criteria for selecting transactions include: Relevant industry sector: SIC codes 2396, 5013, 3465, 3594 and 3714 Announced on or after June 30, 1998 Domestic transactions Target company sales greater than or equal to $1 billion Majority stake acquired
Date Announced 8/17/98 2/1/99 3/16/99 4/6/00 8/2/00 8/7/01 10/16/02 11/17/02 7/9/04 Target Cooper Automotive Aeroquip-Vickers United Technologies Automotive Arvin Industries, Inc. MascoTech, Inc. Textron Automotive Trim The Torrington Company TRW, Inc. - Automotive Parts Dana Corporation (Automotive Aftermarket Group)(4) Acquiror Federal-Mogul Corp. Eaton Corp. Lear Corp. Meritor Automotive, Inc. Heartland Industrial Partners LP Collins & Aikman Corp. Timken Co. Blackstone Group Cypress Group $ Transaction Value 1,900.0 1,986.0 2,305.4 1,116.6 2,053.0 1,208.4 829.3 4,725.0 1,100.0 Revenues 1.0x 0.9x 0.8x 0.3x 1.2x 0.7x 0.7x 0.5x 0.5x Transaction Value / EBITDA(2) 6.5x 7.3x 7.8x 3.7x 6.7x 6.9x 5.6x 4.8x 7.6x EBIT 9.2x 10.4x 13.6x 6.0x 9.3x 11.7x 8.4x 9.2x 11.4x FCF(3) 8.4x 15.4x 23.1x 6.8x 11.0x 15.3x 7.7x 8.2x NA

Mean Median Trimmed Mean(1) High Low

0.7x 0.7x 0.7x 1.2x 0.3x

6.3x 6.7x 6.5x 7.8x 3.7x

9.9x 9.3x 9.9x 13.6x 6.0x

12.0x 9.7x 11.0x 23.1x 6.8x

(1) Trimmed mean is defined as the average of the values, excluding the high and low values. (2) Reflects LTM data available at time of acquisition. Excludes unusual or non-recurring charges. (3) Free cash flow is defined as EBITDA minus capital expenditures. (4) Transaction is still pending.

40

DISCOUNTED CASH FLOW VALUATION ANALYSIS

DISCOUNTED CASH FLOW VALUATION ANALYSIS


Summary of Cash Flows 6.0x Terminal Value EBITDA Multiple
($ in Millions)

DCF analysis using a 6.0x terminal value EBITDA multiple


Projected 2004 EBITDA Growth % Distributable Cash Flow Growth % EBITDA Less: Depreciation and Amortization EBIT Income Taxes(1) Net Income Plus: Depreciation and Amortization (Less): Capital Expenditures Plus/(Less): Restructuring Payments Plus/(Less): Changes in Working Capital Plus/(Less): Net Pension Impact Plus/(Less): Other Assets/Liabilities(3) Plus/(Less): "Fresh Start" Adjustments (Inventory and FAS 106) Distributable Cash Flow Discount Period Convention Discount Rate / Factor Terminal Value EBITDA Multiple Present Values Sum of Discrete Present Values Present Value of Terminal Value Implied Enterprise Value 11.0% 6.0x $664 (329) 335 2005 2.9% NA $683 (312) 372 (148) 223 312 (297) (52) 66 (119) (22) 50 $161 1.0 0.9009 $145 $569 4,056 4,624 2006 25.9% 38.3% $860 (310) 550 (195) 355 310 (299) (30) 14 (95) (28) (5) $222 2.0 0.8116 $181 2007 8.0% 49.7% $929 (312) 617 (248) 369 312 (292) (7) 8 (25) (27) (5) $333 3.0 0.7312 $243 3.0 0.7312 5,546 $4,056 $924(2) Terminal Period

(1) Excludes tax shield resulting from interest expense, assuming 35% tax rate. (2) Reflects adjusted EBITDA which excludes the impact of fresh start adjustments relating to health insurance (FAS 106) and assumes the Proposed UK Settlement and related assumption of the T&N Pension Scheme by T&N and certain of its subsidiaries. (3) Includes primarily minority JV EBITDA reinvested for capital expenditures and working capital and other miscellaneous expenses.

42

DISCOUNTED CASH FLOW VALUATION ANALYSIS


Summary of Cash Flows 6.5x Terminal Value EBITDA Multiple
($ in Millions)

DCF analysis using a 6.5x terminal value EBITDA multiple


Projected 2004 EBITDA Growth % Distributable Cash Flow Growth % EBITDA Less: Depreciation and Amortization EBIT Income Taxes(1) Net Income Plus: Depreciation and Amortization (Less): Capital Expenditures Plus/(Less): Restructuring Payments Plus/(Less): Changes in Working Capital Plus/(Less): Net Pension Impact Plus/(Less): Other Assets/Liabilities(3) Plus/(Less): "Fresh Start" Adjustments (Inventory and FAS 106) Distributable Cash Flow Discount Period Convention Discount Rate / Factor Terminal Value EBITDA Multiple Present Values Sum of Discrete Present Values Present Value of Terminal Value Implied Enterprise Value 11.0% 6.5x $664 (329) 335 2005 2.9% NA $683 (312) 372 (148) 223 312 (297) (52) 66 (119) (22) 50 $161 1.0 0.9009 $145 $569 4,393 4,962 2006 25.9% 38.3% $860 (310) 550 (195) 355 310 (299) (30) 14 (95) (28) (5) $222 2.0 0.8116 $181 2007 8.0% 49.7% $929 (312) 617 (248) 369 312 (292) (7) 8 (25) (27) (5) $333 3.0 0.7312 $243 3.0 0.7312 6,009 $4,393 $924(2) Terminal Period

(1) Excludes tax shield resulting from interest expense, assuming 35% tax rate. (2) Reflects adjusted EBITDA which excludes the impact of fresh start adjustments relating to health insurance (FAS 106) and assumes the Proposed UK Settlement and related assumption of the T&N Pension Scheme by T&N and certain of its subsidiaries. (3) Includes primarily minority JV EBITDA reinvested for capital expenditures and working capital and other miscellaneous expenses.

43

DISCOUNTED CASH FLOW VALUATION ANALYSIS


Discount Rate Derivation
Company Risk Premium Inputs Risk-free Interest Rate (20-year long-term treasury yield) Market Risk Premium(1) Unlevered Asset Beta of Comparables(2) Comparables Tax Rate Weight of Total Equity of Comparables(2) Weight of Net Debt of Comparables(2) Levered Equity Beta of Comparables (Ba*(1+(Wd/We*(1-t))) Cost of Equity: Levered Equity Beta of Comparables Multiply: Market Risk Premium(1) Industry Risk Premium Plus: Company Risk Premium Plus: Risk-Free Interest Rate Cost of Equity (Rc+Rf+Be*(Rm)) Pre-tax Cost of Debt(3) Multiply: Federal-Mogul Tax Rate(4) Cost of Debt (kd*(1-t)) Calculation of WACC: Rounded WACC ((Ke*We)+(Kd*Wd)) Rf Rm Ba t We Wd Be 1.0% 4.9% 7.0% 0.78 35.0% 57.3% 42.7% 1.15 2.0% 4.9% 7.0% 0.78 35.0% 57.3% 42.7% 1.15

Be Rm Rc Rf Ke kd t Kd

1.15 7.0% 8.1% 1.0% 4.9% 13.9% 8.0% 35.0% 5.2%

1.15 7.0% 8.1% 2.0% 4.9% 14.9% 8.0% 35.0% 5.2%

10.0%

11.0%

(1) Long-horizon expected equity risk premium. Per Ibbotson Associates. Stocks, Bonds, Bills and Inflation Valuation Edition 2003 Yearbook. (2) Excludes peer companies with an average trading volume over the past six months of less than 100,000. (3) For pre-tax cost of debt detail, see page 46. (4) Assumed Federal-Mogul tax rate per Federal-Mogul management.

44

DISCOUNTED CASH FLOW VALUATION ANALYSIS


Beta Derivation(1)
Calculation of Unlevered Beta Marginal Tax Rate Net Debt % Equity % Beta Unlevered 35.0% 18.3% 81.7% 0.94 35.0% 49.5% 50.5% 0.66 35.0% 22.5% 77.5% 0.96 35.0% 67.8% 32.2% 0.47 35.0% 29.2% 70.8% 0.90 35.0% 33.1% 66.9% 1.21 35.0% 85.2% 14.8% 0.30 35.0% 13.0% 87.0% 1.03 35.0% 31.7% 68.3% 0.85 35.0% 0.0% 100.0% 0.87 35.0% 69.4% 30.6% 0.86 35.0% 94.0% 6.0% 0.14 35.0% 41.7% 58.3% 0.88 35.0% 35.0% 35.0% 35.0% 35.0% 42.7%(4) 33.1%(4) 41.9%(4) (4) 94.0% (4) 0.0% 57.3%(4) (4) 66.9% 58.1%(4) (4) 6.0% (4) 100.0% 0.78 (4) 0.87(4) 0.79(4) 1.21 (4) 0.14 (4)

Company American Axle & Manufacturing Holdings, Inc. Arvinmeritor, Inc. BorgWarner, Inc. Collins & Aikman Corp. Delphi Corporation Dana Corporation Dura Automotive Systems, Inc. Eaton Corporation Lear Corporation, Inc. Magna International, Inc. Tenneco Automotive, Inc. Tower Automotive, Inc. Visteon Corporation

Ticker AXL ARM BWA CKC DPH DCN DRRA ETN LEA MGA TEN TWR VC Mean Median Trimmed Mean(3) High Low

Beta Levered (2) 1.08 1.08 1.14 1.11 1.14 1.60 1.42 1.13 1.11 0.87 2.13 1.61 1.29 1.29 1.14 1.25 2.13 0.87

(1) Excludes TRW Automotive due to lack of trading history and available data. (2) Two-year adjusted beta per Bloomberg, Inc. (3) Trimmed mean is defined as the average of the values, excluding the high and low values. (4) Excludes peer companies with an average trading volume over the past six months of less than 100,000.

45

DISCOUNTED CASH FLOW VALUATION ANALYSIS


Pre-Tax Cost of Debt Detail
($ in Millions)

The pre-tax cost of debt analysis derives the implied cost of debt for Federal-Mogul based upon its pro forma capital structure and its debt-to-equity ratio over time This table calculates the Companys implied pre-tax cost of debt as of its Effective Date
Blended Average 0.000% 2.288% 4.860% 1.150% 0.082% 8.380%

New Exit Revolver New Exit Term Loan New Tranche A Term Loans, net of discount New Junior Secured PIK Notes, net of discount Foreign Debt

Total Debt $ 828.0 1,263.3 224.2 24.0 $2,339.5

Rate 6.216% (1) 6.466% (1) 9.000% (2) 12.000% (2) 8.000%
(3)

(1) Reflects average forward LIBOR yields to interpolate fixed rate equivalent for Exit Facilities assuming LIBOR + 225 bps for the ABL Facility and L+250 bps for the Term Loan. (2) Based upon an implied market rate of return derived from a comparable yield analysis. (3) Represents principal amount of total debt, net of discount and excludes approximately $60.2 million vendor note which will be non-interest bearing.

Based upon the Companys projections to repay indebtedness with excess cash over time and the associated implied debt-toequity ratio over time, Jefferies has estimated the appropriate pre-tax cost of debt for Federal-Mogul to be 8.0%

46

RESTRUCTURED DEBT DISCOUNT ANALYSIS

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Summary
Although the Pre-Petition Bank Lenders will receive no reduction in principal with respect to the New Tranche A Senior Secured Term Loans (New Tranche A Loans) and the New Junior Secured PIK Notes (New PIK Notes) they are receiving upon exit from bankruptcy, Jefferies believes that the terms the Company received are below market Jefferies has accordingly performed a discount analysis which reflects the estimated current market value of the New Tranche A Loans and the New PIK Notes (collectively, the Restructured Debt) Jefferies believes the yields implied by the Restructured Debt are most comparable to yields on high yield debt securities for several reasons including: The principal terms of the Restructured Debt Approximately $1.4 billion in debt facilities senior to the Restructured Debt Pro forma for the exit from bankruptcy, Federal-Moguls credit statistics are similar to the credit profile of high yield issuers The comparable yield on the New Tranche A Loans is based on the following average yields since September 30, 2003: (i) Leveraged automotive industry issues 9.073% mean yield-to-maturity (ii) New single B rated issues 8.844% mean yield-to-maturity Comparable yield on New Tranche A Loans is assumed to be 9.000% In examining the yield differential between the New Tranche A Loans and the New PIK Notes, Jefferies examined the following: (i) Yield differential between senior notes and subordinated notes for leveraged automotive industry issues 233 bps mean yield differential (ii) Yield differential between holding company and operating company debt issues 327 bps mean yield differential Comparable yield on New PIK Notes is assumed to be 12.000%, based on 300 bps yield differential
48

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Summary (Contd)
($ in Millions)

The following table summarizes the implied discount for the New Tranche A Loans and the New PIK Notes:
Total New Tranche A Loans and New PIK Notes(1)

New Tranche A Loans

New PIK Notes

Principal Amount Comparable Yield Implied Discount (%) Implied Discount ($) Principal Amount, Net of Discount
(1) (2)

$1,329.8 9.000% 4.998%(2) $66.5(2) $1,263.3

$305.6 12.000% 26.630% $81.4 $224.2

$1,635.4 NA 9.041% $147.9 $1,487.6

Includes $1,605.4 million in Restructured Pre-Petition Bank Debt, $5.3 million New Surety PIK Notes and $24.7 million in New Surety Tranche A Loans. Implied discount calculated using average forward LIBOR yields to interpolate fixed rate equivalent for New Tranche A Loans.

49

RESTRUCTURED DEBT DISCOUNT ANALYSIS


High Yield Market Overview
In selecting appropriate yields at which to discount the Restructured Debt, Jefferies examined the recent condition of the high yield market The high yield market in 2003 was one of the strongest markets in the history of high yield debt 508 deals were priced for $138.7 billion Mutual fund net inflows totaled $20.1 billion 12 weeks with over $1 billion in high yield inflows Despite strong 2003 performance, the high yield market performance has been mixed Net outflows of cash from high yield mutual funds In determining comparable yields for the Restructured Debt, Jefferies examined average yields since September 30, 2003
US Treasury Yields
% Yield 10.0%

US Treasury Yield Curves


%
6.0% 5.0% 4.0%

8.0%

6.0%

3.0%
4.0%

2.0% 1.0% 0.0%


1987 1988 1989 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2004
3 Month

2.0%

0.0%

1 2 3
6 Month

10

30

5-Year Treasury

10-Year Treasury

30-Year Treasury

10/01/04
6-Month 1-Year(1) 2-Year

04/01/04
3-Year 5-Year

10/01/03
7-Year 10-Year 30-Year(2)

Date

3-Month

10/01/04 04/01/04 10/01/03

1.69% 0.94% 0.93%

1.98% 1.02% 1.01%

2.20% 1.30% 1.22%

2.62% 1.85% 1.63%

2.88% 2.27% 2.11%

3.42% 3.13% 3.09%

3.73% 3.53% 3.53%

4.19% 4.14% 4.19%

4.94% 4.97% 5.09%

Source:

Bloomberg, L.P.

Source: Bloomberg, L.P. The yield on the 1-year treasury is interpolated from the applicable yield curve. (2) On October 31, 2001, the U.S. Government announced its plans to stop issuing 30-year treasury bonds. The yield on the 30-year treasury is based on the last issued 30-year from February 15, 2001 which matures in 2031.
(1)

50

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Debt Issues of Leveraged Automotive Suppliers(1)
($ in Millions)
Issuer Dana Corp. Dana Corp. Dana Corp. Dana Corp. Dana Corp. Dana Corp. Delco Remy Intl Inc. Delco Remy Intl Inc. Delco Remy Intl Inc. Dura Oper Corp Dura Oper Corp Metaldyne Corp Metaldyne Corp Tenneco Automotive Inc. Tenneco Automotive Inc. TRW Automotive Acq. Corp. TRW Automotive Int Holdings TRW Automotive Acq. Corp. TRW Automotive Acq. Corp. TRW Automotive Acq. Corp. Type of Security Senior Notes Senior Notes Senior Notes Senior Notes Senior Notes Senior Notes Senior Notes Senior Subordinated Notes Senior Subordinated Notes Senior Notes Senior Subordinated Notes Senior Notes Senior Subordinated Notes Senior Secured Notes Senior Subordinated Notes Senior Notes Subordinated PIK Notes Senior Subordinated Notes Senior Notes (Euro) Senior Subordinated Notes (Euro) Coupon 6.500 6.500 10.125 9.000 7.000 7.000 8.625 11.000 9.375 8.625 9.000 10.000 11.000 10.250 11.625 9.375 8.000 11.000 10.125 11.750 Current Amount $ 150.0 350.0 250.0 575.0 197.0 375.0 145.0 165.0 150.0 450.0 458.5 150.0 250.0 475.0 500.0 925.0 600.0 300.0 200.0 Euro 125.0 Euro

Maturity Date 3/15/08 3/1/09 3/15/10 8/15/11 3/15/28 3/1/29 12/15/07 5/1/09 4/15/12 4/15/12 5/1/09 11/1/13 6/15/12 7/15/13 10/15/09 2/15/13 2018 2/15/13 2/15/13 2/15/13 Mean(2) Median(2) Trimmed Mean(2)(3) High(2) Low(2)

Price 105.880 105.750 113.500 120.750 100.500 100.500 102.000 105.000 98.000 99.000 89.000 93.000 79.500 114.000 105.500 114.250 NA 119.000 NA NA

Current Data - 9/30/2004 Yield To Maturity Yield To Worst 4.640 4.640 5.030 5.030 7.100 3.920 5.350 5.350 6.960 6.960 6.960 6.960 7.900 5.670 9.620 9.320 9.750 9.750 8.810 8.810 12.200 12.200 11.250 11.250 15.660 15.660 8.000 7.160 10.200 9.480 7.090 (3) 7.090 (3) 12.000 12.000 7.860 7.860 NA NA NA NA 9.523 9.095 9.420 13.455 6.007 1.850 3.390 4.410 2.200 2.840 9.164 8.652 9.014 13.455 5.477 4.080 3.390 4.410 2.320 2.840 3.408 3.390 3.437 4.410 2.320

Price 103.900 103.920 114.260 117.270 96.230 96.340 101.710 103.630 98.180 103.540 97.630 88.140 99.430 114.070 107.010 113.970 NA 118.480 NA NA

Average from 9/30/03 - 9/30/04 Yield To Maturity Yield To Worst 5.370 5.370 5.570 5.570 7.140 4.800 6.060 6.060 7.350 7.350 7.330 7.330 8.060 7.200 10.060 9.690 9.710 9.700 8.030 7.880 9.620 9.550 10.110 10.080 13.480 13.480 8.060 7.370 9.940 6.840 7.200 7.200 12.000 12.000 8.020 8.020 NA NA NA NA 9.073 9.037 9.044 11.795 6.470 2.000 1.590 3.370 1.880 2.810 2.330 2.000 2.230 3.370 1.590 8.603 8.789 8.439 11.780 6.080 2.500 1.670 3.400 NM 2.810 2.595 2.655 2.655 3.400 1.670

Moody's Ba3 Ba3 Ba3 Ba3 Ba3 Ba3 B2 B3 B3 B1 B2 B3 Caa1 B2 B3 B1 NA B2 B1 B2

Standard & Poor's BB BB BB BB BB BB CCC+ CCC+ CCC+ B+ B B B BBBBNA BBBBBB-

Yield Differential Between Senior Notes and Subordinated Notes Delco Remy Intl Inc. Dura Oper Corp Metaldyne Corp Tenneco Automotive Inc. TRW Automotive

(5)

Mean(2) Median(2) Trimmed Mean(2)(3) High(2) Low(2)


(1) Per Factset Research Systems as of September 30, 2004. (2) Based upon average yield of each issuer. (3) Trimmed Mean excludes high and low values. (4) Based on 12% discount rate used to estimate the fair value of the note for accounting purposes. (5) Reflects average for each type of issue when more than one senior or subordinated note issue exists.

2.938 2.840 2.810 4.410 1.850

51

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Recent Single B Rated Issues Since September 30, 2003
Issuer Koppers Industries, Inc. Power Receivable Finance Dynegy Holdings Inc Dynegy Holdings Inc Dynegy Holdings Inc. HM Publishing Co. Scotts Co. (The) Le Groupe Videotron Ltee B/E Aerospace Inc. IMCO Recycling Inc. LBI Media Inc. Parker Drilling Co. Von Hoffman Corp. Mobile TeleSystems Finance SA Universal Hospital Services, Inc. Phibro Animal Health Corp. Norcraft Cos LP/ Norcraft Finance Corp LNR Property Corp. Vicap S.A. de C.V. (Vitro S.A.) Nationsrent, Inc. Nextel Communications, Inc. DRS Technologies, Inc National Nephrology Associates Inc Metaldyne Corp. Inn of the Mountain Gods Resort & Casino Fisher Scientific International, Inc. Paramount Resources Ltd Genesis Healthcare Corp. Keystone Automotive Operations Inc Oxford Automotive, Inc. Host Marriott LP Gaylord Entertainment Co Neighborcare Inc (Genesis Health Ventures) Nalco Co Nalco Co Nalco Co Nalco Co Dura Operating Corp. (Dura Automotive Systems) Silgan Holdings, Inc. O'Charley's Inc Telex Communicatios Inc. Cincinnati Bell Inc. American Towers Inc. Dex Media Inc Dex Media Inc Manitowoc Co. River Rock Entertainment Authority Charter Communications Holdings LLC/ Capital Corp. Premcor Refining Group Inc. PPC Escrow Corp. (Pilgrim's Pride) Stratus Technologies Michael Foods Inc. Triad Hospitals Inc Issue Date 9/30/03 9/30/03 9/30/03 9/30/03 9/30/03 9/30/03 10/1/03 10/2/03 10/2/03 10/2/03 10/3/03 10/3/03 10/7/03 10/8/03 10/8/03 10/10/03 10/10/03 10/15/03 10/15/03 10/16/03 10/16/03 10/16/03 10/16/03 10/20/03 10/21/03 10/21/03 10/22/03 10/23/03 10/23/03 10/24/03 10/27/03 10/28/03 10/29/03 10/29/03 10/29/03 10/29/03 10/29/03 10/29/03 10/30/03 10/30/03 10/31/03 10/31/03 11/3/03 11/3/03 11/3/03 11/3/03 11/4/03 11/4/03 11/5/03 11/6/03 11/6/03 11/6/03 11/6/03 Type of Security 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Second Priority Senior Secured Notes 144a Second Priority Senior Secured Notes 144a Second Priority Senior Secured Notes 144a Senior Discount Notes 144a Senior Subordinated Notes Senior Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Discount Notes 144a Senior Notes 144a Senior Notes 144a Senior Unsecured Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Unsecured Notes 144a Senior Secured Notes Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Secured Second Lien Notes 144a Senior Notes (series J) 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Notes Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes Face Amount 320.0 22.2 100.0 200.0 200.0 150.9 200.0 335.0 175.0 210.0 68.4 175.0 60.0 400.0 260.0 105.0 150.0 300.0 225.0 250.0 500.0 350.0 160.0 150.0 200.0 150.0 175.0 225.0 175.0 167.0 750.0 350.0 250.0 200.0 465.0 665.0 200.0 50.0 200.0 125.0 125.0 540.0 400.0 500.0 250.0 150.0 200.0 500.0 175.0 100.0 170.0 150.0 600.0 Cpn/Div 9.875 10.750 9.875 10.125 10.125 6.625 6.875 8.500 10.375 9.625 10.250 8.375 10.125 13.000 9.000 7.250 11.750 9.500 6.875 6.875 9.000 10.000 12.000 8.000 7.875 8.000 9.750 12.000 7.250 8.000 6.875 7.750 8.875 7.750 9.000 8.625 6.750 9.000 11.500 8.975 7.250 8.000 7.125 9.750 8.750 7.750 9.250 10.375 8.000 7.000 Price 100.000 99.716 104.250 105.250 105.250 56.960 100.000 99.081 100.000 99.383 58.456 100.000 104.750 100.000 100.000 100.000 100.000 100.000 98.556 100.000 100.000 100.000 100.000 100.000 100.000 107.500 100.000 100.000 100.000 85.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 64.393 100.000 98.651 100.000 100.000 100.000 100.000 100.000 100.000 Moody's B2 B1 B3 B3 B3 CAA1 BA3 BA3 B3 B3 B3 B2 B2 Ba3 B3 B2 B3 BA3 B2 B2 B2 B2 B3 B3 CAA1 B2 B2 B3 B3 B3 BA3 B3 BA3 B2 CAA1 B2 CAA1 B1 B1 BA3 B3 B3 B3 CAA1 CAA1 B1 B2 B3 B2 B2 B3 B3 B3 S&P B BB+ BBBB B+ B+ B+ BBBB B+ BBBB+ BBBB+ B BB B B+ B BBCCC+ B+ BB+ B B B B B+ B+ B B BCCC B B B+ B+ CCC B B+ B BB Maturity 10/15/13 2/1/12 7/15/10 7/15/13 7/15/13 10/15/13 11/15/13 1/15/14 10/1/10 10/15/10 10/15/13 10/1/13 3/15/09 10/14/10 11/1/11 10/1/07 8/15/11 10/15/13 11/1/13 10/15/10 10/31/13 11/1/13 11/1/11 11/1/13 11/15/10 9/1/13 11/1/10 10/15/13 11/1/13 10/15/10 11/1/13 11/15/13 11/15/13 11/15/11 11/15/13 11/15/11 11/15/13 4/15/12 11/15/13 11/1/13 10/15/08 1/15/14 12/1/11 11/15/13 11/15/13 11/1/13 11/1/11 11/15/13 2/1/12 11/15/13 12/1/08 11/15/13 11/15/13 YTM 9.875 11.000 8.917 9.165 9.165 11.500 6.625 7.000 8.500 10.500 11.000 9.625 8.916 8.375 10.125 13.000 9.000 7.250 12.000 9.500 6.875 6.875 9.000 10.000 12.000 6.747 7.875 8.000 9.750 15.600 7.250 6.875 7.750 8.875 7.750 9.000 8.625 6.750 9.000 11.500 8.975 7.250 8.000 9.000 7.125 10.000 8.750 7.750 9.250 10.375 8.000 7.000 Spread 593 556 524 524 745 268 295 507 704 681 545 603 527 588 506 284 759 557 240 251 487 565 823 286 416 367 542 286 380 262 433 242 466 824 405 321 365 465 276 599 446 360 485 696 359 260 Industry Chemicals and Allied Products Electric & Gas Utilities and Sanitary Services Mining Mining Mining Printing & Publishing Chemicals and Allied Products Communications Manufacturing - Furniture & Fixtures Metals & Related Products Communications Mining Printing & Publishing Communications Other Services Chemicals and Allied Products Financial Services Stone, Clay, Glass & Concrete Products Business Services and Software Communications Metals & Related Products Other Services Transportation Equipment Hotels Wholesale Trade - Durable Goods Drilling and Exploration Other Services Retail Trade Metals & Related Products Hotels Hotels Chemicals and Allied Products Electric & Gas Utilities and Sanitary Services Electric & Gas Utilities and Sanitary Services Electric & Gas Utilities and Sanitary Services Electric & Gas Utilities and Sanitary Services Transportation Equipment Metals & Related Products Retail Trade Communications Communications Communications Communications Communications Electronic Equipment Agriculture, Forestry and Fishing Communications Petroleum Refining Agriculture, Forestry and Fishing Business Services and Software Manufacturing - Food & Kindred Products Other Services

52

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Recent Single B Rated Issues Since September 30, 2003 (Contd)
Issuer Quality Distribution LLC/ QD Capital Corp Tabletop Holdings, Inc. Calpine Corp Dollar Financial Group, Inc. Terex Corp. Berry Plastics Corp. Sonic Automotive, Inc. Tekni-Plex, Inc. Steel Dynamics Inc. Concentra Operating Corp. Crown Castle International Corp. LNR Property Corp. Equistar Chemicals, L.P. General Cable Corp Poster Financial Group Inc (Golden Nugget) Nortek Holdings Georgia Gulf Corp. Imax Corp. Millicom International Cellular S.A. MediaNews Group Inc Millar Western Forest Products, Ltd. Pinnacle Foods Holding Corp J Ray McDermott S.A. North American Energy Partners OMI Corp. Penn National Gaming, Inc. Empresa Brasileira de Telecomunicacoes (Embratel) General Nutrition Centers Jostens Holding Corp Hanover Compressor Co. Six Flags, Inc. Huntsman LLC Atrium Cos., Inc. Insight Midwest L.P. Crown Castle International Corp. Iron Mountain Inc. Tenneco Automotive, Inc. Granite Broadcasting Corp. SBA Communications Corp. Equinox Holdings Inc Hanover Compressor Co. Valeant Pharmaceuticals International Blue Ridge Paper Pdts Inc THL Bedding Co./ Simmons Co. Bombardier Recreational Pdts WMC Finance Co. Couche-Tard Financing Corp (Alimentation Couche-Tard Inc) KRATON Polymers LLC/ Capital Corp Sensus Metering Systems Inc Ship Finance International Ltd (Frontline Ltd) United Agri Products Inc Great Lakes Dredge and Dock Corp. Land O'Lakes Inc Issue Date 11/6/03 11/6/03 11/6/03 11/7/03 11/10/03 11/10/03 11/12/03 11/12/03 11/14/03 11/17/03 11/17/03 11/17/03 11/18/03 11/18/03 11/18/03 11/19/03 11/19/03 11/19/03 11/19/03 11/20/03 11/20/03 11/20/03 11/21/03 11/21/03 11/21/03 11/24/03 11/24/03 11/25/03 11/25/03 12/2/03 12/2/03 12/3/03 12/3/03 12/4/03 12/4/03 12/4/03 12/8/03 12/8/03 12/8/03 12/9/03 12/9/03 12/9/03 12/10/03 12/10/03 12/11/03 12/11/03 12/11/03 12/11/03 12/11/03 12/11/03 12/11/03 12/12/03 12/12/03 Type of Security 144a Senior Subordinated Notes 144a Senior Secured Discount Notes 144a 2nd Priority Senior Secured Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Secured Notes (2nd Priority) 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes 144a Senior Secured Notes (2nd Lien) 144a Senior Discount Notes 144a Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Discount Notes Subordinated Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Secured Notes (2nd Lien) 144a First Lien Notes 144a Senior Discount Notes Senior Notes Senior Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes (gtd) 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Secured Notes (2nd Lien) Face Amount 125.0 75.0 400.0 220.0 300.0 95.2 75.0 275.0 100.0 30.0 300.0 550.0 250.0 285.0 155.0 515.0 100.0 160.0 550.0 300.0 190.0 200.0 200.0 200.0 200.0 200.0 200.0 215.0 247.2 262.6 325.0 75.4 50.0 130.0 300.0 170.0 125.0 405.0 404.0 160.0 200.0 300.0 125.0 200.0 200.0 200.0 350.0 200.0 275.0 580.0 225.0 175.0 175.0 Cpn/Div 9.000 9.875 9.750 7.375 10.750 8.625 8.750 9.500 9.500 7.500 7.250 10.625 9.500 8.750 7.125 9.625 10.000 6.875 7.750 8.250 11.000 8.750 7.625 6.875 11.000 8.500 9.625 11.625 10.500 10.500 7.500 6.625 10.250 9.750 9.000 8.625 7.000 9.500 7.875 8.375 11.750 7.500 8.125 8.626 8.500 8.250 7.750 9.000 Price 100.000 55.131 98.000 100.000 99.110 112.000 105.000 100.000 109.000 106.500 96.603 100.500 104.685 100.000 100.000 67.849 100.000 100.000 100.000 99.133 100.000 100.000 97.064 100.000 100.000 98.496 99.049 100.000 60.682 69.307 100.000 99.500 106.875 108.750 98.750 96.500 113.000 98.782 68.404 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 Moody's B3 CAA1 NR B3 B3 B3 B2 B2 B2 B3 B3 BA3 B2 B2 B2 CAA1 B1 B3 B3 B2 B3 B3 B3 B2 B1 B3 B2 B3 CAA2 CAA1 B2 B2 B3 B2 B3 B2 B2 B3 NR B3 B3 B1 B2 CAA1 B3 B2 BA3 B3 CAA1 B2 B3 B3 B2 S&P BBB B+ B BB+ BB+ BCCC B+ BBB B BBBBBB+ B+ B BB+ B+ B NR BBBBB B B+ CCC B CCC+ CCC NR BB BBBBBBB B BB B BB Maturity 11/15/10 5/15/14 11/15/11 11/15/11 1/14/13 7/15/12 8/15/13 11/15/13 3/15/09 8/15/10 12/1/13 10/15/13 5/1/11 11/15/10 12/1/11 5/1/11 12/15/13 12/1/10 12/1/13 10/1/13 11/15/13 12/1/13 12/15/13 12/1/11 12/1/13 12/1/11 12/15/08 12/1/10 12/1/13 3/31/07 6/1/14 10/15/10 5/1/09 11/1/10 12/1/13 1/1/16 7/15/13 12/1/10 12/15/11 12/15/09 12/15/10 12/15/11 12/15/08 1/15/14 12/15/13 12/15/18 12/15/13 1/15/14 12/15/13 12/15/13 12/15/11 12/15/13 12/15/10 YTM 9.000 12.250 10.243 9.750 7.500 8.169 7.750 8.750 7.034 8.057 8.000 7.166 9.500 9.500 8.750 10.000 7.125 9.625 10.000 7.000 7.750 8.250 11.500 8.750 7.625 7.125 11.250 8.500 10.250 11.375 9.625 11.720 5.880 8.039 7.681 7.060 7.775 10.000 9.750 9.000 8.625 7.000 9.500 7.875 8.375 11.750 7.500 8.125 8.626 8.500 8.250 7.750 9.000 Spread 509 785 558 305 519 335 435 386 427 381 341 595 490 633 289 607 586 276 356 407 737 469 349 325 474 606 525 783 +480 (WST) 421 330 240 351 617 572 534 471 307 622 355 415 855 317 380 428 417 425 354 538 Industry Transportation Equipment Financial Services Industrial & Commercial Machinery Rubber & Plastic Products Other Services Rubber & Plastic Products Metals & Related Products Other Services Communications Financial Services Mining Communications Financial Services Metals & Related Products Chemicals and Allied Products Electronic Equipment Communications Printing & Publishing Manufacturing - Paper & Allied Products Manufacturing - Food & Kindred Products Mining Mining Transportation Other Services Electric & Gas Utilities and Sanitary Services Manufacturing - Food & Kindred Products Miscellaneous Manufacturing Business Services and Software Other Services Rubber & Plastic Products Stone, Clay, Glass & Concrete Products Communications Communications Business Services and Software Transportation Equipment Communications Construction Other Services Business Services and Software Chemicals and Allied Products Manufacturing - Paper & Allied Products Manufacturing - Textiles Financial Services Financial Services Manufacturing - Food & Kindred Products Chemicals and Allied Products Miscellaneous Manufacturing Transportation Chemicals and Allied Products Construction Manufacturing - Food & Kindred Products

53

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Recent Single B Rated Issues Since September 30, 2003 (Contd)
Issuer Mariner Health Care Inc. Pathmark Stores Inc. Young Broadcasting Inc. El Pollo Loco Inc NRG Energy Inc. Resolution Performance Products LLC Asbury Automotive Group Inc. Nexstar Finance LLC/ Finance Inc (Nexstar Broadcasting) Suburban Propane Partners LP/ Suburban Energy Finance Corp CSN Islands VII Corp. Elizabeth Arden Inc CSK Auto, Inc. Telecomunicacoes de Minas Gerais (Telemig Celular S.A.)/Amazonia Celelular S.A. Primus Telecommunications Group, Inc. Star Gas Propane, L.P. / /Star Gas Finance Co. Nalco Finance Holdings LLC American Casino & Entertainment Properties LLC Communications and Power Industries, Inc. Seminis Vegetable Seeds Inc Station Casinos, Inc. Vail Resorts Inc. New ASAT (Finance) Ltd Votorantim Overseas III UAP Holding Corp Portola Packaging, Inc. NRG Energy Inc. Mail-Well Inc. Casella Waste Systems Inc. Companhia Siderurgica Paulista (Cosipa) United Rentals, Inc. United Rentals, Inc. Northwest Airlines, Inc. Inmarsat Finance Plc Freeport-McMoRan Copper & Gold Inc. Dex Media Inc William Lyon Homes Inc. Thermadyne Holdings Corp. Nectar Merger Corp / FTD Inc Petro Stopping Centers LP / Petro Financial Corp Qwest Communications International, Inc. Qwest Communications International, Inc. AmeriPath Inc. Dunlop Standard Aerospace Plc Playtex Products, Inc. GCI, Inc. Ply Gem Industries Inc Argosy Gaming Co. Inverness Medical Innovations Pinnacle Foods Holding Corp Affinity Group Holdings, Inc. Pliant Corp. AES Corp. B.F. Saul Real Estate Investment Trust Issue Date 12/12/03 12/12/03 12/12/03 12/16/03 12/17/03 12/17/03 12/18/03 12/18/03 12/18/03 1/8/04 1/8/04 1/9/04 1/12/04 1/13/04 1/13/04 1/15/04 1/15/04 1/15/04 1/15/04 1/15/04 1/15/04 1/16/04 1/16/04 1/20/04 1/20/04 1/21/04 1/21/04 1/22/04 1/23/04 1/23/04 1/23/04 1/26/04 1/27/04 1/28/04 1/28/04 1/28/04 1/29/04 1/30/04 1/30/04 1/30/04 1/30/04 2/4/04 2/4/04 2/4/04 2/5/04 2/5/04 2/5/04 2/5/04 2/5/04 2/6/04 2/6/04 2/10/04 2/10/04 Type of Security 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Secured Notes (2nd Lien) 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Unsecured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Bonds 144a Senior Notes 144a Senior Notes 144a Senior Discount Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Notes 144a Senior Discount Notes 144a Senior Notes 144a Senior Secured Notes (2nd Lien) 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Discount Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Secured Discount Notes (1st Lien) 144a Senior Notes 144a Senior Secured Notes Face Amount 175.0 50.0 90.0 110.0 1,250.0 140.0 200.0 125.0 175.0 200.0 200.0 225.0 120.0 240.0 350.0 694.0 215.0 125.0 140.0 400.0 390.0 150.0 300.0 125.0 180.0 475.0 320.0 45.0 175.0 1,000.0 375.0 300.0 375.0 350.0 361.0 150.0 175.0 175.0 225.0 525.0 500.0 75.0 120.0 460.0 230.0 225.0 350.0 150.0 194.0 200.0 306.0 500.0 250.0 Cpn/Div 8.250 8.750 8.500 9.250 8.000 8.000 8.000 7.000 6.875 9.750 7.750 7.000 8.750 8.000 10.250 7.850 8.000 10.250 6.500 6.750 9.250 7.875 8.250 8.000 7.875 9.750 8.250 6.500 7.000 10.000 7.625 6.875 7.500 9.250 7.750 9.000 7.250 7.500 10.500 11.875 8.000 7.250 9.000 7.000 8.750 8.250 9.000 7.750 7.500 Price 100.000 103.000 106.910 100.000 100.000 100.000 100.000 100.000 100.000 104.875 100.000 100.000 99.504 100.000 110.500 64.235 100.000 100.000 109.000 100.000 100.000 100.000 99.489 65.992 100.000 106.000 100.000 113.500 99.198 100.000 100.000 96.227 100.000 100.000 69.384 100.000 100.000 100.000 100.000 99.321 98.273 107.125 105.125 100.000 98.264 100.000 100.000 100.000 103.596 100.000 73.627 98.288 100.000 Moody's B3 B2 B2 B2 B2 NR B3 B3 B1 B1 B3 B2 B2 B3 B3 CAA2 B2 B3 B3 B2 B2 B3 B1 CAA2 B2 B2 B3 B3 B2 B1 B2 CAA1 B2 B2 CAA1 B3 CAA1 B3 B3 B3 B3 B3 B3 B2 B2 B3 B3 CAA1 B3 B3 B3 B3 B3 S&P BB B B B+ B+ B BB B+ BBB+ CCC B BB BBB+ B B B+ BBB+ B B B+ BBB+ BB BB BBBBCCC+ CCC+ BCCC+ B B+ BB+ BB BB BB+ Maturity 12/15/13 2/1/12 12/15/08 12/15/09 12/15/13 12/15/09 3/15/14 1/15/14 12/15/13 12/23/13 1/15/14 1/15/14 1/20/09 1/15/14 2/15/13 2/1/14 2/1/12 2/1/12 10/1/13 2/1/14 2/15/14 2/1/11 1/23/14 7/15/12 2/1/12 12/15/13 12/1/13 2/1/13 1/30/09 2/15/12 2/15/14 2/1/09 6/30/12 2/1/14 11/15/13 2/15/14 2/1/14 2/15/14 2/15/12 2/25/11 2/15/14 4/1/13 5/15/09 3/1/11 2/15/14 2/15/12 1/15/14 2/15/12 12/1/13 2/15/12 6/15/09 3/1/14 3/1/14 YTM 8.250 8.115 6.500 9.250 8.000 8.000 8.000 7.000 6.875 8.996 7.750 7.000 8.875 8.000 8.230 9.000 7.850 8.000 8.844 6.500 6.750 9.250 7.950 10.750 8.250 7.142 7.875 6.914 8.450 6.500 7.000 11.000 7.625 6.875 8.250 7.500 9.250 7.750 9.000 7.375 7.750 9.116 9.983 8.000 7.500 9.000 7.000 8.750 7.625 9.000 11.125 8.000 7.500 Spread 405 468 376 575 382 467 384 285 274 474 350 290 583 397 528 502 385 427 463 253 278 573 395 695 448 312 386 431 533 272 297 789 367 269 451 330 503 360 508 369 362 544 756 433 332 506 282 487 394 515 809 390 344 Industry Other Services Retail Trade Communications Retail Trade Electric & Gas Utilities and Sanitary Services Chemicals and Allied Products Retail Trade Communications Retail Trade Metals & Related Products Chemicals and Allied Products Retail Trade Electric & Gas Utilities and Sanitary Services Communications Retail Trade Electric & Gas Utilities and Sanitary Services Hotels Electronic Equipment Agriculture, Forestry and Fishing Hotels Other Services Electronic Equipment Financial Services Construction Rubber & Plastic Products Electric & Gas Utilities and Sanitary Services Business Services and Software Electric & Gas Utilities and Sanitary Services Metals & Related Products Business Services and Software Business Services and Software Transportation Communications Construction Communications Construction Industrial & Commercial Machinery Wholesale Trade - Nondurable Goods Other Services Communications Communications Other Services Transportation Equipment Manufacturing - Paper & Allied Products Communications Metals & Related Products Hotels Measuring, Photographic, Optical Goods Manufacturing - Food & Kindred Products Other Services Rubber & Plastic Products Electric & Gas Utilities and Sanitary Services Financial Services

54

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Recent Single B Rated Issues Since September 30, 2003 (Contd)
Issuer Time Warner Telecom Holding Inc. GCI, Inc. North Atlantic Trading Co., Inc. Erico International Corp Phillips - Van Heusen Corp. Solo Cup Company WII Components Inc (Woodcraft Industries) Pantry, Inc. (The) Riverside Forest Products, Ltd. Comstock Resources Inc. Odebrecht Overseas Ltd. AMF Bowling Worldwide Inc. Chattem, Inc. Isle of Capri Casinos Inc. Jo-Ann Stores Inc. Station Casinos, Inc. Insight Health Services Corp. Invensys Plc Ainsworth Lumber Co Ltd AMH Holdings Inc. (Associated Materials) Goodyear Tire & Rubber Co. Station Casinos, Inc. WH Holdings/WH Capital Corp (Herbalife) Airgas, Inc. Friendly Ice Cream Corp. True Temper Sports, Inc. Global Cash Access, LLC J.B. Poindexter & Co. The Newark Group Inc. Gold Kist Inc. American Rock Salt Co. Cellu Tissue Holdings Mrs. Fields Famous Brands LLC/ Mrs Fields Financing Co Inc Amkor Technology Inc. Technical Olympic USA Inc. Pharma Services Intermediate Holding Corp. Calpine Generating Company LLC Team Health, Inc. Omega Healthcare Investors, Inc. Rural Cellular Corp. Nextel Communications, Inc. Sierra Pacific Resources Nextel Communications, Inc. American Achievement Corp. (AAC) Ispat Inland ULC Interactive Health LLC Real Mex Restaurants Inc. Hercules, Inc. KCS Energy, Inc. U.S. Concrete Inc. Diamond Jo LLC (FKA Peninisula Gaming Co LLC)/Old Evangeline Downs LLC Sealy Mattress Co. Service Corporation International Issue Date 2/10/04 2/11/04 2/11/04 2/12/04 2/12/04 2/12/04 2/12/04 2/13/04 2/17/04 2/18/04 2/18/04 2/19/04 2/19/04 2/19/04 2/19/04 2/24/04 2/26/04 2/27/04 2/27/04 2/27/04 2/27/04 3/1/04 3/3/04 3/3/04 3/3/04 3/3/04 3/4/04 3/4/04 3/5/04 3/5/04 3/5/04 3/5/04 3/9/04 3/9/04 3/10/04 3/11/04 3/12/04 3/12/04 3/15/04 3/15/04 3/16/04 3/16/04 3/16/04 3/17/04 3/18/04 3/19/04 3/24/04 3/25/04 3/25/04 3/26/04 3/26/04 3/30/04 3/30/04 Type of Security Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes Senior Notes 144a Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Unsecured Notes 144a Senior Notes 144a Senior Discount Notes 144a Senior Secured Notes (Junior Lien) 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Secured Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Discount Notes 144a Secured Notes (3rd Lien) 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Notes Face Amount 200.0 20.0 200.0 141.0 150.0 325.0 120.0 250.0 150.0 175.0 150.0 150.0 125.0 500.0 100.0 350.0 25.0 550.0 210.0 446.0 450.0 50.0 275.0 150.0 175.0 125.0 235.0 125.0 175.0 200.0 100.0 162.0 115.0 250.0 125.0 219.0 150.0 180.0 200.0 350.0 500.0 335.0 500.0 150.0 650.0 100.0 105.0 250.0 175.0 200.0 230.0 390.0 250.0 Cpn/Div 9.250 7.250 9.250 8.875 7.250 8.500 10.000 7.750 7.875 6.875 11.500 10.000 7.000 7.000 7.500 6.875 9.875 9.875 6.750 11.000 6.500 9.500 6.250 8.375 8.375 8.750 8.750 9.750 10.250 9.500 9.750 11.500 7.125 7.500 11.500 9.000 7.000 8.250 5.950 8.625 5.950 8.250 9.750 7.250 10.000 6.750 7.125 8.375 8.750 8.250 6.750 Price 100.000 98.500 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 99.075 100.000 100.000 100.000 100.000 100.000 101.000 98.147 100.000 57.907 99.413 100.500 100.000 100.000 100.000 100.000 100.000 100.000 100.000 98.470 100.000 98.892 100.000 99.321 100.000 56.943 100.000 100.000 100.000 100.000 97.795 100.000 97.795 100.000 99.212 80.424 100.000 100.000 100.000 100.000 98.596 100.000 99.500 Moody's B2 B2 B2 B3 B2 B3 B2 B3 B2 B2 NR B3 B2 B2 B2 B1 B3 B3 B1 CAA1 B3 B1 B3 BA2 B2 B3 CAA1 B1 CAA1 B2 B3 B2 B3 B1 B2 CAA1 NR B3 B1 B2 B2 B2 B2 B3 CAA1 B3 B2 BA3 B3 B3 B2 CAA1 B1 S&P CCC+ B+ B+ BBBBBBB+ BB+ CCC+ BB BB+ BBB+ BB B+ B B+ BBBBBBBB CCC+ B BB BBBBBB+ BB+ BBBBB+ BBBBBBMaturity 2/15/14 2/15/14 3/1/12 3/1/12 2/15/11 2/15/14 2/15/12 2/15/14 3/1/14 3/1/12 2/25/09 3/1/10 3/1/14 3/1/14 3/1/12 3/1/16 11/1/11 2/15/11 3/15/14 3/1/14 3/1/11 2/1/14 4/1/11 1/0/00 6/15/12 9/15/11 3/15/12 3/15/14 1/0/00 3/15/14 3/15/14 3/15/10 3/15/11 3/15/11 3/15/11 4/1/14 4/1/11 4/1/12 4/1/14 3/15/12 3/15/14 3/15/14 3/15/14 4/1/12 4/1/14 4/1/11 4/1/10 10/15/29 4/1/12 4/1/14 4/15/12 6/15/14 4/1/16 YTM 9.250 7.466 9.250 8.875 7.250 8.500 10.000 7.750 7.875 6.875 11.750 10.000 7.000 7.000 7.500 6.875 9.682 10.250 6.750 11.250 11.125 6.417 9.500 6.250 8.375 8.375 8.750 8.750 9.750 10.500 9.500 10.000 11.500 7.250 7.500 11.500 11.500 9.000 7.000 8.250 6.250 8.625 6.250 8.250 9.875 11.375 10.000 6.750 7.125 8.375 9.000 8.250 6.812 Spread 516 345 539 520 370 445 622 374 385 310 880 663 296 296 375 261 588 675 272 726 764 243 593 216 478 468 495 473 591 667 565 697 432 774 828 558 325 482 249 493 249 487 613 711 302 370 462 528 438 294 Industry Other Services Communications Manufacturing - Tobacco Products Metals & Related Products Manufacturing - Apparel Manufacturing - Paper & Allied Products Manufacturing - Furniture & Fixtures Retail Trade Manufacturing - Paper & Allied Products Mining Chemicals and Allied Products Miscellaneous Manufacturing Chemicals and Allied Products Other Services Retail Trade Hotels Other Services Industrial & Commercial Machinery Agriculture, Forestry and Fishing Metals & Related Products Rubber & Plastic Products Hotels Chemicals and Allied Products Wholesale Trade - Nondurable Goods Retail Trade Miscellaneous Manufacturing Other Services Transportation Equipment Manufacturing - Paper & Allied Products Manufacturing - Food & Kindred Products Mining Manufacturing - Paper & Allied Products Manufacturing - Food & Kindred Products Miscellaneous Manufacturing Construction Chemicals and Allied Products Electric & Gas Utilities and Sanitary Services Business Services and Software Financial Services Communications Communications Electric & Gas Utilities and Sanitary Services Communications Printing & Publishing Metals & Related Products Miscellaneous Manufacturing Retail Trade Chemicals and Allied Products Mining Stone, Clay, Glass & Concrete Products Other Services Manufacturing - Furniture & Fixtures Personal Services

55

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Recent Single B Rated Issues Since September 30, 2003 (Contd)
Issuer Cablevision Systems Corp. (CSC Holdings, Inc.) Encore Acquisition Co. Cablevision Systems Corp. (CSC Holdings, Inc.) Boyd Gaming Corp. Warner Music Group Aearo Corp. EXCO Resources Consolidated Communications Texas Holdings/ Illinois Holdings Port Townsend Paper Corp. NTL Cable Plc (NTL Communications Corp.) OAO Severstal Vicorp Restaurants, Inc. Allied Waste North America Inc. MemberWorks Inc. VWR International VWR International Delco Remy International, Inc. Mueller Group Inc. Superior Essex Communications LLC/ Essex Group Inc. Primus International Inc. Extendicare Health Services, Inc. Midwest Finance Corp. (Midwest Generation LLC) Atlantic Express Transportation Corp. Charter Communications Operating LLC/ Capital Corp. Charter Communications Operating LLC/ Capital Corp. Curative Health Services Inc. CHC Helicopter Corp AmeriGas Partners LP/ AP Eagle Finance Corp. iPCS Escrow / iPCS Inc. Inmarsat Finance Plc INVISTA / Arteva Specialties Sarl (Luxembourg) Waste Services Inc. Amscan Holdings Emmis Operating Co. Giant Industries, Inc. Sea Containers, Ltd. Seneca Gaming Corp. Triad Hospitals Inc Valmont Industries Inc. Wise Metals Group LLC / Wise Alloys Finance Corp. Itron Inc Whiting Petroleum Corp. Polypore Inc. J.B. Poindexter & Co. Ainsworth Lumber Co Ltd Buffets Holdings Inc. Consolidated Container Company LLC Lazydays R.V. Center Inc. Alpha Natural Resources Da-Lite Screen Company, Inc. Gundle / SLT Environmental Inc. Nextel Partners, Inc. Sheridan Group Inc. Issue Date 3/30/04 3/30/04 3/30/04 3/31/04 4/1/04 4/1/04 4/1/04 4/2/04 4/2/04 4/2/04 4/6/04 4/6/04 4/7/04 4/7/04 4/7/04 4/7/04 4/8/04 4/8/04 4/8/04 4/13/04 4/15/04 4/15/04 4/16/04 4/20/04 4/20/04 4/20/04 4/21/04 4/22/04 4/22/04 4/23/04 4/23/04 4/26/04 4/27/04 4/27/04 4/28/04 4/28/04 4/29/04 4/29/04 4/29/04 4/30/04 5/5/04 5/5/04 5/6/04 5/7/04 5/11/04 5/11/04 5/11/04 5/12/04 5/13/04 5/13/04 5/13/04 5/14/04 5/19/04 Type of Security 144a Senior Notes (CSC Holdings, Oppco) 144a Senior Subordinated Notes 144a Senior Notes (Cablevision Systems, Holdco o) 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Unsecured Notes 144a Senior Notes Senior Unsecured Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Secured Notes (2nd Lien) 144a Senior Subordinated Notes 144a Senior Secured Notes (2nd Priority) 144a Senior Secured Notes 144a Senior Secured Notes (2nd Lien) 144a Senior Secured Notes (2nd Lien) 144a Senior Notes 144a Senior Notes Senior Unsecured Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Unsecured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes Senior Subordinated Notes Senior Notes 144a Senior Notes Senior Notes 144a Senior Subordinated Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes 144a Senior Discount Notes 144a Senior Secured Discount Notes (2nd Lien) 144a Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Secured Notes Face Amount 500.0 150.0 1,000.0 350.0 465.0 175.0 100.0 200.0 125.0 425.0 375.0 126.5 400.0 150.0 200.0 320.0 150.0 315.0 275.0 65.0 125.0 1,000.0 105.0 400.0 1,100.0 185.0 250.0 28.0 165.0 102.5 675.0 160.0 175.0 375.0 150.0 103.0 300.0 600.0 150.0 150.0 125.0 150.0 225.0 30.0 110.0 132.0 207.0 155.0 175.0 160.0 150.0 25.0 60.0 Cpn/Div 6.750 6.250 8.000 6.750 7.375 8.250 7.250 9.750 11.000 8.750 9.250 10.500 7.375 9.250 6.875 8.000 9.375 10.000 9.000 10.500 6.875 8.750 12.000 8.375 8.000 10.750 7.375 8.875 11.500 7.625 9.250 9.500 8.750 6.875 8.000 10.500 7.250 7.000 6.875 10.250 7.750 7.250 8.750 8.750 6.750 11.750 10.000 9.500 11.000 8.125 10.250 Price 100.000 100.000 100.000 100.000 100.000 100.000 103.250 100.000 95.348 100.000 100.000 98.791 100.000 98.418 100.000 100.000 100.000 100.000 91.240 100.000 97.500 100.000 100.000 100.000 100.000 100.000 99.455 109.375 100.000 102.500 100.000 100.000 100.000 100.000 99.311 97.369 100.000 100.000 100.000 100.000 99.265 99.260 100.000 100.000 90.043 56.926 72.513 98.735 100.000 100.000 100.000 98.260 102.000 Moody's B1 B2 B3 B1 B3 B3 B2 B3 B3 B3 B2 B3 B2 B2 B2 B3 B3 CAA1 B3 B2 B2 B1 B3 B2 B2 B3 B2 B2 B3 B2 B1 CAA1 B3 B2 B3 B3 B2 B2 BA3 B2 B2 B2 CAA1 B1 B1 CAA1 B3 B3 B3 B2 CAA1 CAA1 B1 S&P BBB B+ B+ BBB BB BB+ B B+ B B BCCC+ BB B+ BBB BBBB BBCCC B B+ BBBNR B BBB+ B+ B B BBBB+ B B BCCC+ BBBB Maturity 4/15/12 4/15/14 4/15/12 4/15/14 4/15/14 4/15/12 1/15/11 4/1/14 4/15/11 1/0/00 4/19/14 4/15/11 4/15/14 4/1/14 4/15/12 4/15/14 4/15/12 5/1/12 4/15/12 4/15/09 5/1/14 5/1/34 4/15/08 4/30/14 4/30/12 5/1/11 5/1/14 5/20/11 5/1/12 6/30/12 5/1/12 4/15/14 5/1/14 5/15/12 5/15/14 5/15/14 5/1/12 5/15/12 5/1/14 5/15/12 5/15/12 5/1/12 5/15/12 3/15/14 3/15/14 12/15/10 6/15/09 5/15/12 6/1/12 5/15/11 5/15/12 7/1/11 8/15/11 YTM 6.750 6.250 8.000 6.750 7.375 8.250 6.644 9.750 12.000 8.750 9.250 10.750 7.375 9.500 6.875 8.000 9.375 10.000 9.500 10.500 7.229 8.750 12.000 8.375 8.000 10.750 7.453 7.150 11.500 7.151 9.250 9.500 8.750 6.875 8.250 11.000 7.250 7.000 6.875 10.250 7.875 7.375 8.750 8.750 8.250 13.875 10.750 12.000 10.000 9.500 11.000 8.458 9.745 Spread 236 289 353 473 334 594 836 507 469 321 534 310 384 548 603 562 712 285 440 908 399 387 661 300 381 737 324 505 507 431 271 384 677 287 270 240 608 350 296 440 415 348 965 662 739 533 632 394 Industry Communications Mining Communications Hotels Other Services Miscellaneous Manufacturing Electric & Gas Utilities and Sanitary Services Communications Manufacturing - Paper & Allied Products Communications Agriculture, Forestry and Fishing Retail Trade Electric & Gas Utilities and Sanitary Services Other Services Measuring, Photographic, Optical Goods Measuring, Photographic, Optical Goods Industrial & Commercial Machinery Metals & Related Products Wholesale Trade - Durable Goods Communications Other Services Electric & Gas Utilities and Sanitary Services Transportation Services Communications Communications Other Services Transportation Retail Trade Communications Communications Chemicals and Allied Products Electric & Gas Utilities and Sanitary Services Miscellaneous Manufacturing Communications Mining Transportation Hotels Other Services Industrial & Commercial Machinery Metals & Related Products Electric & Gas Utilities and Sanitary Services Mining Chemicals and Allied Products Transportation Equipment Agriculture, Forestry and Fishing Retail Trade Rubber & Plastic Products Transportation Equipment Electric & Gas Utilities and Sanitary Services Miscellaneous Manufacturing Electric & Gas Utilities and Sanitary Services Communications Printing & Publishing

56

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Recent Single B Rated Issues Since September 30, 2003 (Contd)
Issuer UGS Corp. / UGS PLM Solutions Inc. Leiner Health Products Group, Inc. Concentra Operating Corp. Hanover Compressor Co. Samsonite Corporation Autocam Corporation Aztar Corp. Finlay Fine Jewelry Corp. Herbst Gaming, Inc. MAAX Corp. Terphane Holding Corp. Appleton Papers Inc. Appleton Papers Inc. BCP Caylux Holdings Luxembourg S.C.A. (Celanese AG) Ferrellgas Partners, L.P. Cadmus Communications Corp. OJSC Vimpel Communications (VimpelCom) Stater Brothers Holdings Inc. Swift Energy Co. Celestica Inc. IASIS Healthcare LLC/Capital Corp. Huntsman LLC Tenet Healthcare Corp. ADESA Inc. Argo-Tech Corporation Clean Harbors Inc. Cornell Cos Viskase Cos Inc. Beverly Enterprises, Inc. Range Resources Corp. Medical Device Manufacturing Inc. (UTI) Kabel Deutschland GmbH (KDG) Paramount Resources Inc. Pierre Foods Inc. The Wornick Co. BCP Caylux Holdings Luxembourg S.C.A. (Celanese AG) Buhrmann US Inc. Seitel Inc. MedCath Holdings Corp. Speedway Motorsports Inc. Horizon Lines LLC / Horizon Lines Holding Corp. Allied Security Belden & Blake Corp. Horizon PCS Escrow Co. Star Gas Partners, L.P. NCL Corporation Ltd. Intertape Polymer US Inc. Vitro Envases Norteamerica SA (VENA / Vitro S.A. de C.V.) The Jean Coutu Group Inc. The Jean Coutu Group Inc. Building Materials Corp. of America Foundation PA Coal Company Loews Cineplex Entertainment Corp. Issue Date 5/19/04 5/24/04 5/25/04 5/25/04 5/25/04 5/26/04 5/26/04 5/27/04 5/27/04 5/27/04 5/27/04 6/3/04 6/3/04 6/3/04 6/4/04 6/9/04 6/9/04 6/9/04 6/9/04 6/10/04 6/10/04 6/15/04 6/15/04 6/16/04 6/17/04 6/17/04 6/17/04 6/17/04 6/18/04 6/22/04 6/23/04 6/24/04 6/24/04 6/24/04 6/24/04 6/28/04 6/28/04 6/28/04 6/29/04 6/29/04 6/30/04 7/1/04 7/1/04 7/8/04 7/8/04 7/9/04 7/14/04 7/16/04 7/20/04 7/20/04 7/21/04 7/21/04 7/22/04 Type of Security 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Notes 144a Senior Notes Senior Notes Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes Senior Subordinated Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes Senior Notes 144a Senior Subordinated Notes Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Secured Notes (2nd Lien) 144a Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Secured Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Secured Notes (2nd Lien) 144a Senior Notes 144a Senior Subordinated Notes Face Amount 550.0 150.0 155.0 200.0 205.0 140.0 300.0 200.0 160.0 150.0 46.5 185.0 150.0 1,000.0 50.0 125.0 250.0 525.0 150.0 500.0 475.0 300.0 1,000.0 125.0 250.0 150.0 112.0 90.0 215.0 100.0 175.0 610.0 125.0 125.0 125.0 225.0 150.0 193.0 150.0 100.0 250.0 180.0 192.5 125.0 30.0 250.0 125.0 170.0 850.0 350.0 200.0 300.0 315.0 Cpn/Div 10.000 11.000 9.125 9.000 8.875 10.875 7.825 8.375 8.125 9.750 12.500 8.125 9.750 9.625 8.750 8.375 10.000 8.125 7.625 7.875 8.750 11.500 9.875 7.625 9.250 11.250 10.750 11.500 7.875 7.375 10.000 10.625 8.875 9.875 10.875 9.625 8.250 11.750 9.875 6.750 9.000 11.375 8.750 11.375 10.250 10.625 8.500 10.750 8.500 7.625 7.750 7.250 9.000 Price 100.000 100.000 98.613 100.000 100.000 97.777 100.000 100.000 99.284 100.000 94.719 100.000 100.000 100.000 103.250 100.000 100.000 99.500 100.000 100.000 100.000 100.000 97.674 100.000 100.000 98.697 98.685 100.000 98.318 98.125 100.000 100.000 100.000 100.000 100.000 103.375 99.164 97.675 100.000 100.000 100.000 98.823 100.000 100.000 106.250 100.000 100.000 95.316 100.000 100.000 100.000 100.000 100.000 Moody's B3 B3 B3 B3 B3 B3 BA3 B1 B3 B3 B3 B2 B3 B2 B2 B2 B1 B1 B1 BA3 B3 B3 B3 B1 B3 CAA1 B3 B2 B2 B3 CAA1 B3 B2 B3 B2 B3 B2 B3 CAA1 BA2 B3 CAA1 B3 B3 B3 B2 B3 B2 B3 B2 B2 B1 B3 S&P BCCC+ BB BBB+ B+ BBCCC+ BBB+ BB B BBBBBBB+ BCCC+ BB+ B B BBB B BNR B B B+ BB BBB+ BBBCCC BB+ BBB B B+ B CCC+ Maturity 6/1/12 6/1/12 6/1/12 6/1/14 6/1/11 6/15/14 6/15/14 6/1/12 6/1/12 6/15/12 6/15/09 6/15/11 6/15/14 6/15/14 6/15/12 6/15/14 6/16/09 6/15/12 7/15/11 7/1/11 6/15/14 7/15/12 7/1/14 6/15/12 7/1/11 7/15/12 7/1/12 6/15/11 6/15/14 7/15/13 7/15/12 7/1/14 7/15/14 7/15/12 7/15/11 6/15/14 7/1/14 7/15/11 7/15/12 6/1/13 11/1/12 7/15/11 7/15/12 7/15/12 2/12/13 7/15/14 8/1/14 7/23/11 8/1/14 8/1/12 8/1/14 8/1/14 8/1/14 YTM 10.000 11.000 9.375 9.000 8.875 11.250 7.825 8.375 8.250 9.750 14.000 8.125 9.750 9.625 8.057 8.375 10.000 8.211 7.625 7.875 8.750 11.500 10.250 7.625 9.250 11.500 11.000 11.500 8.125 7.667 10.000 10.625 8.875 9.875 10.875 9.019 8.375 12.250 9.875 6.748 9.000 11.625 8.750 11.375 8.970 10.625 8.500 11.750 8.500 7.625 7.750 7.250 9.000 Spread 547 640 482 427 448 656 318 392 380 529 373 501 492 384 357 601 356 314 347 393 699 556 308 693 646 343 300 548 600 423 540 657 447 367 787 534 252 456 737 431 709 505 616 401 772 411 343 327 276 454 Industry Industrial & Commercial Machinery Chemicals and Allied Products Other Services Business Services and Software Miscellaneous Manufacturing Metals & Related Products Other Services Retail Trade Hotels Manufacturing - Furniture & Fixtures Manufacturing - Textiles Manufacturing - Paper & Allied Products Manufacturing - Paper & Allied Products Chemicals and Allied Products Retail Trade Printing & Publishing Communications Retail Trade Mining Business Services and Software Other Services Rubber & Plastic Products Other Services Retail Trade Industrial & Commercial Machinery Electric & Gas Utilities and Sanitary Services Other Services Rubber & Plastic Products Other Services Mining Measuring, Photographic, Optical Goods Communications Mining Manufacturing - Food & Kindred Products Manufacturing - Food & Kindred Products Chemicals and Allied Products Wholesale Trade - Durable Goods Mining Other Services Other Services Transportation Business Services and Software Mining Communications Retail Trade Transportation Manufacturing - Paper & Allied Products Stone, Clay, Glass & Concrete Products Retail Trade Retail Trade Wholesale Trade - Durable Goods Mining Other Services

57

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Recent Single B Rated Issues Since September 30, 2003 (Contd)
Issuer Duane Reade, Inc. PanAmSat Corp. Stanadyne Corp. Crompton Corp. Innophos Inc. United Refining Co. Blount, Inc. Borden U.S. Finance Corp / Borden Nova Scotia Finance ULC (Borden Chemical Inc.) US Oncology Inc. US Oncology Inc. Alderwoods Group Inc. Sheffield Steel Corp. Xerox Corp. AMC Entertainment, Inc. / Marquee Inc. (Opco) Century Aluminum Co. Collins & Aikman Products Co. Norcraft Holdings LP / Norcraft Capital Corp THL Buildco Inc. / Nortek Inc. Blockbuster Inc. Rainbow National Services LLC / RNS Co-Issuer Corp. Solectron Corp. Standard Aero Holdings Ply Gem Industries Inc Securus Technologies Inc. MQ Associates Inc (MedQuest Holdco) Ainsworth Lumber Co Ltd M-Foods Holdings Inc. (Michael Foods) Xerox Corp. Chiquita Brands International, Inc. Coleman Cable Inc. Crystal US Holdings 3 LLC (Celanese AG) Crystal US Holdings 3 LLC (Celanese AG) Frontier Oil Corp. Chiquita Brands International, Inc. Coleman Cable Inc. Crystal US Holdings 3 LLC (Celanese AG) Crystal US Holdings 3 LLC (Celanese AG) Jostens Intermediate Holding (IH) Corp. Riddell Bell Holdings Inc. (Riddell Sports, Inc.) PanAmSat Holding Corp. (Holdco) Calpine Corp. Loehmann Capital Corp. Issue Date 7/23/04 7/30/04 8/2/04 8/3/04 8/3/04 8/3/04 8/4/04 8/4/04 8/4/04 8/4/04 8/5/04 8/5/04 8/5/04 8/6/04 8/10/04 8/12/04 8/12/04 8/12/04 8/13/04 8/13/04 8/16/04 8/17/04 8/18/04 8/18/04 8/19/04 9/17/04 9/17/04 9/20/04 9/21/04 9/21/04 9/21/04 9/21/04 9/21/04 9/21/04 9/21/04 9/21/04 9/21/04 9/23/04 9/23/04 9/27/04 9/28/04 9/30/04 Type of Security 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes Senior Subordinated Notes Senior Secured Notes (2nd Priority) 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Notes 144a Senior Secured Notes Senior Notes 144a Senior Notes 144a Senior Notes 144a Senior Subordinated Notes 144a Senior Discount Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Notes Subordinated Notes 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Secured Notes (2nd Lien) 144a Senior Discount Notes 144a Senior Notes 144a Senior Discount Notes Senior Notes 144a Senior Notes 144a Senior Notes Senior Discount Notes (Series A) Senior Discount Notes (Series B) 144a Senior Notes 144a Senior Notes 144a Senior Notes Senior Discount Notes (Series A) Senior Discount Notes (Series B) 144a Senior Subordinated Notes 144a Senior Subordinated Notes 144a Senior Discount Notes 144a Senior Secured Notes (1st Priority) 144a Senior Secured Notes Face Amount 195.0 1,010.0 160.0 375.0 190.0 200.0 175.0 325.0 300.0 275.0 200.0 80.0 500.0 250.0 250.0 415.0 118.0 625.0 300.0 300.0 64.3 200.0 135.0 154.0 136.0 275.0 154.1 250.0 250.0 120.0 163.0 690.0 150.0 250.0 120.0 163.0 690.0 500.0 140.0 416.0 785.0 55.0 Cpn/Div 9.750 9.000 10.000 9.875 8.875 10.500 8.875 9.000 9.000 10.750 7.750 11.375 6.875 8.625 7.500 12.875 8.500 9.000 8.750 7.970 8.250 9.000 11.000 7.250 6.875 7.500 9.875 6.625 7.500 9.875 7.625 8.375 9.625 12.000 Price 100.000 100.000 100.000 99.333 100.000 98.671 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 96.416 68.080 100.000 100.000 99.279 101.980 100.000 100.250 97.651 62.337 100.000 64.910 104.250 100.000 100.000 61.275 59.829 100.000 100.000 100.000 61.275 59.829 100.000 100.000 59.460 99.212 100.000 Moody's B3 B1 CAA1 B1 B3 B3 CAA1 B3 B2 B3 B2 B3 B1 B2 B1 B3 CAA1 B3 B1 B3 B2 CAA1 B3 B2 CAA1 B2 CAA1 BA2 B2 B3 CAA2 CAA2 B2 B2 B3 CAA2 CAA2 B3 B3 CAA1 NR B2 S&P CCC+ B+ B B BBBBBBB BB+ BBBBBBB+ CCC+ BB+ BBB+ BB+ BB+ BBBBB+ BBBBBBB+ B+ CCC+ Maturity 8/1/11 8/15/14 8/15/14 8/1/12 8/15/14 8/15/12 8/1/12 7/15/14 8/15/12 8/15/14 9/15/12 8/15/11 8/15/11 8/15/12 8/15/14 8/24/12 9/1/12 9/12/14 9/1/12 9/1/12 11/15/06 9/1/14 2/15/12 9/1/11 8/15/12 10/1/12 10/1/13 8/15/11 11/1/14 10/1/12 10/1/14 10/1/14 10/1/11 11/1/14 10/1/12 10/1/14 10/1/14 10/1/12 10/1/12 11/15/14 10/1/14 10/1/11 YTM 9.750 9.000 10.000 10.000 8.875 10.750 8.875 9.000 9.000 10.750 7.750 11.375 6.875 8.625 7.500 13.625 9.750 8.500 9.000 8.875 7.007 8.250 8.940 11.500 12.250 7.250 9.750 6.108 7.500 9.875 10.000 10.500 6.625 7.500 9.875 10.000 10.500 7.625 8.375 10.500 9.750 12.000 Spread 563 451 555 576 446 651 464 458 478 634 355 733 284 459 326 953 569 425 498 486 444 403 493 787 823 345 515 246 346 605 592 642 294 346 605 592 642 384 460 651 573 Industry Retail Trade Communications Transportation Equipment Chemicals and Allied Products Chemicals and Allied Products Electric & Gas Utilities and Sanitary Services Industrial & Commercial Machinery Chemicals and Allied Products Other Services Other Services Personal Services Metals & Related Products Industrial & Commercial Machinery Other Services Mining Industrial & Commercial Machinery Wholesale Trade - Durable Goods Metals & Related Products Retail Trade Communications Electronic Equipment Transportation Equipment Metals & Related Products Business Services and Software Other Services Agriculture, Forestry and Fishing Manufacturing - Food & Kindred Products Industrial & Commercial Machinery Wholesale Trade - Nondurable Goods Metals & Related Products Chemicals and Allied Products Chemicals and Allied Products Petroleum Refining Wholesale Trade - Nondurable Goods Metals & Related Products Chemicals and Allied Products Chemicals and Allied Products Miscellaneous Manufacturing Miscellaneous Manufacturing Communications Electric & Gas Utilities and Sanitary Services Retail Trade

Mean Median Trimmed Mean(2) (1) Includes single B rated notes issued on or after September 30, 2003. (2) Trimmed Mean excludes top and bottom 10% of the range.

8.204 8.500 8.453

8.844 8.750 8.791

58

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Holding Company Trading Spread Analysis
($ in Millions)
Level OpCo HoldCo Issuer Advanced Accessory Systems LLC Advanced Accessory Holdings, Inc. Issue 10.750% Sr. Notes due 2011 13.250% Sr. Discount Notes due 2011 Principal $150.0 $88.0 Most Recent (9/30/2004) Price YTW YTM 94.00 40.00 12.07% 20.50% 12.07% 20.50% 843 bp 843 bp YTW Spread to Opco YTM Spread to Opco

OpCo

AMC Entertainment Inc. AMC Entertainment Inc. AMC Entertainment Inc. AMC Entertainment Inc. Marquee Holdings

9.500% Sr. Sub. Notes due 2011 9.875% Sr. Sub. Notes due 2012 8.625% Sr. Notes due 2012 8.000% Sr. Notes due 2014 12.000% Sr. Discount Notes due 2014

$297.9 $175.0 $250.0 $300.0 $170.0

102.75 103.50 106.00 94.00 59.25

8.170% 9.030% 7.346% 8.954% 11.368%

8.920% 9.200% 7.596% 8.954% 11.461% 402 bp 386 bp

HoldCo

OpCo HoldCo

Associated Material Inc. AMH Holdings

9.750% Sr. Sub. Notes 2012 11.250% Sr. Discount Notes due 2014

$165.0 $446.0

114.75 72.75

5.287% 8.617%

7.182% 9.178% 333 bp 200 bp

OpCo

CSC Holdings, Inc. CSC Holdings, Inc. CSC Holdings, Inc. CSC Holdings, Inc. CSC Holdings, Inc. CSC Holdings, Inc. CSC Holdings, Inc. CSC Holdings, Inc. Cablevision System Corp. Cablevision System Corp.

7.250% Sr. Notes due 2008 8.125% Sr. Notes due 2009 8.125% Sr. Debentures due 2009 7.625% Sr. Notes due 2011 6.750% Sr. Notes due 2012 10.500% Sr. Sub. Debentures due 2016 7.875% Sr. Debentures due 2018 7.625% Sr. Debentures due 2018 7.875% Sr. Notes due 2007 8.000% Sr. Notes due 2012

$500.0 $500.0 $400.0 $1,000.0 $500.0 $250.0 $300.0 $500.0 $500.0 $1,000.0

104.00 106.25 106.25 105.38 100.25 113.50 103.25 102.00 106.13 104.50

6.050% 6.580% 6.600% 6.600% 6.710% 4.890% 7.480% 7.390% 5.750% 7.210%

6.050% 6.580% 6.600% 6.600% 6.710% 8.630% 7.480% 7.390% 5.750% 7.210% 232 bp 116 bp

Holdco

OpCo HoldCo

Compass Minerals Salt Holding Corp Compass Minerals International, Inc.

10.000% Sr. Sub. Notes due 2011 12.750% Sr. Discount Notes due 2012 12.000% Sr. Sub. Discount Notes due 2013

$325.0 $120.0 $179.6

112.00 84.00 79.00

5.72% 7.50% 8.21%

7.71% 9.52% 9.36% 249 bp 180 bp

OpCo

Dex Media East Dex Media West Dex Media East Dex Media West Dex Media, Inc.

9.875% Sr. Notes due 2009 8.500% Sr. Notes due 2010 12.125% Sr. Sub. Notes due 2012 9.875% Sr. Sub. Notes due 2013 8.000% Sr. Notes due 2013 9.000% Sr. Discount Notes due 2013

$450.0 $385.0 $525.0 $780.0 $500.0 $361.0

115.00 113.50 124.50 117.50 105.00 73.25

4.62% 4.81% 5.32% 5.91% 7.09% 8.21%

6.39% 5.76% 7.97% 7.17% 7.24% 8.35% 359 bp 259 bp

HoldCo

59

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Holding Company Trading Spread Analysis (Contd)
($ in Millions)
Level OpCo HoldCo El Pollo Loco EPL Intermediate, Inc. Issuer Issue 9.250% Sr. Secured Notes due 2009 12.550% Sr. Discount Notes due 2010 Principal $110.0 $70.0 Most Recent (9/30/2004) Price YTW YTM 103.00 59.50 8.383% 11.991% 8.519% 12.082% 361 bp 356 bp YTW Spread to Opco YTM Spread to Opco

OpCo HoldCo

Haights Cross Operating Co. Haights Cross Communications

11.750% Sr. Discount Notes 2011 12.500% Sr. Discount Notes 2011

$140.0 $135.0

110.00 61.00

9.485% 11.782%

9.717% 11.918% 230 bp 220 bp

OpCo HoldCo

Johnson Diversey, Inc. Johnson Diversey, Inc. Johnson Diversey Holdings, Inc.

9.625% Sr. Sub. Notes due 2012 9.625% Sr. Sub. Notes due 2012 (Euro) 10.670% Sr. Discount Notes due 2013

$300.0 Eur 225.0 $406.3

112.00 82.50

6.30% 9.07%

7.53% 9.50% 277 bp 197 bp

OpCo HoldCo

Language Line Language Line Holdings

11.125% Sr. Sub. Notes Due 2012 14.125% Sr. Discount Notes Due 2013

$165.0 $55.0

102.50 53.50

10.523% 13.893%

10.635% 13.893% 337 bp 326 bp

OpCo HoldCo

LBI Media, Inc. LBI Media Holdings, Inc.

10.125% Sr. Sub. Notes due 2012 11.000% Sr. Discount Notes due 2013

$150.0 $68.4

112.00 72.13

6.98% 9.33%

8.02% 9.61% 235 bp 159 bp

OpCo HoldCo

Liberty Group Operating, Inc. Liberty Group Publishing, Inc.

9.375% Sr. Notes due 2008 11.625% Sr. Discount Notes due 2009

$180.0 $89.0

100.75 99.00

8.75% 11.92%

9.10% 11.92% 317 bp 281 bp

OpCo HoldCo

Medquest MQ Associates

11.875% Sr. Sub. Notes 2012 12.250% Sr. Discount Notes due 2012

$180.0 $87.8

114.00 84.80

8.177% 12.270%

9.322% 12.270% 409 bp 295 bp

OpCo HoldCo

Merisant Company Tabletop Holdings, Inc.

9.500% Sr. Sub. Notes due 2013 12.250% Sr. Sub. Discount Notes due 2014

$225.0 $136.0

95.00 52.00

10.38% 13.55%

10.38% 13.55% 318 bp 318 bp

OpCo HoldCo

Mueller Group, Inc The Mueller Group, Inc.

10.000% Sr. Sub. Notes due 2012 14.750% Sr. Discount Notes due 2014

$315.0 $223.0

108.00 64.25

8.184% 11.612%

8.543% 12.121% 343 bp 358 bp

60

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Holding Company Trading Spread Analysis (Contd)
($ in Millions)
Level OpCo Nalco Co Nalco Co Nalco Co Nalco Co Nalco Finance Holdings Issuer Issue 7.750% Sr. Notes 2011 7.750% Euro Sr. Sub. Notes 2011 8.875% Sr. Notes 2013 9.000% Euro Sr. Sub. Notes 2013 9.000% Sr. Discount Notes due 2014 Principal $665.0 $200.0 $465.0 $200.0 $694.0 Most Recent (9/30/2004) Price YTW YTM 106.00 107.50 71.00 6.357% 7.495% 8.418% 6.676% 7.713% 8.517% 206 bp 184 bp YTW Spread to Opco YTM Spread to Opco

HoldCo

OpCo HoldCo

Nebraska Book Co. NBC Acquisition Corp.

8.625% Sr. Sub. Due 2012 11.000% Sr. Discount Notes due 2013

$175.0 $77.0

99.50 68.00

8.716% 11.218%

8.716% 11.218% 250 bp 250 bp

OpCo HoldCo

Nexstar Finance LLC Nexstar Finance LLC Nexstar Finance Holdings LLC

12.000% Sr. Sub. Notes due 2008 7.000% Sr. Sub. Notes due 2014 11.375% Sr. Discount Notes due 2013

$160.0 $125.0 $74.7

110.00 98.50 76.63

3.68% 7.22% 9.29%

8.63% 7.22% 9.67% 561 bp 245 bp

OpCo HoldCo

Norcraft Companies LP Norcraft Holdings LP

9.000% Sr. Sub. Notes due 2011 9.875 Sr. Discount Notes due 2014

$150.0 $80.3

109.00 72.50

6.871% 8.818%

7.346% 9.014% 195 bp 167 bp

OpCo HoldCo

North Atlantic Trading Company North Atlantic Holding Company

9.250% Sr. Notes due 2012 12.250% Sr. Discount Notes due 2014

$200.0 $97.0

96.00 51.00

10.024% 15.925%

10.024% 15.925% 590 bp 590 bp

OpCo

PanAmSat Corp PanAmSat Corp PanAmSat Corp PanAmSat Corp PanAmSat Holding

6.375% Notes due 2008 8.500% Sr. Notes due 2012 6.875% Debentures due 2028 9.000% Sr. Notes due 2014 10.375% Sr. Discount Notes due 2014

$150.0 $8.0 $125.0 $1,010.0 $416.0

101.50 116.00 84.50 104.00 58.38

5.860% 3.110% 8.400% 8.295% 10.716%

5.860% 5.790% 8.400% 8.394% 10.716% 761 bp 493 bp

HoldCo

OpCo HoldCo

Pharma Services Acquisition Corp.

10.000% Sr. Sub. Notes Due 2013

$450.0 $219.0

106.00 63.00

8.833% 10.886%

9.013% 10.982% 205 bp 197 bp

Pharma Services Intermediate Holdings 11.500% Sr. Discount Notes due 2014

61

RESTRUCTURED DEBT DISCOUNT ANALYSIS


Holding Company Trading Spread Analysis (Contd)
($ in Millions)
Level OpCo HoldCo Smurfit Capital Smurfit Capital MDP Acquisitions PLC MDP Acquisitions PLC Town Sports International, Inc. Issuer Issue 6.750% Sr. Notes due 2005 7.500% Sr. Notes due 2025 9.625% Sr. Notes due 2012 15.500% Sub. PIK Notes due 2013 9.625% Sr. Notes due 2011 Principal $250.0 $350.0 $750.0 $161.8 $250.0 $213.0 Most Recent (9/30/2004) Price YTW YTM 103.00 99.50 113.00 116.00 101.50 51.00 4.02% 7.55% 6.29% 12.51% 9.21% 13.68% 4.02% 7.55% 7.44% 12.51% 9.31% 13.68% 447 bp 437 bp 849 bp 849 bp YTW Spread to Opco YTM Spread to Opco

OpCo HoldCo

Town Sports International Holdings, Inc. 11.000% Sr. Discount Notes due 2014

OpCo HoldCo

United Agri Products Inc UAP Holding Corp

8.250% Sr. Notes due 2011 10.750% Sr. Discount Notes due 2012

$225.0 $125.0

108.00 76.50

6.478% 9.183%

6.824% 9.595% 271 bp 277 bp

Mean Median Trimmed Mean (1) High Low (1) Trimmed Mean excludes high and low values.

383 bp 333 bp 371 bp 849 bp 195 bp

327 bp 277 bp 314 bp 849 bp 116 bp

62