HY One Pagers Goldman Sachs

January 26, 2012

High Yield

One-Pagers Credit Research

A reference book for high yield investors

This reference guide contains single-page summaries for many of the

companies in the high yield universe and serves as a companion to our

Investment Grade One-Pager publication. In addition to credits covered by

the Goldman Sachs credit research team, we also include summary pages

for some uncovered companies that we view as benchmark high yield

names.

We hope you find this book to be a useful tool. Please contact the sector

analysts for additional information.

Contributing analysts

Erin Blum Jason Kim

Gregory Chwatko Raymond M. Leung

Kevin Coyne Amanda R. Lynam, CPA

Karen Eltrich Kristen McDuffy

Justine Fisher Joshua Pinkerton

Jason Gilbert Joseph Stivaletti

Brian Jacoby, CFA Scott Wipperman, CFA

Franklin Jarman

Global Investment Research (212) 902-1000 Investors should consider this report as only a single factor in

making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to www.gs.com/research/hedge.html. This research discusses Rule 144a securities, which generally are available only to Qualified Institutional Buyers.

Erin Blum (212) 855-7718 [email protected] Goldman, Sachs & Co.

Gregory J. Chwatko (212) 902-0673 [email protected] Goldman, Sachs & Co. Kevin Coyne (212) 357-9918 [email protected] Goldman, Sachs & Co.

The Goldman Sachs Group, Inc. Global Investment Research

January 26, 2012 High Yield

Goldman Sachs Credit Research 2

This Page Intentionally Left Blank



Table of contents

Company Page Company Page Accellent (ACCINC) 5 Del Monte Foods (DLM) 55

Advanced Micro Systems, Inc (AMD) 6 Delta Air Lines Inc. (DAL) 56

AES Corporation (AES) 7 Denbury Resources (DNR) 57

Aircastle Ltd. (AYR) 8 Dillard's Inc. (DDS) 58

Alcatel-Lucent (ALU) 9 DineEquity, Inc. (DIN) 59

Alere Inc. (ALR) 10 DISH Network Corporation (DISH) 60

American Achievement (AMEACH) 11 Dole Foods (DOL) 61

American Axle (AXL) 12 DR Horton Inc. (DHI) 62

Amerigroup Corp. (AGP) 13 Dynegy Holdings inc. (DYN) 63

Ameristar Casinos Inc. (ASCA) 14 Edison Mission Energy (EIX) 64

Amkor Technology (AMKR) 15 El Paso Corp. (EP) 65

Apria Healthcare Group Inc. (AHG) 16 Elan Corporation (ELN) 66

Ashland Inc. (ASH) 17 Emergency Medical Services (EMS) 67

Avis Budget Group (CAR) 18 Endo Pharmaceuticals (ENDP) 68

AWAS Aviation Capital (AWAS) 19 Energy XXI (EXXI) 69

Ball Corporation (BLL) 20 Exopack Holding Corp. (EXOPAC) 70

Basic Energy Services (BAS) 21 Felcor Lodging Inc. (FCH) 71

Bausch + Lomb Inc. (BOL) 22 First Data Corp. (FDC) 72

Beazer Homes USA Inc. (BZH) 23 Ford Motor Company (F) 73

Berry Petroleum (BRY) 24 Forest Oil (FST) 74

Berry Plastics (BERRY) 25 Fortescue Metals Group Ltd (FMGAU) 75

Bombardier Inc. (BBDBCN) 26 Freescale Semiconductor, Inc. (FSL) 76

Bon-Ton Department Stores (BONT) 27 Frontier Communications (FTR) 77

Boyd Gaming Corp. (BYD) 28 Gannett Company Inc. (GCI) 78

Bristow Group (BRS) 29 Gaylord Entertainment Company (GET) 79

Brookstone (BRSTNE) 30 GenOn Energy Corp. (GEN) 80

Brunswick Corporation (BC) 31 Goodyear Tire (GT) 81

Burger King Holdings, Inc. (BK) 32 Graphic Packaging Corporation (GPK) 82

Burlington Coat Factory (BCFACT) 33 Great Canadian Gaming Corp. (GRTCAN) 83

Cablevision Systems Corporation (CVC) 34 Greektown Superholdings (GREEK) 84

Caesars Ent. Operating Company (HET) 35 Gymboree Corp. (GYMB) 85

Calpine Corp. (CPN) 36 Hanesbrands Inc. (HBI) 86

Cascades Inc. (CASCN) 37 HCA, Inc. (HCA) 87

Catalent Pharma Solutions (PTSAC) 38 Health Management Associates, Inc. (HMA) 88

Catalyst Paper Corporation (CTLCN) 39 HealthSouth (HLS) 89

CF Industries (CF) 40 Hornbeck Offshore Services (HOS) 90

Charter Communications Inc. (CCMM) 41 Host Hotels & Resorts Inc. (HST) 91

Chesapeake Energy (CHK) 42 Huntsman Corp. (HUN) 92

Chiquita Brands (CQB) 43 IASIS Healthcare (IAS) 93

Chrysler Group LLC (CHRYGR) 44 IMS Health (RX) 94

CityCenter Holdings (CCTRH) 45 Isle of Capri Casinos (ISLE) 95

Clearwire Communications LLC (CLWR) 46 iStar Financial (SFI) 96

CMS Energy Corporation (CMS) 47 J. Crew Group Inc. (JCG) 97

Community Health Systems (CYH) 48 J.C. Penney Co. Inc. (JCP) 98

Constellation Brands (STZ) 49 Jarden Corp. (JAH) 99

Convatec Healthcare (CONVAT) 50 JDA Software Group Inc. (JDAS) 100

Cooper Tire (CTBUS) 51 JetBlue Airways Corp. (JBLU) 101

Crown Holdings, Inc. (CCK) 52 KB Home (KBH) 102

DaVita, Inc (DVA) 53 Kindred Healthcare (KND) 103

Dean Foods (DF) 54 Koppers Inc. (KOP) 104



Company Page Company Page L-3 Communications (LLL) 105 Rock-Tenn Company (RKT) 158

Las Vegas Sands Corp. (LVS) 108 Royal Caribbean Cruises Ltd. (RCL) 159

Leap Wireless International, Inc. (LEAP) 107 Ryland Group Inc., The (RYL) 160

Lennar Corp. (LEN) 108 Saks Inc (SKS) 161

Levi Strauss & Co. (LEVI) 109 Sally Holdings LLC (SBH) 162

Liberty Interactive Corp. (LINTA/QVC) 110 Sanmina-SCI Corp. (SANM) 163

Lifepoint Hospitals Inc. (LPNT) 111 Scientific Games International, Inc. (SGMS) 164

Limited Brands Inc. (LTD) 112 Seagate Technology (STX) 165

Liz Claiborne (LIZ) 113 Sealy Mattress Co. (ZZ) 166

Louisiana-Pacific Corp. (LPX) 114 Sirius XM Radio Inc. (SIRI) 167

Marina District & Finance Co., Inc. (BORGAT) 115 Sitel LLC (SITEL) 168

McClatchy Co., The (MNI) 116 Smithfield Foods (SFD) 169

McMoRan Exploration (MMR) 117 Solo Cup (SOLOC) 170

MDC Holdings Inc. (MDC) 118 Southwest Airlines Co. (LUV) 171

Mediacom Communications Corporation (MCCC) 119 Southwestern Energy (SWN) 172

MediMedia USA, Inc. (MEDIME) 120 Sprint Nextel Corporation (S) 173

Meritor (MTOR) 121 Standard Pacific Corp. (SPF) 174

MetroPCS Communications, Inc. (PCS) 122 Steel Dynamics (STLD) 175

MGM Resorts International (MGM) 123 Stone Energy Corp (SGY) 176

Michaels Stores (MIK) 124 Stream Global Services (SGS) 177

Millar Western Forest Products (MILLAR) 125 Sunoco Inc. (SUN) 178

Mohegan Tribal Gaming Authority (TRIBAL) 126 Surgical Care Affiliates LLC (SCAFF) 179

Momentive Performance (MOMENT) 127 Swift Energy Co. (SFY) 180

Momentive Specialty Chemicals (HXN) 128 Telesat Canada (TELSAT) 181

MTR Gaming Group, Inc. (MNTG) 129 Tenet Healthcare Corporation (THC) 182

Mylan Inc. (MYL) 130 Tenneco Inc. (TEN) 183

Neenah Paper (NP) 131 Tesoro Corp. (TSO) 184

Neiman Marcus Group, The (NMG) 132 Textron Inc. (TXT) 185

New York Times Co., The (NYT) 133 Toll Brothers Inc. (TOL) 186

Newfield Exploration (NFX) 134 TPC Group Inc. (TPCG) 187

Nova Chemicals (NCX) 135 TRW Automotive (TRW) 188

NRG Energy (NRG) 136 U.S. Steel (X) 189

NXP B.V. (NXPBV) 137 Unisys (UIS) 190

Olin Corporation (OLN) 138 United Continental Holdings, Inc. (UAL) 191

Omnicare Inc.(OCR) 139 United Surgical Partners Intl (USPI) 192

Owens-Illinois, Inc. (OI) 140 Universal Health Services (UHS) 193

Parker Drilling Company (PKD) 141 US Airways Group, Inc. (LCC) 194

Peabody Energy (BTU) 142 Valeant Pharmaceuticals (VRX) 195

Pilgrim's Pride Corp. (PPC) 143 Vanguard Health (VHS) 196

Pinnacle Entertainment (PNK) 144 Venoco Inc. (VQ) 197

Pioneer Natural Resources (PXD) 145 Viasystems, Inc. (VIAS) 198

Plains Exploration & Production (PXP) 146 Videotron Ltd (QBRCN) 199

Plastipak Holdings, Inc. (PLASPK) 147 Visant Corp. (VISANT) 200

PolyOne (POL) 148 VWR Funding (VWRINT) 201

PulteGroup Inc. (PHM) 149 W&T Offshore (WTI) 202

PVH Corp. (PVH) 150 Warner Chilcott (WCRX) 203

Quicksilver Resources (KWK) 151 Whiting Petroleum Corp. (WLL) 204

Quiksilver, Inc. (ZQK) 152 Windstream Corp. (WIN) 205

R.R. Donnelley & Sons Co. (RRD) 153 Wynn Las Vegas (WYNN) 206

RadioShack Corp. (RSH) 154 Yankee Candle Co., The (YCC) 207

Range Resources (RRC) 155

Reynolds Group Holdings Limited 156

Rite Aid Corp. (RAD) 157

Note that the source of all data in this report is Goldman Sachs, Goldman Sachs Credit Research, or company data.



Accellent (ACCINC) Erin Blum 212-855-7718

Contact analyst or see latest research for updates to ratings, estimates, and other information. Cindy Guan 212-902-9758

IN-LINE (on secureds and subs)

Bond Summary

Size Coupon Agency Bid YTW STW

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp

$400 8.375 Sr. Sec. 1-Feb-17 B1/B+ $106.281 2/1/2013 $100.500 8.226% 790

$315 10.000 Sub. Nts 01-Nov-17 Caa2/CCC+ $107.500 11/1/2013 $81.500 14.887% 1,409

Financial Profile 2009A 2010A 2011E 4Q10A 3Q11A 4Q11E

Revenue $479 $507 $541 $132 $133 $135

EBITDA 109 108 102 28 24 25

Interest Expense, net $57 $74 $68 $19 $17 $16

Cash Taxes 4 4 6 1 2 2

CapEx 16 26 33 9 8 8

Free Cash Flow 39 9 (23) 6 2 (5)

Total Debt $687 $715 $715 $715 $715 $715

Cash & marketable securities 34 41 18 41 23 17

Net Debt 653 674 697 674 692 698 Agency

Key Credit Statistics LTM Comps Leverage Coverage Ratings

Total Debt/EBITDA 6.3x 6.6x 7.0x Accellent (ACCINC) sub 6.8x 1.5x Caa2/CCC+

Net Debt/EBITDA 6.0x 6.2x 6.8x Accellent (ACCINC) sec 3.7x 1.4x B1/B+

Catalent (PTSAC) 6.7x 1.8x Caa1/B

EBITDA/Interest 1.9x 1.5x 1.5x 1.5x 1.4x 1.5x DJO Global (DJO) 6.4x 1.6x Caa1/CCC+

EBITDA margin 22.7% 21.4% 18.9% 21.2% 18.1% 18.7%

Capitalization

Description Amount

Debt to LTM

EBITDA

Debt to 2011E

EBITDA Liquidity

ABL Revolver 1/29/2015 $0 ABL Revolver Size $75

8.375% Snr Sec. Nts 2/1/2017 $400 Borrowing Base $49

Total Sr Sec debt 400 3.8x 3.7x Letters of Credit 11

Borrowings 0

10% Sub Nts 11/1/2017 $315 Revolver Availability 39

Total Sub debt 315 6.8x 7.0x

Cash & marketable securities $23

Other $0 Total Liquidity $61

Total Debt $715 6.8x 7.0x

Market Cap NA

Enterprise Value NA

Maturities:

Updated 01/25/12

We rate both the Accellent secureds and subs In-Line. While the bonds are among the widest in our coverage, we see this as only fair value because: (1) leverage is also among the highest of the group and especially when considered against the low EV/EBITDA multiples of the public competitors; (2) LTM FCF remains weak; and (3) we see ACCINC’s business as riskier becausethe company is a contract manufacturer and therefore has less control over its order flow and pipeline.

Next Call

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015+

Accellent is a contract manufacturer in the medical device industry with a focus in cardiology, orthopedics and endoscopy. Cardiology is the company’s strongest segment, with orthopedics its weakest segment in terms of performance and company expertise. The company has 14 manufacturing facilities in the United States and 3 in Europe, and it recently completed the addition of a facility in Malaysia. ACCINC expects shipping to begin early 2012 from this facility.

ACCINC does business with the major OEMs such as Boston Scientific, Johnson & Johnson, and Medtronic. MDT and JNJ each accounted for more than 10% of sales in 2010. ACCINC also books pass-through sales of platinum at little or no margin (revenue is included in the cardiology segment).

ACCINC has been proactive in managing its maturity profile with the $400 mn secured offering in January 2010 to refinance its 2012 term loans and a $315 mn sub offering in October 2010 to refinance its 2013 subordinate notes.

Key Dates/Catalysts:- Quarterly earnings. It will be important to see cost discipline at ACCINC to drive EBITDA growth.- Commentary on industry inventory from OEMs and Accellent's competitors (GreatBatch and Symmetry). Recent comments from competitors suggest that the industry inventory picture is weakening.- Shipping from the Malaysia plant to begin in early 2012.

Investment Strengths:- Sales force and plant expansion. Following ACCINC's sales force realignment, we have seen an upward revision of new business wins. The company is also staffing and equipping its Malaysian facility that will not only facilitate expansion into Asia, but also provide low-cost manufacturing.

- Resilient end-market demand. Device end-market growth, while slowed, has remained in the positive low-single-digit territory.

- Increased regulatory scrutiny. We think the increased cost of audits and pricing pressure from hospitals could lead OEMs to consolidate vendors in favor of larger manufacturers such as ACCINC in order to reduce cost and time to production.

Investment Risks:- High leverage. ACCINC is highly levered at mid 6x, a level that has not improved much since the time of its 2005 LBO. Public comps trade in the 6-8x range.

- Strong and concentrated customer group. Risk of insourcing could reduce revenues for ACCINC, as was the case with BSX in 2006 (a revenue hit totaling $40 mn).

- Weak historical growth. ACCINC's top line has posted only a 0.9% CAGR since 2005.

Company Description



Advanced Micro Devices, Inc. (AMD) Updated 1/26/2012 Franklin Jarman 212-902-7537

Contact analyst or see latest research for updates to ratings, estimates, and other information. Karl Blunden 212-357-2769

OUTPERFORM

Bond Summary



$500 8.125 Senior 15-Dec-17 Ba3/B+ 104.06 12/15/2013 107.88 5.7% 542

Financial Profile FY08 FY09 FY10 LTM-3Q11 FY11E FY12E

Revenue 5,792 5,403 6,494 6,526 6,602 6,993

EBITDA 582 492 963 880 866 848

Interest Expense (366) (438) (199) (176) (179) (148)

Cash Taxes (11) (11) (12) (12) (12) (12)

CapEx (622) (466) (148) (185) (212) (250)

Free Cash Flow (1,085) (1,046) (560) (203) 133 178

Total Debt 5,074 4,560 2,421 2,060 2,060 1,575

Cash 1,096 2,676 1,789 1,807 1,892 1,585

Net Debt 3,978 1,884 632 253 168 (10)

Key Credit Statistics

Total Debt/EBITDA 8.7 x 9.3 x 2.5 x 2.3 x 2.4 x 1.9 x Comps Leverage Coverage Sr. Unsec

Net Debt/EBITDA 6.8 x 3.8 x 0.7 x 0.3 x 0.2 x 0.0 x Ratings

ALU 3.2x 4.5x WR/B

EBITDA/Interest 1.6 x 1.1 x 4.8 x 5.0 x 4.8 x 5.7 x AMKR 2.3x 6.6x Ba3/BB

EBITDA margin 10.0% 9.1% 14.8% 13.5% 13.1% 12.1% FSL 5.8x 2.0x Caa1/CCC+

NXP 3.3x 3.7x Caa1/B

FY11E Capitalization SANM 3.6x 3.6x B1/B

Description SizeDebt to EBITDA Liquidity

5.75% Sr. Conv. due 2012 485 2.3 x Revolver Size 0

8.125% Sr. Notes due 2017 500 2.3 x Borrow Base 0

6.00% Sr. Conv. due 2015 630 2.3 x - Amt Drawn 0

7.75% Sr. Notes due 2020 500 2.3 x - LC's 0

Other (55) 2.3 x Amt Unutilized 0

Total Debt - Product Co. 2,060 2.3 x Cash 1,807

Market Cap 4,781 Liquidity 1,807

Enterprise Value 5,034 5.7 x

Maturities:

Next Call

AMD is a global manufacturer of complex semiconductors including microprocessors (MPUs) found in desktops, notebooks, and servers as well as graphics chipsets. The MPU market is essentially a duopoly, composed of two leading vendors: Intel Corp. and AMD. Intel is the dominant player and controls approximately 83% share, while AMD is a distant second at 10% share. In order to improve its product offering and competitive positioning, AMD acquired ATI Technologies, a supplier of graphics processing chips, for $5.4 billion in 2006. In 2011, the company began to leverage its core MPU/GPU capabilities by selling a new chip family named the Fusion, which combines the MPU and GPU on to a single die. Separately, the company has benefited from its relationship with the state of Abu-Dhabi, which currently owns 15% of the AMD's equity and recently purchased AMD's foundry business as well. Abu-Dhabi-owned GlobalFoundries is currently AMD's most important foundry partner.

Key Dates/Catalysts:- AMD's annual analyst day is scheduled for February 2

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

2012 2013 2014 2015 2016 2017 2018 2019 2020

Investment Strengths:- Low capital intensity enhances cash flow profile: The Asset Lite plan completed in 2009 divested AMD’s foundry business to production partner Abu Dhabi. The deal significantly reduced AMD's capital intensity and raised just over $700 million of cash.- Solid liquidity position provides capital structure improvement opportunities: AMD ended 2Q2011 with over $1.8 billion of cash on hand, but needs significantly less to operate effectively. AMD has navigated through a challenging 2011 product launch year; in the event the macroeconomic volatility that surfaced in 2H2011 subsides, we believe it may consider deploying excess cash to reduce gross leverage.

Investment Risks:- Tablet growth could consume future PC demand: We estimate the lost opportunity could reach $50-100 million in annual EBITDA over 2011/2012, which is still manageable in our view.- Weak competitive position: Intel dominates the MPU market, with approximately an 83% market share.- New leadership: After its CEO resigned in 2010, AMD was only able to hire a new CEO in August 2011. AMD's Products Group General Manager left the firm in September 2011, at which point the new CEO assumed the role of Interim General Manager of the Products Group, a large responsibility given his recent move to AMD.- Manufacturing issues: AMD has experienced continuing manufacturing issues on new chip launches, most recently related to lower-than-expected yield from its foundry partner, GlobalFoundries, which was partly responsible for the company's 3Q2011 miss relative to initial guidance.

Company Description



AES Corporation (AES) Updated 1/25/2012 Raymond M. Leung 212-357-5764

Contact analyst or see latest research for updates to ratings, estimates, and other information. Abayomi A. Adigun 212-902-9355

IN-LINE

Bond Summary



$1,000 7.375 Sr Unsec'd 1-Jul-21 Ba3/BB- MW+50 -- 108.750 6.14 414

AES AES AES AES DPL DPL**

Financial Profile* FY10 FY11E FY12E LTM3Q11 FY2010 LTM3Q11

Revenue* 1,022 NA NA NA 1,883 1,921

EBITDA* 804 NA NA NA 644 544

Subsidiary Distributions 1,255 1,250 1,500 1,298 - -

Interest Expense - Parent (464) (417) (468) (363) (72) (156)

Cash Taxes 0 - - - (143) (105)

Investment in Subs (Net) / Capex (519) (2,980) (400) (928) (153) (180)

Free Cash Flow (274) (2,597) 232 NA 49 (72)

Total Debt - Parent 5,515 6,192 6,181 6,192 1,182 2,453

Cash - Parent level 677 285 326 2,089 124 68

Net Debt 4,838 5,907 5,855 4,103 1,058 2,385


Total Debt/Sub Dist 4.4 5.0 4.1 4.8 - -

Net Debt/Sub Dist 3.9 4.7 3.9 3.2 - -

Total debt to EBITDA - - - - 1.8 4.5 AES Corp* 4.1x 3.6x Ba3/BB-

EBITDA Interest coverage - - - - 8.9 3.5 Calpine Corp 6.7x 2.0x B1/BB-

Sub Dist/Interest 2.7 3.0 3.2 3.6 NA NA Dynegy 10.2x 1.1x –/D

EBITDA margin NA NA NA NA 34% 28% Edison Mission 8.5x 1.4x Caa1/B-

*condensed financial information - includes parent revenues, equity in earnings, interest income GenOn 7.8x 1.1x B3/B

** Debt proforma for $1.25bn of notes of Dolphin Subsidiary II notes and $87.25 mm of annualized interest. CMS 4.7x 3.7x Ba1/BB+

Capitalization - Proforma for recent debt issuance NRG 4.7x 2.4x B1/BB-

Description SizeDebt to SubDist *AES reflects sub distributions to parent obligations; LTM4Q2011

AES Corp Secured Revolver -

AES Corp Term Loan 1,050 Liquidity

Total Secured and 2nd Lien Debt 1,050 0.7x Parent Level Liquidity

AES Corp 8.875% due 2011 - Revolver Size (Sec'd) 800

AES Corp 8.375% due 2011 (₤) - Letters of Credit drawn (12)

AES Corp 7.75% due 2014 500 Borrowings -

AES Corp 7.75% due 2015 500 Revolver Availability 788

AES Corp 9.75% due 2016 535

AES Corp 8% due 2017 1,500 Parent cash 2,089

AES Corp 8% due 2020 625 Total Liquidity 2,877

AES Corp 7.375% due 2021 1,000

Other debt (34)

Total Secured and Unsecured Debt 5,676 3.8x

AES Corp Trust Preferred III 516

Total Recourse Debt 6,192 4.1x

Non-Recourse Subsidiary Debt 14,686

Total Consolidated Debt 20,878

Minority Interest 3,926

Market Cap 10,063

EV ex minority interest and non-recourse debt 16,255 10.8x

Parent Maturities

Maturities - Parent level only, including trust preferreds

Next Call

Comps Leverage CoverageAgency Ratings

AES is a global power holding company with subsidiaries and investments located in North America, Latin America, Europe, Africa, and Asia (including the Middle East). Latin America was the largest contributor of 2010 subsidiary distributions at 37%. North America accounted for 26% of 2010 distributions, while Europe (17%) and Asia (8%) and other made up the balance. AES is engaged in both regulated electric utility and unregulated generation. AES has generation interests in nearly 30 countries, with about 40GW of generation capacity and distribution networks that serve over 11 million people. China Investment Corp. has a 15% equity stake in the company. In November 2011, AES completed the acquisition of DPL Inc., which will be a wholly owned subsidiary of AES and is expected to contribute $200-300 million in annual distributions.

Key Dates/Catalysts:- Late-February, AES is expected to report 4Q2011 earnings. AES expects 2011 subsidiary distributions to parent of $1.2-1.3 bn. For 2012, AES previously indicated $1.4-$1.5 bn of distributions. We expect an update on the status of the company's $500 million share repurchase plan ($378 mn to date) and its targeted $100 mn cost savings. - 3Q2012, AES's plan to initiate an annual common dividend of $120 mn. -We also expect management to provide a general business update including the closing of its acquisition of DPL, any pending asset sales and capital allocation plans given its aforementioned dividend plans. - Potential rationalization of non-core assets and investment in new development projects.

-

100

200

300

400

500

600

2012 2013 2014 2015

Investment Strengths:- Consistent and diverse subsidiary distributions, with distributions budgeted at $1.2-1.3 billion for 2011. Distributions have been above $1 billion annually over the past three years, with the top 10 accounting for about 70%, with between 75% and 80% from regulated or contracted assets. - Fairly robust development pipeline of projects that could provide incremental up-streamed distributions beginning 2014/2015.- Diverse infrastructure investments, with North America accounting for 26% of distributions in 2010.- Management has been proactive in extending debt maturities and reducing debt, resulting in a manageable debt maturity profile and favorable leverage position. - As of 9/30/2011, parent liquidity remains strong given the pre-funding of the DPL acquisition at $2.9 bn, which includes $2.1 bn of cash.Investment Risks:- A challenging global economic outlook, with exposure to emerging markets. - Regulatory and legal regimes in many of the countries in which AES operates are not fully developed, subjecting the company to a relatively high degree of regulatory uncertainty.- Potential defaults at projects could affect distributions to the parent.- Future development program might accelerate the need for capital funding and might push leverage higher. - Lack of transparency owing to the complex capital structure.- AES plans to initiate a dividend in 2012, and continued share repurchases highlight a shift to return capital to shareholders that should prove to be negative for spreads.

Company Description



Aircastle Ltd. (AYR) Updated 1/24/2012 Joshua Pinkerton 212-357-9774

Contact analyst or see latest research for updates to ratings, estimates, and other information. Justine Fisher 212-357-6711

IN-LINE

Bond Summary



$300 9.750 Sr. Notes 1-Aug-18 Ba3/BB+ 104.88 1-Aug-14 110.63 6.88% 657

(Thousands of dollars)

Financial Profile FY10 2Q11 3Q11 4Q11E FY11E FY12E

Revenue 527,710 148,838 141,507 148,904 597,163 587,543

EBITDA 481,936 137,260 129,307 136,904 548,854 539,234

Interest Expense 178,262 55,893 48,872 52,231 202,615 204,627

Income Taxes 6,596 1,535 1,237 1,555 7,596 7,596

CapEx (609,672) (125,989) (233,331) (260,000) (766,360) (60,345)

Free Cash Flow (228,606) (30,482) (148,425) (159,575) (421,318) 315,566

Total Debt 2,782,958 2,797,632 2,782,958 3,060,229 3,060,229 2,924,680 Comps Leverage Coverage Ratings

Cash 239,957 184,017 239,957 275,043 275,043 411,705

Net Debt 2,543,001 2,613,615 2,543,001 2,785,186 2,785,186 2,512,975 AYR 5.6x 2.7x Ba3/BB+

Key Credit Statistics AWAS 6.4x 2.5x Ba3/BB

EBITDA/Interest 2.7 x 2.5 x 2.6 x 2.6 x 2.7 x 2.6 x

EBITDA margin 91.3% 92.2% 91.4% 91.9% 91.9% 91.8%

Capitalization

Description SizeDebt to

EBITDAR Liquidity

ACST 2006 396,000.0 Revolver Size 50,000

ACST 2007 917,000.0 Letters of Credit 0

Term Financing No. 1 607,000.0 Borrowings 0

ECA Term Financings 545,729.0 Revolver Availability 50,000

A330 PDP Facility 17,000.0

Unsecured notes 297,000.0

Total debt 2,782,958.0 5.1 x

Market Cap 1,005,115.4

Enterprise Value 3,548,116.4 6.5 x

Cash 239,957

Total Liquidity 289,957

Maturities:

Next Call

Aircastle is a top-10 aircraft leasing company, with approximately 129 aircraft with a book value exceeding $3.7 billion. Aircastle is one of the few public stand-alone leasing companies, and it is the only one with unsecured bonds. Fortress Investment Group founded Aircastle in 2004 and is now a significant minority owner of its equity. Aircastle has developed a niche as a leading lessor in the freighter aircraft market. Freight aircraft generally have longer lives, allowing Aircastle to operate with a somewhat higheraverage fleet age than its peers.

Key Dates/Catalysts:Aircastle is expected to report earnings on or around March 9.

0100200300400500600700800900

1,000

2012 2013 2014 2015 Thereafter

Investment Strengths:- Strength in freighter market: Aircastle is a leader in the niche market for freighter aircraft. Its fleet is approximately 29% freighters. - Orderbook: Aircastle's orderbook of A330s is fully financed and leased. The addition of these aircraft should provide predictable growth over the next year. - Manageable near-term maturities: Aircastle's near term maturities are primarily amortization payments on secured debt, which it should be able to meet with cash on hand and cash from operations.

Investment Risks:- Relatively small size: Aircastle has a book value of $3.7 billion, about one-tenth the size of the market leaders.. - Securitizations: Aircastle has three low-cost securitizations that will go into "turbo mode" and redirect all cash flows to debt repayment beginning in 2011-2013. This could reduce cash flow to the company or force Aircastle to refinance at a higher rate.

Company Description



Alcatel-Lucent (ALUFP) Updated 1/26/2012 Franklin Jarman 212-902-7537


OUTPERFORM / IN-LINE

Bond Summary



€500 8.500 Senior 15-Jan-16 B2/B NC NC 91.62 11.5% 1,112

$1,360 6.450 Senior 15-Mar-29 WR/B NC NC 77.75 9.0% 709

Financial Profile (EUR) FY08A 2009A 2010A LTM-3Q2011 2011E 2012E

Revenue €16,984 €15,157 €15,996 €16,302 €16,149 €16,026

YoY Change -4.5% -10.8% 5.5% -- 1.0% -0.8%

Adj. EBITDA 1,320 684 1,040 1,398 1,378 1,366

Cash Interest (349) (244) (305) (312) (352) (376)

Cash Taxes (123) (89) (117) (53) (80) (105)

Working Capital (131) 471 10 (459) (584) 81

Other (Pension/Restructuring (510) (827) (754) (617) (599) (490)

Operating Cash Flow 207 (5) (126) (43) (236) 476

CapEx (901) (691) (692) (637) (628) (721)

FCF (excl. Dividends) (694) (696) (818) (680) (865) (245)

Total Debt 5,095 4,755 5,378 4,498 4,498 4,498

Cash 4,593 5,570 5,689 3,757 4,891 4,646

Net Debt 502 (815) (311) 741 (393) (148)

Total Debt/EBITDA 3.9 x 7.0 x 5.2 x 3.2 x 3.3 x 3.3 x

Net Debt/EBITDA 0.4 x -1.2 x -0.3 x 0.5 x -0.3 x -0.1 x


EBITDA margin 7.8% 4.5% 6.5% 8.6% 8.5% 8.5%

LTM Capitalization (EUR)

Description Size MultipleRevenues by Region FY2010

Liquidity Summary 3Q2011

EUR 1.4 bn Revolving Credit Facility due 2012/2013 0 2.8 x North America 36% Revolver Size 1,400

Alcatel-Lucent 6.375% notes due 2014* 462 2.8 x Europe 32% Borrow Base 1,400

Alcatel-Lucent 5.0% converts due 2015 1,000 2.8 x Asia Pacific 18% - Amt Drawn 0

Alcatel-Lucent 8.5% senior notes due 2016 500 2.8 x ROW 14% - Unavailable 0

Alcatel-Lucent FRNs due 2012-2016 150 2.8 x Amt Unutilized 1,400

Alcatel-Lucent USA 2.875% converts due 2023 72 2.8 x Cash 3,757

Alcatel-Lucent USA 2.875% converts due 2025 680 2.8 x Liquidity 5,157

Alcatel-Lucent USA 6.5% notes due 2028 200 2.8 x

Alcatel-Lucent USA 6.45% notes due 2029 906 2.8 x Segment Pension

Total senior debt outstanding 3,970 2.8 x Revenues FY2010 Funding YE2010

Alcatel-Lucent USA 7.75% sub. prefs due 2017 716 3.4 x Networks 62.1% Region US Euro

Total debt outstanding (Face) 4,686 3.4 x - IP 10.0% FV of Assets 23,721 3,281

Equity component of converts (500) -- - Optics 16.5% PBO (21,008) (3,712)

Other financial debt 312 -- - Wireless 26.8% Funded Status 2,713 (431)

Reported Gross Debt 4,498 3.2 x - Wireline 9.0%

Cash & Equivalents 3,757 -- Software/Svcs/Solutio 27.4% OPEB

Net Debt 741 0.5 x Enterprise 7.3% Funding YE2010

Market cap 3,256 -- Other 3.2% Region US Euro

Enterprise value 3,997 2.9 x FV of Assets 536 --

PBO (3,334) --

Funded Status (2,798) --

Maturities:

Next Call

0

200

400

600

800

1,000

1,200

1,400

1,600

Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12

Alcatel-Lucent is a manufacturer of telecommunications equipment and a provider of telecommunication services. It provides products and services that enable voice, data, and video communications. Areas of focus include fixed, mobile, and converged broadband networking and IP technology. The company categorizes its business into three main segments: Networks (IP, Optics, Wireless and Wireline), Applications (Network Applications, Enterprise Applications), and Services. ALU's top 10 customers accounted for 43% of revenues in 2010, with AT&T and Verizon each accounting for 11%. The company competes with a broad number of competitors including Cisco, Ericsson, Huawei, ZTE, and Nokia Siemens Networks.The company was formed through the merger of Alcatel S.A. and Lucent Technologies in 2006.

Key Dates/Catalysts:- Alcatel-Lucent is expected to report 4Q2011 earnings on February 10.

-

500

1,000

1,500

2,000

2012 2013 2014 2015 2016 2017 Thereafter

Investment Strengths:- Adequate liquidity totaling over €5.1 billion, including €3.7 billion of cash on hand and €1.4 billion of revolver availability. The announced sale of the Genesys business could add about €1bn more.- Improving free cash flow (but still negative): ALU is guiding to flat full year 2011 free cash flow after €600-800 million annual outflows in 2008-2010. We think ALU could fall short of this target but that FCF will still improve significantly from previous years.- Well positioned for the 4G rollout: ALU has signed several major 4G network contracts (including AT&T and Verizon) which could represent approximately 30% of this new market opportunity.- Leading provider of IP-based network infrastructure solutions: Voice/data networks will continue to migrate toward an all-IP network infrastructure to manage accelerating traffic growth.

Investment Risks:- Pension: While its US pension plan is over-funded by €2.7 billion, the projected benefit obligation (PBO) ended 2010 at €21 billion. We expect the funded status to deteriorate to reflect lower interest rates and challenging asset returns in 2011.- Alcatel generates 10% of revenues from legacy wireline network products. Carriers are reducing spending on wireline networks, as wireless applications continue to gain market share. - Legacy CDMA and GSM infrastructure solutions still account for a sizable portion of wireless revenues. While AT&T and Verizon increased legacy network spending over the past 12 months to better manage smartphone traffic, we expect 2012 to bring more traditional headwinds.- Volatile free cash flow: Alcatel-Lucent typically generates negative free cash flow during the first three quarters of the year, reflecting seasonal working capital needs.

Company Description

ALU (USD) 5 Yr CDS Performance:



Alere Inc. (ALR) Erin Blum 212-855-7718


UNDERPERFORM on the seniors and the subs

Bond Summary



$250 7.875 Sr Nts 01-Feb-16 B2/B- $103.938 2/1/2013 $103.250 6.663% 634

$400 8.625 Sr Sub Nts 01-Oct-18 B3/B- $104.313 10/1/2014 $102.750 7.904% 711


Revenue $1,986 $2,155 $2,346 $578 $586 $610

EBITDA 525 565 566 147 147 148

Interest paid $105 $120 $156 $30 $38 $46

Taxes paid 15 (30) 64 (29) 43 2

Capex 101 96 120 28 27 25

Free Cash Flow 187 179 171 18 37 43

Total Debt $2,147 $2,395 $3,337 $2,395 $3,064 $3,337

Cash 493 401 344 401 277 344

Net Debt 1,655 1,994 2,993 1,994 2,787 2,993

Key Credit Statistics Agency

Total Debt/EBITDA 4.1x 4.2x 5.9x Comps Leverage Coverage Ratings

Net Debt/EBITDA 3.2x 3.5x 5.3x Alere (ALR) Snr 3.8x NA B2/B-

Alere (ALR) Sub 5.0x 3.4x B3/B-

EBITDA/Interest 5.0x 4.7x 3.6x 4.9x 3.9x 3.2x Valeant Pharma (VRX) 4.3x 4.6x B1/BB-

EBITDA margin 26.4% 26.2% 24.1% 25.5% 25.1% 24.2% Warner Chilcott (WCRX) 2.7x 5.8x B3/B+

Capitalization

Description Size

Debt to PF LTM

EBITDA**

Debt to 2011E

EBITDA** Liquidity

Revolving Credit Facility $25 Revolver Size 250

TLA due 6/15/2016 $625 Letters of Credit 4

TLB due 6/15/2017* $1,173 Borrowings 25

DD TL due 6/30/2016 (incremental A) $300 Revolver Availability 221

Total bank debt 2,122.7 3.4x 3.8x

A/R facility 0

7.875% senior notes due Feb 2016 $245 Borrowings 0

Total sr bonds $245 3.8x 4.2x Availability 0

9% Subordinated Notes due May 2016 $391 Cash $277

8.625% subordinated notes due 2018 $400 Total Liquidity 497

Total sub bonds $791 5.0x 5.6x

Other $28

3% Sr Sub Convert Notes due 2016 (not gty) $150

Total Debt $3,337 5.3x 5.9x

Market Cap 2,022

Enterprise Value $5,082 8.1x 9.0x

*Includes a $250mn add-on that was put in post quarter end.

**LTM is PF for recent acquisitions, 2011E is not.

Maturities:

Next Call

We rate both the ALR seniors and subs Underperform. We see the terms of the June 2011 credit agreement as signaling a deteriorating credit profile going forward, which we think is not reflected in current spreads. The term loan has no total leverage limit and a 4.5x secured limit. We also see weak near-term new product pipeline ($50 mn for 2011 and $150 mn for 2012 of revenue according to management).

Updated 01/25/12

0

500

1000

1500

2000

2500

3000

3500

2012 2013 2014 2015+

Alere Inc. (ALR) develops near-patient diagnosis and monitoring tools, and operates a health management business. ALR's products and services focus on cardiology, women's health, infectious disease, oncology, and drugs of abuse. ALR's business can be divided into three segments: professional diagnostics (67% of revenues), health management (28%), consumer diagnostics (4%). Alere has grown its businesses by leveraging a strong intellectual property portfolio (by acquiring distribution networks to expand its geographic reach) and making product acquisitions. Formerly known as Inverness Medical Innovations, the company announced on July 15, 2010, that it had changed its name to Alere Inc.

In June 2011, ALR amended its bond indentures to allow $200 mn of share repurchase and paid up to a maximum of 2.625% consent fee. ALR also refinanced its credit agreement to finance the repurchase, increased the revolver by $100 mn. In July 2011, ALR announced it had approached Axis Shield (ASD) with a take-over offering. ASD initially rejected the offer. ALR eventually closed the ASD acquisition on November 1, 2011 for approximately $364 mn and used a $200 mn DD term loan as well as revolver borrowing to finance it. In December 2011, ALR issued a $250 mn add-on to its term loan. The proceeds were used to fund the acquisition of a US-based pain management business and Arriva.

Key Dates/Catalysts:- Quarterly results: Organic growth has recently lagged expectations and the health management business has been hurt in recent quarters by reduced employer spending on benefits.- Uptake of new product launches CD4 and Heart Check.- Uptake of a new drug to replace Warfarin (Boehringer Ingelheim's Dabigatran). ALR's blood test used to monitor Warfarin dosing contributes about 6% of sales. - Potential acquisitions, which could increase leverage.

Investment Strengths:- Strong LT market growth characteristics: Professional diagnostics market growth rate is around 8%.

- Strong technology platform that is a barrier to entry: ALR has a large installed base (e.g., 63% for Triage in ERs), which is important for building physicians' confidence in ALR's products.

- Significant free cash flow: 5% LTM.

Investment Risks:- Acquisitive in an "expensive" sector: Growth opportunities are in buying specialized point-of-care companies that are typically privately owned.

- Ability to add debt: The June 2011 credit agreement offers the company substantial room to increase leverage. The company only has a 4.5x secured leverage limit and no total leverage limit.

Company Description



American Achievement (AMEACH) Updated: 1/23/12 Kevin Coyne 212-357-9918Celeste Everett 212-902-4751

Contact analyst or see latest research for updates to ratings, estimates, and other information.

OUTPERFORM: On a relative basis, we think the AMEACH senior secured notes are cheap relative to Visant Corp. seniors owing to the low dollar price,

additional security, tighter covenant package for one turn of additional leverage, and better ratings.

Bond Summary

Size Coupon Agency Bid YTW STW Z-Spd

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp

365 10.875 Sr Sec Nts 15-Apr-16 B3/B 105.438 15-Oct-13 74.500 20.12 1,944 1,931

Fiscal year ended August 31

Financial Profile 3QFY11A 4QFY11A FY11A 1QFY12A 2QFY12E FY12E

Revenue 144.2 45.8 284.2 42.9 47.2 271.6

EBITDA 50.6 1.6 57.6 1.8 3.1 57.2

Interest Expense 10.9 10.9 38.8 11.0 10.2 41.7

Cash Taxes 11.5 (10.8) (9.3) (4.8) (4.7) (3.4)

CapEx 2.5 2.1 9.4 2.1 2.5 9.6

Free Cash Flow 25.8 (0.5) 18.6 (6.5) (5.0) 9.3

Total Debt 386.3 387.0 387.0 400.0 390.0 390.0

Cash 1.2 4.8 4.8 7.1 2.6 3.1


Total Debt/EBITDA 6.6x 6.7x 6.7x 6.9x 6.8x 6.8x

Net Debt/EBITDA 6.6x 6.6x 6.6x 6.8x 6.8x 6.8x

EBITDA/Interest 4.7x 0.1x 1.5x 0.2x 0.3x 1.4x Comps Leverage Coverage Ratings

AMEACH 6.9x 1.5x B3/B

EBITDA margin 35.1% 3.5% 20.3% 4.2% 6.7% 21.1% VISANT 6.2x 2.8x Caa1/B-

MGM (srs) 9.2x 1.7x B3/B-

Capitalization

Description 1QFY12ADebt to EBITDA Liquidity 1QFY12A

Revolver due Oct 2015 ($55 mn) 35.0 Revolver Size (a) 54.8

Total Secured Debt 35.0 0.6x Letters of Credit 1.7

10.875% sr secured nts due Apr 16 365.0 Borrowings 35.0

Total Debt 400.0 6.9x Revolver Availability 18.1

A/R facility NA

Borrowings NA

A/R Availability NA

Maturities:

Cash 7.1

Total Liquidity 25.1

(a) Bond indenture permits revolver

to increase to $75 mn.

Next Call

American Achievement Corporation (AMEACH) is a school affinity products company with operations in three segments: Yearbooks (37% of FY2010 revenue), Class Rings (38% FY2010 revenue), and Graduation (14% of FY2010 revenue) & Other Products. The Yearbooks segment includes memory books, calendars, and automated yearbook design software; Class Rings includes both high school and college markets; and Graduation & Other includes diplomas, letter jackets, and a non-scholastic jewelry business selling commemorative, military, and other customized jewelry. AMEACH was formed in 2000 as a holding company that combined the operations of Balfour (brand for all its on-campus product lines), and ArtCarved. A sale of the company to competitor Herff Jones was announced in May 2008 but was ultimately terminated by mutual agreement in December of that year due to resistance from the FTC on anticompetitive grounds.

Key Dates/Catalysts:- August 2011: Steve Parr assumed the position of President and CEO, while former CEO Alyce Alston departed to pursue other opportunities.- FY2012 guidance: EBITDA expected to be flat to slightly higher, and FCF expected to be $1-3 mn. Ring segment revenue expected to be down (on % basis) "in the high single digits" year-over-year.

Investment Strengths:- #1 provider of college class rings (55% market share) and #2 in high school class rings (30% market share of on-campus and retail).- One of the largest yearbook providers (10% market share).- Strong brand recognition post the consolidation under Balfour, a brand that dates back to 1914.- Diversified distribution channels with retail presence in Wal-Mart, K-Mart, JC Penny, and Zales.- Developing innovative products to complement its product offerings and drive sales: personalized pages created via internet, Bal4.tv that uses customized media through a secure video delivery service and QR codes printed in yearbooks.-Gross margins have improved 170 bp to 56.2% in FY2010 through rationalization of excess production capacity, investments in improved technology, and outsourcing.- Strong covenant package: RP basket subject to 2.0x fixed coverage ratio, with a carveout for a small general basket of $5 mn- No near-term maturities.- Secured by substantially all the assets.

Investment Risks:- According to AMEACH, each 10% increase in gold prices results in $2.5 mn of increase in cost of goods sold. The company does not hedge gold and relies on passing along the costs through higher prices.- Operational weakness in FY2010 partially attributed to canceled sale to Herff Jones.- Minimal free cash flow.- Uncertain exit strategy: does not lend itself to an IPO in our view due to small scale of the business; anti-trust obstacles to a strategic acquisition (Herff Jones).

Company Description

0

100

200

300

400

500

2012 2013 2014 2015 2016+



American Axle (AXL) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary

Size Coupon Agency Next Call Bid YTW STW


$300 7.875% Sr. Nts 1-Mar-17 B2/B 103.94 3/1/2012 104.00 636.6% 626


Revenue 2,109.2 1,521.6 2,283.0 2,562.7 2,590.2 2,848.2

EBITDA 76.4 100.2 340.3 381.6 370.6 384.7

Cash interest (73.6) (80.0) (61.6) (73.3) (71.8) (80.3)

Cash Taxes (13.1) (3.8) 43.1 2.6 1.5 1.5

W/C, Divs, Other (171.1) (78.7) (81.5) (329.5) (294.8) 8.3

CapEx (140.2) (141.5) (108.3) (149.8) (150.7) (185.0)

Free Cash Flow (321.6) (203.8) 132.0 (168.4) (145.2) 129.1

Total Debt 1,139.9 1,071.4 1,010.0 1,050.6 1,170.0 1,127.5 Comps Leverage Coverage Ratings

Cash 198.8 178.1 244.6 114.4 265.0 351.7 AXL 2.8x 4.8x B1/BB-

Net Debt 941.1 893.3 765.4 936.2 905.0 775.8 CTBUS 1.3x 8.4x B1/BB-

Key Credit Statistics GT 3.0x 6.5x Ba3/BB-

Total Debt/EBITDA 14.9x 10.7x 3.0x 2.8x 3.2x 2.9x MTOR 3.0x 3.6x B2/B

Net Debt/EBITDA 12.3x 8.9x 2.2x 2.5x 2.4x 2.0x TEN 2.2x 4.5x Ba3/BB

TRW 0.9x 13.6x Ba2/BB+

EBITDA/Interest 1.3x 1.2x 4.0x 4.8x 4.5x 4.4x

EBITDA margin 3.6% 6.6% 14.9% 14.9% 14.3% 13.5%

Capitalization - FY11E

Description SizeDebt to EBITDA

Liquidity - LTM

Revolving Credit Facility 0.0 1.1x Revolver Size 375.0

9.25% Sr. Secured Notes due 2017 378.8 1.1x - Amt Drawn 70.0

Foreign Credit Facilities 35.0 1.1x - LCs 30.0

Capital Lease Obligations 6.3 1.1x Amt Unutilized 275.0

5.25% Sr. Notes due 2014 249.9 3.2x Cash & equivalents 114.4

7.875% Sr. Notes due 2017 300.0 3.2x Liquidity 389.4

7.75% Sr. Notes due 2019* 200.0 3.2x

Total Debt 1170.0 3.2x

Less cash & equivalents 265.0

Net Debt 905.0 2.4x

Market Cap 926.3

Enterprise Value 1831.3 4.9x

* Bonds benefit from guarantees from domestic operating subsidiaries

Maturities (FY11E):

American Axle & Manufacturing Holdings, Inc., designs, engineers, and manufactures driveline systems for light trucks and sport-utility vehicles. The company produces axles, propeller shafts, chassis components, and forged products. American Axle also manufactures various driveline components for light trucks and sport utility vehicles manufactured in North America. About 80% of the company's top line is derived from the light truck platform.

Key Dates/Catalysts:- American Axle will report 3Q2011 earnings on February 3

0100200300400500600700800900

1,000

2012 2013 2014 2015 2016 After

Investment Strengths:- Favorable production trends: D3 production has rebounded from the trough in 2009 and has remained at relatively stable levels in 2011 and early 2012.- Improved margins: Driven by the company’s cost-cutting actions, AXL's 3Q2011 LTM EBITDA margin was 14.9%, versus a 6.6% margin in 2009.- Global expansion: AXL aims to expand globally and increase its presence primarily in Brazil and China.- Adequate near-term liquidity: AXL ended 3Q2011 with $114 million of cash on hand and $389 million of gross liquidity.

Investment Risks:- Rising oil and gas prices: AXL is at risk of a consumer shift away from light trucks and SUVs (i.e., GMT900) to smaller, more environmentally friendly cars. - High reliance on D3 truck production: AXL derives about 84% of its revenues from the D3. While AXL has been focusing on diversifying revenues away from the D3 and North America, we estimate that 80% of the top line will still come from North America in 2013.

Company Description



Amerigroup Erin Blum 212-855-7718


OUTPERFORM

Bond Summary



$475 7.5 Sr 15-Nov-19 Ba3/BB+ $103.750 15-Nov-15 $105.625 6.322% 552


Premium Revenue 5,159 5,783 6,275 1,498 1,601 1,615

Total Revenue 5,188 5,806 6,291 1,502 1,605 1,619

EBITDA 252 488 363 139 90 64

Interest Expense $16 $16 $20 $4 $4 $8

Cash Taxes 52 164 113 47 28 17

CapEx 30 29 42 10 11 10

Free Cash Flow 117 372 261 189 117 50

Total Debt $260 $260 $660 $260 $260 $660

Parent Cash 232 249 715 249 298 715

Net Debt 28 11 (55) 11 (38) (55)



Net Debt/EBITDA 0.1x 0.0x (0.2x) AGP* 1.7x 14.6x Ba3/BB+

HNT 1.2x 11.7x Ba2/BB

EBITDA/Interest 15.5x 30.5x 18.0x 34.7x 21.5x 8.4x CNC 1.0x 16.3x Ba3/BB+

EBITDA margin 4.9% 8.4% 5.8% 9.3% 5.6% 3.9%

*AGP leverage is based on 3Q annualized EBITDA.

Capitalization

Description Size

Debt to LTM

EBITDA

Debt/3Q annualized

EBITDA

Debt/PF 3Q annualized

EBITDA

Debt to 2011E

EBITDA Liquidity

AGP has no revolver NA Revolver Size NA

Total Sr Sec debt NA Letters of Credit NA

Borrowings NA

7.5% senior notes due 11/15/2019* 475 Revolver Availability NA

Total Debt 475 1.1x 1.7x 1.3x 1.3x Balance sheet cash as of 3Q $812

Market Cap 3,210 Parent Cash as of 3Q* $298

Enterprise Value 2,873

*PF for the $75mn add-on in January 2012. *Unregulated cash

Maturities:

Updated 01/25/12

We rate AGP Outperform as we think it trades cheap relative to competitor Centene and we view both companies as credible acquisition candidates. We like AGP fundamentally because of (1) its robust industry growth opportunities, (2) its risk-reducing characteristics of managed Medicaid contracting, and (3) its conservative capitalization in terms of both leverage and statutory capital surplus.

Next Call

Amerigroup is the largest pure-play managed Medicaid company and has roughly 8% market share, ranking second behind UnitedHealthcare in terms of number of Medicaid members. The company was founded in 1994 and has been public since 2001. AGP will serve over 2.7 million members in 14 states with the recent expansions in Texas and Louisiana and the acquisition in New York. In January 2012, AGP was also declared one of five winners of the Washington reprocurement and expansion, which would be another new state for AGP. Final details will be set in February 2012.

Medicaid programs that the company manages includes long-term care (LTC), aged, blind and disabled (ABD), temporary assistance for needy families (TANF), and FamilyCare. The company also has a small part in Managed Medicare (1% of total members).

In November 2011, AGP raised $400 mn in unsecured bonds in order to repay its $260 mn of convertible notes that are in the money and to fund cash to balance sheet. The company does not have a revolver but maintains sufficient parent cash (also known as unregulated cash). In January 2012, AGP issued a $75 mn add-on to the 2019 notes; we believe part of the proceeds will be used to fund statutory capital for the Washington win.

Key Dates/Catalysts:- 4Q earnings and 2012 guidance expected February.- Results of contract reprocurement through 2012.- State rate updates for 2012.- Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We see plenty of growth opportunity outside of Medicaid expansion but headline reaction could be negative if the law is deemed unconstitutional.

050

100150200250300350400450500

2012 2013 2014 2015+

Investment Strengths:- Robust industry growth opportunities. We see three avenues for industry growth: (1) budget-crunched states are increasing their use of managed care to reduce costs (MCOs reduces costs by 3-15%), (2) the Medicare/ Medicaid dual eligibelivble population may be migrated to managed care, and (3) Medicaid enrollment is set to expand by 16 mn people in 2014 due to the Affordable Care Act.

- Credible acquisition candidate. The large market growth opportunity makes managed Medicaid attractive for core managed care. We view managed Medicaid as requiring different core skills than commercial, and so greenfield entry may be challenging.

- Conservative capitalization. Leverage is low at 25% of capitalization. AGP's statutory capital levels are also 2.5x higher than the minimum regulatory requirements.

Investment Risks:- Underwriting risk. AGP assumes the risk of the cost of medical care so EBITDA could be volatile during the underwriting cycle. In addition, AGP is entering a few new regions in 2012, which could be risky as AGP is less familiar with the new population being managed.

- Potential rate cuts or loss of contracts. States could cut rates next year, but this is largely due to the low utilization experienced through 2010 and 1H2011. Rates must still be actuarially sound. There are a number of contracts up for rebid in 2012 but AGP is diversified by state and by county within the state.

- Regulatory/legal risk. Strict Medicaid fraud laws could result in monetary penalties. However, there are currently no cases against the company and settlements tend to be small.

Company Description



Ameristar Casinos Inc. (ASCA) Updated 1/23/12 Kevin Coyne 212-357-9918

Contact analyst for updates and other information. Celeste Everett 212-902-4751

NOT COVERED

Bond Summary

Size Coupon Agency Next Call Bid YTW STW Z-spread


$800 7.50 Sr Nts 15-Apr-21 B3/B+ 105.625 15-Apr-15 106.500 6.219 483 488

Priced at 99.125 (Non-standard call price and date; only 4 yrs but 75% of coupon)

Financial Profile 3Q10A 4Q10A FY10A 1Q11A 2Q11A 3Q11A

Net Revenue 300 294 1,189 317 305 305

EBITDA 81 78 323 96 94 90

Interest expense 28 25 121 25 27 27

Cash Taxes 3 1 (3) (2) 2 (2)

CapEx & M&A 14 20 58 11 16 19

Free Cash Flow 36 32 147 63 49 46

Total Debt 1,665 1,530 1,530 1,485 1,999 1,946

Cash 87 71 71 89 84 92 Comps Leverage Coverage Ratings

Net Debt 1,578 1,459 1,459 1,397 1,916 1,854 PNK 5.0x 2.8x Caa1/B

Key Credit Statistics GCCN 2.8x 4.8x B2/BB-

Total Debt/EBITDA 5.1x 4.7x 4.7x 4.4x 5.7x 5.4x BYD 7.4x 2.0x Caa1/CCC+

Net Debt/EBITDA 4.9x 4.5x 4.5x 4.2x 5.5x 5.2x MGM (sr) 9.2x 1.7x B3/B-


EBITDA margin 27.1% 26.4% 27.2% 30.4% 30.9% 29.6%

Capitalization

Description 3Q11Debt to EBITDA Liquidity 3Q11 Enterprise Value

Revolver due 2016 ($500mm) 249 Revolver Size 500 Shares O/S (mm) 32.63

Term loan A due 2016 (L+275) 200 Letters of Credit 4 Share price 19.70$

Term loan B due 2018 (L+300, floor 1%) 697 Borrowings 249 Market cap 643

Total senior secured debt 1,146 3.2x Revolver available 247 Net debt 1,854

7.50% senior notes due 2021 800 Enterprise value (EV) 2,497

Other debt 1

Total debt 1,946 5.4x EV / LTM EBITDA 7.0x

Restricted cash 6

Cash 92

Total Liquidity 345

Maturities:

Credit facility maintenance covenants

Leverage Sr leverage Coverage

Current 7.00x 4.50x 2.00x

1Q2012 6.50x 4.00x 2.00x

1Q2013 6.00x 3.50x 2.00x

1Q2014 5.50x 3.50x 2.00x

1Q2015+ 5.25x 3.50x 2.00x

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016+

Ameristar Casinos Inc. (ASCA) owns and operates eight casinos in seven markets throughout the United States. ASCA properties are located in St. Louis, MO, Kansas City, MO, East Chicago, IN, Council Bluffs, IA, Black Hawk, CO, Vicksburg, MS, and Jackpot, NV.

Key Dates/Catalysts:- April 2011: Completed new $1.4 billion senior secured credit facility and new $800 million senior note offering. Proceeds used for repayment of existing bank debt and bonds and the purchase of 26.15 million shares of ASCA stock from the estate of former owner Craig Neilsen for $17.50 per share.- May 2011: Estate of Craig Neilsen sold 4.6 million shares of common stock in a public offering, bringing its ownership percentage to 0.8% from 15%.- September 2011: Announces $75 million share repurchase program, expiring September 30, 2014.- November 2011: Announced agreement to purchase land in Springfield, MA, with the intent to apply for the sole casino license for western Massachusetts. Plans include a casino, hotel, and entertainment facilities.

Company Strengths:- New credit facility includes full covenant package.- Strong EBITDA margins.- High-quality properties compared with some of the HET and ISLE competitors in its footprint.- New facility in Colorado.- No near-term maturities.

Company Risks:- Subject to new competition in certain markets (IL, LA).- Relatively low asset coverage.- No exposure to Las Vegas, which we expect to recover sooner than the Midwest region.- Pays $0.10 quarterly dividend.- Indiana property losing market share due to limited access for cars because a bridge is closed for repairs.- Proposed expansion of gaming in Illinois a negative for its Indiana and St. Louis properties.

Company Description



Amkor Technology, Inc. (AMKR) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$345 7.375 Senior 1-May-18 Ba3/BB- 103.69 5/1/2014 107.5 5.4% 506


Revenue 2,659 2,179 2,939 2,843 2,772 2,829

EBITDA 611 538 697 572 514 520


Cash Taxes (24) (12) (6) (6) (6) (5)

CapEx (386) (173) (446) (493) (426) (453)

Free Cash Flow 220 88 97 57 (1) (56)

Total Debt 1,493 1,434 1,364 1,326 1,326 1,326

Cash 424 395 423 483 432 376

Net Debt 1,069 1,039 942 843 894 950



Net Debt/EBITDA 1.8 x 1.9 x 1.4 x 1.5 x 1.7 x 1.8 x

Comps Leverage Coverage Sr. Unsec

EBITDA/Interest 5.3 x 4.8 x 7.0 x 6.6 x 6.4 x 6.9 x Ratings

EBITDA margin 23.0% 24.7% 23.7% 20.1% 18.6% 18.4% FSL 5.8x 2.0x Caa1/CCC+

NXP 3.3x 3.7x Caa1/B

Capitalization (PF Adjusted) SANM 3.6x 3.6x B1/B


Liquidity (LTM)

Secured Revolver (L+150-225 bp) 0 0.6 x Revolver Size 100

Secured Term Loan due 2014 (L+1 150 0.6 x Borrow Base 100

Korean Term Loan 123 0.6 x - Amt Drawn 0

Shanghai working cap 15 0.6 x - LC's 0

Other secured debt 40 0.6 x Amt Unutilized 100

7.375% Senior Notes due 2018 345 1.9 x Cash 483

6.625% Senior Notes due 2021 400 1.9 x Liquidity 583

6.0% Sub Coverts due 2014 0 --

Total Debt 1,073 1.9 x

Less cash 475 --

Net Debt 598 1.0 x

Equity Market Cap 1,011 --


* Assumes in-the-money 6.0% sub converts are treated as equity

Maturities:

Next Call

Amkor Technology is one of the world's largest outsourced semiconductor packaging and test service providers. It is second in size based on revenues to Advanced Semiconductor Engineering (ASE). Both Amkor and ASE are almost double the size of the next-largest players, STATS ChipPAC and Siliconware Precision Industries, rounding out the four largest global semi packagers in the industry. AMKR provides services across a broad array of end markets for 225 clients, with its largest segments including communications (40% of sales), consumer (26% of sales), and computing (12% of sales).

Key Dates/Catalysts:- AMKR is expected to report 4Q2011 earnings in late January/ early February.

0

100

200

300

400

500

600

700

800

2011 2012 2013 2014 2015 Thereafter

Investment Strengths:- Leading SATS provider: AMKR is one of the largest semiconductor packagers in an industry where economies of scale matter- Positive industry fundamentals: We expect long-term growth to continue in the smartphone, consumer, and network infrastructure markets despite near-term volatility associated with a pullback in demand and a moderate inventory correction.- Active capital structure actions: In 2010 AMKR issued $345 million of senior notes due 2018 and used the proceeds to redeem 2011 and 2013 maturities. It also called all of its outstanding 9.25% senior notes in 1Q11 to further extend its debt maturity schedule. Net leverage peaked at 6x in FY2005 but has declined to 2.3x as of 3Q11.

Investment Risks:- A volatile industry: A decline in consumer demand for semi products and/or a continued decrease in higher-margin communications revenues would weaken AMKR’s top-line and EBITDA growth. - Cash deployment: In August, AMKR announced a $150mn stock repurchase program . Separately, in September, AMKR announced an agreement to purchase Toshiba's Malaysian SATS operations for approximately $81mn (although the acquisition has since been delayed owing to the disruptions caused by the flooding in Thailand). While the company still has a sufficient cash balance and revolver availability, further acquisitions may subject the company to some liquidity pressure should the macroeconomic environment deteriorate materially.- Near-term operating volatility: AMKR results missed expectations in 4Q2010, 1Q2011, 2Q2011, and 3Q2011 reflecting seasonal weakness in gaming, inventory adjustments by some customers, higher raw material costs, volatility associated with the earthquake in Japan, and an inventory correction further down the semiconductor supply chain.

Company Description



Apria Healthcare (AHG) Erin Blum 212-855-7718


OUTPERFORM

Bond Summary



$700 11.25 Sr Sec A-1 1-Nov-14 Ba2/BB+ $102.813 1-Nov-12 $104.500 8.417% 832

$318 12.375 Sr Sec A-2 1-Nov-14 B1/B+ $103.094 1-Nov-12 $98.500 13.019% 1279


Revenue $2,095 $2,081 $2,293 $528 $585 $595

EBITDA (bf future cost savings) 377 299 264 48 75 71


Cash Taxes (8) (8) (21) (11) (7) 0

CapEx 151 117 149 32 38 35

Free Cash Flow 19 (32) (48) (42) 36 (26)

Total Debt $1,021 $1,019 $1,028 $1,019 $1,018 $1,028

Cash 158 109 42 109 58 42

Net Debt 863 910 986 910 960 986



Net Debt/EBITDA 2.3x 3.0x 3.7x AHG Sr Sec A-2 4.2x 1.8x Ba2/BB+

HLS 3.2x 4.3x B2/B+

EBITDA/Interest 2.9x 2.3x 2.0x 1.4x 2.2x 2.2x THC Uns 3.9x 2.0x Caa1/CCC+

EBITDA margin 18.0% 14.4% 11.5% 9.0% 12.7% 11.9% CYH 4.8x 2.8x B3/B

Capitalization

Description Size

Debt to LTM

EBITDA

Debt to 2011E

EBITDA Liquidity

ABL revolver due 2016 $0 Revolver Size $250

Series A-1 11.25% notes due 2014* 700 2.9x 2.7x Letters of Credit 21

Series A-2 12.375% notes due 2014* 318 Borrowings 0

Total Sr Sec debt 1,018 4.2x 3.9x Revolver Availability 229

Other 1 Cash $58

Total Liquidity $287

Total Debt 1,018 4.2x 3.9x

Market Cap NA

Enterprise Value NA

(*) A-1 notes have liquidation priority over A-2 notes.

Maturities:

Next Call

Updated 01/25/12

We rate AHG Outperform as the 3Q improvement in EBITDA and our outlook for further improvement makes a refinancing more likely given the high coupons on the bonds (callable as of November 2011). We think a refinancing requires a good 4Q and strong market conditions. While the A-1s are likely covered even under a distressed scenario, we prefer the A-2s due to the more attractive upside/downside.

Apria provides home respiratory and home infusion services and equipment rental. The company serves over 2 million patients from 550 service locations. A focus on managed care payers (Medicare oxygen is less than 10% of revenue), the large home infusion segment, and a greater level of centralization differentiate Apria from competitors. Home infusion contributes 49% of revenue and 72% of EBITDA. Round 2 of competitive bidding is scheduled for 2012, with rates taking effect in July 2013, although the program has seen several delays previously. Approximately $144 million of AHG revenue is subject to Round 2.

AHG was purchased by Blackstone in October 2008. Blackstone contributed $673 million of equity for total consideration of $1,713 million or 5.6x LTM EBITDA. In March 2011, AHG acquired the home health business of Praxair, which it expects to add $85-95 mn of revenues for 9M2011.

In 1Q2011, AHG's EBITDA miss was largely due to higher-than-expected SG&A related to on-shoring expenses and sales force growth. In 3Q2011, AHG announced that hiring related to the on-shoring initiative has been completed. Per management, it takes roughly 6-9 months for new billing and collections teams to become proficient and for SG&A to tick down.

Key Dates/Catalysts:- Potential bond refinancing. Bonds are high coupon and callable November 2011.- Quarterly earnings results. (3Q11 continued the positive EBITDA momentum off of a bad 4Q2010. Stabilization of SG&A costs and reduction in addbacks are key)- It is unclear how, if at all, a 2% across-the-board sequestration would be implemented on competitive bidding reimbursement. -Results of competitive bidding round 2 expected in the Fall of 2012.

0

200

400

600

800

1000

1200

2012 2013 2014 2015+

Investment Strengths:- Business mix is focused away from Medicare: AHG has strategically elected to pursue managed care payers, rather than rely on Medicare business, which is subject to rate cuts.

- Growth in home infusion (historically 10%) offsets reduced Medicare oxygen reimbursement. LTM segment EBITDA of $136 million suggests a valuation of close to $1 billion based on a 7x multiple.

- Reported cost reduction: AHG had realized $171.2 million of savings as of the end of 3Q2011 and anticipates $10.1 million of additional savings for 2011.

Investment Risks:- FCF negative which means AHG will likely begin drawing on its $250 million revolver. Capex is high because of the short lifespan of equipment.

- Ongoing contract rationalization has resulted in declining revenue in respiratory.

- Under competitive bidding, Medicare rates for oxygen concentrators were cut by 33% on average in select markets. This gives an indication of what competitive bidding might look like in later rounds, which will have more financial impact on AHG.

- Process of on-shoring AHG's billing and collection functions could be disruptive, and SG&A might remain elevated.

Company Description



Ashland (ASH) Updated 1/26/2012 Kristen McDuffy 212-357-6157

Contact analyst or see latest research for updates to ratings, estimates, and other information. Adam Goodwin 212-902-0459

IN-LINE

Bond Summary

GS Size Coupon Agency Bid YTW OAS

Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 650 9.125 Sr. Nts 1-Jun-17 Baa3/BB 104.6 1-Jun-13 111.50 3.64% 349

Financial Profile ($, mn)* FY:10 FY:11 FY:12E 1Q:11 4Q:11 1Q:12E

Net Sales 5,741 6,502 8,232 1,433 1,846 1,980

EBITDA 529 429 1,257 165 (286) 281

Cash Interest (131) (109) (205) (27) (33) (51)

Cash Taxes 31 54 (179) (27) 143 (39)

Capital Expenditures (206) (201) (260) (22) (105) (65)

Free Cash Flow 303 77 307 (85) 96 (38)

Comps Leverage Coverage Ratings

Total Debt 1,400 4,003 3,833 1,407 4,003 3,961 Ashland 3.5x 5.7x Ba1/BB

Cash Equivalents 417 737 874 374 737 656 Koppers 2.2x 5.7x B1/B+

Key Credit Statistics Olin 1.9x 10.2x Ba1/BB

PF Debt/EBITDA (3) 1.7x 3.5x 3.1x 1.9x 3.5x 3.5x

PF Net Debt/EBITDA (3) 1.2x 2.8x 2.4x 1.4x 2.8x 2.9x

PF EBITDA/Interest Expense ( 6.2x 5.7x 6.1x 6.4x 5.7x 5.5x

PF LTM EBITDA Margin (3) 14% 14% 15% 13% 14% 14%

Capitalization ($, mn)


Revolver 1,500 Revolver Size 1,000

AR securitization ($200 mn) 1,400 Borrowings -

New Term Loan 650 Letters of Credit 86

6.6% notes (legacy Hercules) - Revolver Availability 914

Total Secured Debt 3,550 3.1x

9.125% senior notes 21

MTN 12 A/R Securitization -

8.8% debentures 20 Borrowing base -

Hercules Tianpu term notes 35 Borrowings -

International revolver agreements 81 A/R Availability -

Other 2 -

Total Senior Debt 3,721 3.2x Cash 737

6.5% junior subordinated ($282 mn) 282 Liquidity 1,651

Total Debt 4,003 3.5x

Share Price 61.6

Market Capitalization 4,806

Enterprise Value 8,072 7.0x

Maturities:

Next Call

0

2040

60

80

100

120140

160

180

FY2012 FY2013 FY2014 FY2015

Ashland is a diversified chemical company consisting of three specialty chemical businesses (Aqualon, Water Technologies, and Performance Materials) and two commodity businesses (Consumer Markets and Ashland Distribution). In November of 2008, Ashland acquired Hercules for $3.4 billion and was subsequently downgraded to high yield from investment grade. In November 2010, the company announced that it had signed an agreement to sell its Distribution business to TPG Capital for $930 million, or a 10.2x multiple of FY2010 EBITDA. In May 2011, Ashland announced that it agreed to acquire ISP for 8.9x LTM EBITDA in a $3.2 billion all-cash transaction, which closed at the end of September 2011). Ashland financed roughly $2.9 billion of the purchase price with new bank debt.

Key Dates/Catalysts:1QFY12 earning release

Investment Strengths:- Ashland's EBITDA is well balanced across its business segments and diversified geographically.- The Aqualon business is high margin and high growth.- Ashland has demonstrated a willingness to sell non-core assets and use cash for debt reduction.- Management plans to use free cash flow to repay debt following the ISP acquisition.

Investment Risks:- Ashland could opt to make a leveraging acquisition or distribute additional cash to shareholders, weakening its current efforts to achieve investment grade ratings.- Performance from the Valvoline business could fall more sharply from recent cyclical peaks than we expect.-ISP acquisition has resulted in a significant increase in leverage.

Company Description



Avis Budget Group (CAR) Updated 1/26/2012 Franklin Jarman 212-902-7537


UNDERPERFORM

Bond Summary



$375 7.750% Sr. Nts 15-May-16 B2/B 103.88 2/27/2012 103.50 435.2% 431


Revenue 5,984.0 5,132.8 5,184.9 5,496.1 5,560.1 6,963.3

EBITDA 181.0 218.8 409.9 600.1 660.2 710.3

Cash Interest (133.2) (135.3) (100.7) (175.1) (196.4) (249.0)

Cash Taxes (15.0) (20.0) (142.0) (142.0) (35.0) (50.0)

CapEx (88.0) (39.0) (61.0) (52.0) (40.0) (50.0)

Free Cash Flow (23.0) 166.8 301.9 192.1 142.4 114.6

Total Debt 1,789.0 2,131.0 2,502.0 2,498.0 3,498.0 3,498.0

Cash 258.0 482.0 911.0 1,002.0 1,091.4 506.9

Net Debt 1,531.0 1,649.0 1,591.0 1,496.0 2,406.6 2,991.1


Total Debt/EBITDA 9.9x 9.7x 6.1x 4.2x 5.3x 4.9x Comps Leverage Coverage Ratings

Net Debt/EBITDA 8.5x 7.5x 3.9x 2.5x 3.6x 4.2x HTZ 3.7x 2.9x B1/B+

CAR 4.2x 3.2x B1/B+


EBITDA margin 3.0% 4.3% 7.9% 10.9% 11.9% 10.2%

Capitalization


Liquidity - LTM

Revolver due 2011/2013 (L+400 bp) 0.0 0.4x Revolver Size 1200.0

Term loan due Apr 2014 (L+425 bp) 268.0 0.4x - Amt Drawn 0.0

Senior FRN's due May 2014 (L+250 bp) 250.0 4.2x - LCs Drawn 784.0

7.625% Senior Notes due May 2014 200.0 4.2x Amt Available 416.0

7.75% Senior Notes due May 2016 375.0 4.2x Cash on hand 1002.0

9.625% Senior Notes due March 2018 445.0 4.2x Net Liquidity 1418.0

8.25% Senior Notes due January 2019 602.0 4.2x

3.50% Convertible Notes due 2014 345.0 4.2x

Other 13.0 4.2x

Total Corporate Debt 2498.0 4.2x

Less cash 1002.0

Net Corporate Debt 1496.0 2.5x

Market Cap 1492.7


Corporate maturities:

Next Call

Avis Budget Group (CAR) is a leading provider of vehicle rental services, including cars and trucks. The company has locations in more than 70 countries and employs over 30,000 people. The Avis brand operates approximately 2,100 locations, with 60% of the revenues generated from commercial customers. Avis’s primary competitor is the Hertz brand, which derives a significant portion of its revenues from corporate accounts. On the leisure side, Budget has about 1,900 locations, with 72% of its revenue generated from leisure accounts. Together, Avis Budget controls 20% of the car rental market. On October 3, 2011, Avis Budget announced the completion of its acquisition of Avis Europe PLC for an equity purchase price of approximately $1.0 billion.

Key Dates/Catalysts:- Avis is expected to report 4Q2011 earnings in late February. We will be focused on any commentary regarding the integration of Avis Europe.

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

2012 2013 2014 2015 2016 Thereafter

Investment Strengths:- Dual brand names allow company to target two distinct markets: higher-end Avis customers and price-conscious Budget customers.- Broad distribution network: No. 1 in on-airport car rental, with 32% market share across both brands.- Successful capital structure actions: In March 2010, CAR extended the maturity of $1.275 billion of bank debt by two years and issued $450 million of senior notes due 2018. More recently, CAR issued $600 million of 8.25% senior notes due 2019.- Fleet reductions could generate additional cash flow for Avis's corporate balance sheet.- Global brand: recent acquisition of Avis Europe provides the company with a more geographically diversified revenue base and the opportunity to grow relationships with global customers.

Investment Risks:- Exposure to Europe: After Avis Budget's acquisition of Avis Europe, we estimate Europe will represent over 30% of the company’s pro forma revenues. We believe weaker-than-expected economic growth in that region could make it difficult for the company to achieve its targeted acquisition synergies- Vehicle residual values: Fleet depreciation has declined over 25% from $1.7 billion in 2008 to $1.2 billion in 2011 thanks to higher residual values. Looking forward, we believe there is downside risk to the residual value growth opportunity, which iscurrently trending at record high levels.- Macro risk: With its heavy reliance on the on-airport car rental, Avis Budget's revenue is tied to enplanements volume, which is sensitive to a macroeconomic slowdown.

Company Description



AWAS Aviation Capital (AWAS) Updated 1/24/2012 Joshua Pinkerton 212-357-9774


IN-LINE

Bond Summary



$542 7.000 Sr. Sec 15-Oct-16 Ba2/BBB- 103.5 18-Oct-13 #N/A N/A #VALUE! #N/A N/A

(thousands of dollars)


Revenue 733 193 197 199 765 815

EBITDA 642 168 178 178 679 729


Income Taxes (19) (5) (3) (8) (23) (22)

CapEx (468) (240) (193) (181) (751) (648)

Free Cash Flow (35) (146) (50) (66) (268) (263)

Total Debt 3,721 3,826 3,932 4,354 4,354 4,801 Comps Leverage Coverage Ratings

Cash 632 849 801 650 650 516 AYR 5.6x 2.7x Ba3/BB+

Net Debt 3,089 2,977 3,132 3,704 3,704 4,284 AWAS 6.4x 2.5x Ba3/BB


EBITDA/Interest 2.5 x 2.5 x 2.9 x

EBITDA margin 87.6% 86.9% 90.5% 89.2% 88.8% 89.4%

Capitalization


EBITDAR Liquidity

7.0% Sr. Sec. Notes due 2016 571.2 Revolver Size 0

L+575 Term loan due 2016 500.0 Letters of Credit 0

Recourse floating rate 313.6 Borrowings 0

Recourse fixed rated 287.1 Revolver Availability 0

Non‐recourse floating rate 730.0

Non‐recourse fixed rate 1,513.5

Total debt 3,932.5 5.8 x

Public Market Cap 0.0

Enterprise Value 3,132.0 4.6 x Cash 801

Total Liquidity 801

Maturities:

Next Call

AWAS is a top 10 leasing company with 205 aircraft that have a book value of $5.5 billion and 113 orders. AWAS was founded in 1985, bought by Morgan Stanley in 2000, and sold to private equity firm Terra Firma in March 2006. In June 2007, AWAS acquired Pegasus Aviation, which owned 82 aircraft and had an order book of 37 aircraft. Today, AWAS is a privately held company owned primarily by Terra Firma and the Canada Pension Plan Investment Board (CPPIB), with its headquarters in Dublin, Ireland.

Key Dates/Catalysts:AWAS is expected to report earnings around February 28.

0

200

400

600

800

1,000

1,200

1,400

2012 2013 2014 2015 Thereafter

Investment Strengths:- New orders: The main focus of AWAS’s expansion is on its large new order book. However, it has also participated in some secondary market transactions.

- Shareholder support: AWAS is a private company with two primary shareholders. The shareholders have put a total of $2 billion into the company, including $83 million in 1Q2011 and $200 million in2Q2011. They have not taken interest or dividend payments out of the company. They havealso indicated that they will continue to put additional equity capital into the company,primarily to help finance the delivery schedule.

Investment Risks:- New orders: The biggest projected cash use for AWAS is its large order book. The company has aircraft purchase commitments of $996 million in 2012, $1.2 billion in 2013, and $948 million in 2014.

- Fully secured capital structure: AWAS does not have unsecured debt outstanding and substantially all of its assets are unencumbered.

Company Description



Ball Corporation (BLL) Updated 1/23/12 Joe Stivaletti (212) 902-3299

Contact analyst or see latest research for updates to ratings, estimates, and other information. James Kitchell (212) 902-9813

IN-LINE

Bond Summary



$500 6.750 Sr Nts 15-Sep-20 Ba1/BB+ 103.375 15-Mar-15 110.250 4.240 382

Financial Profile 12/31/2009 12/31/2010 9/26/2010 7/3/2011 10/2/2011

FY:09 FY:10 3Q:10 2Q:11 3Q:11

Net sales 6,710.4 7,630.0 2,035.0 2,309.7 2,258.3

EBITDA 883.5 1,019.1 288.6 331.1 306.4

Interest expense 117.2 149.4 36.2 45.2 43.0

Capital expenditures 157.9 250.2 62.0 118.5 110.3

Total debt 2,596.2 2,812.3 2,647.3 3,474.4 3,456.7

Cash 210.6 152.0 168.7 144.8 190.1

Net debt 2,385.6 2,660.3 2,478.6 3,329.6 3,266.6

Key Credit Statistics Comps Leverage Coverage Ratings

Total debt/EBITDA 2.9x 2.8x 2.7x 3.0x 3.0x Plastipak 3.2x 3.2x B3/B

Net debt/EBITDA 2.7x 2.6x 2.5x 2.9x 2.8x Owens-Illinois 3.1x 4.7x Ba3/BB

Crown Holdings 2.9x 4.9x Ba3/BB

EBITDA/interest 7.5x 6.8x 8.0x 7.3x 7.1x

EBITDA margin 13.2% 13.4% 14.2% 14.3% 13.6%

Capitalization 10/2/2011


Short-term bank facilities 415.6 0.9x Revolver size 1,000.0

Revolving credit facilities 247.2 0.9x Letters of credit 22.8

Term loan facilities 413.4 0.9x Borrowings 247.2

7.125% senior notes 375.0 3.0x Revolver availability 730.0

6.625% senior notes 450.0 3.0x

7.375% senior notes 325.0 3.0x Cash 190.1

6.750% senior notes 500.0 3.0x Total Liquidity 920.1


Other 230.5 3.0x

Total debt 3,456.7

Market value of equity 6,143.0

Enterprise value 9,599.7

Maturities:

Next Call

10/2/2011

Ball is one of the world’s largest suppliers of metal and plastic packaging to the beverage, food, and household products industries. The company’s primary products include aluminum and steel beverage containers, steel food containers, steel aerosol containers, plastic containers for foods and beverages, steel paint cans, and decorative steel tins. Ball also operates a small aerospace business, which produces spacecraft, instruments and sensors, radio frequency and microwave technologies, and a variety of other aerospace products.

-

400

800

1,200

1,600

2,000

2,400

2,800

3,200

2012 2013 2014 2015+

Investment Strengths:- Efficient assets: Ball operates a global network of modern, efficient beverage can plants located in close proximity to the markets and customers it serves. - Experienced management: Ball is led by a strong management team whose top 10 senior executives average over 20 years of experience in the packaging industry.- Broad geographic footprint: Ball manufactures its products in many regions of the world, including North America, Europe, South America, and Asia.

Investment Risks:- Irrational price competition could lead to lower profitability: Although can manufacturers have behaved rationally in recent years, irrational selling price competition remains a possibility.- Future M&A activity might lead to higher leverage: There is the potential for Ball to make a leveraging acquisition in the future, which could drive bond spreads wider.

Company Description



Basic Energy Services (BAS) Updated: 1/26/12 Jason Gilbert (212) 902-3585

Contact analyst or see latest research for updates to ratings, estimates, and other information. Sarah Yanes (212) 357-5869

IN-LINE

Bond Summary



$475 7.750% Sr. 2/15/2019 B3/B $103.88 2/15/2015 $102.25 7.21% 644

Financial Profile 2008A 2009A 2010A 2011E 2012E

Revenue $1,005 $527 $728 $1,234 $1,529

EBITDA (Adj for non-cash items) $240 $33 $116 $331 $431

Free Operating Cash Flow $112 $46 ($14) $5 $271

Capital Expenditures $87 $43 $64 $200 $200

CompsLeverage

('11E)Coverage

('11E)Agency Ratings

Credit Ratios 2008A 2009A 2010A 2011E 2012E BAS 2.3x 12.8x B3/B

Total Debt/EBITDA (LTM) 1.7x 15.3x 4.4x 2.3x 1.8x HOS 6.3x 2.4x Ba3/BB-

EBITDA/Interest Expense (LTM) 10.7x 1.4x 6.1x 12.8x 22.4x PKD 2.0x 13.4x B1/B+

Debt to Capitalization % 45% 60% 62% 69% 53%

Capitalization


Cash and equivalents $72 Revolver Size $165

Revolving Credit Facility $0 Letters of Credit $0

Long Term Debt Borrowings $0

Senior notes 2016 $225 Revolver Availability $165

Senior notes due 2019 $275 Cash $72

Other $63 Total Liquidity $237

Total Long Term Debt $563

Total Debt $563 2.7x

Preferred Equity $0

Common Equity $340Total Capitalization $903

Maturities:

Next Call

BAS is the third-largest well-services company in the US, with an approximate 11% share. The company completed its IPO in December 2005. Business segments include well servicing, contract drilling, fluid services, and drilling and remedial services. Geographically, most of BAS's assets are located in West Texas (41% of workover fleet), the Mid-Continent (21%), and the Rockies (16%) regions.

To date, Basic has employed an acquisition growth strategy, and we expect the company to continue to expand into new service areas and regions through bolt-on transactions. Basic's corporate history stretches back to 1992, when Sierra Well Services, Inc. was founded as a subsidiary of Southwest Royalties. Sierra employed an acquisition growth strategy, but was unable to weather the downturn of 1997, which led to restructuring and a change in management. Subsequently, the company changed its name to Basic Energy Services in 2000, and altered its geographic and commodity exposure. Basic filed for an IPO in 2000, but pulled the transaction due to general market conditions. The company was then recapitalized with DLJ Merchant Banking Partners. In 2005, Basic successfully completed an IPO at $20 per share. In April 2008, BAS entered into an agreement with Grey Wolf to combine in a merger of equals transaction. This merger was terminated in July 2008 after GW agreed to be acquired by Precision Drilling. Most recently, the company completed the acquisition of Maverick Companies in July 2011 for $180 mn.

Investment Strengths:• Above-average exposure to stronger oil macro• Low maintenance capex of approximately $25 mn

Investment Risks:• Significant capacity additions in pressure pumping and well servicing could delay pricing recovery• Management has historically been acquisitive

Key Dates/Catalysts:• Continued bolt-on acquisitions• Well servicing rig attrition

Company Description

0

50

100

150

200

250

300

350

400

450

500

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t ma

turit

ies

($ m

n)



Bausch + Lomb Inc. (BOL)Contact analyst or see latest research for updates to ratings, estimates, and other information. Erin Blum 212-855-7718

IN-LINE Cindy Guan 212-902-9758

Bond Summary

Size Coupon Agency Bid YTM STM Snr

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp 5-yr CDS$650 9.875 Snr Uns 01-Nov-15 Caa1/B $102.469 01-Nov-12 $104.750 8.366% 826 325 / 355

We are using yield to maturity as the company has said it does not intend to call the bonds.

Financial Profile 4Q11E 2011E

Revenue $732 $2,843

EBITDA 146 572

Interest Expense, net $43 $170

Cash Taxes 12 91

CapEx 23 102

Free Cash Flow 29 164

Total Debt $2,715 $2,715 Agency

Cash 192 187 Comps Leverage Coverage Ratings

Net Debt 2,524 2,528 BOL Snr 5.0x 3.4x Caa1/B

Key Credit Statistics BMET Sub 6.0x 2.0x Caa1/B-

Total Debt/EBITDA 4.8x ALR Sub 3.8x NA B2/B-

Net Debt/EBITDA 4.4x

EBITDA/Interest 3.4x 3.4x

EBITDA margin 19.9% 20.1%

Capitalization

Description Amount

Debt to LTM

EBITDA

Revolver 10/25/2013 $65

Term Loan--US 4/26/2015 $1,439

Term Loan--Euro 4/26/2015 $548

Total Snr Sec debt $2,052 3.8x

Snr Uns Notes due 2015 $649

Old debt remaining $12

Total Snr Uns debt $661 5.0x

Total Sub debt $0

Other Debt $27Total Debt 2,740 5.0x

Market Cap NA

Enterprise Value NA

Maturities:

Updated 01/25/12

Next Call

Our rating is based on a volatile financial track record, offset by a well-known consumer brand and a fast-growing pharma business. On its 3Q11 conference call, the company reiterated that it would likely not refinance the bonds when callable in November, instead preferring to wait for an IPO in one or two years.

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015+

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015+

Bausch + Lomb develops, manufactures, and markets eye health products. BOL operates three segments: vision care (e.g., contact lenses, contact lens solution, about 43% of revenue), pharmaceuticals (37%), and surgical products (e.g., cataract and refractive; 20% of revenue). BOL was purchased by Warburg Pincus in October 2007. In March 2010, BOL announced that it had hired a new chairman and a new CEO, both of whom had worked at Schering-Plough.

In its 3Q2011 conference call, BOL reiterated its plan to not call the bonds at the first November call date, preferring to wait for an IPO in one to two years. 2011 guidance is for top line growth to be in the "upper single digits" with EBITDA growth at around10%. Guidance does not include any potential impact from Japan (which is less than 10% of revenue). 2H2011 should be helped by various new product launches (PureVision 2HD and a new surgery platform).

In September 2011, BOL entered into an agreement granting it the option to buy out its JV partner Technolas Perfect Vision for up to EUR450 mn based on certain milestones and earnouts. BOL CDS was also added to the new HY index S17 in September 2011. In December 2011, TPV's VICTUS platform received CE mark approval. In the same month, BOL acquired Laboratorio Pfortner, the controlling entity of Waicon, the largest Argentinean contact lens company, for an undisclosed sum.

Key Dates/Catalysts:- Quarterly earnings announcements (new products for 2H2011).- Additional commentary around potential IPO or plans for calling the notes.-Comments on intention for the TPV JV.

Investment Strengths:- BOL operates as a hybrid consumer/healthcare company with a well-recognized brand and the high barriers to entry characteristic of a healthcare company.

- Pharma sales growth has been robust, offsetting weakness in the vision segment.

- Diversified product mix across the eye care business as well as geographically, with over 50% of revenue coming from outside the US.

Investment Risks:- EBITDA has been volatile (LTM results have ranged from down 2% to up 46% over the previous year).

- Contact lens and solutions markets are highly competitive with the risk of recalls, price compression, and technology shifts.

- US contact lens sales have been negatively affected by the weak economy.

- The potential buyout of its JV partner TPV and a more acquisitive strategy could cause leverage to creep higher.

Company Description



Beazer Homes USA Inc. (BZH) Updated 1/26/2012 Kristen McDuffy 212-357-6157


OUTPERFORMWe are Outperform rated on Beazer because we believe its bonds are highly attractive from a valuation standpoint. We expect the company's results in FY2012 to demonstrate improvement;

moreover, with no near-term maturities and ample liquidity, we believe the company is well positioned to weather the final years of the housing downturn. In our view, the current spread gap between

Beazer and KB Home is unwarranted given their relatively similar credit metrics and performance outlooks.

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bp

OP 250 12.0 Sr. Sec 15-Oct-17 B2/B 106.00 10/15/2012 108.5 7.86% 771OP 250 9.125 Sr. Nts 15-May-19 Caa3/CCC 104.6 11/15/2014 77 14.29% 1,300


Total Revenues 991 742 977 110 335 216

Total Adjusted EBITDA 1 (43) 25 (19) 9 (1)

Interest Expense (127) (131) (131) (32) (33) (33) Debt-to- Inventory-

Cash Taxes 118 2 - 1 2 - Comps Cap to-Debt Ratings

Capital Expenditures (11) (21) (10) (2) (8) (3) Beazer 86% 0.9x Caa3/CCC

Free Cash Flow 46 (217) (121) (150) 94 (111) KB Home 81% 1.0x B2/B+

Standard Pacific 69% 1.1x B3/B

Total Homebuilding Debt 1,227 1,507 1,507 1,322 1,507 1,507

Total Cash and Cash Equivalents 576 647 527 522 647 537


Homebuilding Debt / Capitalization (3) 76% 86% 91% 79% 86% 87%

Net Homebuilding Debt / Capitalization (3) 63% 82% 89% 71% 82% 84%

Inventories / Homebuilding Debt (2) (3) 0.9x 0.9x NA 0.9x 0.9x NA

Homebuilding Gross Margin (1) 18% 17% 19% 17% 16% 18%

PF Capitalization ($, mn)

Description Size Liquidity

Secured revolving credit facility -

Cash-secured delayed draw term loan 247 Cash-secured facility 275

12% 2nd priority secured notes 250 Borrowings 247

Other secured notes payable 2 Availability 28

Model home financing obligations -

Total Secured 500 Revolver 22

9.125% senior notes 250 Letters of credit (LoC) -

9.125% senior notes 300 Borrowings -

TEU senior amortizing notes 10 Availability 22

6.5% senior notes -

6.875% senior notes 172 Cash 370

8.125% senior notes 173 Restricted Cash 277

Total Senior 1,405 Total Liquidity 669

Mandatory convertible subordinated notes 58

Junior subordinated notes (2) 50

Total Balance Sheet Debt 1,512 Maturities:

Joint Venture Repayment Guarantees 18

Total Debt Outstanding 1,530

Share price 3.1

Market Capitalization 228


Next Call

020406080

100120140160180200

2011 2012 2013 2014 2015 2016

Beazer Homes, established in 1985, builds single family homes in 16 states. The company caters mostly to first-time home buyers, with this cohort accounting for 64% of its home closings in FY2010. Approximately three-quarters of the company’s homes are under 2,500 square feet, and its average home price in fiscal year 2010 was $221,700. Beazer is moderate in size relative to other builders, with 4,513 homes closed in FY2010. The company has relatively balanced regional exposures, with 39% of its closings in the West, 38% in the East, and 22% in the Southeast.


Investment Strengths:- Primarily targets finished lots.- Significantly improved capital structure, liquidity, and maturity schedule.- Willingness to issue equity to reduce outstanding debt.

Investment Risks:- Relatively weak operating margins versus peers.- High SG&A as a percentage of sales.- Company remains highly leveraged.- Difficult path to profitability at current sales pace and cost structure.

Company Description



Berry Petroleum (BRY) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM

Bond Summary



$300 6.750% Sr. 11/1/2020 B2/BB- $103.38 11/1/2015 $107.28 5.40% 463


Revenue $786 $568 $696 $902 $1,162


Free Operating Cash Flow $12 $78 $37 ($40) $175


Credit Ratios 2008A 2009A 2010A 2011E 2012E CompsLeverage

('11E)Coverage


Total Debt/EBITDA (LTM) 2.9x 3.4x 3.0x 2.6x 1.9x BRY 2.6x 7.2x B2/BB-

EBITDA/Interest Expense (LTM) 13.6x 5.9x 5.6x 7.2x 9.5x FST 2.8x 4.0x B1/B


Debt + Preferred per Proved Boe $4.70 $4.29 $4.11 $4.70 $4.41

Debt + Preferred per PDP Boe $8.58 $7.48 $8.34 $9.54 $8.94

Capitalization





Senior notes due 2014 $352 Revolver Availability $349

Senior sub notes 2016 $200 Cash $0

Senior notes due 2020 $300 Total Liquidity $349


Total Debt $1,354 2.8x

Preferred Equity $0

Common Equity $1,244Total Capitalization $2,599

Maturities:

Next Call

Berry Petroleum has transformed from a traditional California heavy oil producer to a more diversified E&P with both crude oil and natural gas interests. We expect the company to continue to use cash flow from its mature California assets to expand its East Texas, Rockies, and Mid-Continent natural gas platforms, and in the current environment the company is focused on increasing its California heavy oil production to increase this cash flow. Management has been conservative over time; however, the pace of acquisitions and divestitures has recently increased. The company has indicated that it would be interested in additional diatomite assets if something became available at an attractive price.

BRY started in 1909 as a California heavy crude producer and has been publicly traded since 1987. In 2000, the California energy crisis led the company to rethink its strategy. Historically, Berry had been reliant on steam injection for heavy oil production. With the shortage in electricity needed to generate steam, the company was forced to shut in more than 10% of production. In response, the company adopted a new strategy to diversify beyond heavy oil. Berry has since built a growth platform in East Texas and the Rockies/Mid-Continent areas through a series of acquisitions. The most recent acquisition was in the Wolfberry for $180 mn. The immediate Berry family currently owns around 35% of the shares and has no special voting rights.

Investment Strengths:• Heavy oil fundamentals remain strong• Approximately 65% of 2011E production is oil, making BRY one of the most oily producers in our coverage• 57% of 2012 production protected through hedges

Investment Risks:• Increasing natural gas exposure• Almost half of production is high-cost CA heavy oil, which heightens BRY’s exposure to negative reserve revision potential• High PUD component (51% of reserves) requires elevated ongoing development spending• Rising services costs pressuring results• Increasingly difficult California regulations

Key Dates/Catalysts:• Potential acquisitions, particularly in the Permian• Update on next-generation oil projects • California permitting

Company Description

050

100150200250300350400450500

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t Mat

uriti

es (

$ m

n)



Berry Plastics Corporation (BERRY) Updated 1/23/12 Joe Stivaletti (212) 902-3299



Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) (bp)

$370 8.250 Sr Sec Nts 15-Nov-15 B1/B 104.125 15-Nov-12 107.000 4.372 428

$800 9.750 Sr Sec Nts 15-Jan-21 Caa1/CCC 104.875 15-Jan-16 104.000 8.965 748

$168 10.250 Sr Sub Nts 1-Mar-16 Caa2/CCC 105.125 Current 97.000 11.176 1,050


FY:10 FY:11 4Q:10 3Q:11 4Q:11

Net sales 4,257 4,561 1,154 1,187 1,229

EBITDA 541 656 153 177 188

Interest expense 282 237 77 78 76

Capital spending 223 160 52 32 34

Total debt 4,374 4,571 4,374 4,412 4,571

Cash 148 42 148 171 42 Comps Leverage Coverage Ratings

Net debt 4,226 4,529 4,226 4,241 4,529 Ball 2.8x 6.6x Ba1/BB+

Crown 2.9x 4.9x Ba3/BB

Key Credit Statistics Owens-Illinois 3.1x 4.7x Ba3/BB


Net debt/EBITDA 7.6x 6.4x 7.6x 6.8x 6.4x Solo Cup 6.3x 1.5x B2/B

Reynolds 6.8x 1.9x Caa1/B-


EBITDA margin 12.7% 14.4% 13.2% 14.9% 15.3%


Description Size Debt to EBITDA Liquidity 10/1/2011

Revolver 195 3.5x Revolver size 650

1st lien term loan (2015) 1,146 3.5x Borrowings 195

1st lien FRNs (2015) 681 3.5x Letters of credit & other 38

1st lien 8.250% nts (2015) 370 3.5x Revolver availability 417

Capital leases and other 100 3.5x

2nd lien FRNs (2014) 210 5.6x Cash 42

2nd lien 9.500% nts (2018) 500 5.6x Total liquidity 459

2nd lien 9.750% nts (2021) 800 5.6x

10.250% sr sub nts (2016) 127 6.4x

11.000% sr sub nts (2016) 455 6.4x

Unamortized discount (13)

Total debt 4,571

Maturities:

Next Call

Berry Plastics manufactures and markets plastic packaging products, plastic film products, specialty adhesives, and coated products. The company's principal products include containers, drink cups, bottles, closures and overcaps, tubes and prescription containers, trash bags, stretch films, plastic sheeting, and tapes, which are sold into a diverse selection of attractive and stable end-markets, including food and beverage, healthcare, personal care, quick service and family dining restaurants, custom and retail, agricultural, horticultural, institutional, industrial, construction, aerospace, and automotive.

-

1,000

2,000

3,000

2012 2013 2014 2015 2016+

Investment Strengths:- Leading market positions: Berry has leading competitive positions in many product lines, including polypropylene containers; drink cups; pharmaceutical bottles and vials; closures; aerosol overcaps and plastic squeeze tubes; plastic trash bags, stretch film, and sheeting; and cloth and foil tape products and adhesives.- Diverse and stable customer base: Berry has over 13,000 customers, ranging from large corporations to small local businesses.

Investment Risks:- Rapid increases in resin prices: Although many of Berry's sales contracts allow for the pass-through of resin price increases, rapid increases in resin prices can have a material adverse impact on the company's profitability.- Leveraging acquisitions: Berry is growth oriented and might make additional leveraging acquisitions.

Company Description



Bombardier Inc. (BBDBCN) Updated 1/26/12 Brian Jacoby, CFA 212-902-3258

Contact analyst or see latest research for updates to ratings, estimates, and other information. Cody Sauer, CFA 212-855-8553

OUTPERFORMBond Summary

Size Coupon Agency Bid YTW T-sprd 5 Yr

Ticker (MM) (%) Priority Maturity Ratings Next Call Date Price (%) bp CDS

BBDBCN $850 7.750 Sr. Unsec. 15-Mar-20 Ba2/BB+ NC - $113.00 5.7 377 340

BBDBCN $250 7.450 Sr. Unsec. 1-May-34 Ba2/BB+ NC - $111.00 6.5 341 340

Fiscal YE Jan 31; ($ million, except where noted)

Canadian GAAP Restated for IFRS

Financials (FYE Jan 31; $mn) FY08 FY09 FY10 F3Q11 FY11 F3Q12 FY12E FY13E

Transportation 7,793 9,756 10,009 2,168 9,098 2,318 9,803 9,700

Aerospace 9,713 9,965 9,357 1,829 8,794 2,305 9,075 9,869

Revenue 17,506 19,721 19,366 3,997 17,892 4,623 18,878 19,569

% YoY Chg 17.6% 12.7% -1.8% -13.1% -7.6% 15.7% 5.5% 3.7%

EBITDA 1,422 1,984 1,596 343 1,615 394 1,605 1,733

EBITDA margin 8.1% 10.1% 8.2% 8.6% 9.0% 8.5% 8.5% 8.9%

Interest Expense (383) (307) (223) (37) (227) (33) (155) (225)

Pretax Income 447 1,291 915 189 997 243 1,079 1,148

Net income 325 1,026 707 145 775 194 854 898

Gross operating cash flow 920 1,726 1,208 237 1,193 321 949 1,338

Working Capital 1,460 (817) (656) (91) 485 (274) (341) 400

Net Operating Cash Flow 2,380 909 552 146 1,678 47 608 1,738

Capital Expenditures (472) (621) (805) (254) (1,094) (393) (1,593) (1,700)

Dividends (30) (147) (178) (49) (197) (50) (211) (235)

Free Cash Flow 1,878 141 (431) (157) 387 (396) (1,196) (197)

Asset sale/(acqs) 55 54 38 0 21 0 9 0

Equity increase/(decrease) (50) (47) (19) (4) (66) 0 (84) (50)

Debt increase/(decrease) (1,076) (166) (7) 40 500 3 90 0

Other cash flow 147 (114) 321 70 (19) (125) 472 0

Net increase/(decrease) in cash 954 (132) (98) (51) 823 (518) (709) (247)

Transportation Backlog ($ billion) 30.9 24.7 27.1 32.7 33.5 33.0

Aerospace Backlog ($ billion) 22.7 23.5 16.7 16.2 19.2 22.3

Total Backlog ($ billion) 53.6 48.2 43.8 48.9 52.7 55.3

Total Consolidated Debt 4,393 3,952 4,162 4,824 4,645 5,069 5,069 5,069

Cash 3,602 3,470 3,372 2,725 4,195 2,708 3,486 3,239

Net Consolidated Debt 791 482 790 2,099 450 2,361 1,583 1,830

Manufacturing Debt 4,393 3,952 4,162 4,824 4,645 5,069 5,069 5,069


Consolidated Debt/EBITDA 3.1x 2.0x 2.6x 3.3x 2.9x 2.9x 3.2x 2.9x

Consolidated Net Debt/EBITDA 0.6x 0.2x 0.5x 1.4x 0.3x 1.4x 1.0x 1.1x

Manufacturing Debt/EBITDA 3.1x 2.0x 2.6x 3.1x 2.9x 2.9x 3.2x 2.9x

Pension & Lease Adj Leverage:

NPV of Operating Leases 482 402 545 581 581 0 581 581

Pension Deficit (@ Dec. 31) 1,180 1,543 1,514 1,630 1,630 1,630 1,630 1,630

Pension & Lease Adj Debt/EBITDA 3.8x 2.7x 3.4x 4.8x 4.4x 3.8x 4.0x 3.8x

Debt/Capital 58.0% 60.2% 52.5% 86.1% 75.3% 83.1% 80.7% 69.3%

Oper cash flow/Debt 54.2% 23.0% 13.3% 14.2% 36.1% 20.5% 12.0% 34.3%

LTM FCF/Debt 42.7% 3.6% -10.4% -11.9% 8.3% -10.8% -23.6% -3.9%

EBITDA/Interest expense 3.7x 6.5x 7.2x 9.3x 7.1x 11.9x 10.4x 7.7x

EBITDA Margin 8.1% 10.1% 8.2% 8.6% 9.0% 8.5% 8.5% 8.9%

Capitalization 10/30/2011 10/30/2011 Comps LeverageEBITDA

CoverageAgency Ratings

Description Size EBITDA (x) Liquidity Textron Inc. 2.0x 8.0x Baa3/BBB-

Revolvers 0 Revolver (matures June 2014) 750 L-3 Communications 2.3x 8.1x Baa3/BBB-

6.75% due 2012 151 Borrowings 0

Floating rate notes due 2013 0 Revolver Availability 750

6.3% due 2014 162

8% due 2014 0 Cash 2,708

7.25% due 2016 (€) 1,129 Total Liquidity 3,458

7.5% due 2018 650

7.75% due 2020 850

6.125% due 2021 (€) 1,042 Letter of credit facilities

7.35% due 2026 (C$) 149 Maturity

7.45% due 2034 250 Issued Available (fiscal year)

Other Sr. Debt 686 BT facility 4,760 3,595 1,165 2016

Total debt 5,069 2.9x BA facility 600 241 359 2014

PSG facility 900 412 488 2012

Market Cap 7,937 4.6x Total 6,260 4,248 2,012


Debt maturities, fiscal year basis:

Amount Committed

Next Call

Bombardier is a leading manufacturer of transportation solutions, with $17.9 billion in FY2011 sales. It ranks as the world's largest rail transportation company and the third-largest civil aerospace company. Bombardier operates under two business segments: Bombardier Aerospace (BA), which represents 47% of fiscal ytd consolidated revenues, and Bombardier Transportation (BT), which represents 53% of total revenues. The company's aerospace segment designs and manufactures aviation products, and is a provider of related services for the business, commercial, amphibious, and specialized aircraft markets. Within its aerospace segment, business aircraft represents approximately 47% of sales. Bombardier sells business aircraft under the following brands: Learjet (light jets), Challenger (mid-size), and Global family (large). In commercial aircraft, Bombardier manufacturers regional jets (CRJ family) and turbo props (Q-series). The company is also developing a new 110-149 seat commercial aircraft called the C-series, which is expected to enter service in late 2013 and currently has 138 firm orders. The company's transportation segment is a global leader in the rail industry and operates in four key market segments: rolling stock (rail vehicles), services, systems, and signaling. The transportation segment generates 65% of its revenues in the European market. From a total consolidated revenue perspective, Bombardier's geographic mix is as follows: 48% Europe, 29% in North America, 18% Asia-Pacific, and 6% other regions.

Key Dates/Catalysts: 1H2012: Potential for additional CSeries orders; update on development of new CSeries and Learjet 85 aircraft

Investment Strengths:

- Bombardier is the world's largest rail transportation company and the third-largest civil aerospace company, which both have high barriers to entry.

- High public support for rail infrastructure, and most of Bombardier's rail transportation revenues are derived from large rail operators in the public sector.

- Bombardier has significant backlog, which totaled $55.3 billion at 3QFY12, consisting of $33.0 billion at its Transportation segment and $22.3 billion at its Aerospace segment.

- Bombardier has a strong liquidity position, with $2.7 billion in cash at 3QFY12, and minimal near-term debt maturities.

- Management has a stated goal to regain investment grade ratings.

- Bombardier recorded a fiscal ytd book-to-bill of 1.3x in its business jet operation, a leading indicator that demand is improving, particularly for its large business aircraft.

Investment Risks:

- Potential development risks (e.g., delays) associated with CSeries commercial airliner and Learjet 85 business aircraft.

- Bombardier has a significant amount of exposure to aircraft residual value guarantees and credit guarantees.

- The fiscal challenges in Europe could delay some rail transportation contracts in this region or cause orders to slow.

- Bombardier faces significant competition from Boeing, Airbus, and Embraer, all of which are investment grade rated with strong financial flexibility.

Company Description

0

50

100

150

200

250

FY2012 FY2013 FY2014 FY2015

($M

N)



Bon-Ton (BONT) Updated: 1/26/12 Karen Eltrich 212-902-6957

Jordan Hughes 212-357-7875

Contact analyst for updates and other information.

NOT COVERED

Bond Summary



$480 10.25 Sr Nts 15-Mar-14 Caa2/CCC+ $102.56 Current 59.75 40.10% 3958

Financial Profile FY08A FY09A FY10A LTM Comps Yield Leverage Coverage Ratings

Revenue 3,225.4 3,034.9 3,046.5 2,976.0 Bon-Ton 40.10% 5.2x 2.1x Caa2/CCC+

EBITDA 158.9 218.1 249.8 204.5 Dillard's 6.56% 1.7x 8.2x B2/BB-

NMG 7.66% 4.6x 3.5x Caa1/B-

Interest Expense 97.8 98.8 112.3 95.3

Cash Taxes 0.0 0.0 1.4 (0.1)

CapEx 89.1 33.0 58.6 71.7

Free Cash Flow (28.1) 86.3 77.6 37.6

Total Debt 1,157.6 1,029.3 930.5 1,054.8

Cash 19.7 18.9 16.3 12.8


Total Debt/EBITDA 7.3x 4.7x 3.7x 5.2x

Net Debt/EBITDA 7.2x 4.6x 3.7x 5.1x

EBITDA/Interest 1.6x 2.2x 2.2x 2.1x

EBITDA margin 4.93% 7.19% 8.20% 6.87%

As of 10/29/11

Description SizeDebt to EBITDA Liquidity 3Q11A

Revolver ($625 million, 2016) 122.5 Revolver Size 625.0

Second Lien Term Loan due 11/18/13 0.0 Borrowings 241.6

Mortgage Loan Facility 237.0 Revolver Availability 379.5

Mortgage Notes 8.0

Total Secured Debt 367.5 1.8x A/R facility NA

10.25% Sr Nts due 2014 510.0 Borrowings 0.0

Capital Leases 63.0 A/R Availability NA

Total Debt 940.5 4.6x Cash 12.8


Market Cap 71.3


Maturities:

Next Call

Bon-Ton was founded in 1898. After completing the acquisition of the Northern Department Store Group from Saks Inc. (now being called Carsons internally) on March 6, 2006, it became one of the largest regional department store chains in the United States. The company operates 275 department stores and includes 11 furniture galleries located in 23 states (in the Northeast, Midwest, and upper Great Plains). Bon-Ton operates under the Bon-Ton, Bergner's, Boston Store, Carson Pirie Scott, Elder-Beerman, Herberger's, and Younkers nameplates.

Key Dates/Catalysts:January and February same store sales number and any corresponding guidance updates. Fourth quarter earnings results in mid-March

Company Strengths:- One of the largest regional department store chains in the US- Strong brand name recognition in its markets- Closing underperforming stores

Company Risks:- Highly competitive marketplace (large overlaps with J.C. Penney and Kohl's)- Sales highly cyclical with the economy- Reduced EBITDA guidance repeatedly post 3Q- Negative same store sales momentum - Majority of sales are in the Midwest

Company Description

0

100

200

300

400

500

600

700

800

2012 2013 2014+



Boyd Gaming Corp. (BYD) Updated 1/23/12 Kevin Coyne 212-357-9918Contact analyst or see latest research for updates to ratings, estimates, and other information. Celeste Everett 212-902-4751

OUTPERFORM / IN-LINE: We believe the 6.3x-levered senior notes offer are attractive compared to the 9.0x-levered MGM senior notes. In BYD, investors pick

150 bps for a credit that should start to see the benefit of a Las Vegas Strip recovery in 2012 as the local economy improves, albeit at a slow rate.Bond Summary

Size Coupon Agency Bid YTW STW Z-spread 5-year(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp CDS$500 9.125 Senior 1-Dec-18 B3/B 104.56 1-Dec-14 98.750 9.37% 803 793 16.5+500$241 7.125 Sr. Sub 1-Feb-16 Caa1/CCC+ 103.56 current 89.000 10.57% 1,001 973 16.5+500

7.125s call price steps down to 102.375 in February 2012.

Financial Profile FY10 1Q11 2Q11 3Q11 4Q11E FY11ENet revenue 2,299.2 564.9 574.4 590.2 611.2 2,340.7Adj. EBITDA 439.8 111.5 118.4 122.0 117.3 469.3

Interest Paid 129.1 49.9 78.5 92.6 56.6 220.1Cash Taxes (9.7) 0.0 1.2 (0.0) 0.0 1.2CapEx 87.5 20.9 10.0 24.6 17.0 72.5Free Cash Flow 232.9 40.7 28.7 4.9 43.7 175.5

Total Debt 3,218.8 3,187.5 3,179.8 3,165.7 3,328.4 3,328.4Unrestricted Cash 145.6 173.8 175.8 187.1 102.1 102.1Net Debt 3,073.1 3,013.6 3,004.0 2,978.6 3,226.3 3,226.3

Key Credit StatisticsTotal Debt/LTM EBITDA 7.3x 7.2x 7.1x 7.0x 7.1x 7.1x Comps Leverage Coverage RatingsNet Debt/EBITDA 7.0x 6.8x 6.7x 6.6x 6.9x 6.9x BYD 7.4x 2.0x Caa1/CCC+ GCCN 2.8x 4.8x B2/BB-EBITDA/Interest 2.5x 1.9x 1.8x 2.0x 2.1x 1.9x PNK 5.0x 2.8x Caa1/BEBITDA margin 19.1% 19.7% 20.6% 20.7% 19.2% 20.1% MNTG 7.1x 1.4x B3/B-Note: Results above include the consolidation of the Borgata joint venture.

Capitalization Liquidity Enterprise Value

Description 3Q11 Lvg Source 3Q11 Source SizeRevolver due 2012 0.0 Revolver Size 960.0 Shares OS (mm) 86.3Revolver due 12/17/2015 754.1 Letters of Credit 15.5 Stock Price $9.08Term Loan due 12/17/2015 (incl. add-on 831.8 Borrowings 754.1 Market Cap 783.8Total Borgata senior secured debt 783.7 Revolver Availability 190.4 Net Debt 3,141.3Total senior secured debt 2,369.6 5.2x Minority interest 203.29.125% Senior Notes - 12/1/18 500.0 Cash 187.1 Enterprise Value (EV) 3,925.1Total senior debt 2,869.6 6.3x Total Liquidity 377.56.750% Senior Sub Notes - 4/15/14 215.7 EV/ LTM EBITDA 8.7x7.125% Senior Sub Notes - 2/1/16 240.8Other 2.4 Credit Agreement Maintenance Covenants (amended December 2010)Total Debt 3,328.4 7.4x 4Q11 1Q12 2Q12 4Q12 2Q13

Secured leverage 4.50x 4.50x 4.25x 4.00x 3.75xNote: Leverage statistics calculated to include the consolidation Total leverage 7.75x 7.50x 7.50x 7.25x 7.00xof the Borgata JV. Interest coverage 2.00x 2.00x 2.00x 2.00x 2.00x

Operating segmentsMaturities: 4Q10 1Q11 2Q11 3Q11

Revenue:Downtown Las Vegas 57.1 55.7 56.6 53.3Locals Las Vegas 152.1 154.5 151.8 145.9Midwest & Gulf Coast 172.5 184.1 181.8 187.9Borgata 168.8 169.1 182.8 202.0

Property EBITDA:Downtown Las Vegas 10.9 9.0 9.4 6.0Locals Las Vegas 34.1 39.6 38.6 30.8Midwest & Gulf Coast 30.4 41.2 42.3 44.5Borgata 34.1 31.7 38.7 49.9

Next Call

0

500

1000

1500

2000

2012 2013 2014 2015 2016+

Boyd Gaming wholly owns 16 casinos in nine markets in six states. At December 31, 2010, the company owned 21,000 slot machines and 415 table games in 812,500 square feet of aggregate gaming space. The company is also 50%-owner of Atlantic City’s Borgata Hotel Casino and Spa. BYD's plan to build a $4.5 billion destination resort called “Echelon Place” on 65 acres on the Las Vegas Strip is currently on hold. BYD also owns a Hawaiian travel agency that operates six weekly flights. The Boyd family owns approximately 37% of the equity, according to SEC filings.

Key Dates/Catalysts:- October 2011: Closed the acquisition of IP Casino Resort & Spa in Biloxi, MS, for $288 mn in cash. The property generated $41 mn in LTM EBITDA through May 2011, and BYD expects to spend $44 mn within the first year on capital improvements. Including the planned capex, The purchase price represents a transaction multiple of 8.1x, including an expected $5 mn of synergies during the first year. - October 2011: Announced agreement with MGM and online poker service provider bwin.party (BPTY). If online poker is legalized in the US, MGM would acquire a 25% stake and BYD would acquire a 10% stake in a new company that would operate online poker using BPTY's technology and brands PartyPoker and World Poker Tour. - November 2011: Issued $350 mn incremental term loan to repay non-extended revolver that matured in May 2012. - November 2011: Canceled agreement to sell its Dania Jai-Alai assets for $80 mn following the two month closing date extension to the end of November.

Investment Strengths:- Experienced management team.- Deep knowledge of local markets and geographic diversification.- Increasing geographic diversity by entering Biloxi, MS gaming market.- Mississippi has one of the lowest gaming tax rates in the US.

Investment Risks:- Potential liquidity shortage if capital markets do not improve in 2012.Echelon Place: Uncertainties remain regarding the outcome for the property going forward. - Sluggish US economy and high unemployment are limiting consumer discretionary spending. - Unemployment in Las Vegas at 12.5% in November.- Availability under its stock repurchase program of $92 million as of 3Q2011.- BYD entered into a purchase option agreement and periodic fee agreement with LVE Energy Partners. BYD must pay LVE ~$11 mn annually related to prior energy commitments associated with Echelon Place development.- Table hold in Atlantic City has become more volatile since the installation of Pennsylvania table games, placing pressure on earnings. - Operations concentrated in Nevada.- Under the senior note indenture, the restricted payment capacity was $419 million as of 2Q2011.

Company Description



Bristow Group (BRS) Updated: 1/26/12 Jason Gilbert (212) 902-3585


UNDERPERFORM

Bond Summary



$350 7.500% Sr. 9/15/2017 Ba3/BB $103.75 9/15/2012 $104.25 6.16% 595


Revenue $1,119 $1,160 $1,205 $1,292 $1,205


Free Operating Cash Flow ($303) ($130) ($32) ($40) $2


Credit Ratios 2008A 2009A 2010A 2011E 2012E

Total Debt/EBITDA (LTM) 3.4x 2.8x 2.8x 3.0x 2.3x

EBITDA/Interest Expense (LTM) 6.9x 6.3x 5.5x 7.8x 18.1x


Capitalization

Description SizeDebt to EBITDA Liquidity Comps

Leverage ('11E)

Coverage ('11E)

Agency Ratings

Cash and equivalents $140 Revolver Size $175 BRS 3.0x 7.8x Ba3/BB

Revolving Credit Facility $88 Letters of Credit $2 HOS 6.3x 2.4x Ba3/BB-


Senior notes 2013-17 $350 Revolver Availability $85

Term loan $200 Cash $140

Convertible sr. notes 2038 $101 Total Liquidity $226

Other $25



Preferred Equity $0

Common Equity $1,517

Total Capitalization $2,282

Maturities:

Next Call

Bristow (formerly Offshore Logistics) is the largest provider of helicopter services to the oil and gas industry, with a fleet of 574 aircraft, including 378 in the consolidated fleet and 196 in unconsolidated affiliates. 83% of sales from outside North America.

Bristow Group's predecessor, Offshore Logistics, was formed in 1955 as a boat company and began providing helicopter services in the early 1970s. Offshore Logistics acquired Bristow Helicopters, which had greater eastern hemisphere exposure, in 1996. In 2002, Offshore Logistics increased its Nigeria exposure through an investment in Pan Africa. Bill Chiles assumed the CEO position in mid-2004, and the company adopted the name Bristow Group in 2006. In late 2006, BRS also sold its aircraft engine overhaul business, Turbo Engines, Inc., for $12 mn. In March 2007, BRS sold its 50% interest in its Brazilian joint venture. In April 2007, BRS acquired Helicopter Adventures, Inc., a flight training provider, for $20 mn and renamed it Bristow Academy, Inc. In October 2008, BRS sold 53 aircraft in the US GOM for $65 mn. Finally, BRS is part of an ongoing SEC and DOJ investigation regarding competitive practices in the US GOM.

Investment Strengths:• Global leader in a market that is undersupplied and has only two major global competitors• Significant asset base supported by liquid aftermarket for helicopters• Strong geographic diversity, with 83% of revenue non-US• Helicopter rates more resilient than pricing in many other oil services sectors (i.e., drilling rigs)• Long-term contracts provide some measure of credit support

Investment Risks:• Aggressive capital expenditure program• Potential for additional acquisitions • Exposure to US Gulf shallow shelf activity; GOM is 17% sales• European operations, 39% of 2011E sales, have underperformed

Key Dates/Catalysts:• Company has firm orders for 11 aircraft and has 67 incremental aircraft built into the five-year plan• Potential bond issuer to fund growth plans• Outstanding investigations by the DOJ for potential payroll and other accounting violations• Management sees growth opportunities in Norway, Mexico and Brazil • Management has indicated an intention to shift toward leasing more of its fleet (over time the intent is to own 80-85% of the fleet versus 95% currently)

Company Description

0

50

100

150

200

250

300

350

400

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es ($

mn)



Brookstone (BRSTNE) Updated: 1/26/12 Karen Eltrich 212-902-6957



OUTPERFORM

Bond Summary



$116 13 Sr Sec 15-Oct-14 NR/CCC+ $106.50 15-Oct-12 79.50 23.69% 2262

Financial Profile FY09A FY10A FY11E 4Q10A 4Q11E

Revenue 430.3 468.2 505.8 249.4 262.0

EBITDA 20.8 19.3 23.1 52.2 47.1 Comps Yield Leverage Coverage Ratings

Brookstone 23.69% 4.4x 1.8x NR/CCC+

Interest Expense 24.2 23.8 19.6 5.4 6.2 Rite-Aid 11.00% 6.9x 1.7x Ca/CCC

Cash Taxes (12.4) (8.9) 0.6 0.1 0.1 J. Crew 8.70% 5.4x 3.2x Caa1/CCC+

CapEx 3.5 5.8 7.1 0.9 2.0

Free Cash Flow 5.5 (1.3) (4.2) 45.7 38.8

Total Debt 173.5 152.0 167.5 152.0 167.5

Cash 31.8 32.1 2.3 32.1 2.3


Total Debt/EBITDA 8.3x 7.9x 7.2x

Net Debt/EBITDA 6.8x 6.2x 7.1x

EBITDA/Interest 0.9x 0.8x 1.2x 9.6x 7.6x

EBITDA margin 4.84% 4.13% 4.58% 20.92% 17.98%

Capitalization 3Q11A


Estimated Liquidity 3Q11A

ABL ($125mm, due 4/14) 29.5 Revolver Size 125.0

Mortgage Notes 2.7 Borrowings 29.5

12% Senior Secured Notes due October 2012 9.9

13% Senior Secured Notes due 2014 125.6

Total Secured Debt 167.7 5.9x

A/R facility NA

Concession on 2010 Note Exchange, net 11.2 Borrowings 0

A/R Availability NA

Cash 1.2


Market Cap (Shareholders' Equity) n/a

Enterprise Value (Total Book Cap) n/a

Maturities:

Next Call

Brookstone is a product development and specialty retail company that operates over 300 Brookstone branded stores nationwide and in Puerto Rico. The stores feature unique and innovative consumer products, and are typically located in high-traffic regional malls and airports.

Key Dates/Catalysts: Late March – fourth quarter earnings release.

Investment Strengths:- Strong brand name - At secured level (senior secured notes)- Backed by strategic investor (Brookstone is OSIM's gateway into the US)

Investment Risks:- Highly levered- Significant seasonality (holiday season represents more than 100% of full-year EBITDA)- Minimal free cash flow generation- High exposure to malls, which are seeing weak traffic- Significant non-cancelable operating leases limit flexibility- Over 50% of assets are intangible- May have difficulty replacing skills of prior CEO

Company Description

0

40

80

120

160

2012 2013 2014+



Brunswick Corporation (BC) Kevin Coyne 212-357-9918


NOT COVERED

Bond Summary

Size Coupon Agency Bid YTW STW Z-Spread 5-yr

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp CDS

$350 11.25% Sr Sec 01-Nov-16 Ba2/B+ 105.625 01-Nov-13 116.250 4.594 439 409 285

$200 7.125% Sr Notes 01-Aug-27 B3/B MW T+15 89.000 8.519 645 614 285

Financial Profile 3Q10 4Q10 2010 1Q11 2Q11 3Q11

Revenue 815 729 3,403 986 1,096 877

EBITDA 68 (25) 208 101 133 74

Interest Expense 23 24 94 23 21 19

Cash Taxes 5 5 26 13 18 0

CapEx 12 26 57 13 19 26

Free Cash Flow 28 (80) 31 51 76 29

Total Debt 834 830 830 812 787 703 Agency

Cash 677 636 636 501 606 479 LTM Comps Leverage Coverage Ratings

Net Debt 158 194 194 311 181 225 BC 11.25s 1.3x 4.8x Ba2/B+

Key Credit Statistics BC 7.125s 2.5x 4.8x B3/B

Total Debt/EBITDA 5.5x 4.0x 4.0x 3.2x 2.8x 2.5x ZZ 10.875s 3.9x 1.4x Ba3/BB-

Net Debt/EBITDA 1.0x 0.9x 0.9x 1.2x 0.7x 0.8x ZZ 8.25s 6.3x 1.4x Caa1/CCC+

EBITDA/Interest 3.0x nm 2.2x 4.3x 6.3x 3.8x

EBITDA margin 8% -3% 6% 10% 12% 8%

Capitalization

Description 3Q11

Debt to LTM

EBITDA Liquidity 3Q11 Enterprise value (EV)

ABL facility due March 2016 - ABL Size 267 Shares O/S (mm) 89.1

EDC secured loan due 2021 50 Letters of Credit 24 Stock price 21.61$

11.25% senior secured notes due 2016 (a) 307 Borrowings 0 Market cap 1,924.9

Total senior secured debt 357 1.3x Revolver Availability 243 Net debt 238.9

11.75% senior notes due 2013 74 Enterprise value (EV) 2,163.8

7.375% debentures due 2023 115

7.125% senior notes due 2027 168 EV/ LTM EBITDA 7.7x

Other 4

Total gross debt 718 2.5x

Cash 479

(a) 11.25s are secured by a first priority lien on BC's headquarters Total Liquidity $722

and the domestic retail bowling centers owned by BC and a

second-lien on substantially all of the other assets securing the

credit facility (other than certain subsidiary stock).

Maturities:

Next Call

Updated 01/23/12

$0

$100

$200

$300

$400

$500

$600

$700

2012 2013 2014 2015 2016+

Brunswick Corporation is a leading global manufacturer and marketer of boats, marine engines, fitness equipment, and bowling and billiards equipment, with approximately 45% of sales generated outside the United States. Total revenues reached $3.7 bn in the LTM ending 3Q2011. Boating includes the boat segment (manufactures and markets pleasure and luxury boats) and the marine engine segment (recreational marine engines). Together, the two segments made up more than 75% of Brunswick’s total sales in 2010. Fitness and Bowling & Billiards made up 16% and 9%, respectively, of sales in 2010. Significant equityholders include Wellington (12%), Fidelity (10%), T. Rowe Price (8%), and Vanguard (5%).

Key Dates/Catalysts:- 2011 Guidance: Adjusted EPS of $0.65-$0.75 per share (vs $0.60-$0.75 per share).- August 2011: Announced plans to build a 150,000 sq ft manufacturing facility in Brazil. The facility will have the capacity to build 400 Sea Ray and Bayliner boats annually and is expected to be completed to provide boats in advance of the 2012 summer boating season (3Q12).- October 2011: Year to date, BC has repurchased $44 million of the 11.75% senior notes due 2013, $41 million of the 11.25% senior secured notes of 2016, $10 million of the 7.375% senior notes due 2023, and $32 million of the 7.125% senior notes due 2027 for total debt reduction of $127 million. - February 15, 2012: Brunswick Investor Day.

Company Strengths:- Leading market shares in pleasure boats, marine engines, commercial fitness equipment, bowling products, and billiards tables- Recognized global brand names .- Strong liquidity and no near-term maturities.- Company has been delevering through EBITDA growth and debt repurchases.- Under terms of the EDC loan, up to 43% of the principal is forgiven if BC achieves certain employment target levels.- Management continues to rationalize product lines to reduce expenses.

Company Risks:- Larger categories are seasonal businesses.- Large ticket price on a mostly discretionary purchase.- End consumer subject to changes in gas prices; high gas prices may make leisure boating less appealing.- Subject to rising commodity costs.

Company Description



Burger King (BKC) Updated: 1/26/12 Karen Eltrich 212-902-6957Jordan Hughes 212-357-7875


UNDERPERFOM

Bond Summary



$796 9.875 Sr Nts 10/15/2018 B3/B- 104.94$ 13-Apr-00 109.25 7.51 643

Financial Profile FY09A FY10A FY11E 4Q10A 4Q11E Comps Yield Leverage Coverage Ratings

Revenue 2,512.2 2,403.4 2,338.1 583.5 594.9 DineEquity 8.10% 5.7x 2.3x B3/CCC+

EBITDA 445.0 453.4 557.2 113.6 137.5 Carrols 8.50% 3.3x 4.0x B2/B

Burger King 7.51% 5.0x 2.9x B3/B-

Interest Expense 51.3 100.5 194.2 63.6 46.5

Cash Taxes 81.9 36.7 48.3 (26.2) 18.0

CapEx 184.8 133.1 64.0 32.6 22.0

Free Cash Flow 127.0 183.1 250.7 43.6 51.0

Total Debt 859.0 2,768.7 3,199.7 2,768.7 3,199.7

Cash 207.0 207.0 530.2 207.0 530.2





EBITDA margin 17.72% 18.87% 23.83% 19.47% 23.12%

Capitalization LTM Liquidity 3Q11A

Description SizeDebt to EBITDA Revolver Size $150.0

Revolver ($150mm due 9/7/15) 0.0 Letters of Credit 28.5

Term Loan B (L+300, due 9/7/16) 1588.0 Borrowings 0.0

Term Loan B Euro (L+325, due 9/7/16 265.9 Revolver Availability $121.5


Capital Leases/Other 138.3 A/R facility N/A

9.875% Senior Notes due 10/15/18 800.0 5.1x Borrowings N/A

Holdco Discount Notes due 4/15/19 403.8 A/R Availability N/A

Total Sub debt 1342.1 5.8x


Market Cap N/A Total Liquidity $590.00

Enterprise Value N/A

Maturities and required debt payments

Next Call

Burger King is the fifth largest quick service restaurant (QSR) chain in the US and the No. 2 player in the hamburger sub segment. It operates through a network of over 12,300 restaurants in 76 countries and territories worldwide. Roughly 60% of its restaurants are in the US and Canada. Eighty-nine percent of its locations are franchised and 11% company owned. Its trademark sandwich is the Whopper, and it has historically sought to differentiate itself on the basis of customization ("Have it your way"), its flame-broiled sandwiches, and in recent years, its King mascot.

Key Dates/Catalysts:Late-March, fourth quarter earnings release

Investment Strengths:- Strong No. 2 market position in hamburger QSR- Franchise-heavy model, with plans for more refranchising- Exportable concept with demonstrated international growth

Investment Risks:- US/Canada sales trends have been weak- Restaurant base needs capital investment - Forecasted EBITDA growth heavily dependent on cost cuts- Free cash flow to be strained by interest burden and franchisee incentives

Company Description

0

10

20

30

40

50

60

2012 2013 2014+



Burlington Coat Factory (BCFACT) Updated: 1/26/12 Karen Eltrich 212-902-6957



OUTPERFORM

Bond Summary



$450 10.00% Sr Nts 2/15/2019 Caa1/ CCC $105.00 15-Feb-15 $95.00 11.04% 948


Revenue 3,553.8 3,701.1 3,859.0 1,197.6 1,215.4 Burlington 11.04% 4.3x 2.7x Caa1/ CCC

EBITDA 306.7 338.1 340.7 188.9 178.7 Bon-Ton 43.43% 5.2x 1.9x Caa2/CCC+

J Crew 8.99% 5.4x 3.2x Caa1/CCC+


Cash Taxes (29.8) 22.1 (8.0) 45.7 39.8

CapEx 130.0 132.1 146.2 28.9 30.0

Free Cash Flow 122.1 84.6 74.4 93.4 78.9

Total Debt 1,292.2 1,372.3 1,450.6 1,372.3 1,450.6

Cash 24.8 30.2 40.5 30.2 40.5





EBITDA margin 8.63% 9.14% 8.83% 15.77% 14.70%

Capitalization


ABL Revolver ($600, L+325, due 9/2/16) 158.1 Revolver Size 600.0

Term Loan B (L +475 (150 floor), due 2/23/1 978.7 Letters of Credit 40.5

Total Secured Debt 1136.8 3.2x Borrowings 0.0

Revolver Availability 559.9

10% Senior Notes due 2/15/19 450.0 4.6x

Capital Leases 24.3

Total Sub debt 474.3 4.6x Cash 45.8



Market Cap N/A


Maturities:

Next Call

Burlington Coat Factory is a recognized retailer of high-quality, branded apparel at everyday low prices (EDLP). The company operates more than 460 stores in 44 US states, primarily under the Burlington Coat Factory Warehouse name.

Key Dates/Catalysts:4Q same store sales and late-April fourth quarter earnings release.

Investment Strengths:- Value positioning a positive in a weak economy- Attractive yield for moderate leverage- Improved selection of in-season merchandise- Strong management team

Investment Risks:- Highly competitive marketplace (department stores, Wal-Mart, Target)- Historically underperforming same-store sales - Weather impacting inventory and sales more than expected

Company Description

0

200

400

600

800

1,000

1,200

1,400

1,600

2012 2013 2014+



Cablevision Systems Corporation (CVC) Updated 1/20/12 Jason Kim 212-902-2233

Contact analyst or see latest research for updates to ratings, estimates, and other information. Satya Tagat 212-902-4427

OUTPERFORM / IN-LINEWe rate the CVC Holdco bonds Outperform as we believe that the company's relatively weak performance through 3Q2011 drove bonds to depressed levels that were not consistent

with CVC's strong asset value. We also believe the company is likely to be prudent with respect to its balance sheet relative to its past. We rate the CVC Opco bonds In-Line as we believe

they are fairly valued at current levels.

Bond Summary


(MM) (%) Issuing Entity / Priority Maturity Ratings Price Date Price (%) bp

$526 8.625 CSC Hold Sr Nts* 15-Feb-19 Ba3/BB NC NC 116.25 5.782 421

$500 8.000 CVC Sr Nts* 15-Apr-20 Ba3/BB NC NC 109.00 6.562 475

*CSC Hold = CSC Holdings, Inc. CVC = Cablevision Systems Corporation.

Financial Profile* FY09A FY10A 2Q11A 3Q11A 4Q11E FY11E

Basic Subscribers 3,063,000 3,008,000 2,980,000 2,962,000 2,946,775 2,946,775

Digital Subscribers 2,893,000 2,906,000 2,905,500 2,902,760 2,902,574 2,902,574

Data Subscribers 2,568,000 2,656,000 2,681,000 2,692,000 2,701,211 2,701,211

Phone (VoIP) Subscribers 2,052,000 2,121,000 2,787,000 2,817,000 2,830,869 2,830,869

Revenue $5,432 $5,713 $1,461 $1,445 $1,464 $5,923

EBITDA 2,228 2,365 586 547 579 2,443

Free Cash Flow 753 819 188 205 206 905

Total Debt 10,541 11,170 10,074 9,974 10,534 10,534

Cash 255 315 357 189 764 764

Net Debt 10,286 10,855 9,718 9,786 9,769 9,769



Total Debt/Basic Sub $3,219 $3,463 $3,128 $3,113 $3,319 $3,319

EBITDA Margin 41.0% 41.4% 40.1% 37.9% 39.5% 39.5%

*Financials are for Restricted Group only.

Capitalization*

Description Debt to Agency

(Restricted Group Only) Size EBITDA Restricted Group Liquidity Comps Leverage Coverage Ratings

RC-1 ($180 mn Facility) $0 Revolver Size* $1,412

RC-2 ($1.23 bn Facility) - Letters of Credit (61) Charter - CCOH 4.3x 2.8x B1/BB-

Term Loan A-2 413 Borrowings - DISH DBS Corporation 2.4x 6.9x Ba3/BB-

Term Loan A-4 600 Revolver Availability 1352 Videotron 2.0x 6.7x Ba1/BB

Term Loan B-1 322

Term Loan B-2 1,137 Cash** 669

Term Loan B-3 1,653 Total Liquidity $2,021

Total Sr Sec debt $4,125 1.9x * $180 mn RC-1 due Feb-2012 and extended $1.23 bn RC-2 Mar-2015.

CSC Hold Sr Nts / Sr Debs 3,170 ** Estimate - Restricted Group cash is not separately disclosed.

Guarantee of Newsday Debt 650

Other -

Total CSC Hold Sr debt $7,944 3.6x

CVC Corp Sr Nts 2,177

Total CVC Sr debt $10,121 4.6x

Net Debt $9,451

Market Cap NA

Enterprise Value NA NA

*Capitalization and cash are pro forma for the November 2011 refinancing and tender transactions

Maturities:

Cablevision Systems Corporation (Cablevision) is a publicly traded holding company (Ticker: CVC). Cablevision operates its businesses through its CSC Holdings, Inc. (CSC Holdings) subsidiary. CSC Holdings is the fifth-largest cable operator in the US based on the number of basic video subscribers (3.0 million subs), serving in and around the NYC metropolitan area. In addition, through its wholly owned subsidiary Cablevision Lightpath, Inc., CSC Holdings provides telephone services and high-speed Internet access to the commercial/business market. CVC also owns Bresnan Broadband Holdings, LLC, which owns cable systems in Montana, Wyoming, Colorado, and Utah serving approximately 302k video subscribers. For financing purposes, Cablevision is structured as a Restricted Group (cable operations and Lightpath) and an Unrestricted Group (principally Bresnan).

Key Dates/Catalysts:February 28, 2012: 4Q2011 earnings. We will also look for an update on management's capital deployment plans and progress on filling the management vacancies.

10,121

0

2,000

4,000

6,000

8,000

10,000

12,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Attractive demographics: CVC's cable systems are located in the NY-NJ-CT tri-state area, which has very attractive demographics. This has led to higher ARPU and deeper penetration of advanced services, as evidenced by CVC's industry-leading financial and operational metrics.

(2) Highly clustered systems: CVC's clustered cable systems allow the company to operate its entire footprint with a single master head-end, increasing cost efficiency and speeding up time-to-market for advanced services.

(3) Potential consolidation candidate: (1) and (2) have meant that CVC has long been viewed as a potential consolidation candidate by strategic competitors. The completion of the Rainbow spin-off leaves CVC as a pure-play cable operator and potentially a more attractive acquisition candidate.

Investment Risks:(1) Limited incremental growth in consumer cable business segment relative to peers: Owing to the already-high penetration rates of all of its products, unlike its less-penetrated peers, growth in CVC's consumer cable business segment is likely to be limited going forward.

(2) Competition from Verizon: In light of CVC's attractive demographics, its footprint has been one of the first to be targeted by Verizon as the RBOC rolls out its FiOS product.

(3) Dolan family: The Dolan family controls 70% of the total voting power of CVC stock and has historically not been viewed as creditor-friendly.

(4) Management turnover: Tom Rutledge resigned as COO on December 15 and was subsequently named CEO at Charter Communications. Mr. Rutledge has been regarded as one of the best executives in the sector, guiding CVC to industry-leading performance over his 10-year tenure at the firm.

Company Description



Caesars Ent. Operating Company (HET) Updated 1/23/12 Kevin Coyne 212-357-9918

Contact analyst or see latest research for updates to ratings, estimates, and other information. Celeste Everett 212-902-4751

and Wynn Las Vegas (WYNN, IL). We also recommend the 10.75% notes due to the attractive yield, location in the maturity profile, and operating subsidiary guarantees.

Bond Summary

Size Coupon Agency Bid YTW STW Z-spread 5-year

(MM) (%) Maturity Ratings Price Date Price (%) bp bp CDS

$2,095 11.250 Sr. Sec (1st lien) notes 1-Jun-17 B3/B 105.62 1-Jun-13 108.00 8.44 812 775 42.5 + 500

$4,515 10.000 Sr. Sec (2nd lien) notes 15-Dec-18 - / CCC 105.000 15-Dec-13 76.00 15.85 1,446 1,445 42.5 + 500

$479 10.750 Sr Nts (Guar) 1-Feb-16 Ca/CCC 105.375 1-Feb-12 77.50 19.03 1,848 1,822 42.5 + 500

Caesars Ent. Operating Company (CEOC)

Financial Profile FY10A 1Q11A 2Q11A 3Q11A 4Q11E FY11E

Revenue 6,856 1,708 1,718 1,734 1,665 6,825

EBITDA 1,465 362 398 372 373 1,505

Interest Expense 1,723 184 635 395 398 1,612

Cash Taxes paid (refund) (190) (7) 2 2 0 (2)

CapEx 135 34 45 62 138 279

Free Cash Flow (203) 151 (284) (87) (163) (383)

Total Debt 18,295 18,057 18,939 18,911 18,905 18,905

Cash 619 588 650 778 609 609

Net Debt 17,675 17,470 18,289 18,133 18,296 18,296 Comps Leverage Coverage Ratings

Key Credit Statistics MGM (sr) 9.2x 1.7x B3/B-

Total Debt/EBITDA 12.5x 12.5x 12.6x 12.8x 12.6x 12.6x PNK 5.0x 2.8x Caa1/B

Net Debt/EBITDA 12.1x 12.1x 12.2x 12.2x 12.2x 12.2x BYD 7.4x 2.0x Caa1/CCC+

EBITDA/Interest 0.9x 2.0x 0.6x 0.9x 0.9x 0.9x Liquidity Caesars Ent. Operating Company

EBITDA margin 21.4% 21.2% 23.2% 21.5% 22.4% 22.1% Source Size

Revolver Size 1,207

Capitalization LTM EBITDA 1,482$ LTM EBITDA 1,918$ Letters of Credit & other 127

Caesars Ent. Oper. Co. Caesars Entertainment Borrowings - Description 3Q11A Lvg (a) 3Q11A Lvg (a) Revolver Availability 1,080

Revolver ($1.2 billion) due Jan 2014 0 0

Term loan B & other secured debt 8,410 13,442 (CMBS) Cash 778

11.125% sr secured (1st) due 2017 2,095 2,095 Total Liquidity 1,858

Total senior secured (1st lien) debt 10,505 7.1x 15,537 8.1x Note: Approx. $350 mn of cash must remain in the cage;

10% sr secured (2nd) due 2015 / 2018 4,768 4,768 cash balance excludes $409 mn of restricted cash.

12.75% sr secured (2nd) due 2018 750 10.8x 750 10.6x

10.75% sr nts (guaranteed) due 2016/18 490 11.1x 490 10.8x CEOC maintenance covenant calculation

5.625% senior notes due June 2015 792 792 Bank debt 7,209.1

5.75% senior notes due Oct 2017 539 539 Less cash 778.2

Other senior debt 1,067 (b) 849 Net bank debt 6,430.9

Total debt (gross) 18,911 12.8x 23,724 12.4x Covenant EBITDA 1,654.3

Total debt (including OID) 15,730 20,761 Covenant net leverage 3.89x

(a) excludes yet-to-be-realized cost savings (b) includes $290 mn intercompany note.

Covenant threshold 4.75x

Maturities: CEOC (3Q11)

2012 24 OpCo summary 4Q10A 1Q11A 2Q11A 3Q11A

2013 149 Net Revenue by Region:

2014 24 Las Vegas 387.2 392.2 417.0 378.1

2015 6,286 Atlantic City 312.3 334.9 356.6 368.9

2016 2,128 Louisiana / Mississippi 284.5 286.1 267.7 291.7

2017+ 10,301 Iowa / Missouri 175.1 177.4 185.1 184.2

Illinois / Indiana 278.2 277.1 268.8 260.0

Other Nevada 61.8 69.2 72.3 102.8

Managed / Int'l. 156.1 171.2 150.2 147.6

Total revenue 1,655 1,708 1,718 1,733

Next Call

Priority

OUTPERFORM / IN-LINE: We continue to prefer the first-lien notes due to the attractive yield vs. the secured gaming paper of MGM Mirage (MGM, IL)

Caesars Entertainment (HET)

Caesars Property Company (PropCo)

$5.0B CMBS

Harrah's LVRio (Las Vegas)

Flamingo LVParis LV

Harrah's AC, Harrah's Laughlin

All material operating subs (excluding

Harrah's Chester, Planet Hollywood,

Octavius)

Caesars Ent. Operating Company

(CEOC or OpCo)(includes customer

Caesars Entertainment (formerly known as Harrah's Entertainment ) operates 52 casinos primarily in the US and UK, most of which are under the Harrah's, Caesars, and Horseshoe brand names. The company operates land-based casinos, riverboat and dockside casinos, casinos on Indian reservations, and racinos. HET properties have over 40,000 hotel rooms and 3 million square feet of casino floor space. HET also operates the World Series of Poker tournament circuit. In January 2008, HET was acquired by TPG Capital and Apollo Management. The LBO was financed using $14 billion of new bank and bond debt, $6.5 billion of CMBS financing, and $6 billon of new equity. HOC will own and/or operate 44 of the properties, while $5.4 billion of CMBS financing will be supported by six other properties in Las Vegas, NV, Laughlin, NV, and Atlantic City, NJ.

Key Dates/Catalysts:- March 2011: Announced new $450 mn term loan to partially fund the completion of the Octavius Tower at Caesars Las Vegas and to build a new retail and entertainment corridor between Flamingo and Imperial Palace on the Strip. Termed "the Linq," it will include over 20 bars and restaurants and a 550 seat observation wheel. Linq is expected to open in late 2013.- May 2011: Completed amendment of its credit facility, which included extending $1.2 bn of maturities to 2018. Among other things, HET received permission to repurchase bank debt below par.- November 2011: Filed Form S-1 IPO registration statement with SEC.- January 2012: 668-room Octavius Tower opens at Caesars Palace in Las Vegas.

Investment Strengths:- Largest gaming operator, with geographic and end market diversification (from wealthy clients to less affluent ones).- Large inventory of undeveloped land on Las Vegas Strip (125 acres @ $3 mn / acre = $375 mn) and Macau (175 acres).- Large customer rewards program - 43 million; rewards cards member can be cross-marketed to play within the HET system of casinos; makes HET less reliant on group / convention travel.- Management believes that an increase in $5 in Las Vegas ADR would increase EBITDA by $33 mn, and an increase in $5 of gaming revenue per person would increase EBITDA by $36 mn. In the regional markets, it believes a $5 increase in ADR would result in $27 mn of incremental EBITDA and an increase of $5 gaming revenue per trip could result in an additional $137 mn of EBITDA.- Optionality in online gaming market with WSOP.- Approximately $350 mn of cash at other HET subsidiaries due to investments by Paulson & Co. and sponsors.- Pursuing low capital expansion opportunities in Ohio (Cleveland and Cincinnati).

Investment Risks:- High leverage: 12.6x leverage provides low interest coverage and low FCF. - Credit agreement covenants allow for increases in senior secured debt ahead of the unsecured notes. ($750 mn of lien capacity, of which $500 mn can be first lien).- OpCo / PropCo structure with CMBS financing limits FCF benefit to OpCo from PropCo properties.- Weak economy slowing discretionary spending.

Company Description



Calpine Corp Updated 1/25/2012 Raymond M. Leung 212-357-5764


OUTPERFORM/IN-LINEWe rate the 2017 notes Outperform due to the company's well-positioned and diverse portfolio, with expectations of gradual financial improvement.



$1,200 7.875 Sec'd 15-Jan-23 B1/BB- 103.94 15-Jan-17 103.01 7.367 537

$1,000 8.000 Sec'd 1-Jun-16 Ba3/BB 104.00 1-Jun-16 107.25 5.232 501

Financial Profile Calpine Calpine Calpine Calpine Calpine

2009 2010 2011E 2012E LTM3Q11

Gross Margin 2,667 2,571 2,686 2,633 2,384

EBITDA 1,542 1,508 1,542 1,464 1,564

EBITDAR 1,542 1,633 1,667 1,589 1,564

Interest Expense (829) (789) (749) (748) (791)

Income Taxes (15) 68 2 (13) 151

CapEx (179) (369) (600) (470) 151

Free Cash Flow 526 220 (55) 133 27

Adjusted GAAP Debt 9,459 10,256 10,464 10,384 10,404

Cash 989 1,327 1,410 1,281 1,285

Net Adjusted GAAP Debt 8,470 8,929 9,054 9,103 9,119


Total Debt/EBITDAR 6.1 6.3 6.3 6.5 6.7 AES Corp* 4.1x 3.6x Ba3/BB-

Net Debt/EBITDAR 5.5 5.5 5.4 5.7 5.8 Calpine Corp 6.7x 2.0x B1/BB-

EBITDA/Interest 1.9 1.9 2.1 2.0 2.0 Dynegy 10.2x 1.1x –/D

Edison Mission 8.5x 1.4x Caa1/B-

* Note our EBITDA does not adjust for maintenance expense that is budgeted at $235 million for 2011. GenOn 7.8x 1.1x B3/B

CMS 4.7x 3.7x Ba1/BB+

Capitalization* NRG 4.7x 2.4x B1/BB-


EBITDAR *AES reflects sub distributions to parent obligations; LTM4Q2011

Project subsidiary debt

Project finance debt 1,658 As of September 30, 2011

CCFC 8% due 2016 970 Liquidity

Notes payable and other borrowings/lease adj. - Revolver 1,000

Total CCFC debt and project debt 2,628 1.7x CDHI LOC Facility 200

Revolver - Total Capacity 1,200

First Lien Term Loan 1,650 Borrowings (revolver) -

Senior secured 7.25% of 2017 1,200 LOC under (revolver) 369

Senior secured 8% of 2019 400 LOC under CDHI Facility 193

Senior secured 7.875% of 2020 1,092 Bank line Availability 638

Senior secured 7.5% of 2021 2,000 Cash 1,285

Senior secured 7.875% of 2023 1,200 Total Liquidity 1,923

Capital lease 234

Operating leases and other adjustments -

Total debt and preferred 10,404 6.7x

Net Total Debt 9,119 5.8x

Minority Interest -

Market Cap 7,220

Enterprise Value (using net total debt) 16,339 10.4x

Enterprise Value (using total debt) 17,624 11.3x

* Proforma for the $2 billion debt issuance.

Maturities

Next Call


Calpine is a wholesale power generator that owns and operates natural-gas-fired and geothermal plants in the West, Texas, Southeast, North, and parts of Canada. The company owns nearly 28GW of generating capacity. Although the portfolio is predominately gas-fired, the generation portfolio is geographically diverse: North (28%), Southeast (22%), West (24%), and Texas (26%). Calpine sells wholesale power, steam, capacity, renewable credits, and ancillary services. Calpine Construction Finance Co (CCFC) owns six gas-fired plants with 3.6GW of capacity in Texas, Florida, Maine, Oregon, and California. CCFC is 100% owned by Calpine and sells its output under a tolling arrangement to Calpine Energy Services, LP. Key Dates/Catalysts:- On Feb. 10, CPN is expected to report 4Q2011 earnings . Key areas of investors focus will center around an update on the overall business, the company's hedging profile, and outlook for power markets. - In terms of guidance, the company expects adjusted EBITDA of $1.7-1.75 bn and free cash flow guidance of $475-$525 million for 2011. For 2012, CPN expects $1.55 to $1.75 billion in EBITDA and free cash flow of $375 to $575 million. Major maintenance is included in adjusted EBITDA which is budgeted at $235 million for 2011 and $185 million for 2012. - Status of the company's $300 million share buyback program. - The company remains proactive in the rationalization of the generation portfolio, which includes divestitures and purchases. - Update on new construction projects - Russell City and Los Esteros. Both projects are targeted for commercial operation in 2013. - May 2012, results of the 2015/2016 PJM capacity auction are expected.

-

50

100

150

200

250

2012 2013 2014 2015

Investment Strengths:- CPN's generation assets are well-positioned given its modern fleet with an average age of 11 years and favorable heat rate position (approximately 7,400 Btu/kWh). - The company's generation portfolio should benefit from its geographical diversity and is well-positioned given the increasing environmental regulations faced by coal-fired generation. - Stability in near-term cash flow, as the company's energy position in 2012 and 2013 is hedged at 63% and 39%, respectively. Also, capacity revenues should contribute to near-term cash flow certainty. - Liquidity remains strong with $1.9 bn of availability that includes about $1.3 billion of cash. The company has no major debt maturities through 2015 and expects FCF of $475-$525 mn for 2011 and $375-$575 mn for 2012. - Given the low heat rate of its fleet, the company should benefit from economic recovery that would expand heat rates. Investment Risks:- Declining commodity prices and a challenging economy may pressure future margins given CPN's reliance on intermediate capacity. - Leverage remains high, but is expected to improve due to a simplified capital structure. - Inability to execute plan of strong plant performance and implemented hedging strategy would lead to FCF generation shortcomings. - Parent level bonds remain structurally subordinated to subsidiary level debt and have an investment-grade-like covenant package. - CCFC is exposed to Calpine counterparty risk. The majority of capacity is in a tolling agreement with Calpine Energy Services.

Company Description



Cascades Inc. Updated 1/23/2012 Joe Stivaletti 212-902-3299

Contact analyst or see latest research for updates to ratings, estimates, and other information. James Kitchell 212-902-9813

IN-LINE

Bond Summary



$500 7.750 Sr Nts 15-Dec-17 Ba3/B+ 103.875 15-Dec-13 100.500 7.595 697

more than 100 production units located in North America and Europe.


FY:10 FY:11E 3Q:10 2Q:11 3Q:11

Revenue 3,182 3,655 832 991 947

EBITDA 310 256 94 62 79


Capital expenditures NA 125 19 22 23

Total debt 1,403 1,476 1,477 1,306 1,371

Cash 6 11 15 18 11

Net debt 1,397 1,465 1,462 1,288 1,360


Total debt/EBITDA 3.8x 5.1x 3.6x 4.2x 4.9x Agency

Net debt/EBITDA 3.8x 5.0x 3.6x 4.2x 4.8x Comps Leverage Coverage Ratings

EBITDA/interest 2.9x 2.5x 3.5x 2.3x 3.2x GP 2.1x 4.8x Baa3/A-

EBITDA margin 9.7% 7.0% 11.3% 6.3% 8.3% GPK 3.8x 3.8x B2/BB-

PKDY 4.5x 2.3x B3/B

ABH 0.9x 8.0x B1/BB-


Description SizeDebt to EBITDA Liquidity 9/30/2011

Bank loans and advances 111 Revolver size 750

Revolving credit facility 140 Letters of credit 10

7.75% sr nts due 2016 198 Borrowings 140

7.75% sr nts due 2017 513 Revolver availability 600

7.875% sr nts due 2020 256

Other recourse debt 56 Cash 11

Total recourse debt 1,274 4.5x Total liquidity 611

Non-recourse debt 115

Unamortized costs (18)

Total debt 1,371 4.9x

Total debt 1,371

Market cap 437

Enterprise value 1,797

Maturities:

Next Call

Cascades produces, converts and markets packaging and tissue products composed mainly of recycled fibers. Cascades employs close to 11,000 people who work in more than 100 production units located in North America and Europe.

Investment Strengths:- Leading market positions in stable, consumer-oriented end markets: A significant portion of Cascades' packaging and tissue products is sold to consumer-oriented end-markets that tend to be relatively insensitive to economic cycles.- Strong focus on improving financial performance and reducing leverage: Cascades has a dedicated and experienced management team focused on improving/divesting underperforming assets and cutting costs.

Investment Risks:- Higher-than-expected input costs: Higher prices than we are expecting for key inputs such as recycled fiber and energy would have a negative impact on the company's performance.- Stronger-than-expected Canadian dollar: Cascades' profitability is highly sensitive to changes in the value of the C$, and exchange rate trends that are less favorable than our expectations would negatively affect the company's results.

Company Description

0

200

400

600

800

1000

1200

2012 2013 2014 2015 2016+



Catalent Pharma Solutions (PTSAC) Erin Blum 212-855-7718

Contact analyst for updates and other information. Cindy Guan 212-902-9758

NOT COVERED

Bond Summary



$565 9.5 Sr. Uns. 15-Apr-15 Caa1/B $104.750 2/27/2012 $103.500 3.858% 382

Financial Profile 2009 2010A Dec 2Q10 Mar 3Q11 Jun 4Q11 Sep 1Q11

Revenue $1,640 $1,703 $413 $418 $449 $411

EBITDA 267 310 81 93 103 75


Cash Taxes 17 22 9 8 6 4

CapEx 84 79 16 21 38 25

Free Cash Flow (10) 155 0 54 15 (3)

Total Debt 2347 2270 2294 2335 2347 2344

Cash 64 164 141 201 205 187

Net Debt 2283 2106 2153 2134 2142 2156

Agency


Total Debt/EBITDA NA 7.3x LTM: 6.7x Catalent (PTSAC) snr 5.6x NA Caa1/B

Net Debt/EBITDA NA 6.8x VWR Int'l (VWRINT) snr 5.6x 2.0x Caa1/B-

IMS Health (RX) 4.2x 2.5x B3/B

EBITDA/Interest 1.5x 1.9x 2.0x 2.3x 2.3x 1.8x Bausch & Lomb (BOL) 5.0x 3.4x Caa1/B

EBITDA margin 16.3% 18.2% 19.6% 22.2% 22.9% 18.3% Biomet (BMET) sub 6.0x 2.0x Caa1/B-

Capitalization

Description SizeDebt to LTM

EBITDA Liquidity

Revolving Credit Facility due April 2013 0 Revolver Size* $350

Extended Revolving Credit Facility* 0 Letters of Credit 15

Term Loan--Dollar 4/10/2014 1,015 Borrowings 0

Term Loan--Euro 4/10/2014 363 Revolver Availability 335

New Term Loan** 300

Total Sr Sec debt $1,678 4.1x A/R facility $0

Borrowings 0

9.5%/10.25 Sr Notes (PIK Toggle) due 2015 624 A/R Availability 0

Total Sr debt $624 5.6x

Cash** $77

9.75% Sub Notes (Euro) due 2017 308 Total Liquidity $412

Total Sub debt $308 6.3x *$150mn due 2013 and $200mn extended to 2016.

**Cash is PF for an assumed $110mn used to fund Aptuit in

Other $33 addition to an assumed $300mn incremental term loan.


Market Cap NA

Enterprise Value NA* Ext revolver matures April 2016 with springing maturity 91 days before TL, senior notes and sub notes

** Assumed incremental term loan to fund Aptuit acquisition, subject to a 4x incurrence limit.

Maturities (Includes the assumed incremental TL in 2014):

Next Call

Updated 01/25/12

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2012 2013 2014 2015+

Catalent is a pharma outsource manufacturing and packaging company. Its business is primarily focused on Oral Technologies, Sterile Technologies, and Packaging services. Oral Technology is the company's core business, and includes Softgels (e.g., Advil Liqui-Gels) and fast-dissolve tablets. Catalent owns the softgel/fast-dissolve technology and collects a royalty on sales of products using it. Sterile Technologies includes blow-fill-seal plastic containers, which hold respiratory drugs and eye drops, and pre-filled syringes. Packaging is a commoditized/low-growth business and includes printing drug inserts and packaging pills.

Catalent was formed from the sale of Cardinal Health's Pharmaceutical, Technical and Services (PTS) unit to Blackstone, which was completed in April 2007. Since then, the company has hired a new CEO and CFO.

In August 2011, the company announced that it has entered into an agreement to purchase Aptuit for $410mn. Aptuit will double PTSAC's clinical services business. PTS's credit agreement allows for a $300 mn incremental term loan though the company is subject to a 4x secured incurrence limit. PTSAC has stated that it is looking to amend and extend the credit facility subject to market conditions.

Key Dates/Catalysts: - Quarterly earnings (strength in the core oral technologies business has been offset by weakness in packaging and sterile technologies) - Progress on plans to wind down UK softgel operations and plans to transfer production to other softgel facilities- Financing and closing of the Aptuit acquisition.- Potential amend and extend of the credit facility.- Recovery of insurance revenue due to the March fire in England.

Company Strengths:- Long-standing customer relationships with well-established pharmaceutical and biotechnology companies, none of which account for more than 7% of revenues.

- Strong value proposition to customers because of technical expertise, breadth of services provided, and geographic reach.

- Highly diversified business based on customers, geography, and end-user markets.

- No maintenance covenants and large $350 mn revolver.

Company Risks:- Highly levered.

- Growth in sterile manufacturing business has been below the company's expectations.

- History of volatile margins industry-wide.

Company Description



Catalyst Paper Corporation (CTLCN) Updated 1/23/12 Joe Stivaletti (212) 902-3299


IN-LINE

Bond Summary



US$390 11.000 Sr Sec Nts 15-Dec-16 Caa3/D 103.000 15-Dec-12 63.500 22.298 2,140

US$250 7.375 Sr Nts 01-Mar-14 C/C 101.229 Current 5.000 274.939 27,468


FY:09 FY:10 3Q:10 2Q:11 3Q:11

Revenue 1,201.7 1,228.6 322.3 297.8 340.3

EBITDA 141.1 71.6 34.5 (3.9) 26.8



Total debt 775.6 774.7 798.3 729.3 808.6

Cash 83.1 95.4 82.3 30.2 17.8

Net debt 692.5 679.3 716.0 699.1 790.8


Total debt/EBITDA 5.5x 10.8x 13.7x 9.7x 12.0x

Net debt/EBITDA 4.9x 9.5x 12.3x 9.3x 11.7x

EBITDA/interest 2.0x 1.0x 1.8x -0.2x 1.4x

EBITDA margin 11.7% 5.8% 10.7% -1.3% 7.9%



Credit facilities 31.5 6.3x Revolver size 330.0

11.000% sr sec nts 391.8 6.3x Borrowing base 167.3

7.375% sr nts 262.0 10.2x Letters of credit 27.7

Non-recourse JV debt 123.3 12.0x Borrowings 31.5

Total debt 808.6 Minimum availability -

Market capitalization 5.7 Revolver availability 108.1

Enterprise value 796.5

Cash 17.8

Total liquidity 125.9

Maturities:

** Unless otherwise noted, all references to dollars are in Canadian dollars.

Next Call

0

100

200

300

400

500

600

2012 2013 2014 2015+

Catalyst Paper Corporation is a North American producer of newsprint and other mechanical printing papers. Altogether, Catalyst operates four paper and pulp mills with a combined annual capacity of 1.9 million tonnes.

Investment Strengths:- Strong focus on efficiency and cost-saving: Catalyst management has maintained a strong focus on increasing efficiency and cutting costs.- Geographically diverse customer base: In 2010, 56% of revenue came from the US, 22% from Asia and Australasia, 9% from Latin America, 12% from Canada, and 1% from Europe and other areas.

Investment Risks:- Changes in the value of the C$: All but one of Catalyst's mills are in British Columbia, which gives the company significant exposure to changes in the value of the C$. - Declining demand: Catalyst has experienced declines in demand for many of its products in recent years.

Company Description



CF Industries Inc. (CF) Updated 1/26/2012 Kristen McDuffy 212-357-6157


OUTPERFORMWe are Outperform rated on CF's 6.875% senior unsecured notes and its 7.125% senior unsecured notes, as we believe the bonds present a potential crossover opportunity.

In our view, CF is likely to be upgraded to investment grade over the near term (Fitch already rates bonds BBB-) owing to its favorable performance outlook and accelerated debt

reduction. We believe CF's bonds offer incremental upside from current levels, as they still trade well wide of comparable investment grade companies.

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpOP 800 6.875 Sr. Nts 1-May-18 Ba1/BB+ 115.25 4.09% 316OP 800 7.125 Sr. Nts 1-May-20 Ba1/BB+ 118.75 4.39% 294

Financial Profile ($, mn)* FY:09 FY:10 FY:11E Q4:10 Q3:11 Q4:11E

Net Sales 4,190 4,374 6,075 1,238 1,404 1,696

Adjusted EBITDA 1,209 1,463 3,001 494 682 797

Cash Interest (25) (224) (116) (50) (30) (32) Comps Leverage Coverage Ratings

Cash Taxes (291) (228) (841) (122) (194) (233) CF 0.6x 20.1x Ba1/BB+

Capital Expenditures (370) (293) (259) (70) (64) (90) Agrium 1.0x 16.8x Baa2/BBB

Free Cash Flow (198) 1,016 1,864 470 783 254

Total Debt 607 1,959 1,613 1,959 1,618 1,613

Cash 1,198 798 977 798 1,426 977


PF LTM Debt/EBITDA (3) 2.2x 1.3x 0.5x 1.3x 0.6x 0.5x

PF LTM Net Debt/EBITDA 1.9x 1.1x 0.5x 1.1x 0.4x 0.5x

LTM EBITDA/Interest NA 6.5x 25.8x 6.5x 20.1x 25.8x

LTM EBITDA margin 29% 33% 49% 33% 48% 49%



Revolver - Revolver Size 500

Term Loan B-1 - Borrowings -

Total Senior Secured Debt - 0.0x Letters of Credit 9

6.875% Senior Notes 800 Revolver Availability 491

7.125% Senior Notes 800

Legacy Terra Notes 13 Cash 1,426

Other Notes Payable 5 Total Liquidity 1,917


Minority Interest 487

Share Price 172.9



Maturities:

Next Call

MWMW

0

200400

600

800

10001200

1400

1600

1800

2011 2012 2013 2014 2015+

CF Industries is the second-largest producer of nitrogen fertilizers globally (first in North America) and the world's third-largest public phosphate producer. On April 15, 2010, the company acquired Terra Industries through the short form merger procedure under Maryland law. CF's acquisition of Terra valued the company at approximately 7.3x 2010E EBITDA (excluding $135 million of synergies expected by the company, the $123 million Yara termination fee, debt redemption premiums, and other items).

Key Dates/Catalysts:4QFY11 earning releasePotential ratings upgrade by credit agencies

Investment Strengths:- Leading market positions.- Cost-advantaged natural gas feedstocks (based on location in North America).- Extensive storage and distribution system.- Strong management team.

Investment Risks:- Fertilizer industry is cyclical.- Margins are vulnerable to fluctuations in natural gas prices.- Minimal product differentiation.- Significant customer concentration.

Company Description



Charter Communications, Inc. Updated 1/20/12 Jason Kim 212-902-2233


IN-LINEWe believe that the Charter bonds are one of the higher-quality names in the HY cable sector and current relative value appears fair compared to the likes of CVC Opco and DISH.

Bond Summary



$700 8.125 CCOH Sr Nts 30-Apr-20 B1/BB- 104.063 30-Apr-15 110.13 5.81 526

Financial Profile FY09A FY10A 2Q11A 3Q11A 4Q11E FY11E





Revenue $6,755 $7,059 $1,791 $1,809 $1,834 $7,204

EBITDA 2,493 2,599 673 653 690 2,679

Free Cash Flow (550) 710 155 90 63 380

Agency

Total Debt excl. Prefs $12,755 $11,549 $11,748 $11,710 $12,111 $12,111 Comps Leverage Coverage Ratings

Cash 754 32 194 32 20 20

Net Debt 12,001 11,517 11,554 11,678 12,091 12,091 CSC Holdings 3.1x 3.2x Ba3/BB

Key Credit Statistics CVC Corp. 4.0x 3.2x B1/B+

Total Debt/EBITDA 5.4x 4.7x 4.7x 4.8x 4.7x 4.8x VMED Finance PLC 3.5x 3.4x Ba2/BB-

Total Debt/Basic Sub $2,800 $2,725 $2,837 $2,857 $2,982 $2,982 DISH DBS Corporation 2.4x 6.9x Ba3/BB-

EBITDA Margin 36.9% 36.8% 37.6% 36.1% 37.6% 37.2%

Capitalization *

Debt /

Description Size EBITDA Liquidity

Bank Debt $3,667 1.4x Revolver Size $1,300

2nd Lien Debt 812 1.7x Letters of Credit (66)

CCVIII Preferred * 776 Borrowings (165)

CCOH 3rd Lien Debt 350 Revolver Availability $1,069

CCOH Unsecured Debt 6,250 4.5x

CCH II Debt 1,480 5.1x Cash $32

Total Liquidity $1,101


Net Debt 12,760 4.9x

Market Cap 5,791


* 70% owned by CCH I, a subsidiary of Charter, and 30% owned by CCI, the issuer of the common stock – it is eliminated in consolidation for total debt.

** Capitalization is pro forma for refinancing and tender transactions subsquent to 3Q2011A

Maturities:

Charter Communications, Inc., is the fourth-largest cable operator in the United States with approximately 12 million homes passed. Through its hybrid fiber and coaxial cable network, Charter offers its customers analog and digital cable video programming, high-speed Internet access, advanced broadband cable services, and, in many of its markets, telephone service. As of September 30, 2011, Charter served approximately 4.4 million analog video customers, of which approximately 3.4 million were also digital video customers. Charter also served approximately 3.4 million high-speed Internet customers and provided telephone service to approximately 1.8 million customers.

On December 19, 2011, Charter announced that Cablevision's former Chief Operating Officer, Tom Rutledge, would be named President and Chief Executive Officer. Mr. Rutledge, who is highly respected within the cable industry and has long been viewed as a top operator, will assume his new positions on February 3, 2012.

Key Dates/Catalysts:February 2012: Results of the most recent bond tender offers.

February/March 2012: 4Q2011 earnings and 2012 guidance (the company typically only gives capex guidance).

937267

1,053105

10,431

0

2,000

4,000

6,000

8,000

10,000

12,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Positioned to generate above-peer revenue and EBITDA growth over the intermediate term given CHTR's relatively low product penetration rates, particularly in data.

(2) Potential M&A candidate for higher quality strategic players.

(3) Relatively tight bond covenants: In terms of debt incurrence tests, Charter's bonds have tighter covenants than most other US cable bonds.

Investment Risks:(1) Competition from DBS/telcos.

(2) Continued video margin pressure: Due to programming cost increases – including retransmission fees – cable's video margins are expected to decline for the foreseeable future.

Company Description



Chesapeake Energy (CHK) Updated: 1/26/12 Jason Gilbert (212) 902-3585


IN-LINE

Bond Summary



$669 7.250% Sr. 12/15/2018 Ba3/BB+ $106.70 6.04% 527


Revenue $10,831 $8,373 $10,024 $12,443 $10,235

EBITDA (Adj for non-cash items) $5,633 $4,420 $4,959 $5,242 $5,063

Free Operating Cash Flow ($3,941) ($870) ($1,451) ($2,794) ($2,605)

Capital Expenditures $9,177 $5,226 $6,568 $7,757 $7,300

CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E CHK 2.0x 33.6x Ba3/BB+

Total Debt/EBITDA (LTM) 2.5x 2.8x 2.5x 2.0x 2.2x PXD 1.9x 8.6x Ba1/BBB-

EBITDA/Interest Expense (LTM) 17.9x 39.1x 141.7x 33.6x 11.4x NFX 1.8x 10.3x Ba2/BB+

Debt to Capitalization % 47% 50% 45% 37% 36% FST 2.8x 4.0x B1/B



Capitalization


Cash and equivalents $111 Revolver Size $4,400

Revolving Credit Facility $3,563 Letters of Credit $60

Long Term Debt Borrowings $3,563

Senior notes 2013-35 $8,226 Revolver Availability $777

Other $0 Cash $111

Total Long Term Debt $8,226 Total Liquidity $888


Preferred Equity $3,062



Maturities:

Next Call

NC

CHK is the largest independent producer of natural gas in the US. The company has been a leader in the shale play "land grab" over the last few years and has emerged with arguably the industry's strongest inventory of drilling locations. We believe that after years of aggressive growth, CHK has moved into asset conversion mode, and should grow more organically and at a more measured pace.

Chesapeake is a "boom, bust and boom again” story, founded in 1989 and taken public in 1993. Initially, CHK achieved drilling success in the Austin Chalk of Texas. The company sought to extend its success into the Louisiana Chalk in the late 1990s. However, drilling results and capital costs proved challenging and a concurrent collapse in natural gas prices left the company distressed. Needing a plan for survival, CHK redefined its strategy to allow for a more diversified asset base and focus on unconventional gas. Since then, the company has built a strong presence throughout the Mid-Continent via more than $20 billion of acquisitions and is a player in every natural gas shale play east of the Rockies. In 2005, CHK acquired Columbia Natural Resources, an Appalachian Basin natural gas producer, for $2.2 billion. Chesapeake recently announced a shift in strategy: It has raised over $5 billion in preferred equity, and has reduced debt by $3.5 billion. The company plans to invest $1.5 billion in liquids-rich plays. CHK indicated a goal of achieving investment grade status and also announced its intention to sell a portion of its Marcellus shale asset. In addition, the company plans to shift its focus toward oil, and expects oil to be 20-25% of its production by 2012. In January 2011, Chesapeake announced its 25/25 plan, which includes a 25% reduction in long-term debt and a 25% production growth rate. Since the announcement, the company has announced a JV in the Niobrara for $570 million and the sale of its Fayetteville assets for $4.75 billion. On April 4, CHK announced a tender offer for $1 billion in senior notes and $1 billion in convertible notes. CHK recently announced a plan to devote $1 billion over the next 10 years to ventures that enhance natural gas demand. In November 2011, CHK announced a JV on its Utica properties with Total for $2.3 bn. In January 2012, Chesapeake announced plans to curtail up to 1 bcf/d of gas production due to weak natural gas prices.

Investment Strengths:• Size and diversity are above average for the rating category• Leader in the Barnett, Haynesville, and Marcellus shales• JVs substantially reduce expected future development costs• Strong liquidity• Aggressive debt reduction plan

Investment Risks:• High natural gas exposure • High absolute leverage and free spending history; we believe rating agencies may be hesitant to upgrade• Historically aggressive financial management• Relatively unhedged in 2012

Key Dates/Catalysts:• Announcements with respect to future VPP transactions and midstream financings• Potential for additional shale play JVs• Results from the Utica• Management is targeting debt redution to $9.5 bn by year-end 2012

Company Description

0200400600800

100012001400160018002000

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Chiquita Brands (CQB) Updated: 1/26/12 Karen Eltrich 212-902-6957



IN-LINE

Bond Summary



$106 7.5 Sr Nts 1-Nov-14 Caa1/B- $101.25 Current 100.00 7.48% 698

Financial Profile FY09 FY10 FY11E 4Q10A 4Q11E Comps Yield Leverage Coverage Ratings

Revenue 3,477.0 3,226.7 3,190.0 773.0 773.0 Chiquita 7.48% 4.1x 2.8x Caa1/B-

EBITDA 208.0 136.1 141.6 5.0 11.6 Dole Foods 4.95% 4.2x 2.7x B2/B+

Dean Foods 6.96% 5.2x 2.9x B2/B-


Cash Taxes 0.6 (2.0) (77.5) (4.0) (1.5)

CapEx 68.3 70.1 75.2 37.0 25.0

Free Cash Flow 77.1 11.8 92.9 (42.0) (22.9)

Total Debt 656.0 634.0 574.4 634.0 574.4

Cash 121.4 156.0 184.9 156.0 184.9


Total Debt/EBITDA 3.15 4.66 4.06

Net Debt/EBITDA 2.57 3.51 2.75


EBITDA margin 5.98% 4.22% 4.44% 0.65% 1.51%

Capitalization 3Q11A


Revolver ($150) L+250, due 2016 0.0 Revolver Size 150.0

Term Loan ($330mm, 2014) L+300 325.9 Letters of Credit 23.0



7.50% Senior Notes Due 2014 156.4

4.25% Convertible Senior Notes Due 20 141.1 A/R facility NA

Other loans and notes payable 1.0 Borrowings 0

Total Sub debt 298.5 A/R Availability NA

Cash 132.8

Total Debt 624.4 4.6x Total Liquidity 259.8

Market Cap 402.4


Maturities:

Next Call

Chiquita is a leading international marketer and distributor of high-quality fresh and value-added food products under the brands Chiquita and Fresh Express and other related trademarks. The company is one of the largest banana producers in the world, and a major supplier of bananas in Europe and North America. Chiquita is the US market leader in value-added salads, with a retail market share of nearly 50%.

Key Dates/Catalysts:Early March, quarterly earnings release

Investment Strengths:- Strong global brand- Holds No. 1 or No. 2 position in the major markets in which it competes (bananas, packaged salads)- Ample liquidity with no near-term maturities

Investment Risks:- High volatility in banana pricing- Significant exposure to fuel costs and currency- Potential for another health-related product recall- Continued weakness in salad segment

Company Description

0

100

200

300

400

500

600

700

2012 2013 2014+



Chrysler Group LLC (CHRYGR) Updated 1/26/12 Brian Jacoby, CFA 212-902-3258

Contact analyst for updates and other information. Cody Sauer, CFA 212-855-8553

NOT COVERED

Bond Summary

Size Coupon Agency Next Call Bid YTW T-sprd 5-year

Company (MM) (%) Priority Maturity Ratings Next Call Date Price (%) bp CDS

Chrysler Group $1,500 8.00 2nd lien 15-Jun-19 B2/B 104.000 15-Jun-15 $97.75 8.4 646 NA

Chrysler Group $1,700 8.25 2nd lien 15-Jun-21 B2/B 104.125 15-Jun-16 $97.00 8.7 677 NA

Financial Profile* ($MN) FY08 FY09 3Q10 FY10 3Q11 LTM 3Q11

Revenue 48,477 28,792 11,018 41,946 13,067 50,615

Modified EBITDA 250 (1,631) 937 3,455 1,119 4,459

Interest Expense 1,080 1,085 308 1,276 301 1,346

Consolidated Net Income (16,844) (8,210) (84) (652) 212 (241)

Depreciation & Amortization 4,808 3,124 698 3,051 660 3,010

Other operating cash flow 10,130 (749) (2,570) 256 (443) 96

Change in Working Capital (3,397) 1,040 300 1,540 (600) 640

Net Operating Cash Flow (5,303) (4,795) (1,656) 4,195 (171) 3,505

CapEx (2,765) (1,327) (500) (2,385) (723) (2,613)

Dividends 0 0 0 0 0 0

Free Cash Flow (FCF) (8,068) (6,122) (2,156) 1,810 (894) 892

Assets Sold (Acquired) 0 0 0 0 0 0

Debt Increase (Decrease) 1,058 6,663 682 (1,417) (30) (1,993)

Stock Increase (Decrease) 0 4,122 0 (109) 0 (109)

Other Cash Flows (623) 1,130 212 1,201 203 2,404

Total Chg in Cash (7,633) 5,793 (1,262) 1,485 (721) 1,194

Cash 1,898 5,862 8,260 7,347 9,454 9,454

Total Debt 13,907 9,551 12,883 13,731 12,384 12,384

Net Debt (Net Cash) 12,009 3,689 4,623 6,384 2,930 2,930

Debt-to- EBITDA

Key Credit Statistics Comps EBITDA Interest cov Agency Ratings

LTM 1st Lien Secured Debt/EBITDA NA NA NA 2.4x 0.8x 0.8x Ford Motor Co. 1.3x 10.5x Ba2/BB+

LTM Total Debt/EBITDA 55.6x -5.9x NA 4.0x 2.8x 2.8x General Motors Co.† 0.6x 13.0x Ba1/BB+

LTM FCF/Total Debt -58.0% -64.1% NA 13.2% NA 7.2% Note: Ford and GM debt metrics exclude pension deficits

EBITDA/Interest Expense 0.2x -1.5x 3.0x 2.7x 3.7x 3.3x †General Motors debt includes Series A preferred stock.

EBITDA margin 0.5% -5.7% 8.5% 8.2% 8.6% 8.8%

Capitalization 9/30/2011 9/30/2011

Description Size EBITDA (x) Liquidity

1st Lien Term Loan L+475 due 2017 2,993 Revolvers 1,300

Mexican Development bank facility 375 Letters of Credit/Other 0

Other 1st lien sec debt 333 Borrowings 0

Total 1st lien sec debt 3,701 0.8x Revolver Availability 1,300

8.00% 2019 1,481

8.25% 2021 1,679 Cash 9,454

Total 2nd lien sec debt 3,160 1.5x Total Liquidity 10,754

VEBA Trust note (face value $4.7bn) 4,180

CAW Healthcare Trust 991

Other unsec debt 351

Total unsec debt 5,522

Total Automotive Debt 12,383 2.8x

Pension & OPEB deficits - tax adjusted 4,295

Total adj automotive debt 16,678 3.5x

Market Cap NA

Enterprise Value NA

Debt Maturities ($mn):

Chrysler Group LLC, headquartered in Auburn Hills, MI, is a North American-based automotive manufacturer selling vehicles in more than 120 countries worldwide. Chrysler is majority-owned by Fiat Spa, an Italy-based auto manufacturer. In 2011, Chrysler produced approximately 1.99 million vehicles, up from 1.57 million in 2010. Approximately 74% of Chrysler's vehicle sales are in the US, 12% in Canada, 4% in Mexico, and the remaining 10% in South America/Asia/Europe. In 2011, Chrysler's US market share increased to 10.6% versus 9.4% in 2010. Chrysler sells vehicles under the brand names Chrysler, Jeep, Dodge and Ram, and also markets automotive parts and accessories under the Mopar brand. Chrysler is responsible for manufacturing and selling the Fiat 500 in North America, and has the exclusive right to distribute the Fiat and Alfa Romeo brands in North America. In April 2009, Chrysler Group LLC was formed when it purchased the principal operating assets of the former Chrysler LLC (Old Carco), which filed for bankruptcy reorganization through a 363 transaction. The reorganization was funded primarily through the following transactions; a $7.1 billion US Treasury facility; a C$2.3 billion Export Development Canada (EDC) loan; a $400 million Mexican Development Bank facility; $4.7 billion UAW VEBA trust note; and a C$974 million Canadian Health Care Trust note. Following the completion of the 363 transaction, Chrysler's shareholders consisted of the UAW Retiree Medical Benefits Trust (67.7% ownership), Fiat (20%), US Treasury (9.9%), and Canada CH Investment Corporation (2.5%). Fiat attained its original 20% stake by contributing intellectual property. In May 2011, Chrysler repaid the US Treasury and the EDC credit facilities by issuing $3.2 billion in 2nd lien senior notes and a $3.0 billion first lien term loan. Fiat's ownership in Chrysler increased by 5% in January 2011 when Chrysler began commercial production of the FIRE engine (Technology Event) and increased another 5% in April 2011 when Chrysler attained revenue expansion outside of North America (Distribution Event). In May 2011, Fiat exercised a call option purchasing 16% of Chrysler for $1.3 billion in cash and in July 2011 Fiat acquired the 1.5% owned by the Canadian government and the 6% owned by the US Treasury. At year-end 2011, Fiat owned 53.5% of Chrysler and in January 2012, Fiat increased its stake to 58.5% following the production of the new 40-mpg Dodge Dart sedan using Fiat architecture (Ecological Event). Chrysler has a strategic relationships with Ally auto finance (retail and wholesale funding), Santander Consumer USA (sub-prime), and US Bank, NA (leasing) for vehicle financing. Fiat does not guarantee Chrysler's debt, nor does Fiat have a formal support agreement with Chrysler.

Company Strengths:

- Chrysler is currently renewing a significant portion of its vehicle portfolio through 2014, with several new small, fuel efficient vehicles planned which should benefit from technology sharing with Fiat.

- In addition to technology sharing, the alliance with Fiat should allow Chrysler to gain greater access to the European and South America auto markets, areas where Chrysler currently has little exposure.

- Over the past four years, Chrysler has significantly reduced its fixed costs by closing under-utilized plants and reducing headcount.

- Chrysler and Fiat are lead by Sergio Marchionne, a CEO with a strong reputation for improving profits and operational efficiencies.

Company Risks:

- A significant economic slowdown in the US and Europe could reduce demand for Chrysler and Fiat vehicles, and reduce cash flow at both companies.

- Chrysler's balance sheet is more levered versus its US peers, Ford and General Motors.

- Chrysler's current vehicle sales mix is significantly exposed to light trucks and SUVS, which would likely see lower demand in a higher fuel price environment.

- Chrysler does not have its own captive finance company, and is entirely reliant on banks for its retail and wholesale vehicle financing.

Company Description

0

250

500

750

2012 2013 2014 2015

($ M

N)



CityCenter Holdings, LLC (CCTRH) Updated 1/23/12 Kevin Coyne 212-357-9918Contact analyst for updates and other information. Celeste Everett 212-902-4751

NOT COVERED

Bond SummarySize Coupon Agency Next Call Bid YTW STW Z-spread(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp$900 7.625 Sr Sec (1st lien) Notes 15-Jan-16 B1/B 103.810 15-Jan-14 104.750 5.85 506 523 $633 10.750 Sr Sec (2nd lien) PIK Toggle Nts 15-Jan-17 Caa2/CCC 105.375 15-Jan-14 107.00 9.07 828

PIK coupon = 11.5%; mandatory PIK until July 2012. Afterwards, issuer can decide to either pay coupon at 100% PIK interest, 100% cash or a 50/50 combination.Other terms include: 35% equity clawback, 420 day reg rights. Outlooks: Moody's - positive S&P - negative

Financial Profile 4Q10 2010 1Q11 2Q11 3Q11Revenue 258 1,332 271 281 260Condo proceeds in revenue 35 526 19 18 15EBITDA 16 69 55 57 46

Interest Expense 66.4 240.7 65.5 67.2 67.8CapEx 62.5 453.7 15.1 25.0 6.3Free Cash Flow (112.6) (625.7) (25.7) (35.1) (28.0)

Total Debt (includes related party debt) 2,747 2,747 2,517 2,553 2,541Cash 78 78 108 183 210 Comps Leverage Coverage RatingsNet Debt 2,668 2,668 2,409 2,370 2,331 CCTRH 11.5x 0.7x Caa2/CCCKey Credit Statistics MGM (sr) 9.2x 1.7x B3/B-Total Debt/EBITDA nm nm nm nm nm HET 1st lien 7.1x 0.9x B3/BNet Debt/EBITDA nm nm nm nm nm WYNN 1.9x 6.6x Ba2 / BBB- BORGAT 5.2x 1.8x B2/BB-EBITDA/Interest 0.2x 0.3x 0.8x 0.8x 0.7x

EBITDA margin 6.3% 5.2% 20.2% 20.3% 17.7%

Capitalization LiquidityDescription 3Q11 Lvg Source 3Q11Senior secured credit facility due 2015 4507.625% secured (first lien) nts due 2016 900 Revolver due 2014 none Credit facility maintenanceTotal first lien debt 1,350 7.7x Letters of Credit & other covenant10.75% sec (2nd lien) PIK toggle nts due 2017 649 Borrowings Fixed charge coverage ratioTotal secured debt 1,999 11.5x Revolver Availability 3Q12 1.10x3.42% Member notes (MGM/Dubai) due 2018 1,123 4Q12 1.15xTotal debt (gross value) 3,122 17.9x Cash 210 1Q13 1.25x

Total Liquidity 210 2Q13 1.25x3Q13 & thereafter 1.50x

Capital expendituresMaximum per year $50 mn(unused amount rolls to following yr.)

Maturities:

Operating metrics 3Q11 4Q10 1Q11 2Q11 3Q11Aria# of rooms 4,004 4,004 4,004 4,004 4,004ADR $175 $190 $201 $202 $200Occupancy rate (%) 82% 80% 86% 90% 87%RevPAR $142 $152 $173 $181 $173

Vdara# of rooms (estimated) 910 910 1,050 1,229 1,329ADR $141 $140 $159 $159 $157Occupancy rate (%) 70% 75% 83% 91% 84%RevPAR $99 $105 $132 $145 $131

CityCenter Holdings LLC is a 50/50 joint venture between MGM Resorts International , Inc. and Dubai World, which owns and operates CityCenter, a multi-use resort and casino on the Las Vegas Strip. The property sits on 67 acres of land and includes- Aria, a hotel/casino with 4,000 rooms, 1,991 slot machines, and 131 tables games; - Vdara, a condo/hotel tower with 1,495 units- Veer Towers, two room towers with 669 condominiums- Mandarin Oriental: a condo/hotel tower with 392 hotel rooms and 225 condos.The property also includes 322,000 sq ft of meeting space, 367,000 sq ft of retail space called Crystals. The construction cost was approximately $9 billion, excluding the value of the land. The Mandarin Oriental and Aria have receive AAA Five Diamond Award status.

Recent events:- 3Q2011: voluntarily repaid $50 mn of bank debt.- October 2011: voluntarily repaid another $50 mn of bank debt.

Company Strengths:- Brand new property with original investment of $9 billion.- 616 of unsold condos could be sold to increase liquidity (after repayment of $125 mn of cost overruns to MGM). This excludes 854 condos put back into room inventory at Vdara and 485 units at Vdara not in room inventory.- Expected support from MGM Resorts in the event liquidity is required. - Strong convention bookings: 170k on books for 2011 (three times the pace from a year earlier).- Las Vegas convention attendance improving: up 2.3% YTD through November 2010. - Banks have shown a willingness to work with company during downturn in Las Vegas operations.- No near-term maturities provides runway to ramp operations.- First liens have 18 months of coupons in escrow while second liens PIK.- First lien has better call protection than second lien.- Reduced headcount from 8,800 at 12/31/09 to 5,300 at 12/31/10.

Company Risks:- No proven track record; uncertain what the EBITDA potential could be for CityCenter.- Highly leveraged - No cash on hand and no revolver; reliant on partners for liquidity if FCF is not sufficient.- Perini litigation: trial to start in 4Q11. Unfavorable outcome could be $250 mn or more.- No guarantee of debt from MGM or Dubai.

Company Description

0

500

1,000

1,500

2,000

2012 2013 2014 2015 2016 2017+

Bond indenture summary:Security interest: Includes stock of subsidiaries (which hold the gaming licenses) and the real property, improvements, fixtures of CityCenter, the personal property of the issuer and the guarantors, the interest escrow account control agreement and IP security agreements. Covenant highlights:- Restricted payments: builder basket (50% of net income) at zero, $50 mn misc. basket.- Debt incurrence: Fixed charge coverage ratio above 2.0x. Carve-outs: capital leases of $100 mn and misc. incurrence of $100 mn.- Limitation on liens- Limitation on layered indebtedness - First $125 million of condo deal proceeds are required to repay MGM completion guarantee- If MGM sells Crystals mall, proceeds must to used to pay down credit facility.



Clearwire Communications LLC (CLWR) Updated 1/20/12 Jason Kim 212-902-2233


IN-LINECLWR's recent financing efforts, and agreements with Sprint, have ensured that CLWR would be sufficiently funded in the short term as it looks to deploy TDD-LTE in its markets with heaviest data

traffic. However, the company still faces sigifnicant questions over the long-term viability of its capital structure and business model, and we think Sprint's much weakend credit profile essentially

eliminates the previous optionality of being absorbed as Sprint's credit. Our In-Line ratings on the bonds reflect these challenges offset by the large coupon and CLWR's sufficient near-term liquidity

Bond Summary



$2,695 12.000 1st Lien 12/1/2015 B2/CCC+ NC NC 94.50 13.88 1265

$500 12.000 2nd Lien 12/1/2017 Ca2/CCC- NC NC 84.25 16.27 1490


Wholesale Subs ('000s) 46 3,246 6,360 8,219 8,919 8,919

Wholesale ARPU NM NM $6.18 $6.20 $6.18 $6.52

Wholesale Churn 0.6% 0.9% 1.3% 1.5% 1.7% 1.6%

Retail Subs 642 1,099 1,288 1,322 1,302 1,303

Retail ARPU $39.65 $45.19 $47.59 $47.05 $48.26 $50.02 Agency


Revenue $274 $557 $294 $332 $360 $1,239

EBITDA (781) (1,091) (109) (46) (20) (369) LEAP Unsecured Nts 5.7x 2.1x B3/CCC+

Free Cash Flow (1,923) (3,825) (411) (125) (206) (1,263) Sprint 3.3x 4.0x B3/B+

Total Debt $2,772 $4,309 $4,302 $4,297 $4,297 $4,298

Cash & Liquid Investments 3,805 1,736 829 698 1,207 1,207

Net Debt (1,032) 2,573 3,956 3,956 3,956 3,956


Total Debt/EBITDA NM NM NM NM NM NM

Net Debt/EBITDA NM NM NM NM NM NM

EBITDA Margin (284.5%) (199.8%) (36.9%) (14.0%) (5.4%) (29.8%)

Capitalization*

Debt /


12.000% 1st Lien Secured Nts $2,695 Revolver Size $0

12.000% 1st Lien Secured Rollover Nts 252 Letters of Credit -

1st Lien Debt $2,947 NM Borrowings -

Revolver Availability $0

12.000% 2nd Lien Secured Nts 500

2nd Lien Debt $3,447 NM Cash* $1,413

Total Liquidity $1,413

Vendor Financing Notes 53 *Pro forma for the December 2011 equity raise of approximately $716mn.

Capital Leases 67

8.250% Exchangeable Nts 729

Total Clearwire Debt $4,297 NM

Net Debt $2,883

Market Cap $2,134

Enterprise Value $5,017 NM

*Capitalization pro forma for the December 2011 equity raise of approximately $716mn.

Maturities:

Clearwire Corporation is a provider of 4G wireless broadband services with a network reaching 133 million POPs. The company had 9.5 million total subscribers as of 3Q2011. Of this 9.5 million, 1.3 million were retail subscribers who purchased service under Clearwire's CLEAR brand, and 8.2 million were wholesale subscribers, which it derives primarily from its wholesale relationship with Sprint. As of September 30, 2011, Sprint held a 54% non-controlling economic interest in Clearwire Communications LLC and a 49.6% non-controlling voting interest in Clearwire Corporation.

On December 1, 2011, Clearwire announced a series of agreements with Sprint that (1) modified their wholesale pricing agreement such that CLWR will provide unlimited WiMAX service for fixed payments through 2013; (2) Sprint will conditionally pay CLWR up to $350mn over two years for LTE capacity; and (3) Sprint would contribute a proportionate amount of equity financing in a new CLWR equity offering.

On December 13, 2011, Clearwire closed a Class A common stock offering that it had announced on December 5. After upsizing of the transaction by $50mn from the original $300mn plan offering, as well as the underwriters' exercise of their over-allotment option, net proceeds were $384.1mn. Sprint contributed an additional $331.4mn to CLWR's equity offering through the purchase of Class B common stock in CLWR and a corresponding number of Class B units in Clearwire Communications LLC. Total net proceeds following the two transactions were $715.5mn, which Clearwire will use for general corporate purposes including TDD-LTE development.

Key Dates/Catalysts:Update on relationship with Sprint and financing situation beyond 2012.

February 2012: 4Q2011 earnings.

2,947

1,349

0

1,000

2,000

3,000

4,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) CLWR's vast spectrum holdings may make it strategically important to other carriers who may be spectrum constrained.

(2) Renewed collaberation and financing arrangements with Sprint give CLWR additional time to augment and transform its business model to its "Switzerland of urban LTE capacity".

Investment Risks:(1) The equity offering provides the company with much needed financing room to begin the transition of its business model. However, we continue to believe that CLWR will face an even higher funding deficit in 2013 and that Sprint and CLWR will need to make significant decisions regarding their ownership structure over the next year.

(2) CLWR's spectrum is difficult to value, and coverage through the levels of debt varies significantly based on the $/MHz/POP assumptions one uses.

Company Description



CMS Energy Corporation (CMS) Updated 1/25/2012 Raymond M. Leung 212-357-5764


Our OUTPERFORM on CMS reflects the highly regulated cash flows and gradual financial improvement with an attractive value.

We are IN-LINE rated on Consumers Energy.

Bond Summary


Name (MM) (%) Priority Maturity Ratings Price Date Price (%) bp

CMS $300 6.25 Sr Unsec'd 1-Feb-20 Ba1/BB+ MW+50 -- 106.56 5.24 333

Consumers $500 6.70 FMB 15-Sep-19 A3/BBB+ MW+50 -- 127.47 2.69 69

Financial Profile CMS CMS CMS Consumers Consumers

FY09 FY10 LTM 3Q11 FY10 LTM 3Q11

Revenue 6,205 6,432 6,565 6,156 6,308

EBITDA 1,293 1,551 1,518 1,490 1,529

Adjusted Interest Expense 422 420 410 265 256

Income Taxes 115 224 185 254 279

CapEx 818 821 834 815 825

Free Cash Flow (13) (182) (45) (239) (69)

Adjusted GAAP Debt 6,103 6,746 7,138 4,529 4,348

Cash 90 247 623 71 373

Net Adjusted GAAP Debt 6,013 6,499 6,515 4,458 3,975 AES Corp* 4.1x 3.6x Ba3/BB-

Key Credit Statistics Calpine Corp 6.7x 2.0x B1/BB-

Total Debt/EBITDA 4.72 4.35 4.70 3.04 2.84 Dynegy 10.2x 1.1x –/D

Net Debt/EBITDA 4.65 4.19 4.29 2.99 2.60 Edison Mission 8.5x 1.4x Caa1/B-

EBITDA/Interest 3.06 3.69 3.70 5.62 5.97 GenOn 7.8x 1.1x B3/B

EBITDA margin 21% 24% 23% 24% 24% CMS 4.7x 3.7x Ba1/BB+

NRG 4.7x 2.4x B1/BB-

Capitalization *AES reflects sub distributions to parent obligations; LTM4Q2011

Description Size Debt to EBITDA Liquidity

Consumers Energy - FMBs 3875 CMS Revolver Size 550

Consumers Energy - Other 283 Consumers Revolver 650

Total Consumers Energy Debt 4,158 2.7x Consumers LOC 134

CMS Revolver ($550) - AR facility 250

CMS Senior Unsecured Notes 1925 Total bank lines 1,584

CMS Convertible Notes due 2023-2029 460 CMS LOC outstanding 3

Other 623 Consumers LOC outstanding 135 Adjustments (28) Borrowings -

Total Parent and Consumers Energy Debt 7,138 4.7x Revolver Availability 1,446

Securitization and Non-recourse debt 182

Total debt 7,319 4.8x Cash 623


Market Cap 5,621


Maturities:

Source: SNL Energy, company documents and Goldman Sachs

Next Call


CMS is a utility holding company with two principal subsidiaries: Consumers Energy Co. and CMS Enterprises, Inc. Consumers Energy is a regulated utility with electric and natural gas distribution operations serving 1.8 million electric and 1.7 million gas customers in Michigan's Lower Peninsula counties. The utility accounts for more than 95% of consolidated cash flows. Through its subsidiaries and equity investments in the power generation business, Enterprises is engaged primarily in domestic operations, with plants fueled by natural gas and biomass.Key Dates/Catalysts:- CMS will report 4Q2011 earnings on Feb. 23. We will look for an update on its business with an emphasis on capital spending. The company is budgeting capex at $6.6 billion for 2012 to 2016 period- Management is targeting EPS of $1.44 for 2011 which is consistent with its 5% to 7% annual earnings growth target. - Update on its pending electric and gas rate cases. The company on June 10, 2011 filed an electric base rate increase seeking a net $115 million rate increase with a 10.7% authorized ROE. The company's gas request is seeking a $49 million rate hike. Decisions are expected mid-to-late 2012. - Potential for opportunistic refinancing.

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015 2016

Investment Strengths:- CMS' primary asset is a solid investment grade utility, Consumers Energy, that accounts for about 95% of cash flow. The utility's financial profile is strong with 3x debt-to-EBITDA. - Improving supportive Michigan regulatory treatment with decoupled rate mechanisms and the ability to self-implement interim rate increases. - Management expects operating cash flow of $1.6 billion in 2011 and 2012. - Liquidity remains strong at over $2.0 billion, with about $623 million in cash. Also, the company has 0.7 bn of net NOLs and credits in 2012. - Management has improved and stabilized the balance sheet following an extensive asset rationalization program that led to divestment of non-core assets.

Investment Risks:- Capital spending remains high at $6.6 billion through 2016 that includes significant environmental spending given the utility's reliance on coal generation.- Ongoing rate relief needs owing to its large spending program. - The economic downturn could pose a greater challenge given CMS's exposure to the auto industry (5% of revenues). Michigan's unemployment rate remains high at 10.6%. - Parent debt levels are expected to remain flat at about $2 billion. - Debt maturities are significant in the near term, with about 25% of consolidated outstanding debt maturing in the next three years.

Company Description



Community Health Systems (CYH) Erin Blum 212-855-7718


UNDERPERFORM


(MM) (%) Priority Maturity Ratings Price Date Price (%) bp CDS Level 5-Year

$1,000 8 Snr. Uns. 15-Nov-19 B3/B $104.000 15-Nov-15 $102.500 7.457% 666 Snr 668 / 696

*Currently callable at $104.4375

Financial Profile 2009 2010 2011E 4Q10A 3Q11A 4Q11E

Revenue $12,087 $12,987 $13,823 $3,403 $3,436 $3,547

EBITDA 1,671 1,770 1,842 452 454 466


Cash Taxes 141 160 171 37 37 45

CapEx 577 667 743 286 181 210

Free Cash Flow 500 521 407 5 54 120

Total Debt $8,911 $8,872 $8,811 $8,872 $8,830 $8,811 Agency


Net Debt 8,567 8,572 8,757 8,572 8,563 8,757 CYH 4.8x 2.8x B3/B

Key Credit Statistics VANGUA 4.4x 2.7x B3/B-

Total Debt/EBITDA 0.8x 0.8x 0.8x THC 3.9x 2.7x Caa1/CCC+

Net Debt/EBITDA 5.1x 4.8x 4.8x HMA 3.0x NA --/BB-

HCA sr uns 4.2x NA B3/B-


EBITDA margin 13.8% 13.6% 13.3% 13.3% 13.2% 13.1%

Capitalization

Description Size

Debt to LTM

EBITDA

Debt to 2011E

EBITDA Liquidity

Revolver due 2013 $0 Revolver Size $750

Term Loan due 2014* $4,476 Letters of Credit 38

Extend Loan due Jan 2017 1,485 Borrowings 0


8.875% Snr Notes due 2015 $2,784 Cash $266

Total Sr bonds $2,784 4.8x 4.7x Total Liquidity $978

Other debt $84


Market Cap 1,720


*In January 2012, CYH announced its intent to extend a portion of the 2014 TL as well as other amendments including the option to replace its revolver.

Maturities: (includes term loan amortization)

Next Call*

Updated 01/25/12

We rate CYH Underperform as (1) leverage is highest of the group (excluding Iasis) and (2) we see the Medicare fraud investigation as a serious overhang, particularly the impact on operating results.

0

2,000

4,000

6,000

2012 2013 2014 2015+

Suburban/rural hospital operator with 132 hospitals; approximately half are rural and half are urban/suburban. CYH purchased Triad, a mid-sized small urban hospital company, in July 2007. 65% of the combined company's hospitals are the sole hospital or one of two hospitals in the community served. CYH is centrally operated and its strategy is to extend that discipline to acquired facilities. CYH completed three acquisitions in 2010 (Marion Regional in South Carolina, Bluefield in West Virginia, and Forum Health in Ohio). Year to date 2011, CYH has acquired Mercy and Moses in Pennsylvania, divested two hospitals in Oklahoma to Ardent Health and acquired Tomball in Houston. On its 2Q11 call, management stated that the Medicare fraud lawsuit has not been disruptive to its operations at the hospital level. However, on its 3Q11 call, CYH cited negative press around the lawsuit as one reason for its 7% s/s admissions decline.

In December 2010, CYH announced an unsolicited bid for THC at $6 a share for a combination of cash and stock, which THC rejected. In April 2011, THC alleged that CYH had overbilled Medicare, with a potential liability in excess of $1 bn. CYH subsequently changed its bid to all cash and later also raised its bid to $7.25 a share. In May 2011, CYH withdrew its bid for THC.

CYH's recent acquisitions of Moses Taylor (closed January 2012) and MetroSouth (expected 1Q12) make a revolver borrowing in 1Q12 likely. In January 2012, CYH announced its intent to amend and extend a portion of its credit facility.

Key Dates/Catalysts:- Quarterly earnings announcements (commercial volumes have been weak industry-wide, although bad debt expense has been relatively stable).- Ongoing investigations by the DOJ and other government agencies related to alleged Medicare overbilling.- Potential acquisitions.- Potential refinancing of the bonds (callable July 15, 2011).- Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We view the ACA as a net positive for hospitals.

Investment Strengths:- High-quality asset base: Largely rural/suburban facilities tend to be less competitive for patients and physicians, require less capex investment, and may have more-favorable rates.

- Excellent track record of margin improvement achieved at acquired facilities: CYH was able to improve margins from low single-digits to mid-teens in a matter of a few years.

Investment Risks:- Medicare and Medicaid reimbursement could be reduced.

- CYH is under investigation by the DOJ and other government agencies related to allegations of filing false Medicare claims. Historically, Medicare fraud investigations have taken years to resolve and settlements are determined partially based on a company's ability to pay. In 3Q11, negative press surrounding the investigation appears to have impacted volumes to some degree.

- Volumes have been weak across the industry and are expected to remain so for the near term.

- CYH's EBITDA growth has lagged its peer group, and leverage has remained high as a result.

Company Description



Constellation Brands (STZ) Updated: 1/26/12 Karen Eltrich 212-902-6957

Contact analyst or see latest research for updates to ratings, estimates, and other information. Jordan Hughes 212-357-7875

UNDERPERFORM

Bond Summary



$500 8.375 Sr Nts 15-Dec-14 Ba2/BB+ NC NC 112.75 3.68 302

$700 7.250 Sr Nts 1-Sep-16 Ba2/BB+ NC NC 110.25 4.74 367

$700 7.250 Sr Nts 15-May-17 Ba2/BB+ NC NC 110.75 4.92 368

Financial Profile FY10 FY11 FY12E 4Q11A 4Q12E

Revenue 3,364.8 3,332.0 2,717.3 715.3 691.1

EBITDA 963.3 908.2 856.3 182.5 189.7


Cash Taxes 160.0 (8.5) (18.5) (172.8) (130.0)

CapEx 107.7 108.1 70.1 38.0 16.0

Free Cash Flow 435.1 613.3 626.1 269.9 258.2

Total Debt 3,835.5 3,236.3 2,869.6 3,236.3 2,869.6

Cash 43.5 9.2 53.6 9.2 53.6


Total Debt/EBITDA 4.0x 3.6x 3.4x Comps Yield Leverage Coverage Ratings

Net Debt/EBITDA 3.9x 3.6x 3.3x Dean Foods 6.96% 5.2x 2.9x B2/B-

Constellation 4.74% 3.4x 4.8x Ba2/BB+

EBITDA/Interest 3.7x 4.7x 4.8x 3.9x 4.2x Del Monte 8.10% 6.4x 2.4x B3/CCC+

EBITDA margin 28.63% 27.26% 31.51% 25.51% 27.45%

Capitalization 3Q12


Revolver Size 650.0

Revolving Credit Facility ($650 due 06/15/1 247.0 Letters of Credit 12.2

Other notes payable to banks 105.3 Borrowings 247.0

Term Loan B (due 6/5/13) L+250 624.7

Term Loan B (due 6/15/15) L+275 201.9 Revolver Availability 390.8


8.375% Sr Nts due 2014 500.0 A/R facility NA

7.25% Senior Notes due 09/01/16 694.5 Borrowings 0.0

7.25% Senior Notes due 05/15/17 700.0 A/R Availability NA

Other Debt 31.2

Cash 55.8


Market Cap (Shareholders' Equity) 4212.6

Enterprise Value (Total Book Cap) 7308.0 8.6x

Maturities & required debt payments

Next Call

Constellation Brands, Inc., is a leading international producer and marketer of beverage alcohol brands, with a broad portfolio across the wine, imported beer, and spirits categories.

Key Dates/Catalysts:Early April - fourth quarter earnings release

Investment Strengths:- Leading, diversified portfolio- Asset-rich company- Strong cash flow generation and deleveraging capability

Investment Risks:- Management has stated its openness to a large acquisition; no ambitions to become IG- Significant portion of earnings reported via joint venture format- Shift to premium products has made the company more vulnerable to slowdown in consumer spending

Company Description

0

1,000

2,000

3,000

2012 2013 2014+



Convatec (CONVAT)Contact analyst or see latest research for updates to ratings, estimates, and other information. Erin Blum 212-855-7718

OUTPERFORM Cindy Guan 212-902-9758

Bond Summary

Size Coupon Agency Bid YTW STW Snr

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp 5-yr CDS$745 10.5 Snr Uns 15-Dec-18 Caa1/B $105.250 15-Dec-14 $97.500 11.023% 1,023 995 / 1071

Financial Profile* 2009E 2010A 2011E 4Q10A 3Q11A 4Q11E

Revenue $1,527 $1,513 $1,579 $396 $411 $419

EBITDA 440 428 433 119 126 122

Cash Interest Expense, net* $206 $165 $230 $28 $59 $54

Cash Taxes (33) 104 (3) 51 (54) 10

CapEx 75 42 32 7 7 11

Free Cash Flow (59) 35 74 30 86 (15)

Total Debt $2,749 $2,718 $2,708 $2,731 $2,710 $2,708 Agency


Net Debt 2,646 2,648 2,652 2,662 2,630 2,652 CONVAT snr 6.3x 2.1x Caa1/B

Key Credit Statistics DJO sub 7.1x 1.6x Caa1/CCC+

Total Debt/EBITDA 6.2x 6.4x 6.3x ACCINC sub 6.8x 1.5x Caa2/CCC+



EBITDA margin 28.8% 28.3% 27.4% 30.0% 30.7% 29.0%

*Cash interest does not include interest on the preferred equity which is accrued

Capitalization

Description AmountDebt to LTM

EBITDA

Debt to 2011E

EBITDA Liquidity

Revolving Credit Facility 12/22/2015 $0 Revolver Size $250

TL B USD due 12/22/2016 $496 Letters of Credit 3

TL B EUR due 12/22/2016 $731 Borrowings 0

7.375% Snr Sec 12/15/2017 EUR $402 Revolver Availability 247

Total Snr Sec debt $1,629 3.8x 3.8x

A/R facility $0

10.5% Snr unsec US 12/15/2018 $745 Borrowings 0

10.875% Snr unsec EURO 12/15/2018 $335 A/R Availability 0

Total Snr Uns debt $1,080 6.3x 6.3x

Cash & marketable securiti $80

Other Debt $2 Total Liquidity $327Total Debt 2,710 6.3x 6.3x

Market Cap NA

Enterprise Value NA

Maturities:

Updated 01/25/12

Our rating reflects (1) compelling relative value, (2) favorable industry characteristics, and (3) improving cash flow. The ostomy industry has several creditor-friendly characteristics, including few competitors, sales to an installed base, non-discretionary products, and slow technology shifts. Management reiterated that it should be "reasonably close to its" 2011 EBITDA guidance of being up yoy.

Next Call

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015+

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015+

Convatec manufactures and distributes medical products in four business segments: ostomy (37% of LTM revenue), wound care (32%), continence and critical care (17%), and infusion (14%). Ostomy is a surgically created opening in the abdomen to allow the discharge of waste when a portion of the intestines has to be removed due to cancer or other disease. CONVAT was spun out from Bristol-Myers Squibb on August 1, 2008, in an LBO by Nordic Capital and Avista Capital at approximately 11x June 2008 LTM EBITDA. Subsequently, on September 2, 2008, CONVAT acquired Nordic’s portfolio company Unomedical for $593.6 million and divested the Unomedical Wound Care and Ophthalmic businesses for $22.3 million as mandated by the European Commission.

In December 2010, Convatec refinanced its capital structure to remove the old LBO term loans and mezzanine debt, and put in place new term loans, secured and unsecured notes. On its 3Q11 conference call, Convatec reiterated that it would be "reasonably close to its" EBITDA guidance of being up yoy over 2010. In August 2011, the press reported that CONVAT made a bid for KCI but in October 2011, KCI announced that the second bidder has withdrawn.

CONVAT CDS was recently added to the new xover index in Europe.

Key Dates/Catalysts:- Quarterly earnings announcements. (Company has guided that 2011 should be up yoy)- Announcements of acquisitions. Convatec has been buying small distributors in Latin America and other markets.

Investment Strengths:- Convatec makes non-discretionary, one-time-use products.

- Sales are to a large permanent installed base. Approximately 95% of ostomy patients are permanent, using 60 pouches per month . Product loyalty is strong. Roughly 30% of patients switch in the first six months but this falls to virtually 0% after the first year.

- FCF should improve due to a drop-off in one-time items and better NWC management.

- End market is growing at 2-3%, driven by an aging population, increased use of stoma surgeries, increased penetration of advanced wound care, critical and continence care and infusion sets; offset by about 1% pricing declines.

Investment Risks:- Leverage remains high at mid 6x. Public comparable Coloplast trades at 12x. We expect a slow deleveraging path.

- Pricing pressure in Europe could be greater than expected due to government austerity measures.

- Market share losses could continue if Convatec is not able to win new nurse sponsoring initiatives in the UK or if the new product uptake is less than expected.

Company Description



Cooper Tire (CTBUS) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$174 8.00% Sr. Nts 15-Dec-19 B2/BB- NC NC 107.00 683.3% 552


Revenue 2,881.8 2,779.0 3,361.0 3,801.3 3,802.9 3,823.6

EBITDA 31.8 335.5 332.7 282.2 243.1 237.5

Interest Expense (45.5) (48.0) (35.9) (37.0) (34.6) (33.9)

Cash Taxes (8.0) (8.0) (8.0) (8.0) (8.0) (8.0)

W/C and Other (170.3) 140.1 (139.9) (228.4) (104.3) (2.0)

CapEx (128.8) (79.3) (119.7) (166.0) (156.3) (170.0)

Free Cash Flow (320.8) 340.3 29.2 (157.2) (60.1) 23.6

Total Debt 658.3 503.2 473.6 356.1 356.1 333.9 Comps Leverage Coverage Ratings

Cash 247.7 427.0 413.4 90.6 244.1 267.7 AXL 2.8x 4.8x B1/BB-

Net Debt 410.6 76.2 60.2 265.6 112.1 66.2 CTBUS 1.3x 8.4x B1/BB-






EBITDA margin 1.1% 12.1% 9.9% 7.4% 6.4% 6.2%

Capitalization


Revolver due 2016 0.0 0.0x Revolver Size 200.0

8.0% Sr Notes due 2019 173.6 1.3x - Amt Drawn 0.0

7.625% Sr Notes due 2027 116.9 1.3x - LCs Drawn 0.0

Other 65.7 1.3x Amt Unutilized 200.0

Total Debt 356.1 1.3x A/R Facility 175.0

Less cash (90.6) -- Cash 90.6

Net Debt 265.6 0.9x Liquidity 465.6

Market Cap 934.2

Enterprise Value 1199.8 4.9x Unsecured Asian Lines 231

Maturities:

Next Call

Cooper Tire & Rubber Company manufactures and markets replacement tires. The company focuses on the manufacture and sale of passenger and light truck replacement tires. Cooper also manufactures radial medium truck tires and materials and equipment for the truck tire retread industry. It currently commands a small share of the US replacement tire market, and sells to a wide variety of aftermarket stores and tire dealers. Cooper offers a variety of branded tires (about 60% of volume) and a large percentage of private label product (about 40% of volume).

Key Dates/Catalysts: - Cooper Tire is expected to report 4Q2011 earnings in late February/ early March.

0

50

100

150

200

250

300

350

2011 2012 2013 2014 2015 After

Investment Strengths:- Long debt maturity runway mitigates raw material risk: CTBUS's next major debt maturity comes in 2019 with the maturity of its 8% senior notes.- Adequate liquidity: CTBUS ended 3Q2011 with more than $450 million of liquidity, consisting of $90 million of cash and cash equivalents and $375 million of company credit lines. - Price raises partially offset raw material risk: Cooper Tire has announced a series of tire price increases in response to escalating raw material costs.

Investment Risks:- Raw materials will remain a headwind: Management estimates that about 50% of the company’s COGS are derived from raw materials – particularly natural rubber and oil. Although natural rubber prices have declined from their early 2011 levels, they remain moderately elevated.- Moderating North American replacement tire volumes: After a strong 2010 in which volumes increased about 7%, North America light vehicle replacement tire shipments were flat in 2011 and are expected to grow by a modest 2% in 2012.- 421 Tariff stepping down: The 30% tariff on Chinese tires declined to 25% in September 2011 and will decline to 0% in September 2012. We believe Cooper Tire is at risk of losing market share if the tariff is not extended by the US government.

Company Description



Crown Holdings, Inc. (CCK) Updated 1/23/12 Joe Stivaletti (212) 902-3299


IN-LINE

Bond Summary

Size Coupon Agency Bid YTW STW(MM) (%) Priority Maturity Ratings Price Date Price (%) (bp)

$700 6.250 Sr Nts 01-Feb-21 Ba3/BB 103.125 01-Feb-16 107.500 4.884 422


FY:09 FY:10 3Q:10 2Q:11 3Q:11

Revenue 7,938 7,941 2,205 2,281 2,423

EBITDA 1,006 1,042 335 316 347


Capital expenditures 180 320 83 81 89

Total debt 2,798 3,048 3,229 3,876 3,757

Cash 459 463 415 546 479

Net debt 2,339 2,585 2,814 3,330 3,278


Total debt/EBITDA 2.8x 2.9x 3.2x 3.5x 3.4x Comps Leverage Coverage Ratings

Net debt/EBITDA 2.3x 2.5x 2.8x 3.0x 2.9x Berry Plastics 6.4x 2.1x Caa1/CCC

Owens-Illinois 3.1x 4.7x Ba3/BB

EBITDA/interest 4.1x 5.1x 6.1x 5.3x 6.0x Ball 2.8x 6.6x Ba1/BB+

EBITDA margin 12.7% 13.1% 15.2% 13.9% 14.3%



Revolving credit facilities 472 1.2x Revolver size 1,200

Term loan facilities 567 1.2x Letters of credit 60

Bank loans and overdrafts 295 1.2x Borrowings 472

7.625% senior notes due 2017 400 2.8x Revolver availability 668

7.125% senior notes due 2018 670 2.8x

6.250% senior notes due 2021 700 2.8x Cash 479

7.375% debentures due 2026 350 3.4x Total liquidity 1,147

7.500% debentures due 2096 64 3.4x

Other debt 239 3.4xTotal debt 3,757

Market value of equity 5,252

Enterprise value 8,658

Maturities:

Next Call

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015+

Crown manufactures metal packaging. The company's primary products include steel and aluminum cans for food, beverage, household, and other consumer products, and metal caps and closures. Crown is the largest global producer of metal food cans andaerosol cans in the world, the second-largest producer of metal vacuum closures, and one of the largest producers of metal beverage cans in the world.

Investment Strengths:- Strong, stable customer base: Crown provides packaging to many of the world's leading consumer products companies, including Anheuser-Busch, Cadbury Schweppes, Coca-Cola, and Pepsi.- Exposure to international growth markets: Crown operates 135 plants in 41 countries and generated approximately 72% of sales from international operations in 2010. - Stable earnings and cash flow: Crown operates in a recession-resistant segment of the packaging industry, and enjoys relatively stable earnings and cash flow generation throughout the cycle.

Investment Risks:- Irrational price competition could lead to lower profitability: Although can manufacturers have behaved rationally in recent years, irrational selling price competition remains a possibility.- Future M&A activity may lead to higher leverage: Crown could make a leveraging acquisition in the near to intermediate term.

Company Description



DaVita, Inc. (DVA) Erin Blum 212-855-7718


UNDERPERFORM

Bond Summary



$775 6.375% Sr. Uns. 1-Nov-18 B2/B $104.781 11/1/2013 $105.000 5.172% 437

$775 6.625% Sr. Uns. 1-Nov-20 B2/B $104.969 11/1/2014 $105.500 5.495% 470


Revenue $6,109 $6,447 $6,975 $1,649 $1,808 $1,850

EBITDA 1,169 1,231 1,410 315 386 391


Cash Taxes 278 260 315 40 94 91

CapEx 275 274 347 104 97 95

Free Cash Flow 392 566 881 16 398 104

Total Debt $3,630 $4,317 $4,491 $4,317 $4,508 $4,491

Cash 539 860 595 860 541 595

Net Debt 3,090 3,457 3,896 3,457 3,967 3,896 Agency


Total Debt/EBITDA 3.1x 3.5x 3.2x DVA 3.2x 5.7x B2/B

Net Debt/EBITDA 2.6x 2.8x 2.8x CYH 4.8x 2.8x B3/B

UHS uns 2.9x NA Baa3/BB+

EBITDA/Interest 6.3x 6.8x 5.8x 5.9x 6.3x 6.3x HLS 3.2x 4.3x B2/B+

EBITDA margin 19.1% 19.1% 20.2% 19.1% 21.4% 21.1% LPNT 1.6x NA Ba1/BB-

Capitalization

Description Size

Debt to LTM PF

EBITDA*

Debt to 2011E

EBITDA Liquidity

Revolver due 2015 $0 Revolver Size $350

Term Loan A of 2015 963 Letters of Credit 46

Term Loan A-2 of 2016 200 Borrowings 0

Term Loan B of 2016 1,737 Revolver Availability 304

Total Sr Sec debt $2,899 2.1x 2.1x

Cash $541

6.375% Senior Notes due 2018 $775 Total Liquidity $845

6.625% Senior Notes due 2020 $775

Other debt $59

Total Sr bonds $1,609 3.2x 3.2x


Market Cap 7,591


Maturities:

Next Call

Updated 01/25/12

We remain Underperform on DVA due to (1) the risk that Medicare “re-coups” the RUGs IV overpayments, (2) the risk of more aggressive international investments, and (3) the potential ongoing shift to lower margin Medicare patients from managed care.

*LTM PF EBITDA includes $63mn of EBITDA from DSI, closed Sept 6, 2011.

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

2012 2013 2014 2015+

Second-largest operator of dialysis centers in the US (Fresenius is the largest). DVA serves 112,000 end-stage renal disease (ESRD) patients (approximately a 30% market share) in 43 states through 1,582 dialysis centers.

Medicare covers people with ESRD regardless of age. Medicare reimbursement is low, so Medicare accounts for 87% of treatments, but is only 50% of DVA's revenue and contributes negative EBIT. Currently, private insurance pays for the first 33 months of dialysis and then Medicare takes over. Medicare bundled payments began January 2011. Under bundled payments, providers have an incentive to reduce drug usage because the drugs no longer garner separate payments. Reimbursement of the Amgen drug EPO (an anemia drug commonly prescribed to dialysis patients) previously accounted for 20% of DVA's revenue. Centers are leased, not owned.

DVA acquired DSI for $690 mn on September 6 and was required by FTC to divest 30 facilities.

In November 2011, Amgen and Davita announced a new seven-year exclusive contract on Epogen.

Key Dates/Catalysts:- Quarterly reports – implementation of new EPO protocols and cost cutting are key.- PDUFA date for Affymax/Takeda's ESA that could compete with Epogen in March 2012.

Investment Strengths:- Large market share in a growing market due to increased incidence of diabetes, hypertension, and other causes of renal disease. Dialysis is needed at least three times per week for the duration of an ESRD patient's life.

- Largely insulated from bad debt expense because Medicare covers dialysis patients regardless of age. Private insurance, if available, pays for the first 33 months. Otherwise, Medicare covers the patient immediately.

- Significant free cash flow at 18% of debt at LTM 3Q2011 (pro forma for recent acquisitions and debt raise).

Investment Risks:- The company's payer mix has deteriorated due to an increasing number of uninsured in the US. DVA says that most Medicare patients are unprofitable.

- While dialysis has historically not faced significant Medicare cuts, the 2% sequestration and potential other cuts could be headwinds.

- Already at the low end of net leverage target range of 3x-3.5x which suggests company may increase leverage.

Company Description



Dean Foods (DF) Updated: 1/26/12 Karen Eltrich 212-902-6957Jordan Hughes 212-357-7875


UNDERPERFORM

Bond Summary



$500 7.00 Sr Nts 1-Jun-16 B2/B- NC NC 100.13 6.96 596

Financial Profile FY09 FY10 FY11E 4Q10A 4Q11E Comps Yield Leverage Coverage Ratings

Revenue 11,160.0 12,134.1 13,127.7 3,153.0 3,368.2 Dean Foods 6.96% 5.2x 2.9x B2/B-

EBITDA 940.4 748.3 728.0 184.7 200.0 Constellation 4.74% 3.4x 4.8x Ba2/BB+

Del Monte 8.10% 6.4x 2.4x B3/CCC+


Cash Taxes 152.1 73.5 (360.5) 14.4 27.5

CapEx 268.2 302.0 325.4 121.4 110.0

Free Cash Flow 273.7 124.5 507.9 (21.7) (1.0)

Total Debt 4,489.3 4,067.5 3,791.0 4,067.5 3,791.0

Cash 36.0 92.0 150.1 92.0 150.1





EBITDA margin 8.43% 6.17% 5.55% 5.86% 5.94%

Capitalization FY11E

AmtDebt to EBITDA Liquidity 3Q11A

Revolver ($225, L+125) due 4/2/12 0.0 Revolver Size 1,500.0

Revolver, L+325 ($1275) due 4/2/14 0.0 Letters of Credit 169.9

Tranche A Term , L+ 125 (due 4/2/12) 71.1 Borrowings 46.5

Tranche A Term L+325 (due 4/2/14) 588.7 Revolver Availability 1,283.6

Tranche B Term L+150 (due 4/2/14) 677.3

Tranche B Term L+325 (due 4/2/16) 1040.4

Total Secured Debt 2377.5 3.3x A/R facility 600.0

Borrowings 385.0

7.00% Notes due 2016 498.8 A/R Availability 215.0

6.90% Notes due 2017 128.7

Capital Lease Obligations 1.0

9.75% Senior Notes due 2017 400.0 Cash 107.7

Receivables-backed facility 385.0

Total Sub debt 1413.5 Total Liquidity 1,606.3


Market Cap 2020.7



Next Call

Dean Foods is the largest processor and distributor of milk and various other dairy products in the United States. It has two divisions: (1) Fresh Dairy Direct-Morningstar, the largest US processor and distributor of milk, creamer, and cultured dairy products, selling its products under a variety of local and regional brand names and under private labels; and (2) WhiteWave-Alpro, which develops, manufactures, markets, and sells a variety of nationally branded soy, dairy, and dairy-related products, such as Silk soymilk, Horizon Organic dairy products, International Delight coffee creamers, and Land O'Lakes creamers and fluid dairy products.

Key Dates/Catalysts:February Class 1 Mover prices and mid-February fourth quarter earnings release

Investment Strengths:- Leading position as only national dairy beverage company- Deep customer relationships across all channels. - Low cyclicality for dairy demand

Investment Risks:- High debt leverage- Demanding amortization schedule- Continued dairy pricing pressure- Price sensitivity to organic- Further anti-trust settlements

Company Description

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2012 2013 2014+



Del Monte Foods (DLM) Updated: 1/26/12 Karen Eltrich 212-902-6957



OUTPERFORM

Bond Summary



$1,300 7.625 Sr Notes 15-Feb-19 B3/CCC+ $103.81 15-Feb-14 97.50 8.10 649


Revenue 3,739.8 3,666.1 3,792.0 969.4 1,022.7 Dean Foods 6.96% 5.2x 2.9x B2/B-

EBITDA 620.8 661.6 584.3 191.4 165.6 Constellation 4.74% 3.4x 4.8x Ba2/BB+

Del Monte 8.10% 6.4x 2.4x B3/CCC+


Cash Taxes 139.9 90.8 34.0 48.2 21.7

CapEx 104.9 82.5 77.2 13.1 22.0

Free Cash Flow 259.7 329.0 232.8 111.3 63.9

Total Debt 1,290.8 4,002.0 3,749.8 1,275.3 3,945.9

Cash 53.7 205.2 117.5 74.0 117.5





EBITDA margin 16.60% 18.05% 15.41% 19.74% 16.19%

Capitalization FY2012E

Description AmountDebt to EBITDA Liquidity 2Q12A

Revolver ($750, due 3/8/16) 0.0 Revolver Size 750.0

Term Loan L+300, 150 libor floor (due 2445.0 Letters of Credit 38.2

Borrowings 0.0

Total Secured Debt 2445.0 4.2x Revolver Availability 651.8

7.625% Senior Sub Nts (due 2/15/19) 1300.0

Other 4.0 A/R facility NA

Total Sub debt 3749.0 6.4x Borrowings 0

A/R Availability NA

Cash 117.5


Market Cap (Shareholders' Equity) NA

Enterprise Value (Total Book Cap) NA

Maturities & required payments:

Next Call

0500

1,0001,5002,0002,5003,0003,5004,0004,500

2012 2013 2014+

Del Monte Foods is one of the largest producers, distributors, and marketers of premium-quality, branded food and pet products for the US retail market. Its leading brands are Del Monte, Contadina, S&W, and other brand names, and its pet food and pet snacks include the brands 9Lives, Kibbles 'n Bits, Pup-Peroni, Snausages, Pounce, Meow Mix, Alley Cat, Milk-Bone, and other brand names.

Key Dates/Catalysts:Early March, third quarter earnings

Investment Strengths:- Strong brands; DLM billion-dollar brand- Holds No. 1 or No. 2 position in its major categories- Pet food and snacks, which now comprise 60% of operating income, are growth categories- Significant free cash flow generation- Pet appeared to stabilize in 2Q

Investment Risks:- Relapse in pet if competitors behave irrationally- Inability to pass through pricing as expected- Potential for acquisitions

Company Description



Delta Air Lines Inc. (DAL) Updated 1/24/2012 Justine Fisher 212-357-6711

Contact analyst or see latest research for updates to ratings, estimates, and other information. Joshua Pinkerton 212-357-9774

OUTPERFORM/UNDERPERFORMBond Summary



$120 8.954 EETC 10-Aug-14 Ba3/B NC NC 99.8 9.09% 888

$499 7.750 EETC 17-Dec-19 Baa2/A- NC NC 107.0 5.89% 512

$601 9.500 Sr. Secured 15-Sep-14 Ba2/BB- NC NC 106.5 5.26% 516


Revenue 31,755 9,153 9,816 8,133 34,849 34,375

EBITDAR 4,565 1,088 1,311 964 3,732 3,988

Interest Expense (1,004) (186) (229) (224) (907) (881)

Income Taxes (15) 4 2 (15) 62 (65)

CapEx (1,342) (313) (233) (350) (1,236) (1,200)

Free Cash Flow 1,490 673 (331) 147 937 1,721


Cash 4,019 4,254 3,670 3,783 3,783 4,592 UAL 2.6x 5.4x B2/B

Net Debt 11,233 10,407 10,824 10,677 10,677 9,089 DAL 3.9x 4.1x B2/B

Key Credit Statistics LUV 2.1x 9.9x Baa3/BBB-

EBITDA/Interest 4.5 x 5.8 x 5.7 x 4.3 x 4.1 x 4.5 x JBLU 4.5x 4.6x B3/B-

Leverage 3.3 x 3.9 x 3.4 x LCC 3.6x 3.9x Caa1/B-

EBITDA margin 14.4% 11.9% 13.4% 11.9% 10.7% 11.6%

Capitalization


EBITDAR Liquidity

Secured debt payable through 2022 6,738.0 Revolver Size 1,800

6.718% due 1/2/23 (2002-1, G-1) 287.6 Letters of Credit 0

6.417% due 7/2/12 (2002-1, G-2) 370.3 Borrowings 0

6.821% due 8/10/22 (2007-1, A) 699.1 Revolver Availability 1,800

8.021% due 8/10/22 (2007-1, B) 190.3

8.954% due 8/10/14 (2007-1, C) 116.7

7.75% due 12/17/19 (2009-1, A) 531.7

Other 5,560.2


Market Cap 8,657.8 Cash 3,670

Enterprise Value 19,481.8 5.2 x Total Liquidity 5,470

Maturities:

Next Call

Delta is the world's second-largest airline. It operates domestic and international routes through its mainline operations, along with the regional brand Delta Connection. It is a member of the Skyteam Alliance. Delta is headquartered in Atlanta and has its main hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York JFK, Salt Lake City, Amsterdam, and Tokyo Narita. It merged with Northwest in 2008.

Key Dates/Catalysts:- Delta is expected to report earnings on January 25.

0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2013 2014 2015 Thereafter

Investment Strengths:- Size: Delta is the world's second-largest airline. This has allowed it to complete deals with partners that would not be available to smaller competitors (for example the $2 billion credit card deal it signed with American Express). - Route structure: Delta acquired a strong route network in the Pacific when it bought Northwest. - New JFK terminal should help Delta gain a stronger foothold in New York when it is complete.

Investment Risks:- Japan risk: Delta is the largest US carrier with service into Tokyo Narita airport, which has seen a decline in travelers following the earthquake and tsunami. - Capital expenditures: Delta recently placed an order for 100 Boeing 737-900ERs. The company says it intends to finance the aircraft with cash, though this could entail additional debt as well. We think replacing ageing DC-9s is positive.- Acquisition risk: Recent press reports have indicated that Delta may make a bid for AMR.

Company Description



Denbury Resources (DNR) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM

Bond Summary



$400 6.375% Sr. 8/15/2021 B1/BB- $103.19 8/15/2016 $108.00 5.02% 425


Revenue $1,297 $1,035 $1,771 $2,205 $2,652

EBITDA (Adj for non-cash items) $861 $551 $1,007 $1,391 $1,769

Free Operating Cash Flow ($280) ($479) ($117) ($346) ($439)

Capital Expenditures $1,054 $1,010 $973 $1,350 $1,300


Total Debt/EBITDA (LTM) 1.0x 2.4x 2.4x 1.9x 1.7x CompsLeverage

('11E)Coverage


EBITDA/Interest Expense (LTM) 16.6x 9.2x 5.7x 7.9x 8.8x DNR 1.9x 7.9x B1/BB-


PXP 4.0x 7.0x B1/BB

Capitalization WLL 1.2x 22.0x Ba3/BB+





Senior notes 2013-21 $2,295 Revolver Availability $1,490

Other $0 Cash $24

Total Long Term Debt $2,295 Total Liquidity $1,514


Preferred Equity $0Common Equity $4,936


Maturities:

Next Call

DNR is one of the leaders in tertiary oil recovery using CO2 and has a dominant position in CO2 reserve ownership. The company owns the Jackson Dome CO2 source, the largest east of the Mississippi, and has a 750 mile existing/planned pipeline network. In late 2009, Denbury announced the acquisition of Encore Acquisition (EAC), which established a new core EOR area in the Rockies for Denbury. The addition of the EAC assets more than doubled Denbury's Enhanced Oil Recovery (EOR) potential. EAC also brought substantial positions in the Bakken and Haynesville shales.

Denbury's predecessor entity was incorporated in Canada in 1951. In 1992, that company acquired Denbury Management, Inc., in the US and subsequently divested all of its Canadian assets. Since 1992, the company has been exclusively focused on the US, primarily in LA, MS, AL, and TX. In December 1997, DNR acquired the Heidelberg field in MS from Chevron for $202 mn. In July 2004, the company sold its offshore assets for $200 mn. In September 2008, DNR exercised a call option to purchase the Hastings field from Venoco. In May 2009, the company announced the sale of 60% of its Barnett Shale acreage to privately held Talon Oil and Gas for $270 mn, and in late 2009 DNR divested the remainder of its Barnett assets to Talon. In November 2009, DNR made a transformative acquisition with the $4.5 bn purchase of Encore Acquisition. Encore began as a private equity portfolio company in 1998 and went public in March 2001. The company's primary expertise was in applying secondary and tertiary production techniques to hydrocarbon recovery. DNR plans to leverage EAC's shale exposure and EOR expertise going forward. Denbury also announced the acquisition of a 95% working interest in the Conroe Field in Texas for $431 mn. The company recently sold $900 mn of non-core assets that it acquired in the EAC acquisition. In June 2011, Denbury announced plans to acquire the remaining 57.5% interest in Riley Ridge that it did not already own for $191 mn. In January 2012, Denbury sold $155 mn in non-core properties.

Investment Strengths:• Production and reserves are both around 80% oil• Tertiary recovery operations have little geologic risk• Identified roadmap of nine development phases with expected peak production of 65k bbl/d in 2016 from around 24k bbl/d in 2009• Competitive advantage with ownership of Jackson Dome, a naturally occurring CO2 reservoir; high barriers to entry

Investment Risks:• Tertiary oil operations have inherently higher costs, which the company estimates at $15-$25 opex/bbl and $7-$12/bbl total capital cost, including acquisition and CO2; requires $35+ oil to be economic in most instances

Key Dates/Catalysts:• Additional non-core asset sales• Additional acquisitions

Company Description

0

200

400

600

800

1000

1200

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Dillard's Inc. (DDS) Updated: 1/26/12 Karen Eltrich 212-902-6957



NOT COVERED

Bond Summary



$162 7.13% Sr Nts 1-Aug-18 0 NC NC $106.70 5.88% 435


Revenue 6,988.5 6,226.6 6,253.5 6,308.8 Bon-Ton 46.32% 5.2x 1.9x Caa2/CCC+

EBITDA 166.5 421.3 600.8 687.3 Dillard's 5.88% 1.7x 0.0x B2/BB-

Express 5.98% 0.6x 0.0x B3/B+

Interest Expense 92.9 74.0 73.8 72.3 NMG 7.70% 5.5x 3.5x Caa1/B-

Cash TAZes (132.2) 27.7 85.4 120.5

CapEx 189.5 78.4 75.6 118.6

Free Cash Flow 16.3 241.2 366.0 375.9

Total Debt 1,209.0 973.5 960.0 1,046.0

Cash 96.8 341.7 343.3 131.3





EBITDA margin 2.38% 6.77% 9.61% 10.89%

Capitalization

Description AmtDebt to EBITDA Liquidity 3Q11A

Revolving Credit Facility ($1000mm due 2012) 142.0 Revolver Size 1,000.0

Letters of Credit 55.8

Borrowings 142.0


Senior Notes 692.1 A/R facility NA

7.5% Grnt'd Pfd Beneficial Int. in Sub Debs 200.0 Borrowings 0

Capital Lease 11.9 A/R Availability NA

Total Sub debt 904.0

Cash 131.3




Maturities:

Next Call

Dillard's ranks among the nation's largest fashion apparel and home furnishings retailers, with annual revenues of approximately $6.2 billion. The company operates more than 300 Dillard's locations across 29 states, all under the nameplate Dillard's.

Key Dates/Catalysts:mid-February, quarterly earnings release. Early February, January same stores sales.

Company Strengths:- Significant real estate value- One of the largest regional department store groups- Improving sales trends

Company Risks:- Unsecured notes have investment grade covenants (no change-of-control provision)- Strong family involvement limits detailed information on operations- High economic sensitivity; recent comps deceleration

Company Description

0100200300400500600700800900

2012 2013 2014+



DineEquity, Inc. (DIN) Updated: 1/26/12 Karen Eltrich 212-902-6957Jordan Hughes 212-357-7875


OUTPERFORM

Bond Summary



$785 9.50 Sr Nts 30-Oct-18 B3/CCC+ $104.75 30-Oct-14 107.50 7.59% 658


Revenue 1,414.0 1,333.1 1,069.7 299.8 236.7 DineEquity 7.59% 5.7x 2.3x B3/CCC+

EBITDA 352.8 352.0 313.6 78.1 64.5 Del Monte 8.34% 6.4x 2.4x B3/CCC+

Carrols 8.65% 3.3x 4.0x B2/B


Cash Taxes 5.2 (9.3) 26.8 (33.6) 5.1

CapEx 15.4 18.7 26.3 7.3 5.5

Free Cash Flow 145.8 171.1 125.3 64.4 20.1

Total Debt 2,124.6 2,038.9 1,787.9 2,038.9 1,787.9

Cash 82.3 102.3 53.8 102.3 53.8





EBITDA margin 24.95% 26.41% 29.31% 26.06% 27.23%

Capitalization 2011E


Revolver ($75mm due 10/31/15) 0.0 Revolver Size 75.0

Term Loan (L+300, 1.25 floor due 10/ 722.0 Letters of Credit 15.7



9.5% Senior Notes due 10/30/18 785.2

Capital Leases 312.1


Discount (31.4)


Market Cap 862.8 Total Liquidity 113.2



Next Call

DineEquity owns the leading US casual and family dining concepts in Applebee's and IHOP, respectively. Its restaurant base of primarily franchised restaurants generates system-wide sales of approximately $7 billion. The Applebee's system includes more than 2,000 restaurants (approximately 25% company-owned), and the IHOP system includes more than 1,500 restaurants (substantially all franchised).

Key Dates/Catalysts:Early March, earnings release.

Investment Strengths:- Leading brands in family and casual dining segments- Stable historical operating performance at IHOP- Applebee's turnaround under way- Strong cash flow generation from franchise-heavy model

Investment Risks:- Potential inability to refranchise remaining Applebee's restaurants at attractive prices- Highly competitive market- Franchise model limits growth upside

Company Description

0

500

1,000

1,500

2,000

2012 2013 2014+



DISH Network Corporation (DISH) Updated 1/20/12 Jason Kim 212-902-2233


IN-LINEOur In-Line rating reflects the binary nature of the implications from DISH's decision with respect to its spectrum holdings and wireless strategy. On the one hand, DISH could be an attractive

acquisition candidate to large telcos that would be interested in DISH's spectrum position if the company can get an FCC waiver. On the other hand, if DISH attempts to pursue a more aggressive

wireless strategy that would require meaningful amount of capital, the bonds could be vulnerable given the trading levels, although this is somewhat offset by DISH's strong credit profile currently.

Bond Summary



$1,400 7.875 DISH DBS Sr Nts 1-Sep-19 Ba3/BB- NC NC 114.75 5.47 380


Subscribers 14,100 14,133 14,056 13,945 13,930 13,930

Revenue $11,664 $12,641 $3,590 $3,603 $3,646 $14,062

Adj. EBITDA 2,688 3,150 979 854 783 3,488

Cash Flow From Ops $2,195 $2,140 $414 $733 $815 $2,806

CapEx (1,037) (1,216) (170) (191) (295) (889)

Free Cash Flow $1,157 $924 $244 $542 $519 $1,917

Total Debt $6,497 $6,515 $8,501 $8,407 $7,490 $7,490

Cash 2,139 2,940 4,593 3,365 2,075 2,075 Agency

Net Debt $4,357 $3,575 $3,909 $5,043 $5,415 $5,415 Comps Leverage Coverage Ratings


Total Debt/Adj. EBITDA 2.4x 2.1x 2.5x 2.4x 2.1x 2.1x CSC Holdings 3.1x 3.2x Ba3/BB

Net Debt/Adj. EBITDA 1.6x 1.1x 1.1x 1.4x 1.6x 1.6x Videotron 2.0x 6.7x Ba1/BB

Charter - CCOH 4.3x 2.8x B1/BB-

Adj. EBITDA/Interest 7.5x 7.3x 7.5x 6.9x 6.6x 6.6x

Adj. EBITDA Margin 23.0% 24.9% 27.3% 23.7% 21.5% 24.8%

Capitalization *

Debt to


Capital leases and other debt $343 Revolver Size $0

Total Capital Leases and Other Debt $343 0.1x Letters of Credit -

DDBS 7.000% Sr Nts due 2013 500 Borrowings -

DDBS 6.625% Sr Nts due 2014 1,000 Revolver Availability -

DDBS 7.750% Sr Nts due 2015 750

DDBS 7.125% Sr Nts due 2016 1,500 Cash* $2,450

DDBS 7.875% Sr Nts due 2019 1,400

DDBS 6.750% Sr Nts due 2021 2,000 Total Liquidity $2,450

Total DDBS Debt $7,493 2.1x *Includes marketable investment securities and pro forma for the redemption of the $914mn of the

Net Debt 5,043 1.4x 6.375% senior notes due 2011 on October 1, 2011.

Market Cap 11,216


* Pro forma for the redemption of the 6.375% senior notes due 2011, which matured on October 1, 2011.

Maturities:

DISH Network Corporation, a publicly traded holding company (Ticker: DISH), is a leading provider of satellite-delivered digital television to customers across the United States. As of September 30, 2011, DISH Network had approximately 14.0 million subscribers.

Key Dates/Catalysts:February 2012: 4Q2011 earnings.

Update on plans for spectrum and other potential investments/acquisitions.

FCC decision on whether or not to grant DISH a waiver to operate a terrestrial network without a satellite component in its 2Ghz spectrum band.

5001,000 750

5,243

0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Solid credit fundamentals: DISH exhibits some of the strongest credit metrics in the US cable & satellite sector, with LTM gross leverage of 2.4x (1.4x net) and significant free cash flow generation.

(2) Strong liquidity.

(3) Strategic optionality due to its spectrum holdings. The looming spectrum shortage in the U.S. wireless space has led to speculation that DISH could be attractive to a higher quality company.

Investment Risks:(1) Technological limitations: Unlike the cable companies, the business model of DBS providers is video-only.

(2) DISH has been very acquisitive recently, and the management team has not delineated a long-term capital allocation strategy to investors.

(3) The lack of clarity with respect to the company's wireless plans could serve as a credit overhang. A costly plan to enter the wireless market could be negative for the credit.

Company Description



Dole Foods Updated: 1/26/12 Karen Eltrich 212-902-6957Jordan Hughes 202-357-7875


IN-LINE

Bond Summary



$315 8.00 Sr Sec Nts 1-Oct-16 B3/B- $104.00 10/1/2012 106.13 4.54 409


Revenue 6,778.6 6,892.6 7,251.5 1,556.6 1,563.6 Chiquita 7.48% 4.1x 2.8x Caa1/B-

EBITDA 416.5 318.4 387.7 19.6 72.3 Dole 4.54% 4.2x 2.7x B2/B+



Cash Taxes 21.7 13.4 20.2 (6.4) 1.4

CapEx 51.2 108.0 80.8 48.0 25.0

Free Cash Flow 137.6 33.1 140.8 (58.7) 11.6

Total Debt 1,598.3 1,603.6 1,613.0 1,603.6 1,613.0

Cash 120.0 170.1 230.8 170.1 230.8





EBITDA margin 6.1% 4.6% 5.3% 1.3% 6.3%



Revolver ($350mm Capacity due 2016 0.0 Revolver Size 350.0

Term Loans due 7/13/18 L+375 897.8 Letters of Credit 82.1

13 7/8% Sr Sec Notes due 3/15/14 174.9 Borrowings 0.0

8% Sr Sec Notes due 10/1/16 315.0


8.875 Sr Notes due 3/15/11 0.0 A/R facility NA

8.75% Debs due 7/15/13 155.0 Borrowings 0.0

Various Notes due 2003-2014 36.5 A/R Availability NA

Capital Leases 57.2


Cash 190.6



Market Cap 815.2


Maturities:

Next Call

Founded in Hawaii in 1851, Dole is the world's largest producer and marketer of high-quality fresh fruit and fresh vegetables. The company does business in more than 90 countries. Dole also markets a growing line of packaged and frozen foods, and is a produce industry leader in nutrition education and research.

Key Dates/Catalysts:Mid-Late March; fourth quarter earnings release

Investment Strengths:- Strong, diversified global brand- Holds No. 1 or No. 2 position in the major markets in which it competes (bananas, pineapples, packaged salads, fruit cups)- Owns more than 20,000 acres in Oahu- Strong management team

Investment Risks:- Exposure to fluctuations in currency, commodity pricing, and fuel.- Has shown increased appetite for acquisitions

Company Description

0

200

400

600

800

1,000

1,200

1,400

1,600

2012 2013 2014+



DR Horton Inc. (DHI) Updated 1/26/2012 Kristen McDuffy 212-357-6157


OUTPERFORMWe rate DR Horton's 6.5% senior unsecured notes of 2016 Outperform. At current spread levels, we think the Horton bonds offer room for outperformance versus similarly

rated, comparably levered peers. Horton has been the most proactive among its peer group in terms of debt reduction; as a result, we believe that its credit metrics should continue to improve

relative to peers, and that the current spread differential between the DHI 6.5s and their tighter-trading comparables will converge.

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpOP 409 6.5 Sr. Nts 15-Apr-16 Ba3/BB- 105 5.16% 451


Total Revenues 4,400 3,637 4,123 1,098 1,098 930

Total Adjusted EBITDA 377 213 322 83 83 65

Cash Interest (173) (131) (88) (30) (30) (22) Debt-to- Inventory-


Capital Expenditures (19) (16) (12) (4) (4) (3) DR Horton 38% 2.2x Ba1/BB+

Free Cash Flow 619 (107) 124 62 62 3 Toll 38% 2.1x Ba3/BB-

Ryland 64% 0.9x B1/BB-

Total Balance Sheet Debt 2,172 1,705 1,705 1,705 1,705 1,705

Total Cash and Cash Equivalents 1,661 1,079 1,200 1,079 1,079 1,079


Homebuilding Debt / Capitalization 44% 38% 37% 38% 38% 38%


Inventories / Homebuilding Debt (2) 1.7x NA NA 2.2x 2.2x NA




Mortgage repurchase facility 117 Homebuilding Cash 716

Other secured 6 Marketable Securities 298

Total Secured 122 Financial Services Cash 17

6% senior notes - Restricted Cash 49

7.875% senior notes - Total Cash 1,079

5.375% senior notes -



2% convertible senior notes 418


5.25% senior bonds 157



Total debt outstanding 1,705

Minority Interest 2.9

Share Price 14.1



Maturities:

Next Call

MW

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015 2016

DR Horton is one the largest homebuilders in the United States, with operations in 26 states and 71 markets. The company is primarily focused on the entry level segment and favors a "spec strategy."

Key Dates/Catalysts:1QFY12 earning releaseFurther debt reduction

Investment Strengths:- Largest homebuilder in the United States based on LTM closings.- Broad geographic footprint.- Focus on entry level segment and spec strategy have enabled market share gains.- Lean cost structure, with one of the lowest SG&A/sales ratios among its peer group.- Conservative management team, committed to debt reduction.

Investment Risks:- Spec strategy could result in inventory overhang issues, which might require pricing reductions and compress gross margins.-Share buybacks.

Company Description



Dynegy Holdings, LLC (DYN) Updated 1/25/2012 Raymond M. Leung 212-357-5764

Contact analyst for updates and other information. Abayomi A. Adigun 212-902-9355

NOT COVERED

Bond Summary



$1,100 7.75 Sr Unsec'd 1-Jun-19 --/D -- -- 58.500 17.382 1543

Financial Profile FY08 FY09 FY10 LTM3Q11

Gross Margin 1,696 1,274 1,142 689

EBITDA - ex MtM and items 792 776 510 351

EBITDAR - ex M2M 885 873 563 404

Interest Expense (447) (421) (367) (378)

Cash Taxes (23) (2) (7) (7)

CapEx (611) (612) (333) (248)

Free Cash Flow (115) (252) (174) (286)

Lease Adjusted Debt 5,140 4,332 4,474 4,133

Cash 694 471 291 881

Net Debt 4,446 3,861 4,183 3,252 AES Corp* 4.1x 3.6x Ba3/BB-

Key Credit Statistics Calpine Corp 6.7x 2.0x B1/BB-

Lease Adj Debt/EBITDAR 5.8x 5.0x 8.0x 10.2x Dynegy 10.2x 1.1x –/D

Net Lease Adj Debt/EBITDAR 5.0x 4.4x 7.4x 8.1x Edison Mission 8.5x 1.4x Caa1/B-

GenOn 7.8x 1.1x B3/B

EBITDAR/Interest 2.0x 2.1x 1.5x 1.1x CMS 4.7x 3.7x Ba1/BB+

EBITDAR/Gross Margin 52% 69% 49% 59% NRG 4.7x 2.4x B1/BB-

*AES reflects sub distributions to parent obligations; LTM4Q2011

Capitalization-As of September 30, 2011


EBITDAR

Roseton/Danskammer Pass-thru* 550 Revolver Size -

Sithe - Synthetic LOC Size 660

Total Subsidiary/SLOB Debt 550 1.4x Total facilities 660

Dynegy Power (GasCo) 1,078 Letters of Credit (475)

Dynegy Midwest Generation (CoalCo) 588 Borrowings (19)

Other - Revolver Availability 166

Total Secured and Subsidiary debt 2,216 5.5x Cash Balances

Dynegy Holdings debt Dynegy Inc. 80

DHI 8.75% due 2012 89 Dynegy Holdings 12

DHI 7.5% due 2015 771 Dynegy Gas HoldCo 170

DHI 7.5% due 2015 - Dynegy Coal HoldCo 190

DHI 8.375% due 2016 1,044 Dynegy Power (GasCo) 106

DHI 7.125% due 2018 172 Dynegy Midwest Generation (CoalCo) 210

DHI 7.75% due 2019 1,100 Collateral Posting Account & Other 135

DHI 7.625% due 2026 171 Total Liquidity 1,069

Other -

Total Senior Debt 5,563 13.8x

DHI Subordinated 8.316% due 2027 200


Cash ex collateral posting 768

Net debt 4,995 12.4x

Market Cap 252

Enterprise Value (Net Debt) 5,247 13.0x

*Off-balance sheet

Maturities:

Next Call

Liquidity - As of Nov. 8, 2011


Dynegy Inc. (DYN) is engaged in the production and sale of electric energy with about 11.6GW of generation capacity. DYN is the parent to Dynegy Holdings, LLC, which is an intermediate-holding company that indirectly owns the company's 6.77GW of gas-fired generation held under Dynegy Power, LLC (GasCo) and Dynegy Northeast Generation, which holds the company's 1.7GW of plants related to Danskammer and Roseton. The company's 3.1GW coal-fired generation portfolio is held under Dynegy Midwest Generation LLC (CoalCo), which is an indirect subsidiary of DYN. On a consolidated basis, the company's generation portfolio operates in three regions: Midwest (42% of capacity), West (29%), and Northeast (29%). Baseload capacity accounts for 29% of total production. In November 2011, Dynegy Holdings and four of its subsidiaries (Dynegy Northeast Generation, Hudson Power LLC, Dynegy Danskammar LLC and Dynegy Roseton, LLC filed a petition for Chapter 11 bankruptcy protection.

Key Dates/Catalysts:- In early March, DYN is expected to report 4Q2011 earnings. Key areas of focus will be further clarity on the company's Ch. 11 debt restructuring, the company's current environmental compliance plan and hedging strategy. In a January 23 8K filing, the company indicated consolidated EBITDA of $245.1 million for 2012 and $459.7 million for 2013 with net debt of about $2.2 billion. - Ongoing developments related to the company's Chapter 11 bankruptcy filing.

0100200300400500600700800900

2012 2013 2014 2015

Company Strengths:- Generation portfolio diversity based on fuel, dispatch, and geographical location. Also the company's Baldwin coal plant is largely scrubbed.- Spending will decline over time owing to lower environmental expenditures. Capex is budgeted at $227 million for 2012, but declines to $141.9 million for 2013. - New management team with extensive industry experience.- Emphasis on cost cutting with targeted fixed cost reduction of $49 million in 2011 over 2010 and an additional $36 million expected in 2012. - First lien agreement hedging may free cash collateral.

Company Risks:- Leverage remains high. - Cash flow are exposed to volatile commodities market, which may pressure margins given the declining hedge profile and gas price environment. Hedges are 48%/20% in 2012 and 14%/3% in 2013 for GasCo/CoalCo. - Future environmental requirements may entail additional costs and spending. Remaining environmental capital spend is about $160 million through 1Q2013. Estimated total capital expenditures are approximately $960 million.

Company Description



Edison Mission Energy (EIX) Updated 1/25/2012 Raymond M. Leung 212-357-5764


IN-LINE

Bond Summary



$1,200 7.00 Sr Unsec'd 15-May-17 Caa1/B- MW+50 -- 55.500 21.454 2066

Financial Profile FY09 FY10 FY11E FY12E LTM3Q11

Revenue 2,317 2,368 2,224 2,248 2,239

EBITDA 729 704 465 259 504

EBITDAR 906 880 641 435 680


Cash Taxes (344) (263) (349) (320) (306)

CapEx (562) (736) (690) (565) (744)

Free Cash Flow 137 (119) (468) (450) (433)

Lease Adjusted Debt* 5,406 5,677 5,760 5,368 5,763

Cash 796 1,075 1,417 1,101 1,235 AES Corp* 4.1x 3.6x Ba3/BB-

Net Debt 4,610 4,602 4,343 4,267 4,528 Calpine Corp 6.7x 2.0x B1/BB-

Key Credit Statistics Dynegy 10.2x 1.1x –/D

Lease Adj Debt/EBITDAR 6.0x 6.5x 9.0x 12.3x 8.5x Edison Mission 8.5x 1.4x Caa1/B-

Net Lease Adj Debt/EBITDAR 5.1x 5.2x 6.8x 9.8x 6.7x GenOn 7.8x 1.1x B3/B


EBITDAR/Interest 2.0x 2.3x 1.4x 1.1x 1.4x NRG 4.7x 2.4x B1/BB-

EBITDAR margin 39% 37% 29% 19% 30% *AES reflects sub distributions to parent obligations; LTM4Q2011

Capitalization


EBITDAR Liquidity

Midwest Generation WC facility ($500) - Midwest Gen WC facility 500

Midwest Generation pass-thru 460 EME secured revolver 564

Homer City Funding pass-thru 678 Total Revolvers 1,064

Project financing and other subsidiary debt 926 Outstanding -

Total Project/Subsidiary Level Debt 2,063 3.0x LOC (68)

EME secured revolver ($564) - Revolver Availability 996

EME 7.5% due 2013 500 Cash

EME 7.75% due 2016 500 EME - Unrestricted 734

EME 7% due 5/15/17 1,200 MWG 333

EME 7.2% due 5/15/12019 800 Homer City 108

EME 7.5625% due 5/15/27 700 Other 60

Other debt - Total Cash 1,235

Total Edison Mission Debt 5,763 8.5x Total Available Liquidity 2,231

Cash 1,235

Total Net Debt 4,528 6.7x

Market Cap NA

Enterprise Value NA

Maturities (excluding sale-lease back debt):

Next Call


Edison Mission Energy is an independent power production company that owns, operates, develops, and sells energy and capacity. Edison Mission's ultimate parent is Edison International (EIX), which also owns Southern California Edison Co., a regulated electric utility. Through a series of intermediate holding companies, Edison Mission owns Midwest Generation, a portfolio of 5.2GW of generating plants in Illinois, and EME Homer City Generation, which owns a 1.88GW of generating capacity in Pennsylvania. Mission operates roughly 10.3GW of generation capacity, with coal accounting for about 7.1GW. The portfolio also includes 1.68GW of wind capacity, with another 185MW under construction.Key Dates/Catalysts:- On February 29, EIX expects to report 4Q2011 results. Along with a business and environmental spend update, we will focus on future wind expenditures and environmental plans and hedging position. The company expects adjusted EBITDA of $529 million in 2011 at Edison Mission Group.- June 2012, the company's credit facilities expire. Also the company has a 2013 bond maturity. - Update on the environmental spending strategy to comply with the Illinois consent decree projected at $1.2 bn at Midwest Gen and Homer City's environmental spending of $500-$700 million. - The three rating agencies have Edison Mission on review for downgrade or a negative outlook. - Status of the construction of the 479MW Walnut Creek plant. - In May 2012, results of the PJM RPM 2015-2016 capacity auction are expected.

0

100

200

300

400

500

600

700

2012 2013 2014

Investment Strengths:- Generation portfolio provides a degree of asset protection, with about 921MW of unencumbered wind assets. Overall, wind business is mostly contracted.- Tax-credits and vendor/bank financings are expected to help fund its wind development program. Also, tax-sharing with parent, EIX, could provide a benefit. - Near-term liquidity is supported by the company's large cash balance of $1.3 billion. - Coal assets are eligible for PJM capacity auction revenues.

Investment Risks:- Leverage is expected to rise to over 10x on a lease-adjusted debt to EBITDAR ratio owing to negative free cash flow due to lower margins as a result of lower realized power prices and higher coal transportation costs. - The lowest hedges amongst IPPs: Midwest Gen's energy output is 29% hedged for 2012. Homer City's hedged energy output is about 12% for 2012. - More-aggressive stance in dealing with bondholders.- Future environmental requirements will elevate spending to comply with the Illinois consent decree, with about $1.2 billion for SO2 compliance. - Expiration of the company's rail contract may result in higher transportation and fuel costs after 2011. - Refinancing requirements tied to the maturity of its 2012 bank line and 2013 bond. - Lack of explicit support from parent.

Company Description



El Paso Corp. (EP) Updated: 1/26/12 Jason Gilbert (212) 902-3585


NOT RATED

Bond Summary



$477 7.250% Sr. 6/1/2018 Ba3/BB- $111.50 5.10% 394

Financial Profile 2007A 2008A 2009A 2010A

Revenue $4,648 $5,153 $4,949 $4,637

EBITDA (Adj for non-cash items) $3,080 $3,425 $3,243 $3,263

Free Operating Cash Flow ($690) ($387) ($695) ($2,228)

Capital Expenditures $2,495 $2,757 $2,810 $4,073

Credit Ratios 2007A 2008A 2009A 2010A

Total Debt/EBITDA (LTM) 4.2x 2.3x 2.7x 4.6x

EBITDA/Interest Expense (LTM) 3.1x 6.7x 3.0x 3.1x

Debt to Capitalization % 71% 78% 81% 78%

Capitalization


Leverage ('10)

Coverage ('10)

Agency Ratings

Cash and equivalents $390 Revolver Size $3,250 EP 4.6x 3.1x Ba3/BB-

Revolving Credit Facility $1,250 Letters of Credit $600 WMB 2.8x 5.1x A3/A-

Long Term Debt Borrowings $1,250

Senior notes, various $12,181 Revolver Availability $1,400

Total Long Term Debt $12,181 Cash $390

Total Debt $13,431 4.5x Total Liquidity $1,790

Preferred Equity $0



Maturities:

Next Call

NC

El Paso has transformed itself from a diversified production, processing, power, and pipeline conglomerate to a pure play focused on E&P and pipeline activities. The company's pipeline network is a world-class asset, with significant capacity expansions available. The E&P business has attractive opportunities in the Haynesville and Eagle Ford shales, as well as the Altamount oil program.

In 2003, El Paso had $22.5 bn of debt, debt/cap of 83%, and EBITDA/interest expense of 0.9x. The company's E&P business experienced significant reserve write-downs, particularly from EP's Gulf of Mexico properties. As a result of operational and liquidity challenges, EP significantly underperformed the peer group from 2003 to 2006. Beginning in 2H2005 EP began selling non-core assets and raised $5.8 bn for debt reduction. Debt came down to just over $14 bn by the end of 2006. The company streamlined the business portfolio from five segments to two by 2007: pipelines and E&P. EP also restructured its E&P business, consolidating all E&P operations into El Paso Exploration and Production Company, increasing reserve life (RP ratio from six years in 2003 to almost 10 in 2006) and reducing its focus on higher-risk offshore prospects. EP acquired E&P company Medicine Bow Energy Corp. in August 2005 for $800 mn. In February 2007, EP sold its ANR pipeline to TransCanada for $4.14 bn. In August 2007, EP acquired Houston-based E&P People's Production for $875 mn in cash. People's had significant assets in Arkansas, Louisiana, and Texas – particularly South Texas. In December 2008, EP raised $200 mn through sales of non-core assets, including a stake in a Brazilian power plant. In 2010, the company began actively dropping assets down into its MLP, raising approximately $2.4 bn YTD. The company announced its first dropdown of 2011 in March with the sale of 22% of Southern Natural Gas Company to EPB for $587 mn. In May 2011, El Paso announced plans to separate the company, with plans to spin off the E&P business. In October 2011, Kinder Morgan agreed to acquire El Paso for $26.87/share. The transaction is pending.

Company Strengths:• Largest pipeline company in US, with significant growth opportunities• Pipeline business is extremely stable and insulated from fluctuations in commodity prices

Company Risks:• Total debt is still more than $13 bn• Natural gas exposure

Key Dates/Catalysts:• Further non-core asset sales, including dropdowns to the MLP• Completion of acquisition by Kinder Morgan

Company Description

0

500

1000

1500

2000

2500

201

2

201

3

201

4

201

5

201

6

201

7

201

8

201

9

202

0

202

1

202

2

Deb

t ma

turi

ties

($ m

n)



Elan Corporation (ELN) Erin Blum 212-855-7718


IN-LINE

Bond Summary



$625 8.75 Sr. Uns. 15-Oct-16 B2/B $108.750 10/15/2012 $109.375 5.402% 518

Financial Profile 2009A 2010A 2011E* 4Q10A 3Q11A 4Q11E

Revenue $1,113 $1,170 $1,263 $309 $329 $288

EBITDA 96 166 227 46 60 44


Cash Taxes 46 2 4 (1) (5) 0

CapEx 39 44 31 10 10 10

Free Cash Flow (125) 24 (20) 1 93 7

Total Debt $1,540 $1,285 $626 $1,285 $1,285 $626

Cash & marketable securities 844 422 343 422 1,009 343

Net Debt 696 863 283 863 276 283


Total Debt/EBITDA 16.0x 7.7x 2.8x LTM Comps Leverage Coverage Ratings

Net Debt/EBITDA 7.2x 5.2x 1.2x Elan Pharma (ELN) 4.8x 2.4x B2/B

Bausch & Lomb (BOL) 5.0x 3.4x Caa1/B

EBITDA/Interest 0.7x 1.4x 2.2x 1.6x 2.1x 3.2x Catalent (PTSAC) snr 5.6x NA Caa1/B

EBITDA margin 8.6% 14.2% 18.0% 14.9% 18.4% 15.3%

*2011E estimate includes 3 historical quarters containing EDT revenue.

Capitalization - Pro forma for the sale of EDT

Description Actual

Debt to PF LTM

EBITDA** Liquidity

Term Loans $0 Revolver Size $0

Total Sr Sec debt 0 0.0x Letters of Credit 0

Borrowings 0

8.875% Sr. Notes due 12/1/2013* 2 Revolver Availability 0

L+412.5 Sr. Notes due12/1/2013* 0

8.75% Sr Notes due 10/15/2016* 625 A/R facility $0

Total Sr debt 626 4.8x Borrowings 0

A/R Availability 0

Other $0

Total Debt $626 4.8x Cash & marketable securities* $350

Market Cap 8,251 Total Liquidity $350

Enterprise Value $8,527 64.9x * 3Q11 cash less proceeds for post quarter paydown of debt.

* PF for debt pay down after 3Q11 quarter end.

** PF LTM EBITDA is actual LTM EBITDA less EDT EBITDA.

Maturities:

Next Call

We continue to rate ELN In-Line. While proactive debt repurchase seems more likely than we previously thought, we believe this is fully reflected at current levels. The first call price is $108.75 in October 2012. Elan EBITDA is now completely derived from one drug and leverage remains moderately high at 3.6x on a 3Q2011 annualized basis.

Updated 01/25/12

0

100

200

300

400

500

600

700

2012 2013 2014 2015+

Elan is a neuro-science based biotech company focused on autoimmune diseases such as multiple sclerosis, and neurodegenerative diseases such as Alzheimer’s and Parkinson's. The franchise drug Tysabri was introduced to treat MS in November 2004. Three months later, ELN and Biogen (BIIB) pulled the drug due to three cases (two fatal) of PML, a very rare brain infection. The FDA re-approved Tysabri in June 2006 and the drug was also approved for commercial distribution in July 2006 in the EU. Elan owns a 25% stake in a leading Alzheimer's disease drug candidate, bapineuzumab. Pfizer and Johnson & Johnson (JNJ) are the partners.

In September 2010, two of ELN's directors resigned from the board after auditor McKenna Long & Aldridge cleared ELN of any wrongdoing despite shareholder and director allegations.

In May 2011, ELN announced the sale of EDT (a contract manufacturer) to Alkermes for $500 mn in cash and $460 mn in shares. ELN closed the sale of EDT in mid September 2011. ELN has tendered at par for the 2016s and the 2013 FRNs, and at $103.239 for the 2013s. In 3Q11, ELN announced that post quarter end, it repurchased $200 mn face value of the 2016 notes in a private transaction.

Key Dates/Catalysts:- Expected debt repayment. Monetization of Alkermes stock position over time could result in additional debt reduction. - Quarterly earnings - especially Tysabri adoption.- Market uptake of oral MS drugs Gilenia (Novartis) and updates on oral drug candidate BG-12 (Biogen).- From JNJ and Pfizer: mid-2012 data on Phase III trials for Alzheimer's disease drug bapineuzumab.

Investment Strengths:- Sizable equity market cap provides cushion to bonds.

- Large cash balance. ELN also has a 25% stake in ALKS, a $1.6 bn company. ELN could monetize this over time and use the proceeds to further delever.

- Differentiated science. Widely recognized superior efficacy of Tysabri in an underserved multiple sclerosis patient population.

Investment Risks:- Very concentrated revenue base. Post the sale of EDT, ELN EBITDA is now completely derived from one drug.

- Likely need to contribute funding to JAI's bapineuzumab in 1H2012. As of 3Q11, JAI has roughly $126 mn of the original $500 mn JNJ funding remaining and its current spend rate is $50 mn per quarter to fund its AIP programs.

- Tysabri adoption: The incidence of PML is rising as more patients remain on the drug beyond 24 months. This and Gilenia (oral MS drug) are major competitive concerns.

Company Description



Emergency Medical Services Erin Blum 212-855-7718


NOT COVERED

Bond Summary



$950 8.125 Sr 1-Jun-19 Caa1/B- 106.094 6/1/2014 $101.500 7.772% 698

Financial Profile 2009A 2010A 4Q10A 1Q11A 2Q11A 3Q11A

Revenue $2,570 $2,859 $734 $761 $780 $788

EBITDA 281 318 81 84 73 89


Cash Taxes 69 85 22 23 1 4

CapEx 45 49 18 15 6 16

Free Cash Flow 183 87 11 41 22 22 Agency


Total Debt $454 $421 $421 $411 $2,392 $2,373 EMS 7.3x 1.9x Caa1/B-

Cash 333 287 287 335 187 134 IAS 6.0x 2.1x Caa1/CCC+

Net Debt 121 134 134 76 2,205 2,239 KND 4.6x 4.4x B3/B-





EBITDA margin 11.0% 11.1% 11.1% 11.1% 9.3% 11.3%

Capitalization


EBITDA Liquidity

Revolver 5/25/2016 0 Revolver Size $350

Term Loan due 2018 1440 Letters of Credit 0

Total Sr Sec debt 1440 4.4x Borrowings 0

Revolver Availability 350

8.125% Senior notes 6/1/2019 950

Total Sr debt 950 7.3x Cash $134

Total Liquidity 484

Other 2


Market Cap NA

Enterprise Value NA

Maturities:

Updated 01/25/12

Next Call

EMS is a provider of medical transportation services and facility-based physician services in the US, operating under two brands: American Medical Response or AMR (48% of revenue) and EmCare (52%).

AMR provides pre and post hospital transport for both emergency and non-emergency, ground and fixed-wing air. AMR has roughly a 7% market share of the total ambulance market. EmCare provides facility-based physician services, including ER staffing, inpatient services, radiology, and anesthesiology. EmCare has roughly an 8% market share of the ER services market.

In May 2011, Clayton, Dubilier & Rice acquired EMS for $3.2 bn.

Key Dates/Catalysts:- Quarterly earnings announcements. (In 3Q2010, EMS walked away from 17contracts, which is higher than the company's historal average in the low teens; terminating more unprofitable contracts could depress earnings.)- Potential acquisitions as the ambulatory services market is fragmented. - Potential extension of "Medicare Extenders" to keep ambulance rates from being cut.- Reimbursement risk surrounding the Medicare "doc fix".

0

500

1000

1500

2000

2500

3000

2012 2013 2014 2015+

Company Strengths:- EMS's scale and geographic outreach provide a competitive advantage over smaller players. AMR operates in 38 states and EmCare provides services in 40 states.

- By law, most communities are required to provide ambulatory services. Approximately 86% of EMS's net revenues are generated under exclusive contracts. Non-emergency services are under non-exclusive contracts.

Company Risks:- EmCare's business model of targeting smaller hospitals in tough markets could be risky even though EmCare may obtain subsidies or walk-away rights. EMS walked away from 17 contracts in 3Q2010, which was higher than the company's historical average in the low teens.

- Weak hospital utilization could imply weak results for EMS unless ER utilization picks up.

- Highly levered at low 7x.



Endo Pharmaceuticals (ENDP) Erin Blum 212-855-7718


UNDERPERFORM

Bond Summary



$500 7.000 Sr. 15-Jul-19 Ba3/BB- $103.500 15-Jul-15 $108.500 5.191% 440

Financial Profile 2010A PF LTM* 2011E 4Q10A 3Q11A 4Q11E

Revenue $1,716 $2,885 $2,732 $511 $759 $805

EBITDA 670 1,037 998 201 283 299


Cash Taxes 134 131 154 31 34 54

CapEx 20 47 54 9 15 16

Free Cash Flow 434 566 574 162 190 193

Total Debt $1,185 $3,735 $3,721 $1,185 $3,735 $3,721


Net Debt 718 3,315 3,080 718 3,315 3,080 Agency


Total Debt/EBITDA 1.8x 3.6x 3.7x Endo (ENDP) 3.6x 4.9x Ba3/BB-

Net Debt/EBITDA 1.1x 3.2x 3.1x Warner Chilcott (WCRX) 2.7x 5.8x B3/B+

Valeant (VRX) 4.3x 4.6x B1/BB-

EBITDA/Interest 14.4x 4.9x 7.3x 14.6x 5.4x 7.5x Mylan (MYL) 3.1x 4.6x B1/BB-

EBITDA margin 39.0% 35.9% 36.5% 39.4% 37.3% 37.1%

*PF LTM includes a full year impact of all acquisitions. 2011E does not.

Capitalization

Description Amount

Debt to LTM

EBITDA

Debt to 2012E

EBITDA Liquidity

Revolver $0 Revolver Size $500

Term Loan A 4/14/2016 $1,486 Letters of Credit 0

Term Loan B 4/14/2018 $563 Borrowings 0


7% senior notes due 12/15/2020 400 Cash & marketable securities $420

7% senior notes due 7/15/2019 500 Total Liquidity $920

7.25% senior notes due 1/15/2022 $400

Total Sub debt 1,300 3.2x 3.4x

1.75% Sub Convertible notes 4/15/15 $380

Other $5


Market Cap NA

Enterprise Value NA

Maturities:

Updated 01/25/12

We rate ENDP Underperform. While the company has a stated leverage target of 2-2.5x by 2013, has repaid debt in 3Q, and expects further repayment in 4Q, we see this as already priced in to the bonds. Thus, we think risk is to the downside. We also think potential risk surrounding (1) the transition to new Opana ER and (2) unknown fate of Lidoderm as Watson’s 30-month stay expires June 2012, could cause the pace of delevering to slow or lead the company to pursue acquisitions to fill top line.

Next Call

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2012 2013 2014 2015+

Endo Pharmaceuticals is a specialty pharma and medical device company specializing in pain, urology, endocrinology and oncology with a portfolio of branded drugs, generic drugs, medical devices, capital equipment and practice management services. Endo sells 175 products, with its largest product Lidoderm, a pain patch, contributing 28% of LTM PF sales. Lidoderm has patent protection until 2015 but two generic companies WPI and MYL have filed paragraph IV challenges. Consensus assumes generic entry some time in 2014-2015. WPI's 30-month stay expires June 2012.

In December 2010, ENDP closed its acquisition of Qualitest, making it the fifth largest player in generics. It also enhanced ENDP's pain franchise as 40% of Qualitest sales had been in pain.

In June 2011, ENDP closed its acquisition of American Medical Systems (AMMD), which it financed with over $2.5 billion of debt. AMMD added critical mass to ENDP's medical device and urology presence.

In December 2011, ENDP received approval for its new tamper resistant formulation of Opana ER. In January 2012, ENDP announced that there may be shortages of Opana and other opiod products due to the temporary shutdown of Novartis' plant in Lincoln, Nebraska. Management expects full production levels of the new formulation by the end of 1Q or early 2Q2012.

Key Dates/Catalysts:- Quarterly earnings. Management has guided to high single digit growth in devices which we think could prove too optimistic. Transition to the new formulation of Opana ER will be important for the franchise.- Potential settlement on Lidoderm patent challenges from WPI and MYL that could allow generic entry prior to the 2015 patent expiration. Trial is set for February 2012. WPI's 30-month stay expires June 2012.

Investment Strengths:- Stated leverage target range of 2x-2.5x. ENDP has stated that its focus post the AMMD acquisition would be to delever. However, the pace of delevering will depend on management appetite for bolt-on acquisitions.

- Medical devices products are lower risk profile than pharma due to their shorter and less expensive development time frame and lack of a sharp patent cliff. Entry into medical devices segment also reduced revenue exposure to Lidoderm.

- Concentrated focus on pain and urology across its segments could present unique cross-selling opportunities. Management also sees urology as a favorable specialty due to the aging population and a shift toward more minimally invasive procedures.

Investment Risks:- Revenue concentration is high with Lidoderm at 28% of LTM PF sales. Consensus estimates imply generic entry some time between 2014-2015, but we see risk that a settlement could allow earlier competition. ENDP has settled with generic companies regarding challenges to Opana and Opana ER.

- An unsuccessful transition to the new formulation of Opana ER could cause market share loss as it did with the Oxycontin transition (Oxycontin is made by Purdue).

- Small "conglomerate" strategy could be risky. The few companies that have both substantial pharma, medical device and other healthcare segments are large companies with substantial scale in R&D and marketing such as JNJ, ABT and AGN.

Company Description



Energy XXI (EXXI) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM

Bond Summary



$750 9.250% Sr. 12/15/2017 Caa1/B $104.63 12/15/2014 $110.75 6.57% 627


Revenue $572 $417 $607 $1,099 $320


Free Operating Cash Flow $18 ($20) $10 $259 $77


CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E EXXI 1.7x 6.0x Caa1/B

Total Debt/EBITDA (LTM) 2.8x 3.8x 4.2x 1.7x 1.6x MMR 2.0x 15.5x Caa1/B

EBITDA/Interest Expense (LTM) 4.0x 2.9x 4.0x 6.0x 7.1x WTI 1.2x 15.8x Caa1/B


Capitalization






Senior notes 2019 $250 Cash $18

Total Long Term Debt $1,000 Total Liquidity $508


Preferred Equity $0



Maturities:

Next Call

EXXI is a Gulf of Mexico producer that has grown through debt-financed acquisitions and has significant exploration upside. The company's strategy is to acquire mature oilfields; management has indicated it is not interested in unconventional resource plays.

EXXI was initially established in July 2005 as a special purpose acquisition vehicle in London. The company went public in October 2005, and has since made several significant US GOM acquisitions. In February 2006, the company acquired Marlin Energy for $407 mn. In July 2006, it acquired Louisiana Gulf Coast producing properties from Castex for $312 mn. In June 2007, the company acquired Pogo's GOM shelf properties for $417 mn. In November 2009, Energy XXI announced it would acquire GOM shelf oil and gas properties from MitEnergy Upstream for $283 mn. These properties represent the remainder of the former Pogo properties. In November 2010, the company announced the acquisition of six GOM properties from ExxonMobil for $1.01 bn.

Investment Strengths:• MitEnergy and XOM acquisitions greatly enhance scale• Multiple exploration catalysts and growth opportunities, with Davy Jones as the highlight

Investment Risks:• Singularly focused on the US Gulf of Mexico; low asset diversification • Exposed to new regulations facing the Gulf following the Macondo spill• Aggressive debt-financed acquisition history• Short operating history

Key Dates/Catalysts:• Flow tests from Davy Jones I and II• First production from Davy Jones, expected in 1Q2012• Drilling at newly acquired Exxon Mobile (XOM) properties• Booking of reserves from Davy Jones• Additional acquisitions

Company Description

0

100

200

300

400

500

600

700

800

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Exopack Holding Corp. (EXOPAC) Updated 1/23/12 Joe Stivaletti (212) 902-3299


OUTPERFORM

Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) (bp)$235 10.000 Sr Nts 01-Jun-18 Caa1/CCC+ 107.500 01-Jun-14 102.500 9.389 836


FY:09 FY:10 3Q:10 2Q:11 3Q:11

Revenue 673.7 785.1 216.7 219.8 219.6

EBITDA 65.4 92.1 28.6 26.6 25.8



Total debt 288.6 389.3 402.6 596.4 599.9

Cash 0.6 2.5 1.5 2.5 1.3

Net debt 288.0 386.8 401.1 593.8 598.6

Key Credit Statistics Comps Leverage CoverageAgency Ratings

Total debt/EBITDA 4.4x 3.7x 4.1x 5.4x 5.6x Berry Plastics 6.4x 2.1x Caa1/CCC

Net debt/EBITDA 4.4x 3.7x 4.0x 5.4x 5.5x Crown Holdings 2.9x 4.9x Ba3/BB



EBITDA margin 9.7% 11.7% 13.2% 12.1% 11.7%



Revolving credit facility 2.5 3.3x Revolver size 75.0

Term loan 349.1 3.3x Borrowing base 75.0

Senior notes 235.0 5.6x Letters of credit 3.8

Capital lease obligation and other 13.2 5.6x Borrowings 2.5

Total debt 599.9 Revolver availability 68.7

Cash 1.3


Maturities:

Next Call

0

100

200

300

400

500

600

700

2012 2013 2014 2015+

Exopack produces flexible packaging products made from paper and plastic. The company operates manufacturing facilities in the US, UK, and Canada, and serves over 1,200 customers in a variety of industries including food, medical, pet food, chemicals, beverages, personal care, and lawn & garden.

Investment Strengths:- Recession-resistant business model: A substantial portion of Exopack's revenue comes from such products as charcoal and pet food bags, which are resistant to cyclical downturns. - Long-term relationships with blue-chip customers: Exopack converts and prints products for many big, stable consumer and industrial products companies such as Procter & Gamble, Masterfoods, Cargill, Clorox, and Kellogg’s.- Proven ability to pass through cost increases: Exopack has demonstrated a consistent ability to pass along paper and plastic raw material cost increases in the form of higher selling prices.

Investment Risks:- Additional M&A activity: Exopack has an opportunistic acquisition strategy, and additional acquisitions could increase leverage.

Company Description



Felcor Lodging Trust, Inc. (FCH) Updated 1/23/12 Kevin Coyne 212-357-9918


UNDERPERFORM: While we still expect FCH to recover further in 2011 as the overall lodging environment improves, we believe the FCH 10% secured notes have limited upside

at current levels. We believe the collateral package may shrink as four of its 14 properties are up for sale and FCH has the option to make a par offer to bondholders.

Bond Summary

Size Coupon Agency Bid YTW STW Z-Spread 5-year


$492 10.000 Sr Sec Nts 1-Oct-14 B2 / B- MW T+50 110.38 5.75 553 516 550

Financial Profile 2010A 1Q11A 2Q11A 3Q11A 4Q11E 2011E

Revenue 933 235 257 246 234 972

Adj EBITDA 188 44 64 52 48 208



CapEx 39 15 23 23 34 95 Comps Leverage Coverage Ratings

Free Cash Flow 6 (5) 6 (5) (22) (26) FCH 7.7x 1.5x B2 / B-

HST 5.7x 3.9x Ba1/BB+

Total Debt (incl converts)* 1,601 1,517 1,649 1,587 1,567 1,567 HOT 3.3x 4.7x Ba1/BB+

Cash 201 91 231 117 88 88 GET 5.8x 2.7x Caa2/B

Net Debt 1,401 1,426 1,418 1,470 1,479 1,479 RCL 5.3x 7.0x Ba2/BB


Total Debt/EBITDA 8.5x 7.8x 8.2x 7.7x 7.5x 7.5x Qtr Occupancy ADR RevPAR

Net Debt/EBITDA 7.4x 7.4x 7.0x 7.2x 7.1x 7.1x 3Q11 75.9% 103.43$ $99.04

2Q11 76.3% 129.68$ 98.94$

Adj. EBITDA/Interest 1.3x 1.3x 1.8x 1.5x 1.3x 1.5x 1Q11 69.6% 127.88$ 88.97$

Adj. EBITDA margin 20.2% 18.7% 24.9% 21.1% 20.6% 21.4% 4Q10 66.2% 120.47$ 79.77$

* excludes OID on 10% notes 3Q10* 74.7% 126.21$ 94.31$

2Q10* 74.9% 125.45$ 93.97$

1Q10 67.9% 123.02$ 83.67$

* 2Q/3Q typically seasonally stronger quarters.

Capitalization

Description 3Q11Debt to EBITDA Liquidity 3Q11 Enterprise Value

Term loan (none) - Line of credit 225 Shares o/s (mm) 124.6

Senior secured revolver (L+450) due Aug 2014 - Letters of Credit - Stock price 3.94$

Total Mortgage Debt 570 Borrowings - Market cap 491

10% senior secured notes due Oct 2014 492 Revolver Availability 225 Net debt 1,470

6.75% senior secured notes due June 2019 525 Preferred equity 479

Total senior secured debt 1,587 7.7x Minority interest 28

Cash 117 Enterprise value (EV) 2,468

Total Liquidity 342

-0.5720346

EV / LTM EBITDA 12.0x

Maturities:

Next Call

0

200

400

600

800

2012 2013 2014 2015 2016+

Felcor Lodging Trust is a real estate investment trust ("REIT") that concentrates on upscale and full-service hotels throughout the US and Canada. Felcor, which is the nation's largest owner of all-suite hotels, owns 76 consolidated hotels in 22 states. Felcor is the largest owner of Embassy Suites Hotels and Doubletree Guest Suites hotels. Other hotels are flagged under global brands such as Embassy Suites Hotels, Doubletree, Hilton, Sheraton, Westin, and Holiday Inn. Significant equity holders include Vanguard Group (10%) and Apollo Management (6%), according to Bloomberg.

Key Dates/Catalysts:- Revised 2011 guidance: Expect RevPAR increase of between 6%-7% (vs. 6%-7.5%), adjusted EBITDA of $207-210 mn (vs. $207-213 mn), capex of $95 mn (vs. $85 mn), and interest expense of $141 mn.- 2Q2011: Sold three hotels for $54 million, out of the first group of 14 hotels brought to market in 4Q2010. - 3Q2011: Sold three hotels for proceeds of $46 million. Subsequent to 3Q2011, sold one hotel in Dallas and one hotel in Toronto. In the near future, management expects to begin marketing an additional 15 non-strategic hotels for sale.- October 2011: Amended a $178 million CMBS loan that was due to mature in November 2011. FCH extended the maturity by two years in exchange for a L+220 interest rate and a $20 million principal repayment.

Investment Strengths:- Well-diversified portfolio of properties and well-recognized brand names.- Ample asset coverage.- Common dividends suspended in December 2008. - Share repurchases prohibited when leverage exceeds 4.85x.- CMBS and mortgage debt is non-recourse to FCH.- Leverage target of 4.0x-4.5x.

Investment Risks:- Cyclical business that fluctuates with economic cycle when business / leisure travel slows.- Subject to falling real estate values. Current state of real estate and credit markets increases risk in terms of FCH's ability to refinance upcoming maturities successfully.- The transformative nature of its portfolio repositioning may cause FCH to lose momentum during the ongoing recovery in the lodging sector.- Six out of 60 owned hotels are unencumbered as of 2Q2011.

Company Description



First Data Corp. (FDC) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$784 9.875 Senior 24-Sep-15 Caa1/B- 104.94 2/27/2012 98.25 10.5% 1,016

$748 10.550 Senior PIK 24-Sep-15 Caa1/B- 105.28 2/27/2012 98.50 10.4% 1,052

$2,500 11.250 Sr. Subs 31-Mar-16 Caa2/CCC+ 105.63 2/27/2012 87.88 15.3% 1,498


Adjusted Revenues 6,795 6,279 6,441 6,543 6,563 6,736

Adjusted EBITDA 2,574 2,132 2,027 2,157 2,191 2,290

Cash Interest Expense (1,480) (1,416) (1,396) (1,555) (1,434) (1,832)


CapEx (512) (379) (370) (384) (195) (235)

Free Cash Flow (76) 0 385 382 562 (43)

Total Debt 22,573 22,610 22,709 22,803 22,770 22,870

Cash 406 737 510 402 686 643

Net Debt 22,166 21,873 22,200 22,401 22,084 22,227


Total Debt/EBITDA (OpCo) 8.8 x 10.6 x 11.2 x 10.6 x 10.4 x 10.0 x

Net Debt/EBITDA (OpCo) 8.6 x 10.3 x 11.0 x 10.4 x 10.1 x 9.7 x


EBITDA margin 37.9% 33.9% 31.5% 33.0% 33.4% 34.0%

Capitalization LTM 3Q11 FY11E Liquidity (F11E)

Description SizeDebt to EBITDA Size

Debt to EBITDA Revolver Size 1,518

Revolver due 9/24/13 (L+275) 11 5.9 x 0 5.8 x - Amt Drawn 11

Revolver due 9/24/16 (L+400) 22 5.9 x 0 5.8 x - LC's 45

Term Loan - B1 (L+275) due 9/24/14 2,483 5.9 x 2,483 5.8 x Amt Unutilized 1,462

Term Loan - Delayed Draw 37 5.9 x 37 5.8 x Cash 402

Term Loan - Euro (L+275) due 9/24/14 415 5.9 x 415 5.8 x Liquidity 1,865

Term Loan - B2 (L+275) due 9/24/14 2,227 5.9 x 2,227 5.8 x Foreign lines of credit* 267

Term Loan - B3 (L+275) due 9/24/14 1,417 5.9 x 1,417 5.8 x

Term Loan - Ext (L+400) due 3/24/18 4,667 5.9 x 4,667 5.8 x

7.375% Secured Notes due 2019 750 5.9 x 750 5.8 x

8.875% Secured Notes due 2020 510 5.9 x 510 5.8 x

Foreign bank lines 55 5.9 x 55 5.8 x Maturities:

Capital Leases & Other 178 5.9 x 178 5.8 x

8.25% 2nd Lien Secured Notes due 2021 2,000 7.3 x 2,000 7.2 x

8.75%/10.0% 2nd Lien PIK Tog Nts due 2022 1,000 7.3 x 1,000 7.2 x

9.875% Senior Nts due 2015 784 9.4 x 784 9.3 x

10.55% Senior PIK Nts due 2015 748 9.4 x 748 9.3 x

12.625% Unsecured Notes due 2021 3,000 9.4 x 3,000 9.3 x

11.25% Sr Sub Nts due 2016 2,500 10.6 x 2,500 10.4 x

Total OpCo Debt 22,803 10.6 x 22,770 10.4 x

Less cash 402 -- 686 --

Net Debt 22,401 10.4 x 22,084 10.1 x

Next Call

First Data Corporation is the largest third-party independent merchant acquiring company in the world. It provides electronic commerce and payment solutions for merchants, financial institutions, and card issuers. The company is organized into three primary segments through which it reports revenues and earnings: Retail & Alliance Services, Financial Services, and International. The Retail & Alliance Services segment consists of its businesses that facilitate a merchant’s ability to accept credit, debit, stored-value and loyalty cards, and checks. First Data’s Financial Services segment provides debit network access as well as credit and retail card processing services to a broad range of financial institutions. The International segment operates in four primary geographic regions and provides services similar to the other two segments for both merchant and financial customers. The company was purchased through an LBO by KKR in 2007.

Key Dates/Catalysts:- First Data is expected to report 4Q earnings in early February- The debit interchange fee limitation, a provision of the Durbin Amendment, took effect on October 1, 2011. The network exclusivity provision will take effect on April 1, 2012. We expect management to provide more commentary during earnings calls on industry participants' responses to these regulations. - We remain focused on the potential for First Data to refinance its senior unsecured notes due 2015 as part of another potential amend-to-extend offer to the lenders.

$0.0

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

$14,000.0

2011 2013 2013 2014 2015 2016 After

Investment Strengths:- Transaction mix improving: Transaction volume growth in 3Q2011 was driven by a recovery in credit card transactions, which carry higher margins for merchant acquirers like FDC. While the trend has moderated in 4Q2011, the most recent quarter's growth in credit transactions still exceeds that reported in 1Q2011 and 2Q2011.- BAMS alliance accretion: FDC expects BAMS to drive $125 million of incremental savings over the next few years as it further integrates the platform.- Extending a long runway: First Data has achieved success in extending future debt maturities and currently has no funded debt maturing until Sep-2014. We anticipate that the company will continue to focus on ways to further improve its ability to grow into its capital structure, including future A-to-E transactions and bond refinancings.- Leading market position: FDC continues to control close to a 50% share of US-based transaction volumes within the merchant acquiring market.

Investment Risks:- Highly levered capital structure: FDC remained over 10x levered as of 3Q2011. We expect leverage to decline slowly over time, but FDC's debt service needs provide marginal room for error.- Competitive market environment: Competition is high in the merchant acquiring segment, and in the card account and network processing segment.- Weak free cash flow profile: We expect free cash flow to be marginal over the next few years as FDC spends much of its $2 billion of EBITDA on cash interest ($1.8 billion) and capex ($440 million).

Company Description



Ford Motor Company (F) Updated 1/26/12 Brian Jacoby, CFA 212-902-3258

Ford Motor Credit Company (FMCC) Cody Sauer, CFA 212-855-8553


OUTPERFORM/OUTPERFORM

Bond Summary

Size Coupon Agency Bid YTW T-sprd 5-year

Company (MM) (%) Priority Maturity Ratings Price (%) bp CDS

Ford $361 6.500 Sr. Unsec 1-Aug-18 Ba2/BB+ $108.00 5.0 425 331

Ford $1,794 7.450 Sr. Unsec 16-Jul-31 Ba2/BB+ $122.00 5.6 246 331

FMCC $1,500 8.000 Sr. Unsec 15-Dec-16 Ba1/BB+ $117.50 4.0 322 265

FMCC $1,000 5.875 Sr. Unsec 2-Aug-21 Ba1/BB+ $108.50 4.8 276 265

Financial Profile* ($MN) FY08 FY09 FY10 LTM3Q11 FY11E FY12E FY13E

Revenue 129,166 103,868 119,280 125,787 129,079 131,657 139,542

EBITDA 1,041 3,033 9,963 10,100 10,244 11,524 12,982

Interest Expense 1,938 1,477 1,807 966 815 724 675

Consolidated Net Income (14,672) 2,717 6,561 6,788 7,910 6,079 7,203

Depreciation & Amortization 5,803 3,743 3,876 3,680 3,606 4,000 4,025

Other oper cash flow incl pension 2,429 (7,286) (3,974) (2,447) (3,796) (1,750) (2,300)

Change in Working Capital (6,000) 3,700 (100) 500 475 (100) 350

Net Auto Operating Cash Flow (12,440) 2,874 6,363 8,521 8,195 8,229 9,278

CapEx (6,620) (4,043) (4,066) (4,255) (4,621) (5,300) (5,500)

Dividends 0 0 0 0 0 (760) (912)

Free Cash Flow (FCF) (19,060) (1,169) 2,297 4,266 3,574 2,169 2,866

Assets Sold (Acquired) 3,143 8 1,318 135 135 0 0

Debt Increase (Decrease) (287) 9,496 (12,107) (12,191) (5,844) 775 (1,050)

Stock Increase (Decrease) 756 2,450 1,339 109 0 0 0

Cash (to)/from FMCC & Ford Hldgs 9 1,000 2,700 4,100 3,000 0 0

Other Cash Flows (5,807) (245) 30 469 (365) (650) (600)

Total Chg in Cash, Equivs & ST VEBA (21,246) 11,540 (4,423) (3,112) 500 2,294 1,216

*FMCC accounted for on an equity basisCash & Equivs + Short-term VEBA 13,391 24,931 20,508 20,776 21,008 23,302 24,518

Total on-balance sheet Debt 1 25,846 33,610 19,077 12,654 13,154 13,929 12,879

Net Debt (Net Cash) 12,455 8,679 (1,431) (8,122) (7,854) (9,373) (11,639)

Debt-to- EBITDA

Key Credit Statistics Comps EBITDA Interest cov Agency Ratings

LTM Secured Debt/EBITDA 6.6x 6.9x 0.9x 0.5x 0.6x 0.6x 0.4x Chrysler Group LLC3 2.8x 3.7x B2/B

LTM Total Debt/EBITDA 24.8x 11.1x 1.9x 1.3x 1.3x 1.2x 1.0x General Motors Co.4 0.6x 13.0x Ba1/BB+

LTM FCF/Total Debt -73.7% -3.5% 12.0% 33.7% 27.2% 15.6% 22.3% 3 Pro forma for May 2011 bank/bond financing; 2nd lien bond ratings

EBITDA/Interest Expense 0.5x 2.1x 5.5x 10.5x 12.6x 15.9x 19.2x 4 Excludes GM Finance debt; corporate family debt ratings

EBITDA margin 0.8% 2.9% 8.4% 8.0% 7.9% 8.8% 9.3% Note: Chrysler and GM debt metrics exclude pension deficits1 Includes NPV of New UAW Note A and New Note B in 2009 and in 1Q2010

Capitalization - Ford (auto) 9/30/2011 Ford (auto) 9/30/2011

Description Size EBITDA (x) Liquidity

Revolver due Dec 2011 0 Revolvers 10,192

Revolver due Nov 2013 0 Letters of Credit/Other 0

Term Loan B1 due 2013 0 Borrowings 0

DOE Loans, EXIM & EIB 5,301 Revolver Availability 10,192

Total Sr Sec Debt 5,301 0.5x

6.500% 8/1/2018 361 Cash 20,776

7.450% 7/16/2031 1,794 Total Liquidity 30,968

Convertible Debt 700

Other Sr Unsec Debt 4,499

Total Sr Unsec Debt 7,353 1.3x

Subordinated Convertible Debt 0

Total Automotive Debt 12,654 1.3x

Pension deficit - tax adjusted 9,117

Total adj automotive debt 21,771 2.0x

Market Cap 49,355 4.9x


Debt Maturities:

Ford Motor Company is a global automotive manufacturer that operates in 200 markets, spanning six continents. The company is headquartered in Dearborn, Michigan, and employed 166,000 workers at the end of 3Q2011. Based on our estimate, Ford sold approximately 5.7 million vehicles worldwide in 2011, up from 5.3 million vehicles in 2010. In its largest market, North America, Ford sold approximately 2.5 million units in 2011 versus 2.4 million units in 2010. Approximately 58% of Ford's auto revenues were in North America, and it held a 16.8% US market share in 2011 compared to 16.7% in 2010. Ford's remaining sales came from Europe (27% of total), South America (8%), and Asia/Pacific/Africa (7%). Over the past few years, the company has trimmed its brands to just two: Ford and Lincoln. In 2010, Ford ended production of its Mercury-branded vehicles and sold its former Volvo car business to China's Zhejiang Geely Holding Group for $1.8 billion. Ford holds a 3.5% stake in Mazda that was reduced from 11% in 4Q2010. In 2008, Ford divested its Jaguar and Land Rover operations to Tata Motors for approximately $2.3 billion. The company’s CEO is Alan Mulally, and its core North American auto business is run by Mark Fields. Ford's wholly owned captive finance subsidiary, Ford Motor Credit Company (FMCC), provides vehicle financing to both retail and wholesale customers. FMCC ended 3Q2011 with total assets of $97.5 billion, cash and securities of $12.4 billion, managed receivables of $81.8 billion, and managed leverage of 8.0x. Ford expects FMCC's managed receivables to be approximately $82-87 billion by YE2011. Ford does not guarantee FMCC's debt, but it does have a support agreement with FMCC that requires Ford to make capital contributions to the finance company if FMCC's managed leverage exceeds 11.5x for a calendar quarter.

Key Dates/Catalysts:2H2012 - potential upgrade to investment grade by Moody's and Fitch in the fall of 2012.

Investment Strengths:Ford has significantly reduced its automotive debt and has a stated goal of returning to investment grade.

Ford has gained market share with its new small-car models such as the Fiesta and Focus, and its new 2013 Fusion sedan should generate further market share gains, in our view.

FMCC is a key strategic asset for Ford, as it provides both retail and wholesale customer financing, and continues to pay dividends to Ford.

Ford's current UAW contract provides the company with a competitive cost structure and we expect Ford's auto business to remain firmly profitable in 2012.

Investment Risks:The economies in the US and Europe have been slowing, and further weakness could result in lower global vehicle sales.

Ford carries a greater debt load than some of its competitors.

Ford must further strengthen its competitive position in fuel-efficient cars, as it tries to become less reliant on the SUV and full-size pickup truck segments.

FMCC's noninvestment grade ratings cause it to face higher funding costs versus some of its competitors (e.g., banks), and its capital structure is heavily weighted towards secured funding (ABS). FMCC's 2012 pretax profits will likely be lower year over year due to reduced gains on off-lease vehicles and higher provisioning.

Company Description

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2012 2013 2014 2015

($M

N)

Ford Motor Co. Ford Motor Credit



Forest Oil (FST) Updated: 1/26/12 Jason Gilbert (212) 902-3585


IN-LINE

Bond Summary



$1,000 7.250% Sr. 6/15/2019 B1/B $103.63 6/15/2012 $100.25 7.16% 639


Revenue $1,592 $1,167 $952 $834 $889

EBITDA (Adj for non-cash items) $1,244 $870 $689 $579 $642

Free Operating Cash Flow ($1,334) ($72) ($275) ($248) ($21)

Capital Expenditures $2,404 $669 $808 $754 $575

CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E FST 2.8x 4.0x B1/B

Total Debt/EBITDA (LTM) 2.2x 2.3x 2.7x 2.8x 3.0x CHK 2.0x 33.6x Ba3/BB+

EBITDA/Interest Expense (LTM) 9.9x 5.3x 4.6x 4.0x 4.9x NFX 1.8x 10.3x Ba2/BB+

Debt to Capitalization % 62% 65% 58% 57% 58% PXD 1.9x 8.6x Ba1/BBB-



Capitalization








Preferred Equity $0



Maturities:

Next Call

Forest is in the latter stages of a portfolio restructuring to focus on unconventional gas. Following the spin-off of Mariner (September 2005), Forest became smaller, longer-lived and more onshore focused. Then, in January 2007, FST announced the acquisition of The Houston Exploration Company for $1.5 bn, which added significant South Texas assets. In December 2009, the company sold its Permian Basin properties to SandRidge Energy for $838 mn. F&D costs have improved recently and are roughly in the middle of the peer group. Following significant portfolio changes, we expect FST to focus on its Granite Wash and Haynesville Shale properties.

In the past four years FST has redefined itself with over $3 bn of asset purchases and the sale of Gulf of Mexico and Alaska (August 2007), Canadian (July 2009; December 2009), and Permian Basin (December 2009) properties. The risk profile has changed dramatically, as FST no longer faces the Gulf of Mexico decline curve. In September 2008, FST completed the acquisition of Greater Buffalo Wallow and East Texas assets from Cordillera Texas LP for $873 mn. Concurrent with the acquisition, the company announced an agreement to sell a package of Rockies assets, which closed in November 2008 for $200 mn. In December 2009, Forest sold its Permian basin assets for $838 mn. In December 2010, Forest announced its plan to spin off its Canadian operations and carry out an IPO. The IPO was completed in June 2011. Forest is actively pursuing a JV partner in the Eagle Ford shale.

Investment Strengths:• Recent transactions have improved the quality of the portfolio and facilitated deleveraging• Compelling growth opportunities in the Granite Wash and Haynesville• Ample liquidity following recent transactions

Investment Risks:• Reinvestment risk after the Permian and Canadian divestitures• $1.1 bn special dividend to shareholders in March 2006 suggests management’s “equity friendly” nature• High natural gas exposure (72% of 2011E production)

Key Dates/Catalysts:• Bolt-on acquisitions or other uses of historically high cash balance• Granite Wash drilling results• Eagle Ford JV

Company Description

0

200

400

600

800

1000

1200

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Fortescue Metals Group Ltd (FMGAU) Updated 1/20/12 Justine Fisher 212-357-6711


OUTPERFORM

Bond Summary



$2,040 7.000% Sr Notes 1-Nov-15 B1/B 105.25 1-Nov-15 103.06 5.77 540

Fiscal year end June 30

Financial Profile FY10A 6/30/11A FY11A 12/31/11E FY12E FY13E

Revenue 3,220 2,909 5,442 1,608 6,735 7,846

EBITDA 1,223 1,475 2,765 796 3,474 3,471


Taxes 2 (358) (313) (86) (304) (383)

CapEx (584) (917) (1,428) (1,600) (5,700) (2,247)

Free Cash Flow 1,049 951 1,351 (1,210) (3,033) 435

Total Debt 2,976 4,662 4,662 6,063 5,965 5,761 Comps Leverage CoverageAgency Ratings

Cash 1,236 2,663 2,663 2,538 746 789 Peabody Energy 3.2x 11.4x BB+/Ba1

Net Debt 1,740 2,000 2,000 3,525 5,219 4,971 Steel Dynamics 2.7x 5.1x BB+/Ba2

Key Credit Statistics US Steel Corp. 4.3x 5.0x BB/B1

Total Debt/EBITDA 2.4X 3.2X 1.7X 7.6X 1.7X 1.7X FMG 7.6x 12.4x B1/B

EBITDA/Interest 3.1X 6.8X 6.4X 12.4X 11.0X 9.2X

EBITDA margin 37.98% 50.70% 50.80% 49.50% 51.58% 44.25%

Capitalization Liquidity

Description SizeFY12E Debt to EBITDA Revolver Size 600.0

Preference Shares 153.9 Letters of Credit -

2015 7% unsecured notes 2,040.0 Borrowings -

2016 6.375% unsecured notes 600.0 Revolver Availability 600.0

2018 6.875% unsecured notes 900.0

Add'l carrying value for unsecured notes 24.6 A/R facility -

Subordinated Loan Note (Leucadia) 943.9 Borrowings -

Total Debt 4,662.4 1.3x A/R Availability -

exclude all but $100m of Leucadia note (843.9)

Total Debt ex-Leucadia NPV adjustment 3,818.5 1.1x Cash 2,662.7

Market Cap 14,977.0 Total Liquidity 3,262.7

Enterprise Value 16,976.7 4.9x

Maturities

Next Call

Fortescue is an Australian iron ore company. It mines ore exclusively in Australia, and the bulk of its exports go to China.

Key Dates/Catalysts:- Current plans call for FMG to expand production from 40 million tons per year to 155 million tons.

0

1,000

2,000

3,000

4,000

5,000

2012 2013 Thereafter

Investment Strengths:- Growth: Current plans call for it to expand production from 40 million tons per year to 155 million tons. - Leverage: We foresee relatively low leverage of less than 2.0x for the next couple of years, even taking into account additional debt issuance to fund capex. - Size: We project $3.5 billion of EBITDA in FY2012 and $3.5 billion of EBITDA in FY2013, making FMG one of the largest companies in our coverage space. Its market capitalization is almost A$15 billion.

Investment Risks:- Cost overruns: FMG's growth capex budget could be low, leading to cost overruns and possibly additional debt issuance. - Access to the capital markets: If costs are greater than we expect or prices do not meet our forecasts, FMG may need to issue additional debt to meet its capex needs.- Lower iron ore prices: This could reduce EBITDA and require additional capital raising (possibly another $750 million, according to our estimates) to fund capex.

Company Description



Freescale Semiconductor (FSL) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$663 10.125 Sr Sec 15-Mar-18 Ba3/B 105.06 3/15/2014 112.50 6.0% 582

$250 8.875 Senior 15-Dec-14 Caa1/CCC+ 102.22 2/27/2012 102.75 1.5% 142

$764 10.125 Snr Subord 15-Dec-16 Caa2/CCC+ 105.06 2/27/2012 106.50 -9.1% (911)


Revenue 5,091 3,508 4,458 4,741 4,570 4,370

EBITDA 919 304 956 1,130 1,080 1,030



CapEx (239) (85) (282) (210) (192) (175)

Free Cash Flow 171 (9) 112 (94) 15 227

Total Debt 9,773 7,544 7,616 6,592 6,544 6,294

Cash 1,394 1,363 1,043 744 813 790 Comps Leverage Coverage Sr. Unsec

Net Debt 8,379 6,181 6,573 5,848 5,731 5,504 Ratings

Key Credit Statistics AMD 2.3x 5.0x Ba3/B+

Total Debt/EBITDA 10.6 x 24.8 x 8.0 x 5.8 x 6.1 x 6.1 x AMKR 2.3x 6.6x Ba3/BB

Net Debt/EBITDA 9.1 x 20.3 x 6.9 x 5.2 x 5.3 x 5.3 x NXP 3.3x 3.7x Caa1/B


EBITDA margin 18.1% 8.7% 21.4% 23.8% 23.6% 23.6%

Capitalization (FY11E)

Description SizeDebt to EBITDA Liquidity LTM

Replacement Revolver due 2016 0 3.9 x Revolver Size 425

Extended Term Loan (L+425) due 2016 2,215 3.9 x Borrow Base 425

10.125% Senior Secured Notes due 2018 663 3.9 x - Amt Drawn 0

9.25% Senior Secured Notes due 2018 1,380 3.9 x - Letters of Credit 22

Capital Leases & Other 3 3.9 x - Unavailable 0

8.875% Senior Notes due 2014 250 5.4 x Amt Unutilized 403

Senior FRN Notes due 2014 (L+387.5) 57 5.4 x Cash 744

10.75% Senior Notes due 2020 473 5.4 x Liquidity 1,147

8.05% Senior Notes due 2020 739 5.4 x

10.125% Senior Sub Notes due 2016 764 6.1 x


Less cash 813 --

Net Debt 5,731 5.3 x


Enterprise Value 9,562 8.9 x Maturities:

Next Call

Freescale Semiconductor is a global semiconductor manufacturer with leading technology in embedded chips. Based on revenues, it is among the 10 largest semiconductor companies in the world and in the top five in the US. The company was spun out from Motorola in July 2004 and remained a public company until the LBO by a consortium of sponsors led by Blackstone late in 2006. Continental and Motorola are FSL's largest customers, contributing approximately 10% of revenues each. Freescale's primary business units include Microcontroller Solutions (35% of sales), Cellular Products (10%, but being wound down), Networking & Multimedia (26%), and Radio Frequency, Analog & Sensors (25%).

Key Dates/Catalysts:- Freescale is expected to report 4Q2011 earnings on January 26.- September 1, 2014: If net leverage is greater than 4.0x and more than $500 million of the senior unsecured notes due 2014 remain outstanding, the extended term loan’s maturity (2016) accelerates to that date.

0.0

500.0

1,000.0

1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

2012 2013 2014 2015 2016 Thereafter

Investment Strengths:- Leading automotive semiconductor supplier: FSL is a leading semiconductor manufacturer, with 70% of its total sales generated by embedded chips.- Aggressive restructuring actions: FSL has been targeting to drive EBITDA margins toward 25%. - Adequate near-term liquidity: FSL completed a debt exchange in 2009 that reduced cash interest costs and total debt outstanding, but still left leverage at a very high level.

Investment Risks:- Free cash flow remains weak: Free cash flow was negative in 1Q2011, 2Q2011, and 3Q2011. We remain concerned about escalating costs, which we believe should consume much of FSL’s incremental cash flow, especially in light of recent macro headwinds- High leverage: Despite a 2011 LBO and successful debt exchanges, the FSL LBO pushed the limits in terms of the amount of leverage a semiconductor company can bear and the balance sheet remains highly levered.- Cellular wind-down remains a top-line headwind: Revenues at the cellular products business declined from a peak of $1.5 billion to less than $500 million LTM as of 3Q11.

Company Description



Frontier Communications Corporation (FTR) Updated 1/20/12 Jason Kim 212-902-2233


UNDERPERFORMOur Underperform ratings on the FTR bonds reflect our belief that top-line challenges will prove to be more persistent than the market expects. While we believe FTR will meet and

ultimately beat its synergy targets, we think that revenue trend is a more important issue to focus on given the significant reverse operating leverage excluding synergies.

Bond Summary



$1,100 8.500 Sr Nts 15-Apr-20 Ba2/BB NC NC 101.00 8.33 650

$945 9.000 Sr Nts 15-Aug-31 Ba2/BB NC NC 91.00 10.06 732

Financial Profile * FY09A FY10A 2Q11A 3Q11A 4Q11E FY11E

Residential Lines ('000s) 4,095 3,636 3,429 3,345 3,271 3,271

YoY % Change NA (11.2%) (11.1%) (10.5%) (10.0%) (10.0%)

HSD Customers ('000s) 1,695 1,697 1,715 1,729 1,739 1,739

YoY % Change 7.5% 0.1% 1.1% 2.2% 2.5% 2.5%

Total Access Lines ('000s) 6,311 5,746 5,490 5,374 5,283 5,283

YoY % Change (10.1%) (9.0%) (8.6%) (8.5%) (8.0%) (8.0%)

Revenue $6,071 $5,652 $1,322 $1,291 $1,272 $5,232

EBITDA 2,968 2,645 634 609 599 2,469

FCF After Dividends 174 115 (60) (44) (32) (19)

Agency

Total Debt $4,884 $8,327 $8,249 $8,248 $8,350 $8,350 Comps Leverage Coverage Ratings

Cash 359 251 233 206 275 275

Net Debt 4,525 8,076 8,016 8,042 8,074 8,074 WIN 3.5x 3.2x Ba3/B+

Key Credit Statistics Charter - CCOH 4.3x 2.8x B1/BB-

Total Debt/EBITDA 4.2x 3.1x 3.2x 3.3x 3.4x 3.4x CVC Corp 4.0x 3.2x B1/B+

Net Debt/EBITDA 3.9x 3.0x 3.1x 3.2x 3.3x 3.3x Sprint 3.3x 4.0x B3/B+

EBITDA Margin 48.9% 46.8% 47.9% 47.2% 47.1% 47.2%

* Operating metrics, revenue, and EBITDA figures are pro forma for the VZ access lines acquisition.

Capitalization*

Debt /


Subsidiary Debt $60 Revolver Size $750

Total Subsidiary / Other Debt $60 Letters of Credit -

Unsecured RC ($750mm Facility) - Borrowings -

Unsecured TL 575 Revolver Availability $750

Sr Nts & Debentures 7,715

Total FTR Debt $8,350 3.4x Cash $206


Net Debt $8,144 3.3x

Market Cap 6,080


*Pro forma for the October 2011 refinancing transaction

Maturities:

Frontier Communications Corporation is the largest pure rural telecommunications carrier and the fifth-largest Incumbent Local Exchange Carrier in the United States. Frontier’s services include voice, high-speed Internet, satellite video (through agreements with DISH), wireless Internet data access, data security solutions, bundled offerings, specialized bundles for small businesses and home offices, and advanced business communications Access Solutions for medium and large businesses. Frontier operates in 27 states with over 15,000 employees.

Key Dates/Catalysts:February 23, 2012: 4Q2011 earnings.

Access line trends in acquired VZ markets.

Update on systems conversion progress and outlook on the company's dividend.

95639 659 859

6,099

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Strong management team: FTR's team has a proven track record of integrating acquisitions.

(2) Synergies: FTR expects to achieve $600 mn in run-rate synergies by the end of 2012 from its VZ access lines acquisition.

(3) No meaningful secured debt: FTR's capital structure currently consists of mostly unsecured debt.

Investment Risks:(1) Top-line pressure: Largely owing to continued heavy access line losses in the acquired VZ markets, FTR faces challenges in trying to stabilize its revenue trends.

(2) Event risk from system conversions: FTR successfully converted four markets soon after it acquired the VZ properties. Over the next year, it will convert the remaining nine states' systems to FTR's platform.

(3) Regulatory changes: FTR derived 12% of its revenues from revenues tied to regulation (USF and ICC). Since status quo is probably the best-case scenario for FTR, we believe regulatory reforms would likely affect FTR's revenue and EBITDA negatively.

Company Description



Gannett Co. (GCI) Updated 1/23/2012 Scott Wipperman 212-357-9922

Contact analyst or see latest research for updates to ratings, estimates, and other information. Scott Marchakitus 212-902-9760

OUTPERFORMOur Outperform rating is driven by GCI's business diversity, free cash flow generation, and improved balance sheet.

Bond Summary

Size Coupon Agency Bid YTW STW 5-year

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp CDS

$250 8.750 Sr Guar 15-Nov-14 Baa3/BB 111.50 4.324% 411 265/285

$250 9.375 Sr Guar 15-Nov-17 Baa3/BB 104.688 11/15/13 111.50 5.095% 488

Financial Profile FY09 FY10A FY11E FY12E

Revenue 5,613 5,462 5,234 5,244

Adjusted EBITDA 1,090 1,273 1,147 1,229


Operating Cash Flow 913 773 757 713

CapEx (68) (69) (71) (90)

Dividends (119) (38) (47) (90)

Free Cash Flow 726 666 639 533

Total Debt 3,062 2,352 1,778 1,478

Cash 99 183 124 175

Net Debt 2,963 2,169 1,654 1,303

Key Credit Statistics CompsGross

Leverage CoverageAgency Ratings

Total Debt/EBITDA 2.8x 1.8x 1.6x 1.2x NYT 2.2x 3.7x B1/B+

Net Debt/EBITDA 2.7x 1.7x 1.4x 1.1x MNI 4.7x 2.1x Caa1/B-

EBITDA/Interest 6.2x 7.4x 6.9x 8.9x RRD 3.1x 4.7x Ba1/BB+

EBITDA margin 19.4% 23.3% 21.9% 23.4%

Capitalization


Revolver Borrowings 395 Revolver Size 1,630 Matures September 30, 2014

Total Bank Debt 395 Letters of Credit -

8.75% due Nov 15, 2014 250 Borrowings 395

10.0% due June 1, 2015 67 Revolver Availability 1,235

6.375% due Sept 1, 2015 250

10.0% due April 1, 2016 193

9.375% due Nov 15, 2017 250 Cash 196

7.125% due Sept 18, 2018 250 Total Liquidity 1,431

Total Sub Guarantee Debt 1,655 1.8x Credit agreement maintenance

6.375% due April 1, 2012 307 covenants:

Total Debt 1,962 1.8x Sr Leverage (as defined) 3.5x

Market Cap 2,521


Maturities:

Next Call

Gannett is a leading news information provider, with publishing, broadcasting, and digital operations. GCI publishes 82 dailynewspapers and roughly 850 non-daily publications in the US. Its newspaper properties include USA Today, which is one of the largest papers in the US, with average daily circulation of roughly 1.8 million. In addition, Gannett owns the second-largest publishing operation in the UK, Newsquest. Newsquest has 17 daily newspapers and over 200 non-daily newspapers, magazines, and trade publications. Its Broadcasting segment operates 23 local television stations in the US, with a market reach of more than 20.8 million households. Finally, Gannett owns an array of digital properties including a majority stake in Career Builder, ShopLocal, PointRoll, and Ripple6.

Key Dates/Catalysts:- 4Q2011 earnings on January 30, 2012. - Company may look to term out revolver borrowings.

Investment Strengths:- Gannett has a strong portfolio of digital properties, including a majority stake in Career Builder, ShopLocal, and Ripple6. - Strong business diversity with significant broadcasting operations (23 local TV stations). - USA Today is one of the largest papers in the US, with average daily circulation of roughly 1.8 million.- GCI generates significant free cash flow. - GCI is at the forefront in terms of experimenting with creative news distribution, including its shift of the Detroit Free Press to a hybrid print/digital model and its focus on improving Sunday circulation at its 30 largest papers. - Broadcasting segment should benefit from political advertising and Olympics in 2012.

Investment Risks:- Company could look to return more capital to shareholders in 2012. - GCI has indicated it could be more acquisitive in the digital space. - Local advertising market is growing more competitive. - Longer-term secular concerns with print advertising and Local Broadcasting market.- Sizable pension deficit at year-end 2010 of roughly $349 million (qualified plans).- Additional large-scale expense cuts will be difficult amid rising newsprint costs and tougher comps. - Double-dip recession or weaker economy could further weaken ad revenue.

Company Description

0

100

200

300

400

500

600

700

800

2012 2013 2014



Gaylord Entertainment Company (GET) Updated 1/23/12 Kevin Coyne 212-357-9918


IN-LINE: We believe the bonds are fairly valued as yield-to-call paper and given the expectation that lodging room rates are expected to continue to rebound

in 2012 as group visitation rebounds.

Bond Summary

Size Coupon Agency Bid YTW STW Z-Spread


$152 6.75 Sr Nts 15-Nov-14 Caa2/B 101.125 Current 100.375 6.24 614 575


Revenue 772 221 237 225 265 947

Adj EBITDA (CCF) 149 46 63 49 59 217


Cash Taxes (65) (0) (8) 1 3 (4)

CapEx 195 37 24 32 8 102

Free Cash Flow (62) (12) 26 (3) 26 36 Comps Leverage Coverage Ratings

FCH 7.7x 1.5x B2 / B-

Total Debt 1,159 1,162 1,165 1,071 1,071 1,071 HST 5.7x 3.9x Ba1/BB+

Cash 124 87 111 12 41 41 HOT 3.3x 4.7x Ba1/BB+

Net Debt 1,035 1,075 1,054 1,059 1,030 1,030 GET 5.8x 2.7x Caa2/B

Key Credit Statistics RCL 5.3x 7.0x Ba2/BB

Total Debt / Adj EBITDA 7.8x 7.7x 7.4x 5.8x 4.9x 4.9x

Net Debt / Adj EBITDA 6.9x 7.1x 6.7x 5.7x 4.8x 4.8x Qtr Occupancy ADR RevPAR

3Q11 73.6% 158.15$ 117.25$

Adj. EBITDA / Interest 1.8x 2.2x 2.9x 2.7x 2.6x 2.6x 2Q11 73.2% 173.65$ 126.68$

Adj. EBITDA margin 19.3% 20.9% 26.5% 21.7% 22.3% 22.9% 1Q11 69.3% 162.76$ 113.21$

4Q10 69.5% 158.86$ 110.51$

3Q10 74.7% 154.91$ 117.68$

2Q10 72.2% 169.20$ 123.03$

Capitalization

Description 3Q11ADebt to EBITDA Liquidity 3Q11A Enterprise Value

Credit facility due 8/1/15 (L+225) 200 Line of credit 525 Shares o/s (mm) 48.4

Term loan due 8/1/15 400 Letters of credit 8 Stock price 28.75$

Senior secured debt 600 3.2x Borrowings 200 Market cap 1,392

6.75% senior notes due 2014 152 Revolver availability 317 Net debt 1,059

3.75% convertible notes due 2014 360 Enterprise value (EV) 2,450

Nashville Predators promissory note -

Capital lease obligations & other (41) EV / LTM EBITDA 13.2x

Total debt (book value) 1,071 5.8x Cash 12 EV / 2011E EBITDA 11.3x

Total liquidity 329 EV / 2012E EBITDA 10.6x

Excludes $475 million accordion.

Maturities:

4Q10A 1Q11A 2Q11A 3Q11A

Gaylord Opryland 38$ 60$ 73$ 72$

Gaylord Palms 41 45 38 27

Gaylord Texan 56 50 46 48

Gaylord National 63 52 60 58

Other 16 12 20 21

Total revenue 213 221 237 225

Next Call

Property revenue

0

200

400

600

2012 2013 2014 2015 2016+

Gaylord Entertainment Company (GET) is a lodging company that focuses on the large group meetings segment. GET's primary properties include Gaylord Opryland Resort & Convention Center in Nashville, Tennessee; the Gaylord Palms Resort & Convention Center near Orlando, Florida; the Gaylord Texan Resort & Convention Center near Dallas, Texas; and Gaylord National Resort & Convention Center near Washington DC (opened April 2008). These four properties are among the largest in the industry. GET also owns and operates the Grand Ole Opry. According to Bloomberg, significant equityholders include TRT Holdings (22%), Columbia Wanger (15%), GAMCO (9%), and Dimensional Fund Advisors (6%).

Key Dates/Catalysts:- Revised 2011 guidance: Based on RevPAR increase of 3%-5% (vs. 5.5%-7.5%) and total RevPAR increase of 0.5%-2.5% (vs. 4%-6%), GET expects adjusted EBITDA (consolidated cash flow) of $164-168 million (vs. $170-177 million) for its Gaylord Palms, Texan, and National properties. Including results at Opryland and other, GET expects total adjusted EBITDA of $215-225 million (vs. $215-230 million) including a RevPAR increase of 17%-19% and a total RevPAR increase of 15%-17% at Gaylord Opryland.- 2012 guidance: Expects 2012 adjusted EBITDA of $228-243 million due to a RevPAR increase of 3%-6% and a total RevPAR increase of 2%-5%.- August 2011: Refinanced existing credit facility with new $925 facility consisting of a $525 mn revolver and a $400 mn term loan with initial pricing of L+225 bp. The credit facility includes a $475 mn accordion term loan.- August 2011: Extended its shareholder rights plan by one year to August 12, 2012, following volatility in the market and significant stock purchases by TRT Holdings.- November 2011: S&P upgraded corporate credit rating to B+ from B and senior unsecured rating to B from B-outlook is stable owing to improved credit metrics despite additional borrowing for its planned Denver project.- February 7, 2012: 4Q2011 earnings release.

Investment Strengths:- Strong brand name in meeting industry.- Higher visibility due to longer booking lead times generally associated with corporate clients. - All-in-one facilities allow for capturing of additional dollars spent by guests (e.g., restaurant and spa business).- GET repurchased $29 million of the 6.75% senior notes during 2010.

Investment Risks:- Relatively small portfolio of properties.- High concentration of large group meeting business.- Term loan has uncommitted accordion feature that can increase size of term loan by $475 million, which would prime the bonds.- Restricted payment capacity at the end of 2Q2011: $380 million.- Plans to build an $800 million hotel and entertainment complex on an 85-acre site near Denver International Airport. GET expects to open the 1,500 room complex in early 2016. Project risk includes uncertainty about groups' desire to hold meetings in Denver.- Washington D.C. property, Gaylord National, continues to feel pressure from reduced government and government-related business.

Company Description



GenOn Energy Corp. (GEN) Updated 1/25/2012 Raymond M. Leung 212-357-5764


OUTPERFORM/IN-LINEOur Outperform on the 2017 and 2018 reflect attractive relative value and the expectations of a strong liquidity profile and improving credit metrics owing to higher capacity prices in 2013.

Bond Summary


Issuer (MM) (%) Priority Maturity Ratings Price Date Price (%) bp

GEN $725 7.875 Sr Unsec'd 15-Jun-17 B3/B MW+50 -- 90.75 10.15 935

GEN $675 9.500 Sr Unsec'd 15-Oct-18 B3/B MW+50 -- 93.00 11.00 1020

GEN $550 9.875 Sr Unsec'd 15-Oct-20 B3/B MW+50 -- 94.50 10.86 886

GEN-AG $450 8.500 Sr Unsec'd 1-Oct-21 B3/BB- MW+37.5 -- 90.50 10.06 805

Financial Profile FY10 FY11E FY12E FY13E LTM3Q11

Gross Margins 1,307 1,807 1,618 1,825 1,523

EBITDA 503 603 449 634 518

EBITDAR - ex M2M 651 762 601 786 666

Lease Adjusted Interest Expense (376) (492) (479) (485) (624)

Income taxes 2 18 86 35 (1)

CapEx (304) (571) (516) (290) (418)

Free Cash Flow 46 (273) (351) 1 (141)

Comps Leverage Coverage

Lease Adjusted Debt 7,305 5,291 5,519 5,455 5,207

Cash 3,947 1,536 1,507 1,543 1,746 AES Corp* 4.1x 3.6x Ba3/BB-

Net Debt 3,358 3,755 4,011 3,913 3,461 Calpine Corp 6.7x 2.0x B1/BB-

Key Credit Statistics Dynegy 10.2x 1.1x –/D

Lease Adj Debt/EBITDAR 11.2x 6.9x 9.2x 6.9x 7.8x Edison Mission 8.5x 1.4x Caa1/B-

Net Lease Adj Debt/EBITDAR 5.2x 4.9x 6.7x 5.0x 5.2x GenOn 7.8x 1.1x B3/B


EBITDAR/Interest 1.7x 1.5x 1.3x 1.6x 1.1x NRG 4.7x 2.4x B1/BB-

*AES reflects sub distributions to parent obligations; LTM4Q2011

Note: FY2010 and FY2009 reflects GenOn GAAP, which is largely Mirant's financials.

Capitalization


EBITDAR Liquidity

Mirant lease debt* 754 Revolver Size 788

Reliant lease debt* 387 Term Loan Size 695

Total Project-Level Debt 1,141 1.7x Total Revolver/Term Loan 1483

Mirant Americas Gen 8.5% due 2021 450 LOC/Borrowings 239

Mirant Americas Gen 9.125% due 2031 400 Outstanding Term Loan 686

Other and Operating Lease Adjustment* 65 Revolver Availability 558

Total Project and GenOn Americas Generation debt 2,056 3.1x Cash

GenOn secured revolver - GenOn Cash* 1600

GenOn secured term loan 686 GenOn Mid-Atlantic 84

GenOn 7.625% of 2014 575 REMA 62

GenOn 7.875% of 2017 725 Cash for debt reduction (13)

GenOn 9.5% of 2018 675 Total cash 1733

GenOn 9.875% of 2020 550 TOTAL LIQUIDITY 2291

GenOn 6.75% of 2036 PEDFA Notes -

Other (60)

Total Consoldiated Debt 5,207 7.8x

Consolidated debt net of cash 3,487 5.2x

Market Cap 1,659

Enterprise Value net of cash 5,146 7.7x

*Includes Marsh Landing

Maturities excluding lease maturiies

Next Call

Agency Ratings

GenOn Energy Inc. is engaged in the ownership, long-term leasing, and operation of power generation facilities in the Mid-Atlantic, Northeast, California, Southeast, and Midwest, with approximately 24.2GW of capacity. On December 3, 2010, RRI Energy Inc and Mirant Corp completed their merger that formed GenOn Energy. Through GenOn Holdings, GEN is the parent of GenOn Marsh Landing, GenOn Americas Generation LLC, and Reliant Energy Mid-Atlantic. In turn, GenOn Americas Generation is the indirect parent of GenOn Mid-Atlantic, which is a unit of GenOn North America. About half of GenOn's fleet (by capacity) is located in PJM. Based on capacity, coal-fired generation accounted for about 31% of the portfolio, but accounted for about 87% of output.

Key Dates/Catalysts:- February 29, GEN is expected to report 4Q2011 earnings. Given the decline in gas prices, the comapny may make a notable revision in its adjusted EBITDA of $607 million for 2011, $496 million for 2012, and $761 million for 2013. - We expect a general business update and an update on its merger cost-savings target of $155 million. We will focus on the effects enviromental requirements will have on the company along with GEN's planned hedging strategy, as gas prices continue to fall. - Status of the Marsh Landing gas-fired plant construction that is expected to be completed in mid-2013. - May 2012, results of the PJM capacity auction for the planning year of 2015/2016.

0

100

200

300

400

500

600

700

2012 2013 2014 2015

Invest ment Strengths:- GenOn benefits from a large and diverse generation portfolio with the Mid-Atlantic fleet well positioned given the completion of its environmental spending requirements to comply with the Maryland Healthy Air Act. - Hedging profile is expected to improve. Currently, GEN is 90% hedged for 2012 and 50% hedged for 2013 baseload. - Capacity revenues will increase in 2013, which should translate into margin improvement and ensures EBITDA is hedged by more than 50% through 2014. - Strong liquidity profile, with $2.3 billion available liquidity, that includes $1.7 billion of cash. - Management indicated that it plans to maintain liquidity and hedges consistent with a 5% probability event for five years and still have $200 million in working capital, without drawing on the revolver.

Investment Risks:- Energy margins face pressure given the decline in gas prices. - Leverage is expected to increase to peak in 2012, but should begin declining in 2013 with higher capacity revenues.- Power plant fleet generation is predominantly coal fired; this leaves GenOn highly vulnerable to climate regulations. - Multi-tiered capital structure results in structural subordination.- Aging fleet with most of the plants over 40 years old that relies on coal-fired generation. - Future environmental rules may require incremental expenditures of $565 million to $700 million.

Company Description



Goodyear Tire (GT) Updated 1/26/2012 Franklin Jarman 212-902-7537


UNDERPERFORM

Bond Summary



$994 8.250% Sr. Nts 15-Aug-20 B1/B+ 104.13 8/15/2015 107.94 671.8% 596


Revenue 19,488.0 16,301.0 18,832.0 22,156.0 22,604.4 23,258.1

EBITDA 1,523.3 916.0 1,395.0 2,045.0 2,117.7 2,116.1


Cash Taxes (310.0) (310.0) (167.0) (175.3) (183.5) (250.0)

CapEx (1,049.0) (746.0) (944.0) (1,132.0) (1,106.0) (1,200.0)

Free Cash Flow (1,849.0) 551.0 (20.0) (1,270.0) (817.7) (210.3)


Cash 1,894.0 1,922.0 2,005.0 2,126.0 3,054.3 2,844.0 AXL 2.8x 4.8x B1/BB-

Net Debt 3,085.0 2,598.0 2,740.0 3,957.0 3,028.7 3,239.0 CTBUS 1.3x 8.4x B1/BB-






EBITDA margin 7.8% 5.6% 7.4% 9.2% 9.4% 9.1%

Capitalization - Pro forma (FY11E)


Liquidity - LTM

First Lien Credit Facility due 2013 200.0 1.0x Revolver (1st lien) 1,500.0

EUR 400 mn Credit Facility due 2016 524.0 1.0x - Amt Drawn 200.0

Pan-European A/R Facility due 2015 537.0 1.0x - LCs Drawn 415.0

Chinese Credit Facilities due 2016 370.0 1.0x Amt Unutilized 885.0

Other credit facilities 538.0 1.0x Foreign credit facilities 1,702.0

2nd Lien Term Loan due 2014 1,200.0 1.6x Cash 2,126.0

6.75% Sr. Notes due 2019 336.0 2.9x Liquidity 4,713.0

10.5% Sr. Notes due 2016 630.0 2.9x

8.75% Sr. Notes due 2020 264.0 2.9x

8.25% Sr. Notes due 2020 994.0 2.9x

7.0% Sr. Notes due 2028 149.0 2.9x

Other (Notes payable & overdrafts) 341.0 2.9x

Total Debt 6,083.0 2.9x

Less cash 3,054.3 --

Net Debt 3,028.7 1.4x

Market Cap 3,293.9Enterprise Value 6,322.6 4.5x

Maturities:

Next Call

The Goodyear Tire & Rubber Company develops, manufactures, distributes, and sells tires for most applications. The company also manufactures and markets several lines of rubber and rubber-related chemicals, and provides automotive repair services. Goodyear also retreads truck, aircraft, and heavy equipment tires. The company provides its products and services worldwide.

Key Dates/Catalysts:- Goodyear Tire is expected to report 4Q2011 earnings in February.

0

500

1,000

1,500

2,000

2012 2013 2014 2015 2016 2017 After

Investment Strengths:- Price/mix effectively offsetting raw material costs: At the Detroit Auto show in January, Goodyear indicated that although it expects raw material headwinds of $600 mn in 4Q11 and $500 mn in 1Q12 yoy, it believes improved price mix will offset the continued raw material cost increases.- Natural rubber headwinds are mitigating: Although still elevated, natural rubber prices have decreased in recent months.

Investment Risks:- Pension funded status: As asset values and interest rates have decreased in 2011 (increasing the present value of pension liabilities) , we expect that GT's funded status has deteriorated materially since the company last reported details on its pension plan. - Raw materials will remain a headwind: Management estimates that about 50% of the company’s COGS are derived from raw materials – particularly natural rubber and oil. Although natural rubber prices have declined from their early 2011 levels, they remain moderately elevated.- Moderating North American replacement tire volumes: After a strong 2010 in which volumes increased about 7%, North America light vehicle replacement tire shipments were flat in 2011 and are expected to grow by a modest 2% in 2012.

Company Description



Graphic Packaging Corporation (GPK) Updated 1/23/12 Joe Stivaletti (212) 902-3299


IN-LINE

Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) (bp)$425 9.500 Sr Nts 15-Jun-17 B2/BB- 104.750 15-Jun-13 109.500 5.615 545


FY:09 FY:10 3Q:10 2Q:11 3Q:11

Revenue 4,095.8 4,095.0 1,042.8 1,080.7 1,073.3

EBITDA 556.4 573.9 151.3 150.1 152.0



Total debt 2,800.2 2,579.1 2,725.7 2,437.8 2,363.7

Cash 149.8 138.7 166.3 191.2 157.1

Net debt 2,650.4 2,440.4 2,559.4 2,246.6 2,206.6





EBITDA margin 13.6% 14.0% 14.5% 13.9% 14.2%



Revolving credit facilities - 2.9x Revolver size 400.0

Term loans 1,677.7 2.9x Letters of credit 32.2

9.5% senior notes 423.3 4.1x Borrowings -

7.875% senior notes 246.3 4.1x Revolver availability 367.8

Other debt 16.4 4.1x International availability 4.3

Total debt 2,363.7

Market capitalization 1,884.2 Cash 157.1

Enterprise value 4,105.7 Total liquidity 529.2

Maturities:

Next Call

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2012 2013 2014 2015+

Graphic Packaging Corporation manufactures paperboard and folding cartons used in beverage and consumer products packaging. The company also leases packaging machines to customers. GPK's primary products include folding cartons, coated unbleached kraft and coated recycled paperboard, and multiwall bags.

Investment Strengths:- Competitive cost position and global presence: GPK maintains low-cost, high-quality converting plants and paperboard production facilities in North America, Central/South America, Europe, and Asia.- Strong focus on cutting costs and paying down debt: Management is focused on improving GPK's cost position and using free cash flow to pay down debt.- Strong, stable relationships with key customers: GPK benefits from long relationships with stable customers such as Anheuser-Busch, General Mills, Miller Brewing Company, Coors Brewing Company, and many Coca-Cola and Pepsi bottling companies.

Investment Risks:- Higher-than-expected input costs: Costs for raw materials such as fiber and energy may be higher than we are currently expecting, which could cause GPK to materially underperform our expectations.

Company Description



Great Canadian Gaming Corp. (GCCN) Updated 1/23/12 Kevin Coyne 212-357-9918


IN-LINE: While GCCN management has historically acted extremely conservatively with its balance sheet, our concerns have risen for bondholders

following (1) the significant recent management reshuffling and (2) a shift in capital allocation including the recent increase in its share buyback program.

Size Coupon Agency Bid YTW STW Z-spd

(US$ MM) (%) Priority Maturity Ratings Price Date Price (%) (bp) (bp)

$170 7.250 Sr. Sub 15-Feb-15 B2/BB- 101.813 Current 101.000 6.24 614 574

Based upon Canadian GAAP (C$, millions)


Revenue 383.5 92.0 99.5 101.0 101.8 394.3

EBITDA 136.4 31.5 37.8 38.2 35.6 143.1


Cash Taxes 4.1 7.9 2.2 1.9 3.5 15.5

CapEx 26.1 5.8 17.6 10.9 12.0 46.3

Free Cash Flow 78.2 11.1 10.8 17.5 12.3 51.7

Total Debt (incl. derivatives) 396.5 390.9 394.5 402.5 402.0 402.0

Cash 105.5 115.3 119.3 116.7 118.2 118.2

Net Debt 291.0 275.6 275.2 285.8 283.8 283.8



Net Debt/EBITDA 2.1x 2.0x 2.0x 2.0x 2.0x 2.0x PENN 2.8x 6.5x B1/BB

ISLE 6.3x 2.4x Caa1/CCC+

EBITDA/Interest 4.9x 4.7x 5.3x 4.8x 4.6x 4.8x PNK 5.0x 2.8x Caa1/B

EBITDA margin 35.6% 34.2% 38.0% 37.8% 35.0% 36.3% GCCN 2.8x 4.8x B2/BB-


Description 3Q11ADebt to EBITDA Source 3Q11A Source Size

Revolver - 7/21/16 - Revolver Size 350.0 Shares OS (mm) 82.1

Term Loan B - 2/14/14 169.0 Letters of Credit 32.3 Stock Price C$ 8.58

Total Sr Sec debt 169.0 1.2x Borrowings - Market Cap 704.5

7.25% Sub Notes - 2/15/15 176.2 Revolver Availability 317.7 Net Debt 285.8

Interest derivative liability 57.3 Enterprise Value 990.3

Other - CPLTD 2.0

Total debt 402.5 2.8x Cash 116.7 LTM EBITDA 142.5


EV/ EBITDA 6.9x

EV/2012E EBITDA 6.7x

Maturities:

Credit facility covenants

Comps Current

Senior leverage 3.50x

Total leverage 5.00x

Interest coverage 2.25x

Next Call

0

50

100

150

200

250

2012 2013 2014 2015 2016+

Founded in 1982, Great Canadian Gaming (GRTCAN) is a leading multi-jurisdictional gaming and entertainment operator in Canada, with a dominant market share in its key jurisdictions. GCCN has operations in British Columbia, Ontario, Nova Scotia, and Washington state. The company's principal Canadian facilities consist of 10 casinos, three standardbred racetracks (all of which offer slot machines), one thoroughbred racetrack, a hotel and conference center, a bingo hall, and two community gaming centers. GCCN operates casinos that primarily cater to regional customers, offering multiple entertainment venues for different budgets.

Key Dates/Catalysts:- September 2011: Founder, CEO, and Chairman Ross McLeod passed away at the age of 58. The board of directors appointed President Rod Baker as interim CEO.- September 2011: Increased share repurchase program to a total of 5,844,359 shares, or 10% of the public float. - November 2011: Announced a C$60 million expansion project for its Boulevard Casino that will add a 181-room hotel tower, meeting facilities, and food and beverage options. Construction is expected to begin in 1Q2012 and will be complete in 4Q2013.- November 2011: Appointed three new directors to its board of directors, including Neil Baker, the second largest equity holder of GCCN and the father of the current CEO, Rod Baker.

Investment Strengths:- Long-term contracts: Gross revenues split with provinces of 5-20 years.- Regulators manage industry growth, avoiding harmful competition.- Provinces share in costs of growth, with reimbursement of capex over time.- Though capex is reimbursed, GCD maintains ownership of assets.- Political preference toward not increasing the number of casinos.- River Rock continues to improve as renovations are completed and construction disruptions are over, as well as owing to the opening of the Canada Line transit system.- No near-term maturities.

Investment Risks:- 35% of revenues derived from the River Rock property during LTM period ending 3Q2011.- Boulevard Casino is losing market share due to disruption from highway construction, which is expected to continue until 2013.- Stock repurchase program expires on January 26, 2012. Since January 27, 2011, it has repurchased 1,479,600 shares at a weighted average price of C$7.16, leaving capacity under the program to repurchase an additional 4,364,759 shares.

Company Description



Greektown Superholdings, Inc. (GREEK) Updated 1/23/12 Kevin Coyne 212-357-9918Contact analyst for updates and other information. Celeste Everett 212-902-4751

NOT COVERED

Bond Summary

Size Coupon Agency Bid YTW STW Z-spread


$385 13.000 Sr Secured 01-Jul-15 NR/NR 106.500 01-Jan-13 106.500 10.35 1,005 978

NOT COVERED


Revenue 83 78 330 84 82 80

Adjusted EBITDA 20 20 82 19 20 18 Comps Leverage Coverage Ratings

GREEK 5.0x 1.2x NR/NR

Interest Paid 0 0 14 25 0 25 BORGAT 5.2x 1.8x B2/BB-

Cash Taxes 1 0 2 0 0 0 CCTRH 1st 7.7x 0.7x B1/B

Capital Expenditures 4 5 15 2 3 5

Free Cash Flow 15 15 52 (8) 16 (12) Maintenance covenants

Total Debt 385 385 385 385 385 385 Fixed charge coverage 1.05x

Cash 36 35 35 34 45 46

Net Debt 349 350 350 351 340 339 Required under the credit facility and by the

Key Credit Statistics Michigan Gaming Control Board.




EBITDA margin 24.2% 25.4% 25.0% 23.0% 23.8% 22.2%


Description Debt to EBITDA Source

Revolving term loan due 12/30/13 - Revolver due 2013 30

Total first lien debt - 0.0x Letters of Credit & other 1

13% sr sec (2nd lien) nts due 2015 280.2 Borrowings -

13% sr sec (2nd lien) nts due 2015 104.8 Revolver Availability 29

Other (capital leases, etc.) 2.5

Total debt 387.5 5.1x

Cash 46

Total Liquidity 75

Revolver availability

subject to the resolution of the

Maturities: Trappes Mortgage Release. See

filings for more details.

Next Call

Bonds have mandatory redemption at 103 if company generates excess free cash flow.

0

50

100

150

200

250

300

350

400

450

2012 2013 2014 2015 2016 2017+

Greektown Superholdings (GREEK) was formed to hold, directly and indirectly through Greektown Newco Sub, Inc., which owns and operates Greektown Casino. Greektown Casino opened in November 2000 and is one of three casinos operating in downtown Detroit. The property includes a 100,000 square foot casino with 2,600 slot machines and 63 table games. The property also has an approximately 400-room hotel tower, 4,500 parking spaces, 10,000 square feet of meeting space, four restaurants, seven bars, and two entertainment venues. For the 12 months ended 3Q11, 90% of its revenue was generated from its gaming activities and, of this, approximately 88% of its gaming revenue is generated from slots.

Key Dates/Catalysts:- 3Q2011: GREEK expects fiscal 2011 capex to be $18 mn including investment in the new Asteria casino

bar/lounge, which is expected to open by the end of 2011.- November 2011: For the two months ended November 2011, Greektown gaming revenue isup 3.3% yoy.- 1Q2012: management intends to build out a new parking garage for $30 mn. The company believes this project can be completed in 1Q2012, subject to regulatory approval and financing.- 2012: capital expenditures are expected to be $18 million, excluding the potential investment in the parking garage.

Company Strengths:- Located in a three casino market with no new supply expected to open in downtown Detroit.- new "super pit" provides better gaming atmosphere while helping create operating efficiencies with personnel and security.- plans to build a new $30 mn parking garage to ease

access to the property. Construction is subject to regulatory approvals and financing.- Greater Detroit area continues to improve from an

economic standpoint, albeit it is still a laggard compared to the rest of the US.- Tighter border controls make it more cumbersome

for Detroit visitors to head to Windsor, Canada to visit the Caesars casino.- Secured gaming paper with minimal priority debt ahead of the bonds.

Company Risks:- The failure to resolve the Trappers Lease dispute by June 30, 2012, will result in a default under the credit facility unless otherwise waived.- Lower tier property among the three properties in

the market.

Company Description



Gymboree Corp. (GYMB) Updated: 1/26/12 Karen Eltrich 212-902-6957



NOT COVERED

Bond Summary



$400 9.125 Sr Notes 1-Dec-18 Caa1/CCC+ $104.56 12/1/2014 88.00 11.72% 723

Financial Profile FY08A FY09A FY10A LTM

Revenue 1,000.7 1,014.9 1,074.4 1,150.4

EBITDA 203.0 219.4 236.9 215.7 Comps Yield Leverage Coverage Ratings

Gymboree 11.72% 5.9x 2.3x Caa1/CCC+

Interest Expense 0.0 0.0 17.6 85.6 J Crew 8.70% 5.4x 3.2x Caa1/CCC+

Cash Taxes 56.2 62.8 26.4 (28.5) Burlington 11.09% 4.3x 2.7x Caa1/ CCC

CapEx 56.2 39.6 47.5 36.1

Free Cash Flow 90.7 117.0 145.3 122.5

Total Debt 0.0 0.0 1,216.0 1,251.9

Cash 140.5 257.7 32.1 45.7



Net Debt/EBITDA -0.7x -1.2x 5.0x 5.6x

EBITDA/Interest NA NA 13.4x 2.5x

EBITDA margin 20.29% 21.62% 22.05% 18.75%

Capitalization LTM



ABL ($225mm) L+275 40.0 Revolver Size 225.0

Term Loan (L+350, 1.5 floor) due 2017 811.9 Letters of Credit 65.1



9.125% Senior Notes due 12/1/18 400.0 A/R facility NA

Total Subordinated Debt 400.0 5.8x Borrowings 0

A/R Availability NA


Market Cap (Shareholders' Equity) n/a Total Liquidity 165.6

Enterprise Value (Total Book Cap) n/a

Maturities:

Next Call

Gymboree is a designer and retailer of children's apparel, which it sells through its large store network and online. In addition to its flagship Gymboree stores (over 600 locations), the company has two related concepts: Janie and Jack (more upscale product offering, sold through more than 100 locations) and Crazy 8 (more affordable products, sold through over 80 stores).

Key Dates/Catalysts:Late-April, fourth quarter earnings release

Company Strengths:- Historically strong EBITDA growth- Children's apparel is a relatively high-margin and low-fashion-risk segment- Well-recognized brand and large footprint- Potential for growth ex-US

Company Risks:- Some cannibalization of flagship stores by Crazy 8 growth- Very high inventory levels coming out of 1Q11 and 2Q11- Exposure to cotton inflation- Intense competition from concepts with lower price points including CRI and PLCE

Company Description

0

200

400

600

800

1,000

1,200

1,400

2012 2013 2014+



Hanesbrands Inc. (HBI) Kevin Coyne 212-357-9918Contact analyst or see latest research for updates to ratings, estimates, and other information. Celeste Everett 212-902-4751

UNDERPERFORM: While we believe HBI is one of the best-operated global apparel companies, we think this benefit is more than priced into the bonds. The increased cost of

cotton will continue to be a headwind for HBI, considering that 60% of its revenue is generated by cotton products.

Bond Summary



$1,000 6.375 Sr Notes 15-Dec-20 B1/BB- 103.190 15-Dec-15 103.500 5.750 442 430

Other provisions: 35% equity claw at 106.375 through 12/15/13.

Financial Profile FY2010 1Q11 2Q11 3Q11 4Q11E 2011E

Revenue 4,327 1,036 1,225 1,230 1,225 4,717

Adj. EBITDA 491 123 170 175 135 603


Cash Taxes 23 10 21 23 11 65

CapEx 106 25 22 21 24 93

Free Cash Flow 211 47 88 93 62 289

Total Debt 2,131 2,268 2,240 2,181 2,215 2,215

Cash 44 65 45 48 86 86

Net Debt 2,088 2,203 2,196 2,133 2,128 2,128




LTM Comps Leverage Coverage Ratings

EBITDA/Interest 3.3x 3.0x 4.3x 4.6x 3.5x 3.8x JAH 7.5s 4.1x 4.2x B2/B

EBITDA margin 11.3% 11.9% 13.9% 14.2% 11.0% 12.8% LEVI 7.625s 4.2x 3.7x B2/B+

SBH 10.5s 2.9x 4.5x B1/BB+

Capitalization

Description 3Q11 Lvg Liquidity 3Q11

Senior secured revolver due Dec 2015 15$ Revolver Size 600$ Shares O/S (mm) 97.2

A/R securitization facility due March 2012 175 Letters of Credit 13 Share price 24.68$

Total Secured 190 0.3x Borrowings 15 Market cap 2,398

FRN (L+337) senior notes due Dec 2014 491 Revolver Availability 572 Net debt 2,167

8% senior notes due Dec 2016 500 Enterprise value (EV) 4,565

6.375% senior notes due Dec 2020 1,000 A/R facility 225

Other 34 Borrowings 175 EV / LTM EBITDA 8.0x

Total debt 2,215 3.9x A/R Availability 50 EV / 2011E EBITDA 7.6x

EV / 2012E EBITDA 8.1x

Cash 48

Total Liquidity 670

Maturities: Operating statistics

4Q10 1Q11 2Q11 3Q11

Revenue:Innerwear 490 451 605 515

Outerwear 365 331 331 433

Hosiery 50 45 34 34

Direct to consumer 99 83 97 98

International 145 127 158 150

Total revenue 1,150 1,036 1,225 1,230

Segment EBITDA:

Innerwear 51 69 102 89

Outerwear 27 31 42 62

Hosiery 14 17 10 9

Direct to consumer 9 2 11 14

International 22 25 23 21

Total segment EBITDA 123 143 187 194

Updated 1/23/2012

Enterprise value

Next Call

Hanesbrands, Inc. designs, manufactures, sources, and sells apparel items for men, women, and children. It operates in four segments: Innerwear, Outerwear, Hosiery, International, and Direct to Consumer. Its product portfolio includes t-shirts, bras, panties, men's underwear, kids' underwear, socks, hosiery, casualwear, thermals, sleepwear, fleece, and activewear. The company offers products under the Hanes, Champion, Playtex, Bali, Just My Size, barely there, L'eggs, and Wonderbra brand names. The company sells its products through multiple distribution channels, including mass market retailers, department stores, national chain stores, specialty retailers, wholesale clubs, and sporting goods stores. According to Bloomberg, significant equity holders include Wellington Mgmt (9%) and Shapiro Capital Mgmt (5%).

Key Dates/Catalysts:- November 2010: Acquired GearCo, Inc. for $227 million in cash and assumed debt.- February 2011: Amended senior secured credit facility, extended maturity by two years to 2015, increased flexibility under both the covenants and the use of excess free cash flow.- March 2011: Amended A/R securitization facility. Size increased to $225k from $150k, and termination date extended one year to March 2012. - October 2011: Names Richard Moss as Chief Financial Officer. Moss served as treasurer since January 2006.

Investment Strengths:- Stable innerwear business (45% of sales): high volume / frequently replenished apparel essentials; the average US consumer makes 3.5 trips to retailers to purchase men’s underwear and 4.5 trips to purchase women’s underwear annually; US mass business is dominated by Hanes and Fruit of the Loom- Strong FCF generation; margin enhancement opportunities with ongoing offshoring of manufacturing- Well-known brands: HBI's 2010 Form 10-K states, "According to NPD Group/Consumer Tracking Service, our brands held either the number one or number two U.S. market position by units sold in most product categories in which we compete, for the 12-month period ended December 31, 2010."- Strong distribution network with established global retailers- HBI has at least a 10-year relationship with all of its top-10 customers (65% of FY2010 revenues).- Product development is driving increased market share. Some recent innovations include Hanes Comfort Flex Underwear, Champion 360º Max Support sports bra and Wonderbra Secret Agent No Slip Fit bras.- Focus on supply chain and vertical integration has given HBI more foresight into escalating cotton prices.

Investment Risks:- Vulnerability to cotton price fluctuation- over 60% of its revenue is driven by cotton-related products.- Relatively low growth historically, with many commodity-like products (and some fashion-exposed segments); HBI story hinges on management's ability to improve cost structure and reinvest behind brands- Operates in highly competitive categories, such as intimates and outerwear, with numerous strong branded competitors.- Customer concentration: Top 10 customers account for 65% of sales; could be affected by inventory management, merchandising, and pricing strategies- Sales channel is concentrated in US customers, with 88% of sales from US-based customers in 2010.- Structural risk: Non-guarantors of the notes generate 74% of revenue and hold 44% of assets as of 2Q2011.- Stock repurchase program: up to 10 million shares over next three years (to date, 2.8 mn repurchased for $75 million as of 2Q2011).

Company Description

0

400

800

1,200

2012 2013 2014 2015 2016 2017+



HCA, Inc. (HCA) Erin Blum 212-855-7718


OUTPERFORM (1st liens and Holdco)/IN-LINE (unsecureds)

Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) bp CDS Levels 5-Year

$3,000 6.50 First Lien 15-Feb-20 Ba3/BB T+50 MW $105.750 5.601% 421 Sr 485 / 505

$2,000 7.50 Snr. Uns. 15-Feb-22 B3/B- T+50 MW $106.750 6.570% 517

$1,525 7.75 Holdco 15-May-21 B3/B- 103.875 11/15/2015 $104.875 6.838% 604

Financial Profile 2009 2010 2011E 4Q10A 3Q11A 4Q11E

Revenue $30,052 $30,683 $32,646 $7,736 $8,050 $8,478

EBITDA 5,472 5,868 5,936 1,447 1,412 1,514

Interest Expense $1,987 $2,097 $2,052 $526 $519 $480

Cash Taxes 633 658 542 170 (23) 235

CapEx 1,317 1,325 1,570 465 394 400

Free Cash Flow 1,430 1,874 1,789 123 486 413

Total Debt $25,730 $28,318 $27,585 $28,318 $26,755 $27,585

Cash 312 411 350 411 359 350 Agency

Net Debt 25,418 27,907 27,235 27,907 26,396 27,235 LTM Comps Leverage Coverage Ratings

Key Credit Statistics HCA 1st Lien 2.8x NA Ba3/BB

Total Debt/EBITDA 4.7x 4.8x 4.6x HCA Sr Uns 4.2x NA B3/B-

Net Debt/EBITDA 4.6x 4.8x 4.6x HCA Holdco 4.5x 3.2x B3/B-

THC 3.9x 2.7x Caa1/CCC+

EBITDA/Interest 2.8x 2.8x 2.9x 2.8x 2.7x 3.2x CYH 4.8x 2.8x B3/B

EBITDA margin 18.2% 19.1% 18.2% 18.7% 17.5% 17.9% HMA Sec 3.0x NA --/BB-

PF Capitalization*

Description Size

Debt to LTM PF EBITDA

Debt to 2011E

EBITDA Liquidity

Revolving Credit Facility due 2015* $460 Revolver Size $2,000

Term Loan A due 2012 $494 Letters of Credit 0

Extended TL A-1 due May 2016 $579 Borrowings 460

Term Loan B due 2013 $1,689 Revolver Availability 1,540

Euro Term Loan B due 2013 $419

ABL Facility due 9/30/2016* $1,730 A/R facility $2,500

Extended TL B-2 due March 2017 $2,000 Borrowings 1,730

Extended TL B-3 due May 2018 $2,373 A/R Availability 770

Other secured debt/mortgages $314

First lien bonds $7,150 Cash $359

Total 1st Lien sec debt $17,208 2.8x 2.9x Total Liquidity $2,669

9.875% 2nd lien Notes due 2017 $196

Total Secured bonds $196 2.8x 2.9x

Snr Uns. Bonds $8,326

Total Senior debt $8,326 4.2x 4.3x

7.75% Holdco notes due Nov 2021 $1,525

Total Holdco debt $1,525 4.5x 4.6x

Total Debt $27,255 4.5x 4.6x

Market Cap 11,612

Enterprise Value $38,508

*PF for $500 million unsecured deal, and HealthOne acquisition.

Maturities:

Next Call

Updated 01/25/12

We remain Outperform on the 1st liens as we think they should trade inside the UHS secureds. We are In-Line on the unsecureds in recognition of the relatively high leverage and middle-of-the-group spreads. We rate the HCA Holdco notes Outperform based on relative value. Fundamentally, we see HCA as the best-in-class hospital operator.

0

5,000

10,000

15,000

20,000

25,000

2012 2013 2014 2015+

HCA is the largest of the hospital companies, with 164 hospitals and 101 ambulatory surgery centers. Its facilities are located in urban and suburban markets, with Florida and Texas accounting for about 50% of beds. HCA started the for-profit hospital industry when it was founded by the Frist family in 1968 following the introduction of Medicare in 1965. The company spun out Triad and Lifepoint in 1999. An LBO was carried out by KKR, Bain, and ML Capital Partners in November 2006.

In March 2011, HCA completed its initial public offering at $30 per share and received $2.5 bn of net proceeds, which were used to reduce amounts outstanding under its revolving credit facilities. HCA also announced the redemption in full of the 9.125% 2nd liens of 2014 as well as clawing a portion of the 9.875% 2nd liens of 2017.The company later issued $3 bn of first liens and $2 bn of unsecureds to refinance the two 2016 2nd lien tranches. In June 2011, HCA proposed the acquisition of interest in HCA-HealthONE for $1.45 bn. HCA issued another $500 mn of unsecureds to help finance this transaction, which closed October 2011. We estimate HealthONE will add roughly $250 mn of EBITDA as it was previously unconsolidated. In September 2011, HCA announced a $1.5 bn share repurchase from Bank of America, funded out of cash and credit facility. In September 2011, HCA provided more details surrounding its 2Q2011 miss. HCA expects full year 2011 EBITDA to be 0-2% above 2010, post the deferred revenue recognition of certain HIT revenues.

Key Dates/Catalysts:- Quarterly earnings announcements (commercial volumes have been weak industry-wide, although bad debt expense has been relatively stable)- Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We view the ACA as a net positive for hospitals.

Investment Strengths:- Best-in-class of hospital companies with the largest portfolio, stronger-than-average markets, and highest margins.

- Focus on core markets and higher profitability services along with cost-cutting has raised margins.

- Manageable debt maturity schedule since the company has proactively reduced its term loan balance. The pre-2013 unsecured bonds are carved out in credit agreement and likely to be refinanced prior to maturity, in our view.


‐ Volumes have been weak across the industry and are expected to remain so for the near term.

- Weak Medicare case mix due to a shift from surgical to medical as a result of a decline in cardio surgeries could continue to pressure earnings.

Company Description



Health Management Associates, Inc. (HMA) Erin Blum 212-855-7718


UNDERPERFORM (secured/unsecured)

Bond Summary

Size Coupon Agency Bid YTW STW CDS Levels 5-Year

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp HMA Snr 531 / 568

$400 6.125 Snr 1st Lien 15-Apr-16 --/BB- T+20 MW $102.500 5.450% 512 HMA Sub 564 / 601

$875 7.375 Snr 15-Jan-20 B3/B- 103.688 15-Jan-16 $102.500 6.849% 605


Revenue $4,664 $5,156 $5,816 $1,352 $1,400 $1,587

EBITDA 685 737 833 187 196 219


Cash Taxes 76 101 120 26 22 31

CapEx 200 209 263 62 70 60

Free Cash Flow 249 231 337 19 114 85

Total Debt $3,059 $3,034 $3,589 $3,034 $3,421 $3,589

Cash 106 102 78 102 88 78

Net Debt 2,953 2,932 3,511 2,932 3,333 3,511

Agency


Total Debt/EBITDA 4.5x 4.1x 4.3x HMA 1st Lien 3.0x NA --/BB-

Net Debt/EBITDA 4.3x 4.0x 4.2x LPNT 3.1x 5.2x Ba1/BB-

CYH 4.8x 2.8x B3/B

EBITDA/Interest 3.1x 3.5x 3.9x 3.5x 3.9x 3.5x HCA sr uns 4.2x NA B3/B-

EBITDA margin 14.7% 14.3% 14.3% 13.8% 14.0% 13.8%

Capitalization

Description Size

Debt to LTM PF

EBITDA** Liquidity

Revolving credit facility due 11/18/2016 0 Revolver $500

Term Loan A due 11/1/2016 725 Letters of Credit 49

Term Loan B due 11/1/2018 1,400 Borrowings 0

6.125% Sec Notes due 4/15/16* 400 Revolver Availability 451

Total Sr Sec debt $2,525 3.0x

Cash $88

7.375% of 2020 unsecured notes 875 Total Liquidity $539

Total Senior debt $875 4.0x

3.75% Convert sub note due 5/1/2028 91

Total Sub debt $91 4.1x

Capital leases/Other $98

Total debt $3,589 4.2x

Market Cap 1,675

Enterprise Value $5,176 6.1x

* Credit facility and 6.125% bonds of 2016 notes are pari passu.

** PF EBITDA includes approximately $53mn contribution from Mercy Health.

Maturities:

Updated 01/25/12

Next Call

We rate both the HMA secured and unsecured notes Underperform due to (1) HMA's relatively high total leverage of 4.2x, but yields at the low end of the peer group, (2) our concerns that a more active acquisition plan will cause leverage to creep higher, and (3) tail risk associated with a company-wide investigation related to physician relationships at the 22 JV-ed hospitals.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2012 2013 2014 2015+

Pure-play rural, mid-sized hospital operator with 58 facilities that are concentrated in the Southeast, particularly Florida and Mississippi. HMA executed a levered recap in 1Q2007, increasing leverage by 3x, to pay a special dividend.

During a November 2011 business update call, HMA commented that "today [it] is a growth company." HMA acquired Mercy Health Partners in Tennessee from Catholic Health Partners for $525 mn on September 30, 2011. The company put in place a $360mn term loan in order to fund the acquisition of Mercy. HMA CDS was added to the new HY CDX S17 index September 2011. In November 2011, HMA refinanced its existing credit facility and Knoxville TL and unwound an unfavorable swap with a new $725 mn of TL A, $1.4 bn of TLB, and $875 mn of senior bonds. In January 2012, the local Florida press reported that a former employee has sued the company for wrongful termination after he allegedly reported Medicare overbilling practices at four HMA hospitals. In the same week, HMA also announced that its general counsel was retiring. The company states that the general counsel's resignation and the lawsuit are unrelated.

Key Dates/Catalysts:- Quarterly earnings announcements (commercial volumes have been weak industry-wide, although bad debt expense has been relatively stable).- Possibility of additional acquisitions in light of management comments concerning a strong pipeline.- Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We view the ACA as a net positive for hospitals.

Investment Strengths:- Exclusively rural facilities require less capex investment and are less competitive than suburban or urban facilities.

- Market share and physician recruitment initiatives could drive top-line growth, and focus on supply cost-cutting could drive EBITDA gains.



- Potential new bond issuance to fund acquisitions as management has commented that its pipeline remains robust.

- Tail risk of various investigations at the company.

Compan y Description



HealthSouth (HLS) Erin Blum 212-855-7718


UNDERPERFORM

Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) (bp) CDS Levels 5-Year

$290 8.125 Sr 15-Feb-20 B2/B+ $104.063 2/15/2015 $104.750 7.142% 634 106 0


Revenue $1,918 $1,999 $2,063 $521 $498 $522

EBITDA 399 427 460 117 111 111

Rent 48 48 50 13 13 13


Cash Taxes (3) (737) 26 (736) 18 2

CapEx 73 105 105 21 26 43

Free Cash Flow 308 200 173 34 21 44

Total Debt $1,663 $1,511 $1,297 $1,511 $1,328 $1,297

Cash 81 48 52 48 48 52Net Debt 1,582 1,463 1,245 1,463 1,280 1,245 Agency


Key Credit Statistics HLS 3.2x 4.3x B2/B+

Total Debt+6*rent/EBITDAR 4.4x 3.8x 3.1x DVA 3.2x 5.7x B2/B

Net Debt+6*rent/EBITDAR 4.2x 3.7x 3.0x VANGUA 4.3x 2.9x B3/B-

CYH 4.8x 2.8x B3/B


EBITDA margin 20.8% 21.4% 22.3% 22.4% 22.2% 21.3%

PF Capitalization

Description Size

Debt to LTM

EBITDAR

Debt to 2011E

EBITDAR Liquidity

Revolving credit facility $178 Revolver Size $500

Term Loan A of 2016 $99 Letters of Credit 46

Rent adjustment (6x) 297 Borrowings 178

Total Sr Sec debt 574 1.1x 1.1x Revolver Availability 276

10.75% Senior Notes 2016 0 Cash $48

8.125% Senior Notes due 2020 286 Total Liquidity $324

7.25% Senior Notes due 2018 337


Total Sr debt $935 3.0x 3.0x

Capital Leases 79

Other Debt $37

Total Debt incl rent adjustment $1,625 3.2x 3.2x

6.5% preferred equity $387

Market Cap 1,899


Maturities

Next Call

Updated 01/25/12

We rate HLS Underperform on reimbursement risk as over 70% of its revenue is from traditional Medicare. While the Super Committee did not reach negotiated cuts, we believe the 2% sequester cut could be revisited by Congress. HLS bonds now trade only modestly wide to the core hospital group, but we still see the risk/reward tradeoff as unattractive.

0

500

1,000

1,500

2,000

2012 2013 2014 2015+

HLS is a pure-play post-acute care company focused on Inpatient Rehabilitation Facilities (IRF) and outpatient rehab clinics. HLS is the largest provider of inpatient rehabilitation in the US. The company operates 97 IRFs and 28 Outpatient satellites. Roughly 70% of its revenue is from traditional Medicare. HLS grew rapidly in the mid-1990s through acquisitions.

In March 2011, HLS completed a $120 mn add-on deal split between the 2018s and 2022s, the proceeds of which are for the paydown of its revolver and 2016 bond maturity. In August 2011, HLS completed the sale of 5 of its LTACHs to LifeCare for $117.5 mn of proceeds, which the company used, together with its revolver capacity, to call its remaining 10.75% notes.

Key Dates/Catalysts:- Quarterly earnings announcements where we see discharge growth and cost discipline as key.- Outcome of the Ernst & Young arbitration case.

Investment Strengths:- Solid and consistent operating performance with low single-digit same-facility discharge growth and improving margins.

- Very strong free cash flow (13% of rent-adjusted debt on an LTM basis) and commitment to de-levering.

Investment Risks:- Over 70% of revenues come from traditional Medicare. HLS's high Medicare exposure puts it more at risk for reimbursement cuts than other providers.

- Unclear long-term growth strategy as previous plan to expand into other post-acute modalities seems to have fallen by the wayside given the exit from the LTACH business.

Company Description



Hornbeck Offshore Services (HOS) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM

Bond Summary



$300 6.125% Sr. 12/1/2014 Ba3/BB- $101.02 2/27/2012 $100.50 5.49% 539


Revenue $441 $396 $421 $371 $484


Free Operating Cash Flow ($295) ($90) $69 $23 ($253)






Capitalization


Leverage ('11E)

Coverage ('11E)

Agency Ratings

Cash and equivalents $132 Revolver Size $250 HOS 6.3x 2.4x Ba3/BB-

Revolving Credit Facility $0 Letters of Credit $1 BAS 2.3x 12.8x B3/B

Long Term Debt Borrowings $0 PKD 2.0x 13.4x B1/B+


Total Long Term Debt $767 Cash $132

Total Debt $767 6.6x Total Liquidity $381

Preferred Equity $0

Common Equity $829


Maturities:

Next Call

HOS has a two-segment strategy in the offshore transportation business: a US GOM-centric "new generation" OSV business and a Tug and Tank Barge business providing logistics solutions to northeastern US and Puerto Rico. As a result of HOS's leverage to demand for deepwater drilling activity, we expect the company to be an above-average performer in the context of a challenging environment for oil services companies. However, we believe OSV dayrates are likely to remain volatile in the near term, particularly in the shallow US Gulf. HOS currently has a fleet of 51 OSVs excluding newbuilds.

Hornbeck was established in 1997 with a focus on servicing the deepwater segment of the offshore market. The company also has a tug and tank barge business, which it considers to be complementary to its OSV business. Hornbeck has added to its OSV and TTB fleets via newbuild expansion and acquisition. The company's operations are primarily domestic and are focused in the Gulf of Mexico, with some smaller exposure to Mexico and Trinidad. In August 2007, the company acquired 20 OSVs from Nabors Industries for $186 mn. In June 2008, HOS announced that it had hired an advisor to review strategic alternatives for the TTB segment. The review is ongoing. Following the Macondo incident, Hornbeck continues look to supplement its GOM activity with international operations.

Investment Strengths:• Good diversification, reflecting cyclical leverage in OSV segment and stability in tank barge business• Youngest offshore fleet in the industry, with high exposure to deepwater drilling and production• Growing international diversification• Amended covenants to provide additional cushion

Investment Risks:• Slowness of drilling in the GOM, following the moratorium, is a significant negative for the company's business• High leverage• OSV dayrates are highly leveraged to the oil services cycle• Small size for the ratings category; ratings upgrade unlikely• TTB segment has been weak• Historically aggressive builder of new OSVs on spec; any incremental spec newbuild programs likely to be viewed negatively by rating agencies

Key Dates/Catalysts:• Increase in activity in the Gulf of Mexico• Potential for additional non-energy industry applications for HOS’s next generation OSVs to offset weakness in the US Gulf of Mexico• Continued diversification away from the US Gulf by moving OSVs internationally• Progress of recently announced newbuild program

Company Description

0

50

100

150

200

250

300

350

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Host Hotels & Resorts LP (HST) Updated 1/23/2012 Kevin Coyne 212-357-9918Contact analyst or see latest research for updates to ratings, estimates, and other information. Celeste Everett 212-902-4751

OUTPERFORMOur OP rating reflects HST’s low leverage and strong asset coverage. HST continues to balance its funding through the issuance of debt and equity.

We continue to prefer HST to other crossover lodging and cruising credits. We believe HST can achieve investment grade ratings in the next 12-24 months.

Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp 5-yr CDS

$500 6.875 Sr. Notes 1-Nov-14 Ba1/BB+ 101.719 current 101.750 4.47% 440 398 255

$500 6.000 Sr. Notes 1-Nov-20 Ba1/BB+ 103.000 1-Nov-15 106.000 4.94% 412 369 255


Revenue 4,437 903 1,296 1,142 1,615 4,956

Adj EBITDA 831 144 313 212 350 1,019

Cash interest 347 64 80 55 75 274


CapEx 309 94 146 95 195 530 Credit facility maintenance covenants

Free Cash Flow 171 (15) 84 61 78 208 Covenants Leverage Coverage Fixed Chr

2011 7.25x 1.75x 1.15x

Total Debt 5,477 5,538 5,888 5,488 5,456 5,456 2012 7.25x 1.75x 1.15x

Cash 1,113 154 634 524 207 207

Net Debt 4,364 5,384 5,254 4,964 5,250 5,250


Total Debt/EBITDA 6.6x 6.5x 6.5x 5.7x 5.4x 5.4x HOT 3.3x 4.7x Ba1/BB+

Net Debt/EBITDA 5.3x 6.3x 5.8x 5.2x 5.1x 5.1x FCH 7.7x 1.5x B2 / B-


EBITDA margin 18.7% 15.9% 24.2% 18.6% 21.7% 20.6%

Capitalization

Description 3Q11ADebt to EBITDA Liquidity 3Q11A Enterprise value

Revolver due Sep 2012 119 Revolver Size $600 Shares o/s (mm) 706.2

Term loan due Sep 2012 - Letters of Credit - Stock price 16.62$

Mortgage Notes (various on 16 props.) 1,016 Borrowings 119 Market cap 11,738

Total Sr Sec (1st lien) debt 1,135 1.2x Revolver Availability 481 Minority interest 153

6.875% Senior Notes 1-Nov-14 498 Net Debt 4,964

6.375% Senior Notes 15-Mar-15 650 Enterprise value (EV) 16,855

6.75% Senior Notes 1-Jun-16 800

9% Senior Notes 15-May-17 390

5.875% Senior Notes 15-Jun-19 500 Cash $524 LTM Adj. EBITDA 961

6% Senior Notes 1-Nov-20 500 Total Liquidity 1,005 EV / Adj. EBITDA 17.5x

3.25% Sr Converts 15-Apr-24 175

2.625% Sr. Converts 15-Apr-27 413 EV / 2011E EBITDA 16.5x

Other debt 427


Maturities:

Occupancy ADR RevPAR

3Q11 76% 169$ 128$

2Q11 75% 184$ 139$

1Q11 66% 174$ 116$

4Q10 68% 180$ 122$

3Q10 74% 163$ 120$

Next Call

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2012 2013 2014 2015 2016 2017+

Host Hotels & Resorts LP (LP), along with its operating partner Host Hotels & Resorts Inc. (HST), operates as a self-managed REIT of hotel properties. HST's lodging portfolio primarily consists of 121 owned properties, which had a total of approximately 57,203 rooms as of 3Q2011. The company is geographically diverse, with hotels in most of the major metropolitan areas in 26 US states, Canada, Mexico, and Chile under the Marriott, Ritz-Carlton, Sheraton, Hyatt, Fairmount, Hilton, Four Seasons, and Swissotel brands. Locations include central business districts of major cities, areas near airports, and resort/convention destinations that typically benefit from high barriers to entry vis-à-vis competitors. HST owns 98% of LP. Significant HST equity holders include Vanguard (11%), APG Investments (5%), Morgan Stanley Investment Mgmt. (5%), according to Bloomberg.

Key Dates/Catalysts:- 2011 guidance: Adjusted EBITDA of $1,015-1,025 mn and diluted EPS of -$0.03 to -$0.01 per share based on an increase in RevPAR of 6.25-6.75%. Maintenance capex expected to be $300-320 mn.- May 2011: Announced intent to redeem $150 mn of the 3.25% convertible notes due 2025 at par. HST expects holders to convert into equity.- June 2011: Moody's placed Host's Ba1 rating on positive outlook.- September 2011: Increased quarterly dividend to $0.04 from $0.03.- December 2011: Terminated an agreement to acquire the 888-room Grand Hyatt Washington D.C. for $442 million, or approximately $498,000 per key.- December 2011: Increased quarterly dividend to $0.05 from $0.04.- February 14, 2012: 4Q2011 earnings release.

Investment Strengths:- Strong brand names.- Generates solid free cash flow.- Strong liquidity position and manageable leverage.- Solid asset coverage. Despite $1.1 billion of mortgage debt as of 3Q2011, 107 of 123 properties remain unencumbered by liens. - During 2010, issued 27 million shares of common stock under its continuous equity offering program for net proceeds of $406 million. In April, entered into a new program that allows for up to $400 million of common stock. YTD 3Q2011 issued 16.7 million common shares for net proceeds of $289 million.

Investment Risks:- Paying quarterly dividend of $0.05 per common share. - 37% of business was driven by group travel during fiscal 2010.- Under bond indentures, HST may incur up to $400 million of secured debt if interest coverage is at least 2.0x.- Permitted to release security in subsidiary stock if leverage is below 6.0x (not released to date).- Sizable restricted payment basket ($10.3 billion as of 2Q2011).

Company Description



Huntsman Corp. (HUN) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 600 5.500 Sr. Unsec 30-Jun-16 B1/NR 98.25 5.95% 524

IL 530 8.625 Sr. Sub. 15-Mar-21 B3/B 104.3 9/15/2015 109.50 6.70% 518

Financial Profile ($, mn) FY:09 FY:10 FY:11E Q4:10 Q3:11 Q4:11E

Revenues 7,665 9,250 11,284 2,412 2,976 2,695

Total EBITDA 534 850 1,260 217 345 285


Cash Taxes (155) (6) (118) 13 (49) (34)


Free Cash Flow (48) 379 549 65 140 62

Total Debt 4,436 4,321 4,137 4,321 4,231 4,137

Cash Equivalents 1,745 966 436 966 453 436

Net Debt 2,941 3,355 3,701 3,355 3,778 3,701


Debt/EBITDA 8.5x 5.1x 3.3x 5.1x 3.5x 3.3x Huntsman 3.5x 4.8x B1/BB-

Net Debt/EBITDA 5.1x 3.9x 2.9x 3.9x 3.2x 2.9x MSC 5.5x 2.5x B3/CCC+

MPM 6.8x 1.7x B3/B-


EBITDA margin 7% 9% 11% 9% 11% 11%


Revolver -

Term Loan B 652 Revolver 300

Term Loan B - Extended 650 Borrowings -

Term Loan C 427 Letters of credit 25

A/R Facility (on balance sheet) 245 Revolver Availability 275

Total Huntsman International Senior Secured 1,974 1.7xAustralia credit facilities 27

HPS (China) debt 167 US A/R facility 250

Senior Unsecured Notes 600 European A/R 310

Variable interest entities--AAC 306 Borrowing base 541

Other Debt 95 Amount Drawn 245

Total Huntsman International Senior Debt 3,169 2.7x Availability 296

Senior Subordinated Notes (€ 400 mn) -

Senior Subordinated Notes (€ 135 mn) 88 Cash at Huntsman Corp 360

Senior Subordinated Notes - Liquidity 931

Senior Subordinated Notes 530

Senior Subordinated Notes 350

Total Huntsman International Debt 4,137 3.5x


Share Price 11.5



Maturities:

Next Call

PF Capitalization ($, mm)

MW

Huntsman is a leading producer of differentiated chemicals. Its largest business is Polyurethanes, and the company also competes in Advanced Materials, Textile and Effects, Performance Products, and Pigments (titanium dioxide). At the end of 2007, Huntsman divested its polymer and base chemicals assets in North America to a subsidiary of Koch Industries. Following court proceedings, the company terminated its agreement to merge with Hexion. In the settlement, Huntsman received $1 billion from Apollo (Hexion's parent) and Apollo's affiliates.

Key Dates/Catalysts:4Q2011 earnings releaseHuntsman has substantial cash on its balance sheet and could look to make acquisitions; conversely, the company could use cash to reduce outstanding indebtedness

Investment Strengths:- Leading position in MDI, which is a high-growth business, particularly in Asia.- Huntsman is focused on restructuring the Textiles and Effects business to improve margins.- The company has a large amount of cash on its balance sheet.

Investment Risks:- Huntsman has significant cash on the balance sheet and could look to make acquisitions.

0

100

200

300

400

500

600

700

800

900

1000

2011 2012 2013 2014 2015

Company Description



IASIS Healthcare (IAS) Erin Blum 212-855-7718


OUTPERFORM

Bond Summary



$850 8.375 Sr. 15-May-19 Caa1/CCC+ $106.281 5/15/2014 $94.750 9.381% 858

Financial Profile FY2010A FY2011A FY2012E Dec 1QF11A Sep 4QF11A Dec 1QF12E

Revenue $2,521 $2,787 $2,931 $673 $717 $739

EBITDA 287 299 307 70 72 77


Cash Taxes 45 27 10 9 3 3

CapEx 81 98 160 15 34 40

Free Cash Flow 176 39 37 (9) 7 9

Total Debt $1,442 $1,879 $1,869 $1,453 $1,879 $1,876

Cash 145 147 169 129 147 153

Net Debt 1,297 1,732 1,700 1,324 1,732 1,724 Agency


Total Debt/EBITDA 0.0x 0.0x 0.0x IAS 6.0x 2.1x Caa1/CCC+

Net Debt/EBITDA 4.5x 5.8x 5.5x VANGUA 4.3x 2.9x B3/B-

CYH 4.8x 2.8x B3/B

EBITDA/Interest 3.1x 2.7x 2.5x 3.0x 2.1x 2.5x THC 3.9x 2.7x Caa1/CCC+

EBITDA margin 11.4% 10.7% 10.5% 10.3% 10.1% 10.4%

Pro forma Capitalization

Description Size

Debt to LTM PF

EBITDA*

Debt to FY12E

EBITDA Liquidity

Revolving Credit Facility due 5/3/2016 $0 Revolver Size $300

Term loan B due 5/3/2018 1,025 Letters of Credit 85

Total Sr Sec debt 1,025 3.3x 3.3x Borrowings 0


8.375% Sr notes due 5/5/19 $850

Total Sr debt 850 6.0x 6.1x Cash* $147


Other--Capital Lease Obligations $6 *Cash balance shown here is at Opco and does not include the $230mn

Total Debt $1,881 6.0x 6.1x of cash at Holdco.

Market Cap NA

Enterprise Value NA

*LTM EBITDA is PF for acquisition of St Joseph Medical Center

Maturities:

We rate IAS Outperform. We view the high leverage and the headwind from the health plan as more than priced-in. Also, we see upside if IAS uses its $230 mn of holdco cash to complete an acquisition, which we estimate could reduce leverage by 0.5x to 5.6x. We believe most investors are assuming the holdco cash would go to sponsors and leverage would remain at 6.1x.

Next Call

Updated 01/25/12

0

400

800

1,200

1,600

2,000

2012 2013 2014 2015+

Small hospital operator with 17 facilities located in three high-growth markets (Salt Lake City, Phoenix, Tampa), plus Texas and Louisiana. Markets are urban and suburban. Focused on building market concentration to facilitate physician recruitment and negotiation with managed care payers. Around 20% of EBITDA comes from Medicaid health plan in Arizona. The company has been owned by TPG since 2004.

On October 1, 2010, IASIS announced the completion of its acquisition of Brim Holdings, Inc, which consists of two hospitals (Wadley Regional Medical Center – 370 beds; Pikes Peak Regional Hospital – 15 beds) for a total cash-for-stock transaction valued at $95 mn. In May 2011, Iasis completed the acquisition of a 79.1% equity ownership interest in St. Joseph Medical Center (SJMC) in downtown Houston for a cash consideration of $157 mn. The company recapitalized in the same quarter in order to raise funds for the SJMC acquisition and put $230 mn of cash at the holdco level, the proceeds of which could be used for an acquisition or a dividend to the sponsor.

Key Dates/Catalysts:- Quarterly earnings announcements (commercial volumes have been weak industry-wide, although bad debt expense has been relatively stable.)- Possible acquisition announcement using the $230 mn of holdco cash that was raised during the April refinancing. - Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We view the ACA as a net positive for hospitals.

Investment Strengths:- High market concentration in high-population growth markets and markets likely to outperform in a recession (Salt Lake City).

- Historically strong track record of organic growth: Markets have experienced less of an increase in unemployment than the national average.


- Small number of facilities heightens operating risk, as a disruption at one will likely have a significant impact on financial results.


- The health plan is likely to post declining revenue in the near term due to reduced enrollment. We have modeled FY2012 health plan revenue down 13% yoy.

Company Description



IMS Health (RX) Erin Blum 212-855-7718


NOT COVERED

Bond Summary



$1,000 12.5 Snr 01-Mar-18 B3/B $110.000 01-Mar-14 $117.000 8.098% 777


Revenue $2,190 $2,222 $587 $558 $591 $589

EBITDA 594 612 175 151 173 191


Cash Taxes 105 (97) (2) (18) (26) 13

CapEx 117 104 32 21 22 22

Free Cash Flow 425 131 45 (24) 57 89

Total Debt 1245 2984 2949 3083 3077 3047

Cash 380 496 496 546 579 649

Net Debt 864 2488 2453 2537 2498 2398

Key Credit Statistics Comps Leverage CoverageAgency Ratings

Total Debt/EBITDA 2.1x 4.9x LTM: 4.4x IMS Health (RX) 4.2x 2.5x B3/B

Net Debt/EBITDA 1.5x 4.1x Multiplan (MLTPLN) 6.3x 1.9x Caa1/CCC+

Catalent (PTSAC) snr 5.6x NA Caa1/B


EBITDA margin 27.1% 27.6% 29.8% 27.0% 29.3% 32.4%

2009A was pre LBO.

Capitalization


EBITDA Liquidity

Revolver ($375mm) 2/26/2016* 58 Revolver Size $375

Term Loan (US$) 8/26/2017 1283 Letters of Credit 0

Term Loan (€) 8/26/2017 764 Borrowings 0

Total Sr Sec debt $2,105 2.8x Revolver Availability 375

12.5% notes due 3/1/2018 1000 A/R facility 0

Total Sr debt $1,000 4.2x Borrowings 0

A/R Availability 0

Total Debt $3,105 4.2x Cash* 309

Market Cap NA Total Liquidity $684

Enterprise Value NA

*Per 3Q 10Q and conf call, company drew down $90mn after quarter end and expect to pay down $32mn by year-end.

Maturities: *3Q11 cash less $340mn purchase of SDI after quarter end.

Next Call

Updated 01/25/12

IMS Health (RX) purchases prescription data from pharmacists and drug distributors, repackages the data, and sells it to pharmaceutical companies in over 100 countries. Pharmaceutical companies use the data to determine sales force compensation, and to plan drug launches and marketing spend. The data is necessary because the sales force targets physicians; however, physicians are not the ultimate purchasers and it is otherwise very difficult to measure salesforce effectiveness. Though it has competitors in specific drug categories and specific locations, IMS is the only company providing this data on a global basis. More than 60% of revenue is generated outside of the US.

IMS was spun off from Nielsen Research (formerly Cognizant Corp.) in 1998 and was taken private by TPG, CPP Investment Board, and Leonard Green in February 2010 for $5.96 bn, or 9.9x LTM EBITDA. Sponsors contributed $2.8 bn of equity.

In March 2011, IMS amended its credit agreement and increased revolver size by $100 mn, to $375 mn of availability, and extended the maturity by one year. In June 2011, the Supreme Court ruled in favor of IMS that a VT statute limiting the commercial use of doctor-level prescription data violates the First Amendment. IMS has noted that it believes the existing laws in NH and ME are likely to be declared unconstitutional or repealed in light of this decision in the coming months. In October 2011, IMS closed the acquisition of SDI, which is expected to add roughly $65 mn of EBITDA. In January 2012, IMS announced that it has sold the SDI promotional and Medical Audit businesses to Inventiv Health as per FTC regulation; financial terms were not disclosed. The divested assets represents less than $15 mn or approximately 10% of SDI's 2011 revenue.

Key Dates/Catalysts:- Quarterly earnings results- Integration of the SDI acquisition, which closed October 31, 2011.

Company Strengths:- Solid cash flow. LTM free cash flow was 6% of debt.

- Commanding market share. IMS has 50%+ market share. We view this position as defensible due to the difficulty of a competitor building a network of data suppliers. One of the three big drug distributors (ABC, MCK, CAH) could provide some market data, but the data would not be as comprehensive as IMS's.

- High level of importance to customers, coupled with low cost relative to SG&A budgets, results in high 20% margins. For example, top customer pays IMS about $140 mn out of an SG&A budget of what we would estimate to be $20 bn.

- Pharma industry is a good customer group over long term –large,highly profitable industry.

Company Risks:- Dislocation in the pharma industry in the near term. Customers are cutting costs/merging in reaction to patent cliff, recession, and concerns about the impact of health reform.

- Customer concentration (top 10 are 40% of revenue).

- 144A for life.

Company Description

0

500

1000

1500

2000

2500

3000

3500

2012 2013 2014 2015+



Isle of Capri Casinos (ISLE) Updated 1/23/12 Kevin Coyne 212-357-9918


NOT COVEREDBond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) (bp) (bp)

$300 7.75 Sr Nts 15-Mar-19 B3/B- 103.875 15-Mar-15 94.250 8.85 747 734

$357 7.00 Sr Sub Nts (a) 1-Mar-14 Caa1/CCC+ 101.167 Current 98.500 7.79 756 724

(a) Call price steps down to par on 3/1/2012.

Fiscal year ended April 30th

Financial Profile 2QFY11 3QFY11 4QFY11 FY11 1QFY12 2QFY12

Revenue 247 232 274 1,005 246 247

EBITDA 45 40 65 197 41 43


Cash Taxes 1 (6) 0 (6) (0) 0

CapEx 13 20 12 59 15 20

Free Cash Flow 1 10 30 60 17 (10)


Total Debt 1,260 1,252 1,193 1,193 1,178 1,185 ISLE 6.3x 2.4x Caa1/CCC+

Cash (incl restricted) 100 104 110 110 108 106 HET 12.8x 0.9x Ca/CCC

Net Debt 1,160 1,148 1,082 1,082 1,070 1,079 MNTG 7.1x 1.4x B3/B-

Key Credit Statistics PNK 5.0x 2.8x Caa1/B

Total Debt/LTM EBITDA 7.0x 6.7x 6.1x 6.1x 6.2x 6.3x



EBITDA margin 18.2% 17.0% 23.9% 19.6% 16.5% 17.5%


Description 2QFY12Debt to EBITDA Source 2QFY12 Source

Sr sec revolver due November 2013 (b) 28 Revolver Size 300 Shares O/S (mm) 39.0

Sr sec term loan due November 2013 (b) 498 Letters of Credit 24 Share price $4.99

Other - Borrowings 28 Market cap 195

Total senior secured debt 526 2.8x Revolver Availability 248 Net debt 1,092

7.75% senior notes due March 2019 298 Less: Limitations due Enterprise Value (EV) 1,286

Total senior debt 823 4.4x to covenant restrictions (103)

7% senior sub debt due March 2014 357 Net revolver Available 145 EV / LTM EBITDA 6.8x

Other 4

Total debt 1,185 6.3x Restricted cash 12

Total debt #REF!

(b) Revolver and term loan maturity dates extend to 2016 and 2017, Cash 93

respectively, if the 7% senior subs are refinanced prior to that date. Total Liquidity 251

Maturities:

Revenue Summary 3QFY11 4QFY11 1QFY12 2QFY12

Mississippi 44 55 38 45

Louisiana 31 35 36 33

Missouri 43 52 47 47

Iowa 53 62 58 58

Colorado 26 30 31 32

Florida 35 42 35 33

Other 0 0 0 0

Total net revenue 232 274 246 247

Next Call

Isle of Capri (ISLE) owns and operates 14 casinos and racetracks in the US, located in Mississippi, Louisiana, Iowa, Missouri, Colorado, and Florida. As of April 2011, ISLE operated 14,947 slot machines and 375 table games and managed 3,078 hotel rooms. As of April 2011, members of the Goldstein family, including Vice Chairman Robert Goldstein, collectively owned and controlled approximately 42.6% of the common stock.

Key Dates/Catalysts:- April 2011: Receives Category 3 gaming license in PA. The casino will be part of Nemacolin Woodlands Resorts in southwest PA, which includes 335 guestrooms and various resort amenities. ISLE expects to invest $50 mn to build a gaming facility, and to operate 600 slot machines and 28 table games as well as a restaurant and lounge. The project is pending an appeal by a third party challenging the granting of the license to ISLE.- August 2011: Lowered fiscal 2012 capex budget to $90 million from $140-150 million. ISLE removed the planned Nemacolin capex as a third party appeals the granting of the license to ISLE.- December 2011: Has begun rolling out an enhanced customer loyalty program at its Pompano property and expects to implement the program across its portfolio by the end of 2013.- December 2012: Expected opening of its Cape Girardeau facility in Missouri.

Company Strengths:- Diversified asset mix, with no exposure to Las Vegas or Atlantic City.- Solid liquidity position.- Modest maintenance capex ($25 million per year).- Solid management team working on new brand strategy.- Florida legislature passed legislation lowering state gaming tax to 35% from 50%.- Further portfolio diversification with the Cape Girardeau facility in Missouri. The $125 million facility is expected to open by the end of 2012.

Company Risks:- High leverage compared with its regional gaming operator peer group.- Low EBITDA margins compared with peer group.- Continued pressure on consumer spending.- Increasing competitive pressure from new gaming supply and increased promotional activities.- Florida property facing increasing competition from Native American casino, which has introduced table gaming.- Continues to be affected by a sluggish economy and high unemployment.- Elevated fuel prices could reduce visitation and spend per visit.

Company Description

-100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0

1,000.0

FY2012 FY2013 FY2014 FY2015 FY2016+



iStar Financial (SFI) Updated 1/25/2012 Amanda Lynam (212) 902-9238


UNDERPERFORM

Bond Summary

Size Coupon Agency Yield UST Price 5 Yr CDS

Ticker (MM) (%) Maturity Ratings (%) Spread ($) bid pts + 500bp

SFI $448 5.95 15-Oct-13 Caa1/B+/B- 12.3 1,206 90.50 8.75/9.75

Financial Profile FY08 FY09 FY10 9M2010 9M2011 LTM 9/30

Revenue $1,354 $893 $575 $443 $338 $476

EBITDA (defined by SFI) $1,698 $704 $778 $672 $494 $600

Provision for losses $1,029 $1,255 $331 $277 $30 $85

Charge offs ($270) ($814) ($935) ($671) ($135) ($399)

Repayments/principal collections $1,823 $951 $1,520 $1,209 $1,069 $1,379

Proceeds- sales of loans/NLAs/OREOs $1,141 $1,056 $2,523 $2,152 $229 $600

12/31/2008 12/31/2009 12/31/2010 9/30/2010 9/30/2011

Total Debt* $12,486 $10,895 $7,345 $8,517 $5,995

Secured Debt $1,913 $5,594 $3,123 $4,127 $2,831

Unsecured Debt $10,512 $5,015 $4,043 $4,306 $3,207

Unencumbered Assets $12,597 $5,571 $5,060 $4,970 $4,087

Total Assets $15,297 $12,811 $9,175 $10,465 $7,754 Comps Agency Ratings

Total Equity $2,447 $1,656 $1,695 $1,761 $1,605 SFI Caa1/B+/B-

Total reserve for loan losses $977 $1,418 $815 $1,025 $710

As a % of total loans (before reserves) 7.8% 15.3% 15.1% 16.1% 17.9% Due to SFI's unique business model, we

Key unsecured covenant statistics believe there are limited business comps

UA/UD 1.3x 1.4x 1.4x 1.4x 1.5x available.

2.7x 2.4x 1.6x 1.9x not given

Note: The fixed charge covenant ratio is calculated by SFI on a trailing twelve-month basis. The company has not disclosed thisratio since year-end 2010.

* Total debt includes debt premiums/(discounts) and may not equal the sum of secured debt and unsecured debt line items shown above

Capitalization

Description ($mn) 9/30/2011 Key covenants

Tranche A-1 facility $1,071 Secured credit facility

Tranche A-2 facility $1,450 Colateral coverage of 1.25x of outstanding borrowings (maintenance)

Line of credit $244 Unsecured debt securities

Secured term loans $310 Unencumbered assets to unsecured indebtedness (UA/UD) must

Unsecured notes $2,863 exceed 120% (maintenance)

Preferreds $100 Fixed charge coverage ratio must exceed 1.5x (incurrence)

Total debt $6,038

Market Cap (at 1/20/2012) $578

Cash (unrestricted) $217

Enterprise value $6,398

Remaining consolidated unsecured maturities (as of 9/30/2011):

Fixed Charge Cover Ratio

iStar Financial (SFI) is a fully-integrated finance and investment company focused on the commercial real estate industry. The company maintains significant concentrations in certain property types (apartments and land) and geographies (particularly in the western US).

SFI’s credit metrics, financial flexibility, and debt ratings deteriorated during the credit crisis, as non-performing loans and loan provisions increased materially. The company’s constrained financial flexibility has restricted SFI’s ability to carry out new investment activities. Since the beginning of the credit crisis, SFI has significantly curtailed asset originations, and has focused primarily on resolving problem assets and generating liquidity to satisfy the company’s debt repayments.

In March 2011, SFI entered into a $2.95 billion senior secured credit facility and used the proceeds to repay $2.62 billion of outstanding borrowings under existing secured credit facilities. The borrowings under the March 2011 facility are collateralized by a first lien on a fixed pool of assets, initally composed of $3.69 billion in assets (56% performing loans, 22% net lease assets, and 22% non-performingloans/REOs).

Pro-forma for the sale of its interest in Oak Hill, SFI held $350 million of cash at the end of October 2011.

$0

$500

$1,000

$1,500

$2,000

$2,500

2012 2013 2014 2015 Thereafter

$ in

mill

ion

s

Investment Strengths:- As of September 30, 2011, SFI held $4.83 billion of unencumbered assets ($4.1 billion net of accumulated depreciation and loan loss reserves).- In March 2011, demonstrated an ability to successfully refinance near-term maturities, and entered into a new $2.95 billion secured credit facility.- SFI's REHI and OREO portfolios may generate value, to the extent that certain properties are sold at values near or above their current marks (assets were impaired before they were transferred into these portfolios). In October 2011, SFI said it expects these assets to begin contributing income in 2014.

Investment Risks:- Despite the March 2011 refinancing, SFI still has a challenging near-term maturity schedule, with $1.7 billion of debt maturities and term loan payments due in 2012.- SFI's capital structure contains a large amount of secured debt (44% of debt is secured), which reduces the value that unsecured holders may be able to extract in a hypothetical recovery scenario.- SFI’s ability to increase debt levels is limited by a fixed charge coverage covenant (though it can incur new debt for the purposes of refinancing existing debt).- SFI is solely focused on the real estate market, so vulnerable to downturns in real estate cycles.

Company Description



J. Crew Group Inc. (JCG) Updated: 1/26/12 Karen Eltrich 212-902-6957



OUTPERFORM

Bond Summary



$400 8.125 Sr Nts 1-Mar-19 Caa1/CCC+ $104.06 1-Mar-14 97.00 8.70% 723


Revenue 1,578.0 1,722.2 1,844.4 471.5 517.5

EBITDA 275.8 283.7 295.3 43.9 62.5 Comps Yield Leverage Coverage Ratings

J. Crew 8.70% 5.4x 3.2x Caa1/CCC+

Interest Expense 5.4 3.9 87.4 0.5 23.0 Burlington 11.09% 4.3x 2.7x Caa1/ CCC

Cash Taxes 82.5 83.5 12.6 5.8 6.8 Gymboree 11.72% 5.9x 2.3x Caa1/CCC+

CapEx 44.7 52.4 95.0 21.3 23.0

Free Cash Flow 143.2 144.0 100.3 16.3 9.7

Total Debt 49.2 1,600.0 1,591.0 1,600.0 1,594.0

Cash 298.1 381.4 204.9 381.4 191.8


Total Debt/EBITDA 0.2x 5.6x 5.4x 36.5x 25.5x

Net Debt/EBITDA -0.9x 4.3x 4.7x 27.8x 22.4x


EBITDA margin 17.48% 16.47% 16.01% 9.31% 12.08%




ABL ($250mm, L+250) due 2016 0.0 Revolver Size 250.0

Term Loan (L+350, 1.25% floor) due 2018 1194.0 Letters of Credit 7.7



Senior Notes due 2018 400.0 A/R facility NA

Total Subordinated Debt 400.0 5.4x Borrowings 0

Total Debt 1594.0 5.4x A/R Availability NA

Market Cap (Shareholders' Equity) n/a Cash 142.7

Enterprise Value (Total Book Cap) n/a Total Liquidity 385.0

Maturities:

Next Call

J. Crew is a specialty retailer of women's, men's, and children's apparel through a network of more than 300 retail stores and through its direct (online and catalog) segment. In addition to the core J Crew concept, the company has several related concepts, including crewcuts (children's), Factory, and Madewell, which is a recently launched brand for young women.

Key Dates/Catalysts:Mid- to late March, fourth quarter earnings release

Investment Strengths:- Strong brand name- Track record of high-teens EBITDA growth under current management- High online penetration (28% of revenues)

Investment Risks:- Trading at a large premium to apparel retail peers considering leverage- Fashion missteps have hurt recent results- Traffic remains challenging- Macro shock could slow business

Company Description

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2012 2013 2014+



J.C. Penney Company (JCP) Updated 1/25/2012 Gregory Chwatko 212-902-0673

Contact analyst or see latest research for updates to ratings, estimates, and other information. Annalee Bloomfield 212-902-8028

NOT RATED

Bond Summary

Size Coupon Agency UST Z Spread 5 Yr

Ticker (MM) (%) Maturity Ratings Price Spread (bp) CDS

JCP $400 5.65 01-Jun-20 Ba1/BB+/BBB- $98 400 423 323/333

JCP $400 6.38 15-Oct-36 Ba1/BB+/BBB- $84 473 533 323/333

Financial Profile 2009 2010 3Q11A

Revenue 17,556 17,759 3,906

EBITDA 1,158 1,336 209

Operating Income 663 825 81

Interest Expense (net) 260 231 57

Operating Cash Flow 1,577 592 120

CapEx (600) (499) (178)

Dividends (183) (189) (45)

Free Cash Flow 794 (96) (103)

Total Debt 3,392 3,099 3,099 CompsAdjusted Leverage Coverage Agency Ratings

Cash 3,011 2,622 1,551

Net Debt (Cash) 381 477 1,548 LTD 3.5x 8.3x Ba2/BB+/BB+

Key Credit Statistics M 2.4x 7.5x Baa3/BBB-/BBB-

Total Debt/EBITDA 2.9x 2.3x 2.3x RSH 4.5x 7.2x Ba3/BB-/B+

Adjusted Debt/EBITDAR 4.0x 3.4x 3.3x


EBITDA/Interest 4.5x 5.8x 3.7x

EBITDA margin 6.6% 7.5% 5.4%

Capitalization

SizeDebt to EBITDA Liquidity

Revolver Size 1,250

9.0% Notes, due 2012 230 Letters of Credit 157

6.875 MTN, series A, due 2015 200 Borrowings 0

7.65% Debentures, due 2016 200 Revolver Availability 1,093

7.95% Debentures, due 2017 285

5.75% Notes, due 2018 300

5.65% notes due 2020 400 Cash 1,085

7.125% Debentures, due 2023 255 Total Liquidity 2,178

6.9% notes due 2026 2

6.375% Notes, due 2036 400

7.4% Debentures, due 2037 326

7.625% Notes, due 2097 500

Capital lease obligations/Other 1


Market Cap 8,730


Maturities:

Description

J.C. Penney is one of America's largest retailers, operating throughout the United States and Puerto Rico. JCP has one of the largest apparel and home furnishing sites on the internet, jcp.com, and the nation's largest general merchandise catalog business. Across its integrated enterprise, J.C. Penney offers a wide array of national, private, and exclusive brands that reflect the company's commitment to providing customers with style and quality at smart prices.JCP is executing a strategic Long Range Plan that consists of four integrated strategies aimed at building a deeper, more enduring relationship with customers, increasing the engagement and retention of associates, and delivering industry-leading financial performance to shareholders.

Key Dates/Catalysts:Earnings releases, same-store sales announcementsOutisde investor positions

Company Strengths:- JCP has maintained healthy liquidity ($1.6 billion in cash and equivalents as of 3Q2011). - In addition, JCP extends its financial flexibility owing to its non-burdensome debt maturity schedule.- JCP management's approach to the company's credit profile and capital structure has been conservative.- JCP is one upgrade away from a return to IG rating status at two of three agencies. - Ron Johnson, previously with Apple's retail operations, succeeding Mike Ullman as CEO may provide a catalyst for operational improvements.

Company Risks:- In order to maintain its position in the hyper-competitive department store sector, JCP must constantly make innovations in its private brands and introduce new brands and merchandise to suit emerging middle-market consumer trends and interests. - Weak consumer spending levels may weigh on sales and margin improvements. - Pershing Square's and Vornado's stakes in the company could lead to deployment of cash for shareholder enhancement,or a public proxy battle, which could weaken the company's credit profile. For example, the company completed a $900 million share repurchase program in 1H2011.

Company Description

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2012 2013 2014 2015 2016+



Jarden Corporation (JAH) Kevin Coyne 212-357-9918


NOT COVERED

Bond Summary



$300 8.000 Sr Nts 01-May-16 Ba3/BB- 104.000 01-May-13 109.250 3.522 334 304

$300 6.125 Sr Nts 15-Nov-22 Ba3/BB- 103.750 01-May-12 103.625 5.477 415 405

$650 7.500 Sr Sub 01-May-17 B2/B 103.060 15-Nov-15 106.500 6.034 529 497


Revenue 1,602 1,684 6,023 1,483 1,674 1,785

EBITDA 214 204 720 125 206 239


Cash Taxes 49 46 123 12 45 50

CapEx 31 42 138 27 24 28

Free Cash Flow 88 68 282 41 91 117


Total Debt (excl A/R facility) 2,956 3,241 3,241 3,195 3,198 3,180 JAH 7.5s 4.1x 4.2x B2/B

Cash 456 695 695 406 495 446 HBI 6.375s 3.9x 4.6x B1/BB-

Net Debt 2,500 2,545 2,545 2,789 2,703 2,733 ZQK 6.875s 3.7x 2.7x Caa1/CCC+

Key Credit Statistics LEVI 7.625s 4.2x 3.7x B2/B+



Maintenance Covenants Net Leverage Coverage

EBITDA/Interest 4.2x 4.1x 4.1x 4.0x 4.1x 4.2x Current 4.00x 2.00x

EBITDA margin 13.4% 12.1% 12.0% 8.4% 12.3% 13.4% 1Q2013 4.00x 2.25x

1Q2015 & thereafter 4.00x 2.50x

Capitalization

Description 3Q11A

Debt to LTM

EBITDA Liquidity 3Q11A Enterprise value (EV)

Senior secured revolver due Mar 2016 0 Revolver (USD) due 2016 175 Shares O/S (mm) 90.8

Senior secured TL A due Mar 2016 509 Revolver (Other curr.) 75 Share price 34.76$

Senior secured TL B due Jan 2017 500 Letters of Credit 41 Market cap 3,156

Securitization & other secured debt 337 Borrowings - Net debt 2,733

Total senior secured debt 1,347 1.7x Revolver Availability 209 Enterprise value 5,889

8% senior notes due May 2016 294

6.125% senior notes due Nov 2022 300

Total senior debt 1,941 2.5x A/R Facility 300 EV / LTM EBITDA 7.6x

7.5% senior sub notes due May 2017 657 Borrowings 300

7.5% senior sub notes due Jan 2020 475 A/R Availability -

Other debt 107

Total Debt $3,180 4.1x Cash 446


(*) Total debt excludes securitization facility.

Maturities:

Next Call

Updated 1/23/2012

0

400

800

1200

1600

2000

2012 2013 2014 2015 2016+

Jarden is a diversified consumer products company operating in four segments: Branded Consumables (playing cards, home canning, baby care, home care, etc.), Consumer Solutions (small electric appliances: Sunbeam, Oster, Holmes, etc.), Outdoor Solutions (Coleman, K2, Rawlings, Stearns, Shakespeare, Berkeley), and Process Solutions. Jarden's trademarks include Crock-Pot, FoodSaver, Harmony, Holmes, Oster, Mr. Coffee, Sunbeam, SEAL-a-Meal, and FoodSaver, among many others. Jarden also offers various consumer and medical plastic products, including jar closures, contact lens packaging, plastic cutlery, refrigerator door liners, medical disposables, and rigid packaging, as well as zinc strip and fabricated zinc products, such as coinage blanks. Jarden Corporation sell its products through various retail formats, including club stores, drugstores, grocery retailers, mass merchants, department stores, value retailers, home improvement stores, and craft stores. The company was founded in 1991 and is headquartered in Rye, New York. According to Bloomberg, significant equityholders include TIAA CREF (9%), Horizon Asset Mgmt (6%) and JP Morgan Chase (5%).

Key Dates/Catalysts:- June 2011: CEO stated that 2.5x is the ideal leverage for the company.- August 2011: Board of directors approved a new $500 million stock repurchase plan.

Company Strengths:- Diverse, known brand portfolio with dominant/niche market positions; Jarden owns over 100 active brands and has 12 domestic brands that have been in use for more than a century.- Management is experienced and has proven ability to integrate acquisitions and realize cost-saving synergies.- Acquisitions have generally been low-multiple, non-auction situations, and management has generally kept leverage in the 3-4x range.- Company has global sales footprint, with approximately 40% of sales generated outside the US on a pro forma basis.- Modest dividend policy ($8 mn / quarter).- At December 31, 2010, JAH had $1 billion of domestic tax NOLs.- Long-term goal to reach $5.00 in adjusted EPS by 2014.

Company Risks:- The company has a history of being very acquisitive.- Large restricted payments basket ($800 million).- Recent acquisitions have limited synergies with other business lines.- During 3Q2011, completed $150 mn stock repurchase program. - Pension plan: At year-end 2010, the pension and OPEB plans were underfunded by $135 million. During 2011, JAH expects to contribute $15 million of cash to its pension plans.- At 3Q2011, there were $1.4 billion of liabilities at non-guarantor subsidiaries.

Company Description



JDA Software Group Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$273 8.0 Senior 15-Dec-14 B1/BB- 104.00 12/15/2012 107.88 3.3% 321


Revenue 646 554 617 666 677 725

EBITDA 132 117 116 156 194 191

Cash Interest (12) (2) (22) (22) (25) (22)

Cash Taxes (7) (7) (15) (15) (14) (18)

CapEx (10) (8) (17) (10) (15) (33)

Free Cash Flow 152 116 48 149 168 117

Total Debt 65 272 273 273 273 273

Cash 271 261 172 290 276 393

Net Debt (206) 11 101 (17) (3) (120)



Net Debt/EBITDA -1.6 x 0.1 x 0.6 x -0.1 x 0.0 x -0.6 x


EBITDA/Interest 9.5 x N/A 7.1 x 7.1 x 9.0 x 9.6 x Ratings

EBITDA margin 20.4% 21.2% 18.8% 23.4% 28.6% 26.3% SGS 3.0x 2.8x B1/B+

Capitalization


8.0% Senior Notes due 2014 273 1.7 x

Total Debt 273 1.7 x Liquidity

Market Cap 1,267 Revolver Size 100

Enterprise Value 1,251 8.0 x Letters of Credit 0

Borrowings 0


Maturities: Cash 290

Total Liquidity 390

Next Call

JDA Software Group is a leading provider of global supply-chain planning software, which includes end-to-end solutions from raw materials to freight, assembly, distribution, warehouse, store, and consumer. JDA was founded in 1985. In 2000, it expanded into the manufacturing and wholesale-distribution markets through strategic acquisitions. JDA’s enterprise software solutions are specifically designed to enable planning, optimization, and execution of supply chain processes for manufacturers, wholesale/distributors, and retailers, as well as for government and aerospace defense contractors.

Key Dates/Catalysts:- JDAS is expected to report 4Q2011 earnings on January 31. The company preannounced 4Q2011 earnings on January 12 to highlight a shortfall in license sales during the last 2 weeks of December. Management may use the January 31 call to provide an update as to whether that trend has continued into 2012.- On March 22, 2011, JDAS announced that it had entered into an agreement for a $100 million senior secured revolving credit facility at L+100 bp. The facility will mature in September 2014.

0

50

100

150

200

250

300

2012 2013 2014 Thereafter

Investment Strengths:- Strong cash flow profile: JDAS generated cumulative free cash flow of $150 million over the past 2 years. We believe it will remain strong in 2011 at over $150 million for the full year.- Conservative capital structure: JDAS’s conservative capital structure consists of only one bond (the $275 million of 8% senior notes due 2014) and a $100 million revolver. We think net leverage could approach 0.0x by YE2011.- Recurring revenue base: Approximately 45% of the combined company’s revenue is derived from maintenance contracts and subscription-based licenses.

Investment Risks:- Pullback in demand from retail customers: JDAS preannounced 4Q2011 earnings on January 12 to highlight a shortfall in license sales during the last 2 weeks of December which management attributed to a reduction in retail customer budgets. At that time, management indicated that closing rates for new licenses had not rebounded. We remain focused on whether this trend will continue.- Competitive marketplace: The supply chain management market is highly competitive. Oracle (22% share) and SAP (16% share) control the tier 1 position while JDAS holds a No. 3 position with a 6% share. - History of acquisitions: Management has made 10 acquisitions in the last 11 years, and its recently signed $100 million revolver could provide liquidity for another deal as the i2 integration unfolds.

Company Description



JetBlue Airways Corp. (JBLU) Updated 1/24/2012 Justine Fisher 212-357-6711


IN-LINEBond Summary



$39 L+37.5 EETC 15-Dec-13 Ba3/BBB- NC NC 90.00 6.50% 593


Revenue 3,779 1,151 1,209 1,254 4,680 4,680

EBITDAR 679 180 189 190 674 674


Income Taxes (64) (18) (3) (3) (9) (9)

CapEx (249) (81) (133) (133) (530) (530)

Free Cash Flow 210 12 (14) (14) (138) (138)

Total Debt 3,033 3,083 3,247 3,030 3,030 3,147

Cash 963 1,173 1,239 1,144 1,144 1,123 Comps Leverage Coverage Ratings

Net Debt 2,070 1,910 2,008 1,886 1,886 2,024 UAL 2.6x 5.4x B2/B

Key Credit Statistics DAL 3.9x 4.1x B2/B

EBITDA/Interest 3.9 x 4.2 x 5.3 x 5.2 x 4.6 x 4.6 x LUV 2.1x 9.9x Baa3/BBB-

Leverage 4.5 x 4.5 x 4.7 x JBLU 4.5x 4.6x B3/B-

EBITDA margin 18.0% 15.6% 15.7% 15.2% 14.4% 14.4% LCC 3.6x 3.9x Caa1/B-

Capitalization

SizeDebt to

EBITDAR Liquidity

Capital Leases 131 Revolver Size 0

Floating rate equipment notes due through 2020 750 Letters of Credit 0

Class G-1 EETC, due 2016 222 Borrowings 0

Class G-2 EETC due 2014 and 2016 373 Revolver Availability 0

Class B-1 EETC due 2014 49

Fixed rate equipment notes due through 2025 1,157

Special Facility Bonds (JFK and Orlando) 83

Other 482

Total debt 3,247 4.8 x

Market Cap 1,724 Cash 1,239

Enterprise Value 3,732 5.5 x Total Liquidity 1,239

Maturities:

Next Call

Description

JetBlue is a low-cost airline, serving primarily point-to-point routes. It maintains a fleet of A320 and Embraer 190 aircraft. JetBlue is based out of New York's JFK Airport, with Boston, Fort Lauderdale, Orlando, Long Beach, and Washington Dulles as additional focus cities. The carrier is not a member of any international alliance, although Lufthansa is a significant equity holder in the company. JetBlue recently signed an interline cooperation agreement with AMR.

Key Dates/Catalysts:JetBlue is expected to report earnings on January 26.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2012 2013 2014 2015 Thereafter

Investment Strengths:- Brand: JetBlue has a strong brand and loyal customer base. It offers live inflight television on its flights through wholly owned subsidiary LiveTV. - Fleet: JetBlue operates an exclusively A320 and Embraer E190 fleet. By limiting the number of plane types it flies, JetBlue reduces training costs and gains leverage with the manufacturers by buying in bulk. - Non-union workforce: None of JetBlue's employees are currently unionized. This gives the company more flexibility to adjust work rules and other policies.- Airline partnerships: While JetBlue is not a member of any of the international alliances, it has signed interline agreements and partnerships with a number of airlines, most notably Lufthansa (which owns a large equity stake) and AMR.

Investment Risks:- High labor costs: JetBlue employees are not unionized, and it has maintained a "no furlough" policy in the past to retain employee loyalty. As a result when demand for air travel dropped, JetBlue was not able to reduce labor costs as quickly as competitors did, and it saw its labor costs per ASM increase. - Small size and largely domestic focused: JetBlue is concentrated in a few key markets (New York, Florida), which makes it more susceptible to fluctuations in regional demand. - Over-expansion: JetBlue is one of the few airlines with plans to significantly expand capacity this year. It could have difficulty filling these new seats if the recovery is not as strong as it expects.

Company Description



KB Home (KBH) Updated 1/26/2012 Kristen McDuffy 212-357-6157


UNDERPERFORM

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpU 300 7.25 Sr. Nts 15-Jun-18 B2/B+ 95 8.27% 710


Total Revenues 1,825 1,590 1,316 451 367 480



Cash Taxes 209 7 - 2 - - Comps Cap to-Debt Ratings

Capital Expenditures (1) (0) (0) 0 0 (0) KB Home 81% 1.0x B2/B+

Free Cash Flow 363 (114) (204) 35 (45) 112 Beazer 86% 0.9x Caa3/CCC

Standard Pacific 69% 1.1x B3/B

Total Debt Outstanding 2,007 1,956 1,584 1,956 1,813 1,584

Total Cash and Cash Equivalents 1,292 1,024 480 1,024 593 480




Inventories / Homebuilding Debt (2) 0.7x 0.9x NA 0.9x 1.0x 1.1x




Mortgages/land contracts/other loans 28 Homebuilding cash 477

Senior notes due 2014 250 Financial services cash 3

Senior notes due 2015 300 Restricted cash 113

Senior notes due 2015 450 Total Cash 593

Senior notes due 2017(1) 265

Senior notes due 2018 300


LTV maintenance requirements -

Several guarantees 226


Share price 9.3



Next Call

NC

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015 2016

KB Home is the fourth-largest homebuilder in the United States based on LTM closings and revenues. The company began operating in 1957 through various subsidiaries of Kaufman and Broad, Inc. In 1986, Kaufman and Broad transferred all of its homebuilding and mortgage banking operations to the company, which subsequently completed an IPO under the name Kaufman and Broad Home Corporation. The business was spun off from Kaufman and Broad, Inc., in 1989, becoming an independent company operating predominantly in California and France. In 2001, the company changed its name to KB Home. Over the next several years, KB significantly expanded its presence throughout the United States, and in 2007, it divested its French operations. Today the company operates in 10 states (CA, AZ, NV, CO, TX, FL, MD, NC, SC, VA) and 30 major markets.

Key Dates/Catalysts:1QFY12 earning release Potential capital raise in FY2012

Investment Strengths:- Good geographic diversity.- Primarily targets finished lots.

Investment Risks:- Build-to-order model could hinder sales pace.- Margins have been relatively weak in recent periods despite the company's build-to-order strategy.- SG&A as a percentage of sales remains very high.- Relatively weak liquidity position.

Company Description



Kindred Healthcare (KND) Erin Blum 212-855-7718


IN-LINE

Bond Summary



$550 8.25 Sr 1-Jun-19 B3/B- 106.188 6/1/2014 $90.000 10.216% 942

Financial Profile 2010A PF LTM* 2011E** 4Q10A 3Q11A 4Q11E

Revenue $4,360 $6,049 $5,561 $1,135 $1,514 $1,562

EBITDA 225 459 377 69 104 108

EBITDAR 582 876 776 160 210 214


Cash Taxes 34 0 23 13 (2) 13

CapEx (177) (232) (215) (67) (81) (50) Agency

Free Cash Flow 33 (7) (26) (8) (14) 21 Comps Leverage Coverage Ratings

KND 4.6x 4.4x B3/B-

Total Debt $366 $1,500 $1,479 $366 $1,500 $1,479 IAS 6.0x 2.1x Caa1/CCC+

Cash 17 34 34 17 34 34 EMS 7.3x 1.9x Caa1/B-

Net Debt 348 1,466 1,445 348 1,466 1,445




Total Rent adj Debt/EBITDAR 4.3x 4.6x 5.0x


EBITDA margin 5.2% 7.6% 6.8% 6.1% 6.9% 6.9%

* PF LTM includes the acquisition of RehabCare as well as a full year of other KND acquisitions but does not include expected synergies.

**2011E is not pro forma

Pro forma Capitalization

Description SizeDebt to LTM PF

EBITDAR Liquidity

Asset backed revolver due 6/1/2016 $249 Revolver Size $650

Term Loan due 6/1/2018 $698 Letters of Credit $0

Rent adjustment (6x)* $2,502 Borrowings $249

Total Sr Sec debt $3,449 3.9x Revolver Availability 401

8.25% Senior notes 6/1/2019 $550 Cash $34

Total Sr debt $550 4.6x Total Liquidity 435

Other $3


Market Cap 634


Maturities:

Updated 01/25/12

We rate Kindred In-Line. While bonds trade at among the highest yield of our provider group, we remain concerned about reimbursement cuts such as (1) a revisiting of the sequester 2% Medicare cut; (2) for LTACs, the expiration of the moratorium; and (3) state Medicaid rate cuts. In addition, we see limited opportunity for de-levering given the 2012 SNF rate cuts.

Next Call

Kindred is the largest operator of long-term acute care hospitals, LTACHs (45% of pro forma revenues), and the fourth-largest operator of skilled nursing facilities, SNFs (35%) pro forma for its acquisition of RehabCare (RHB). The company also has a contract rehabilitation services business (17% of pro forma revenues) as well as hospital rehabilitation services, HRS (3%). Pro forma for the RHB acquisition, KND will have 123 hospitals (LTACHs and rehab hospitals), 226 skilled nursing facilities, and seven assisted living facilities in 46 states.

In June 2011, KND completed the acquisition of RHB for $1.7 bn. The company expects run-rate synergies of approximately $40 mn, with about $25 mn of it being achieved in 2011. KND also recently acquired Vista Healthcare (five LTACHs) in November 2010 for $179 mn in cash, which was funded through the revolver. In 3Q11, KND acquired a home health provider, Professional Healthcare, for $51 mn, funded through the revolver. At a recent conference, the company described homecare as a "fourth segment [it is] incubating."

Key Dates/Catalysts:- Quarterly earnings, including any updated guidance on the expected impact of the July 29 SNF rule changes.- Patient and facility criteria for LTACHs and the potential end to the moratorium (legislation has been introduced in the Senate).

0

200

400

600

800

1000

1200

1400

1600

2012 2013 2014 2015+

Investment Strengths:- Stated leverage target. The company plans to delever to prior levels, so roughly half a turn from 4.7x to 4.4x.

- KND's cluster market strategy is enhanced by the RHB acquisition. These cluster markets present opportunities for KND hospitals, SNFs, and rehab centers to reduce costs and offer better continuum of care.

Investment Risks:- Ability to manage through the 11.1% SNF Medicare cut and therapy changes.

- Growth prospects for the LTACHs may be unclear if the moratorium is not lifted and if patient and facility criteria are not defined.

- State Medicaid rates could be reduced more than expectations (management expects 0 to +1%)



Koppers (KOP) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 300 7.875 Sr. Nts 1-Dec-19 B1/B+ 103.9 1-Dec-14 105.75 6.67% 525


Net Sales 1,124 1,246 1,496 308 401 343

EBITDA 120 127 154 24 47 35


Cash Taxes 9 (24) (21) (3) (9) 2 Koppers 2.2x 5.7x B1/B+

Capital Expenditures (18) (30) (32) (16) (7) (12) Ashland 3.5x 5.7x Ba1/BB

Free Cash Flow 67 53 36 19 9 23 Olin 1.9x 10.2x Ba1/BB

Total Debt 361 320 315 320 315 315

Cash Equivalents 58 35 82 35 59 82


Debt/EBITDA 2.9x 2.5x 2.1x 2.5x 2.2x 2.1x


EBITDA/Interest Expense 6.2x 5.1x 5.9x 5.1x 5.7x 5.9x

LTM EBITDA Margin 11% 10% 10% 10% 10% 10%



Revolving Credit Facility 15 Revolver Size 300

Capital leases and other secured debt - Borrowings 15

Senior Secured Debt 15 0.1x Letters of Credit 14

Senior Unsecured Notes 300 Revolver Availability 268

TKK guarantee -

Total Debt 315 2.2x Other credit facilities 15


Share Price 36.9 Cash 59

Market Capitalization 764 Liquidity 342


Maturities:

Next Call

0

50

100

150

200

250

300

2010 2011 2012 2013 2014

Koppers is a global integrated provider of carbon compounds and commercial wood treatment products and services. The company's products are sold into a wide range of end markets, including the aluminum, railroad, specialty chemical, utility, rubber, concrete, and steel industries. Koppers is organized into two primary business segments: Carbon Materials & Chemicals and Railroad & Utility Products.

Key Dates/Catalysts:4Q2011 earning releasePotential leveraging acquisition

Investment Strengths:- Koppers has leading market positions in several of its key businesses, including its core North American carbon pitch and railroad crosstie operations.- Long-standing relationships with large, blue-chip customers.- Limited threat of substitutes for key products.

Investment Risks:- North American and Western European carbon pitch demand may continue to be weak given anemic aluminum production due to excess capacity.- Koppers is dependent on a single raw material, coal tar, which has recently been in short supply in some markets.- Significant customer concentration, with top 10 accounting for 50% of total revenue.- Relatively weak EBITDA margins.

Company Description

0

50

100

150

200

250

300

350

2012 2013 2014+



L-3 Communications Holdings, Inc. (LLL) Updated 1/26/2012 Brian Jacoby, CFA 212-902-3258

Contact analyst or see latest research for updates to ratings, estimates, and other information. Cody Sauer, CFA 212-855-8553

OUTPERFORM/IN-LINEOur Outperform on the 6.375% sub notes of 2015 reflects their attractive yield-to-call within the next year.

Bond Summary

Size Coupon Agency Bid YTW T-sprd 5 Yr

Ticker (MM) (%) Priority Maturity Ratings Next Call Date Price (%) bp CDS1

LLL $1,000 6.375 Sr. Sub 15-Oct-15 Ba1/BB+ 101.063 15-Oct-12 102.50 1.3 129 185

LLL $800 4.750 Sr. Unsec 15-Jul-20 Baa3/BBB- NC - 100.38 4.7 270 1851 5-year CDS is sub CDS

Financial Profile ($mn) FY08 FY09 3Q10 FY10 3Q11 FY11E FY12E

Total Revenue 14,901 15,615 3,835 15,680 3,787 15,390 13,581

EBITDA 1,765 1,874 499 1,981 464 1,873 1,639

Gross Operating Cash Flow 1,386 1,564 327 1,480 365 1,516 1,319

Working Capital 1 (157) 68 (19) 100 (80) 30

Net Operating Cash Flow 1,387 1,407 395 1,461 465 1,436 1,349

Capital Expenditures (218) (186) (34) (181) (51) (189) (200)

Dividends (147) (165) (46) (184) (46) (192) (190)

Free Cash Flow 1,022 1,056 315 1,096 368 1,055 959

Total Debt (on bal sheet) 4,493 4,112 4,132 4,137 4,126 4,126 4,326

Cash 867 1,016 650 607 538 273 473

Net Debt 3,626 3,096 3,482 3,530 3,588 3,853 3,853


Lease Adj Debt/EBITDA 2.66x 2.31x 2.42x 2.18x 2.28x 2.28x 2.68x

Lease Adj Net Debt/EBITDA 2.21x 1.81x 2.09x 1.90x 2.01x 2.15x 2.42x

Lease Adj Debt/Capital 46.8% 41.8% 43.0% 41.1% 41.2% 40.5% 39.5%

LTM FCF/Debt 22.7% 25.7% 26.1% 26.5% 25.3% 25.6% 22.2%

EBITDA/Interest expense 6.1x 6.7x 7.8x 7.4x 8.1x 7.9x 6.8x

EBITDA Margin 11.8% 12.0% 13.0% 12.6% 12.3% 12.2% 12.1%

Capitalization 9/30/2011 9/30/2011 Comps Leverage EBITDA Coverage Agency Ratings

Description Size EBITDA Liquidity Bombardier 2.9x 11.9x Ba2/BB+

Revolvers 0 Northrop Grumman11.0x 16.8x Baa2/BBB

LLL 5.2% of 2019 1,000 Revolver (mat. Oct. 2012) 1,000 Lockheed Martin 1.5x 13.4x Baa1/A-

LLL 4.75% of 2020 800 Letters of Credit (10) Raytheon 1.1x 20.4x A3/A-

LLL 4.95% of 2021 650 Borrowings 0 1 NOC ratings for Hold Co.

Other Sr. Debt 500 Revolver Availability 990

Total Sr debt 2,950 1.6x

LLL 6.375% subs of 2015 500 Cash+Available Revolver 1,528

3% CODES of 2035 689

Unamortized discount (13)

Total Sub debt 1,176

Total debt (on bal sheet) 4,126 2.2x

NPV of oper. leases 574

Total adj. debt 4,700 2.3x

Market Cap 7,089 3.8x


Enterprise Value (op. lease adj.) 11,251 5.8x

Maturities:

*2012 debt maturity reflects $700mn in CODES 2015 debt that is puttable anytime after 2/1/2011

**2015 debt maturity reflects 6.375% subs of 2015 which are currently callable

Next Call

L-3 Communications (LLL) is a major US defense company, providing high technology products, systems, and subsystems. The company is a prime contractor in command, control, communications, intelligence, surveillance, and reconnaissance systems (C3ISR), government services, and aircraft modernization and maintenance. Electronic Systems (36% of 3Q11 LTM revenues) provides a broad range of products, including components, systems, and subsystems such as Electro-Optic/Infrared and Power & Control Systems, and services to military and commercial customers in several niche markets. C3ISR (23% of revenues) provides manned and unmanned surveillance, sensors, manpacks, and logistics support. Aircraft Modernization and Maintenance (16% of revenues) provides modernization, upgrades, maintenance, and logistics support and services for various government aircraft and other platforms to the DoD and allied governments. In July 2011, LLL announced that it would spin off approximately 55% of the Government Services business ($2bn in revenue and $193mn in EBITDA) in a tax free distribution. LLL expects the transaction to be completed in 1H2012 and the new company will be named Engility. The Government Services segment provides a broad range of engineering, technical, analytical, information technology, advisory, training, logistics and support services to the DoD, DoS, DoJ, US government intelligence agencies, and allied foreign governments.Key Dates/Catalysts: 1H2012 – spin-off of Engility and additional clarity on US Department of Defense Budget


- LLL is a leading defense company, with strong FCF and a diverse program base.

- Excellent business position in C3ISR and electronics, which are well positioned in the US defense budget.

- Solid liquidity position, with $538 million in cash at 3Q11 and $1 billion in annual FCF.

Investment Risks:

- Management traditionally favors shareholder-friendly uses of free cash flow versus debt reduction (e.g., buying back stock, making acquisitions).

- The US defense budget is facing significant cutbacks in coming years.

- Risk of new supply: LLL has issued senior debt to call its higher-coupon subordinated debt, and could continue this trend to reduce the remainder of its $500mn in subordinated debt.

Company Description

0

100

200

300

400

500

600

700

800

2012* 2013 2014 2015**

($, m

n)



Las Vegas Sands Corp. (LVS) Updated 1/23/12 Kevin Coyne (212) 257-9918

Contact analyst for updates and other information. Celeste Everett (212) 902-4751




$189 6.375 Sr Sec Nts 15-Feb-15 Ba2/BB 101.063 current 101.00 5.37 505 487

Financial Profile ($mm) 4Q10A FY10A 1Q11A 2Q11A 3Q11A

US Properties only (excludes Macao and Singapore)

Net revenue 394$ 1,505$ 396$ 430$ 454$

Adjusted EBITDA 100 369 87 114 120

Consolidated Las Vegas Sands (includes Macao and Singapore)

Net revenue 2,015$ 6,853$ 2,112$ 2,345$ 2,409$

Adjusted EBITDA 698 2,078 695 849 860

Interest paid, net of cap int. 32 237 81 68 54

Cash taxes paid (refund) 1 1 (6) 0 0

CapEx 374 2,024 333 388 367

Free Cash Flow 291 (185) 287 393 439 Comps Leverage Coverage Ratings

MGM (senior) 9.2x 1.7x B3/B-

Total Debt 10,141 10,141 10,103 10,059 9,739 WYNN (consolidated) 1.9x 6.6x Ba2 / BBB-

Cash (unrestricted) 3,037 3,037 3,134 3,479 3,952 HET (sr unsecured) 12.8x 0.9x Ca/CCC

Net Debt 7,104 7,104 6,969 6,580 5,788

Key Credit Statistics US credit agreement covenants (effective date)

Total Debt / Adj EBITDA 4.9x 4.9x 4.1x 3.5x 3.1x 4Q11 1Q12 3Q12 4Q12+

Net Debt / Adj EBITDA 3.4x 3.4x 2.9x 2.3x 1.9x Leverage 6.00x 5.50x 5.00x 5.00x

LVS can cure covenant breach with $50mn of cash per quarter

Adj EBITDA / Interest 8.8x 8.8x 9.9x 11.3x 13.2x

Adj EBITDA margin 34.6% 30.3% 32.9% 36.2% 35.7%

Description 3Q11ADebt to EBITDA Liquidity 3Q11A Enterprise Value (Consolidated)

Corporate and US-related: Revolver due May 2012/2014 750 Shares O/S (mm) 732.7

Sr sec credit facility - Term B & Del Draw 2,856 Letters of Credit 25 Stock price 49.74$

Sr sec credit facility - Revolver - Borrowings - Market cap 36,445

6.375% senior notes due Feb 2015 189 Revolver Availability (US) 725 Net debt 5,788

Airplane financings 76 Preferred stock 680

FF&E credit facility 25 Macau revolver 1,000 Minority interest 1,496

Total Corporate & US Debt 3,146 Singapore availability 79 Restricted cash 184

Total Macao-related corporate debt 2,915 Enterprise value (EV) 44,225

Total Singapore-related debt 3,678 Cash & S/T invest. 3,952

Total Consolidated Debt 9,739 3.1x Total Liquidity 5,756 EV / EBITDA 14.3x

LTM EBITDA 3,102

Note: Leverage excludes benefit of equity cure, and capital contribution, etc.

Maturities:

Next Call

Las Vegas Sands Corp. (LVS) is a hotel, gaming, and resort development company headquartered in Las Vegas. LVS owns The Venetian Resort Hotel Casino, the Sands Expo and Convention Center, and Venetian Macao Limited, which is a developer of multiple casino hotel resort properties in The People’s Republic of China’s Special Administrative Region of Macao. Macao properties include the Sands Macao and the Venetian Macao. In April 2010, LVS opened Marina Bay Sands, a $6 billion casino resort in Singapore. The majority owner is Sheldon Adelson, who controls 44% of the voting stock, according to Bloomberg.

Key Dates/Catalysts:- 1Q2011: Told Las Vegas Review-Journal that LVS could invest $1-2 billion in Florida to build five Las Vegas-style casinos, including one in Miami. - September 2011: Macau subsidiary entered into a new US$3.7 billion credit facility.- November 15, 2011: LVS to redeem all of 10% cumulative preferred stock. LVS expects to save $76 million in annual dividend payments- December 2011: CEO Adelson tells the Las Vegas Review-Journal that he is opposed to online poker.- December 2011: Plans to build $2 billion tourism complex in Vietnam

455 529

1,322

3,268

4,165

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2012 2013 2014 2015 2016

Company Strengths:- Bonds are secured and rank pari passu with $3 bn credit agreement, which has first-lien security interest in substantially all of Las Vegas Sands LLC and the guarantors' assets.- Strong support from majority owner: CEO Adelson is well known in the gaming industry and continues to support the company.- Secured $1.75 bn in project finance for development of its resort on the Cotai Strip in Macau.- LVS expects recovery of group bookings throughout 2010.- May 2010: Management stated that every $10 of additional ADR translates to $20-25 mn of incremental EBITDA in Las Vegas.- Strong operating performance from its Macau and Singapore subsidiaries.- According to the company, of the $2 billion of cash held by unrestricted foreign subsidiaries, $1.15 billion is "available to be repatriated to the US with virtually no tax consequences due to the company's significant foreign taxes paid."

Company Risks:- Small bond issue size.- Las Vegas Strip recovery proceeding slowly. Management believes competitive pressure is keeping convention & group booking rates flat year over year. - Covenant concerns in 2010 as maintenance covenants step down in both the US credit facility and the Macau credit facility; management expects to use equity cures and excess cash to remain in compliance.

Company Description



Leap Wireless International, Inc. (LEAP) Updated 1/20/12 Jason Kim 212-902-2233


OUTPERFORM/IN-LINEWe rate the LEAP secured 2016s Outperform owing to their strong asset coverage through the bonds, including LEAP's spectrum ownership. We rate the LEAP unsecured 2020s

In-Line given intense competition in the prepaid wireless market and the still-challenging macro environment.

Bond Summary



$1,100 7.750 Sr Sec Nts 15-May-16 Ba2/B+ 105.813 15-May-12 106.00 5.72 335

$1,600 7.750 Sr Nts 15-Oct-20 B3/CCC+ 103.875 15-Oct-15 96.00 8.40 647


Subscribers ('000s) 4,954 5,518 5,746 5,755 5,930 5,930

ARPU $40.31 $37.76 $40.15 $41.25 $41.89 $40.86

Churn 4.5% 4.7% 4.2% 3.8% 3.8% 3.7%

CPGA $196 $199 $251 $238 $225 $224

CPU $18.27 $19.22 $21.83 $23.09 $23.30 $22.92

Revenue $2,410 $2,697 $761 $763 $820 $3,124

EBITDA 486 525 161 154 137 564

Free Cash Flow (415) (87) (64) 63 (136) (157)

Agency


Cash 564 419 724 800 655 655

Net Debt 2,204 2,476 2,556 2,480 2,617 2,617 MetroPCS 3.7x 5.0x B2/B

Key Credit Statistics Sprint 3.3x 4.0x B3/B+



EBITDA Margin 20.1% 19.5% 21.1% 20.2% 16.7% 18.1%

Capitalization

Debt /


1st Lien Promissory Note due 2015 $30 Revolver Size $0

7.75% Sr Secured Nts due 2016 1,100 Letters of Credit -

Total Secured Debt $1,130 2.1x Borrowings -

10.000% Sr Nts due 2015 300 Revolver Availability $0

7.750% Sr Nts due 2020 1,600

Total Opco Debt $3,030 5.7x Cash $800

4.5% Holdco Convertible Nts due 2014 250 Total Liquidity $800

Total LEAP Debt $3,280 6.1x


Market Cap 544


Maturities:

Leap Wireless International, under its “Cricket” brand, offers wireless voice and data service in the US. Its offerings provide unlimited nationwide services for a flat rate without a contract or a credit check. As of September 30, 2011, LEAP offered its Cricket service in 47 states and the District of Columbia and had over 5.7 million subscribers. The company’s network footprint in its operating markets covered approximately 95.3 million POPs.


Margin impact from MVNO agreement: LEAP's MVNO agreement with Sprint will become a bigger factor in overall margins as LEAP adds more out-of-market subscribers.

9 9255 300

2,709

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Positioned to benefit from proliferation of lower priced smartphones as a low-cost, value-driven operator.

(2) Potential to participate in M&A as a possible candidate for higher quality strategic players.

(3) Solid liquidity: We expect LEAP to end 20111 with $655 mn of liquidity. The company also has no meaningful maturities until 2014.

Investment Risks:(1) Fierce competition from national postpaid carriers as well as other prepaid brands like Boost (from Sprint) and Straight Talk (from America Movil's TracFone and Wal-Mart). A further deterioration in competitive dynamics would pressure LEAP's ARPU and subscriber metrics.

(2) Macro pressure: LEAP's subscriber base tends toward consumers with less discretionary income; therefore, weak economic conditions and high gas/food prices have a disproportionately large impact on their spending.

(3) Lack of spectrum depth: LEAP has an average of 20MHz of spectrum across its footprint, which is significantly less than that of its larger competitors.

Company Description



Lennar Corp. (LEN) Updated 1/26/2012 Kristen McDuffy 212-357-6157


OUTPERFORMWe rate the Lennar 6.95% senior unsecured notes of 2018 Outperform. In our view, Lennar bonds look cheap at current spread levels, as they trade wide to peers despite similar or even lower

leverage. We believe that Lennar's performance will outpace that of most other builders over the next several quarters, leading to stronger credti metrics and even more favorable relative value

comparisons.

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpOP 250 6.95 Sr. Nts 1-Jun-18 B3/B+ 102.00 6.56% 539


Total Revenues 3,119 3,074 3,095 860 820 953



Cash Taxes 314 26 9 4 2 - Comps Cap to-Debt Ratings

Capital Expenditures 0 (5) (3) (4) (2) - Lennar 55% 1.2x B3/B+

Free Cash Flow 342 150 (208) 41 (145) 49 Ryland 64% 0.9x B1/BB-

Total Homebuilding Debt 2,956 3,242 3,464 3,242 3,227 3,464

Total Cash and Cash Equivalents 1,467 1,402 1,222 1,402 936 1,222




Inventories / Homebuilding Debt (2) 1.2x 1.1x NA 1.1x 1.2x #VALUE!




5.95% senior notes 113 Homebuilding Cash 800

5.95% senior notes 267 Financial Services Cash 57

5.5% senior notes 249 Rialto Cash 70

5.6% senior notes 501 Restricted Cash 9

6.5% senior notes 250 Total Liquidity 936



2% convertible senior notes 277

2.75% convertible senior notes 385 Maturities:

Mortgage notes on land and other debt 445

Total Senior 3,128

Mortgage Warehouse Repurchase Facility 189

Total Balance Sheet Debt 3,317

Joint Venture Recourse Debt & Guarantees 99



Share Price 22.2


ENTERPRISE VALUE 7,413

Next Call

MW

0

100

200

300

400

500

600

2011 2012 2013 2014 2015

Lennar Corp. is the second-largest builder in the United States based on market cap and the third-largest builder based on LTM closings. The company sells single-family attached and detached homes under the Lennar brand name. It primarily targets first-time buyers, followed by move-up and active adult buyers. Lennar also operates a business that invests in distressed real estate assets, Rialto Investments

Key Dates/Catalysts:1QFY12 earning releasePossible reversal of the company's deferred tax valuation allowance.

Investment Strengths:- Broad geographic footprint.- Ample liquidity.- High margins due to product re-engineering and cost reductions.- Financially savvy management team- Rialto provides access to attractive distressed land deals.

Investment Risks:- Rialto could cause company to divert capital away from core homebuilding operations.- Leverage remains relatively high.

Company Description



Levi Strauss & Co. (LEVI) Kevin Coyne 212-357-9918


OUTPERFORM: We expect continued benefits from exposure to fast-growing countries in Asia and from new innovative products like the new line of Curve ID fitted jeans and the

Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp CDS (pts)

$524 7.625 Sr Notes 15-May-20 B2/B+ 103.813 15-May-15 104.500 6.732 547 543 3+500

Financial Profile 2010 1Q11 2Q11 3Q11 4Q11E 2011E

Revenue 4,411 1,121 1,093 1,204 1,341 4,758

EBITDA 493 127 94 111 137 469


Cash Taxes 86 19 10 14 23 66

CapEx 155 40 35 30 47 153

Free Cash Flow 116 33 15 37 32 117

Total Debt 1,867 1,879 1,900 1,990 1,987 1,987 LTM Comps Leverage CoverageAgency Ratings

Cash 274 258 262 238 309 309 LEVI 8.875s 4.2x 3.7x B2/B+

Net Debt 1,593 1,621 1,638 1,752 1,678 1,678 HBI 6.375s 3.9x 4.6x B1/BB-

Key Credit Statistics JAH 7.5s 4.1x 4.2x B2/B

Total Debt/EBITDA 3.8x 3.9x 3.9x 4.2x 4.2x 4.2x ZQK 6.875s 3.7x 2.7x Caa1/CCC+



EBITDA margin 11% 11% 9% 9% 10% 10%

Note: Fiscal year ends the last Sunday in November.

Capitalization

Description 3Q11

Debt to LTM

EBITDA Liquidity 3Q11

ABL facility due Sep 2016 (L+150) 108 Revolver Size 850

Total Secured 108 0.2x Letters of Credit 84

Senior unsecured term loan due Apr 2014 324 Borrowings 108

8.875% senior notes due Nov 2016 350 Covenant limitations 321

4.25% senior notes due Nov 2016 (¥20 bn) 118 Revolver Availability 337

7.75% senior notes due May 2018 (€300 mn) 431

7.625% senior notes due 2020 525 Cash 238

Other, including capital leases 134

Total debt 1,990 4.2x Total liquidity 575

Operating statistics

4Q10 1Q11 2Q11 3Q11

Maturities: Revenue:

Americas 772 592 599 718

Europe 300 312 281 275

Asia Pacific 218 217 213 211 Total revenue 1,290 1,121 1,093 1,204

Operating income:

Americas 139 75 83 111

Europe 31 71 38 31

Asia Pacific 23 37 25 26

Corporate (74) (85) (81) (88)

Total operating income 119 99 65 81

Next Call

Updated 1/23/2012

lower-cost Denizen brand. While we recognize that we may be a little early with this call due to near-term margin pressure, we think long-term investors may find this entry point attractive.

-

500

1,000

1,500

2,000

2012 2013 2014 2015 2016+

Levi Strauss designs and markets jeans and jeans-related pants, casual and dress pants, tops, jackets, and related accessories for men, women, and children under the Levi’s, Dockers, and Levi Strauss Signature brands in markets around the world. Products are distributed primarily through chain retailers and department stores in the United States, and mainly through department stores, specialty retailers, and franchised stores abroad. Levi Strauss also distributes Levi’s, Dockers, and Levi Strauss Signature products through 498 company-operated retail stores in 31 countries, including the United States. Levi Strauss's common stock is majority owned by the Haas family, descendants of its founder, Levi Strauss.

Key Dates/Catalysts:- 2011 Guidance: Expect gross margins in the "high 40's to low 50's." Expecting capex of $145 million.- October 2011: Refinanced its asset-based revolving loan and increased capacity by $100 million to $850 million. The new facility matures September 30, 2016, and carries interest of L+150-275 bp, depending on borrowing base availability.

Investment Strengths:- Iconic, worldwide jeans brand. The company has been making blue jeans for over 150 years in the US.- Jeans are viewed as more of a consumer staple, so they carry less fashion risk than other garments.- Diversified distribution, with roughly 43% of LTM sales generated outside North America as of 2Q2011. Derives sales from over 55,000 retail locations in 110 countries.- Strong performance in emerging markets, particularly India and China.- New design concepts are improving consumer experience: "Curve ID" allows women to select jeans not just by cut, rise, waist size, and length, but also by body shape, and its Denizen brand is a more affordable jean for sale in low-cost geographies in Asia (and was introduced to the US this past July).- No near-term maturities and solid liquidity position.

Investment Risks:- Highly competitive marketplace, including private-label brands of leading retailers, designer brands, and large apparel companies such as VF and Polo.- Highly exposed to cotton prices. Management stated on its 2Q11 conference call that it expects "the higher cost of cotton [to] continue to negatively impact margins and working capital through the remainder of 2011." LEVI may be able to pass on part of the costs through higher pricing.- Sizable pension ($332 mn) and post-retirement liabilities ($141 mn).- Dividend frequency steadily increasing: made a $20 million dividend payment in 1Q11, its second $20 million dividend in the trailing-12-month period.

Company Description



Liberty Interactive (LINTA/QVC) Updated 1/20/12 Jason Kim 212-902-2233


QVC 7.375s of 2020: OUTPERFORM; LIBERT 8.25s of 2030: In-Line.QVC: We believe the QVC 2020s offer value as crossover bonds as they trade wide to similarly rated retail names despite QVC's superior margins, a proven track

track record of sales, and record of sales trends that have outperformed peers in good times and bad.

Liberty Interactive LLC: We find the relationship between the QVC 2020s and the LIBERT 2030s fair at current levels.

Bond Summary



$500 7.375 QVC Sr Sec Nts 10/15/2020 Ba2/BBB- 103.688 4/15/2015 109.42 5.21 463

$504 8.250 LI LLC Sr Debs * 2/1/2030 B3/BB NC NC 98.00 8.47 597

* LI LLC = Liberty Interactive LLC.


QVC Revenue $7,374 $7,813 $1,898 $1,886 $2,654 $8,273

QVC Adj. EBITDA $1,565 $1,671 $418 $373 $547 $1,701

QVC EBITDA Margin 21.2% 21.4% 22.0% 19.8% 20.6% 20.6%

LINTA Revenue $8,305 $8,938 $2,245 $2,133 $3,073 $9,610 Agency

LINTA Adj. EBITDA $1,654 $1,752 $450 $377 $606 $1,811 Comps Leverage Coverage Ratings

LINTA EBITDA Margin 19.9% 19.6% 20.0% 17.7% 19.7% 18.8%

HSN Inc. 1.2x 7.0x Ba2/BB

Key Credit Statistics Macy's 2.0x 7.5x Baa3/BBB-

QVC Debt/QVC EBITDA 2.6x 1.7x 1.6x 1.5x 1.4x 1.4x JC Penney 2.3x 5.8x Ba1/BB+

LINTA Debt/LINTA EBITDA 3.8x 3.4x 3.9x 3.7x 3.7x 3.7x Limited Brands 2.1x 8.3x Ba2/BB+

Capitalization

Debt to


QVC Revolver ($2.0 bn Facility) 459 Revolver Size $2,000

QVC Sr Sec Nts 2,000 Letters of Credit -

Total QVC Secured Debt 2,459 1.5x Borrowings (459)

LI LLC Debt $4,067 Revolver Availability $1,541

Other Debt 85

Total Debt $6,611 3.7x Cash:

Net Debt $5,715 Attributed to LINTA $896

Market Cap (LINTA) $8,797 Total LINTA Liquidity $2,437


Maturities:

Liberty Media is a holding company that is primarily engaged in the video and online commerce, media, communications, and entertainment industries in North America, Europe, and Asia. Following the split-off transaction of the Liberty Starz and Liberty Capital tracking stock groups in September 2011, Liberty Media essentially reflects the Liberty Interactive (LINTA) tracking stock group. LINTA's main businesses are video and online commerce through its main operating unit QVC and various e-commerce businesses. LINTA also holds several equity stakes in other companies.


$5,843

$0

$2,000

$4,000

$6,000

$8,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Strong operational fundamentals: QVC's efficient business model allows for superior margins compared with those of its retail peers. In addition, QVC has proven to be more resilient during the economic downturn in terms of its top-line trends.

(2) Good liquidity/maturity profile: QVC has no debt maturities until 2015, and Liberty's maturities are also very manageable.

Investment Risks:(1) Mature markets: QVC's existing markets are becoming increasingly mature, and incremental growth is tougher to achieve. The company is increasingly dependent on new markets for growth, which exposes it to execution risk.

(2) Financially aggressive management team: Liberty's chairman, John Malone, has a long history of using leverage to enhance equity returns.

(3) Acquisitions: We expect Liberty to remain active in acquiring e-commerce or other related businesses.

Company Description



LifePoint Hospitals (LPNT) Erin Blum 212-855-7718


IN-LINE

Bond Summary



$400 6.625 Sr 1-Oct-20 Ba1/BB- 103.313 10/1/2015 $104.250 5.844% 505


Revenue $2,963 $3,262 $3,546 $853 $877 $903

EBITDA 467 497 534 123 127 130


Cash Taxes 80 82 101 17 23 25

CapEx 167 169 219 47 49 65

Free Cash Flow 17 37 (26) 0 11 (37) Agency


Total Debt $1,502 $1,652 $1,651 $1,652 $1,651 $1,651 LPNT 1.6x NA Ba1/BB-

Cash 187 207 227 207 199 227 HMA 1st Lien 3.0x NA --/BB-

Net Debt 1,315 1,444 1,424 1,444 1,452 1,423 UHS uns 3.2x 0.2x B1/B+

HCA 1st ln 2.8x NA Ba3/BB

Key Credit Statistics HCA sr uns 4.2x NA B3/B-




EBITDA margin 15.8% 15.2% 15.1% 14.5% 14.4% 14.4%

Capitalization


EBITDA

Debt to 2011E

EBITDA Liquidity

Revolver 0 Revolver Size $350

Term Loan B due 2015 444 Letters of Credit 31

Total Sr Sec debt 444 0.8x 0.8x Borrowings 0


6.625% Sr Notes due 2020 400

Total Sr debt 400 1.6x 1.6x Cash $199

Total Liquidity 518

3.5% Conv Sub Notes due 2014 575

3.25% Conv Sub Notes due 2025 225

Total Sub debt 800 3.1x 3.1x

Capital Leases 7


Market Cap 1,935


Maturities:

Next Call

Updated 01/25/12

We rate LPNT In-Line. We like its exclusively rural asset base, which (1) contributes to high EBITDA margins (15%-16%) as a result of stronger managed care pricing and greateroutpatient businesses and (2) results in high FCF (13% of debt) due to more modest capex requirements. However, we now see these factors as priced in.

Mid-sized hospital operator with 52 hospitals almost exclusively located in rural areas and concentrated in Tennessee, Kentucky, Alabama, Louisiana, and West Virginia. The LPNT hospitals are the sole provider in 46 of 52 markets. LPNT was spun out from HCA in 1999. LPNT has higher-than-average EBITDA margins owing to favorable pricing from managed care due to its low-competition markets.

LPNT acquired the four-hospital Sumner Regional Health System in September 2010 for $145 million and Clark Regional in May 2010. Proceeds of the $400 million September 2010 bond issue were used to refinance the $250 million term loan and for general corporate purposes.

In 3Q11, LPNT announced three acquisitions with its Duke partner that together represents $180 mn of revenue. In January 2012, LPNT announced a new JV with Duke in Virginia. LPNT stated that its acquisition pipeline remains active, and it continues to work on a number of potential arrangements similar to the Duke/LPNT partnership.

Key Dates/Catalysts:- Quarterly earnings announcements (commercial volumes have been weak industry-wide, although bad debt expense has been relatively stable).- Potential acquisitions or partnerships based on management comments.- Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We view the ACA as a net positive for hospitals.

0

200

400

600

800

1000

1200

2012 2013 2014 2015+

Investment Strengths:- Lowest leverage of the hospital peer group. LTM leverage of 3.1x.

- Rural asset base provides less competition for doctors and patients, and contributes to higher margins.


- Shareholder friendly: In September 2011, LPNT announced a $250 mn share repurchase program.

- Acquisitive: LPNT has commented that it is still aggressively looking for acquisitions, but will be a disciplined buyer in locations where there is better volume growth, a diversified employer base, and payer mix.




Limited Brands, Inc. (LTD) Updated 1/25/2012 Gregory Chwatko 212-902-0673


UNDERPERFORM

Bond Summary



LTD $1,000 6.63 01-Apr-21 Ba2/BB+/BB+ $109 344 357 185/195

LTD $300 7.60 15-Jul-37 Ba2/BB+/BB+ $100 450 513 185/195

Financial Profile FY09 FY10 FY11E 4Q10A 4Q11E

Revenue 8,632 9,613 10,358 3,456 3,509

EBITDA 1,219 1,642 1,748 807 887

Operating Income 862 1,283 1,384 714 787

Interest Expense (net) 237 208 247 48 64

Operating Cash Flow 1,193 1,284 1,209 1,203 1,116

CapEx (202) (274) (388) (77) (50)

Dividends (193) (1,488) (528) (1,017) (37)

Free Cash Flow 798 (478) 293 109 1,029

Total Debt 2,723 2,507 3,536 2,507 3,536 CompsAdjusted Leverage Coverage Agency Ratings

Cash 1,804 1,130 1,787 1,130 1,787

Net Debt (Cash) 919 1,376 1,749 1,376 1,749 JCP 3.3x 5.8x Ba1/BB+/BBB-

Key Credit Statistics M 2.4x 7.5x Baa3/BBB-/BBB-

Total Debt/EBITDA 2.2x 1.5x 2.0x 1.5x 2.0x RSH 4.5x 7.2x Ba3/BB-/B+

Adjusted Debt/EBITDAR 3.9x 3.1x 3.3x 3.1x 3.3x

Net Debt/EBITDA 0.8x 0.8x 1.0x 0.8x 1.0x


EBITDA margin 14.1% 17.1% 16.9% 23.3% 25.3%

Capitalization


Revolver Size 1,000

Term Loan due August 2012 0 Letters of credit 32

6.125% Notes due December 2012 58 Borrowings 0

5.25% Notes due November 2014 221 Revolver availability 968

6.9% Notes due July 2017 721

8.5% Senior unsecured Notes due June 2019 487

7% senior guaranteed notes due May 2020 400 Cash 498

6.625% senior guaranteed notes due April 2021 1,000 Total Liquidity 1,466

6.95% Debentures due March 2033 350

7.6% Note due July 2037 299

Credit facility due July 2016 0


Market Cap 12,242


Maturities:

Description

Limited Brands is a specialty retailer of women’s intimate apparel and other apparel as well as beauty and personal care products and accessories under various trade names. The company sells its merchandise through its retail stores in the United States and Canada, which are primarily mall based, and through its web sites and catalogues. Limited Brands conducts its business in twoprimary segments: Victoria’s Secret and Bath & Body Works.

Key Dates/Catalysts:Earnings announcementsShare repurchases and special dividend announcements

Investment Strengths:- The company holds a leading market position in intimate apparel and personal care products.- Revenue benefits from geographic diversification- Improved same-store sales trends.- Next debt maturity is not until December 2012, in the amount of $58 million outstanding.

Investment Risks:- Challenging consumer conditions and competition affect profitability.- Shareholder focus remains, as illustrated by the special dividends and share repurchases announced in March and November 2010.- Management has stated that returning to IG status is not a priority for the company.

Company Description

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2012 2013 2014 2015 2016+



Liz Claiborne (LIZ) Kevin Coyne 212-357-9918


NOT COVERED

Bond Summary



$220 10.50% Sr Sec 15-Apr-19 B2/B- $105.250 15-Apr-14 108.000 8.556 825 794 405

€ 222 5.000% Sr Notes 08-Jul-13 Caa1/CCC MW T+15 96.625 7.536 739 632 405

Wellington Mgmt. (10%),

Financial Profile 3Q10 4Q10 2010 1Q11 2Q11 3Q11

Revenue 437 704 2,500 513 556 398

EBITDA 31 39 50 (13) 6 40


Cash Taxes 1 2 8 (1) 4 3

CapEx 20 29 77 16 39 4

Free Cash Flow (1) (5) (95) (40) (55) 17

Total Debt 737 578 578 714 769 748 Agency


Net Debt 720 555 555 698 742 736 LIZ NM 2.5x Caa1/CCC

Key Credit Statistics LEVI 4.2x 3.7x B2/B+

Total Debt/EBITDA 11.6x 14.6x 12.1x nm HBI 3.9x 4.6x B1/BB-

Net Debt/EBITDA 11.1x 14.2x 11.7x nm ZQK 3.7x 2.7x Caa1/CCC+

JNY 3.8x 4.5x Ba3/B+

EBITDA/Interest 2.7x 3.0x 0.8x -1.0x 0.3x 2.5x

EBITDA margin 7.2% 5.5% 2.0% -2.5% 1.1% 10.0%

NM - Not meaningful

Capitalization

Description 3Q11 (b)

Debt to LTM

EBITDA Liquidity Enterprise value (EV)

Senior secured revolver due August 2014 189 ABL Size 350 Shares O/S (mm) 94.6

Capital lease obligations 10 Letters of Credit 34 Stock price 9.59$

Total first lien debt 199 Borrowings 189 Market cap 907.2

10.5% senior secured notes due April 2019 220 Less: borrowing base Net debt 780.6

Total senior secured debt 419 limitations 0 Enterprise value (EV) 1,687.8

5% Euro notes due July 2013 296 Revolver Availability 127

6% convertible sr nts due June 2014 (a) 77 Less: minimum required EV/ LTM EBITDA 23.6x

Other - availability 45

Total debt 792 nm Net revolver available 82

Note: If Euro notes are not refinanced by July 2013, the credit facility

maturity date is accelerated to July 2013.

(a) If stock trades above $4.29 for 20 of a 30 day period, the converts Cash 12

can be converted and redeemed for stock and/or cash. During 2Q11

and 3Q11, the security met the test and is convertible. Total Liquidity $93

(b) Excludes impact of the sale of Liz Claiborne and other brands. LIZ is required to maintain $45 mn

Maturities: of availability on its revolver

Monthly same store sales by brand (yoy % change)

Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11

kate spade 65% 54% 114% 54% 81% 39%

Lucky Brand 10% 13% 24% 23% 16% 21%

Juicy Couture -8% -11% -5% -13% -7% -5%

Updated 01/23/12

Next Call

$0

$50

$100

$150

$200

$250

$300

$350

2012 2013 2014 2015 2016+

Liz Claiborne (LIZ) owns recognizable apparel brands such as Juicy Couture, Lucky jeans, and kate spade. LIZ sells its apparel and other branded merchandise through a combination of specialty stores, department stores, outlet stores. Approx. 34% of 2010 sales were in international markets. According to Bloomberg, significant equity holders include Whitebox Advisors (9%), Wellington Mgmt. (9%), Tremblant Capital (8%), Invesco (8%), BONY (8%), Tiger Consumer Mgmt (7%), Alyeska Investments (7%), Vanguard (6%), and Brigade Capital (5%).

Key Dates/Catalysts:- October 12, 2011: Enters into agreement to sell its Liz Claiborne, Monet, and Kensie brands, and completed sale of Dana Buchman brand for total proceeds of$328 mn ($308 mn in cash). According to the company, sale proceeds represent approximately 8x 2011 forecasted EBITDA.- January 2012: Announced name change to Fifth & Pacific; new ticker will be FNP, effective May 2012.- January 2012: Provided SSS data for November and December. In light of some margin pressure in Juicy Couture, 4Q2012 EBITDA expected to come in at low end of previously released range of $80-90 mn. LIZ lowered its 2012 EBITDA guidance to $125-140 mn from $130-150 mn due to LIZ now expects net debt at the end of 4Q12 to be $265-270 mn (down from $270-290 mn), which based on the midpoint of 2012 EBITDA guidance equates to net leverage of 2.0x. In other news, LIZ CFO Andrew Warren resigned and is going to become CFO of Discovery Communications.

Company Strengths:- Well recognized global brand names.- Management making decisions to streamline operations- Strong brand recognition and growth profile for kate spade.- Good geographic diversification (34% of 2010 sales were international).- Management focused on reducing debt.- Lucky Brand revenue rebounding in 2011.

Company Risks:- Rising input costs (cotton).- Fashion trend risk as certain brands like Juicy Couture and Lucky Brand lose momentum in the marketplace.- Significant leverage

Company Description



Louisiana-Pacific Corporation (LPX) Updated 1/23/12 Joe Stivaletti (212) 902-3299


UNDERPERFORM

Bond Summary



$244 13.000 Sr Sec Nts 15-Mar-17 Ba3/BBB- 106.500 15-Mar-13 98.000 4.871 475


FY:09 FY:10 Q3:10 Q2:11 Q3:11

Revenue 1,055 1,384 323 362 351

EBITDA (54) 77 6 (2) 2



Total recourse debt 309 245 243 255 257

Total cash and investments 440 436 434 368 375

Net recourse cash / (debt) 131 191 191 114 118


Total debt/EBITDA NM 3.2x 4.5x 20.2x 29.9x

EBITDA/interest NM 1.2x 0.4x NM 0.1x Comps Leverage Coverage Ratings

EBITDA margin NM 5.6% 1.9% NM 0.6% Georgia-Pac 2.1x 4.8x Baa3/A-

NM = not meaningful


Description AmountDebt to EBITDA

13.000% senior secured notes 188 21.9x

Chilean term credit facility 40 29.9x

Other debt 10 29.9x

Recourse portion of limited recourse notes 19 29.9x

Total recourse debt 257

Non-recourse debt 470

Total debt 727

Maturities:

Next Call

0

50

100

150

200

250

300

2012 2013 2014 2015+

Louisiana-Pacific (LPX) manufactures building products and is the world's largest producer of oriented strand board (OSB). The company has approximately 3,800 employees and owns facilities in North and South America. Louisiana-Pacific's products are primarily used in the construction of new and manufactured homes, and for repair and remodeling work.

Investment Strengths:- Leading North American OSB producer: LPX is the largest North American OSB producer.- Well positioned for recovery in new home construction: LPX operates relatively low-cost OSB facilities across North and South America, which puts the company in a good position to benefit from a recovery in new home construction.

Investment Risks:- EBITDA is likely to remain weak until the housing market recovers: LPX has generated weak EBITDA for many quarters, and profitability is unlikely to improve significantly until the housing market starts to recover.

Company Description



Marina District & Finance Company, Inc. (Borgata) Updated 1/23/12 Kevin Coyne 212-357-9918Contact analyst or see latest research for updates to ratings, estimates, and other information. Celeste Everett 212-902-4751

IN-LINE: We believe Borgata will be able to weather the recent competitive threat from Aqueduct Racetrack in Queens, NY. However, over the next six months, the BORGATbonds will face the overhang of the new Revel Casino in Atlantic City. We think the next 6-12 months may create more attractive entry points for long-term investors.

Bond SummarySize Cpn Agency Next Call Bid YTW STW Z-spread(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp$400 9.875 Sr Sec 15-Aug-18 B2/BB- 104.938 15-Aug-14 92.250 11.595 1,033 1,023


Net Revenue 738 169 183 202 177 731

Adjusted EBITDA 169 32 39 50 38 159


Cash Taxes 4 (0) 0 0 0 0

CapEx 16 4 7 9 12 31

Free Cash Flow 99 8 10 20 6 44

Total Debt 861 829 820 807 807 807

Cash 42 24 21 32 39 39

Net Debt 819 805 799 774 767 767





EBITDA margin 22.9% 18.8% 21.2% 24.7% 21.7% 21.7%


Description 3Q11A Lvg Source 3Q11PFSr secured revolver due Aug 2014 15Total senior secured priority debt 15 0.1x Revolver due 2014 75 Comps Leverage Coverage Ratings9.5% sr secured notes due Oct 2015 398 Letters of Credit & other - BORGAT 5.2x 1.8x B2/BB-9.875% sr secured notes due Aug 2018 394 Borrowings 15 BYD sr 6.3x 2.0x B3/BTotal debt 807 5.2x Revolver Availability 60 CCTRH 1st lien 7.7x 0.7x B1/BOther, including OID (23) HET 1st lien 7.1x 0.9x B3/BTotal debt 784 5.1x Cash 32

Total Liquidity 92

Pro forma for the November 2011 Maturities: credit facility amendment. Credit facility maintenance covenants

Minimum LTM EBITDA $125 million

The Borgata Hotel Casino & Spa (Borgata, BORGAT) is an upscale destination resort with 2,000 guest rooms and a 161,000 square foot casino floor. The property sits on 46 acres and is located in Atlantic City, New Jersey. Borgata was instituted as a 50/50 joint venture between Boyd Gaming Corporation (BYD) and MGM Resorts International (MGM). The property opened in 2003 with an initial investment of $1.1 billion and has since undergone two expansions that totaled $650 million of additional capital. Today, the property includes 12 restaurants, two nightclubs, 11 boutique shops, a 54,000 square foot spa, meeting and event space with 88,000 square feet, and an entertainment venue with 2,400 seats. In March 2010, MGM transferred its ownership interest into a divestiture trust to facilitate sale to a third party, and it has until March 2013 to sell the property before turning it over to the trustee to facilitate a sale in the following 12 months.

Key Dates/Catalysts:- August 2011: Hurricane Irene caused all Atlantic City casinos to close for two days, reducing revenues by approximately $10 mn and EBITDA by $6 mn, per BYD management.- October 2011: Expected opening of Resorts World New York at Aqueduct Racetrack with 5,000 slots.- November 2011: Reduced its revolver capacity by one-half to $75 million and reduced its minimum LTM EBITDA maintenance covenant to $125 million from $150 million.- December 2011: Recorded 19% yoy growth in gaming revenue during the month.- May 2012: Expected soft opening of Revel in Atlantic City with 150,000 square feet of gaming space.

Investment Strengths:- Borgata is in our view the best property in Atlantic City as it brought back the glamour and glitz of Las Vegas. It is the youngest property in Atlantic City at eight years old (most properties were built in the late 1970s or early 1980s).- Ability to attract more high-end customers, as evidenced by ADR of $132 in 2010 versus $100 for the overall Atlantic City market. For the trailing-12-months ending August 31, 2011, its slot win/unit/day is 23% higher than the market average, and its table win/unit/day is 44% higher.- We expect the property to continue to generate positive free cash flow through 2013 despite expected EBITDA declines following the opening of Aqueduct in NY in 2011 and Revel in AC in 2012.- Low maintenance capex requirements of $15 million per year. Additional capex of $50 million is planned through 1H2012 to renovate the 1,600 rooms in the original hotel tower ahead of Revel's opening in May 2012.- Well-established property with a robust rewards database of 2.8 million customers.

Investment Risks:- Future additional supply in an already-weak market: Revel expected to open by summer 2012 with 1,100 hotel rooms and 150,000 square feet of gaming space. Landry's Inc. plans to invest $150 million in its recently re-branded Golden Nugget. Two additional boutique hotels have been authorized by New Jersey regulators (Hard Rock has submitted plans for a $275 million facility, according to the Associated Press.)- Pressure from neighboring states' gaming expansion: Resorts World New York is planning to open with 5,000 slots by the end of 2011; LVS opened a 300-room hotel tower at its Sands Bethlehem property in May 2011; two additional Category 3 facilities planned in PA. - Potential for future gaming expansion in neighboring states: available license in PA from former group led by the Mashantucket Western Pequot Tribe.- Limited room under the credit facility maintenance covenant, although we believe lenders would be willing to amend the covenant under nominal terms in the event it is violated.- Table hold has become more volatile since the addition of Pennsylvania table games, placing pressure on earnings. - Elevated fuel prices could reduce visitation and spend per visit.- Non-standard redemption options that allow annual redemption for up to 10% of the principal amount outstanding at 103 for both the 9.5% and 9.875% senior secureds.

Company Description

0

100

200

300

400

500

2012 2013 2014 2015 2016 2017+



McClatchy (MNI) Updated 1/23/2012 Scott Wipperman 212-357-9922


Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) bp CDS

$336 5.750 Sr Unsec 1-Sep-17 Caa2/CCC 69.00 13.914% 1,314

$865 11.500 Sr Sec 15-Feb-17 B1/B+ 108.63 15-Feb-13 101.50 11.026% 1,027 28 / 30 pts

Financial Profile FY08 FY10 FY11E FY12E

Revenue 1,472 1,375 1,269 1,213

Adjusted EBITDA 370 382 348 329


Operating Cash Flow 382 225 115 113

CapEx (21) (16) (16) (15)

Dividends (52) 0 0 0

Free Cash Flow 309 209 99 98

Total Debt 1,950 1,775 1,635 1,635

Cash 5 18 98 185

Net Debt 1,945 1,757 1,537 1,450


Total Debt/EBITDA 5.3x 4.6x 4.7x 5.0x CompsGross


Net Debt/EBITDA 5.3x 4.6x 4.4x 4.4x NYT 2.2x 3.8x B1/B+

EBITDA/Interest 2.4x 2.2x 2.2x 2.2x GCI 1.8x 6.4x Ba1/BB

EBITDA margin 25.1% 27.8% 27.4% 27.1%

Capitalization


Consenting RC due 7/1/2013 0 Consenting RC 125 Matures July 1, 2013

Total Bank Debt 0 Letters of Credit 47

11.50% due 2/15/2017 865 Borrowings 0

Total Sub Guaranteed Debt 865 2.4x Minimum liquidty covenant 50

4.625% due 11/1/2014 93 Revolver Availability 28

5.75% due 9/1/2017 337

7.15% due 11/1/2027 89 Cash 17

6.875% due 3/15/2029 276 Total Liquidity 45

Total Sr Unsecured Bonds 795 4.7x Credit agreement maintenance

Other debt 0 covenants:

Total Debt 1,660 4.7x Leverage (as defined) 6.5x

Market Cap 217 Interest Cov (as defined) 1.5x

Total Enterprise Value 1,860

Maturities:

IN-LINE/UNDERPERFORMOur In-Line rating on the 11.5% of 2017 reflects our outlook for challenging fundamentals, which is partially offset by MNI's FCF generation, improved maturity profile, and opco gaurantees on the 11.5% of 2017. Our Underperform on the 5.75% of 2017 reflects fundamentals and valuation.

Next Call

McClatchy is the third-largest newspaper company by circulation in the US. The company operates 30 daily newspapers and 43 non-daily papers in 29 markets across the US. It had average daily paid circulation of approximately 2.1 million and Sunday circulation of 2.8 million in 2010. MNI's portfolio of digital assets includes its newspaper affiliated Web sites and ownership stakes in Career Builder (14.4%) and Classified Ventures, LLC (25.6%). The company substantially increased its operations in 2006 with the acquisition of Knight Ridder and its portfolio of daily newspapers. MNI's larger papers by circulation include The Sacramento Bee, The Kansas City Star, The Miami Herald, and The Fort Worth Star Telegram.

Key Dates/Catalysts:- 4Q2011 results February 8, 2012. - Company continues to buy back bonds on the open market.

Strengths:- McClatchy has aggressively reduced costs to help offset revenue declines.- MNI has improved its maturity profile and is now focused on buying back debt early. - Strong local presence, with largest daily paper by circulation in its respective markets. - Only 6.0% of workforce is represented by unions, which gives MNI more flexibility in restructuring operations. - Aggressive management team with history of taking steps to improve is balance sheet. - Ownership stakes in various digital ventures, including a 25.6% stake in Classified Ventures and a 14.4% stake in Career Builder, offer additional value. - Digital ventures have paid dividends to McClatchy, which the company can utilize for debt reduction.

Risks:- High exposure to California and Florida markets has hurt performance. - Secular pressure and increased competition in local ad markets. - Underfunded pension of $298 million could require significantly higher funding in the future years. - Local online ad market has grown more competitive in recent quarters.- Print ad revenue declines remain a significant concern.- Expense cuts will likely be smaller and more challenging going forward. - Heavy debt load and higher leverage limit flexibility.- A double-dip recession or weaker-than-expected rebound in advertising would hurt results further.

Company Description

0

20

40

60

80

100

120

2012 2013 2014



McMoRan Exploration (MMR) Updated: 1/26/12 Jason Gilbert (212) 902-3585


UNDERPERFORM

Bond Summary



$300 11.875% Sr. 11/15/2014 Caa1/B $105.94 2/27/2012 $106.25 6.95% 706


Revenue $1,072 $436 $430 $543 $478


Free Operating Cash Flow $387 ($7) ($119) ($320) ($185)



('11E)Coverage



EBITDA/Interest Expense (LTM) 15.0x 4.6x 5.1x 15.5x 5.3x SGY 1.0x 33.5x Caa2/CCC+

Debt to Capitalization % 55% 59% 24% 25% 24% WTI 1.2x 15.8x Caa1/B

Capitalization








Preferred Equity $0



Maturities:

Next Call

McMoRan is a US-Gulf-focused exploration-oriented E&P. The company's core competency is finding reserves in deep structures. MMR is one of the purest "wildcatting" stories in HY energy.

Predecessor company McMoRan Oil & Gas was spun out by metals & mining giant Freeport-McMoRan in May 1994. The company then merged with Freeport-McMoRan Sulfur in 1998 and renamed the combined entity McMoRan Exploration. In 2000, the company closed its sulfur mining operations at Main Pass, and in 2002 MMR sold all of its sulfur transportation and terminalling assets. In August 2007, McMoRan acquired Newfield Exploration's US GOM shelf assets for $1.1 bn plus assumption of $200 mn of asset retirement liabilities. The acquisition added 321 bcfe of proved reserves and 235 mmcfe/d of production. The NFX acreage expanded McMoRan's acreage in the GOM from 0.3 million acres to 1.5 million acres. In September 2010, MMR announced it would acquire Plains Exploration's shallow water GOM assets for $818 mn.

Investment Strengths:• Strong history of US GOM exploration• Extensive US GOM infrastructure in place• Significant upside potential with Davy Jones discovery

Investment Risks:• High exposure to the Gulf of Mexico and exposure to the inherent risks; limited diversity• Potential for increased regulation in the GOM following the Macondo oil spill• Management typically does not hedge • Aggressive company, with little balance in terms of low-risk projects• Increased its GOM exposure with purchase of Plains Exploration (PXP) shallow water assets

Key Dates/Catalysts:• Flow tests of Davy Jones I and II; first production expected in 1H2012• Reserve bookings at Davy Jones• Announcement with respect to other new ultradeep opportunities; MMR has identified 15 shelf prospects with large structures

Company Description

0

50

100

150

200

250

300

350

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



MDC Holdings Inc. (MDC) Updated 1/26/2012 Kristen McDuffy 212-357-6157


UNDERPERFORM

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpU 250 5.625 Sr. Nts 1-Feb-20 Ba3/BB- 94 6.60% 506


Total Revenues 898 959 862 260 211 266

Total Adjusted EBITDA (5) 3 (37) (3) (6) (5)



Capital Expenditures (8) (8) (33) (0) (2) (1) MDC 53% 0.8x Ba1/BB+

Free Cash Flow 120 (334) (216) (100) (46) (8) Toll 38% 2.1x Ba3/BB-

DR Horton 38% 2.2x B1/BB-

Total Balance Sheet Debt 1,027 1,268 755 1,268 1,017 755

Total Cash and Cash Equivalents 1,562 1,541 833 1,541 1,103 833



Net Homebuilding Debt / Capitalization (3) NM NM NM NM NM NM

Inventories / Homebuilding Debt (2) 0.5x 0.6x NA 0.6x 0.8x NA




Mortgage repurchase facility 11 Cash and Cash Equivalents 305

Total Secured 11 Marketable Securities 535

7% Senior Notes due 2012 - Total Liquidity 840

5.5% Senior Notes due 2013 -

5.375% Medium-Term Notes due 2014 250

5.375% Medium-Term Notes due 2015 250 Maturities:


Total Debt Outstanding 761

Shares Outstanding 47

Share Price 20.7


ENTERPRISE VALUE 904

Next Call

MW

0

50

100

150

200

250

300

2012 2013 2014 2015

MDC Holdings is one of the smaller publicly traded homebuilders in the United States, with an enterprise value of just under $1 billion, FY2010 closings of 3,245 homes, and FY2010 revenues of $959 million. In its core homebuilding operations, the company primarily purchases finished lots for the construction and sale of single-family detached homes under the brand Richmond American Homes.

Key Dates/Catalysts:4QFY11 earning releasePotential share buybacksPotential large acquisition

Investment Strengths:- Significant cash balance.- Clean balance sheet.- Conservative management team.

Investment Risks:- Gross margins have been relatively weak and SG&A expense has been elevated.- Company has been less adept versus other builders at managing speculative inventory.- Company is land-light, which could cause underperformance at the onset of a housing recovery.

Company Description



Mediacom Communications Corporation (MCCC) Updated 1/20/12 Jason Kim 212-902-2233


IN-LINEOur In-Line ratings on the MCCC bonds reflect the company's high leverage at just over 6x, balanced by reasonable liquidity and our expectation that management will continue to be

proactive in addressing its debt maturities. MCCC should also see notable margin expansion from migrating its phone services in-house, which should aid EBITDA growth in the near term.

Bond Summary



$350 9.125 MCCC LLC Sr Nts* 15-Aug-19 B3/B- 104.563 8/15/2014 108.00 7.28 620

$500 8.500 MCCC Broadband Sr Nts* 15-Oct-15 B3/B- 102.833 2/27/2012 103.00 5.87 531

*MCCC LLC = Mediacom LLC. MCCC Broadband = Mediacom Broadband LLC



Digital Subscribers 678,000 731,000 724,000 703,000 694,215 694,215

Data Subscribers 778,000 838,000 855,000 850,000 847,115 847,115

Phone (VoIP) Subscribers 287,000 332,000 335,000 338,000 340,760 340,760

Revenue $1,460 $1,499 $391 $391 $389 $1,552

EBITDA 540 546 149 148 150 585

Free Cash Flow 123 115 37 52 38 177

Total Debt $3,365 $3,384 3,635 3,600 3,568 3,568 Comps Leverage Coverage Ratings

Cash 81 156 119 120 121 121

Net Debt $3,284 $3,228 $3,516 $3,480 $3,447 $3,447 Charter - CCOH 4.3x 2.8x B1/BB-

Key Credit Statistics Cablevision Systems Corp 4.0x 3.2x B1/B+


Total Debt/Basic Sub $2,718 $2,837 $3,191 $3,273 $3,310 $3,310

EBITDA Margin 37.0% 36.5% 38.1% 37.9% 38.5% 37.7%

Capitalization

Debt to

Description Size EBITDA * Liquidity – Mediacom LLC Liquidity – Mediacom Broadband

Mediacom LLC: Revolver Size $225 Revolver Size $430

Revolver $93 Letters of Credit (9) Letters of Credit (3)

Term Loans 1,160 4.8x / 4.5x Borrowings (93) Borrowings (143)

Capital Leases - Revolver Availability $123 Revolver Availability $285

HY Debt 350

Total Mediacom LLC Debt $1,603 6.2x / 5.8x Cash $11 Cash $7

Total Liquidity $134 Total Liquidity $292

Mediacom Broadband:

Revolver $143

Term Loans 1,355 4.5x

Capital Leases -

HY Debt 500

Total Broadband Debt $1,997 6.0x

Total Mediacom Debt $3,600 6.1x

Market Cap NA

Enterprise Value NA

* Mediacom LLC's Debt/EBITDA is expressed: Excluding Investment Income / Including Investment Income. Investment Income is from the Preferred Investment in Mediacom Broadband.

Maturities:

Mediacom Communications Corporation (MCCC) is the eighth-largest cable television company in the US based on customers served, focusing on serving smaller cities and towns in the US. As of September 30, 2011, MCCC had approximately 1.1 million basic, 703,000 digital, 850,000 high-speed data, and 338,000 telephone customers between Mediacom LLC and Mediacom Broadband. In March 2011, MCCC's Chairman/CEO/Founder Rocco Commisso completed a go-private transaction at $8.75 per share.

MCCC operates its business through two wholly owned subsidiaries:- Mediacom LLC: As of September 30, 2011, served 488,000 basic, 300,000 digital, 383,000 high-speed data, and 159,000 telephone customers.- Mediacom Broadband LLC: As of September 30, 2011, served 612,000 basic, 403,000 digital, 467,000 high-speed data, and 179,000 telephone customers.

In November 2011, Mediacom Broadband LLC entity completed an extension of $216mn of its $430mn revolver that was set to mature in December 2012. The new RC matures on 12/30/2016, subject to springing maturies on the TLD (7/31/2014) and 8.5% senior notes due 2015 (4/15/2015).

Key Dates/Catalysts:February/March 2012: 4Q2011 earnings release.

Potential capital markets activities: MCCC management team has historically been very savvy and proactive in accessing the capital markets to clean out maturities.

26 26

1,8461,703

0

1,000

2,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Insulated from the telco threat in the near term: Telcos rolling out their video offerings typically target higher-density areas of the country with more attractive demographics. Because MCCC focuses on rural areas, it might not face telco competition in the near to intermediate term.

(2) Opportunity for margin expansion: MCCC has recently completed the process of bringing its phone product in-house, which helped reduce its cost of goods sold for the phone business substantially. This drove double-digit EBITDA growth at both issuing entities in 3Q2011.

Investment Risks:(1) High leverage: MCCC's leverage stands around 6.1x, making it the highest-levered cable credit in the US.

(2) Rural footprint: With a rural focus, MCCC's systems demographics are less attractive than those of other MSOs with more urban exposure. This is evident in MCCC's below-industry-average ARPU and penetration rates of advanced services. Also, more of MCCC's subscribers are prone to cherry-pick deeply discounted packages, only to cancel the subscription when the promotion period ends, leading to higher churn.

(3) Lack of scale: As a smaller cable operator with less attractive demographics, MCCC faces higher programming rates relative to larger MSOs. It also has less negotiating leverage to deal with broadcasters in retransmission discussions.

Company Description



MediMedia USA, Inc. (MEDIME) Erin Blum 212-855-7718


NOT COVERED

Bond Summary



$150 11.375 Sr Sub Nts 15-Nov-14 Caa2/CCC+ $100.000 15-Nov-11 $85.000 18.462% 1,840


Revenue $292 $309 $81 $67 $68 $68

EBITDA 63 68 23 12 5 9

Interest paid $29 $26 $6 $6 $6 $7

Taxes paid (7) (2) (3) 2 0 (30)

Capex 22 21 7 8 1 5

Free Cash Flow (1) 2 1 (9) (21) (9)

Total Debt 373 371 371 388 388 387

Cash 0 4 4 47 17 124

Net Debt 373 367 367 341 370 263


Total Debt/EBITDA 5.9x 5.4x LTM: 7.8x Agency

Net Debt/EBITDA 5.9x 5.4x 5.3x Comps Leverage Coverage Ratings

MediMedia (MEDIME) 5.5x 1.9x Caa2/CCC+


EBITDA margin 21.6% 22.1% 28.2% 18.2% 7.6% 13.1% VWR (VWRINT) 5.6x 2.0x Caa1/B-



EBITDA Revolver Size 50

Revolver due 2012, portion ext to 2014* $47 Letters of Credit 3

TL B due 2014* $76 Borrowings 47

Total bank debt $123 2.5x Revolver Availability 1

Total sr bonds $0 2.5x A/R facility 0

Borrowings 0

11.375% senior sub notes due 2014 $150 A/R Availability 0

Total sub debt $150 5.5x

Cash* $9

Other debt $0 Total Liquidity 10

Total Debt $273 5.5x *3Q11 cash less $114mn for debt pay down post quarter end.

Market Cap NA

Enterprise Value NA

LTM EBITDA is pro forma for the Animal Health sale.

*Credit facility is pro forma for a $114mn pay down post quarter end, assuming this was on TL B. Per 10Q, MEDIME extended the term of the

majority of the Facility to August 15, 2014. We are assuming all of TL B was extended as well as a portion of the revolver.

Maturities:

Next Call

Updated 01/25/12

$0

$50

$100

$150

$200

$250

$300

2012 2013 2014 2015+

MediMedia USA (MEDIME) provides content, printing, and marketing services to the healthcare and pharmaceuticals industries. Patient Education (60% of revenues) publishes pamphlets, newsletters and online content to educate patients about drugs, diseases, health, and safety – paid for by hospitals, managed care companies, employers, and medical societies. Pharma Group (40% of revenues) provides outsourced marketing services for pharmaceutical companies (Rx pads, detailing to managed care companies to get onto preferred-drug formularies, and a proprietary database of drug inserts). MEDIME also operates a large FDA-approved drug sample distribution facility in New Jersey. Vestar Capital Partners acquired MEDIME in October 2006 for $265 mn of equity.

Medimedia sold a formulary business for $34.7 mn in March 2011 and its animal health business VetStreet for $114 mn of net proceeds in August 2011. In October 2011, MediMedia amended its credit facility to provide a covenant waiver for 2Q and 3Q, reset financial covenants for the remainder of the facility term and extended the term of the majority of the facility to August 14, 2014, among other modifications. The company also repaid $114 mn of credit facility with proceeds from its sale of the animal health business.

MediMedia has equity cure rights. Bonds have cross defaults.

Key Dates/Catalysts:- Demand for drug samples could be further reduced, as pharmaceutical companies re-evaluate their marketing practices.

Company Strengths:- Premier clients: Long-standing relationships with recognized organizations: American Red Cross (17-year relationship), Harvard Medical School (seven-year relationship).

- Diversity of customers: about 40% of revenue from pharma, 17% from employers, 43% from health plans and physicians.

Company Risks:- Stalled growth: Acquisitions have been small and organic growth is very low.

- Small size: Significant competition from better-capitalized companies; competition is largely based on price.

- Large debt maturity in 2014 post the extension of the majority of its credit facility to 2014. Increased interest rates under the amendment will put further strain on cash flows.

Company Description



Meritor (MTOR) Updated 1/26/2012 Franklin Jarman 212-902-7537


OUTPERFORM

Bond Summary



$250 8.125% Sr. Nts 15-Sep-15 B3/CCC+ NC NC 96.75 919.5% 890

Financial Profile FY08 FY09 FY10 FY11 FY12E

Revenue 7,167.0 4,457.0 4,584.0 4,667.0 4,830.9

EBITDA 364.0 103.0 258.0 342.0 373.4

Cash interest (38.8) (88.9) (96.3) (84.6) (83.4)

Cash Taxes (5.0) (20.0) (48.0) (44.3) (84.3)

CapEx (172.0) (111.0) (56.0) (105.0) (105.0)

Free Cash Flow (161.0) (123.0) 155.0 (7.0) 14.6


Total Debt 1,303.0 1,177.0 1,029.0 1,034.0 950.0 AXL 2.8x 4.8x B1/BB-

Cash 497.0 95.0 343.0 217.0 165.6 CTBUS 1.3x 8.4x B1/BB-

Net Debt 806.0 1,082.0 686.0 817.0 784.4 GT 3.0x 6.5x Ba3/BB-

Key Credit Statistics MTOR 3.0x 3.6x B2/B

Total Debt/EBITDA 3.6x 11.4x 4.0x 3.0x 2.5x TEN 2.2x 4.5x Ba3/BB

Net Debt/EBITDA 2.2x 10.5x 2.7x 2.4x 2.1x TRW 0.9x 13.6x Ba2/BB+


EBITDA margin 5.1% 2.3% 5.6% 7.3% 7.7%

Capitalization


Liquidity - LTM

Secured Revolver due Jan-2014 0.0 0.0x Revolver Size 441.0

A/R Securization facility due 2013 0.0 0.0x - Amt Drawn 0.0

8.75% Notes due 2012 84.0 3.0x - LCs Drawn 26.0

8.125% Notes due 2015 250.0 3.0x Amt Unutilized 415.0

10.625% Notes due 2018 245.0 3.0x A/R Securitization Avail. 125.0

4.625% Convert Notes due 2026 300.0 3.0x Cash 217.0

4.0% Convert Notes due 2027 200.0 3.0x Liquidity 757.0

Unamortized Discounts/Other -45.0 3.0x


Less cash 217.0

Net Debt 817.0 2.4x

Market Cap 645.3


Maturities:

Next Call

Meritor, Inc., formerly ArvinMeritor, provides the global transportation industry with integrated systems, modules, and components. The company serves commercial truck, trailer, and specialty original equipment manufacturers and related aftermarkets. Meritor also provides coil coating applications, including those for the transportation, appliance, construction, and furniture industries.

Key Dates/Catalysts:- MTOR will report 1QFY12 earnings on February 2, 2012.

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015 Thereafter

Investment Strengths:- Late cycle commercial truck opportunity: Significant pent-up demand in North America should continue to help MTOR's sales.- Leverage poised to improve: We expect MTOR'sleverage to improve to 2.5x (net leverage of 2.1x) by the end of FY20121 (September 2012)- Improved liquidity: Liquidity remained strong at $757 million at the end of 4QFY11. In February 2010, MTOR extended the maturity of its credit facility to January 2014 from June 2011, while also issuing new senior notes ($250 million) and equity ($210 million). - Exit of light vehicle segment: MTOR completely exited its low-margin light vehicle segment in early 2011 and is now 100% levered to the commercial vehicle, military, and industrial markets.

Investment Risks:- Leverage is still high: MTOR ended 4QFY11 with gross leverage of 3.0x (2.4x net). - Revised guidance: Management’s credibility has come under pressure in recent months given that guidance for both 2QFY11 and 3QFY11 were revised prior to earnings and its 10% EBITDA margin target for the end of 2012 now looks unlikely to be achieved- Defense segment remains weak: Management expects lower FMTV volumes in the near term, driven by production shifting to a new prime contractor.

Company Description



MetroPCS Communications, Inc. (PCS) Updated 1/20/12 Jason Kim 212-902-2233


IN-LINEOur In-Line rating reflects PCS's strong liquidity profile and modest leverage offset by significant competitive pressure in the prepaid wireless space and the company's need to acquire

additional spectrum to address its capacity needs.

Bond Summary



$1,000 6.625 Sr Nts 15-Nov-20 B2/B 103.313 15-Nov-15 99.75 6.66 514


Subscribers ('000s) 6,640 8,155 9,080 9,149 9,346 9,346

ARPU $40.68 $39.79 $40.49 $40.80 $40.74 $41.55

Churn 5.5% 3.6% 3.9% 4.5% 3.7% 3.9%

CPGA $146 $157 $178 $194 $184 $177

CPU $17.23 $18.49 $18.94 $19.52 $19.80 $19.96

Revenue $3,481 $4,069 $1,209 $1,205 $1,256 $4,964

EBITDA 956 1,176 357 327 356 1,385

Free Cash Flow 68 204 79 24 2 56

Agency


Cash 1,154 1,171 2,156 2,141 2,136 2,136

Net Debt 2,525 2,615 2,600 2,612 2,610 2,610 LEAP Secured Nts 2.1x 2.1x Ba2/B+

Key Credit Statistics LEAP Unsecured Nts 5.7x 2.1x B3/CCC+

Total Debt/EBITDA 3.8x 3.2x 3.7x 3.7x 3.6x 3.6x Sprint 3.3x 4.0x B3/B+


EBITDA Margin 27.5% 28.9% 29.5% 27.2% 28.4% 27.3%

Capitalization

Debt /


Revolver ($100mm Facility) $0 Revolver Size $100

Term Loan B-2 due 2016 987 Letters of Credit -

Term Loan B-3 due 2018 1,491 Borrowings -

Capital Leases 274 Revolver Availability $100

Total Secured Debt $2,753 2.1x

7.875% Sr Nts due 2018 1,000 Cash $2,141

6.625% Sr Nts due 2020 1,000 Total Liquidity $2,241



Market Cap 3,153


Maturities:

MetroPCS is the fifth-largest facilities-based wireless telecommunications provider in the United States on the basis of number of subscribers served. The company offers wireless broadband personal communication services, or PCS, on a no long-term contract, flat rate, unlimited usage basis in major metropolitan areas in the United States.

MetroPCS launched service in 2002 and has consistently been among the fastest-growing wireless broadband PCS providers in the United States as measured by growth in subscribers and revenues during that period. With Metro USA, MetroPCS customers can use their services in areas throughout the United States, covering a population of over 280 million. As of September 30, 2011, MetroPCS had approximately 9.1 million subscribers.


Potential spectrum acquisitions.

25 25 25 25

4,653

0

1,000

2,000

3,000

4,000

5,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Strong liquidity, with over $2.1bn in cash.

(2) Positioned to benefit from proliferation of lower priced smartphones as a low-cost, value-driven operator.

(3) Potential to participate in M&A as a possible acquisition candidate for higher quality strategic buyers.

Investment Risks:(1) Fierce competition from national postpaid carriers as well as other prepaid brands like Boost (from Sprint) and Straight Talk (from America Movil's TracFone and Wal-Mart). A further deterioration in competitive dynamics would pressure PCS's ARPU and subscriber metrics.

(2) Macro pressure: PCS's subscriber base tends toward consumers with less discretionary income; therefore, weak economic conditions and high gas/food prices have a disproportionately large impact on their spending.

(3) Lack of spectrum depth: PCS has an average of 20MHz of spectrum across its footprint, which is significantly less than that of its competitors. We expect PCS's management team to be aggressive in pursuing spectrum acquisitions.

Company Description



MGM Resorts International (MGM) Updated 1/23/12 Kevin Coyne 212-357-9918Contact analyst or see latest research for updates to ratings, estimates, and other information. Celeste Everett 212-902-4751

IN-LINE: We believe the MGM notes are adequately priced considering the high leverage profile and the bullish outlook for Las Vegas.

Bond SummarySize Coupon Agency Bid YTW STW Z-spread 5-year(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp CDS$850 11.125 Sr Sec Nts 15-Nov-17 Ba2/B+ 105.563 15-May-13 113.500 4.47 431 396 -$743 7.625 Sr Nts 15-Jan-17 B3/B- T+50 bps MW 100.000 7.62 683 657 6.25+500

$150 7.625 Sr Sub Nts 15-Jul-13 Caa1/CCC NC NC 101.000 6.89 671 637 -

The financial table below is presented on a GAAP basis and accounts for the MGM China entity as a consolidatedsubsidiary as of June 3, 2011. Prior to June 3, MGM China was an unconsolidated investment.Financial Profile FY10A 1Q11A 2Q11A 3Q11A 4Q11E FY11ENet Revenue 6,019 1,505 1,806 2,234 2,182 7,726EBITDA 1,131 331 375 453 466 1,626

Interest Expense 1,114 270 267 273 262 1,071Taxes paid (refund) (330) 2 (174) 1 (20) (191)CapEx 207 34 51 91 97 273Free Cash Flow 140 25 232 88 128 473

Comps Leverage Coverage RatingsTotal Debt 12,048 12,081 12,049 12,021 12,299 12,299 MGM (US; sr) 9.2x 1.7x B3/B-Cash 499 431 922 936 794 794 HET 12.8x 0.9x Ca/CCCNet Debt 11,549 11,650 11,128 11,085 11,505 11,505 WYNN 1.9x 6.6x Ba2 / BBB-Key Credit StatisticsTotal Debt/EBITDA 10.7x 10.0x 9.2x 8.4x 7.6x 7.6x Maintenance covenants Max.Net Debt/EBITDA 10.2x 9.6x 8.5x 7.7x 7.1x 7.1x Min. LTM EBITDA Capex 3Q11 1,150 500EBITDA/Interest 1.0x 1.2x 1.4x 1.7x 1.8x 1.5x 4Q11 1,200 500EBITDA margin 18.8% 22.0% 20.8% 20.3% 21.3% 21.0% 1Q12 / 2Q12 1,250 500

Note: Step-ups continue through 2013Capitalization Liquidity Enterprise Value

Description - US subsidiary only 3Q11ADebt to EBITDA Source 3Q11A Source Size

13% senior secured notes due 2013 750 Shares O/S (mm) 488.8 10.375% senior secured notes due 2014 650 Revolver due 2014 1,700 Stock Price $13.1111.125% senior secured notes due 2017 850 Letters of Credit & other 59 Market cap 6,409 9% senior secured notes due 2020 845 Borrowings 450 Net Debt 11,099 Total sr secured debt (incl. liens) 4,145 3.2x Revolver Availability 1,191 Minority interest 0Revolver due Feb 2014 450 Enterprise Value 17,508 Term loan due Feb 2014 1,7176.75% senior notes due Sept 2012 535 LTM EBITDA 1,434 5.875% senior notes due Feb 2014 508 Cash 922 EV/ EBITDA 12.2x4.25% convertible sr notes due Apr 2015 1,450 Total Liquidity 2,113 6.625% senior notes due July 2015 877 EV/ 2011E EBITDA 10.8x7.5% senior notes due June 2016 733 EV/ 2012E EBITDA 8.8x7.625% senior notes due Jan 2017 743 Note: Liquidity excludes $188 mn of11.375% senior notes due March 2018 475 cash held in trust by state of NJ asOther senior notes 1,286 part of the sale of the Borgata Total senior debt 11,869 9.2x investment. Amount is currently 8.375% sr sub notes due Feb 2011 0 reported in "Prepaids exp. & other."Other 152Total Debt 12,021 9.3x Operating statisticsNote: Excludes $850 mn of 8.625% notes issued in January 2012. Las Vegas Strip Properties: 1Q11A 2Q11A 3Q11A

Las Vegas Strip Properties:Maturities: Occupancy rate 87.0% 94.0% 95.0%

Average daily rate $130 $126 $124RevPAR $113 $118 $117Revenue by SegmentLas Vegas Strip $1,111 $1,207 $1,205Other Nevada properties 34 37 35MGM Grand Detroit 143 142 139Mississippi 116 122 130MGM China (51% owned) 0 193 623Other 100 117 101Total revenue 1,505 1,818 2,234

Next Call

0

1,000

2,000

3,000

4,000

5,000

2012 2013 2014 2015 2015+

MGM Resorts International, Inc. (MGM) owns and operates 17 properties in Nevada, Mississippi, and Michigan, and it has investments in three other properties in Nevada and Illinois. The company has major developments under construction in Michigan and in Macau. MGM properties have over 50,000 hotel rooms, 2 million square feet of casino floor space, 1,985 table games, and 35,000 slot machines. Properties include Bellagio, MGM Grand, Mandalay Bay, Monte Carlo, the Borgata of Atlantic City, and Beau Rivage. MGM and its partner, Dubai World, jointly own CityCenter, a Las Vegas Strip property with 5,000 rooms, which opened in December 2009. According to Bloomberg, significant equity holders include Tracinda Corp. (23%), Paulson & Co. (8%), Janus Capital Mgmt (6%), and Dubai World (5%).

Key Dates/Catalysts:- 2Q2011: MGM to begin consolidating Macau subsidiary in consolidated financial statements.- June 2011: Started $70 mn renovation of Bellagio's 2,568 rooms in the main tower. Renovation completed in December 2011.- September 2011: Began room remodeling of MGM Grand Las Vegas. To be completed in 12 months.- October 2011: Announced agreement with BYD and on-line poker service provider bwin.party (BPTY). If online poker is legalized in the US, MGM would acquire a 25% stake and BYD would acquire a 10% stake in a new company that would operate online poker using BPTY's technology and brands PartyPoker and World Poker Tour. - January 2012: Issued $850 mn of 8.625% notes due 2019 at par. Net proceeds to be used to repay debt.- January 2012: Signed a contract with Rolling Hills Estates Realty Trust to purchase a remote 150 acres of land in Brimfield, MA. MGM is looking to develop a casino/ resort on the lot, which is 65 miles west of Boston.

Investment Strengths:- Diverse offering of high-end and middle-market casino properties on the Las Vegas Strip.- Global diversification: Exposure to high-growth Macau market.- Banks have shown a willingness to work with company during downturn in Las Vegas operations.- Management expects to benefit from operating leverage: 1% increase in occupancy results in incremental EBITDA of $40 million, a $5 increase in room rates results in additional EBITDA of $50 million, $5 additional customer spend results in $40 million of EBITDA.- 2011: Through November , YTD convention attendance up 4.4% yoy in Las Vegas.

Investment Risks:- Leverage at US subsidiary remains high at 9.3x.- Concentrated on Las Vegas Strip: 76% of 3Q2011 wholly owned casino property EBITDA was generated by wholly owned Strip casinos.- Potential cannibalization of existing Las Vegas Strip properties as CityCenter increases occupancy and reaches maximum capacity of the gaming floor and convention space.

Company Description



Michaels Stores (MIK) Updated: 1/26/12 Karen Eltrich 212-902-6957



IN-LINE/OUTPERFORM

Bond Summary



$800 7.75% Sr Nts 1-Nov-18 Caa1/CCC $103.88 1-Nov-14 104.00 6.75% 578

$400 11.38% Sr Sub Nts 1-Nov-16 Caa2/CCC $105.69 Current 105.75 8.27% 781


Revenue 3,888.0 4,031.0 4,183.7 1,331.0 1,377.7 Neiman 7.66% 4.6x 3.5x Caa1/B-

EBITDA 548.0 622.0 688.1 241.0 249.1 JCG 8.70% 5.4x 3.2xCaa1/CCC+

Yankee 10.14% 4.5x 1.9x B3/CCC+

Interest Expense 258.7 311.8 247.2 77.1 59.2 Michaels 8.27% 4.3x 2.8x Caa2/CCC

Cash Taxes 45.4 66.1 102.1 48.7 56.3

CapEx 43.0 81.0 109.0 20.0 25.0

Free Cash Flow 201.0 163.1 229.8 95.2 108.6 3QA

Amounts Outstanding 10/29/11

Total Debt 3,803.0 3,668.0 3,271.5 3,668.0 3,271.5 Asset-Based Revolver ($900mm, due Apr 201 0.0

Cash 217.0 319.0 78.7 319.0 78.7 Secured Term loans 1,996.0

Key Credit Statistics 7.75% Senior Notes due Nov 2018 795.0


Net Debt/EBITDA 6.5x 5.4x 4.6x 11.375% Senior Sub Notes due Nov 2016 393.0

13% Sub. Discount Notes due Nov 2016 327.0

EBITDA/Interest 2.0x 2.0x 2.4x 3.1x 4.2x Other Debt 0.0

Total Debt 3,511.0

EBITDA margin 14.09% 15.43% 16.45% 18.11% 18.08%

Capitalization Forecasted 2012E


Asset-Based Revolver ($900mm, due Apr 2014) L+3 0.0 Revolver Size 850.0

Secured Term loan B-1 due Oct. 2013 L+225 256.9 Letters of Credit 55.0

Secured Term loan B-2 due Jul, 2016 L+450 869.9 Borrowings 0.0

Secured Term loan B-3 due Jul. 2016 L+450 619.2


7.75% Senior Notes due Nov 2018 795.0 3.7x

11.375% Senior Sub Notes due Nov 2016 393.0 4.3x A/R facility NA

13% Subordinated Discount Notes due Nov 2016 337.6 Borrowings 0

Total Sub debt 1525.6 4.8x A/R Availability NA

Cash 111.0


Market Cap N/A


Maturities:

Next Call

Michaels Stores is the largest arts-and-crafts specialty retailer in the US and Canada. The company operates more than 1,000 retail stores in 48 states under two formats: (1) Michaels Stores and (2) Aaron Brothers.

Key Dates/Catalysts:Mid- to late March– Fourth quarter earnings release

Investment Strengths:- Historically positive industry dynamics- Strong brand-name recognition- Excellent store locations- Almost all mature stores are cash flow positive- Improving working capital management- Good chance of an IPO in 2012- Firing on all cylinders and recent momentum

Investment Risks:- High debt leverage- Crafts space is highly competitive- Cyclicality in seasonal and picture frame sales

Company Description

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014+



Millar Western Forest Products (MILLAR) Updated 1/23/12 Joe Stivaletti (212) 902-3299


IN-LINE

Bond Summary



$210 8.500 Sr Nts 1-Apr-21 B3/B- 104.250 1-Apr-16 74.000 13.522 1,160


FY:10 FY:11E Q3:10 Q2:11 Q3:11

Revenue 295.4 273.7 83.4 71.8 71.8

EBITDA 41.5 26.1 12.5 13.2 5.9



Total debt 202.5 220.1 NA 212.7 230.2

Cash 45.1 24.2 NA 41.5 35.3

Net debt 157.4 195.9 NA 171.1 194.9


Total debt/EBITDA 4.9x 8.4x NA 5.9x 7.8x

Net debt/EBITDA 3.8x 7.5x NA 4.7x 6.6x


EBITDA margin 14.0% 9.5% 14.9% 18.4% 8.2%



Senior notes 220.1 Revolver size 50.0

Other 10.0 Letters of credit 3.4

Total debt 230.2 7.8x Borrowings -

Revolver availability 46.6

Cash 35.3


Maturities:

*Unless otherwise noted, all references to dollars are in Canadian dollars.

Next Call

0

50

100

150

200

250

2012 2013 2014 2015+

Millar Western is a privately owned manufacturer of pulp and lumber headquartered in Edmonton, Alberta.

Investment Strengths:- Competitive, low-cost production facilities- Strong, experienced management team

Investment Risks:- Prolonged weakness in lumber demand and prices- Strong Canadian dollar

Company Description



Mohegan Tribal Gaming Authority (TRIBAL) Updated 1/23/12 Kevin Coyne 212-357-9918





$250 6.125 Senior 15-Feb-13 Caa2/CC 101.531 current 83.50 26.39% 2,590 2,457

$225 7.125 Sr. Sub 15-Aug-14 Ca/CC 102.375 current 62.00 29.36% 2,913 2,878

Fiscal year ended September 30th

Financial Profile FY10 F1Q11 F2Q11 F3Q11 F4Q11 FY11

Revenue 1,422 336 348 361 373 1,418

EBITDA 283 68 80 83 91 322


Cash Taxes - - - - 1 2

CapEx 48 16 7 17 12 52

Free Cash Flow 118 23 43 37 48 150

Total Debt 1,862 1,878 1,808 1,780 1,803 1,803


Net Debt 1,797 1,784 1,742 1,711 1,689 1,689 TRIBAL 5.6x 2.7x Ca/CC

Key Credit Statistics BYD 7.4x 2.0x Caa1/CCC+

Total Debt/LTM EBITDA 6.6x 6.5x 6.2x 5.8x 5.6x 5.6x PNK 5.0x 2.8x Caa1/B

Net Debt/EBITDA 6.3x 6.2x 6.0x 5.6x 5.2x 5.2x MGM (sr) 9.2x 1.7x B3/B-


EBITDA margin 19.9% 20.4% 22.9% 23.0% 24.2% 22.7%

Capitalization Liquidity Property Summary

Description F4Q11Debt to EBITDA Source F4Q11

Mohegan Sun

Pocono Downs

Revolver due March 2012 535 Revolver Size 675

11.5% sr sec notes (2nd lien) due 2017 200 Letters of Credit 4 % of Rev. 79% 21%

Salishan Credit facility & other 20 Borrowings 535

Senior relinquishment liability 89 Revolver Availability 136 # of rooms 1,200 -

Senior secured debt 845 2.6x Less: limitations due # of slots 6,360 2,390

6.125% senior notes Feb 2013 250 to covenant restrictions 3 # of tables 326 66

Total senior debt 1,095 3.4x Net Revolver Available 134

8% senior sub nts due April 2012 250 Square footage

7.125% senior sub nts due Aug 2014 225 Gaming 315,500 90,000

6.875% senior sub nts due Feb 2015 150 Cash 114 Meeting 100,000 -

Junior relinquishment liability and other 89 Total Liquidity 248 Retail 130,000 -


Maturities:


Total Senior Fixed

Period ending Leverage Leverage Charge

4Q11 6.25x 3.75x 1.10x

Next Call

Mohegan Tribal Gaming Authority (TRIBAL) operates two properties: the Mohegan Sun in Uncasville, Conn., and Pocono Downs in Plains Township, PA. TRIBAL owns the Connecticut Sun, a WNBA team, and the Mohegan Sun Arena, part of the Mohegan Sun complex. It operates a golf course and country club in southeast Connecticut. In August 2007, Mohegan Sun opened the Sunrise Square, an Asian-themed gaming area with an 8,500-sq-foot gaming space, a 5,000-sq-foot bus lobby, and a 4,000-sq-foot Asian food outlet. Current projects include a new gaming area and hotel tower at Mohegan Sun and an expansion in Pocono Downs.

Key Dates/Catalysts:- November 2010: Announced it has engaged Blackstone Advisory Partners "to assist the Authority in its strategic planning and analysis in connection with its business and financial goals, including operational improvements, contemplated hotel projects and the Authority’s bank and bond maturities."- May 2011: Enters a joint venture with Concord Resort Hotel to develop a $600 mn resort in the Catskills region of NY state. The plans include a 258-room hotel, a 75,000 sq. ft casino with 2,100 VLTs, five restaurants, and a harness racetrack, which will include pari-mutuel racing. TRIBAL will manage the property and will have a small equity stake.- August 2011: Massachusetts lawmakers introduce gaming bill. Bill includes three all-inclusive gaming licenses for three casinos in three separate parts of the state. Bill also includes a slots-only license to operate up to 1,250 slots in any region of the state.- December 2011: Receives going concern opinion from auditors. Lenders grant waiver to covenants in order to not treat the going concern opinion as an event of default. As management works with advisors and lenders to finalize a refinancing plan, TRIBAL is "pleased with the progress made in recent weeks."

Company Strengths:- High-quality resort in Mohegan Sun.- Mohegan Sun Arena offers full-scale entertainment.- TRIBAL has an option to purchase 152 acres of land in western Massachusetts, which could be used to build and operate a casino if gaming is approved in MA. This could reduce impact to its Connecticut property if MA residents decide to allow casinos closer to home.- July 2010: Added 80 table games at PA casino.- Reduced tribe distributions to $4.5 mm in 2QFY11 from $11.2 mn in 2QFY10- Management contracts would be a capital-efficient avenue to increase EBITDA.

Company Risks:- Limited liquidity due in part to its covenants.- Sizable maturities in 2012. - Geographic risk: Majority of revenue is generated by its Mohegan Sun property in Connecticut.- Competitive threats are emerging, such as Aqueduct in Queens, NY, which will be operated by Genting and is expected to install VLTs by February 2011.- Uncertainty in Massachusetts: State Senate voted to approve three casino licenses, and the House passed a gaming bill that would need to be reconciled before gaming is ultimately approved. The governor vetoed the bill since it involved slots at too many racetracks.- Uncertainty regarding restructuring laws in Native American jurisdictions.- Numerous casino operators with deep pockets competing for three Massachusetts gaming licenses.

Company Description

-100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0

2012 2013 2014 2015 2016+



Momentive Performance Materials (MOMENT) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 200 12.500 2nd lien 15-Jun-14 B2/CCC 106.3 15-Dec-11 106.00 8.77% 862

IL 635 9.000 S. 2nd lien 15-Jan-21 Caa1/CCC 104.5 15-Jan-16 84.50 11.85% 1026

IL 382 11.500 Sr. Sub 1-Dec-16 Caa2/CCC 105.8 1-Dec-11 78.50 18.37% 1762

Financial Profile ($, mn) FY:09 FY:10 FY:11E 4Q:10 3Q:11 4Q:11E

Revenue 2,083 2,588 2,673 670 653 632

Adjusted EBITDA 262 488 421 108 95 83


Cash Taxes 4 (12) (18) (1) (8) (3)


Free Cash Flow (40) 155 (2) 10 (27) (0)

Total Debt 3,087 3,006 3,018 3,006 3,021 3,018


Net Debt 2,877 2,752 2,771 2,752 2,771 2,771



Net Debt/EBITDA 11.0x 5.6x 6.6x 5.6x 6.2x 6.6x MPM 6.8x 1.7x B3/B-

Huntsman 3.5x 4.8x B1/BB-

EBITDA/Interest Expense 1.1x 2.0x 1.6x 2.0x 1.7x 1.6x

EBITDA margin 13% 19% 16% 19% 16% 16%



Revolver - Revolver size 300

New $300 mn revolver - Borrowings -

Senior Secured Term Loan ($) 66 Letters of Credit 50

Senior Secured Term Loan (€) 116 Revolver Availability 250

Extended secured term loan ($) 403

Extended Secured Term Loan (€) 434 Synthetic LOC 34

Construction loan borrowings 38 Letters of Credit 33

Other short-term borrowings 21 LOC Availability 1

Total Senior Secured Debt 1,077 2.4x

2nd lien notes 200 Cash Equiv. 250

Total Secured Debt 1,277

Springing second lien notes ($) 1,161 Liquidity 500

Springing second lien notes (€150mn) 204

Total Senior Debt 2,642 5.9x

Senior Subordinated Notes ($) 379

Total Debt 3,021 6.8x Maturities:

PIK Seller Note ($400 million) 663 8.3x

Next Call

Momentive Performance Materials (MPM), a specialty chemical company, is the world’s second-largest producer of silicones and silicone derivatives, and is a leading producer of quartz derivatives. Momentive is the former GE Advanced Materials business, and was acquired by Apollo in September 2006 for approximately $3.8 billion. In October 2010, Momentive and Hexion completed a merger under a new holding company, with each of their respective capital structures remaining separate and in place.

Key Dates/Catalysts:4Q2011 earnings releasePotential combination of Momentive/Hexion opcosPotential IPO of the combined company, which management has mentioned as a goal

Investment Strengths:- Attractive industry growth dynamics, with an estimated CAGR of 5-6%.- High-margin, true specialty business .- Technical know-how creates significant barriers to entry.- Diverse end-markets, geographical exposure, and customer base.

Investment Risks:- Leverage is very high.- Limited free cash flow due to higher interest burden.- Rising raw material costs.-Continued inventory destocking

0

200

400

600

800

1000

1200

2011 2012 2013 2014 2015 2016

Company Description



Momentive Specialty Chemicals (HXN) Updated 1/26/2012 Kristen McDuffy 212-357-6157


OUTPERFORM

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpOP 1,000 8.875 1.5 lien 1-Feb-18 B3/CCC+ 104.4 2/1/2014 99.25 9.04% 796

IL 440 9.000 2nd lien 15-Nov-20 Caa1/CCC+ 104.5 11/15/2015 90.50 10.69% 912


Revenue 3,751 4,818 5,343 1,218 1,322 1,224

Adjusted EBITDA 374 601 661 140 162 136


Cash Taxes 19 (23) (8) 10 (6) (1)


Free Cash Flow 28 182 262 34 51 49

Total Debt 3,610 3,738 3,530 3,738 3,636 3,530


Net Debt 3,475 3,558 3,196 3,558 3,465 3,196


Debt/Adjusted EBITDA 9.7x 6.2x 5.3x 6.2x 5.5x 5.3x Comps Leverage Coverage Ratings

Net Debt/Adjusted EBITDA 9.3x 5.9x 4.8x 5.9x 5.2x 4.8x MSC 5.5x 2.5x B3/CCC+

Huntsman 3.5x 4.8x B1/BB-

Adjusted EBITDA/Interest 1.6x 2.2x 2.5x 2.2x 2.5x 2.5x MPM 6.8x 1.7x B3/B-




Existing Revolver ($225 mn) - Existing Secured Revolver Size 225

New $200 mn Revolver - Letters of credit ($50 mn) 25

Additional credit facilities - Borrowings 0

Term Loan 457 Revolver Availability 200

Extended Term Loan 930

A/R facility - Apollo (off balance sheet) - Apollo liquidity vehicles 200

Total 1st Lien Debt 1,387 2.1x Borrowings 0

Senior Secured 1.5 Lien Debt 1,000 Facility Availability 100

Total 1.5 Lien Debt 2,387

Senior Secured 2nd Lien Debt 574 Additional Facility Availability 156

Senior Secured 2nd Lien Debt 120

Untendered second lien notes -

Total Senior Secured Second Lien Debt 3,081 4.6x Cash 171

Unsecured credit facility from Apollo 100 Total Liquidity 627

$4 million loan from Apollo 2

Australian Term/Working Cap facility 18

Sinking Fund Debenture 62 Maturities:

Borden Debentures 74

Borden Debentures 189

Brazilian bank loans 68

Capital leases 12

Other debt 30

Total Debt at Hexion Specialty Chemicals In 3,636 5.5x

Termination facility at Hexion LLC 172

Total Debt through Hexion LLC Holdco 3,808 5.7x

Next Call

LTM

We rate the Momentive Specialty Chemicals (MSC) 8.875% 1.5 lien bonds of 2018 Outperform. At current valuations, we believe that these bonds offer compelling relative

value given MSC's strong growth trajectory. In our view, the possible sale of MSC's formaldehyde and resins business offers a potential catalyst for spread tightening for the

1.5 liens, as we think the company would be likely to use proceeds to pay down bank debt or acquire a higher-margin specialty business.

Momentive Specialty Chemicals is the world's largest producer of thermosetting resins, operating in four primary segments: epoxy and phenolic resins, formaldehyde and forest product resins, coatings and inks, and performance products. Epoxy and phenolic resins and formaldehyde and forest product resins represent over 80% of its total EBITDA. The primary end markets for the company's products are industrial, construction, and consumer/durables, with no end market representing more than 20% of sales. Hexion, the predecessor to Momentive Specialty Chemicals, was created in May 2005 when Apollo Management L.P. combined three of the companies in its portfolio, Resolution Performance Products, Resolution Specialty Materials, and Borden Chemical. In October 2010, Hexion and Momentive completed a merger under a new holding company, with each of their respective capital structures remaining separate and in place. Hexion was renamed Momentive Specialty Chemicals, and Momentive's name was changed to Momentive Performance Materials.

Key Dates/Catalysts:4Q2011 earnings releasePotential sale of the formaldehyde businessPotential IPO of the combined company, which management has mentioned as a goal

Investment Strengths:- Hexion has right-sized its cost base and will benefit significantly from an improvement in the automotive and construction end markets.- Sufficient liquidity and covenant headroom.

Investment Risks:- Leverage remains high.- Could experience margin compression due to increasing raw material costs.-Looser market conditions in base epoxy resins, resulting in less favorable results in this part of the business. -Continued inventory destocking.

050

100150200250300350400450500

2011 2012 2013 2014

Company Description



MTR Gaming Group, Inc. (MNTG) Kevin Coyne 212-357-9918


NOT COVERED



$565 11.500 Sr Sec (2nd lien) 1-Aug-19 B3/B- 106.00 1-Aug-15 91.00 13.52 1,152 1,185

(a) MNTG has the option to pay the coupon in either: a) cash at a rate of 11.5% per year, or b) 10.5% in cash and 1% PIK until August 2013.

Financial Profile 3Q10A 4Q10A FY 10A 1Q11A 2Q11A 3Q11A

Revenue 119.1 94.8 424.9 98.3 110.5 115.6

EBITDA 24.0 17.2 78.8 16.2 23.1 23.4


Cash Taxes (refund) 0.0 - 8.9 - - -

CapEx (incl. gaming license) 14.9 2.3 27.8 0.3 3.4 4.4

Free Cash Flow (4.6) 1.5 (12.0) 2.5 6.3 2.7

Total Debt 377.8 378.1 378.1 377.3 378.7 548.7 Comps Leverage Coverage Ratings

Cash 41.4 53.8 53.8 45.8 59.5 64.7 MNTG 7.1x 1.4x B3/B-

Net Debt 336.4 324.3 324.3 331.5 319.2 483.9 PNK 5.0x 2.8x Caa1/B

Key Credit Statistics GCCN 2.8x 4.8x B2/BB-

Total Debt/EBITDA 5.0x 4.8x 4.8x 4.8x 4.7x 6.9x BYD 7.4x 2.0x Caa1/CCC+

Net Debt/EBITDA 4.5x 4.1x 4.1x 4.2x 4.0x 6.0x ISLE 6.3x 2.4x Caa1/CCC+

PENN 2.8x 6.5x B1/BB

EBITDA/Interest 1.8x 1.3x 1.5x 1.2x 1.7x 1.4x MGM (sr) 9.2x 1.7x B3/B-

EBITDA margin 20.2% 18.2% 18.5% 16.5% 20.9% 20.3%

Capitalization

Description 3Q11 Debt to EBITDA Liquidity 3Q11 Enterprise Value

Senior secured revolver due Aug. 2016 - Revolver 20.0 Shares O/S (mm) 27.64

Total senior secured (1st lien) debt - Letters of Credit - Share price 2.38$

11.5% Sr Sec (2nd lien) notes due 2019 (a) 565.0 7.1x Borrowings - Market cap 65.8

Other Revolver available 20.0 Net debt 500.3

Total debt 565.0 7.1x Enterprise value (EV) 566.1

Cash 64.7 EV / LTM EBITDA 7.1x


LTM EBITDA 80.0

(a) MTR has the option to pay the coupon in either: a) cash at a rate of

11.5% per year, or b) 10.5% in cash and 1% PIK until August 2013.

(Mkt Val Debt- cash) /

2008E EBITDA #REF!

Maturities:


Maximum Minimum Minimum

Total Interest LTM

Effective date Leverage Coverage EBITDA

4Q11 7.75x 1.25x 60$

1Q12 7.75x 1.25x 80$

2Q12 7.75x 1.30x 80$

3Q12 7.50x 1.40x 80$

1Q13 7.00x 1.40x 80$

4Q13 6.50x 1.40x 80$

Note: Capex limited to $25 mn per year.

Next Call

Updated 1/23/12

0

100

200

300

400

500

600

2012 2013 2014 2015 2016 2017+

MTR Gaming Group Inc. (MNTG) is a regional casino operator of mid-market casinos and horseracing tracks with three principal properties: Mountaineer Casino, Racetrack and Resort in Chester, WV; Presque Isle Downs in Erie, PA; and Scioto Downs racetrack in Columbus, OH. Top equity holders are Jeffrey Jacobs, former chairman of MTR's board (14%), Brigade Capital (10%), Arbiter Partners (7%), Par Capital Mgmt (7%), according to Bloomberg.

Key Dates/Catalysts:- March 2011: Pittsburgh-based Rivers Casino to add 19 table games, bringing total to 107.- August 2011: MNTG completes $565 mn senior secured note offering; proceeds will be used to purchase a gaming license in Ohio and build out a gaming facility at Columbus-based Scioto Downs racetrack.- October 2012: Ohio public policy group files lawsuit to challenge the governor's and legislature's authority to put VLTs at the seven racetracks in Ohio.- 2012: MNTG intends to apply for a gaming license to operate VLTs at its Scioto Downs Racetrack in Columbus, OH. MNTG expects to spend $50 mn on the license and $125 mn to build out 130,000 sq. ft of additional space, which will include a 70,000 sq. ft. gaming floor. MNTG expects to install up to 2,200 VLTs in 2012 upon resolution of the public policy lawsuit against Ohio lawmakers.

Company Strengths:- Columbus market opportunity: one of two gaming facilities for 1.8 mn people. Attractive tax rate of 33% compared to PA and WV.- Modest maintenance capex.- New bond indenture includes an excess free cash flow sweep.- May 2011: Entered into lease mineral rights agreement with Chesapeake Energy. ($2 mn payment / year + 14% royalty on sales).

Company Risks:- With the Penn Proposal passing for four all-inclusive casinos, MNTG's two properties in West Virginia and Pennsylvania will be negatively affected. PENN expects to open its Columbus, Ohio, location at the end of 2012. The Cleveland casino will be owned by Cleveland Cavaliers owner Dan Gilbert and will be operated by Caesars. The Cleveland facility is expected to open in the first half of 2012, and Columbus is expected to open in 4Q2012.- Under the governor's recent amendments, PENN has announced its intention to move its Columbus-based Beulah Park racetrack to the Youngstown, OH, area, which would be a negative for the Mountaineer casino.- Dependent on Mountaineer and Presque Isle Downs for a majority of revenues.- MNTG expects to increase use of casino credit for qualified patrons to further enhance gaming revenue.

Company Description



Mylan Inc. (MYL) Erin Blum 212-855-7718


OUTPERFORM

Bond Summary



$550 7.625 Sr 15-Jul-17 B1/BB- $101.906 7/15/2015 $110.000 4.746% 442

$1,000 7.875 Sr 15-Jul-20 B1/BB- $103.938 7/15/2015 $111.000 5.395% 460


Revenue $5,093 $5,451 $6,150 $1,435 $1,576 $1,552

EBITDA 1,237 1,388 1,657 363 434 411


Cash Taxes (21) 10 170 (23) 35 53

CapEx 154 193 238 97 57 70

Free Cash Flow 451 739 540 98 226 282

Total Debt 4,965 5,103 5,142 5,103 5,106 5,142 LTM Comps Leverage CoverageAgency Ratings

Cash 381 662 831 662 513 831 Mylan (MYL) 3.1x 4.6x B1/BB-

Net Debt 4,584 4,441 4,311 4,441 4,593 4,311 Valeant (VRX) 4.3x 4.6x B1/BB-

Key Credit Statistics Warner Chilcott (WCRX) 2.7x 5.8x B3/B+

Total Debt/EBITDA 4.0x 3.7x 3.1x Endo (ENDP) 3.6x 4.9x Ba3/BB-Net Debt/EBITDA 3.7x 3.2x 2.6x


EBITDA margin 24.3% 25.5% 26.9% 25.3% 27.5% 26.5%

Capitalization

Description Size

Debt to LTM

EBITDA

Debt to 2011E

EBITDA Liquidity

Revolving Credit Facility 200 Revolver Size $1,250

US Term Loan A 11/14/2016 1,250 Letters of Credit 0

Total Sr Sec debt 1,450 0.9x 0.9x Borrowings 200

Revolver Availability 1,050

1.25% Sr Convertible Notes due Mar 2012 600

3.75% Sr Convert Notes due Sept 2015 575 Cash $513

7.625% Sr Notes due July 2017 550 Total Liquidity $1,563

7.875% Sr Notes due July 2020 1,000

6.00% Sr Notes due Nov 2018 800

Total Sr debt 3,525 3.1x 3.0x

Other 9

Short term borrowings (Matrix WC facility) 158


Market Cap 8,983

Enterprise Value 13,612 8.5x 8.2x

Maturities:

Next Call

We rate MYL Outperform. We like MYL’s creditor-friendly generics business and robust pipeline. With leverage close to the company’s 3.0x target we no longer see significant delevering but continue to see the bonds as highest quality of our pharma names.

Updated 01/25/12

Mylan operates a global generic pharmaceutical business, as well as a small branded pharmaceutical business. The company operates in 140 countries – with strong market positions in several countries including US, France, Italy, and Australia – and has a product portfolio consisting of over 900 products. MYL operates two segments: Generics (92% of 2010 revenues) and Specialty (8%). MYL is the No. 3 player globally and has a No. 2 position in the US.

Formerly a domestic pharmaceutical company, the 2007 acquisition of Merck KgaA gave MYL a global presence with a diversified product portfolio. The acquisition of a controlling interest in Matrix Laboratories in 2006 – and the remaining interest in 2009 – allowed MYL to manufacture and supply active pharmaceutical ingredients for products it manufactures, as well as for third-party clients. On its 3Q11 conference call, MYL stated that it would consider a $2-4 bn-sized acquisition that temporarily brought leverage to 4x, but management does not see a need to do this and the immediate focus is driving organic growth.

Key Dates/Catalysts:- Quarterly earnings - Ongoing FDA approvals and subsequent product launches, particularly "first to file" submissions- Potential for rating agency upgrade (though MYL commented on its 3Q earnings call that this is not a focus and the company sees being a cross-over rated company as the sweet spot).- Potential approval of Copaxone ANDA in early part of 2012

0

1,000

2,000

3,000

4,000

5,000

2012 2013 2014 2015+

Investment Strengths:- Poised for growth: governments/payers seek to reduce costs and a number of branded drugs are going off-patent in 2012. Including Bioniche, MYL has 170 ANDAs pending FDA approval, which represents over $98.4 bn in annual brand sales and will likely boost earnings throughout 2011.

- Highly diversified: MYL operates in 140 countries worldwide with a portfolio consisting of over 900 products; MYL's top product is less than 5% of revenue.

- Significant free cash flow generator: Free cash flow was over $450 mn in 2009 and 2010; MYL projects CFO of $800-900 and capex of $250-300 mn for the year 2011.

- Well-articulated long-term leverage target of 3.0x. MYL still expects to pay down 2012 converts with cash.

Investment Risks:- Risk of a moderate-size acquisition: MYL could possibly make an acquisition to gain a presence in emerging European or Latin American markets or to add to its branded portfolio.

- Uncertain visibility in longer-term industry growth: Beyond 2012, growth will depend on emerging markets and bio-similars.

Company Description



Neenah Paper (NP) Updated 1/23/12 Joe Stivaletti (212) 902-3299

Contact analyst for updates and other information. James Kitchell (212) 902-9813

NOT COVERED

Bond Summary



$158 7.375 Sr Nts 15-Nov-14 B1/BB- 101.229 Current 100.000 7.354 727


FY:09 FY:10 3Q:10 2Q:11 3Q:11

Revenue 573.9 657.7 161.5 182.9 174.9

EBITDA 68.0 83.0 19.6 23.6 20.4



Total debt 319.2 244.9 246.4 206.2 190.5

Cash 5.6 48.3 38.7 9.3 10.8

Net debt 313.6 196.6 207.7 196.9 179.7





EBITDA margin 11.8% 12.6% 12.1% 12.9% 11.7% Comps Leverage Coverage Ratings

Boise Inc. 1.7x 5.4x Ba3/BB



Revolver 6.1 0.4x Revolver size 95.0

Neenah Germany revolver 17.1 0.4x Borrowing base 84.5

Project financing 9.3 0.4x Letters of credit 0.9

Senior notes due 2014 158.0 2.2x Borrowings 6.1

Total debt 190.5 Revolver availability 77.5

Market capitalization 353.4

Enterprise value 533.1 Cash 10.8


Maturities:

Next Call

-

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

2012 2013 2014 2015+

Neenah Paper manufactures premium and specialty paper products. Based in Alpharetta, Georgia, Neenah has paper manufacturing operations in the United States and Germany.

Company Strengths:- Strong market positions: Neenah maintains a leading position in most of its product categories.

Company Risks:- Lower-than-expected demand and selling prices: Currently weak economic conditions may result in lower-than-expected demand and selling prices for Neenah's paper products.- Possible future acquisitions: Following the sale of its timberlands, Neenah may look to make additional leveraging acquisitions.

Company Description



The Neiman Marcus Group (NMG) Updated: 1/26/12 Karen Eltrich 212-902-6957



IN-LINE

Bond Summary



$500 10.375 Sr Subs 15-Oct-15 Caa1/B- $103.46 Current $103.45 7.66 720


Revenue 3,692.8 4,002.3 4,309.8 1,171.6 1,239.7 Neiman 7.66% 4.6x 3.5x Caa1/B-

EBITDA 447.0 524.7 578.1 136.4 147.9 Michaels 6.75% 4.3x 2.8x Caa2/CCC

Yankee 10.14% 4.5x 1.9x B3/CCC+

Interest Expense 237.1 280.5 164.0 55.2 40.3 J. Crew 8.70% 5.4x 3.2x Caa1/CCC+

Cash Taxes (3.48) 17.64 103.57 12.89 28.50

CapEx 75.9 94.2 178.2 22.8 55.0

Free Cash Flow 137.4 132.4 132.3 45.4 24.1

Total Debt 2,879.7 2,681.7 2,681.7 2,789.8 2,681.7

Cash 421.0 321.6 486.9 530.7 453.2





EBITDA margin 12.10% 13.11% 13.41% 11.64% 11.93%



Revolver ($700mm, due Jan 15 2016) 0.0 Revolver Size 700.0

Sr Sec. Term Loan Facility (L+350 due May 2018) 2060.0 Letters of Credit 3.5

Sr Sec. Term Loan Facility (L+400 due April 2016) 0.0 Borrowings 0.0


9% Sr Nts due 2015 0.0

10 375% Subs due 2015 500.0 A/R facility NA

7.125% Senior Debentures due June 2028 121.7 Borrowings 0.0

A/R Availability NA


Cash 289.6


Market Cap N/A


Maturities:

Next Call

Neiman Marcus serves the unique needs of the luxury market, and has a goal of providing its customers with distinctive merchandise and superior service. The company operates 41 Neiman Marcus stores in the United States and two Bergdorf Goodman stores in Manhattan. It also operates 28 Last Call clearance centers as well as Neiman Marcus Direct, its direct-to-consumer business that conducts both print catalog and online operations under the Neiman Marcus, Horchow, and Bergdorf Goodman brand names.

Key Dates/Catalysts:Early March– second quarter earnings release

Investment Strengths:- Strong management team- Luxury has been a leading subsegment within retail- Highly variable cost structure (pays little rent expense and sales force is 100% commission-based)

Investment Risks:- High leverage- Moderate free cash flow- Sales performance highly correlated to stock market

Company Description

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014+



New York Times Co. (NYT) Updated 1/23/2012 Scott Wipperman 212-357-9922


IN-LINE

Bond Summary


(MM) (%) Priority Maturity Ratings Price (%) bp CDS

$225 6.625 Sr Notes 15-Dec-16 B1/B+ 103.000 5.905% 513 245/265

Financial Profile FY09A FY10A FY11E

Revenue 2,440 2,393 2,331

Adjusted EBITDA 328 377 357

Interest Expense 82 85 85

Operating Cash Flow 246 153 163

CapEx 51 34 49

Dividends 0 0 0

Free Cash Flow 194 120 114

Total Debt 769 996 772

Cash 37 400 357

Net Debt 733 597 415

Comps Leverage Coverage

Agency Ratings

Key Credit Statistics Gannett 1.8x 6.4x Ba1/BB

Total Debt/EBITDA 2.3x 2.6x 2.2x MNI 4.7x 2.1x Caa1/B

Net Debt/EBITDA 2.2x 1.6x 1.2x RRD 3.1x 4.7x Ba1/BB+


EBITDA margin 13.4% 15.8% 15.3%

Capitalization


Credit Facility - June 2016 0 Revolver Size 125 Matures in June 9, 2016

4.610% MTN due 9/26/2012 75 Letters of Credit 62

5.00% notes due 3/15/2015 250 Borrowings 0

6.625% notes due 12/15/16 225 Revolver Availability 63

Total Bonds 550

Other debt 225 Cash 263

Total Debt 775 2.2x Total Liquidity 326

Market Cap 1,175 Credit agreement maintenance

Enterprise Value 1,687 covenants (as defined):

Springing Fixed Charge Covenant

Maturities:

Our In-Line reflects NYT's improved balance sheet, strong liquidity and premium content which is offset by spread valuation, its high cost structure and print ad revenue weakness. In addition, we believe the unexpected retirement of CEO Janet Robinson and sale of its Regional Media business create uncertainity.

The New York Times (NYT) is a media company whose primary operations include newspapers and Internet businesses. NYT classifies its business into two segments: the News Media Group and About Group. The News Media Group consists of the New York Times Media Group, which includes The New York Timespaper, NYTimes.com, and the International Herald Tribune. The News Media Group also holds the New England Media Group, which primarily includes The Boston Globe and the Worcester Telegram and Gazette. The About Group consists of the About.com Web site and other Internet businesses. The company also owns a stake in New England Sports Ventures and interests in a newsprint mill and paper mill. A significant portion of the company's revenue is derived from selling advertising in its newspapers and related Web sites. The company reports its advertising in three categories: National, Retail, and Classified.

In January, the company sold its Regional Media Group to Halifax Media LLC for $143 million. The Regional Media Group consisted of 14 daily regional newspapers.

Key Dates/Catalysts:- 4Q2011 results on February , 2012- The company is currently searching for a new CEO following the retirement of CEO Janet Robinson.

0

250

500

750

2012 2013 2014 2015


‐ NYT owns a premier asset in the New York Timespaper. - NYTimes.com is one of the leading newspaper-related Web sites. - Company is well positioned to monetize content across alternative platforms such as tablets and smartphones. - Recent digital subscription offerings could help offset decline in print circulation revenue. - The company has cleaned up its debt maturity schedule. - Healthy liquidity, with $206 million in cash pro forma for the repayment of its 14.053% notes.

Investment Risks:- Higher cost structure than industry peers. - Unexpected retirement of CEO Janet Robinson creates uncertainty. - Pension plan was underfunded by $442 million as of 12/31/10 and could require increased funding. - NYT is reliant on its "Times" franchise, creating some concentration risk for investors.- More than 40% of NYT's workforce is unionized, which may constrain future restructuring efforts. - Print ad revenue declines have not abated.- About Group ad revenue performance has been weak, which has weighed on overall digital ad revenue. - Recent NYTimes.com pay-wall could cannibalize digital ad revenue. - Double-dip recession or weaker economy could further weaken ad revenue.

Company Description



Newfield Exploration (NFX) Updated: 1/26/12 Jason Gilbert (212) 902-3585


IN-LINE

Bond Summary



$700 6.875% Sr. Sub. 2/1/2020 Ba2/BB+ $103.44 2/1/2015 $107.25 5.30% 453


Revenue $1,944 $2,189 $2,327 $2,644 $3,023


Free Operating Cash Flow ($1,456) $178 ($28) ($374) $72


CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E NFX 1.8x 10.3x Ba2/BB+

Total Debt/EBITDA (LTM) 1.6x 1.2x 1.4x 1.8x 1.4x CHK 2.0x 33.6x Ba3/BB+

EBITDA/Interest Expense (LTM) 12.3x 13.6x 10.9x 10.3x 14.0x FST 2.8x 4.0x B1/B

Debt to Capitalization % 40% 42% 41% 43% 39% PXD 1.9x 8.6x Ba1/BBB-



Capitalization





Senior sub notes 2014-20 $2,919 Revolver Availability $1,184



Preferred Equity $0



Maturities:

Next Call

Newfield has successfully transformed itself from a US Gulf-only player in 1995 to a predominantly onshore US producer today. NFX's growth engine is its leading position in the Woodford Shale (OK), which is one of the most attractive shale plays in the US. Recent acquisitions and divestitures have increased the company's US Rockies exposure.

Newfield was founded in 1989 with an initial focus on the shallow waters of the Gulf of Mexico. Since the mid-1990s, the company has moved toward a more diversified asset base, including domestic US assets in the Onshore Gulf Coast, Mid-Continent, Rocky Mountains, and Gulf of Mexico regions, and international assets in the UK North Sea, Malaysia, and China. In 2007, the company raised $1.8 bn through the sale of non-core assets, including the sale of N Sea assets for $486 mn (October 2007) and the divestiture of its shallow gulf properties to MMR for $1.1 bn. In addition, in June 2007, NFX spent $578 mn to acquire Stone Energy's Rocky Mountain assets. Subsequently, NFX sold its North Sea properties to Centrica PLC for $286 mn in October 2007. In May 2008, NFX announced a JV agreement with XOM to explore 87k gross acres in South Texas over three years. In November 2009, NFX announced a JV with Hess in the Marcellus shale for up to 140k gross acres. In July 2010, S&P raised Newfield's corporate family rating to investment grade.

Investment Strengths:• Strong upside potential from Granite Wash, Marcellus, and Eagle Ford positions• Strong hedge position, with 58% of 2012E volumes protected• Well balanced between oil and gas (60% gas)

Investment Risks:• Company may require external capital or asset divestitures to fund growth in new plays• Rich valuation and near-term deleveraging unlikely• Recent struggles in the Granite Wash

Key Dates/Catalysts:• Continued updates on capital spending plans• Eagle Ford, Uinta, and Granite Wash results

Company Description

0

100

200

300

400

500

600

700

800

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Nova Chemicals (NCX) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 350 8.375 Sr. Unsec 1-Nov-16 Ba2/BB- 104.2 11/1/2013 111.00 4.16% 388


Revenue 2,957 4,576 5,240 NA 1,448 1,101

EBITDA 342 881 1,155 NA 311 116

Cash Interest (142) (161) (132) NA (23) (41)

Cash Taxes 33 16 (125) NA (7) (1)

Capital Expenditures (101) (131) (176) NA (42) (80)

Free Cash Flow (75) 612 583 NA 369 93

Total Debt 2,065 1,810 1,813 NA 1,813 1,813

Cash 267 300 959 NA 874 959

Net Debt 1,798 1,510 854 NA 939 854


LTM Debt/EBITDA 6.3x 2.1x 1.6x NA 1.5x 1.6x Nova Chem 1.6x 8.7x WR/NR

LTM Net Debt/EBITDA 5.5x 1.7x 0.7x NA 0.8x 0.7x Olin 1.9x 10.2x Ba1/BB

PolyOne 1.9x 5.4x Ba3/B

LTM EBITDA/Interest Expense 2.4x 5.5x 8.7x NA 8.9x 8.7x

LTM EBITDA Margin 12% 19% 22% NA 23% 22%



Credit Facility ($350mn) - Revolver 425

Cogen Debt (1) - Borrowing base 425

A/R Financing 184 Est. Amount Drawn -

Total Senior Secured Debt 184 0.2x Letters of Credit 16

Unsecured revolver drawings - Revolver Availability 409

Senior Unsecured (C$ 250) -

Senior Unsecured 400 Bilateral facilities -

Senior Unsecured 400 Unsecured revolver -

Senior Unsecured 100 Unsecured revolver 40

New Senior Unsecured Bonds 350 Unsecured revolver 100

New Senior Unsecured Bonds 350 Total Bilateral Facilities 140

Other Unsecured Debt 29 Borrowings -

Transaction Costs and Other - Availability 140


Shareholder's equity 2,426 Cash 874

Total Capitalization 4,239 Total Liquidity 1,423

Maturities:

Next Call

Nova Chemicals is a leading North American olefins/polyolefins producer that is wholly owned by IPIC, an Abu Dhabi investment vehicle. The company has two large olefins/polyolefins sites in Canada – a large ethane-based site in Joffre, Alberta, and a naphtha-based site in Corunna, Ontario.

Key Dates/Catalysts:4Q2011 earnings releasePotential combination of Nova with Borealis, also owned by IPIC

Investment Strengths:- Nova's owner, IPIC, is a double-A rated entity that has verbally pledged its support for Nova. Nova's bonds trade to reflect this implicit IPIC guarantee.- Large, backward-integrated producer.- Joffre site has access to advantaged feedstocks, and therefore is the lowest-cost ethylene producer in North America.- IPIC has indicated it may look to combine Nova with Borealis, another of its portfolio companies, over the long term.

Investment Risks:- Minimal business diversity.- Commodity chemical business is highly cyclical.- Decreased ethane availability at Joffre could pose near-term headwinds until newly identified sources become operational.

Company Description

0

100

200

300

400

500

600

700

2012 2013 2016



NRG Energy, Inc. (NRG) Updated 1/25/2012 Raymond M. Leung 212-357-5764


IN-LINECore high yield power holding that exhibits complementary businesses (wholesale and retail) and a solid underlying financial and liquidity position.

Bond Summary



$1,200 7.875 Sr Unsec'd 15-May-21 B1/BB- 103.94 15-May-16 94.250 8.790 680

Financial Profile FY08A FY09A FY10A FY11E LTM3Q11

Gross Margin 4,244 4,766 3,874 3,571 3,606

EBITDA 2,257 2,672 2,412 1,796 2,066

EBITDAR - ex M2M 2,311 2,774 2,523 1,864 2,177


Cash Taxes (46) (47) (20) (50) (20)

CapEx (899) (734) (706) (2,464) (2,061)

Free Cash Flow 282 1,742 982 (1,576) (872)

Lease Adjusted Debt 8,583 9,234 12,902 10,886 10,177

Cash 1,494 2,304 2,951 2,907 1,127

Net Debt 7,089 6,930 9,951 7,979 9,050


Lease Adj Debt/EBITDAR 3.7 3.3 5.1 5.8 4.7 AES Corp* 4.1x 3.6x Ba3/BB-

Net Lease Adj Debt/EBITDAR 3.1 2.5 3.9 4.3 4.2 Calpine Corp 6.7x 2.0x B1/BB-

Dynegy 10.2x 1.1x –/D

EBITDAR/Interest 3.4 3.9 3.5 2.4 2.4 Edison Mission 8.5x 1.4x Caa1/B-

GenOn 7.8x 1.1x B3/B


Capitalization NRG 4.7x 2.4x B1/BB-


EBITDAR *AES reflects sub distributions to parent obligations; LTM4Q2011

2011 Senior Credit Facility ($2,300) - As of September 30, 2011

Term Loan Facility 2018 1,592 Liquidity

Project and operating lease debt 1,616 Revolving credit facility 2,300

Total Secured & Non-recourse project debt 3,208 1.5x

NRG Energy 7.25% due 2014 - Total facilities 2,300

NRG Energy 7.375% due 2016 - Facility borrowings (1,949)

NRG Energy 7.375% due 2017 1,090

NRG Energy 7.625% due 2018 1,200 Revolver Availability 351

NRG Energy 7.625% due 2019 800 Cash 1,127

NRG Energy 8.5% due 2019 691 Total NRG Liquidity 1,478

NRG Energy 8.25% due 2020 1,100

NRG Energy 7.875% due 2021 1,200

Other -


Operating lease adjustment 888

Lease Adjusted Debt 10,177 4.7x

Preferred Shares 248

Market Cap 3,985

Enterprise Value to EBITDA 14,410 7.0x

Maturities (includes project debt)

Next Call


NRG is a wholesale power generation company engaged in the ownership, development, construction, and operation of electric generation facilities. Also, the company provides retail services to more than 1.8 million customers, largely composed of Mass customers. The company's generation portfolio of around 25GW is diverse on a geographical, fuel, and dispatch basis. NRG's domestic portfolio regions include Texas (10.7GW), Northeast (6.9GW), South Central (4.1GW), West (2.15GW), and Thermal (115MW). The company also has just over 1GW of international generation assets located in Australia and Europe. NRG recently completed the acquisition of Green Mountain Energy ($70-80 million of 2011 EBITDA) for $350 million and 1.278GW related to the Cottonwood Generating Station for $525 million. Key Dates/Catalysts:- Mid-to-Late Febraury, NRG is expected to release 4Q earnings. The company expects 2011 EBITDA of $1.8-$1.85 bn with free cash flow of $800-$875 mn. For 2012, the company expects EBITDA of $1.825 bn to $2.0 bn. We will listen closely for an update on the company's hedge position as gas and power prices continue to fall..- Environmental regulations are pending: Cross-State Air Pollution Rule (stay implemented late December), Once Thru Cooling (316(b)), anticipated final rule July 2012.- In January 2012, NRG can call its 2017 notes, which have more restrictive covenants than recent notes. Thus, we would look for an update on the company's capital allocation plans. For 2011, NRG is targeting $430 mn in share repurchases. - Update on expansion into renewable projects. - Future capital allocation related to deployment of large cash balance. - Status of the South Texas Project has been out of service since late November 2011.

0

50

100

150

200

250

300

350

400

450

2011 2012 2013 2014 2015

Investment Strengths:- Well-positioned generation portfolio, underpinned by company's low-cost baseload fleet (38% of capacity), which includes nuclear and coal generation assets. - Large retail service provider operations represent a complementary hedge to the company's wholesale generation portfolio, which will provide a degree of cash flow stability.- Comprehensive hedging strategy for baseload output, with baseload hedge positions of 100% in 2012 and 35% in 2013. - Strong liquidity profile, with about $1.5 billion of available liquidity and no major debt maturities over the near-term. - Favorable bond covenants package, which includes RP, COC, and limitation on liens in the 2017 notes.

Investment Risks:- Wholesale and retail operations are exposed to volatile commodity markets and a high degree of competition which may pressure gross margins. - Guidance was recently reduced for 2011 owing to a mismatch in its hedging profile due to extreme weather in Texas. - Focus on returning capital to shareholders would reduce the company's strong liqudity profile. - Capital spending is manageable, but future environmental spending and renewable development backlog could elevate capital outlays and associated funding needs. - Financial results rely heavily on Texas, which is the company's primary geographical region.

Company Description



NXP B.V. (NXPBV) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$922 9.750 Snr Secured 1-Aug-18 B2/B+ 104.88 8/1/2014 113.00 5.9% 563

Financial Profile FY08 FY09 FY10 LTM-3QE FY11E FY12E

Revenue 5,443 3,843 4,657 4,341 4,275 4,210

EBITDA 486 336 1,105 1,167 1,084 1,081


Cash Taxes (8) (8) (14) (28) (30) (40)

CapEx (379) (96) (258) (273) (267) (289)

Free Cash Flow (1,001) (841) 101 (29) 125 538

Total Debt 6,367 5,283 4,528 3,821 3,312 2,823

Cash 1,796 1,041 898 865 583 633 Comps Leverage Coverage Sr. Unsec

Net Debt 4,571 4,242 3,630 2,956 2,729 2,190 Ratings

Key Credit Statistics AMD 2.3x 5.0x Ba3/B+

Total Debt/EBITDA 13.1 x 15.7 x 4.1 x 3.3 x 3.1 x 2.6 x AMKR 2.3x 6.6x Ba3/BB

Net Debt/EBITDA 9.4 x 12.6 x 3.3 x 2.5 x 2.5 x 2.0 x FSL 5.8x 2.0x Caa1/CCC+


EBITDA margin 8.9% 8.7% 23.7% 26.9% 25.3% 25.7%

Capitalization (LTM)

Description SizeDebt to EBITDA Liquidity FY2011E

E+275 Revolver due 2012/2015 0 0.2 x Revolver Size 701

10% Super Priority USD Notes due 2013 221 0.2 x Borrow Base 701

10% Super Priority EUR Notes due 2013 39 0.2 x - Amt Drawn 0

L+325 Term Loan due 2017 498 2.6 x - LC's 32

L+425 Term Loan due 2017 0 2.6 x Amt Unutilized 669

L+275 Sr. Sec. USD Notes due 2013 666 2.6 x Cash 583

E+275 Sr. Sec. EUR Notes due 2013 668 2.6 x Liquidity 1,252

L+550 Sr. Sec. USD Notes due 2016 0 2.6 x

9.75% Sr. Sec. USD Notes due 2018 922 2.6 x Maturities:

9.5% Sr. USD Notes due 2015 510 3.3 x

8.625% Sr. EUR Notes due 2015 275 3.3 x

Other (incl unamor discount) 22 3.3 x


Less cash 865 --

Net Debt 2,956 2.5 x



Next Call

NXP is an integrated device manufacturer (IDM) of high-performance mixed signal and standard semiconductors for the automotive, identification, wireless infrastructure, lighting, industrial, mobile, consumer, and computing markets. The company was formed from the divested assets of Philips Electronics' semiconductor manufacturing solutions and is headquartered in the Netherlands. In August 2006, Phillips sold an 80.1% controlling stake to a group of private equity investors led by KKR, Silver Lake Partners, and AlpInvest Partners. The purchase price was €4.305 billion, or 7.5x LTM adjusted EBITDA. In 2010, NXP completed an initial public offering of 14% of the equity, which raised gross proceeds of $476 million.

Key Dates/Catalysts:- NXP is expected to report 43Q2011 earnings on February 9, 2012.- NXP closed the sale of its Sound Solutions business to Dover Corp. for $855 million in July 2011.- NXP completed its IPO on August 5, 2010, and a 25 million share secondary offering on March 9, 2011

0.0

500.0

1,000.0

2012 2013 2014 2015 2016 2017 2018 After

Investment Strengths:- Aggressive debt reduction efforts: By the end of 2011, NXP will have repaid $2.5 bn of debt since its 2006 LBO, helped by $442 mn of IPO proceeds and $885 mn of proceeds from the sale of its Sound Solutions business.- Leverage to a strong auto cycle: NXP's High-Performance Mixed-Signal (HPMS) segment is well leveraged to strong global auto production and improving content-per-vehicle opportunities.- Successful cost-cutting initiatives should drive further margin growth: NXP has reduced capex by $450mn since its 2006 IPO and expects further efficiencies.

Investment Risks:- Leverage profile: While NXP has made progress in reducing financial leverage, it is still more levered than many of its peers – especially given the historical volatility of the operating cycle. - Inventory correction: Companies with high exposure to the computing and industrial end markets have been affected by semiconductor industry inventory cycle corrections, which can result in sales and margin volatility. - Working capital has consumed free cash flow: Changes in working capital have consumed cash over the past couple of years, driving a more volatile free cash flow profile.

Company Description



Olin Corporation (OLN) Updated 1/26/2012 Kristen McDuffy 212-357-6157


UNDERPERFORM

Bond Summary

GS Size Coupon Agency Next Call Bid YTW OAS

Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpU 150 8.875 Sr. Unsec. 15-Aug-19 Ba1/B+ 104.4 15-Aug-14 107.00 7.32% 599


Revenue 1,532 1,586 1,946 385 550 431

EBITDA+distributions 202 197 313 59 99 68


Cash Taxes (40) 10 (33) (4) (8) (8)


Free Cash Flow 11 97 (4) 27 18 (73)


Total Debt including SunBelt 447 539 538 539 590 538 Olin 1.9x 10.2x Ba1/BB

Total cash 459 561 270 561 390 270 PolyOne 1.9x 5.4x Ba3/B

Net Debt - - 269 - 200 269




LTM EBITDA/Interest 12.0x 7.0x 10.3x 7.0x 10.2x 10.3x




Senior unsecured revolving facility - Revolver 240

6.5% Senior unsecured notes 11 Revolver usage -

6.75% Senior unsecured notes 125 Letters of Credit 9

9.125% Senior unsecured notes 75 Revolver Availability 232

8.875% Senior unsecured notes 150

Industrial development bonds 11 LOC facility 35

Tennessee tax-exempt bonds 41 Usage 26

Mississippi tax-exempt bonds 42 Availability 9

AL recovery and go zone bonds 34

Other 15 Cash & equivalents 318

Total Debt 504 1.7x Restricted cash 72

SunBelt Debt 85 Liquidity 621

Total Debt including SunBelt 590 1.9x

Share price 22.2



Maturities:

Olin is a commodity chemical company that produces chlorine and caustic, primarily for the merchant market. The company also has a small ammunition business, which is called Winchester. Over the last several years, Olin made one major acquisition and one major divestiture. In August 2007, the company acquired Pioneer Companies, consisting of significant chlor-alkali assets, primarily located in Canada. In October 2007, Olin sold its Metals business to Global Brass and Copper Holdings for $400 million.

Key Dates/Catalysts:2Q2011 resultsPotential acquisition in the bleach space

Strengths:- Low leverage and conservative balance sheet.- Ample liquidity.- Strong market share in merchant chlor-alkali market.

Risks:- Olin has expressed a willingness to be acquisitive in the downturn.- Olin has high-cost technology relative to some peers.- Phase-out of mercury-based chloralkali plants in the US will require significant capex over the next several years.- ECU margins may weaken over the intermediate term due to new vinyls-based chlor-alkali capacity.- Loss of business due to Westlake's recent decision to build out additional chlor-alkali capacity.

0

20

40

60

80

100

120

140

160

2011 2012 2013 2014 2016

Company DescriptionOlin is a commodity chemical company that produces chlorine and caustic, primarily for the merchant market. The company also has a small ammunition business, which is called Winchester. Over the last several years, Olin made one major acquisition and one major divestiture. In August 2007, the company acquired Pioneer Companies, consisting of significant chlor-alkali assets, primarily located in Canada. In October 2007, Olin sold its Metals business to Global Brass and Copper Holdings for $400 million.

Key Dates/Catalysts:4Q2011 resultsPotential acquisition in the bleach space

Investment Strengths:- Low leverage and conservative balance sheet.- Ample liquidity.- Strong market share in merchant chlor-alkali market.

Investment Risks:- Olin has expressed a willingness to be acquisitive in the downturn.- Olin has high-cost technology relative to some peers.- Phase-out of mercury-based chloralkali plants in the US will require significant capex over the next several years.- ECU margins may weaken over the intermediate term due to new vinyls-based chlor-alkali capacity.- Loss of business due to Westlake's recent decision to build out additional chlor-alkali capacity.

0

20

40

60

80

100

120

140

160

2011 2012 2013 2014 2016

Company Description



Omnicare (OCR) Erin Blum 212-855-7718


NOT RATED

Bond Summary

Size Coupon Agency Bid YTW STW CDS

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp Levels 5-Year

$550 7.750% Snr. Sub. 2-Jun-20 Ba3/BB $103.875 6/1/2015 $109.750 5.576% 478 Sub 250 / 300


Revenue $6,188 $6,146 $6,150 $1,558 $1,544 $1,521

EBITDA 688 594 608 147 157 156


Cash Taxes 97 12 109 (19) 23 29

CapEx 31 24 49 5 21 10

Free Cash Flow 453 345 493 93 147 84

Agency

Total Debt $2,109 $2,216 $2,043 $2,216 $2,193 $2,043 LTM Comps Leverage Coverage Ratings

Cash 276 494 584 494 680 584 OCR snr 2.6x 5.7x Ba2/BB

Net Debt 1,833 1,722 1,459 1,722 1,513 1,459 HLS 4.0x 3.4x B2/B+

Key Credit Statistics ALR sub 5.0x 3.4x B3/B-




EBITDA margin 11.1% 9.7% 9.9% 9.4% 10.2% 10.3%

Capitalization

Description Amount

Debt to LTM

EBITDA

Debt to 2011E

EBITDA Liquidity

Revolving Credit Facility due 5/18/2015 $0 Revolver Size $300

Term loan due Aug 2017 $450 Letters of Credit 20

Total Sr debt 450 0.8x 0.7x Borrowings 0


6.125% Sr. Sub. notes, due 2013* $0

6.875% Sr. Sub. notes, due 2015* 0 A/R facility $0

7.75% Sr Sub notes, due 2020 550 Borrowings 0

3.75% Convert Sr. Sub Nts due 12/15/2025 575

Total Sub debt with gty $1,125 2.6x 2.6x A/R Availability 0

3.25% convertible Sr. Notes, due 2035 453 Cash* $530

Capitalized lease and other debt obligations 15 Total Liquidity $810

*3Q11 cash less $150mn for repayments of 2013 and 2015

Total Debt $2,043 3.4x 3.4x notes post quarter end.

Market Cap 3,813


*PF for announced repayments post quarter end.

Maturities:

Next Call

Updated 01/25/12

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015+

OCR provides pharmacy services – primarily purchasing, repacking, and dispensing drugs – to nursing homes and assisted living facilities. Under Medicare Part D, prescription drug plans (PDPs) operated by the likes of UnitedHealth and Humana contract with OCR to provide drugs to members of the plans. The PDPs pay OCR for drugs at contracted rates, commonly pegged to Medicaid rates. OCR buys drugs primarily from drug distributors at negotiated rates. OCR adds value to the supply chain by having pharmacists steer patients to the most cost-effective drugs (typically generics) and by being a volume purchaser, which earns rebates from manufacturers.

John Figueroa from McKesson was named CEO in December 2010 following the departure of the previous CEO in August 2010. In September, OCR acquired Continuing Care RX (32,000 beds). On September 3, 2010, Omnicare announced it would exchange its home infusion business for Walgreen's long-term care pharmacy business, adding approximately 7,000 serviced beds. In its 4Q2010 conference call, OCR characterized 2011 as a year of transformation due to continued investments in the business.

In August 2011, OCR tender for Pharmerica (PMC) at $15 per share. PMC has urged shareholders to take no action. OCR's tender offer has been extended to January 27, 2012.

Key Dates/Catalysts:- Quarterly earnings announcements- January 27, 2012 - deadline for tender offer for PMC shares.

Company Strengths:- Strong FCF at 26% of debt as of LTM 3Q2011. In our view, cash priorities are likely share repurchase ($79 mn left on the current authorized program of $300 mn) .

- Benefit from the trend to generic drugs: The dispensing of generic drugs has higher margin than the dispensing of branded drugs, so OCR is positioned to benefit from the large number of generics to be introduced over the next several years.

Company Risks:- New management may be unable to fix the service quality problems that have been causing the company to lose beds, or operating problems may extend beyond service quality.

- Reduced prescription volume and increased reimbursement pressure.

- Former CEO Joel Gemunder is a permitted holder under the bond indenture.

Company Description



Owens-Illinois, Inc. (OI) Updated 1/23/12 Joe Stivaletti (212) 902-3299


UNDERPERFORM

Bond Summary



$600 7.375 Sr Nts 15-May-16 Ba3/BB NC NC 111.000 4.534 380

$250 7.800 Sr Debs 15-May-18 B1/BB- NC NC 109.500 5.967 467


FY:09 FY:10 Q3:10 Q2:11 Q3:11

Net sales 6,652 6,633 1,689 1,959 1,862

EBITDA 1,209 1,266 355 322 349



Total debt 3,608 4,278 4,345 4,340 4,088

Cash 756 640 658 260 257

Net debt 2,852 3,638 3,687 4,080 3,831


Total debt/EBITDA 3.0x 3.3x 3.4x 3.4x 3.3x Ball 2.8x 6.6x Ba1/BB+

Net debt/EBITDA 2.4x 2.8x 2.9x 3.2x 3.1x Crown Holdings 2.9x 4.9x Ba3/BB

Solo Cup 6.3x 1.5x B2/B

EBITDA/interest 5.7x 5.5x 6.6x 4.8x 5.6x Plastipak 3.2x 3.2x B3/B

EBITDA margin 18.2% 19.1% 21.0% 16.4% 18.7%



Revolving credit facility 30 1.1x Revolver size 900

Term loans 1,069 1.1x Letters of credit 103

Short-term loans and other 295 1.1x Borrowings 30

Senior notes and debentures 2,694 3.3x Availability 767

Total debt 4,088

Market capitalization 3,778 Cash 257

Enterprise value 7,609 Total liquidity 1,024

Maturities:

Next Call

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2012 2013 2014 2015+

Owens-Illinois is the largest manufacturer of glass containers in the world, with operations in North America, South America, Asia Pacific, and Europe.

Investment Strengths:- Low-cost global operations: OI's scale, diversity, and proprietary equipment and technologies help keep the company's operations very cost-competitive throughout the world.- Long relationships with strong, stable customers: For many years OI has provided glass bottles to its top customers, which include leading consumer products companies.- Strong asset base: OI has invested significantly in recent years to improve productivity and reduce costs

Investment Risks:- Inability to maintain selling prices in the face of weaker demand: Prolonged volume weakness could pressure glass bottle manufacturers to reduce selling prices in order to preserve or gain market share.- Acquisitions: OI management has expressed interest in expanding its glass business, and acquisitions could result in increased leverage.

Company Description



Parker Drilling Company (PKD) Updated: 1/26/12 Jason Gilbert (212) 902-3585


UNDERPERFORM

Bond Summary



$300 9.125% Sr. 4/1/2018 B1/B+ $104.56 4/1/2014 $104.70 7.78% 748


Revenue $830 $753 $659 $702 $860


Free Operating Cash Flow $23 ($49) ($96) $67 $65


CompsLeverage

('11E)Coverage


PKD 2.0x 13.4x B1/B+

Credit Ratios 2008A 2009A 2010A 2011E 2012E BAS 2.3x 12.8x B3/B

Total Debt/EBITDA (LTM) 1.7x 2.7x 2.9x 2.0x 1.7x HOS 6.3x 2.4x Ba3/BB-



Capitalization





Term loans $67 Revolver Availability $153

Senior notes $420 Cash $103

Total Long Term Debt $487 Total Liquidity $256


Preferred Equity $0

Common Equity $633


Maturities:

Maturities:

Next Call

PKD's primary business segments include US "brown water" barge drilling; international land and offshore barge drilling; and drilling-related rental tools. Parker's US barge fleet consists of 12 deep barge rigs, three intermediate barge rigs, and two shallow/workover barge rigs. The company's drilling-related rental tools business operates under "Quail Tools" and is currently undergoing a geographic expansion.

PKD's core competency is deep land drilling in international locations; the company has experience operating in over 51 countries. Internationally, PKD markets 28 drilling rigs that operate throughout the CIS, Latin America, Asia Pacific, and Africa & Middle East. In addition, the company has two barge rigs in Mexico and the Caspian Sea, and also focuses on project management contracts for clients. In early 2012, Parker announced a delay in its 2 Alaska rigs, due to necessary modifications.

Investment Strengths:• Good scale and geographic diversification for the ratings category; one of the best high yield energy vehicles for international exposure• Long-term trend toward growing demand for deep international drilling• Solid and growing backlog of project management services revenue

Investment Risks:• Weak recent quarterly operating results• US barge drilling market remains weak• High leverage, although leverage position has improved materially from historical levels• International drilling continues to be weak

Key Dates/Catalysts:• Continued expansion of project management business• Expansion of Quail Tools into new shale plays and internationally

Company Description

0

50

100

150

200

250

300

350

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Peabody Energy (BTU) Updated 1/20/12 Justine Fisher 212-357-6711


UNDERPERFORM

Bond Summary



$1,500 6.250% Sr Notes 15-Nov-21 BB+/Ba1 MW MW 104.63 5.55 422

Financial Profile FY10 2Q11 3Q11 4Q11 FY11E FY12E

Revenue 6,860 2,008 2,036 2,229 8,018 9,490

EBITDA 1,815 605 504 659 2,184 2,533


Cash Taxes -- -- -- -- -- --

CapEx (633) (263) (310) (250) (938) (1,100)

Free Cash Flow 2,064 395 575 533 1,724 1,815

Total Debt 2,750 2,512 2,502 6,956 6,956 6,504

Cash 1,295 1,252 1,402 916 916 1,086

Net Debt 1,455 1,260 1,101 6,041 6,041 5,418 Comps Leverage CoverageAgency Ratings

Key Credit Statistics Peabody Energy 3.2x 11.4x BB+/Ba1

Total Debt/EBITDA 1.5x 3.2x 2.6x Steel Dynamics 2.7x 5.1x BB+/Ba2

Net Debt/EBITDA 0.8x 2.8x 2.1x US Steel Corp. 4.3x 5.0x BB/B1

FMG 7.6x 12.4x B1/B


EBITDA margin 26.46% 30.10% 24.78% 29.56% 27.24% 26.69%

Capitalization

Description SizeFY11E Debt to EBITDA Liquidity

Term Loan 475.0 Revolver Size 1500.0

Revolver 0.0 Letters of Credit 0.0

Capital Leases 58.6

New Macarthur-related term loan 0.0 Borrowings 0.0

7.375% Senior Notes due 2016 650.0

7.875% Senior Notes due 2026 247.3 Revolver Availability 1500.0


Other debt 46.8 A/R facility 0.0

6% Senior Notes due 2018 0.0 Borrowings 0.0


4.75% Conv. Jr. Sub. Debentures due 2066 374.7

A/R Availability 0.0


Market Cap 9,713.6 Cash 1401.6

Enterprise Value 10,814.4 5.0x Total Liquidity 2901.6

Maturities:

Next Call

Peabody Energy is the largest public coal company in the world. Peabody's largest tonnage exposure is to the Powder River Basin (PRB), but its largest EBITDA exposure is to Australia. This is especially true after the recent Macarthur Coal acquisition. Peabody has mines in the Powder River Basin, the Southwestern US, Illinois, and Australia. It owns 20 mines in the US and 10 in Australia.

Key Dates/Catalysts:Peabody's PRB operations could see lower prices if low natural gas prices continue to put pressure on the demand for thermal coal.

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 Thereafter

Investment Strengths:- World leader in both sales and reserves.- Diversified geographic footprint, with operations in the US and Australia. - Australia provides significant upside with global met and steam coal exposure.

Investment Risks:- Cost inflation is an issue for all coal companies.- Higher costs and production problems in the Australian operations have hurt results in the past, and might offset some of the benefits of strong export coal pricing.- Limited capacity at Australian coal export terminals could limit upside for the company's production. - Purchase of Macarthur Coal could indicate that Peabody plans to focus on expansion rather than on improving credit quality, and that it could pursue additional leveraging acquisitions. We think this forestalls an upgrade to Investment Grade in the near term.

Company Description



Pilgrim's Pride Corp. (PPC) Updated: 1/26/12 Karen Eltrich 212-902-6957Jordan Hughes 212-357-7875


IN-LINE

Bond Summary



$500 7.88 Sr Nts 15-Dec-18 Caa1/B- $103.94 15-Dec-14 95.25 8.81% 738

Financial Profile FY09* FY10 FY11E 4Q10A 4Q11E Comps Yield Leverage Coverage Ratings

Revenue 7,088.1 6,881.6 7,789.4 1,811.3 2,083.0 Pilgrim's 8.81% NM NM Caa1/B-

EBITDA 318.2 478.3 (160.4) 121.0 13.4 Smithfield 5.08% 1.9x 5.8x B2/BB-



Cash Taxes (21.6) (23.8) (26.9) (19.5) (20.5)

CapEx 88.2 179.3 131.9 70.3 10.0

Free Cash Flow 94.0 219.1 (375.3) 45.7 (3.5)

Total Debt 41.1 1,339.3 1,452.5 1,339.3 1,452.5

Cash 220.0 106.1 25.3 106.1 25.3


Total Debt/EBITDA .1x 2.8x -9.1x

Net Debt/EBITDA -.6x 2.6x -8.9x

EBITDA/Interest 2.x 4.6x -1.5x 4.6x -1.4x

EBITDA margin 4.5% 6.9% -2.1% 6.7% 0.6%

* FY09 ended September 2009, before calendar shift.

Capitalization (2012E) Liquidity 3Q11A

Description SizeDebt to EBITDA Revolver Size 700.0

Exit Credit Facility w/ 2 term notes payable maturing 2012-14 578.5 Letters of Credit 40.1

Exit Credit Facility revolving note payable due 2012 ($700) 372.4 Borrowings 394.4

Total Secured Debt 950.9 NM Revolver Availability 243.9

7 7/8% Senior Notes due 2018 496.7

Other debt 4.9

Total Sub debt 501.6 NM

Total Debt 1,452.5 NM Cash 46.9

Market Cap 1,261.2 Total Liquidity 290.8

Enterprise Value 2666.7 NM

Maturities:

Next Call

Pilgrim's Pride is the second-largest chicken producer in the US, representing approximately 17% of US chicken production, and the second-largest in Mexico. It is majority owned by a subsidiary of JBS S.A., the largest meat processing company in the world. Pilgrim's processes over 10 billion pounds of chicken annually through its 26 facilities, located primarily in the southeastern US.

Key Dates/Catalysts:Early to mid-February, quarterly earnings release

Investment Strengths:- Leading market position- Chicken consumption continues to show positive trends- Implicit backing of JBS USA

Investment Risks:- Currently free cash flow negative- High corn prices- Weak chicken pricing

Company Description

0

200

400

600

800

1,000

1,200

2012 2013 2014+



Pinnacle Entertainment (PNK) Updated 1/23/12 Kevin Coyne 212-357-9918


IN-LINE/UNDERPERFORM : We believe the senior notes offer better relative value in the PNK structure. We remain concerned about the increasing

concentration of properties in Louisiana and the expectations for new competitors emerging near the company's existing properties in Indiana and Louisiana.

Bond Summary



$450 8.625 Senior 1-Aug-17 B1/BB 104.313 1-Aug-13 107.500 6.11 589 559

$350 8.75 Sr Sub Nts 15-May-20 Caa1/B 104.375 15-May-15 100.75 8.59 720 725


Net Revenue 1,102.4 287.7 299.1 295.9 272.1 1,154.8

EBITDA 226.4 61.4 59.0 68.7 55.1 244.2


Cash Taxes (7.3) (0.4) 1.6 (4.1) 5.0 2.1

CapEx & M&A 182.5 38.3 40.8 127.9 60.9 267.8

Free Cash Flow (51.9) (2.7) (9.0) (79.3) (30.8) (121.7)


Cash 201.4 149.5 148.7 89.7 112.8 112.8 PNK 5.0x 2.8x Caa1/B

Net Debt 975.3 1,027.6 1,038.7 1,110.0 1,137.0 1,137.0 GCCN 2.8x 4.8x B2/BB-

Key Credit Statistics BYD 7.4x 2.0x Caa1/CCC+

Total Debt/EBITDA 5.2x 5.3x 5.2x 5.0x 5.1x 5.1x MGM (sr) 9.2x 1.7x B3/B-



EBITDA/Interest 2.2x 2.3x 2.3x 2.8x 2.8x 2.5x Leverage Sr sec lvg Coverage

EBITDA margin 20.5% 21.4% 19.7% 23.2% 20.3% 21.1% 4Q2011 7.25x 2.75x 1.50x

1Q2012 7.50x 2.75x 1.65x

2Q2012 7.75x 2.75x 1.65x

Capitalization Additional step-ups and step-downs through 2015.

Description 3Q11ADebt to EBITDA Liquidity 3Q11A Enterprise Value

Revolver due Aug 2016 (L+250) 32.0 Revolver Size 410.0 Shares O/S (mm) 62.13

Total senior secured debt 32.0 0.1x Letters of Credit 9.8 Share price 10.81$

8.625% senior notes due Aug 2017 450.0 Borrowings 32.0 Market cap 671.7

Total senior debt 482.0 2.0x Revolver available 368.2 Net debt 1,116.4

7.50% senior sub notes due June 2015 375.0 Enterprise value (EV) 1,788.1

8.75% senior sub notes due May 2020 350.0

Other debt including OID (7.3) EV / LTM EBITDA 7.5x

Total debt 1,199.7 5.0x Restricted cash 6.5

Cash 83.3 LTM EBITDA 239.5


Maturities:

Segment results

Property 1Q11A 2Q11A 3Q11A

Boomtown New Orleans (LA) 36.9 33.4 32.1

Belterra (IL) 36.8 38.5 42.1

L' Auberge du Lac (LA) 88.8 96.1 98.2

Boomtown Bossier City (LA) 23.1 21.2 21.1

Boomtown Reno (NV) 7.6 9.7 0.0

Lumiere Place / River City (MO) 93.5 96.5 98.4

Total revenue 287.7 299.1 295.90

100 200 300 400 500 600 700 800 900

2012 2013 2014 2015 2016+

Pinnacle Entertainment (PNK) owns and operates seven casinos in the United States. The US casinos are located in southeastern Indiana (Belterra Casino Resort); Lake Charles, New Orleans, and Bossier City, Louisiana (L’Auberge du Lac, Boomtown New Orleans, and Boomtown Bossier City); Reno, Nevada (Boomtown Reno); and St. Louis, Missouri (Lumiere Place / River City). In addition, PNK has one new property under construction in Baton Rouge, LA. Significant equityholders include Columbia Wanger (10%), Jennison Associates (9%), Daruma Asset Mgmt (6%), and Vanguard (5%), according to Bloomberg.

Key Dates/Catalysts:- May 2011: PNK to make $95 mn cash investment in Vietnamese casino project in return for a 26% equity stake. PNK will develop and manage the second of five projects at the new "Ho Tram Strip." MGM is developing the first project, which is expected to open in 1Q2013. PNK's site no. 2 will begin after MGM's phase 1 is open.- September 2011: Announces an $82 million expansion project for its River City Casino in St. Louis. The project includes a 200-room hotel tower, a multi-purpose event center with 10,000 square feet, and a covered parking lot with 1,700 spaces. Construction is scheduled to begin in 1Q2012 and expected to be completed in 2H2013.- November 2011: Boomtown Reno and adjoining land sold for up to $22 mn, subject to sale of the gaming license.- 4Q2011: Capex to be $65 mn of which $45 mn is related to Baton Rouge.

Investment Strengths:- Attractive properties with relatively low average age.- Credit agreement includes a cash flow sweep that requires "excess cash flow" to repay debt.- No near-term maturities.- Potential upside to River Downs acquisition with Ohio state government proposed legalization of the installation of slots at racetracks. - According to the Associated Press, the Kentucky governor is asking Congress for a constitutional amendment to legalize casinos.

Investment Risks:- Concentrated in Louisiana market (LTM ending 3Q2011: Louisiana properties generated 51% of revenue and 57% of property EBITDA). - Capacity growth in Louisiana: PNK has one project in the pipeline for LA – a $357 mn riverboat in Baton Rouge, which is expected to open in summer 2012. PNK has invested $109 mn to date in Baton Rouge as of 3Q2011.- Competition from new (and potential) jurisdictions, including significant proposed gaming expansion in Illinois and Ohio.- International risk with the new Vietnam joint venture and potential for future funding into an unrestricted subsidiary. PNK has stated that as more equity is required, it will have the opportunity but not the obligation to contribute.- Increased competition for the L'Auberge property in Lake Charles once Creative Casinos and its partner, MGM Resorts, open a $400 mn resort / casino expected by the end of 2013.

Company Description



Pioneer Natural Resources (PXD) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM

Bond Summary



$450 7.500% Sr. 1/15/2020 Ba1/BBB- $118.74 4.65% 332


Revenue $2,271 $1,616 $1,934 $2,372 $3,090

EBITDA (Adj for non-cash items) $1,067 $739 $1,093 $1,467 $1,931

Free Operating Cash Flow ($419) $80 $89 ($961) $677

Capital Expenditures $1,444 $463 $1,196 $2,365 $1,305





Capitalization


Leverage ('11E)

Coverage ('11E)

Agency Ratings

Cash and equivalents $211 Revolver Size $1,250 PXD 1.9x 8.6x Ba1/BBB-

Revolving Credit Facility $0 Letters of Credit $65 CHK 2.0x 33.6x Ba3/BB+

Long Term Debt Borrowings $0 FST 2.8x 4.0x B1/B

Senior notes 2016-38 $2,571 Revolver Availability $1,185 NFX 1.8x 10.3x Ba2/BB+



Preferred Equity $0



Maturities:

Next Call

NC

Pioneer's most important fields/developments are the Spraberry oil field in West Texas and the Eagle Ford Shale. The company is one of the more controversial "crossover" names in the space. Investors have penalized Pioneer for high organic F&D costs and an inability to effectively replace reserves. However, upside in Spraberry, Eagle Ford, and other plays could reverse this trend. Closest peers are NFX and Noble (NBL).

In September 2004, Pioneer completed the acquisition of Evergreen Resources, which was focused on CBM development in the Raton Basin in S. Colorado, for $1.8 bn in cash and stock. PXD then purchased Occidental Petroleum assets in 2005. During 2005 and 2006, Pioneer sold a number of assets in Canada, Argentina (Apache), and the US Gulf of Mexico (Marubeni) for net proceeds of just over $2 bn. During 2005, PXD also sold almost 28 mmbbls of production forward for an average of $32/bbl through three Volumetric Production Payments with terms through 2013. In June 2010, Pioneer completed a JV in the Eagle Ford Shale with Reliance Industries for $1.15 bn. In February 2011, Pioneer completed the sale of its Tunisia subsidiary to OMV for $866 mn.

Investment Strengths:• De-risked asset base with focus on long-lived domestic assets with predictable geology• Approximately 68% of 2012E production hedged• Balanced oil/gas exposure• Eagle Ford Shale exposure

Investment Risks:• Historically shareholder-friendly management, weighing on ratings• High organic finding and development costs• Streamlined portfolio could have more-limited growth prospects• High leverage, including substantial off-balance-sheet liabilities (VPPs that roll off through 2012)

Key Dates/Catalysts:• Activist shareholder Southeastern Asset Management has proposed a number of shareholder-friendly initiatives• Eagle Ford progress• Update on test wells of additional Permian zones• Additional non-core asset sales• Additional vertical integration

Company Description

0

100

200

300

400

500

600

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Plains Exploration (PXP) Updated: 1/26/12 Jason Gilbert (212) 902-3585


IN-LINE

Bond Summary



$400 7.625% Sr. 6/1/2018 B1/BB $103.81 6/1/2013 $107.60 4.49% 428


Revenue $2,418 $1,419 $1,519 $1,872 $2,261

EBITDA (Adj for non-cash items) $1,635 $841 $922 $1,211 $1,531

Free Operating Cash Flow $210 ($1,144) ($152) ($496) ($533)


CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E PXP 4.0x 7.0x B1/BB

Total Debt/EBITDA (LTM) 1.7x 3.1x 3.6x 4.0x 3.1x FST 2.8x 4.0x B1/B

EBITDA/Interest Expense (LTM) 14.2x 11.4x 8.6x 7.0x 6.3x DNR 1.9x 7.9x B1/BB-

Debt to Capitalization % 54% 45% 50% 57% 54% WLL 1.2x 22.0x Ba3/BB+

Capitalization





Senior notes 2012-21 $3,329 Revolver Availability $944


Total Debt $3,784 3.2x Total Liquidity $955

Preferred Equity $0



Maturities:

Next Call

PXP has traditionally been a California heavy oil producer, but over the last several years it has diversified throughout the US via three acquisitions for around $8 bn: most importantly a private company, Pogo, and a 20% stake in CHK's Haynesville acreage. The company's strategy has been to fund operations using cash flow from CA to grow its exposure in unconventional plays. The company's core areas include California, Gulf of Mexico, Gulf Coast, Panhandle, Permian Basin, and Rockies.

In 2002, PXP was spun out from Plains Resources (pipeline assets became Plains All-American MLP), with Jim Flores as CEO. Assets included positions in CA, IL, and S. LA/US GOM. Historically, Plains has been acquisitive (in addition to the three recent acquisitions, PXP bought 3TEC for $400 mn in 2003; Nuevo for $964 mn in 2004; and California assets for $117 mn in 2005). Other events over the last several years have included the unwinding of underwater hedges (>$1 bn), sales of properties to help fund hedge restructuring, and an unsuccessful attempt to buy Stone Energy. PXP has been active in partnering with other companies and currently works with MMR/EXXI on Blackbeard West, CHK in the Haynesville, and Shell in the deepwater GOM. To deleverage its balance sheet, PXP announced a divestiture of Piceance and Permian assets for $1.25 bn to Occidental Petroleum (OXY) in Sept 2008. In August 2009, PXP amended its Haynesville JV agreement with Chesapeake, agreeing to accelerate the payment of its remaining joint venture drilling carries in exchange for a 12% reduction in the total amount of drilling carry obligations to CHK. In September 2010, PXP announced the divestiture of its shallow water GOM assets to McMoRan for $818 mn. In November 2010, the company acquired 60,000 net acres in the Eagle Ford shale for $578 mn. In late 2010, PXP announced its intention to divest its deepwater GOM assets by 1Q2011. However, in May 2011, the company announced that it would put the deepwater assets into a self-financing, separate entity.

Investment Strengths:• Balanced portfolio of long-lived onshore, and unconventional shale• Strong hedge position, with 70% of 2012E production protected• Significant exploration upside• An experienced management team with an established track record

Investment Risks:• Acquisitive management• High operating costs due to emphasis on mature oil production• Challenging California operating environment

Key Dates/Catalysts:• Results from the Mowry shale• Lucius updates

Company Description

0

200

400

600

800

1000

1200

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Plastipak Holdings, Inc. (PLASPK) Updated 1/23/12 Joe Stivaletti (212) 902-3299


OUTPERFORM

Bond Summary



$250 8.500 Sr Nts 15-Dec-15 B3/B 102.833 Current 102.500 7.054 683


FY:09 FY:10 3Q:10 2Q:11 3Q:11

Net sales 1,778.7 1,941.8 517.7 572.8 619.1

EBITDA 210.5 213.7 51.6 69.6 49.8



Total debt 710.0 731.6 747.0 756.2 742.2

Cash 61.5 30.5 15.8 10.7 22.1

Net debt 648.5 701.1 731.2 745.5 720.1


Total debt/EBITDA 3.4x 3.4x 3.4x 3.4x 3.3x Comps Leverage Coverage Ratings

Net debt/EBITDA 3.1x 3.3x 3.3x 3.3x 3.2x Berry Plastics 6.4x 2.1x Caa1/CCC


EBITDA/interest 3.8x 3.3x 3.3x 4.0x 2.9x Crown Holdings 2.9x 4.9x Ba3/BB

EBITDA margin 11.8% 11.0% 10.0% 12.2% 8.0%



Revolving credit facility 25.2 1.0x Revolver size 375.0

Real estate mortgage loans 100.3 1.0x Letters of credit 26.5

Notes payable to banks 16.9 1.0x Borrowings 25.2

Secured notes payable 60.2 1.0x Revolver availability 323.3

Capital leases 26.3 1.0x

Other notes payable 37.7 3.3x


10.625% senior notes 225.6 3.3x Cash 22.1

Total debt 742.2 Total liquidity 345.4

Maturities:

Next Call

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015+

Plastipak manufactures rigid blow-molded plastic containers, serving various end-market segments and many of the world's largest consumer products companies. In North America, the company is the exclusive supplier of plastic containers to Procter & Gamble for heavy-duty, liquid laundry detergents and is also a large supplier of plastic containers for salad dressings, barbeque sauces, and grated cheeses. Plastipak participates in four key product categories: carbonated and non-carbonated beverages, consumer cleaning, food and processed juices, and industrial, automotive, and agricultural. The company serves over 450 customers and operates 27 plants in the US, Brazil, and Europe.

Investment Strengths:- Long-term relationships with major consumer products companies: Relationships with top 10 customers (including PepsiCo., P&G, and Dr. Pepper Snapple Group) average over 15 years.- Competitive manufacturing facilities and processes: 27 plants, mostly located near the filling sites of key customers and complemented by the company's Whiteline common carrier subsidiary, which serves a significant portion of Plastipak's transportation needs.- Good cost pass-through arrangements: Customer agreements typically permit pass-through of higher resin costs in the form of higher selling prices.

Investment Risks:- Heavy sales concentration with key customers: Top 10 customers accounted for approximately 63.7% of sales in 2010, with the company's largest customer, P&G, accounting for 18.7%.- Appetite for acquisitions: Plastipak is growth-oriented and may make additional leveraging acquisitions.

Company Description



PolyOne (POL) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 360 7.375 Sr. Unsec. 15-Sep-20 Ba3/B+ 103.69 9/15/2015 106.5 6.17% 456


Revenue 2,061 2,622 2,887 618 736 664

EBITDA + Distributions 135 225 235 50 57 43

Cash Interest (34) (32) (36) (8) (8) (11)

Cash Taxes 19 (18) (59) (5) (13) (6)


Free Cash Flow 177 111 3 45 12 24

Total Debt w/ Sunbelt Guarantee 458 496 710 496 433 710

Cash Equivalents 223 378 201 378 410 201 Comps Leverage CoverageAgency Ratings

Net Debt 236 118 509 118 23 509 PolyOne 1.9x 5.4x Ba3/B

Key Credit Statistics Olin 1.9x 10.2x Ba1/BB

PF Total Debt/EBITDA 4.7x 2.5x 2.6x 2.5x 1.9x 2.6x

PF Net Debt/EBITDA 2.4x 0.6x 0.7x 0.6x 0.1x 0.7x

PF EBITDA / Interest 2.9x 6.2x 5.4x 6.4x 6.7x 5.4x

PF LTM EBITDA Margin 7% 7% 9% 8% 8% 9%

Liquidity

Description SizeDebt to EBITDA A/R facility Size 300

NEW A/R Facility - Eligible A/R amount 176

NEW Term Loan 300 A/R Facility Drawn -

Senior Secured 50 Letters of Credit -

Total Senior Secured Debt 350 1.3x A/R availability 176

Stub 2012s -

Senior Unsecured 360

Other - Cash 177

Total Debt 710 2.7x Liquidity 353

Share Price 14.2



Maturities:

Next Call


PolyOne is a leading producer of PVC compounds, specialty PVC resins, polymer formulations, and color additives. The company is also a distributor of thermoplastics and has a 50% stake in SunBelt, a chlor-alkali producer, which distributes cash to PolyOne on a quarterly basis. In 2007, the company divested its 24% stake in OxyVinyls LP, a PVC and chlor-alkali manufacturer, and in 2010 it sold its 50% interest in the SunBelt joint venture. In October 2011, PolyOne announced its plan to acquire ColorMatrix for $486 million, which would equate to an 11.1x multiple. The deal was funded with cash on hand, as well as $300 million of new debt.

Key Dates/Catalysts:4Q2011 earnings release

Investment Strengths:- Leading market positions in Vinyl Compounds, Polymer Coating Systems, and Color and Additives (No. 1 in each in North America).- Focused on moving toward more specialty and defensive end markets, such as healthcare.- Diversified by business, by geography, by end market, and by customer.- Consistent free cash flow generation.

Investment Risks:- PolyOne's end markets may recover more slowly than we expect.- The company may be unable to fully pass through increases in raw material costs to customers, resulting in margin compression. - ColorMatrix acquisition resulted in a substantial increase in leverage.

0

10

20

30

40

50

60

2011 2012 2015

Company Description



PulteGroup Inc. (PHM) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 400 6.375 Sr. Nts 15-May-33 B1/BB- 72.50 9.38% 710


Total Revenues 4,084 4,569 3,989 1,185 1,142 1,115

Total Adjusted EBITDA (61) 204 230 64 117 89


Cash Taxes 360 945 56 57 2 50 Comps Cap to-Debt Ratings

Capital Expenditures (39) (15) (19) (4) (4) (4) Pulte 63% 1.5x B1/BB-

Free Cash Flow 702 739 (131) (212) 58 70 Lennar 55% 1.2x B3/B+


Total Cash and Cash Equivalents 1,891 1,495 1,326 1,495 1,256 1,326




Inventories / Homebuilding Debt (2) 1.2x 1.4x NA 1.4x 1.5x NA




4.550% Sr. Unsecured Notes - Cash 1,143

7.875% Sr. Unsecured Notes - Restricted Cash 113

8.125% Sr. Unsecured Notes - Total Liquidity 1,256

7.875% Sr. Unsecured Notes -

7.500% Sr. Unsecured Notes -

5.450% Sr. Unsecured Notes 97

6.250% Sr. Unsecured Notes 63 Maturities:












Total Balance Sheet Debt 3,335

Joint Venture Recourse Debt & Guarantees 1


Share Price 7.5



Next Call

MW

0

100

200

300

400

500

600

700

2012 2013 2014 2015

PulteGroup Inc. is the fourth-largest builder in the United States based on market cap and the second-largest builder based on LTM closings. Through its various brands, including Pulte Homes, Del Webb, Centex, and DiVosta, the company offers single-family detached homes, townhouses, condominiums, and duplexes at different price points. Pulte serves nearly all major customer segments − first-time, move-up, and active adult. The company is one of the most geographically diversified homebuilders, with operations spanning 28 states and 60 markets.


Investment Strengths:- Strong business diversity.- Lean cost structure.- Long lot position should enable the company to outperform in the future.- Strong presence in active adult market positions the company for future growth.

Investment Risks:- Legacy land positions have dampened gross margins.- Near-term operating performance is likely to lag that of certain peers.

Company Description



PVH Corp. (PVH) Kevin Coyne 212-357-9918


NOT COVERED

Bond Summary



$100 7.75% Sr Secured 15-Nov-23 Ba1/BBB NC NC 110.000 6.519 457 446

$600 7.375% Sr Notes 15-May-20 Ba3/BB+ $103.688 15-May-15 111.000 4.767 446 413

Financial Profile 3QFY10 4QFY10 FY10 1QFY11 2QFY11 3QFY11

Revenue 1,516 1,398 4,637 1,369 1,334 1,654

Adjusted EBITDA 249 161 658 200 183 259


Cash Taxes 56 (18) 23 30 35 53

CapEx 26 46 101 34 39 44

Free Cash Flow 125 95 408 103 77 130

Total Debt 2,524 2,369 2,369 2,267 2,155 2,104 Agency


Net Debt 2,032 1,870 1,870 1,972 1,867 1,944 PVH 7.375s 2.6x 8.2x Ba3/BB+

Key Credit Statistics HBI 6.375s 3.9x 4.6x B1/BB-

Total Debt/EBITDA 4.4x 3.6x 3.6x 3.0x 2.7x 2.6x ZQK 6.875s 3.7x 2.7x Caa1/CCC+



EBITDA margin 16% 12% 14% 15% 14% 16%

Note: Fiscal year ending on the Sunday closest to February 1.

Capitalization Enterprise value

Description 3QFY11 Lvg Liquidity 3QFY11 Source

Senior secured revolver due 2016 0 Revolver Size 460 Shares O/S (mm) 67.61

Senior secured Term Loan A due 2016 742 Letters of Credit 102 Stock price 77.60$

Senior secured Term Loan B due 2016 650 Borrowings 0 Market cap 5,246

7.75% Senior secured notes due 2023 100 Revolver Availability 358 Preferred stock 189

Total Secured 1,492 1.9x Net debt 1,944

7.375% senior notes due 2020 600 Enterprise value 7,379

Other 13 Cash 160

Total Unsecured 2,104 2.6x

Total Liquidity 518 EV / LTM EBITDA 9.2x

Maturities:

Next Call

Updated 01/23/12

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016+

Phillips-Van Heusen is one of the largest apparel companies in the world, with a wide variety of brands including Calvin Klein, Van Heusen, Tommy Hilfiger, IZOD, ARROW, and Bass. The company also maintains a portfolio of licensed brands, including Geoffrey Beene, Kenneth Cole New York, Kenneth Cole Reaction, Sean John, JOE Joseph Abboud, MICHAEL Michael Kors, Michael Kors Collection, CHAPS, DKNY, Elie Tahari, Nautica, Ted Baker, Ike Behar, Claiborne, J. Garcia, Robert Graham, U.S. POLO ASSN., Jones New York, Axcess, and Timberland. PVH operates in three segments: Calvin Klein (Calvin Klein Licensing, Calvin Klein Apparel, Calvin Klein dress furnishings), Tommy Hilfiger (Tommy Hilfiger North America and Tommy Hilfiger International), and Heritage Brands (Heritage Brand Wholesale Dress Furnishings, Heritage Brand Wholesale Sportswear, Heritage Brand Retail). Approximately 350 different manufacturers produced its apparel products in 500 factories in over 30 countries worldwide in FY2010, and it sells its products through over 16,000 doors in the US through department, mass market, specialty, and independent stores.

Key Dates/Catalysts:- May 2010: Completed the $3 billion acquisition of Tommy Hilfiger. - FY2011 guidance: Adjusted EPS of $5.28-$5.30 (vs $5.23-$5.25). 4QFY11 comp sales expected to be +15% in the Calvin Klein business, +12% in the Tommy Hilfiger North America business, +12% in the Tommy Hilfiger International business, and +4% in the Heritage Brands business.- FY2012 guidance: Adjusted EPS of $5.90-$6.00, including a $0.25 negative impact from a weaker euro, an increase in pension expense of $0.15, and a decrease in interest expense of $0.10. Earnings growth is expected entirely in 2HFY12 given input cost inflation and larger currency impacts through 1HFY12.

Company Strengths:- Calvin Klein and Tommy Hilfiger have strong global brand awareness. Over the last seven years, CK sales have growth at a CAGR of more than 13%. Since 2005, TH has grown at a CAGR of over 13%. Management expects both brands to grow sales at 8-10% in the long term.- Customer diversity improved following the Tommy Hilfiger acquisitions: top five customers decreased to 23% of FY2010 revenues versus 31% in FY2009 and 32% in FY2008.- Leading market share in dress shirts, neckwear, and sportswear tops.-Focus on de-leveraging. PVH has paid down $538 million in the past 18 months and expects to repay another $165 million during 4QFY11and $300 million in 2012. The company maintains a leverage target of 2.0-2.5x, which it expects to reach by year-end 2011 or into 2012.- Strong management team.- Will look to grow its product categories and brands opportunistically. Management has stated it is not looking to fix brands, and would like a business with global reach to leverage the platform it has built for CK and TH. Any transaction it pursues must be accretive within the first six months.

Company Risks:- Apparel industry is highly competitive.- Economically sensitive industry; sales could be hurt in a sluggish economic environment.- Relies on business partners to preserve the value of the Calvin Klein brand (such as The Warnaco Group and Coty).- Non-exclusive agreement with Li & Fung Trading Limited whereby PVH is required to use Li & Fung for at least 54% of its sourced products.

Company Description



Quicksilver Resources (KWK) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM/IN-LINE

Bond Summary



$298 9.125% Sr. 8/15/2019 B2/B $104.56 8/15/2014 $98.19 9.47% 870


Revenue $801 $832 $930 $895 $821


Free Operating Cash Flow ($830) ($82) ($297) ($422) $40

Capital Expenditures $1,287 $694 $695 $701 $375


('11E)Coverage


Total Debt/EBITDA (LTM) 4.5x 4.3x 3.2x 4.6x 4.6x KWK 4.6x 2.3x B2/B

EBITDA/Interest Expense (LTM) 5.7x 2.9x 3.1x 2.3x 2.3x CHK 2.0x 33.6x Ba3/BB+


Debt + Preferred per Proved Boe $7.10 $6.03 $3.91 $3.36 $2.73 PXD 1.9x 8.6x Ba1/BBB-


Capitalization





Senior sub notes and other $1,826 Revolver Availability $744



Preferred Equity $0



Maturities:

Next Call

Quicksilver Resources is focused on unconventional natural gas resources (82% of production, 76% of reserves) with assets in the Barnett Shale, Rocky Mountains, and Canada (Horseshoe Canyon CBM). The Barnett Shale, where the company sees a 10-year inventory of drilling locations, is the clear growth engine, along with the Horn River. While the company has made acquisitions in the past, management is primarily focused on drill bit growth in onshore, unconventional plays. KWK has historically not been afraid to be a first mover in new plays.

Mercury Exploration, KWK's predecessor, was started in 1963 by Frank Darden. Quicksilver Resources was founded in 1997 and became a public company through a merger with MSR Exploration in 1999. The original focus plays were located in OK, NM, and W TX. In 1991, KWK began operations in N. Michigan to develop Antrim Shale gas. The company bolstered its MI presence through the 2000 acquisition of Terra Energy Ltd and other Michigan assets from CMS Energy Corp, and the 2002 purchase of Enogex Exploration from OGE Energy for $32 mn. Then, in September 2007, the company sold its MI assets to BreitBurn Energy Partners (where KWK retains 40% ownership) for $1.5 bn to focus on the Barnett Shale and Canada. In August 2008, KWK acquired Barnett Shale acreage (13k acres; 350 bcfe reserves) from a variety of private parties for $1.3 bn in cash and stock. In July 2010, KWK sold its interest in Quicksilver Gas Services for $1 bn. The Darden family continues to control around 3% of the company. In October 2010, an investor group, including the Darden family, sent a letter to the company requesting a review of strategic alternatives, including a possible take-private transaction. However, in March 2010 the Darden Family announced it would not pursue a take-private transaction. In 4Q11Quicksilver secured a JV on its Horn River midstream assets and the company is currently pursuing JVs in several other plays to help fund its cash flow gap. In November 2011, the company announced its intention to form an MLP with its Barnett assets.

Investment Strengths:• Debt repayment remains a priority• Industry-leading all-in cost structure and long reserve life; 10-year drilling inventory in the Barnett• Extremely strong reserve replacement track record• Strong leverage to the prolific Barnett Shale unconventional gas play• Growth potential in emerging Horn River Basin

Investment Risks:• High leverage levels• Significant capital spending requirements ne• Limited geographic diversity; 80%+ of reserves in the Barnett Shale• High natural gas exposure

Key Dates/Catalysts:• Following the Darden family's decision not to take the company private, management indicated it might pursue asset sales to help shore up the balance sheet• Drilling results from Horn River (Canada) and Greater Green River Basin (Colorado) plays• Potential JVs• Progress in new oil plays (Exshaw, Southern Alberta, Sandwash Basin, Bone Springs)• IPO of Barnett MLP

Company Description

0

100

200

300

400

500

600

700

800

900

1000

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

De

bt m

atu

ritie

s ($

mn

)



Quiksilver, Inc. (ZQK) Updated 1/23/2012 Kevin Coyne 212-357-9918


IN-LINE: Management is doing a nice job of growing the business and taking market share. However, we believe macro pressures will pick up in 2012, and execution risk is increasing

with the 2012 launch of a cold weather apparel line in the US. We believe the bonds are reasonably priced versus its peers considering ZQK's niche focus on surfer and skate apparel.

Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) (bp) (bp)

$400 6.875% Sr 15-Apr-15 Caa1/CCC+ $102.292 Current 94.500 8.877 857 826

Financial Profile 2QFY11A 3QFY11A 4QFY11A FY11A 1QFY12E FY12E

Revenue 478 503 545 1,953 437 2,033

EBITDA 62 53 57 200 21 206


Cash Taxes 12 3 4 21 (6) 41

CapEx 16 13 34 81 16 76

Free Cash Flow 19 22 5 25 (4) 27

Total Debt 733 747 748 748 746 745

Cash 139 126 110 110 234 121

Net Debt 594 621 638 638 512 623



Net Debt/EBITDA 2.9x 3.1x 3.2x 3.2x 2.7x 3.0x LTM Comps Leverage Coverage Ratings

ZQK 6.875s 3.7x 2.7x Caa1/CCC+

EBITDA/Interest 1.8x 1.8x 2.7x 2.7x 3.2x 3.4x HBI 6.375s 3.9x 4.6x B1/BB-

EBITDA margin 13.0% 10.5% 10.5% 10.3% 4.9% 10.1% JAH 7.5s 4.1x 4.2x B2/B

Note: Fiscal year ends October 31. LEVI 7.625s 4.2x 3.7x B2/B+

Capitalization

Description 4QFY11A Lvg Liquidity 4QFY11A Enterprise Value

European ST credit arrangements 2 Total credit facilities 385 Shares o/s (mm) 165

Asia/Pacific AUD$30 mn ST lines of credit 18 Letters of Credit 73 Stock price $4.41

$150 mn Americas ABL facility due Aug 2014 21 Borrowings 42 Market cap 729

$20 mn Americas TL due Aug 2014 19 Credit facility availability 184 Net debt 638

Total senior secured debt 60 0.3x Minority interest 12

6.875% sr notes due April 2015 400 Enterprise value (EV) 1,379

8.875% sr notes due Dec 2017, €200 mn 283 Cash 110

Capital lease obligations & other 5

Total debt 748 3.7x Total Liquidity 293

EV/LTM EBITDA 6.9x

EV/FY11E EBITDA 6.9x

Maturities:

Next Call

0

50

100

150

200

250

300

350

400

450

2012 2013 2014 2015 2016 2017+

Quiksilver, Inc. (ZQK) designs, develops, and distributes apparel, footwear, and accessories in over 90 countries under its three core brands: Quiksilver, Roxy, and DC. In FY2011, Quiksilver contributed 41% of revenues, Roxy generated 27%, and DC generated 28%. ZQK began operations in California in 1976 producing boardshorts for surfers under a license agreement with Quiksilver brand founders in Australia. ZQK went public in 1986, introduced its Roxy brand for teenage girls in 1991, and acquired DC in 2004. ZQK's products are sold primarily in surf, skateboard, snowboard shops, and specialty stores. ZQK's largest equity holders include Rhone Capital (19%), Triton (14%), Janus Capital Mgt (8%).

Key Dates/Catalysts:- FY2012 guidance: Expects yoy growth across its brands and regions, and despite continued margin pressure from (1) elevated input costs through 2QFY12 and (2) higher cost purchases in Europe for FY2012 from a weaker euro, ZQK expects yoy EBITDA growth.

Investment Strengths:- Niche player with a focus on the action sports of surfing, skateboarding, and snowboarding.- Controls and builds brand awareness through close relationships with independent specialty active sport stores and chains and through top athlete sponsorship.- Diversified with presence in European and Asia Pacific regions, which combined account for 53% of FY2011 revenue stream and 59% of gross profit.- Adequate liquidity and minimal near-term maturities. Completed a debt-for-equity exchange with Rhone Capital in August 2010 for $140 million of term loans due in 2014.- Net leverage target of 2.0x, and aims to increase revenues to $2.5-3.0 billion over the next five years with at least $350 million of annual EBITDA, or an improvement in margins of 200-300 bp.

Investment Risks:-Largely discretionary apparel items at higher price points that may be vulnerable to a weak consumer.- Exposure to the European consumer: ZQK derived 39% of LTM revenues and 44% of gross profits from Europe as of 4QFY11. If the European consumer were to be pressured by potential austerity measures, we think sales could decline meaningfully.- Rising input costs: Reported a 160 bp yoy decline in gross margins for both 3QFY11 and 4QFY11, largely reflecting a 250 bp and 100 bp yoy decline in margins in its Americas segment in 3QFY11 and 4QFY11, respectively.- High fashion risk: Its target casual youth lifestyle can switch tastes relatively quickly, and recent relative public comps are signaling a return to classic trends over the surf/skate trends favored by ZQK.- Increased competition in industry from specialty store brands as well as mass retailers striking exclusive arrangements with other surf brands (Ocean Pacific in Wal-Mart). Nike has begun targeting action sports customers with "Salvation Stores" that include Converse and Hurley. - The Asia/Pacific region has been underperforming due to recessionary pressures in Australia and a strong Australian dollar, reducing the number of tourists to the region.

Company Description



R.R. Donnelley (RRD) Updated 1/20/2012 Scott Wipperman 212-357-9922


UNDERPERFORM

Bond Summary

Size Coupon Agency YTW UST Z Spread 5 Yr

Ticker (MM) (%) Maturity Ratings Bid Price (%) Spread (bp) CDS

RRD $400 7.625% 06/15/20 Ba1/BB+ 89.00 9.561 762 791 9 1/2 - 111/2

Financial Profile FY08 FY09 FY10A FY11E FY12E

Revenue 11,582 9,857 10,019 10,611 10,579

Normalized EBITDA 1,785 1,306 1,253 1,265 1,294


Operating Cash Flow 1,016 1,421 744 922 722

CapEx (323) (195) (225) (254) (225)

Dividends (219) (214) (214) (204) (185)

Free Cash Flow 474 1,013 304 464 312

Total Debt 4,127 3,322 3,530 3,689 3,930

Cash 324 499 519 436 489 CompsGross


Net Debt 3,803 2,823 3,011 3,253 3,441 GCI 1.8x 6.4x Ba1/BB

NYT 2.2x 3.7x B1/B+



Net Debt/EBITDA 2.1x 2.2x 2.4x 2.6x 2.7x


EBITDA margin 15.4% 13.2% 12.5% 11.9% 12.2%

Capitalization


Credit Facility Borrowings 345 Revolver Size 1,750 Matures December 17, 2013

5.625% sr notes 1/15/12 159 Letter of Credit 37

4.95% sr notes 4/1/14 600 Covenant reduction 434

5.5% sr notes 5/15/15 400 Borrowings 345

8.60% sr notes 8/15/16 350 Revolver Availability 934

6.125% sr notes 1/15/17 525 Cash 368

7.25% sr notes due 5/15/18 600 Total Liquidity 1,302

11.25% sr notes 2/1/2019 172

7.625% sr notes 6/15/2020 400 Credit agreement maintenance

8.875% sr notes 4/15/21 81 covenants:

6.625% sr notes 4/15/29 200 Interest Cov (as defined) 3.0x

8.82% sr notes 4/15/31 69 Lev Cov (as defined) 4.0x

Other 46


Market Cap 2,922


Maturities:

Description

Our Underperform reflects our view the challenging operating environment should continue to weigh on company fundamentals. In addition, we believe RRD will need to issue debt and / or draw on its revolver to supplement its liquidity position, both of which could be negative for spreads. Finally, our U reflects event risk tied to M&A and share buyback activities.

R.R. Donnelley is the world's largest provider of print (including digital) and related services, with operations in North America, Europe, Latin America, and Asia. The company leverages its scale and diverse product offering to maintain market share. In addition to commercial printing, RRD offers solutions in direct mail, financial printing, forms and labels, logistics, print management, online services, and content and database management. The company also has an International segment, with printing operations in Asia, Europe, Latin America, and Canada. That segment produces around 25% of revenue. RRD has over 60,000 customers and serves more than 90% of Fortune 500 companies, capturing 15% of their print spend. The company has historically grown through a series of acquisitions in recent years. RRD recently completed the acquisition of Bowne & Co. for $481 million in November 2010. Bowne is a provider of business services that helps companies manage shareholder, investor, and marketing communications.

Key Dates/Catalysts:- 4Q11 earnings on February 22, 2012, where we expect the company to provide full year guidance. - RRD could look to tap bond market to term out revolver borrowings. - Moody's and S&P both have negative outlooks.

Investment Strengths:- RRD is the largest commercial printer in North America, which allows it to leverage its scale and pass along cost savings to customers. - RRD is operating from a position of financial strength relative to most peers.- The company continues to generate $500 million to $600 million of free cash flow before dividends despite the difficult operating environment. - Organic growth opportunity to cross sell products to large exisiting client base.

Investment Risks:- Share buyback program and new leverage target of 2.5x to 3.0x demonstrates more-aggressive financial policy. - Close to 90% of its cash is overseas, which hampers liquidity and financial flexibility. - Negative outlooks by both Moody's and S&P could lead to further downgrades. - Underfunded pension will require increased funding. - Commercial printing market is highly competitive, fragmented, and secularly challenged, and suffers from a supply/demand imbalance.- Pricing for services is expected to continue to decline on an annual basis. - M&A strategy creates event risk.- Company does not have full access to its credit facility because of leverage covenant restraint. - The US Postal Service is under financial strain and may discontinue Saturday delivery or raise postage rates, which could reduce demand for RRD's services.

Company Description

0

100

200

300

400

500

600

700

2012 2013 2014 2015



RadioShack Corp. (RSH) Updated 1/25/2012 Gregory Chwatko 212-902-0673

Contact analyst for updates and other information. Annalee Bloomfield 212-902-8028

NOT COVERED

Credit Summary



RSH $325 6.75 15-May-19 Ba3/BB-/B+ $85 777 822 739/798

Financial Profile FY09 FY10 3Q11

Revenue 4,276 4,473 1,032

EBITDA 454 464 32

Operating Income 362 372 11

Interest Expense (net) 41 42 13

Operating Cash Flow 246 155 162

CapEx (81) (80) (21)

Dividends (31) (27) 0

Free Cash Flow 134 49 140

Total Debt 669 640 666 CompsAdjusted Leverage Coverage Agency Ratings

Cash 908 569 668

Net Debt (Cash) (239) 70 (1) JCP 3.3x 5.8x Ba1/BB+/BBB-

Key Credit Statistics LTD 3.5x 8.3x Ba2/BB+/BB+

Total Debt/EBITDA 1.5x 1.4x 2.1x M 2.4x 7.5x Baa3/BBB-/BBB-

Adjusted Debt/EBITDAR 4.0x 4.5x 4.5x

Net Debt/EBITDA -0.5x 0.2x 0.0x


EBITDA margin 10.6% 10.4% 3.1%

Capitalization


Revolver Size 450

Short term debt 0 Letters of Credit 29

2.5% convertible notes due 2013 337 Borrowings 0

6.75% notes due in 2019 325 Revolver Availability 421

Total Debt 662 2.1x

Cash 668


Market Cap 1,016


Maturities:

Description

RadioShack Corporation is engaged in the retail sale of consumer electronics goods and services through its RadioShack store chain and non-RadioShack-branded kiosk operations. The company's strategy is to provide cost-effective solutions to meet the routine electronics needs and distinct electronics wants of its customers. As of December 31, 2010, RadioShack had 4,486 company-operated stores under the RadioShack brand located throughout the United States as well as in Puerto Rico and the US Virgin Islands. There are approximately 211 company-operated stores in Mexico.

Key Dates/Catalysts:Earnings announcementsLimited amount of debt/high liquidityAdditional capital structure announcements

Company Strengths:- The company benefits from its convenient locations in major shopping malls and strip centers as well as individual storefronts.- The liquidity profile remains healthy, with only the 2013 convertible notes and 2019 notes outstanding.- Solid performance of its wireless service business.

Company Risks:- The company's performance is tied to the macro environment and consumer spending trends.- Small store size limits product selection and variety.- Competition remains very aggressive, and the unfavorable pricing environment persists.- Event risk candidate owing to management's past interest in taking the company private.

Company Description

$0

$50

$100

$150

$200

$250

$300

$350

$400

2012 2013 2014 2015 2016+



Range Resources (RRC) Updated: 1/26/12 Jason Gilbert (212) 902-3585


IN-LINE

Bond Summary



$250 7.250% Sr. Sub. 5/1/2018 Ba3/BB $103.63 5/1/2013 $107.24 4.10% 389


Revenue $1,283 $1,018 $947 $1,085 $1,278


Free Operating Cash Flow ($93) $17 ($319) ($856) ($296)

Capital Expenditures $918 $574 $832 $1,476 $1,000

CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E RRC 3.0x 6.1x Ba3/BB

Total Debt/EBITDA (LTM) 1.9x 2.6x 3.5x 3.0x 2.7x SWN 0.7x 26.4x Ba1/BBB-



Capitalization





Senior sub notes 2013-21 $1,788 Revolver Availability $1,478



Preferred Equity $0



Maturities:

Next Call

Forth Worth, TX, based Range Resources is – along with CHK, HK, and SWN – one of the four major shale gas E&Ps. The company is focused on two core areas: (1) the Marcellus shale in Pennsylvania and (2) the Nora CBM in Appalachia. Management has refocused the company on gas resource plays by actively selling conventional properties to fund capital spending. With its key Marcellus Shale play still in early development, Range has a multi-year backlog of potential development activity.

Range began in 1980 as Lomak Petroleum and was initially listed on the NASDAQ and transferred to the NYSE in 1996. In 1998, the company was renamed Range Resources. Since then RRC has pursued a strategy of organic growth coupled with acquisitions on a cost-efficient basis. Range has completed over $1.3 billion of acquisitions focused in the Southwestern and Appalachian regions of the US since 2004. Finding and development cost performance has been strong with a five-year average of $2.13/mcfe. The company has a drilling inventory of over 11,000 identified locations, or around 15 years based on its current pace of drilling. Range was added to the S&P 500 Index in December 2007. In July 2009, RRC closed the sale of its West Texas Furhman Mascho properties for $182 mn. In March 2010, Range closed the sale of its Ohio properties for $300 mn. In February 2011, Range announced the sale of its Barnett shale properties to a private company for $900 mn.

Investment Strengths:• Industry-leading all-in cost structure and reserve replacement• Top-tier acreage position in the Marcellus Shale• 40% of 2012E production hedged• 24-year reserve life is near the high end of our coverage• Much of RRC’s Marcellus gas has high liquids content• RRC plans to use non-core asset sales to fund growth in Marcellus

Investment Risks:• Management has historically outspent cash flow• Production growth in the Appalachia region could be limited by the pace of infrastructure development• High natural gas exposure and tight valuation• High leverage per PDP boe

Key Dates/Catalysts:• Drilling results from the Upper Devonian, Utica, and Mississippian• Potential for fracking legislation• Ethane agreements in the Marcellus• Additional non-core asset sales

Company Description

0

100

200

300

400

500

600

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Reynolds Group Holdings Limited Updated 1/23/2012 Joe Stivaletti 212-902-3299



Bond Summary



$1,500 7.125 Sr Sec Nts 15-Apr-19 Ba3/BB- 103.563 15-Oct-14 103.500 6.254 540

$1,500 9.000 Sr Nts 15-Apr-19 Caa1/B- 104.500 15-Oct-14 97.000 9.580 804

more than 100 production units located in North America and Europe.

Financial Profile 12/31/2010 12/31/2011 12/31/2012 9/30/2010 6/30/2011 9/30/2011

FY:10 FY:11E FY:12E 3Q:10 2Q:11 3Q:11

Revenue 6,774 11,984 14,552 1,612 2,843 3,069

EBITDA 1,251 2,166 2,719 310 476 563

Interest expense 496 1,002 1,320 124 206 243

Capital expenditures 337 547 700 78 116 125

Total debt 12,143 17,605 17,355 6,119 12,840 18,079

Cash 652 538 500 451 584 1,037

Net debt 11,491 17,068 16,855 5,668 12,256 17,042


Total debt/EBITDA 6.7x 6.8x 6.7x 5.3x 6.7x 7.2x Agency

Net debt/EBITDA 6.3x 6.6x 6.2x 4.9x 6.4x 6.8x Comps Leverage Coverage Ratings

EBITDA/interest 2.5x 2.2x 2.1x 2.5x 2.3x 2.3x Berry 6.4x 2.1x Caa1/CCC

EBITDA margin 18.5% 18.1% 18.7% 19.2% 16.7% 18.4% Solo 6.3x 1.5x B2/B

Exopack 5.5x 2.3x Caa1/CCC+

Plastipak 3.2x 3.2x B3/B


Pro Forma Debt to Pro Forma

Description Size EBITDA Liquidity 9/30/2011

Senior secured term loans 4,650 Revolver size 228

Senior secured notes 5,734 Letters of credit 107

Other secured debt 53 Borrowings -

Total secured debt 10,437 4.2x Revolver availability 121

Senior guaranteed notes 5,183

Other unsecured debt 1,988 Cash 555

Total debt 17,608 7.0x Total liquidity 676

Note: Pro forma for change of control put. Note: Pro forma for change of control put.

Maturities:

Next Call

Reynolds Group Holdings Limited is a leading global manufacturer and supplier of consumer food and beverage packaging and storage products. Reynolds Group Holdings Limited is based in Auckland, New Zealand.

Over the last 15 months, Reynolds completed three significant acquisitions: (1) Pactiv, in November 2010, for approximately $6.0 billion; (2) Dopaco, in May 2011, for approximately $400 million; and (3) Graham Packaging, in September 2011, for approximately $5.0 billion. Pactiv manufactures a wide array of consumer and foodservice packaging products, including branded products like Hefty trash bags. Dopaco manufactures paper cups and folding cartons for the quick-service restaurant and foodservice industries. Graham Packaging manufactures value-added rigid plastic containers for the food, beverage, and consumer products markets. These acquisitions, which were completed for an average multiple of 8.7x LTM EBITDA, strengthened and diversified Reynolds’s product offerings, and are expected to deliver significant synergies.

Investment Strengths:- Recession-resistant business model: the global consumer, food, beverage, and foodservice packaging markets have historically experienced stability through economic downturns as food and beverage products are typically less sensitive to changing economic conditions than many other products.- Strong market positions: Reynolds is one of the world’s largest providers of consumer packaging products, beverage packaging and foodservice solutions with strong, competitive positions across its markets; most of the company's revenue is derived from number one or number two market positions.

Investment Risks:- Acquisition risk: management has shown awillingness to incur debt and increase leverage to make acquisitions.- Integration risk: management could encounter problems in combining and operating the businesses it has acquired or in realizing synergies

Company Description

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2012 2013 2014 2015 2016+



Rite Aid (RAD) Updated: 1/26/12 Karen Eltrich 212-902-6957


OUTPERFORM/IN-LINE

Bond Summary



$500 7.500 Sr Sec Nts 1-Mar-17 Caa2/B- $103.75 1-Mar-12 $95.50 6.68 607

$500 8.625 Sr Nts 1-Mar-15 Caa3/CCC $102.16 1-Mar-12 $87.50 9.00 839

$300 7.700 Debs 15-Feb-27 Ca/CCC NC NC $63.00 11.08 890


Revenue 25,669.1 25,214.9 25,624.6 6,456.5 6,650.2 Rite Aid 9.00% 6.0x 1.7x Caa3/CCC

EBITDA 924.9 858.9 901.8 215.4 233.2 Neiman 7.66% 4.6x 3.5x Caa1/B-

Michaels 8.27% 4.3x 2.8x Caa2/CCC

Interest Expense 515.8 547.6 522.0 132.5 130.5 Supervalu 6.89% 3.3x 3.7x B2/B

Taxes 0.0 9.8 2.3 1.5 (10.0)

CapEx 183.9 194.6 248.3 68.9 70.0

Free Cash Flow 225.3 106.8 129.1 12.5 42.6

Total Debt 6,370.9 6,219.9 6,181.7 6,219.9 6,181.7

Cash 103.6 91.1 143.1 91.1 143.1





EBITDA margin 3.60% 3.41% 3.52% 3.34% 3.51%



Senior sec credit facility 61.0 Revolver Size $1,175.0

Tranche 2 Term loan due 6/4/14 L+175 1044.4 Letters of Credit $131.4

Tranche 5 Term Loan due 2/17/18 L+325 (125 floor) 331.8 Borrowings $191.0

8% Senior Secured Notes due 8/15/20 (1st lien) 650.0

9.75% Senior Secured Notes due 6/12/16 (1st lien) 404.9

10.375% Senior Secured Notes due 7/15/16 (2nd lien) 442.8

7.5% Senior Secured Notes due 3/1/17 (2nd lien) 500.0 Revolver Availability $849.6

10.25% Senior Secured Notes due 10/2019 (2nd lien) 268.3


Other 5.4 A/R facility NA

Total Secured Debt 3708.6 Borrowings NA

A/R Availability NA

Guaranteed Unsecured Debt 1663.5

Total Gtd Unsecured Debt 1663.5 6.0x

Unsecured Notes 673.5 Cash $148.5

Other 0.0 Total Liquidity $998.1

Total Unsecured Debt 673.5

Lease Financing Obligations 136.1




Maturities:

Next Call

Rite Aid is one of the largest drugstore chains in the US, with more than 4,700 locations in 31 states and the District of Columbia. In June 2007, Rite Aid acquired Jean Coutu USA, the holding company for the Brooks and Eckerd drugstore chains.

Key Dates/Catalysts:Mid-April– fourth quarter earnings results

Investment Strengths:- One of the largest drugstore chains, with a strong presence along the East and West coasts- Recent improvement in sales trends, driven by wellness+ loyalty program- Ample liquidity, with no near-term maturities- WAG/ESRX impasse to benefit RAD script business

Investment Risks:- Comps have lagged CVS and WAG- High debt leverage- Competition is significantly better capitalized; underinvestment in RAD storebase

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2012 2013 2014+

Company Description



Rock-Tenn Company (RKT) Updated 1/25/12 Joe Stivaletti 212-902-3299


IN-LINE

Bond Summary



$300 9.250 Sr Nts 15-Mar-16 Ba2/BBB- 104.625 03/15/12 104.500 6.939 668


FY:09 FY:10 1Q:11 4Q:11 1Q:12

Net sales 2,812.3 3,001.4 761.1 2,463.5 2,267.7

EBITDA 524.3 494.5 131.6 344.3 300.0



Cash 11.8 15.9 10.0 82.8 82.1

Total debt 1,345.6 1,127.0 1,055.5 3,445.4 3,475.9

Net debt 1,333.8 1,111.1 1,045.5 3,362.6 3,393.8 Agency


Key Credit Statistics GP 2.1x 4.8x Baa3/A-

Total debt/EBITDA 2.6x 2.3x 2.1x 2.7x 2.9x CASCN 4.8x 2.7x Ba3/B+

Net debt/EBITDA 2.5x 2.2x 2.0x 2.7x 2.8x UFS 0.4x 13.0x Baa3/BBB-

BZ 1.7x 5.4x Ba3/BB


EBITDA margin 18.6% 16.5% 17.3% 14.0% 13.2%



Revolver 309 Revolver size 1,475

Term loans 2,221 Letters of credit 91

A/R facility 542 Borrowings 309

5.625% sr sec nts 80 Revolver availability 1,075

Other secured debt 24

9.250% sr nts 300 Term loan A 227

Total debt 3,476 2.9x Cash 82

Market Cap 4,357 Total liquidity 1,384

Enterprise Value 7,751 Note: Revolver availability estimated.

Maturities:

Next Call

Rock-Tenn is a leading integrated manufacturer of corrugated and consumer packaging and recycling solutions. The company primarily manufactures containerboard, recycled paperboard, bleached paperboard, packaging products, and merchandising displays. Rock-Tenn operates locations in the United States, Canada, Mexico, Chile, Argentina, Puerto Rico, and China.

0

500

1000

1500

2000

2500

3000

2012 2013 2014 2015 2016+

Investment Strengths:- Leading market positions: Rock-Tenn enjoys leading market positions across many of its product categories.- Low-cost operations: Rock-Tenn's containerboard mill assets are clustered in the second quartile of the cost curve.

Investment Risks:- Leveraging acquisitions: Rock-Tenn has made several acquisitions in recent years and may seek additional acquisition opportunities in the future.

Company Description



Royal Caribbean Cruises Ltd. (RCL) Updated 1/23/12 Kevin Coyne 212-357-9918


UNDERPERFORM: Despite an improving outlook, we remain concerned about the planned capacity increase in the cruising sector; we favor lodging names

because they offer stronger asset coverage and better industry fundamentals.

Bond Summary

Size Coupon Agency Bid YTW STW Z-spread 5-year


$550 7.000 Senior 15-Jun-13 Ba2/BB NC NC 105.250 3.06 289 257 485

$300 7.500 Senior 15-Oct-27 Ba2/BB NC NC 98.500 7.66 571 539 485

Financial Profile 2010A 1Q11A 2Q11A 3Q11A 4Q11E 2011E

Net revenue 6,752.5 1,672.0 1,767.9 2,322.0 1,772.9 7,534.7

Adj. EBITDA 1,446.3 322.8 340.2 684.9 291.6 1,639.6


Cash Taxes 0.0 0.0 0.0 0.0 0.0 0.0

CapEx 2,187.2 66.3 185.3 778.5 69.9 1,100.0

Free Cash Flow (1,112.0) 155.9 62.0 (191.8) 139.0 165.0

Total Debt 9,150.1 8,779.3 8,604.9 8,775.7 8,527.0 8,527.0

Unrestricted Cash 419.9 470.3 551.5 451.5 324.5 324.5

Net Debt 8,730.2 8,309.0 8,053.4 8,324.2 8,202.5 8,202.5


Total Debt/LTM EBITDA 6.3x 5.8x 5.5x 5.4x 5.2x 5.2x

Net Debt/EBITDA 6.0x 5.5x 5.2x 5.1x 5.0x 5.0x Comps Leverage Coverage Ratings

RCL 5.3x 7.0x Ba2/BB

EBITDA/Interest 3.9x 3.2x 3.7x 7.0x 3.5x 4.4x HST 5.7x 3.9x Ba1/BB+

EBITDA margin 21.4% 19.3% 19.2% 29.5% 16.4% 21.8% HOT 3.3x 4.7x Ba1/BB+

GET 5.8x 2.7x Caa2/B


Description 3Q11A Lvg Source 3Q11A Source Size

Revolver due Nov 2014/July 2016 560.0 Revolver due Nov 2014 525.0 Shares OS (mm) 217

Other unsecured term loans 4,660.3 Revolver due July 2016 875.0 Stock Price $28.11

7% senior notes due June 2013 550.0 Letters of Credit 0.0 Market Cap 6,107.2

6.875% senior notes due Dec 2013 350.0 Borrowings 560.0 Net Debt 8,253.2

5.625% senior notes due Jan 2014 (EUR 1bn) 1,338.7 Revolver Availability 840.0 Enterprise Value (EV) 14,360.5

11.875% senior notes due July 2015 300.0

7.25% senior notes due June 2016 350.0 EV/ EBITDA 8.8x

7.25% senior notes due Mar 2018 150.0 Mkt val net debt/ EBITDA

7.5% senior notes due Oct 2027 300.0 Cash 451.5

Other (including derivative liability/asset) 145.7 Total Liquidity 1,291.5 Maintenance Covenants

Total Debt 8,704.7 5.3x Net debt-to-capital 62.5%

Fixed charge ratio 1.25x

Minimum net worth 5.7 bn$

Maturities:

Operating metrics

4Q10A 1Q11A 2Q11A 3Q11A

Available berth days 7,943.8 8,100.3 8,038.0 8,575.9

YoY % change 8.3% 10.1% 6.6% 6.3%

Occupancy 103.1% 104.3% 103.7% 107.9%

Passenger cruise days 8,193.1 8,445.7 8,337.6 9,255.8

YoY % change 10.8% 11.4% 6.7% 6.9%

Net yield per available berth 152.74$ 159.25$ 165.93$ 202.28$

YoY % change 3.2% 4.0% 3.8% 5.3%

Net cruise cost 116.79$ 119.40$ 123.60$ 122.41$

YoY % change 0.0% 0.2% 3.3% 4.8%

Next Call

0

500

1000

1500

2000

2500

3000

2012 2013 2014 2015 2016+

Royal Caribbean Cruises Ltd. (RCL), the world's second-largest cruise company, operates 40 ships under five brands. RCL had roughly 92,300 berths that call on approximately 420 destinations as of 3Q2011. Its two main global brands, Royal Caribbean International and Celebrity Cruises, have historically focused on serving the North American market. However, over the years RCL has expanded its international passenger sourcing with the additions of Pullmantur in Spain and Latin America, CDF Croisieres de France, and TUI Cruises (50% JV, TUI AG) in Germany. Co-founder Arne Wilhelmsen and Cruise Associates own 35% of the outstanding equity and maintain a shareholders' agreement that controls the board of directors' selection and other policies.

Key Dates/Catalysts:- 2011 guidance: Due to losses taken on its WTI fuel option portfolio and a strengthening USD, lowered EPS guidance to $2.70-2.80 (vs. $2.85-2.95) based on an increase in net yields of approximately 4% on a reported basis (from 5%) and approximately a 3-4% increase (vs. +4%) in net cruise costs per available passenger cruise day. Anticipates a 7.5% increase in capacity. Expects capex of $1.1 billion in 2011, primarily due to new ship orders.- 4Q2011 guidance: Expects EPS of $0.09-$0.19 based on a net yield increase of 3-4% on a constant currency and reported basis and an increase in cruise costs per available passenger cruise day of approximately 6% (an increase of 3-4% excluding fuel on a constant currency basis and approximately 4% on a reported basis). Anticipates a 7.3% increase in capacity.- January 2012: Carnival Corp's Costa Concordia was grounded off the coast of Isola del Giglio, Italy with over 4,200 passengers and crew members. There were injuries and loss of life, which may cause some potential RCL customers to rethink their desire to book a cruise.

Investment Strengths:- Market leadership: No. 2 player in the cruise industry. Maintains roughly 32% of the North American market and 24% of the global cruising market (Cruise Industry News).- Export credit agents of Europe (Finland, Germany) provide cheap financing terms to fund the delivery of new vessels. The unsecured term loans carry low interest rates and are guaranteed by the ECA and effectively the sovereign government of the shipyard.- RCL operates in underpenetrated markets and has exposure to significant upside in emerging markets. It estimates that 12-17% of the North American market has cruised and that outside of NA the penetration drops to 3% of the population in Europe and 2% of the population in Asia and South America. - Hedges a portion of its fuel costs: 57% through the remainder of 2011, 55% for 2012, 47% for 2013, and 30% for 2014 as of 3Q2011. WTI Fuel options cover an additional 11% of estimated consumption for 2013.

Investment Risks:- The leisure and cruise industry is highly dependent on discretionary spending and consumer confidence. - Overcapacity in the cruising industry will weigh on pricing. RCL has two ship builds through 2014, Carnival (CCL) has 10 ships in the pipeline through 1Q2016, and Norwegian Cruise Line (NCL) has two ships on order through 2014.- Significant commitments to capital expenditures, mainly due to the size of the newbuild pipeline.- Geopolitical risk: The events in Northern Africa led to 63 voyage modifications, and the Japan earthquake tsunami caused 21 voyage modifications (management believes further modifications are likely).- Increased exposure to Europe and a weakening consumer: Has increased deployments from Europe to 31% in 2011 versus 11% in 2005.- Significant maturities over the next few years.

Company Description



The Ryland Group Inc. (RYL) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 300 6.625 Sr. Nts 1-May-20 B1/BB- 96.5 7.19% 563


Total Revenues 1,284 1,054 933 227 249 284




Capital Expenditures (2) (13) (11) (3) (3) (2) Ryland 64% 0.9x B1/BB-

Free Cash Flow 288 (90) (178) (56) (38) (27) DR Horton 38% 2.2x Ba1/BB+

Total Homebuilding Debt 868 892 844 892 844 844









Secured notes payable 5 Cash and Cash Equivalents 154

Total Secured 5 Restricted cash 68

6.875% senior notes 174 Marketable securities 339

5.375% senior notes 126 Total Liquidity 562


6.625% senior notes due 2020 300

Total Balance Sheet Debt 836

Joint Venture Repayment Guarantees 12

Total Debt Outstanding 847


Share Price 18.7



Maturities:

Next Call

MW

0

50

100

150

200

250

2012 2013 2014 2015 2017

Founded in 1967, Ryland is a leading homebuilder that primarily builds single family detached homes, in addition to attached dwellings – including condominiums, townhomes, and some mid-rise buildings. The company markets its homes to entry level, first and second-time move-up buyers, with prices typically ranging from $100,000 to more than $450,000. Ryland is well diversified geographically throughout the United States, currently operating in 15 states and 20 markets across the country.

Key Dates/Catalysts:4QFY11 earning releaseCould potentially access capital markets to bolster liquidity

Investment Strengths:- Broad geographic footprint.- Ample liquidity.- Land acquisition is primarily focused on finished lots.

Investment Risks:- Build-to-order strategy might hinder sales volumes.- Company has yet to achieve profitability on a GAAP (net income) basis.- Has been aggressively pursuing land deals given its relatively depleted inventories.

Company Description



Saks Inc. (SKS) Updated: 1/26/12 Karen Eltrich 212-902-6957



NOT COVERED

Bond Summary



$207 2.00% Conv. Nts 15-Mar-24 B2/BB NA NA $102.38 -21.89% -2042


Revenue 3,052.8 2,625.7 2,785.7 2,954.8 Saks -21.89% 1.5x 5.5x B1/BB

EBITDA 26.8 118.3 222.5 266.0 Bon-Ton 40.10% 5.2x 1.9x Caa2/CCC+

Dillard's 6.56% 1.7x 8.2x B2/BB-

Interest Expense 39.5 49.5 56.7 52.5 Neiman Marcus 7.66% 4.6x 3.5x Caa1/B-

Taxes (29.5) (40.1) (13.9) 40.6

CapEx 125.0 59.0 50.5 72.5

Free Cash Flow (108.2) 50.0 129.2 129.2

Total Debt 640.1 521.2 549.3 405.8

Cash 10.3 147.3 197.9 73.7





EBITDA margin 0.88% 4.51% 7.99% 9.00%

Capitalization 3Q11A/LTM


Revolver due 2016 ($500mm, L+2.0-2.5) 0.0 Revolver Size 500.0

Letters of Credit 5.9

Borrowings 0.0


Senior Notes 2.1

7.5% Convertible Notes due 2013 120.0 A/R facility NA

2% convert nts due 3/15/24 230.0 Borrowings 0.0

Capital lease obligations 53.7 A/R Availability NA


Cash 73.7




Maturities:

Next Call

Saks Inc. includes Saks Fifth Avenue luxury department stores (46 stores), Off 5th Saks Fifth Avenue Outlet stores (57 stores ), and saks.com. Saks Fifth Avenue stores are principally freestanding stores in exclusive shopping destinations or anchor stores in upscale regional malls. The stores typically offer a wide assortment of distinctive luxury fashion apparel, shoes, accessories, jewelry, cosmetics, and gifts.

Key Dates/Catalysts:Mid- to late February: fourth quarter earnings release

Company Strengths:- Strong brand-name recognition- Significant owned real estate- Luxury has recently been a leading retail subsegment

Company Risks:- Much lower margins than Neiman Marcus- Sales highly correlated to stock market

Company Description

0

50

100

150

200

250

300

2012 2013 2014+



Sally Holdings LLC (SBH) Kevin Coyne 212-357-9918


OUTPERFORM: As our top pick for 2012, we prefer the SBH 6.875% senior notes to other companies in our Consumer & Apparel universe due to the company’s

stable operations and defensive characteristics. We believe the SBH seniors offer exposure to a more defensive business with limited commodity exposure versus HBI and PVH.Bond Summary

Size Coupon Agency Bid YTW STW Z-Spread(MM) (%) Priority Maturity Ratings Price Date Price (%) bp bp$750 6.875 Sr Nts 15-Nov-19 B1/BB+ 103.438 15-Nov-15 106.750 5.495 473 429

Financial Profile 2QFY11 3QFY11 4QFY11 FY11 1QFY12E FY12ERevenue 802 837 837 3,269 855 3,517EBITDA 123 133 133 503 125 553

Interest Expense 28 28 27 113 25 95Cash Taxes 43 35 38 121 30 143CapEx 14 14 17 60 17 70Free Cash Flow 38 56 50 209 52 245

Total Debt 1,545 1,485 1,413 1,413 1,458 1,458Cash 59 53 63 63 83 303Net debt 1,486 1,432 1,350 1,350 1,375 1,155

Key Credit StatisticsTotal Debt/EBITDA 3.4x 3.1x 2.8x 2.8x 2.8x 2.6xNet Debt/EBITDA 3.3x 3.0x 2.7x 2.7x 2.7x 2.1x EBITDA/Interest 4.4x 4.8x 4.8x 4.5x 5.0x 5.8x Comps Leverage Coverage Ratings

EBITDA margin 15.3% 15.9% 15.8% 15.4% 14.6% 15.7% SBH 10.5s 2.9x 4.5x B1/BB+Note: Fiscal year ends September 30. REV 9.75s 4.4x 2.8x B2/B

Capitalization

Description 4QFY11PF Lvg Liquidity 4QFY11A Enterprise valueABL facility due Nov 2015 (L+225) 0 Revolver Size 400 Shares o/s (mm) 185Term Loan B due Nov 2013 (L+250) 697 Letters of Credit 34 Stock price $20.45Total Secured Debt 697 1.4x Borrowings 0 Market cap 3,779

Revolver Availability 367 Net debt 1,3956.875% Senior Notes due Nov 2019 750 Enterprise value (EV) 5,173Other debt (including cap leases) 11 Cash 63Total debt 1,458 2.9x

Total Liquidity 430 EV/LTM EBITDA 10.3xPro forma for the issuance of the 6.875% senior notes. EV/FY12E EBITDA 9.4x

Maturities:

Next Call

Updated 01/23/12

Sally Beauty Holdings (SBH) is the largest professional beauty supplies distributor in the United States with a presence in the United Kingdom, Belgium, Chile, Mexico, Puerto Rico, France, Germany, Canada, Ireland, and Spain. As of September 30, 2011, SBH operated a total of 4,128 stores, supplied products to more than 181 stores (its franchised stores), and had over 1,116 distributor sales consultants. SBH distributes a wide array of beauty products through its two business units- Sally Beauty Supply and Beauty Systems Group (BSG). Sally Beauty Supply targets both retail consumers and salon professionals and BSG, which operates stores under the CosmoProf service mark, targets salons and salon professionals. Its largest equity holder, Clayton, Dubilier & Rice, owns 35% of the company, following a $575 mn capital contribution upon the spinoff from Alberto Culver in November 2006.

Key Dates/Catalysts:- FY2012 guidance: Expects capex to be $65-70 million, with store base growth of 4-5% yoy.- October 2011: Completed an upsized secondary common stock offering of 18 mn shares held by funds associated with Clayton, Dubilier & Rice. - November 2011: Issued $750 mn of 6.875% notes due 2019 at par, proceeds used to retire existing bonds.- May 2012: Interest rate swaps expire on the Term Loan B. Management has stated it would like to wait for the swaps to expire prior to a refinance.

Investment Strengths:- Stable and defensive operating profile: its beauty product offerings have proven to be more resilient during periods of contraction. Same-store sales declined only 0.4% in FY2009.- Strong brand recognition: Both divisions are leaders in their respective categories. - Strong management team.- Private label products (SBH owns the trademark and perhaps the actual formula) and controlled label products (SBH has exclusive rights to a manufacturer's formula) offer much higher margins and contribute 44% to Sally Beauty Supply sales.- Its loyalty card program, the Beauty Club Card (BCC), is increasing store visits on average by one trip per year and resulting in 25-40% higher spend per visit. - Opportunity for global expansion - 18% of Sally Beauty revenues were generated outside the US as of 4QFY11. - Track record for repaying debt. No near-term maturities.

Investment Risks:- Restricted payment capacity increases dividend risk: as of 4QFY11, the RP basket had approximately $410 million of capacity, or three-quarters of a turn of leverage. Its financial sponsors may want to extract equity in the form of a dividend, as it has been five years since the original investment and leverage is approaching 3.0x.- Highly fragmented and competitive market. Specifically, drug stores and supermarkets are bolstering their offerings of beauty products.- Manufacturer concentration/competition by manufacturers. In December 2006, L'Oreal shifted a significant amount of revenue out of BSG into its own regional distribution networks.- Does not target investment grade ratings. Management stated on its 3QFY11 earnings call, if "you start to try to strive for investment grade type ratings, the law of diminishing returns starts to kick in, in terms of pricing and maximizing our capital structure in the market."

Company Description

0

200

400

600

800

FY2012 FY2013 FY2014 FY2014 FY2015+



Sanmina-SCI Corp (SANM) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$400 8.125 Snr Subord 1-Mar-16 B3/B- 104.063 2/27/2012 104.25 -9.6% (969)

Financial Profile FY09 FY10 FY11 1Q12 FY12E

Revenue 5,177 6,319 6,602 1,502 6,329

EBITDA 198 322 362 73 329


Cash Taxes (30) (40) (12) (1) (7)

CapEx (66) (81) (108) (28) (98)

Free Cash Flow 142 (161) 128 (50) 148


Total Debt 1,438 1,306 1,243 1,244 1,094 Ratings

Cash 899 593 640 604 632 AMD 2.3x 5.0x Ba3/B+

Net Debt 539 713 602 639 462 AMKR 2.3x 6.6x Ba3/BB

Key Credit Statistics FSL 5.8x 2.0x Caa1/CCC+

Total Debt/EBITDA 7.3 x 4.1 x 3.4 x 3.6 x 3.3 x

Net Debt/EBITDA 2.7 x 2.2 x 1.7 x 1.9 x 1.4 x

EBITDA/Interest 1.7 x 3.0 x 3.7 x 3.6 x 4.2 x

EBITDA margin 3.8% 5.1% 5.5% 4.8% 5.2%

PF Capitalization (FY11E)


ABL due 2013 (L+250 bp) 0 0.0 x Revolver Size 235

L+275 Senior Notes due 2014 257 2.1 x Borrow Base 166

7.00% Senior Notes due 2019 500 2.1 x - Amt Drawn 0

8.125% Sub Notes due 2016 400 3.4 x - LC's 25

Other (ST foreign credit facilities) 85 3.4 x Amt Unutilized 141

Total Debt 1,243 3.4 x ST borrowing facilities 85

Less cash 640 -- Utilization 60

Net Debt 602 1.7 x Availability 25

Equity Market Cap 887 -- Cash 640

Enterprise Value 1,489 4.1 x Liquidity 806

Maturities:

Next Call

Sanmina-SCI (SANM) is a global electronics manufacturing service (EMS) provider for original equipment manufacturers (OEMs) in the multimedia, communications, enterprise computing and storage, industrial and semiconductor capital equipment, aerospace and defense, automotive, and medical industries. SANM offers a broad array of services to OEMs, including product design and engineering, volume manufacturing, final system assembly and test, direct order fulfillment, and after-market product service and support. Over the past several years, SANM has focused the company away from more commoditized high-volume PC solutions to capture higher-margin, lower-volume solutions in niche EMS markets like industrial/auto/medical. Headquartered in San Jose, CA, SANM recorded over $6.3 billion in revenues for 2010 and has 45,000 employees in 18 countries.

Key Dates/Catalysts:- SANM will report 2QFY12 earnings in April

0.0

100.0

200.0

300.0

400.0

500.0

600.0

2012 2013 2014 2015 2016 2017 2018 2019 After

Investment Strengths:- Adequate liquidity: SANM’s liquidity remains strong, with over $600 million of cash on hand and no drawings on its $235 million revolver.- Niche EMS markets like medical and auto should provide attractive growth opportunities over the medium to long term.- Deleveraging profile: Sanmina has reduced debt by approximately $300 million since the end of FY2007.

Investment Risks:- Highly leveraged capital structure: Although SANM has reduced debt over the past few years, it is the most levered EMS credit in our sector (3.4x gross leverage; 1.7x net leverage).- Lack of visibility: SANM has limited visibility into customer demand trends, which have been historically volatile and cyclical.- Free cash flow could be stretched in a recovery. SANM burned $161 million of free cash in 2010 and $30 million in 1QFY11, as it reinvested in working capital and capex to leverage improving markets. Cash flow improved in 2Q-4Q2011, during which the company generated $158mn in FCF.

Company Description



Scientific Games International, Inc. (SGMS) Updated 1/23/12 Kevin Coyne 212-357-9918


IN LINE We believe SGMS is one of the lower risk gaming credits owing to the stability of the instant lottery ticket business. We expect lottery sales to remain stable, whereas we expect regional gaming operators to continue to feel pressure from elevated unemployment.

Bond Summary



$350 9.250 Senior 15-Jun-19 B1/BB- 104.625 15-Jun-14 109.250 6.79 657 626

NOT COVERED


Revenue 882 197 220 223 231 870

Adjusted EBITDA 293 63 75 68 62 269


Cash Taxes (3) 5 5 1 1 12

CapEx (incl. software) 109 22 22 22 30 97

Free Cash Flow 86 10 21 18 4 53 Comps Leverage Coverage Ratings

IGT 2.3x 6.0x Baa2/BBB

Total Debt 1,397 1,393 1,391 1,392 1,390 1,390 HST 5.7x 3.9x Ba1/BB+

Cash 124 119 127 87 97 97 WYNN 1.9x 6.6x Ba2 / BBB-

Net Debt 1,272 1,274 1,264 1,305 1,293 1,293

Key Credit Statistics Maintenance covenants

Total Debt/EBITDA 4.8x 4.9x 5.0x 5.1x 5.2x 5.2x Current 1Q2014 1Q2015

Net Debt/EBITDA 4.3x 4.5x 4.6x 4.8x 4.8x 4.8x Leverage:

Senior debt 2.75x 2.75x 2.75x

EBITDA/Interest 2.9x 2.7x 2.6x 2.5x 2.5x 2.5x Total debt 5.75x 5.50x 5.25x

EBITDA margin 33.2% 32.1% 34.1% 30.4% 27.1% 30.9% Int. coverage 2.25x 2.25x 2.25x



Senior secured revolver due 2015 0 Revolver due 2015 250 Shares O/S (mm) 92.1

Senior secured term loan due 2015 567 Letters of Credit & other 61 Stock Price 11.42$

Total senior secured debt 567 2.1x Borrowings - Market cap 1,052

7.875% senior sub notes due 2016 200 Revolver Availability 189 Net Debt 1,305

8.125% senior sub notes due 2018 250 Enterprise Value 2,357

9.25% senior sub notes due 2019 345

Other debt 29 Cash 87 LTM EBITDA 271

Total debt 1,392 5.1x Total Liquidity 276 EV/ EBITDA 8.7x

Maturities: Operating segments

4Q10A 1Q11A 2Q11A 3Q11A

Segment revenue:

Printed Products 124 116 133 130

Lottery Systems 63 56 57 60

Diversified Gaming 25 25 31 34

Total revenue 212 197 220 223

Adjusted Segment EBITDA:

Printed Products 35 38 47 44

Lottery Systems 23 22 21 20

Diversified Gaming 9 9 12 12

Other (2) (6) (6) (8)

Adjusted EBITDA 65 63 75 68

0

200

400

600

800

1,000

1,200

1,400

1,600

2012 2013 2014 2015 2016+

Scientific Games International, Inc. (SGMS), a subsidiary of Scientific Games Corp., is a leading supplier of technology-based products, systems, and services to the gaming market worldwide. SGMS operates in three business segments: Printed Products, Lottery Systems, and Diversified Gaming. The Printed Products group is a leading provider of instant lottery tickets to 43 of the 44 US states with lotteries and to approximately 50 countries. The Lottery Systems group provides software, equipment, and data communication services to 11 states that operate online lotteries such as Lotto and to five states that operate video lottery terminal systems. The Diversified Gaming group provides systems and services to public and private operators in wide area gaming markets. According to Bloomberg, significant equityholders include Ron Perelman (34%), Wells Capital Management (8%), and Fine Capital Partners (7%).

Key Dates/Catalysts:- August 2011: Amended credit agreement to extend maturity to June 2015 from June 2013.- September 2011: Completed acquisition of Barcrest Group Limited, a supplier of gaming content and machines in Europe, for $51 million (£33 million).- January 2012: Multi-state Powerball game increases ticket price to $2 from $1 (Powerball contributed $20 mn to SGMS revenues in 2010).- January 2012: Wins Illinois Video Gaming Central Communication System Contract to service the potential 60,000 VLTs at Illinois licensed bars, restaurants, and truck stops (or other venues that serve liquor). The contract has a term of six years and may be extended by up to an additional four years.

Investment Strengths:- More state and national governments are adding or increasing lotteries to make up for budget shortfalls.- Instant ticket sales have grown at a CAGR of 9.9% since 1999.- Market share leader in instant tickets (~80%). Maintains capacity to print 45 billion instant tickets, and in 2010 it printed 37 billion.- Long-term contracts make revenues predictable.- Barriers to entry owing to patents and printing presses.- Geographic diversification, with 47% of 2010 revenues generated outside the US.- Significant opportunities in new markets such as China; has installed two printing presses for local printing in China.

Investment Risks:- Business model is subject to changes in regulations in any given jurisdiction.- Sizable restricted payments basket – we estimate $289 million of capacity as governed by the 8.125% indenture.- Non-guarantor subs make up 100% of assets, 2% of consolidated total debt, and 51% of LTM EBITDA.- New $200 million share buyback program, which will expire December 31, 2011. During 2010, repurchased 2.6 million shares at a total cost of $26 million. No shares have been repurchased for the nine months ending September 30, 2011.

Company Description



Seagate Technology (STX) Updated 1/25/2012 Gregory Chwatko 212-902-0673


IN-LINE

Bond Summary



STX $600 6.88% 01-May-20 Ba1/BB+/BB+ $109 460 425 285/315


Revenue 11,395 10,971 13,948 2,719 3,150

EBITDA 2,663 1,580 3,170 403 757

Operating Income 1,883 826 2,353 $206 $577

Interest Expense (net) (180) (227) (246) ($46) ($66)

Operating Cash Flow 1,932 1,264 2,561 507 681

CapEx (639) (843) (598) (202) (127)

Dividends 0 (74) (303) 0 (75)

Free Cash Flow 1,293 347 1,660 305 480

Total Debt 2,502 3,512 3,484 2,925 3,484 Comps Leverage Coverage Agency Ratings

Cash 2,629 3,253 4,584 2,911 3,401

Net Debt (Cash) (127) 259 (1,100) 14 83 ALU 3.6x 2.8x B1/B/--



Net Debt/EBITDA 0.0x 0.2x -0.3x 0.0x 0.0x

EBITDA/Interest -14.8x -7.0x -12.9x -8.8x -11.4x

EBITDA margin 23.4% 14.4% 22.7% 14.8% 24.0%

Fiscal year ends in June

Capitalization


Cash $2,988

10% Senior secured second-priority Notes due May 2014 415

6.8% due October 2016 600

7.75% notes due December 2018 750 Total Liquidity $3,338

6.875% due May 2020 600

7% due November 2021 600

Other 1


Market Cap 9,218


Maturities:

Description

Secured revolving credit facility due 1/15

$350

Seagate is a leading designer, manufacturer, and marketer of hard disk drives, which are the primary medium for storing electronic information in systems ranging from desktop and notebook computers and consumer electronics devices to data centers delivering information over corporate networks and the Internet. Seagate also sells its branded storage solutions under both the Seagate and Maxtor brands. In addition to manufacturing and selling disk drives, the company provides data storage services for small- to medium-sized businesses, including online backup, data protection, and recovery solutions.

Key Dates/Catalysts:Earnings announcementPotential capital structure announcements

Investment Strengths:- Seagate is an industry leader in the hard drive space.- The company benefits from increased pricing power following this fall's flooding in Thailand. - The company has a manageable liquidity position, with a cash balance of $3 billion. - Leverage metrics have improved owing to stronger performance.- The recent consolidation between Western Digital and Hitachi Global Storage Technologies improves the competitive landscape.

Investment Risks: - The hard drive industry has historically been (and is likely to remain) volatile and highly competitive as participants often compete on pricing.- Weak demand environment hurts performance, leading to weaker credit metrics.- Event risk is still a concern following the company's new $2 billion share repurchase authorization and past private equity interest.

Company Description

0

500

1,000

1,500

2,000

2,500

3,000

2012 2013 2014 2015 2016+



Sealy Mattress Company (ZZ) Kevin Coyne 212-357-9918


NOT COVERED

Bond Summary



$315 10.875 Sr Sec 15-Apr-16 Ba3/BB- 108.156 15-Apr-12 108.500 7.72% 762 724

$390 8.25 Sr Sub 15-Jun-14 Caa1/CCC+ 101.375 Current 95.250 10.56% 1,034 1,003

Financial Profile FY10 1QFY11 2QFY11 3QFY11 4QFY11 FY11

Revenue 1,219 306 321 334 269 1,230

EBITDA 178 30 33 48 15 126


Cash Taxes 20 (1) (1) 10 5 20

CapEx 17 6 7 4 5 22

Free Cash Flow 56 4 4 12 (17) (4)

Total Debt 795 792 787 786 792 792 LTM Comps Leverage Coverage Ratings

Cash 109 102 79 86 108 108 ZZ 10.875s 3.9x 1.4x Ba3/BB-

Net Debt 686 690 708 700 684 684 BC 11.25s 1.3x 4.8x Ba2/B+

Key Credit Statistics ZZ 8.25s 6.3x 1.4x Caa1/CCC+

Total Debt/EBITDA 4.5x 5.0x 5.2x 5.2x 6.3x 6.3x BC 7.125s 2.5x 4.8x B3/B



EBITDA margin 14.6% 9.8% 10.2% 14.5% 5.6% 10.3%

Note: Fiscal year ends in November.

Capitalization

Description 4QFY11Debt toEBITDA Liquidity 4QFY11 Enterprise value

$100 mn ABL facility (L+350) due 5/13/2013 0 Revolver Size 100 Shares o/s (mm) 101

10.875% Sr sec notes due 4/15/2016 305 LOCs, Borrowing base limits 31 Stock price $1.45

8% Sr sec converts (PIK) due 7/15/2016 185 Borrowings 0 Market cap 146

Total Sr Sec debt 490 3.9x Revolver Availability 69 Net debt 684

8.25% sr sub notes due 6/15/2014 269 Enterprise value (EV) 830

Other debt (capital leases, OID) 33 Cash 108

Total debt 792 6.3x

Total Liquidity 177 EV/LTM EBITDA 6.6x

Maturities:

Next Call

Updated 1/23/12

0

200

400

600

2012 2013 2014 2015 2016 2017+

Sealy Mattress Company, a wholly owned subsidiary of Sealy Corporation (ZZ), manufactures and markets mattresses and mattress foundations. The company holds the #1 position in the US, with approximately 19% market share in 2010, according to the International Sleep Products Association and Furniture/Today. The company participates primarily in the traditional innerspring segment but has also entered the specialty category in recent periods. The company’s well-known brands include Sealy, Sealy Posturepedic, Stearns & Foster, and Bassett. ZZ owns and operates a total of 27 bedding manufacturing and distribution centers globally. These include three manufacturing and distribution centers in Canada, and one each in Mexico, Argentina, Uruguay, and Puerto Rico. Its vertical integration for box spring and innerspring components is a key point of differentiation versus its competitors. Sealy is approximately 46%-owned by KKR, following a 2004 LBO and subsequent IPO in 2006.

Key Dates/Catalysts:- FY2012 guidance: Expect mid-single-digit raw material cost inflation, with higher inflation in 2HFY12. Plans to offset the cost pressures through other efficiency gains and improved mix.- May 2011: Redeemed $10 million of 10.875% notes.- July 2012: Soft call conversion for senior secured convertible pay-in-kind notes due 2016 if (1) the stock price is greater than $2.50 and (2) leverage excluding the converts is less than 3.4x.- December 2011: Redeemed an additional $10 million of the 10.875% notes at 103.

Company Strengths:- Leading domestic market share at around 19%.- Broad product lineup from high-end Stearns & Foster to lower end Sealy and Bassett brands. For FY2011, ZZ earned 67% of its domestic revenues from the premium end of the market with retail price points of $750 and above. - Vertical integration for certain components lessens reliance on outside suppliers.- Diversified customer base.- Historically, the mattress industry is relatively stable, with high barriers to entry: Leading brands control two-thirds of industry- Replacement demographics/innovation drive demand; average American replaces his/her mattress every seven to ten years- Reduced exposure to Europe: Following the sale of its European manufacturing operations in France and Italy in November 2010, 92% of FY2011 net revenues on a pro forma basis were earned in North America, with the US contributing 77% to total sales. ZZ transitioned into a license arrangement with third parties following the European assets sale.

Company Risks:- Competitors (including specialty mattresses) have grabbed meaningful market share in recent years at high price points, resulting in increased price competition for traditional innerspring mattresses.- High-ticket and deferrable nature mean that sales/profits are sensitive to macro trends in the short term.- Exposure to raw material inflation: ZZ’s primary input costs are derived from oil and steel, including polyurethane foam, polyester, polyethylene foam, and steel innerspring component parts. Over 50% of ZZ’s raw materials are made of foam and steel, and raw materials as a percent of cost of goods sold is approximately 67%, or two-thirds.- Larger retail customer bankruptcies have pressured sales.

Company Description



Sirius XM Radio Inc. (SIRI) Updated 1/20/12 Jason Kim 212-902-2233

Contact analyst for updates and other information. Satya Tagat 212-902-4427

NOT COVERED

Bond Summary



$800 8.750 SIRI Sr Nts 1-Apr-15 B3/BB- NC NC 111.25 4.87 418

Financial Profile FY09A FY10A 1Q11A 2Q11A 3Q11A LTM

Subscribers ('000s) 18,773 20,191 20,564 21,016 21,350 21,350

Revenue $2,527 $2,839 $728 $747 $765 $2,980

EBITDA $463 $626 $181 $185 $197 $708

Agency

Cash Flow From Ops $434 $513 $18 $195 $115 $550 Comps Leverage Coverage Ratings

CapEx (249) (312) (35) (40) (40) (170)

Free Cash Flow $185 $201 ($17) $155 $75 $381 Charter - CCOH 4.3x 2.8x B1/BB-

CVC Corp. 4.0x 3.2x B1/B+

Total Debt $3,219 $3,321 $3,189 $3,114 $3,113 $3,089

Cash 383 587 434 528 605 581

Net Debt $2,835 $2,735 $2,755 $2,585 $2,508 $2,508





EBITDA Margin 18.3% 22.1% 24.9% 24.8% 25.8% 23.8%

Capitalization*

Debt to Liquidity

Description Size EBITDA Revolver Size $0

9.750% Sr Secured Nts 257 Letters of Credit -

Capital Leases 3 Borrowings -

Total Secured Debt $260 0.4x Revolver Availability $0

13.000% Sr Nts $779 Cash* $581

8.750% Sr Nts 800 Total Liquidity $581

7.625% Sr Nts 700

Total Senior Debt $2,539 3.6x

7.000% Exchg Sr Sub Nts 550

Total SIRI Debt $3,089 4.4x

Consolidated Debt $3,089 4.4x

Net Debt 2,508 3.5x

Market Cap 9,946

Enterprise Value $12,454

*Capitalization and cash are pro forma for the redemption of the 3.250% Convertible Notes, which matured on October 15, 2011.

Maturities:

SIRIUS XM provides satellite radio service in the US, with over 21 million subscribers. The SIRIUS system consists of four in-orbit satellites, more than 125 terrestrial repeaters that receive and retransmit signals, satellite uplink facilities, and studios. The XM system consists of four in-orbit satellites and more than 650 terrestrial repeaters. Subscribers can also receive certain music and other channels over the Internet.


Company Strengths:(1) Solid operational momentum.

(2) Almost all revenues come from monthly subscriber fees, with only 2% of sales from advertising.

(3) Improving OEM penetration driving subscriber gains.

Company Risks:(1) Competition from other media: Erosion of subscribers due to other forms of radio (Internet radio, terrestrial HD radio, etc.).

(2) High programming costs: Efforts to retain key contracts could lead to increasing programming costs.

(3) High leverage: at 4.4x LTM.

Company Description

779

550

1,057

703

0

500

1,000

1,500

2012 2013 2014 2015 2016+



Sitel, LLC (SITEL) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$293 11.5 Senior 1-Apr-18 Caa2/B- 105.75 4/1/2014 75.00 18.4% 1,814


Revenue 1,747 1,558 1,368 1,396 1,432 1,492

EBITDA 133 138 115 128 132 145


Cash Taxes (10) (13) (12) (21) (11) (12)

CapEx (43) (24) (34) (36) (45) (50)

Free Cash Flow 3 36 1 (42) (37) 3

Total Debt 638 608 670 679 678 683


Net Debt 592 581 597 656 664 661 SGS 3.0x 2.8x B1/B+





EBITDA margin 7.6% 8.8% 8.4% 9.1% 9.2% 9.7%

LTM Capitalization

Description Amt OutDebt to EBITDA Liquidity

$85 mm Revolver due 2013 26 3.0 x Revolver 85

L + 550 bp Term Loan due 2014 209 3.0 x - Amt Drawn 26

L + 675 bp Ext Term Loan due 2017 145 3.0 x - LCs Drawn 1

Other (incl cap leases) 5 3.0 x Availability 58

11.5% Senior Notes due 2018 293 5.3 x Cash 24

Total Debt 679 5.3 x Liquidity 81

Less cash 24 --

Net Debt 656 5.1 x

Maturities:

Next Call

Sitel is a top 5 global provider of customer care outsourcing services, with service offerings encompassing technical support, customer service, customer acquisition/retention and revenue generation. The majority of Sitel’s customer care services are inbound and delivered telephonically. Sitel offers a global and flexible operating platform with services delivered in 36 languages through a network of over 100 customer contact centers in 26 countries. Sitel reduces costs for clients by leveraging its economies of scale, providing access to a skilled labor force, and leveraging strategically located facilities in cost-effective labor markets. Key end markets include Technology (15% of sales), Financial Services (13%), Telecom (12%), Media & Entertainment (12%), and Retail/Consumer (10%). The company is private and majority owned by Onex Corporation following its merger with ClientLogic in 2007.

Key Dates/Catalysts:- Sitel is expected to report 4Q2011 earnings in February.

0

50

100

150

200

250

300

350

2012 2013 2014 2015 2016 2017 2018 After

Investment Strengths:- Industry leader poised to benefit from cyclical recovery: We expect call volume and outsourcing needs to continue to improve in 2012 as highlighted by SITEL's public comps, including Convergys, TeleTech, and Teleperformance. Sitel is a top 5 player and well positioned to leverage growth.- Flexible cost structure: Approximately 70% of Sitel’s cost base is variable. Management has reduced headcount by 1,500 over the past three years.- Strong sponsor support: Sitel’s sponsor equity group is led by Onex and has invested approximately $251 million since 1998.

Investment Risks:- Weak free cash flow: We expect free cash flow to remain break-even in 2012, reflecting elevated capex needs as the company looks to grow into its capital structure.- Secured leverage covenant requires focus: Sitel must comply with a secured debt leverage covenant, although the step-down provisions have been amended to provide greater flexibility.- European revenue exposure: Sitel generates about 40% of revenues and 17% of EBITDA from Europe.

Company Description



Smithfield Foods (SFD) Updated: 1/26/12 Karen Eltrich 212-902-6957Jordan Hughes 212-357-7875


IN-LINE

Bond Summary



$500 7.75 Sr Nts 1-Jul-17 B3/B+ NC NC 112.50 5.08 395


Revenue 11,202.6 12,202.7 13,087.6 3,186.2 3,377.4 Chiquita 7.48% 4.1x 2.8x Caa1/B-

EBITDA 413.1 1,130.6 1,071.7 294.2 264.0 Smithfield 5.08% 1.9x 5.8x B2/BB-


Interest Expense 266.4 245.4 186.1 60.3 47.2 Dole 4.54% 4.2x 2.7x B2/B+

Cash Taxes (113.2) 257.7 189.5 95.7 49.6

CapEx 182.7 176.8 297.9 43.8 80.0

Free Cash Flow 77.2 450.7 398.2 94.4 87.3

Total Debt 3,008.1 2,122.3 2,013.0 2,503.8 2,013.0

Cash 451.2 374.7 234.8 577.9 199.7





EBITDA margin 3.69% 9.27% 8.19% 9.23% 7.82%



US Credit Facility, expiring Jun 2016 ($1.2 bn), L+250-325 0.0 Revolver Size $925

Term loan, due August 2016 L+375 200.0 Letters of Credit 0

10% Senior Secured Notes due 7/15/14 610.0 Borrowings 0

Total Secured Debt 810.0 0.8x Revolver Availability 925

7.75% Senior Unsecured Notes due May 2013 160.0 A/R facility 275

4% Senior Convertible Notes due July 2013 352.7 Letters of Credit 116

7 3/4% Senior Unsecured Notes due July 2017 500.0 Borrowings 150

Various due May 2011 through May 2017 160.0 A/R Availability 9

Capital Leases 30.3

Total Unsecured debt 1203.0 1.9x

Total Debt 2013.0 1.9x Cash 136

Market Cap 3743.8 Total Liquidity $1,071


Maturities:

Next Call

Smithfield Foods is the largest pork producer and processor in the United States.

Key Dates/Catalysts:Early March– third quarter earnings release

Investment Strengths:- Largest pork producer and processor in the United States- Strong management team- Favorable export positioning- Significant asset value

Investment Risks:- Volatile pork and corn prices- Highly capital-intensive- Shift in financial focus toward acquisitions

Company Description

0

200

400

600

800

1,000

1,200

1,400

1,600

2012 2013 2014+



Solo Cup Company (SOLOC) Updated 1/23/12 Joe Stivaletti (212) 902-3299


IN-LINE

Bond Summary



$300 10.500 Sr Sec Nts 1-Nov-13 B2/B 105.250 Current 100.750 7.418 738

$325 8.500 Sr Sub Nts 15-Feb-14 Caa2/CCC 101.417 Current 91.000 13.668 1,342


FY:09 FY:10 3Q:10 2Q:11 3Q:11

Net sales 1,502.6 1,582.9 409.6 435.9 416.3

EBITDA 143.8 112.9 27.9 26.4 19.9



Total debt 636.1 637.7 718.8 688.5 692.4

Cash 40.4 23.5 29.2 15.1 27.4

Net debt 595.7 614.3 689.6 673.4 664.9



Net debt/EBITDA 4.1x 5.4x 6.3x 5.9x 6.3x Owens-Illinois 3.1x 4.7x Ba3/BB

Crown Holdings 2.9x 4.9x Ba3/BB


EBITDA margin 9.6% 7.1% 6.8% 6.0% 4.8%



ABL revolver 63.2 3.5x ABL revolver size 200.0

Senior secured notes 296.6 3.5x Borrowing base 168.9

Other secured debt 7.6 3.5x Letters of credit 12.9

Senior subordinated notes 325.0 6.5x Borrowings 63.2

Total debt 692.4 ABL revolver availability 92.8

Cash 27.4

ABL revolver 92.8

Canadian revolver 9.4 Total liquidity 129.7

Maturities:

Next Call

9/25/2011

Solo is one of the largest providers of single-use cups, lids, food containers, plates, bowls, and cutlery in North America. Solo’s primary customers are foodservice distributors and operators – such as Sysco, U.S. Foodservice, Starbucks, and McDonald’s – and retailers of consumer products – such as Kroger, Target, Wal-Mart, and Costco. Although the company is widely known for its iconic red plastic cold cups and other branded consumer product offerings, Solo is primarily a provider of food and beverage containers to the foodservice industry. Sales to this end-market represent approximately 80% of the company’s total net sales.

-

50

100

150

200

250

300

350

2012 2013 2014 2015+

Investment Strengths:- Diverse product offering: Solo manufactures and supplies a broad portfolio of single-use products used to serve food and beverages, including cups, lids, food containers, plates, bowls, portion cups, cutlery, and straws.- Strong customer relationships: Solo maintains strong direct relationships with prominent companies, including McDonald’s, Sysco, Starbucks, U.S. Foodservice, Wal-Mart, and Costco; Solo estimates that its top 10 customers have been with Solo for over 20 years on average.- Efficient manufacturing facilities: Solo has streamlined its manufacturing footprint in recent years, going from 32 facilities in 2004 to less than half that number today.

Investment Risks:- Persistent volume weakness: Solo has experienced volume pressure in recent quarters, which has hurt earnings.- Raw material price fluctuations: Inability to pass cost increases on to customers or a significant time lag in any selling price increases could reduce Solo's profitability.

Company Description



Southwest Airlines Co. (LUV) Updated 1/24/2012 Justine Fisher 212-357-6711


IN-LINE

Bond Summary



$300 5.125 Senior 1-Mar-17 Baa3/BBB- NC NC 107.55 3.49% 272

$373 6.150 EETC 1-Aug-22 A2/A- NC NC 107.00 4.91% 359


Revenue 12,104 4,135 4,312 4,045 15,595 16,563

EBITDAR 1,796 520 545 367 1,747 2,071


Income Taxes (286) (114) 85 (2) (44) (38)

CapEx (493) (215) (276) (325) (873) (1,300)

Free Cash Flow 1,068 (43) (332) 41 478 27


Cash 3,538 4,374 3,656 3,133 3,133 2,986 UAL 2.6x 5.4x B2/B

Net Debt (158) (142) 550 613 613 608 DAL 3.9x 4.1x B2/B




EBITDA margin 14.8% 12.6% 12.6% 9.1% 11.2% 12.5%

Capitalization


10.5% notes due 2011 403 Revolver Size 800

Term Loan Agreement due 2020 445 Letters of Credit 0

French Credit Agreement due 2012 14 Borrowings 0

French Credit Agreement due 2017 73 Revolver Availability 800

Various PTCs 420

Term Loan Agreement due 2019 391

Other Sr. Notes 970

Other 1,490


Market Cap 7,326 Cash 3,656

Enterprise Value 7,876 4.5 x Total Liquidity 4,456

Maturities:

Next Call

Southwest Airlines (LUV) is the fourth-largest US airline by revenue, but it carries more domestic passengers than any other carrier. It flies a primarily Boeing 737 fleet and, until recently, did not offer assigned seats. LUV does not currently offer international flights, but is working on code share agreements with carriers in Canada and Mexico. It is not a member of any international airline alliance. Southwest does not operate a hub-and-spoke system, but instead relies on point-to-point flights. Major focus airports are Chicago Midway, Las Vegas, Dallas Love, and Denver.

Key Dates/Catalysts:- Southwest has closed its merger with AirTran and is currently integrating its operations and working toward a single operating certificate.

0

200

400

600800

1000

1200

14001600

1800

2012-13 2014-15 Thereafter

Investment Strengths:- Large amount of unencumbered assets: Southwest has several billion of unencumbered assets that it can secure in the future if it requires additional liquidity. - Primarily 737 fleet reduces pilot training costs and the number of spare parts that are necessary to keep on hand. There is some risk to this strategy now that the purchase of AirTran and its 717 fleet is complete. - Southwest has recently been layering in fuel hedges for "catastrophic" price levels, which could aid costs if fuel prices skyrocket.- Strong history of cooperation between management and unions.

Investment Risks:- Over-expansion: Southwest's historical business model has relied on providing low-cost service, particularly to cheaper, secondary airports. LUV has recently announced expansion plans in New York, Boston, and Minneapolis. - Domestic only: Southwest has begun exploring options to provide service to Mexico and Canada, including code shares and potentially direct flights. However, it does not offer any longer-range international flights. Its all-737 fleet would make trans-Atlantic or Pacific service difficult without a change in fleet composition. International flights provide end-market diversification and can often carry higher yields. - Integration risk with the AirTran acquisition.

Company Description



Southwestern Energy (SWN) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM

Bond Summary



$600 7.500% Sr. 2/1/2018 Ba1/BBB- $117.00 4.26% 349


Revenue $2,312 $2,160 $2,623 $2,984 $3,051




CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E SWN 0.7x 26.4x Ba1/BBB-

Total Debt/EBITDA (LTM) 0.6x 0.7x 0.7x 0.7x 0.9x RRC 3.0x 6.1x Ba3/BB



Capitalization








Preferred Equity $0



Maturities:

Next Call

NC

SWN is the clear leader in the developing Fayetteville Shale play. SWN was founded in 1929 as a local gas distribution company in Arkansas. In 1943, the company began an E&P program, and subsequently diversified into other regions. After some legal issues, a new management team was assembled in 1998, which marked the beginning of the "modern" SWN. In 2002, the company began accumulating acreage in the Overton field on the Arkansas side of the Arkoma Basin, which grew into SWN's cornerstone Fayetteville Shale play. On April 3, 2008, SWN announced it had sold 56k net acres in the Fayetteville to XTO Energy for $520 mn in cash. On July 1, 2008, SWN closed the sale of its utility business to SourceGas LLC for $320 mn. The company also announced the sale of certain Permian Basin assets for $225 mn. In total, the company sold $1 bn of non-core assets in 2008. In June 2010, the company sold $355 mn of East Texas assets to Exco. Southwestern was upgraded to investment grade by S&P in July 2010. The company is currently focused on diversifying in several new ventures, including the Lower Smackover.

Investment Strengths:• Dominant position in the emerging Fayetteville Shale play• Midstream segment provides business diversity• Strong organic reserve replacement history• Top-tier F&D costs

Investment Risks:• Spending continues to outweigh cash flow generation• Limited geographic diversity• 100% natural gas leverage

Key Dates/Catalysts:• May need to access the debt markets to fund the FOCF deficit• Continued rollout of midstream infrastructure; potential for separation or MLP of midstream segment over time• Results from the Marcellus and other developing plays, such as the Lower Smackover/Brown Dense formation

Company Description

0

100

200

300

400

500

600

700

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Sprint Nextel Corporation (S) Updated 1/20/12 Jason Kim 212-902-2233


OUTPERFORM/IN-LINEWe favor the shorter-dated bonds within Sprint's capital structure (OP on the 5.95s of 2014), which reflects our preference to invest in the company's willingness and ability to access

the capital markets to bolster its liquidity. We rate the 2019 and 2032 bonds In-Line as the company faces a challenging operational environment. Specifically, we expect the company

to burn $3.4bn in 2012 and $1.8bn in 2013 as it seeks to execute its aggressive 4G rollout and network modernization plan while also absorbing margin dilution from the iPhone.

Bond Summary



$1,157 5.950 Sr Nts 3/15/2014 Ba3/BB- 1/24/2012 100.744 99.25 6.33 584

$1,729 6.900 Sr Nts 5/1/2019 B1/BB- NC NC 83.75 10.11 844

$1,998 8.750 Sr Nts 3/15/2032 B1/BB- NC NC 82.50 10.91 811

Financial Profile FY09A FY10A 2Q11A 3Q11A 4Q11E 2011E

Postpaid Subs ('000s) 33,967 33,112 32,897 32,853 33,103 33,103

Postpaid ARPU $54.75 $54.47 $56.66 $57.68 $58.45 $56.98

Postpaid Churn 2.1% 1.9% 1.8% 1.9% 1.9% 1.8%

Prepaid Subs 10,688 12,277 13,797 14,282 14,932 14,932

Prepaid ARPU $24.28 $27.26 $27.54 $27.23 $27.47 $27.83

Revenue $32,260 $32,563 $8,311 $8,333 $8,706 $33,663

EBITDA 6,407 5,633 1,314 1,402 748 4,978

Free Cash Flow 3,288 2,880 316 (210) (233) 148

Agency


Cash & ST Investments 3,924 5,473 4,271 4,001 5,062 5,062

Net Debt 17,077 14,666 14,217 14,485 15,174 15,174 LEAP Unsecured Nts 5.7x 2.1x B3/CCC+

Key Credit Statistics MetroPCS 3.7x 5.0x B2/B



EBITDA Margin 19.9% 17.3% 15.8% 16.8% 8.6% 14.8%

Capitalization*

Debt /


Senior Guaranteed Debt $500 0.1x Revolver Size $2,100

Junior Guaranteed Debt 3,000 0.6x Letters of Credit (1,100)

Other Sprint Nextel Debt 4,500 Borrowings -

Sprint Capital Debt 6,204 Revolver Availability $1,000

Nextel / iPCS Debt 5,261

Capital Lease Obligations, Other 771 Cash* 5,420

Total Sprint Debt $20,236 3.6x Total Liquidity $6,420

Net Debt $14,816 2.7x

Market Cap $9,099


*Capitalization and cash are pro forma for various transactions subsequent to 3Q2011. Cash balance also reflects $331mn investment Sprint made in CLWR's equity offering in December, 2011.

Maturities:

Sprint Nextel is the third-largest wireless operator in the United States, with about 53 million customers. The company offers a range of wireless and wireline communications services to individuals, businesses, and governments. Sprint had nearly 33 million postpaid subscribers as of the end of 3Q2011, with roughly 28 million using the company's CDMA technology and 5 million using its iDEN platform. Sprint also served approximately 14 million prepaid customers.

Sprint also offers 4G services through its mobile virtual network operator wholesale relationship with Clearwire Corporation and its subsidiary Clearwire Communications LLC. As of September 30, 2011, Sprint held a 54% non-controlling economic interest in Clearwire Communications LLC and a 49.6% non-controlling voting interest in Clearwire Corporation.


Progress on Network Vision initiative

Potential for capital markets activities.

1,773 1,3512,637

14,475

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Strategic value: Sprint's position as the third largest wireless operator in the US gives the company strategic value as other communication providers look to enter the wireless market.

(2) The company has reduced churn in recent quarters, and the recent addition of the iPhone 4S to its device portfolio could help reduce churn even further.

Investment Risks:(1) Competition: The US wireless market is highly competitive and the top 2 players (Verizon and AT&T) have much greater scale and stronger balance sheets compared to Sprint.

(2) Cash flow is expected to be significantly negative in 2012 (and to a lesser extent in 2013) as the company faces elevated capex due to its Network Vision spending plans as well as dilution from iPhone offerings.

(3) Sprint faces meaningful debt maturities every year from 2013 through 2019.

Company Description



Standard Pacific Corp. (SPF) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 575 8.375 Sr. Nts 15-May-18 B3/B 101.5 8.06% 693


Total Revenues 1,180 925 877 215 245 280



Cash Taxes (0) - (0) - (0) - Comps Cap to-Debt Ratings

Capital Expenditures - - - - - - Standard Pacific 69% 1.1x B3/B

Free Cash Flow 459 (105) (300) (68) (91) 25 Beazer 86% 0.9x Caa3/CCC

KB Home 81% 1.0x B2/B+










Secured project debt / notes payable 4 Homebuilding Cash 420

6.5% Senior Notes - Financial Services Cash 11

6.875% Senior Notes - Restricted Cash 31

6.25% Senior Notes 5 Total Cash 463

7% Senior Notes 30

10.75% Senior Notes 280 Unsecured revolver 210

8.375% Senior Notes 575 Borrowing base 197

8.375% Senior Notes 400 Borrowings -

Term Loan B - Total Availability 197

Total Senior 1,294

6% Senior Subordinated Notes - Total Liquidity 660

9.25% Senior Subordinated Notes 10

Total Homebuilding Balance Sheet 1,304

Mortgage Credit Facilities 53


Non-Recourse JV Debt 178

Recourse JV Indebtedness -


Share price 4.1



Next Call

MW

0

5

10

15

20

25

30

35

2012 2013 2014 2015

Standard Pacific is a leading homebuilder, with operations in 27 markets across California, Florida, Texas, the Carolinas, Colorado, and Nevada. The company generally sells more upscale homes, with an average sales price in the mid-$300,000 range; however, it participates in multiple market segments across the pricing spectrum, from the most basic homes at $100,000 to mansions at over $7 million. MP CA Homes LLC, an affiliate of MatlinPatterson Global Advisors LLC, holds 49% of the voting power of Standard Pacific's stock. MatlinPatterson initially invested in the company on June 27, 2008, as part of a more comprehensive equity recapitalization and organizational restructuring.


Investment Strengths:- Large exposure to the California market, which has been recovering more quickly versus other regions.- Best-in-class gross margins and lean cost structure.- Strong management team.- Implied backing of MatlinPatterson.

Investment Risks:- Leverage remains somewhat high despite recent equity raises and debt reduction.- Speculative land acquisition strategy, focused largely on raw land.-Could draw on revolver to fund land purchases.

Company Description



Steel Dynamics (STLD) Updated 1/20/12 Justine Fisher 212-357-6711


IN-LINE

Bond Summary



$350 7.625% Sr Notes 15-Mar-20 BB+/Ba2 103.81 15-Mar-15 110.81 4.98 468


Revenue 6,301 2,080 2,043 1,879 8,018 8,370

EBITDA 602 269 182 148 885 913


Cash Taxes -- -- -- -- -- --

CapEx (133) (35) (38) (60) (152) (200)

Free Cash Flow 299 189 100 46 558 553

Total Debt 2,387 2,379 2,380 2,380 2,380 2,254

Cash 187 278 457 532 532 728 Comps Leverage CoverageAgency Ratings

Net Debt 2,200 2,102 1,924 1,848 1,848 1,526 Peabody Energy 3.2x 11.4x BB+/Ba1

Key Credit Statistics Steel Dynamics 2.7x 5.1x BB+/Ba2

Total Debt/EBITDA 4.0x 2.7x 2.5x US Steel Corp. 4.3x 5.0x BB/B1

Net Debt/EBITDA 3.7x 2.1x 1.7x FMG 7.6x 12.4x B1/B


EBITDA margin 9.56% 12.93% 8.92% 7.87% 11.03% 10.90%

Capitalization


Revolver Size 1100.0

Term Loan 0.0 Letters of Credit 49.0

Other 42.7 Borrowings 0.0

6.75% Senior Notes due 4/1/2015 500.0 Revolver Availability 1051.0

7.375% Senior Notes due 11/1/2012 700.0

7.75% Senior Notes due 4/15/2016 500.0 A/R facility 0.0

7.625% Senior notes due 3/15/2020 350.0 Borrowings 0.0

5.125% Senior Convertible Notes 287.5 A/R Availability 0.0


Market Cap 3,472.9 Cash 456.7

Enterprise Value 5,396.4 6.1x Total Liquidity 1507.7

Maturities:

Next Call

Steel Dynamics, the nation's fifth-largest producer of steel, produces flat-rolled and long product steel at its five mini-mills.

Key Dates/Catalysts:We expect demand for steel will continue to be relatively tepid in 2012.

0100200300400500600700800900

1,000

2012-13 2014-15 Thereafter

Investment Strengths:- Low costs: STLD has lower fixed costs than its integrated peers. It can also more easily add or reduce production with less expense than integrated producers. - Diversified mini-mill: STLD produces a variety of flat-rolled, products, structural, rail, and bar products. While non-residential construction has yet to recover (which would be necessary to see real traction in the long products businesses), this diversification is positive during times when flat-rolled pricing is under pressure.- Raw materials: Mini-mills should have an easier time passing through scrap surcharges to customers.

Investment Risks:- Scrap business margins: While ownership of raw materials assets could give STLD better insight into this market, margins in the scrap business have underwhelmed since the OmniSource acquisition in 2007.- Steel price gains could be hard to maintain as domestic demand remains relatively weak.- Steel Dynamics said it is considering options for a new flat-rolled mill, which could add leverage.

Company Description



Stone Energy (SGY) Updated: 1/26/12 Jason Gilbert (212) 902-3585


IN-LINE

Bond Summary



$200 6.750% Sr. Sub. 12/15/2014 Caa2/CCC+ $101.13 2/27/2012 $98.69 7.26% 696


Revenue $803 $702 $651 $840 $775


Free Operating Cash Flow $76 $188 $23 ($10) ($94)


CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E SGY 1.0x 33.5x Caa2/CCC+


EBITDA/Interest Expense (LTM) 44.2x 16.9x 36.0x 33.5x 11.3x WTI 1.2x 15.8x Caa1/B


Capitalization








Preferred Equity $0

Common Equity $664


Maturities:

Next Call

Stone Energy transformed itself through the August 2008 acquisition of Bois D'Arc, which increased proved reserves to 720 bcfe from 385 bcfe. The company is now the second-largest independent producer in the US GOM. Focuses of the company include western basin oil, eastern US (Appalachia) gas, and shallow/deep offshore gas production. The company has a 50% gas/50% oil mix and an R/P ratio of around six years.

SGY was founded in 1952 by James Stone as Stone Oil in Cincinnati, Ohio. The company relocated to Louisiana in 1981 and went public in 1993, initially with properties in the Gulf Coast Basin. In 2004, Stone made acquisitions in the deep shelf and deep water of the GOM and in the Rockies. In October 2005, the company announced a large reserve write-down (171 bcfe proved; 20.7% of year-end 2004), which prompted an SEC investigation; Stone's share price declined over 23%. In April 2006, SGY entered into an agreement to be acquired by Plains Exploration. However, in June 2006, the transaction was abandoned after Stone received a competing offer from Energy Partners, which the board deemed to be “superior.” This proposed transaction was terminated as well, after EPL received an acquisition proposal from Woodside Petroleum in October. In December 2006, Stone announced a strategic plan to refocus its operations on the Gulf Coast and sell its Rockies properties. The Rockies assets were subsequently sold to Newfield Exploration in May 2007 for $575 mn. In September 2007, its board of directors authorized a $100 mn share repurchase program. In April 2008, SGY announced the acquisition of Bois D’Arc Energy in a 62% cash and 38% stock transaction valued at $1.5 bn. The transaction closed in August 2008. In late 2011, Stone acquired BP's 75% interest in the Pompano field in the GOM for $204 mn.

Investment Strengths:• Multi-year inventory of lower-risk exploitation projects on the Gulf Shelf• Growing high-impact deepwater program• Marcellus Shale acreage offers additional upside optionality

Investment Risks:• Challenging regulatory environment in the GOM affects exploration activities • Reserve life of around six years is below E&P average of about 14• Weak recent track record of organic reserve replacement

Key Dates/Catalysts:• Potential for increased (and possibly costly) regulation in GOM following Macondo oil spill• Horizontal well results in the Marcellus Shale• Potential for bolt-on acquisitions

Company Description

0

50

100

150

200

250

300

350

400

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Stream Global Services Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$200 11.25 Sr Sec. 1-Oct-14 B1/B+ 105.62 10/1/2012 102.38 9.7% 955


Revenue 823 795 800 849 855 893

EBITDA 43 72 73 80 83 94

Cash Interest (8) (32) (29) (29) (26) (31)

Cash Taxes (13) (4) (10) (11) (10) (12)

CapEx (16) (23) (23) (37) (36) (40)

Free Cash Flow 14 (30) (0) (7) 13 6

Total Debt 74 218 228 243 255 224


Net Debt 26 203 209 221 229 199 SITEL 5.3x 2.0x Caa2/B-





EBITDA margin 5.2% 9.0% 9.1% 9.4% 9.7% 10.5%

Capitalization


ABL due Oct 2013 (L+375) 28 0.3 x Revolver Size 100

11.25% 2nd Lien Notes due Oct 2014 200 3.0 x - Amt Drawn 28

Other (incl unamortized discount) 15 3.0 x - LCs 6

Total Debt 243 3.0 x Amt Unutilized 67

Less cash 21 -- Covenant Limit (20)

Net Debt 221 2.8 x Adjusted Availability 47

Cash 21

Maturities: Liquidity 68

Next Call

Stream Global Services is a leading global service provider of customer relationship management (“CRM”) and other business process outsourcing (“BPO”) services to a wide range of customers. The company specializes in complex voice-centric transactions, such as sophisticated technical support, warranty support, customer service, and revenue generation services. Stream's leading customers include Dell Computer, Sirius/XM Satellite, and Hewlett Packard. On August 14, 2009, Stream announced that it had entered into a definitive agreement to merge with EGS Corp., the parent company of eTelecare.

Key Dates/Catalysts:- SGS is expected to report 4Q2011 earnings in February.

0

50

100

150

200

250

2011 2012 2013 2014 After

Investment Strengths:- Improving results driven by call volume growth: Revenues grew 10% in 1H2011 thanks to new client wins and cross-selling growth with existing clients.- eTelecare deal improves competitive position: The recent purchase positions Stream as a top 10 player in the industry.- Recurring revenue base: SGS generated consistent revenue growth through the 2008/2009 global slowdown, with sales results declining only 1% from the peak.- Low-cost footprint: Stream operates 49 service centers across North America, Latin America, Europe, the Philippines, India, the Middle East, and Africa, with limited geographic overlap.

Investment Risks:- Moderate customer diversity: A substantial portion of the company’s revenue is generated by a limited number of clients.- Marginal free cash flow: We expect Stream to generate marginal FCF as it continues to invest in new capacity growth over the next year.- Asset-light nature of business: The value of the company lies in its diverse, low-cost labor force.- Marginal enterprise coverage: SGS’s public comparables trade at approximately 5x 2011 EV/EBITDA.

Company Description



Sunoco Inc. (SUN) Updated 1/26/12 Jason Gilbert (212) 902-3585


IN-LINEBond Summary



$400 5.750% Sr. 1/15/2017 Ba2/BB+ $104.04 4.82% 405

Financial Profile 2008 2009 2010 2011E 2012E

Revenue $53,766 $31,497 $37,264 $44,226 $47,170

EBITDA $1,884 $1,310 $1,113 $616 $838

FOCF $306 $90 $295 $359 $1,794

CapEx $1,286 $899 $772 $634 $500




Debt/Capitalization (%) 43% 49% 44% 81% 97%

Capitalization


Leverage ('11E)

Coverage ('11E)

Agency Ratings

Cash and equivalents $1,656 Revolver Size $1,738 SUN 4.6x 3.5x Ba2/BB+

Revolving Credit Facility $0 Letters of Credit $115 VLO 1.2x 13.3x Baa2/BBB

Long Term Debt Borrowings $0 TSO 0.8x 11.1x Ba1/BB+

Notes $3,524 Revolver Availability $1,623

Total Long Term Debt $3,524 Cash $1,656


Preferred Equity $0



Maturities:

Next Call

NC

Sunoco (SUN) is the largest independent refiner in the Northeast US. The company currently operates three refineries with over 675k b/d of processing capacity. It also owns 32% of Sunoco Logistics Partners LP, five chemicals plants, and four coke plants producing about 20% of total US supply. Finally, the company markets refined products through a network of 4,700 retail outlets, of which about 500 are owned or operated.

Sunoco was founded in 1890 in PA as The Sun Oil Company and purchased its first refinery in 1894. In 1925, the company went public on the NYSE. After operating as an integrated oil company for almost a century, in 1988 Sun's board decided to spin off the E&P segment to focus on refining and marketing. Following the shift in strategy, the company made a number of refining acquisitions, including both Atlantic Petroleum's and Chevron's Philadelphia refineries. In 1998, the company was renamed Sunoco, and in 1995, it company completed the divestiture of its stake in Canadian oilsands subsidiary Suncor. After focusing its portfolio on refining for more than a decade, in 2001 the company expanded its chemicals production through the acquisition of Pittsburgh-based Aristech Chemical. Then, in 2003, the company acquired a polypropylene plant from Equistar and began construction of a $140 mn coke manufacturing facility in Haverhill, OH. Sunoco would later announce that it was permanently closing the Bayport, TX, polypropylene plant in January 2009. In 2004, Sunoco acquired El Paso's Eagle Point refinery in NJ. Most recently, in April 2009, the company announced the sale of its Tulsa refinery to Holly Corp. for $65 mn. In October 2009, the company idled its Eagle Point refinery indefinitely in response to weak market conditions. In June 2010, Sunoco announced plans to separate its Coke business. In December 2010, the company announced the sale of its Toledo refinery, indicating it plans to focus on the retail and logistics businesses. In summer 2011 SUN completed the spinoff of its SunCoke business. In late 2011, SUN announced its intention to sell or close its remaining refineries by summer 2012.

Investment Strengths:• Relatively low maintenance capex of around $500 mn • Strong liquidity• Shifting focus to more profitable logistics business

Investment Risks:• Reduced diversification following recent asset sales and pending coke separation• Uncertainty regarding business strategy going forward

Key Dates/Catalysts:• Sale/shutdown of refining business• Ratings actions

Company Description

0

50

100

150

200

250

300

350

400

450

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t M

atur

ities

($

mn)



Surgical Care Affiliates (SCAFF) Erin Blum 212-855-7718


IN-LINE

Bond Summary



$150 10.00% Sr Sub 15-Jul-17 Caa1/CCC+ $105.000 15-Jul-12 $96.000 10.991% 1,019


Consolidated facilities 125 123 144 123 144 144

Revenue $737 $740 $734 $184 $181 $188

EBITDA 98 104 116 26.6 29.6 31.3


Cash Taxes 14 16 20 (5) (5) (2)

CapEx 33 29 29 7 7 7

Other 31 27 47 1 (18) 22

Free Cash Flow 27 32 59 13 (6) 35

Total Debt $678 $682 $784 $682 $784 $784 Agency


Net Debt 644 652 701 652 736 701 SCAFF Sr 4.8x NA B3/B-

Key Credit Statistics SCAFF Sub 6.0x 1.3x Caa1/CCC+

Total Debt/EBITDA 6.9x 6.6x 6.8x USPI Sr 5.2x 3.0x Caa1/CCC+

Net Debt/EBITDA 6.6x 6.3x 6.1x THC 3.9x 2.7x Caa1/CCC+

VHS 4.3x 2.9x B3/B-


EBITDA margin 13.2% 14.0% 15.8% 14.4% 16.3% 16.6%


Description Size

Debt to LTM PF

EBITDA*

Debt to 2011E

EBITDA* Revolver Size $132

Revolving Credit Facility due 6/30/2016 $0 Letters of Credit 0

Term Loans due 12/29/2014 121 Borrowings 0

Term Loans--extended 12/30/2017 219 Revolver Availability 132

Incremental TL B 6/30/2018 100

Total Sr Sec debt $440 3.5x 3.8x Cash $48


8.875% Sr PIK Toggle Notes due 2015 $165

Total Sr bonds $165 4.8x 5.2x

10% Sr Sub Notes due 2017 $150

Total Sub debt $150 6.0x 6.5x

Capital Leases and Other $28

Total Debt $784 6.2x 6.8x

Market Cap NA

Enterprise Value NA

*LTM EBITDA is pro forma for IUH acquisition. 2011E is not.

Maturities:

Next Call

Updated 01/25/12

We rate SCAFF In-Line owing to our belief that ASCs are well positioned for a post-reform healthcare delivery system because they are low-cost providers. These factors are offset by SCAFF’s small size, high leverage, and modest free cash flow.

0

100

200

300

400

500

600

700

2012 2013 2014 2015+

SCAFF operates 123 ambulatory surgery centers (ASC) and four surgical hospitals located in 31 states. Key states are California, North Carolina, and Florida. ASCs present a powerful value proposition to payers (the cost of performing a surgery at ASCs is less than the cost of performing the same procedure at a general hospital), doctors (better scheduling and equity ownership), and patients (ASCs provide a less intimidating setting than hospitals). Facilities are co-owned with doctors, with SCAFF owning 65% of a facility on average. The company’s ASCs are multi-specialty, slanted toward gastro-intestinal and ophthalmology. 21% of revenue comes from Medicare.

SCAFF was formed in June 2007 through TPG's acquisition of HealthSouth's surgery division.

In July 2011, SCAFF completed the purchase of 49% of Indiana University Health (IUH) for $123 mn for nine ASCs. IUH continues to own the other 51%. To fund the acquisition, SCAFF raised $100 mn of additional Term Loan B, $25 mn of incremental equity from existing shareholders, and $0.8 mn from balance sheet. SCAFF also amended its credit agreement to carve out the IUH investments from its restrictive investment basket.

Key Dates/Catalysts:- Quarterly earnings announcements - Potential additional acquisitions or sale, reflecting our view that the industry is likely to consolidate. In 3Q11, SCAFF commented that its pipeline of potential JVs continues to grow.

Investment Strengths:- Well-positioned industry owing to a trend toward outpatient settings. Outpatient procedures are on the rise as a result of technological advances that allow less-invasive procedures and also because shorter hospital stays lower costs.

- Limited bad debt risk because ASCs are able to turn down patients who are unable to pay.

- Limited government reimbursement risk because Medicare contributes less than 20% of revenue.

- Modest capex (low $20 million range maintenance capex), and development capex can be curtailed as necessary.

Investment Risks:- ASC procedures tend to be more elective/deferrable than in-patient procedures, so volumes are likely to be at least somewhat negatively affected by the weak economy.

- Centers are not wholly owned and equity minority owners are paid dividends prior to debt service.

- Very high leverage at 6.0x.

Company Description



Swift Energy (SFY) Updated: 1/26/12 Jason Gilbert (212) 902-3585


IN-LINE

Bond Summary



$250 7.125% Sr. 6/1/2017 B3/B+ $103.56 6/1/2012 $101.84 6.50% 620


Revenue $827 $371 $438 $591 $746


Free Operating Cash Flow ($40) $10 ($95) ($100) ($106)


CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E SFY 2.0x 10.9x B3/B+

Total Debt/EBITDA (LTM) 1.0x 2.2x 1.7x 2.0x 1.6x BRY 2.6x 7.2x B2/BB-



Capitalization








Preferred Equity $0

Common Equity $971


Maturities:

Next Call

We view Swift as a "steady as she goes" story, with few near-term catalysts and little exposure to the popular unconventional shale plays. The company has operations focused on three core regions: South Texas, South Louisiana, and Toledo Bend, which spans the TX/LA border. South Louisiana is the company's most important region, with Lake Washington, Cote Blanche Island, Bay de Chene, and others representing around 80% of production. We believe Swift is the largest oil producer in LA. The company's asset mix is weighted approximately 60% to crude oil for production and 47% for proved reserves.

Earl Swift founded the company in 1979 and initially focused on West Virginia. The company went public in 1981 and expanded to 12 states by 1985. From 1998 to 2004, the company acquired new acreage in the Austin Chalk, New Zealand, and South Louisiana. In October 2007, SFY acquired 83k acres in South Texas from Escondido Resources for $250 mn. SFY then sold its New Zealand assets for $98 mn in two separate transactions in 1H2008. In September 2008, the company acquired South Texas acreage from Crimson Energy Partners for $46 mn. Swift operates 97% of its properties, giving it a high degree of control. In late 2009, the company entered into a JV with Petrohawk Energy to help develop the company's properties in the Eagle Ford Shale.

Investment Strengths:• High oil exposure, at about 60% of production• Emerging Eagle Ford and AWP Olmos plays provide resource upside• Conservative management team issued $115 mn of equity in 2009 to reduce debt

Investment Risks:• Virtually no production hedges • Weak historical all-in reserve replacement and F&D costs• Low diversification, with the majority of production and cash flow generated in hurricane-prone regions• Exposure to hurricane season with Louisiana assets

Key Dates/Catalysts:• Update on Eagle Ford and Olmos development

Company Description

0

50

100

150

200

250

300

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Telesat Canada (TELSAT) Updated 1/20/12 Jason Kim 212-902-2233


IN-LINEA dividend recap recap at Telesat no longer seems likely as management indicated that such a transaction would be inefficient from a tax perspective as well as potentially limiting

with respect to other strategic alternatives the company may choose to pursue. The company has strong organic growth prospects in 2012 and 2013 due to new satellite launches,

and we view its bonds as fairly valued at current levels as yield-to-call bonds.

Bond Summary



$693 11.000 Sr Nts 01-Nov-15 Caa1/B- 105.500 01-May-12 106.88 5.07 322

$217 12.500 Sr Sub Nts 01-Nov-17 Caa1/B- 106.250 01-May-13 111.50 7.53 663

Financial Profile (C$) FY09A FY10A 2Q11A 3Q11A 4Q11E FY11E

Revenue C$787 C$821 C$200 C$200 C$201 C$804

EBITDA 560 625 155 154 155 637

Cash Flow From Ops C$298 C$345 C$83 C$162 C$61 C$422

CapEx (264) (262) (163) (61) (70) (372)

Free Cash Flow C$34 C$83 (C$81) C$102 (C$9) C$50

Total Debt excl. Prefs C$3,229 C$3,107 C$3,010 C$3,108 C$3,019 C$3,019

Cash 154 220 142 198 285 285

Net Debt C$3,075 C$2,887 C$2,867 C$2,910 C$2,734 C$2,734 Agency



Net Debt/EBITDA 5.5x 4.6x 4.5x 4.7x 4.4x 4.4x EH Holdings - SATS 5.8x 2.3x B3/B-


EBITDA Margin 71.2% 76.1% 77.5% 77.0% 77.0% 77.2%

Capitalization

Debt to


Revolver (C$153mm Facility) C$0 Revolver Size C$153

Term Loan A (Canadian Facility) 120 Letters of Credit (0)

Term Loan B (US Facility) 1,887 Borrowings -

Delayed Draw Term Loan B (US Facility) 145 Revolver Availability C$153

Capital Lease Obligations -

Total Telesat Canada Secured Debt C$2,152 3.4x Cash C$198

11.000% Sr Nts due 2015 728 Total Liquidity C$351

Total Telesat Canada Sr Debt C$2,880 4.6x

12.500% Sr Sub Nts due 2017 228

Total Telesat Canada Sr Sub Debt C$3,108 5.0x

Telesat Holdings PIK Preferreds 141

Total Debt + Preferred C$3,249 5.2x

Market Cap NA

Enterprise Value NA

Maturities:

Telesat is the fourth-largest FSS provider in the world. Telesat currently has 13 owned and operated satellites, with two more under construction (Nimiq 6 and Anik G1). The company also manages the operations of 13 additional satellites for third parties. Telesat offers services to more than 400 customers worldwide, including a variety of blue-chip companies such as Bell TV, Star Choice, EchoStar, Disney, HBO, and Canadian Broadcasting Corporation.

Key Dates/Catalysts:March 2012: 4Q2011 earnings.

Update on the progress of the satellite launches.

Potential for bank debt refinancing in the absence of other strategic transactions.

3,249

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2012 2013 2014 2015 2016+

Investment Strengths:(1) Significant deleveraging: Over the past three years since its LBO, Telesat has delevered by almost 3 turns owing to strong EBITDA growth as new satellites were successfully launched. Telesat also realized significant cost synergies from merging the Loral Skynet businesses with Telesat's existing operations.

(2) Substantial revenue backlog: As of September 30, 2011, Telesat had C$5.6 billion of backlog, representing 6.9x LTM revenues. This provides excellent visibility into revenue trends.

Investment Risks:(1) Satellite launch/anomaly risk: Historically, one in 10 launches has failed, and satellites are exposed to various technical anomalies while in orbit.

(2) Customer concentration.

(3) Intermediate-term competitive threats: For domestic (i.e., in Canada) growth opportunities, we believe Ciel could pose some threat for Telesat. In international markets, increasing supply in these regions could lead to pricing pressure.

(4) Satellite capex cycle.

(5) FX risk.

Company Description



Tenet Healthcare Corp. (THC) Erin Blum 212-855-7718


OUTPERFORM (secureds)/IN-LINE (unsecureds)

Bond Summary


(MM) (%) Priority Maturity Ratings Price Date Price (%) bp CDS Levels 5-Year

$900 6.25 Sr. Sec. 01-Nov-18 B1/BB- T+50 MW $103.500 5.619% 482 Snr 543 / 568

$600 8 Sr. Uns. 01-Aug-20 Caa1/CCC+ $104.000 8/1/2015 $103.000 7.410% 661


Revenue $9,031 $9,205 $9,630 $2,301 $2,342 $2,408

EBITDA 980 1,050 1,157 281 195 306


Cash Taxes (23) (977) 111 2 4 38

CapEx 456 476 398 196 100 100

Free Cash Flow (31) (4) 155 (21) 48 129

Total Debt $4,501 $4,261 $4,398 $4,261 $4,276 $4,398

Cash 690 405 232 405 185 232

Net Debt 3,811 3,856 4,166 3,856 4,091 4,166 Agency


Total Debt/EBITDA 4.6x 4.1x 3.8x THC Sec 2.2x NA B1/BB-

Net Debt/EBITDA 3.9x 3.7x 3.6x THC Sr Uns 3.9x 2.7x Caa1/CCC+

CYH 4.8x 2.8x B3/B


EBITDA margin 10.9% 11.4% 12.0% 12.2% 8.3% 12.7%

Pro Forma Capitalization

Description Size

Debt toLTM

EBITDA

Debt to 2011E

EBITDA Liquidity

Revolver $0 Revolver Size $800

Total Sec debt (Lien on assets) $0 0.0x 0.0x Letters of Credit 169

Borrowings 0

9% first lien due May 1, 2015 $1 Min avail requirement 100

10% first lien due May 1, 2018 714 Revolver Availability 531

8.875% first lien due July 1, 2019 925

6.25% first lien due 11/1/2018 900 Cash $185

Total Sec debt (Lien on stock) 2,540 2.2x 2.2x Total Liquidity $716

6.375% Sr. Notes due 12/1/11 $0

6.5% Sr. Notes due 6/1/12 57

7.375 Sr. Notes due 2/1/13 216

9.875% Sr. Notes due 7/1/14 60

9.25% Sr. Notes due 2/1/15 474

6.875% Sr. Notes due 11/15/31 430

8.0% Sr. Notes due 8/01/20 600

Total Sr debt 1,837 3.9x 3.8x

Total Sub debt 0

Notes Payable and Cap Leases $21


7% Pref Equity $345

Market Cap 2,374


Note: First lien debt is limited to the greater of $2.6 bn or 3.0x; secured debt is limited to the greater of $3.2 bn or 4.0x.

Maturities:

Next Call

Updated 01/25/12

We rate the THC secureds Outperform. We like secured hospital paper due to our continuing concerns around reimbursement and the bonds trade slightly wide to the othersecured bonds, despite much lower leverage. More broadly, we are generally constructive on THC due to improving leverage and free cash flow. We rate the unsecureds In-Line as we prefer the HCA holdcos for similar yield.

0

1,000

2,000

3,000

4,000

5,000

2012 2013 2014 2015+

Hospital operator focused on urban markets. THC operates 49 hospitals concentrated in Florida, Texas, and California. In 2003, the DOJ initiated investigations of THC relating to Medicare fraud and physician kick-backs. The company settled in 2006 for $725 million plus $175 million of foregone Medicare fees.

Through 2009 and 2010, THC refinanced over $3.5 billion of unsecured bonds with $2.4 billion of secured bonds, $600 million of 10-year unsecured bonds, and $334 million of preferred equity. In December 2010, CYH announced an unsolicited bid for THC at $6 a share for a combination of cash and stock, which THC rejected. In April 2011, THC alleged that CYH overbilled Medicare with a potential liability in excess of $1 billion. CYH subsequently changed its bid to all cash and later also raised its bid to $7.25 a share. In May 2011, CYH withdrew its bid for THC.

In November 2011, THC issued $900 mn of secured bonds in order to refinance its 2015 secured bond and 2011 senior notes.

Key Dates/Catalysts:- Quarterly earnings announcements - Acquisitions. THC has been acquisitive recently on the Outpatient side.- Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We view the ACA as aa net positive for hospitals.

Investment Strengths:- Potential for continued margin improvement and improved free cash flow as legal settlement payments have been completed.

- First large bond maturity is not until 2015.


- Ongoing negative trend in higher-margin commercial volumes. THC's facilities are located in competitive urban markets.

- Weak Medicare case mix due to a decline in cardio surgeries could continue to pressure earnings.

- Under pressure from shareholders to create value/return cash because stock is trading well below the CYH bid price that was turned down.

Company Description



Tenneco Inc. (TEN) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$250 8.125% Sr. Nts 15-Nov-15 B1/BB- 104.06 2/27/2012 105.80 -1481.3% (1,486)


Revenue 5,916.0 4,649.0 5,937.0 6,998.0 7,168.8 7,699.9

EBITDA 381.0 353.0 514.0 583.0 608.4 610.5


Cash Taxes (62.0) 38.0 (53.0) (67.0) (83.0) (80.0)

CapEx (233.0) (120.0) (152.0) (184.0) (192.0) (231.0)

Free Cash Flow (73.0) 121.0 92.0 37.0 81.5 151.1

Total Debt 1,451.0 1,220.0 1,223.0 1,304.0 1,304.0 1,304.0

Cash 126.0 167.0 233.0 163.0 343.5 494.6 Comps Leverage Coverage Ratings

Net Debt 1,325.0 1,053.0 990.0 1,141.0 960.5 809.4 AXL 2.8x 4.8x B1/BB-

Key Credit Statistics CTBUS 1.3x 8.4x B1/BB-

Total Debt/EBITDA 3.8x 3.5x 2.4x 2.2x 2.1x 2.1x GT 3.0x 6.5x Ba3/BB-

Net Debt/EBITDA 3.5x 3.0x 1.9x 2.0x 1.6x 1.3x MTOR 3.0x 3.6x B2/B

TEN 2.2x 4.5x Ba3/BB

EBITDA/Interest 3.4x 2.7x 3.4x 4.5x 5.6x 5.6x TRW 0.9x 13.6x Ba2/BB+

EBITDA margin 6.4% 7.6% 8.7% 8.3% 8.5% 7.9%

Capitalization


Revolver due 2012/2014 97.0 0.6x Revolver/LC Size 752.0

Term Loan B due June 2016 148.0 0.6x - Amt Drawn 97.0

Other (foreign lines of credit) 84.0 0.6x - LCs Drawn 54.0

8.125% Senior Notes due 2015 250.0 2.2x Amt Available 601.0

7.75% Senior Notes due 2018 225.0 2.2x Cash on hand 163.0

6.875% Senior Notes due 2020 500.0 2.2x Net Liquidity 764.0


Less cash 163.0 --

Net Debt 1141.0 2.0x

Market Cap 1,908.4 --


Maturities:

Next Call

Tenneco Inc. designs, manufactures, and markets emission control and ride control products and systems for the automotive original equipment market and the after-market. The company's products include shocks and struts, shock absorbers, mufflers, and performance exhaust products, as well as noise, vibration, and harshness control components.

Key Dates/Catalysts:- Tenneco is expected to report 4Q2011 earnings on February 2.

0100200300400500600700800900

2012 2013 2014 2015 2016 2017 After

Investment Strengths:- Global emissions regulation timeline: Approximately 63% of Tenneco’s top line is derived from the company’s emission control business. The emission control business is set up to grow over the next three years thanks to stricter global emission regulations.- Commercial vehicle opportunity: Historically, commercial vehicles have represented a small portion of Tenneco’s revenues (7% in 2010). Management expects to grow the commercial vehicle & specialty business to 30-35% of OE revenue by 2015 with the launch of new programs and stricter emission regulations.- Successful capital markets actions: TEN completed an initiative to amend and extend $550 million of its revolving credit facility (now due May 2014). TEN also refinanced its 8.625% subordinated notes with proceeds from the 6.875% senior notes of 2020.- Strong exposure to the BRICs and Thai markets: TEN has a global manufacturing footprint with strong relationships in the BRIC+T countries.

Investment Risks:- Significant exposure to the Europe: Tenneco derives 43% of its revenue from Europe. Demand in the region may be adversely affected by the Eurozone's debt concerns and associated austerity measures.- Tenneco has one of the highest steel price exposures in the automotive sector.

Company Description



Tesoro Corp. (TSO) Updated: 1/26/12 Jason Gilbert (212) 902-3585


UNDERPERFORM

Bond Summary



$300 9.750% Sr. 6/1/2019 Ba1/BB+ $104.88 6/1/2014 $113.50 5.49% 519


Revenue $28,309 $16,872 $20,583 $30,204 $31,721

EBITDA (Adj for non-cash items) $1,026 $442 $561 $1,937 $1,405

Free Operating Cash Flow $213 ($19) $97 $1,139 $338


CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E TSO 0.8x 11.1x Ba1/BB+

Total Debt/EBITDA (LTM) 1.6x 4.2x 3.6x 0.8x 1.1x SUN 4.6x 3.5x Ba2/BB+



Capitalization


Cash and equivalents $1,135 Revolver Size $2,500




Total Long Term Debt $1,604 Cash $1,135


Preferred Equity $0



Maturities:

Next Call

Tesoro operates seven refineries concentrated in the Western US. With about 670k b/d capacity, TSO is the fourth largest independent refiner in the US (vs. leader Valero with 3.0 mn b/d capacity). Approximately 50% of TSO's capacity is equipped to process heavy crude.

Tesoro was founded in 1968 by Bob Westfield as an E&P company and purchased Alaska assets in the 1970s. The company first entered into refining in 1998 through the purchase of the Anacortes (WA) refinery from Shell and the Hawaii refinery from BHP. In 2000, management decided to focus entirely on R&M. They purchased Golden Eagle in 2002 when the stock was at $15. Timing proved unfortunate, however, as the 9/11 events and one of the warmest winters on record made 2002 one of the worst years for refining margins in history. TSO was a distressed credit and was forced to focus on debt reduction.

In January 2007, TSO announced the acquisition of Shell's Wilmington refinery, which has a capacity of 100k b/d, for $1.63 bn. In September 2007, Tracinda Corp. announced a partial tender for 16% of TSO shares for $64. The tender was later withdrawn. In December 2010, Tesoro announced it would contribute a portion of its logistics assets to an MLP and sell a minority interest in the MLP in an IPO. The $273 mn IPO was completed in April 2011. In 2012, Tesoro announced plans to divest its Hawaii operations.

Investment Strengths:• Ability to process a wide spectrum of crude gravities; heavy crude represents about one-third of crude processed• Waterborne access at several refineries provides crude purchasing flexibility• CARB fuel requirements in California limit product imports from other regions and have made PADD5 more resilient over time

Investment Risks:• Geographic concentration in PADD5, which remains weak• Pure-play refining and marketing company

Key Dates/Catalysts:• Product demand trends in PADD5• Sale of Hawaii refinery

Company Description

050

100150200250300350400450500

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Textron Inc. (TXT) Updated 1/26/12 Brian Jacoby, CFA 212-902-3258

Textron Financial Corp. Cody Sauer, CFA 212-855-8553


OUTPERFORMBond Summary

Size Coupon Agency Yield Price T-sprd Z-sprd 5 Yr

Ticker (MM) (%) Maturity Ratings (%) ($) Spread (bp) CDS

TXT $250 5.950 21-Sep-21 Baa3/BBB- 5.4 $104.03 350 354 235

TXT (TFC) $375 5.400 28-Apr-13 Baa3/BB+ 2.7 $103.30 250 219 61

Financial Profile ($mn) FY08 FY09 4Q10 FY10 4Q11 FY11 FY12E

Textron Inc. (Finco on equity basis)

Revenue 13,287 10,139 3,100 10,307 3,242 11,172 12,100

EBITDA 1,690 928 297 1,019 377 1,228 1,350

Gross Interest Expense (125) (144) (43) (152) (30) (154) (150)

Other (non-cash pension) (318) (417) (278) (301) (227) (229) (143)

Working Capital (357) 292 328 42 152 (84) (85)

Net Operating Cash Flow 1 890 659 304 608 272 761 972

Capital Expenditures (537) (238) (136) (270) (152) (423) (450)

Dividends (284) (21) (6) (22) (5) (22) (23)

Free Cash Flow169 400 162 316 115 316 499

Capital contribution (to)/from TFC (483) 79 (5) 122 (30) (3) 0

FCF after capital transact. w/TFC (414) 479 157 438 85 313 499

Total Debt (excl TFC) 2,569 3,584 2,302 2,302 2,459 2,459 2,305

Cash (excl TFC) 531 1,748 898 898 871 871 1,141

Net Debt 2,038 1,836 1,404 1,404 1,588 1,588 1,164


LTM Total Debt/EBITDA 1.52x 3.86x 2.26x 2.26x 2.00x 2.00x 1.71x

LTM Net Debt/EBITDA 1.21x 1.98x 1.38x 1.38x 1.29x 1.29x 0.86x

Debt/Capital 52.1% 55.9% 43.6% 43.6% 47.3% 47.3% 41.4%

LTM FCF/Debt 2.7% 11.2% 13.7% 13.7% 12.9% 12.9% 21.6%

EBITDA/Interest expense 13.5x 6.4x 6.9x 6.7x 12.6x 8.0x 9.0x

EBITDA Margin 12.7% 9.2% 9.6% 9.9% 11.6% 11.0% 11.2%

1 Excludes capital contributions to TFC and dividends from TFC

Textron Financial Corp.

Revenue 723 360 24 207 12

Net Income (461) (205) (39) (230) NA

Cash 16 144 33 33 14

Assets 9,344 7,324 4,570 4,570 3,213

Debt (excl interco debt) 7,388 5,488 3,435 3,435 1,974

Shareholders Equity 1,079 804 501 501 413

Fixed charge cov excl cap contrib2-0.74x -0.89x -1.77x -1.89x NA

Debt/Equity 6.8x 6.8x 6.9x 6.9x 4.8x2 TXT Financial received $152mn, $383mn, $270mn, and $625mn in gross cash capital contributions from TXT in 9mos11, 2010, 2009, and 2008, respectively, to comply with support agreement.

Capitalization - TXT Inc. 12/31/2011 12/31/2011 Comps Leverage

EBITDA Coverage

Agency Ratings

Description Size EBITDA Liquidity Bombardier 2.9x 6.8x Ba2/BB+

Revolvers 0 TXT Inc. Ingersoll-Rand 2.2x 4.1x Baa1/BBB+

TXT Inc 4.5% 2013 Convertible 375 Revolver due 2015 1,000

TXT Inc. 5.95% 2021 250 Commercial Paper (11)

Other Sr. Debt 1,834 Borrowings 0

Total Sr debt 2,459 2.0x Revolver Availability 989

Total Sub debt 0 Cash+Available Revolver 1,860

Total debt (excl TFC) 2,459 2.0x

TXT Fin.

Ex/Im facility 500

Net Debt (excl TFC) 1,588 1.3x Letters of Credit 0

Market Cap 6,951 5.7x Borrowings (426)

Enterprise Value 8,539 7.0x Ex/Im Availability 74

TFC Cash+Ex/Im Availability 88

Maturities:

Textron Inc. (TXT) is a diversified industrial company with a portfolio of leading brands. It operates through five business segments: Cessna (24% of consolidated revenue) is the world's largest manufacturer of general aviation aircraft (e.g., business jets and piston aircraft). TXT's Industrial segment (24% of revenue) manufactures Greenlee tools, E-Z-Go golf carts, Jacobsen lawnmowers, and Kautex blow-molded fuel systems for cars and light trucks (i.e., plastic fuel tanks). TXT's Bell segment (31% of revenue) is a leading supplier of helicopters and tilt rotor aircraft. Textron Systems (19% of revenue) is a primary supplier to the US Department of Defense, providing combat vehicles, marine craft, network-centric warfare equipment, and unmanned aerial vehicles. The last segment is Finance, which accounts for only 2% of revenues. TXT, through wholly-owned Textron Financial Corp. (TFC), provides financing for TXT customers through wholesale and other forms of lending. TFC had $3.5 billion in managed receivables at 3Q2011. TFC expects to further shrink this portfolio to approximately $2.5 billion within several years by winding down its non-captive business. TXT has a support agreement with TFC that requires TXT to (1) maintain TFC's fixed charge coverage at 1.25x or higher; (2) own 100% of TFC; and (3) maintain TFC's equity at or above $200 million. In addition, as per TFC's credit agreement, it must maintain debt/equity at 9x or less.

Key Dates/Catalysts: 1Q2012 – Continued progress on winding down TFC's portfolio; update on business jet outlook.


- TXT has a portfolio of businesses with leading brands, such as Cessna, Bell, and E-Z-Go.

- TXT has solid liquidity with $871 million in manufacturing cash at 4Q11, and it should generate $499 million in FCF in 2012, in our view.

- If the wind-down of Textron Finance (TFC) continues to be successful, it could free up capital for TXT by 2013.

Investment Risks:

- TXT has been mentioned as a potential split-up candidate, according to Bloomberg News; at this writing, the company has not commented on this.

- Textron Finance (TFC) may need further financial support from TXT, as it could decide to liquidate some of its longer-tail golf course and resort portfolios.

- Cessna still faces a weak business jet market, particularly for light jets, a key market for the company.

- While TXT's defense programs are well supported and funded, such as the V-22 Osprey tilt-rotor aircraft, the company is exposed to the declining US defense budget.

Company Description

0 100 200 300 400 500 600 700

2012 2013 2014 2015

($, m

n)

Textron Inc. Textron Financial



Toll Brothers Inc. (TOL) Updated 1/26/2012 Kristen McDuffy 212-357-6157


IN-LINE

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpIL 250 6.75 Sr. Nts 1-Nov-19 Ba1/BB+ 105.5 5.86% 438


Total Revenues 1,495 1,476 1,680 334 428 366




Capital Expenditures (5) (10) (8) (4) (3) (2) Toll Brothers 38% 2.1x Ba1/BB+

Free Cash Flow (142) (79) (144) (111) (22) (136) DR Horton 38% 2.2x Ba3/BB-


Total Cash and Cash Equivalents 1,298 1,160 744 1,153 1,160 752




Inventories / Homebuilding Debt (2) NA 2.1x NA 2.0x 2.1x NA




Unsecured revolver - Unsecured revolver 885

Unsecured term loan(1) 98 Borrowings -

Other loans payable 57 LOCs 100

Mortgage company warehouse loan 140 Revolver Availability 785


5.95% Senior Notes 268 Cash 906

4.95% Senior Notes 300 Marketable Securities 234

5.15% Senior Notes 400 Total Liquidity 1,140


6.75% Senior Notes 1,655

Total Senior Debt -

Joint Venture Repayment Guarantees 1,655


Minority Interest 6

Shares Outstanding 168

Share Price 23.0



Maturities:

Next Call

MW

0

50

100

150

200

250

300

350

2012 2013 2014 2015 2016

Toll Brothers Inc. designs, builds, and markets single-family detached and attached homes, primarily focusing on the luxury market. The company is also involved in projects where it builds or converts apartment buildings into high-, mid-, and low-rise luxury homes. Toll Brothers targets move-up, empty-nester, active-adult, age-qualified, and second-home buyers in 21 states throughout the United States.


Investment Strengths:- Leading market share in luxury market. - Strong brand recognition.- Limited competition.- Conservative leverage profile, high cash balance.- Strong management team.

Investment Risks:- Strategy of buying raw land pushes profit to out-years.- Company could use revolving credit facility to fund land purchases.

Company Description



TPC Group Inc. (TPCG) Updated 1/26/2012 Kristen McDuffy 212-357-6157


OUTPERFORMWe rate the TPCG 8.25% senior secured notes of 2017 Outperform, viewing the bonds as a solid core holding that also offer compelling relative value given the company's

strong growth trajectory. In our view, TPCG's operating performance over the next several years should be exceptionally strong, leading the 8.25s to tighten from current

trading levels. At the same time, we think downside risk is mitigated by the secured nature of the bonds and TPCG's inherent business stability due to index-based pricing

mechanisms in its sales contracts.

Bond Summary


Rating (MM) (%) Priority Maturity Ratings Price Date Price (%) bpOP 350 8.25 Sr. Sec. 1-Oct-17 B1/-- 106.19 10/1/2013 102.5 7.60% 673

Financial Profile ($, mn)* FY:09 FY:10 FY:11E Q4:10 Q3:11 Q4:11E

Revenues 1,179 1,918 2,906 486 835 722

Adjusted EBITDA 54 104 117 18 44 (32)


Cash Taxes 7 39 (12) 0 (6) 18 TPCG 2.1x 5.0x B1/--

Capital Expenditures (9) (23) (50) (11) (12) (18) Georgia Gulf 2.7x 3.9x B1/B+

Free Cash Flow 13 75 37 39 31 21

Total Debt Outstanding 274 350 350 350 350 350

Cash equivalents 0 86 104 86 82 104




EBITDA / Interest 3.7x 5.5x 3.5x 5.5x 5.0x 3.5x

LTM EBITDA margin 5% 5% 4% 5% 6% 4%



Revolving Credit Facility - Revolving Credit Facility 175

8.25% Senior Secured Notes 350 Borrowing Base 175

Total Debt 350 2.1x Borrowings -

Availability 175

Share Price 30.0

Market Capitalization 480 Cash and Cash Equivalents 82

Enterprise Value 748 4.5x Total Liquidity 257

Maturities:

Next Call

TPC Group (TPCG) is a leading processor of crude C4 hydrocarbons, including butadiene, butene-1, raffinates, and MTBE. The company also upgrades isobutylene and propylene into higher-value derivative such as polyisobutylene, diisobutylene, nonene, and tetramer. TPCG operates as a merchant processor and marketer of these products, serving as an intermediary between its raw materials suppliers − North American ethylene producers − and a diverse base of customers. It is organized around two business segments: C4 Processing and Performance Products, which accounted for 65% and 35%, respectively, of its LTM EBITDA.

Key Dates/Catalysts:4QFY11 earning releasePotential ratings upgrade by credit agencies

Investment Strengths:- Leading market positions with limited competition.- Long-term relationships with customers and feedstock suppliers.- Well-positioned assets.- Margin stability and strong free cash flow generation.

Investment Risks:- Limited diversification.- Relatively low margins.- Recent actions have been shareholder-friendly.- Relatively new management team.

Company Description

0

50

100

150

200

250

300

350

400

2012 2013 2014 2015+



TRW Automotive (TRW) Updated 1/26/2012 Franklin Jarman 212-902-7537


IN-LINE

Bond Summary



$334 7.00% Sr. Nts 15-Mar-14 Ba2/BB+ NC NC 107.38 336.7% 316

$467 7.25% Sr. Nts 15-Mar-17 Ba2/BB+ NC NC 108.13 541.1% 465


Revenue 14,995.0 11,614.0 14,383.0 15,971.0 16,163.9 16,585.6

EBITDA 979.0 911.0 1,671.0 1,727.0 1,704.9 1,897.9


Cash Taxes (148.0) (61.0) (76.0) (76.0) (76.0) (76.0)

CapEx (482.0) (201.0) (294.0) (354.0) (524.0) (540.0)

Free Cash Flow 375.0 236.0 758.0 520.0 638.4 753.1


Cash 766.0 788.0 1,078.0 890.0 1,320.4 2,073.5 AXL 2.8x 4.8x B1/BB-

Net Debt 2,156.0 1,583.0 768.0 642.0 211.6 (541.5) CTBUS 1.3x 8.4x B1/BB-



Net Debt/EBITDA 2.2x 1.7x 0.5x 0.4x 0.1x -0.3x TEN 2.2x 4.5x Ba3/BB



EBITDA margin 6.5% 7.8% 11.6% 10.8% 10.5% 11.4%

Capitalization - Pro forma


Revolver due 2016 0.0 0.1x Revolver Size 1,020.0

Other 105.0 0.1x - Amt Drawn 0.0

7.0% Senior Notes due 2014 334.0 0.9x - LCs Drawn 28.0

6.375% Senior Euro Notes due 2014 233.0 0.9x Amt Unutilized 992.0

3.500% Exchangeable Sr Notes due 2015 174.0 0.9x Cash 890.0

7.25% Senior Notes due 2017 467.0 0.9x Net Liquidity 1,882.0

8.875% Senior Notes due 2017 219.0 0.9x


Less cash 890.0

Net Debt 642.0 0.4x

Market Cap 4,867.8


Maturities:

Next Call

TRW is a leading manufacturer of active and passive safety-related automotive systems, modules, and components. TRW believes it holds a top-three market position in foundation brakes (No. 1), anti-lock braking systems (No. 3), steering gears (No. 1), seat belts (No. 1), air bags (No. 2), and engine valves (No. 2). The company’s long-term strategy is to become the leading supplier of active and passive safety-related components in the automotive market. Active safety refers to automobile features that mainly allow the driver to avoid collisions. Most notably, steering and braking components fall into this category. Passive safety refers to occupant restraints that reduce the likelihood of injury once a collision has occurred. Specifically, TRW’s passive safety systems include airbags, seatbelts, and crash sensors.

Key Dates/Catalysts:- TRW is expected to report 4Q2011 earnings on February 16, 2012.

0100200300400500600700800

2012 2013 2014 2015 2016 2017 After

Investment Strengths:- Strong customer and product revenue diversity:No single customer accounts for more than 20% of revenues; TRW is a leader in multiple products, including brakes, steering gears, seat belts, air bags, and engine valves.- Strong liquidity: TRW ended 3Q2011 with more than $1.8 billion of liquidity.- Low leverage: TRW is one of the least levered high yield auto supplier credits in our coverage universe. The company ended 3Q2011 with leverage of 0.9x (0.4x net).

Investment Risks:- Significant exposure to the Europe: TRW derives 51% of its revenue from Europe. Demand in the region may be adversely affected by the Eurozone's debt concerns and associated austerity measures.- Strategic acquisitions pose a risk: In our view, TRW could be poised to consider making a strategic acquisition given its scale and low leverage.

Company Description



U.S. Steel (X) Updated 1/20/12 Justine Fisher 212-357-6711


UNDERPERFORM

Bond Summary



$600 7.375% Sr Notes 1-Apr-20 BB/B1 MW MW 101.61 7.11 579


Revenue 17,374 5,120 5,081 4,599 19,664 19,696

EBITDA 505 433 340 101 937 1,153


Cash Taxes (97) (65) (33) (12) (126) (85)

CapEx (676) (221) (225) (230) (856) (850)

Free Cash Flow (2,383) (200) (155) (210) (728) 20

Total Debt 3,733 3,901 3,858 4,055 4,055 4,041 Comps Leverage CoverageAgency Ratings

Cash 578 393 270 250 250 228 Peabody Energy 3.2x 11.4x BB+/Ba1

Net Debt 3,155 3,508 3,588 3,805 3,805 3,813 Steel Dynamics 2.7x 5.1x BB+/Ba2

Key Credit Statistics US Steel Corp. 4.3x 5.0x BB/B1

Total Debt/EBITDA 7.4X 2.3X 2.8X 10.1X 4.3X 3.5X FMG 7.6x 12.4x B1/B

EBITDA/Interest 1.8X 9.0X 8.9X 1.9X 5.0X 5.5X

EBITDA margin 2.91% 8.46% 6.69% 2.19% 4.76% 5.85%

Capitalization


Industrial Development Bonds 458.0 Revolver Size 1,296.0

Fairfield Caster Lease 10.0 Letters of Credit -

Other Capital Leases and obligations 80.0 Borrowings 230.5

Revolver drawings (US, USSK, and USSS) 142.0 Revolver Availability 1,065.5

Province note (Stelco-related) 114.0

5.65% Senior Notes due 2013 300.0 A/R facility 625.0

6.05% Senior Notes due 2017 450.0 Borrowings 75.0

7.00% Senior Notes due 2018 500.0 A/R Availability 550.0


7.375% Senior Notes due 2020 600.0 Cash 270.0

4% Convertible Notes due 2014 863.0 Total Liquidity 1,885.5


Market Cap 4,230.7 Enterprise Value 7,818.7 8.3x

Maturities

Next Call

U.S. Steel is one of the largest steel producers in the United States. Most of its annual production is flat-rolled tonnage made in the United States, but U.S. Steel also has a large flat-rolled operation in Europe, and produces about 1 million tons of tubular products in the United States annually.

Key Dates/Catalysts:January 31: U.S. Steel scheduled to announce 4Q2011 earnings.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2012-13 2014-15 Thereafter

Investment Strengths:- X owns iron ore assets, which gives it more price stability on its inputs in the US. - It has a high level of contractual business with OEMs.- X has a large OCTG (tubular) business that allows it to benefit from high demand for shale oil- and gas-related demand.

Investment Risks:- Exposure to cyclical steel market. Steel prices could remain under pressure in the current global economic environment.- X has high fixed costs versus mini-mill peers, which can greatly reduce EBITDA in a low price environment.- European segment is vulnerable to this year's Euroland economic woes. - Not integrated in coking coal.

Company Description



Unisys Corp. (UIS) Updated 1/26/2012 Franklin Jarman 212-902-7537

Contact analyst for updates and other information. Karl Blunden 212-357-2769

NOT COVERED

Bond Summary



$216 12.750 Sr. Secured 15-Oct-14 Ba1/BB+ 106.38 10/15/2012 114.13 1.6% 148

Financial Profile 2009A 2010A 1Q2011A 2Q2011A 3Q2011A LTM-3Q2011

Revenue 4,598 4,060 911 937 1,020 3,913

EBITDA 698 635 95 98 160 548


Cash Taxes (42) (57) (33) 9 (33) (61)

CapEx (144) (147) (32) (17) (15) (91)

Free Cash Flow 194 132 (15) 7 65 202

Total Debt 912 824 619 447 445 445 Comps Leverage Coverage Ratings

Cash 648 828 833 625 667 667 JDAS 1.9x 7.1x B1/BB-

Net Debt 264 (4) (214) (178) (222) (222) SGS 3.0x 2.8x B1/B+



Net Debt/EBITDA 0.4 x 0.0 x -0.4 x -0.3 x -0.4 x -0.4 x


EBITDA margin 15.2% 15.6% 10.4% 10.4% 15.7% 14.0%

Capitalization


12.75% Sr Sec Notes due 2014 216 0.4 x Revolver Size 0

14.25% Sr Sec Notes due 2015 26 0.4 x A/R securitization facility 150

Other (13) 0.4 x Cash 667

8.0% Sr Unsec Notes due 2012 66 0.8 x Total Liquidity 817

12.5% Sr Unsec Notes due 2016 150 0.8 x

Total Debt 445 0.8 x

Market Cap 886

Enterprise Value 664 1.2 x

Maturities:

Next Call

Unisys provides IT consulting and operations services to its global customer base. This includes systems integration and consulting, IT and process outsourcing, IT infrastructure development and maintenance, and security. Services-related revenues contributed approximately 88% of total revenues. The remaining 12% of revenues is driven by the Technology segment, mainly enterprise server sales. Business with the US government represents a sizable portion of UIS's revenues at approximately 20%.

Key Dates/Catalysts:- Unisys will report 4Q2011 earnings on January 31, 2012.

0

50

100

150

200

250

2012 2013 2014 2015 After

Company Strengths:- Proactive capital structure actions: UIS priced 2.6 million shares of mandatory convertible preferred stock in 1Q2011 for net proceeds of $250 million. In April, the company used the proceeds to purchase $44 million of its senior secured notes due 2014 and $135 million of its senior secured notes due 2015. In October 2011, Unisys called for the redemption of the remaining $66 million of its 8% senior notes due 2012, with the redemption to take place in November.- Adequate cash balances support restructuring while also offsetting recent earnings weakness.- Competitive strength has been in government security programs, which are typically long-lived and provide steady growth.

Company Risks:- Technology segment (12% of revenues) has been volatile, offsetting some of UIS's recent restructuring benefits.- Relatively small in size versus competitors. UIS competes against larger companies such as EDS, IBM, and Accenture, which have better financial profiles.

Company Description



United Continental Holdings, Inc. (UAL) Updated 1/24/2012 Justine Fisher 212-357-6711


OUTPERFORM/IN-LINE/UNDERPERFORM

Bond Summary



$506 10.400 EETC 1-Nov-16 Baa2/BBB+ NC NC 113.75 4.74% 444

$87 12.000 EETC 15-Jan-16 Ba2/BB+ NC NC #N/A N/A #VALUE! #N/A N/A

$378 6.636 EETC 2-Jul-22 Baa2/BB+ NC NC 102.75 6.13% 481

$219 7.875 EETC 2-Jul-18 Ba3/B NC NC 99.25 8.13% 783

$703 5.983 EETC 19-Apr-22 Baa1/A- NC NC 106.31 4.97% 365

$345 9.000 EETC 8-Jul-16 Baa2/BBB+ NC NC 113.25 5.14% 484


Revenue 34,013 9,702 10,171 8,773 36,848 36,935

EBITDAR 6,498 1,484 1,694 946 4,876 4,944


Income Taxes 5 (4) (7) 0 (13) (76)

CapEx (779) (177) (211) (300) (931) (1,909)

Free Cash Flow 2,421 576 174 (25) 1,487 739


Cash 8,717 8,625 8,407 8,025 8,025 8,711 UAL 2.6x 5.4x B2/B

Net Debt 6,416 4,973 4,750 4,746 4,746 4,007 DAL 3.9x 4.1x B2/B




EBITDA margin 19.1% 15.3% 16.7% 10.8% 13.2% 13.4%

Capitalization


EBITDAR Liquidity

Old CAL secured debt 4,384 Revolver Size 405

UAUA Fixed rate secureds 455 Letters of Credit 226

6.636% due 7/2/22 (2007-1, A) 378 Borrowings 0

7.336% due 7/2/19 (2007-1, B) 84 Revolver Availability 179

L + 225 due 7/2/14 (2007-1, C) 74

10.4% due 11/1/16 (2009-1, A) 599

9.75% due 1/15/17 (2009-2, A) 621

Other 6,562


Market Cap 7,176.2 Cash 8,407


Maturities:

Next Call

United Continental is the world's largest airline, offering service to approximately 375 locations through its mainline United and regional United Express offerings. It is a member of the Star Alliance, the world's largest airline alliance. The company is focused on its main hub cities of Chicago, Denver, Los Angeles, San Francisco, Washington Dulles, Newark, Houston, and Cleveland. Of the major network carriers, United (along with Delta) has some of the largest exposure to the Pacific region. United and Continental announced their merger in 2010 and received a single operating certifcate at the end of 2011.

Key Dates/Catalysts:UAL is expected to report earnings on January 26.

0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2013 2014 2015 Thereafter

Investment Strengths:- Size: United is the wordl's largest airline and it has now received a single operating certifcate with Continental, allowing it to further integrate its operations and achieve synergies. - Asia routes: United (along with Delta) is the major US carrier to Asia. Its operations in Los Angeles and San Francisco give it hubs close to Asia. It also enjoys fifth freedom rights in Japan.- While December monthly PRASM was up by less than expected (up 4-5% yoy), PRASM trends have been decent for the airlines despite macroeconomic concerns.

Investment Risks:- High fuel prices are a continued risk for airlines. - Limited unencumbered collateral: United has limited unencumbered assets that it could use to raise additional secured debt. - Risk to routes/slots bond refinancing depending on the outcome of the AMR bankruptcy. UAL has $700 million of routes/slots bonds maturing in 2013 and another $800 million of routes/slots bonds maturing in 2015. Its $1.2 billion credit facility matures in 2012.

Company Description



United Surgical Partners Intl (USPI) Erin Blum 212-855-7718


OUTPERFORM

Bond Summary



$240 8.875% Sr. Sub. 1-May-17 Caa1/CCC+ 104.438 5/1/2012 103.000 7.81% 748

$198 9.25% Sub. PIK Toggle 1-May-17 Caa1/CCC+ 104.625 5/1/2012 101.000 8.88% 855


Revenue $622 $598 $603 $154 $149 $155

EBITDA 201 203 201 55 48 52


Cash Taxes (0) 33 40 8 9 10

CapEx 32 40 31 11 15 9

Free Cash Flow 90 74 79 7 35 11

Total Debt $1,146 $1,144 $1,131 $1,144 $1,116 $1,131 LTM Comps Leverage CoverageAgency Ratings

Cash 35 60 52 60 56 52 USPI 5.2x 3.0x Caa1/CCC+

Net Debt 1,111 1,084 1,079 1,084 1,061 1,079 SCAFF Sr 4.8x NA B3/B-

Key Credit Statistics SCAFF Sub 6.0x 1.3x Caa1/CCC+

Total Debt/EBITDA 0.6x 0.5x 0.5x VANGUA 4.3x 2.9x B3/B-

Net Debt/EBITDA 5.5x 5.3x 5.4x IAS 6.0x 2.1x Caa1/CCC+


EBITDA margin 32.3% 33.9% 33.3% 35.9% 31.9% 33.8%

Capitalization


EBITDADebt to 2011E

EBITDA Liquidity

Revolver 4/19/2013* $16 Revolver Size $85

Term Loan--US due 4/19/2014 504 Letters of Credit 2

Term Loan--UK due 4/19/2014 51 Borrowings 16

Secured debt at Consolidated Subsidiaries 47 Revolver Availability 67

Total Sr Sec debt 619 3.0x 3.1x

A/R facility $0

Total Sr bonds $0 3.0x 3.1x Borrowings 0

A/R Availability 0

8.875% Snr Sub Notes due 2017 $240

9.25% Snr Sub PIK Toggle Notes due 2017 $198 Cash $56

Total Sub debt 438 5.2x 5.3x Total Liquidity 123

Other $2Total Debt 1,058 5.2x 5.3xMarket Cap NA

Enterprise Value NA

*$16mn was borrowed on the revolver after quarter end.

Maturities:

Updated 01/25/12

Plus $150 mm incremental credit facility available under certain conditions

Next Call

We rate USPI Outperform, as we view USPI and ambulatory surgery centers as well positioned to benefit in a cost-conscious healthcare environment. In addition, with less than 20% of revenue from Medicare, reimbursement risk is lower than other providers. Over the longer term, we believe USPI is well positioned to be a consolidator of ambulatory surgery centers.

0

100

200

300

400

500

600

2012 2013 2014 2015+

USPI operates 186 multi-specialty ambulatory surgery centers (ASC) across the US, and five surgical hospitals in the UK. Centers are owned in partnership with doctors and, in many cases, local hospital systems. ASCs present a powerful value proposition to payers (procedures performed at ASCs cost less than the same procedures performed at a general hospital), doctors (better scheduling and equity ownership), and patients (less intimidating setting than hospital). USPI is differentiated from its competitors by its strong relationships with hospital systems – which translate into higher reimbursement rates from managed care – and facility concentration in select cities.

Key Dates/Catalysts:- Quarterly earnings announcements (An improving trend in ss case growth is key. Recent quarters have been around 2% compared with the 4% historical level.) - Potential acquisitions, reflecting our view that the industry is likely to consolidate.

Investment Strengths:- Well-positioned industry owing to trend toward outpatient settings. Outpatient procedures are on the rise as a result of technological advances that allow less-invasive procedures and cost saving of shorter hospital stays.

- Partnerships with local hospital systems allow USPI to benefit from hospital rate setting, with managed care resulting in better rates.

- Good growth prospects. Industry is ripe for consolidation, with the top five chains controlling less than 15% of the market.

Investment Risks:- Centers are not wholly owned and equity minority owners are paid dividends prior to debt service. The average USPI ownership is roughly 35%.

- Rate pressure from managed care.

Company Description



Universal Health Services (UHS) Erin Blum 212-855-7718


UNDERPERFORM (secureds)/IN-LINE(unsecureds)

Bond Summary

Size Coupon Agency Bid YTW STW 5-Year

(MM) (%) Priority Maturity Ratings Price Date Price (%) bp Uns

$400 7.125 Sr Sec Notes 30-Jun-16 Baa3/BB+ T+30 MW $110.000 4.596% 427 195 / 205

$250 7.00 Sr Uns 1-Oct-18 B1/B+ 103.5 1-Oct-14 $104.000 6.002% 520


Revenue $5,202 $5,568 $7,545 $1,559 $1,849 $1,884

EBITDA 702 761 1,190 223 271 283

Rent 70 77 94 22 23 24


Cash Taxes 170 152 251 38 52 58

CapEx 380 239 323 62 96 100

Free Cash Flow 137 243 379 35 106 54

Total Debt $1,052 $3,916 $3,642 $3,916 $3,688 $3,642

Cash 9 29 47 29 39 47Net Debt 1,042 3,886 3,595 3,886 3,649 3,595


Key Credit Statistics UHS sec 2.9x NA Baa3/BB+

Total Debt+8*rent/EBITDAR 2.1x 5.4x 3.4x UHS uns 3.2x 0.2x B1/B+

Net Debt+8*rent/EBITDAR 2.1x 5.4x 3.4x HMA 1st Lien 3.0x NA --/BB-

HCA 1st ln 2.8x NA Ba3/BB

EBITDAR/Interest+rent 6.7x 5.4x 4.4x 3.8x 4.1x 4.4x HCA sr uns 4.2x NA B3/B-

EBITDA margin 13.5% 13.7% 15.8% 14.3% 14.6% 15.0%

Capitalization

Description Size

Debt to PF LTMEBITDA

Debt to 2011E

EBITDA Liquidity

Revolving Credit Facility 11/15/2015* $250 Revolver Size $800

AR Revolver 10/25/2013 $240 Letters of Credit 64

Revenue bonds + mortgage payables $5 Borrowings 250

Term Loan A due 11/15/2015 $1,023 Revolver Availability $486

Term Loan B due 1115/2016 $1,459

Old PSYS debt $24 A/R facility $240

Total bank debt $3,002 2.6x 2.5x Borrowings 240

A/R Availability $0

6.75% Sr. Sec. Notes due 11/15/2011* 0

7.125% Sr. Sec. Notes due 6/30/2016 400 Cash $39

Total Secured debt 400 2.9x 2.9x Total Liquidity $525

7.000% Sr. Notes due 10/1/2018 250

Total Sr debt $250 3.2x 2.7x


Market Cap 4,042


Rent-adjusted leverage 4,398 3.5x 3.4x

*Assumes 2011 notes were repaid with revolver borrowings.

LTM PF includes PSYS EBITDA.

Maturities:

We are In-Line on the seniors and we are Underperform on the secureds. The secureds trade tightest of the hospitals by a wide margin despite mid-3x leverage. We see the modest benefits of the behavioral business as offset by the company's very urban portfolio. Though behavioral health is well positioned relative to acute care owing to a favorable supply/demand mismatch of beds, its exposure to state Medicaid funding is a risk.

Updated 01/25/12

Next Call

UHS is a mid-sized hospital operator with 25 acute care hospitals, 179 behavioral health centers, and 7 other facilities (surgical hospitals, ambulatory surgery centers, and radiation oncology centers). The company’s footprint is concentrated in the west and southwest regions of the country, with five acute care facilities in the Las Vegas, Nevada, area.

In November 2010, UHS closed its acquisition of Psychiatric Solutions (PSYS) for $3.1 bn. Pro forma for the acquisition, UHS's behavioral health segment (psychiatric hospitals and boarding schools) will contribute about 58% of EBITDA, up from 40% before the acquisition. In November 2011, UHS signed a definitive agreement to acquire Knapp Medical Center, which has annual revenue of approximately $140 mn. The acquisition is expected to close in 1Q12.

Key Dates/Catalysts:- Quarterly earnings announcements, including progress on planned synergies. - Potential for additional large, debt-funded acquisitions, as management has suggested this possibility at recent investor events.- Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We view the ACA as a net positive for hospitals.

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2012 2013 2014 2015+

Investment Strengths:- Opportunity for de-levering through synergies from the PSYS acquisition.

- Behavioral health business improves margins and diversifies risk. EBITDA margin is higher in this segment than in acute care (low 20%s compared with low teens % for acute care), and bad debt risk is much lower, as most admissions are made only after pre-approval from the payer. However, behavioral health is more dependent on state Medicaid dollars.

Investment Risks:- Medicare and Medicaid reimbursement could be reduced

- Integration risk: UHS plans to roll the acquired PSYS facilities into its existing regional management structure.

- Concentration in Las Vegas, which has experienced higher-than-average unemployment.

- Acute care volumes have been weak across the industry and are expected to remain so for the near term.

- Management maintains voting control (84%).

Company Description



US Airways Group, Inc. (LCC) Updated 1/24/2012 Joshua Pinkerton 212-357-9774


IN-LINE

Bond Summary



$254 6.250 EETC 22-Apr-23 Ba2/BBB MW MW 95.75 7.07% 575

$73 8.500 EETC 22-Apr-17 B2/B+ MW MW 95.50 10.13% 982

(thousands of dollars)


Revenue 11,908 3,503 3,436 3,108 13,008 13,089

EBITDAR 1,699 405 411 250 1,254 1,335


Income Taxes 0 0 (21) 3 (18) (4)

CapEx (201) (66) (210) (188) (504) (778)

Free Cash Flow 603 158 (314) (304) (155) (493)


Cash 1,859 2,247 2,043 1,780 1,780 1,562 UAL 2.6x 5.4x B2/B

Net Debt 2,541 2,095 2,428 2,732 2,732 3,225 DAL 3.9x 4.1x B2/B




EBITDA margin 14.3% 11.6% 12.0% 8.0% 9.6% 10.2%

Capitalization


EBITDAR Liquidity

Term loan, matures 2014 1,136.0 Revolver Size 0

Equipment notes payable 1,609.0 Letters of Credit 0

EETCs 1,245.0 Borrowings 0

Other secured debt 77.0 Revolver Availability 0

Prepaid Miles 200.0

Airbus Advance 165.0

Industrial development bonds 29.0

Other debt 10.0


Public Market Cap 1,265.0 Cash 2,043


Maturities:

Next Call

US Airways is the fifth largest airline in the US and the smallest of the mainline carriers. It has hubs in Charlotte, Philadelphia and Phoenix and operates the US Airways Shuttle between La Guardia, Boston and Washington National. It is a member of the Star Alliance. It is the only major US airline that does not currently hedge any of its fuel needs. It is one of the larger Airbus customers in the US.

Key Dates/Catalysts:US Airways is expected to report earnings January 25.

0200400600800

1,0001,2001,4001,6001,800

2012 2013 2014 2015 Thereafter

Investment Strengths:- High proportion of leased aircraft. LCC has the highest proportion of leased aircraft of all the airlines we cover. This should increase its flexibility to return older aircraft and reduce capacity if necessary.

- Solid express business. US Airways Express makes up about 17% of LCC's total ASMs. Express flights generally have a higher PRASM which helps LCC's overall PRASM numbers.

Investment Risks:- Consolidation. US Airways has been a persistent advocate for further consolidation in the US airline industry and has been linked to a possible bid for AMR in recent press reports.

- Weak hub markets. With hubs in Charlotte, Philadelphia and Phoenix, US Airways lacks a presence in the largest cities and business markets in the US.

- Unhedged. US Airways is the only major US carrier that does not hedge fuel, which could expose it to large swings in costs if fuel prices rise.

- Limited international operations. US Airways flies to Europe and Latin America but does not serve any destinations in the Pacific.

Company Description



Valeant Pharmaceuticals (VRXCN) Erin Blum 212-855-7718


OUTPERFORM

Bond Summary



$500 6.75 Sr Nts 1-Oct-17 B1/BB- $103.375 10/1/2014 $101.500 6.371% 562

$700 7.00 Sr Nts 1-Oct-20 B1/BB- $103.500 10/1/2015 $101.000 6.808% 550

Financial Profile 2010A PF LTM* 2011E** 4Q10A 3Q11A 4Q11E Agency

Revenue $1,210 $3,306 $2,443 $515 $601 $668 Comps Leverage Coverage Ratings

EBITDA 482 1,585 1,236 247 307 342 Valeant Pharma (VRX) 4.3x 4.6x B1/BB-

Warner Chilcott (WCRX) 2.7x 5.8x B3/B+

Interest paid $96 $346 $321 $52 $86 $85 Mylan (MYL) 3.1x 4.6x B1/BB-

Taxes paid (0) 0 (39) (103) (29) 6 Endo (ENDP) 3.6x 4.9x Ba3/BB-

Capex 0 38 52 0 10 8

Free Cash Flow 0 1,124 653 0 164 210

Total Debt $3,641 $6,714 $6,714 $3,641 $5,250 $6,714


Net Debt 3,246 6,456 6,391 3,246 4,992 6,391





EBITDA margin 39.8% 47.9% 50.6% 48.0% 51.2% 51.2%

* PF LTM includes a full year of all recently closed acquisitions but not future projected synergies.

** 2011 estimates is not pro forma for a full year of acquisitions.

Capitalization pro forma for 4% convert redemption and new revolver.

Description

PF for convert/ revolver

Debt to PF LTM

EBITDA*

Debt to PF 2011E EBITDA* Liquidity

Revolving Credit Facility 4/20/2016 $220 Revolver Size 275

Term Loan A 4/20/2016 $2,225 Letters of credit 0

Total sr sec debt $2,445 1.5x 1.5x Borrowings 220


6.750% Sr Notes due 2017 $500

7.000% Sr Notes due 2020** $690 Cash & marketable securities $258

5.375% BVF converts due 2014** $19 Total Liquidity $313

6.875% Sr Notes due 12/1/2018** $945

6.75% Sr Notes due 8/15/2021 $650

6.5% Sr Notes due 7/15/2016** $916

7.25% Sr Notes due 7/15/2022 $550

Total sr bonds $4,269 4.2x 4.2x

Other debt $68


Market Cap 14,808


* PF LTM EBITDA and PF 2011E is pro forma for a full year of all recently closed acquisitions but not future projected synergies.

** PF for additional repurchase of BVF converts and $100mn face value repurchase of HY bonds in 4Q11.

Maturities:

Next Call

We rate VRX Outperform as we think the bonds trade cheap enough to offset what we see as a small risk of VRX making a multi-billion, levering acquisition. Fundamentally, we like VRX’s (1) highly diversified revenue base with the largest product only 6% of sales, (2) minimal patent exposure, and (3) solid free cash flow. While the company has been acquisitive and shareholder friendly in the past 12 months, we find that leverage has actually not increased since the close of the BVF merger.

Updated 01/25/12

0

1000

2000

3000

4000

5000

6000

7000

8000

2012 2013 2014 2015+

Valeant Pharmaceuticals (VRX) is a specialty pharmaceutical company that acquires, manufactures, and markets a broad range of pharmaceutical products, including branded products in the US, Canada, and Australia and "branded" generics in Eastern Europe and Latin America. Branded generics are products that are bioequivalent to original products, but marketed under company brand names. The company's key products are Wellbutrin, Zovirax, Xenazine (all acquired with BVF) and Benzaclin (acquired with Dermik). Key new epilepsy drug retigabine (brand names Potiga and Trobalt) was recently approved in Europe and in the US.

On September 28, 2010, specialty pharma company Biovail (BVF) and VRX merged. In November 2010, February 2011, and March 2011, VRX issued a total of $3.15 bn of debt, the proceeds of which it used to repurchase shares, pay down all of term loan A, repay the 4% convertible notes, and fund two acquisitions, PharmaSwiss and the rights to Zovirax for US and Canada.

In March 2011, VRX announced a bid to acquire Cephalon (CEPH), which would have been all debt funded for a total of $6.7 bn. CEPH's board rejected the bid. CEPH was later acquired by TEVA for $81.50 per share.

Between June 2011 and January 2012, VRX closed the licensing agreement for Elidel and Xerese for $76 mn, the roughly $500 mn acquisition of Sanitas, the $425 mn acquisition of Dermik, the $345mn acquisition of Ortho Dermatologics, the Zuacta distribution agreement, the $91mn acquisition of Afexa, and the A$625mn acquisition of iNova. The company has put in place a $2.225 bn term loan in order to finance all the acquisitions and has previously indicated that it intends to repay 50% of the roughly $1 bn it would raise to fund recently announced acquisitions within two years. In December 2011, VRX also made a hostile bid for ISTA for $6.50 a share and later increased it to $7.50 a share for an acquisition price of roughly $370 mn. The offer expires January 31, 2012.

Key Dates/Catalysts:-Possible debt repayment in accordance with July comments that would repay about half of the new debt- Possible acquisition announcements ; acquisitions have been historically purely debt funded.- Potential share repurchase. - Potential sale of Potiga.

Investment Strengths:- Diversified product offering and geographic mix. No one product is more than 10% of revenue.

- Strong free cash flow generation: VRX generates strong FCF (17% LTM), as it benefits from modest capex and low R&D.

- Favorable tax rate due to BVF's Barbados subsidiary. VRX expects to reduce its cash tax rate to less than 10% from 36% for 2011.

Investment Risks:- Most of the company's top drugs are maturing and facing declining sales profiles.

- Potential for share repurchases. Management is strongly focused on EPS growth.

- The "virtual R&D" business model requires VRX to be a continual acquirer, which could mean repeat bond issuances. VRX's recent acquisitions have been focused on dermatology as well as European branded generics.

Company Description



Vanguard Health (VHS) Erin Blum 212-855-7718


UNDERPERFORM

Bond Summary



$950 8.00 Sr 01-Feb-18 B3/B- $104.000 01-Feb-14 $104.000 6.841% 651

Financial Profile FY2011 PF LTM FY2012E Dec 10 2Q Sept 11 1Q Dec 11 2QE

Revenue $4,896 $6,561 $6,555 $961 $1,570 $1,650

EBITDA 418 534 537 85 122 136


Cash Taxes 9 (2) 25 10 (14) 12

CapEx 207 263 383 35 63 80

Free Cash Flow 70 90 (68) (8) (151) 101

Total Debt $2,788 $2,346 $2,340 $1,968 $2,346 $2,344

Cash 937 155 232 58 155 253 Agency

Net Debt 1,851 2,192 2,108 1,909 2,192 2,091 LTM Comps Leverage Coverage Ratings

Key Credit Statistics VANGUA 4.3x 2.9x B3/B-

Total Debt/EBITDA 6.7x 4.4x 4.4x THC uns 3.9x 2.7x Caa1/CCC+

Net Debt/EBITDA 4.4x 4.1x 3.9x IAS 6.0x 2.1x Caa1/CCC+


EBITDA margin 8.5% 8.1% 8.2% 8.8% 7.8% 8.3%

Capitalization

Description Size

Debt to PF LTM

EBITDA*

Debt to FY12E

EBITDA Liquidity

Revolving Credit Facility 1/29/2015 $0 Revolver Size $260

Term Loans due 1/29/2016 805 Letters of Credit 34

Total Sr Sec debt 805 1.5x 1.5x Borrowings 0


8% Senior Notes due 2018 1,157

7.75% Senior Notes due 2/1/2019 350 Cash $155

Total Sr bonds $1,507 4.3x 4.3x Total Liquidity $380

10.375% Holdco notes due 2/1/2016 $15

Other Debt and Capital Leases $20


Market Cap 870


*LTM is pro forma for acquisitions.

Maturities:

Next Call

Updated 01/25/12

We rate Vanguard Underperform due to (1) the risk of Medicare cuts, as Vanguard's low margins magnify the effect of revenue cuts on EBITDA; (2) risk to growth in Detroit in a tough economy as well as capital commitments weighing down on FCF; and (3) our view that the Arizona Medicaid plan is likely to be a drag for now.

0

400

800

1,200

1,600

2,000

2,400

2,800

2012 2013 2014 2015+

Smaller hospital operator with 28 facilities concentrated in five markets: San Antonio, the greater Phoenix area, Chicago, Massachusetts, and Detroit. VANGUA is differentiated from its peers based on its high market concentrations. As a result of its market-concentration strategy, acquisitions have been "lumpy," consisting of several facilities in one area. The acquisition of Detroit Medical Center (eight facilities with a $417 million purchase price) was completed December 31, 2010, and the acquisitions of Arizona Heart Hospital (59 beds) and Avera Heart Hospital of South Dakota (55 beds) closed on October 4, 2010. In September 2011, VHS acquired a 51% interest in Valley Baptist, which is expected to generate $525 mn of revenues.

In June 2011, VHS issued 25 mn shares in an initial public offering at $18 a share or approximately 6.5x EV/EBITDA. In July 2011, the underwriters exercised in full the over-allotment option and issued an additional 3.75 mn shares at $18 per share. To date, the company has redeemed $628.8 mn and another $95.2 mn of the 10.375% discount notes, leaving 3% of the principal left. Proceeds of the discount holdco notes were for a dividend to the sponsors of $447 mn. Blackstone and Morgan Stanley Capital Partners are the sponsors.

Key Dates/Catalysts:- Quarterly earnings announcements (commercial volumes have been weak industry-wide, although bad debt expense has been relatively stable). DMC performance will be key, as the Detroit market will now comprise more than a third of VHS revenues.- Potential acquisition announcements.- Election results (November 2012) and potential Supreme Court decision on the constitutionality of the individual mandate could determine the fate of the Affordable Care Act (ACA). We view the ACA as a net positive for hospitals.

Investment Strengths:- Market concentration improves the hospitals' negotiating position with managed care payers.

- Opportunity for growth due to recent large acquisitions.

Investment Risks:- Medicare and Medicaid reimbursement could be reduced

- Integration risk associated with Detroit Medical Center. The deal also includes a $850 million capex commitment and the assumption of a $228 million pension liability.


- The health plan is likely to post declining revenue in the near term due to reduced enrollment.

Company Description



Venoco Inc. (VQ) Updated: 1/26/12 Jason Gilbert (212) 902-3585


IN-LINE

Bond Summary



$149 11.500% Sr. 10/1/2017 Caa1/B $105.75 10/1/2013 $103.00 10.66% 1036


Revenue $463 $342 $333 $339 $389




CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E VQ 3.9x 3.0x Caa1/B

Total Debt/EBITDA (LTM) 3.1x 3.7x 3.4x 3.9x 3.2x SGY 1.0x 33.5x Caa2/CCC+

EBITDA/Interest Expense (LTM) 4.6x 4.6x 4.6x 3.0x 3.6x MMR 2.0x 15.5x Caa1/B

Debt to Capitalization % 120% 134% 115% 94% 85% WTI 1.2x 15.8x Caa1/B

Capitalization








Preferred Equity $0

Common Equity $40

Total Capitalization $722

Maturities:

Next Call

Venoco is a California-focused E&P and probably the largest gas producer in the state. VQ produces from four primary regions: Sacramento Basin, offshore California, Southern CA onshore, and Texas. The company's strategy has been to acquire and enhance under-invested properties. Following operational missteps in 2007, however, we believe management has become more internally focused, making execution the near-term priority.

Formerly a petroleum engineer at Unocal, CEO Tim Marquez co-founded Venoco in 1992. The company acquired interests in its "workhorse" Willows and Grimes fields near Sacramento from Mobil in 1996. In 1998, VQ acquired Sacramento Delta fields from Chevron. VQ purchased TexCal in 2006 for $456 mn in cash, which created both Sacramento Basin and Hastings Field exposure. VQ also owns three platforms offshore Santa Barbara (Gail, Holly, and Grace), which the company acquired in the late 1990s. The company went public in November 2005 and remains closely held by Marquez (60%). In March 2007, VQ acquired the Manvel (TX) and West Montalvo (coastal CA) fields for $106 mn. In April 2010, the company announced the sale of three assets in Texas for $100 mn. On August 29, 2011 Venoco received a proposal from CEO Timothy Marquez to take the company private at $12.50/share ($770 mn). In January 2012, VQ announced it would go through with the offer by Marquez.

Investment Strengths:• Largest natural gas producer in California• Significant growth opportunities in Sac Basin, W Montalvo, and S Ellwood fields• 83% of 2012E production hedged

Investment Risks:• Weak operating history as a public company• Limited exposure to high visibility plays; high average cost production• Equity-friendly management appears to have higher-than-peer-average sustained leverage targets• High capex needs relative to cash flow

Key Dates/Catalysts:• Monterey shale well results• Management expects to sell its Hastings Field interest for $250-400 mn• Take private transaction and subsequent strategy

Company Description

0

100

200

300

400

500

600

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Viasystems, Inc. (VIASYS) Updated 1/26/2012 Franklin Jarman 212-902-7537


UNDERPERFORM

Bond Summary



$214 12.0 Sec 15-Jan-15 B2/BB- 106 7/15/2012 108.13 6.8% 668

Financial Profile FY08 FY09 FY10 FY11E FY12E

Revenue 713 496 929 1,055 1,157

EBITDA 92 66 142 137 156


Cash Taxes (6) (6) (13) (15) (15)

CapEx (49) (22) (57) (110) (110) Comps Leverage Coverage Ratings

Free Cash Flow 5 102 18 (43) (33) AMKR 2.3x 6.6x Ba3/BB

SANM 3.6x 3.6x B1/B

Total Debt 221 331 225 226 226

Cash 83 109 104 60 27

Net Debt 138 222 122 166 199


Total Debt/EBITDA 2.4 x 5.0 x 1.6 x 1.6 x 1.5 x

Net Debt/EBITDA 1.5 x 3.4 x 0.9 x 1.2 x 1.3 x

EBITDA/Interest 3.9 x 1.8 x 4.3 x 4.4 x 5.0 x

EBITDA margin 12.9% 13.3% 15.2% 13.0% 13.5%

Capitalization


$75 mm ABL facility 0 0.1 x US ABL facility 75

Foreign credit facilities 10 0.1 x US ABL facility availability 40

Capital leases 1 0.1 x - Amt Drawn 0

12% 2nd lien notes due 2015 214 1.6 x - LCs Drawn 0

Other 1 1.6 x Amt Unutilized 39

Total Debt 226 1.6 x Foreign credit facilities 45

Less cash 71 -- - Amt Drawn 10

Net Debt 155 1.1 x Amt Unutilized 35

Cash 71

Liquidity 145

Maturities:

Next Call

Viasystems, Inc., is a leading international provider of complex multi-layer PCBs and electro-mechanical solutions (E-M Solutions). A printed circuit board (PCB) is a rigid or flexible substrate made of layers of copper circuit patterns separated by insulating material. PCBs form the backbone of most electronic devices, and provide the surface on which electronic components and connections are mounted. Viasystems primarily competes against other Asian and US PCB manufacturers, including TTM, Ibiden, Kingboard, Compeq and Gold Circuit Electronics. The company also competes with EMS providers like Jabil and Flextronics. The company merged with Merix on February 16, 2010, to enhance Viasystems’ PCB capabilities and help further diversify its customer base. Merix generated $254 million of revenues and $5 million of EBITDA in 2009.

Key Dates/Catalysts:- Viasystems is expected to report 4Q2011 earnings in February2012.

0

50

100

150

200

250

2011 2012 2013 2014 Thereafter

Investment Strengths:- Low-cost manufacturing footprint enhances competitive position: VIAS is one of the largest manufacturers of complex high quality PCBs in China, with over 3 million square feet of low-cost manufacturing capacity.- Merix merger has enhanced customer diversity and scale: The merger has helped VIAS expand its OEM and CEM customer base from 125 at the end of 2009 to over 800 today, with product solutions spanning all relevant PCB market segments.

Investment Risks:- Margin pressure: Higher copper and material costs, coupled with increased Chinese labor costs, have pressured margins. - Customer concentration: In 2010, sales to its 10 largest customers accounted for approximately 58% of the company’s net sales (down from 74% in 2009).- Maintenance covenant: VIAS must comply with a minimum fixed charge coverage ratio of 1.1x if excess availability under its ABL facility is less than $15 million.

Company Description



Videotron Ltd. (QBRCN) Updated 1/20/12 Jason Kim 212-902-2233

Contact analyst for updates and other information. Satya Tagat 212-902-4427

NOT COVERED

Bond Summary



$715 9.125 Sr Nts 15-Apr-18 Ba1/BB 104.563 15-Apr-13 110.75 3.68 335

(C$, millions)

Financial Profile FY09A FY10A 1Q11A 2Q11A 3Q11A LTM





Wireless Subscribers 82,813 136,100 164,700 210,600 258,100 258,100

Revenue C$2,001 C$2,209 C$578 C$601 C$612 C$2,377

EBITDA 973 1,036 251 274 275 1,060

Free Cash Flow 365 58 (7) 27 87 42

Agency

Total Debt C$1,833 C$2,133 C$2,133 C$2,133 C$2,109 C$2,109 Comps Leverage Coverage Ratings

Cash 150 96 65 37 89 89

Net Debt 1,683 2,037 2,068 2,096 2,021 2,021 CSC Holdings 3.1x 3.2x Ba3/BB

Key Credit Statistics DISH DBS Corporation 2.4x 6.9x Ba3/BB-

Total Debt/EBITDA 1.9x 2.1x 2.1x 2.0x 2.0x 2.0x Virgin Media Finance PLC 3.5x 3.4x Ba2/BB-


EBITDA Margin 48.6% 46.9% 43.4% 45.6% 45.0% 44.6%

Capitalization *

Debt to


Revolver C$0 Revolver Size C$575

Total Sr Sec Debt C$0 Letters of Credit -

6.875% Sr Nts due 2014* 503 Borrowings -

6.375% Sr Nts due 2015* 206 Revolver Availability C$575

9.125% Sr Nts due 2018* 800

7.125% Sr Nts due 2020 300 Cash C$89

6.875% Sr Nts due 2021 300

Total Debt C$2,109 2.0x Total Liquidity C$664

Market Cap NA

Enterprise Value NA

* Includes the impact of foreign exchange swaps to convert USD debt into CAD.

Maturities:

Videotron is the largest cable operator in the Province of Quebec and the third largest in Canada. In addition to cable TV service, Videotron provides Internet, cable telephony, and mobile wireless telephony services in the Province of Quebec. Videotron’s cable network covers roughly 90% of Quebec’s approximately 3.3 million residential and commercial premises that are passed by cable.

Videotron is a wholly owned subsidiary of Quebecor Media, which is one of Canada’s leading media companies, with activities in cable distribution, business, residential and mobile wireless telecommunications, newspaper publishing, television broadcasting, book, magazine, and video retailing, publishing and distribution, music recording, production and distribution, and new media services.

Key Dates/Catalysts:March 2012: 4Q2011 earnings.

Company Strengths:(1) Strong operational momentum: Videotron has posted impressive growth rates in recent years, driven by triple-play bundles. The recent launch of facility-based wireless service can add to its growth and further reduce churn through product bundling.

(2) Solid credit profile: Videotron has strong credit metrics, with low leverage (2.0x LTM), C$575 million of unused revolver, and no debt maturities until 2014.

Company Risks:(1) Wireless: Videotron is making an agressive push into the wireless space, which puts pressure on margins given the heavy upfront costs.

(2) Distributions to parent Quebecor Media: Videotron has distributed C$1.9 billion of cash to its parent, Quebecor Media, since 2004. Quebecor Media has been fairly acquisitive in the past, and it could use Videotron's strong balance sheet to help it fund future deals within the confines of the restricted payment capacity of the Videotron bonds. We estimate that Videotron currently has restricted payment capacity of about C$2.4 billion, and the basket grows by approximately C$800 million per year.

(3) Large acquisitions.

Company Description

206

1,400

0

500

1,000

1,500

2012 2013 2014 2015 2016+



Visant Corp. (VISANT) Updated: 1/23/12 Kevin Coyne 212-357-9918Celeste Everett 212-902-4751


IN-LINE: We continue to believe that the school affinity sector is sustainable over the long term. We believe VISANT is a solid credit with a solid managem

we prefer the more attractive yield, security interest, and tighter covenant package in the AMEACH senior secured notes.

Bond Summary



$750 10.00 Sr Notes 1-Oct-17 Caa1/B- $107.50 1-Oct-13 90.00 12.51 1,174 1,138


Revenue 1,240.9 250.7 493.2 227.7 245.9 1,217.5

EBITDA 339.4 48.8 191.2 45.4 39.3 321.3


Cash Taxes 27.5 (12.7) 49.7 (12.2) (11.6) 13.3

CapEx 50.2 12.8 14.6 14.8 7.0 49.3

Free Cash Flow 141.4 6.0 87.2 3.2 3.7 96.7

Total Debt 2,012.4 1,985.5 1,982.7 2,031.6 1,919.6 1,919.6

Cash 60.2 25.2 53.0 37.3 114.0 114.0



Net Debt/EBITDA 5.8x 5.8x 5.9x 6.0x 5.6x 5.6x VISANT 6.2x 2.8x Caa1/B-

AMEACH 6.9x 1.5x B3/B

EBITDA/Interest 2.8x 1.1x 4.8x 1.1x 1.0x 2.0x MGM (srs) 9.2x 1.7x B3/B-

EBITDA margin 27.3% 19.5% 38.8% 19.9% 16.0% 26.4%

Capitalization

Description 3Q11ADebt to EBITDA Liquidity 3Q11A

Revolver due Dec 2015 ($175 mn) 52.0 Revolver Size 175.0

Term Loan due Dec 2016 (L+400, 125 1,216.4 Letters of Credit 12.3

Capital leases & equipment financings 13.2 Borrowings 52.0

Total Secured Debt 1,281.6 3.9x Revolver Availability 110.7

10% Senior notes due Oct 2017 750.0

Total debt 2,031.6 6.2x A/R facility NA

Borrowings NA

A/R Availability NA

Cash 37.3


Maturities:

Next Call

Visant Corp. is a specialty publishing and marketing company that operates in three segments: Memory Book, Scholastic, and Marketing & Publishing Services. Memory Book includes Visant’s yearbook and memory book services, while Scholastic includes class rings, varsity and chenille letters, caps and gowns, diplomas, and other graduate products. Through its Marketing & Publishing Services segment, Visant also provides fragrance and cosmetics samples and other direct marketing materials to corporations, and educational and trade book covers to publishers. Visant was founded in 2004 following the completion of a transaction between KKR and DLJ Merchant Banking Partners where they merged the businesses of Jostens, Arcade, and Von Hoffman. KKR and DLJ maintain a 45% ownership stake, with management and directors owning the majority of the remaining portion.

Key Dates/Catalysts:- 3Q2011: announced lost yearbook contracts will result in revenue decline of 4% yoy in the Memory Book segment. Management expects to offset the lost revenue with expense reductions.- December 2011: Voluntarily repaid $60 million of term loans outstanding.

Investment Strengths:- Leading market positions across its product lines -35% market share in yearbooks, 30% share of class rings, over 50% share of book component production, and 70% share in flat fragrance sampling. - Marketing and Publishing Services stand to benefit from macro rebound owing to its long-standing, leading customer relationships.- Strong operating leverage with $1 of incremental revenue flowing through 50% to EBITDA.- Proactive management team.- Strong free cash flow generation: generated over $750 million in FCF from 2006 to 2011.- International growth opportunities: Current footprint in Canada and France and is looking to expand next in Brazil and China.

Investment Risks:- Elevated gold prices hurting class ring margins, although this is partially offset by entering into forward contracts to hedge the price of gold.- Educational publishing exposed to muni budgets, could feel pressure from cutbacks in education funding.- Further economic slowdown could cause customers to trade down or delay the purchase of yearbooks and other products.- Shift toward internet away from direct marketing could impact its fragrance and cosmetic sampling businesses.- Lack of a clear exit strategy for current sponsors: an IPO may prove challenging due to no clear public

Company Description

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016+



VWR Funding (VWRINT)Contact analyst or see latest research for updates to ratings, estimates, and other information. Erin Blum 212-855-7718

OUTPERFORM Cindy Guan 212-902-9758

Bond Summary



$713 10.25 Sr. PIK Tog 15-Jul-15 Caa1/B- $102.563 15-Jul-12 $103.750 7.352% 725


Revenue $3,561 $3,639 $4,175 $979 $1,066 $1,076

EBITDA 329 353 401 100 105 106


Cash Taxes (26) 28 20 15 11 8

CapEx 24 42 38 15 9 13

Free Cash Flow 145 81 49 43 5 24

Total Debt 2,767 2,672 2,771 2,672 2,774 2,771

Cash 124 142 127 142 109 131

Net Debt 2,642 2,530 2,644 2,530 2,664 2,640


Total Debt/EBITDA 8.4x 7.6x 6.9x AgencyNet Debt/EBITDA 8.0x 7.2x 6.6x LTM Comps Leverage Coverage Ratings

VWR (VWRINT) snr 5.6x 2.0x Caa1/B-


EBITDA margin 9.2% 9.7% 9.6% 10.2% 9.8% 9.8% IMS Health (RX) 4.2x 2.5x B3/B

Capitalization

Description Size

Debt to LTM

EBITDA

Debt to 2011E EBITDA Liquidity

Revolving Credit Facility due 2013 119 Revolver Size $250

AR Facility 11/4/2014 ($200 size) 0 Letters of Credit 13

Term Loans--US due 2014 601 Borrowings 119

Term Loans--Euro due 2014 792 Revolver Availability 118

Total Sr Sec debt $1,513 3.8x 3.8x

A/R facility* $200

10.25% Snr Uns PIK Toggles due 2015 713 Borrowings 0

Total Sr debt $713 5.6x 5.5x A/R Availability 200

10.75% Sub PIK Toggles due 2017--Dollar 359 Cash $109

10.75% Sub PIK Toggles due 2017--Euro 171 Total Liquidity $427

Total Sub debt $530 7.0x 6.9x *Only $165mn is available.

Capital Leases and Other $17


8% Pref Equity 1,400

Total Book Capitalization $4,173

Maturities:

Next Call

We rate VWR Outperform due to (1) the low-risk profile of the business and (2) positive momentum on top-line growth. The bonds are currently callable at $105.125, but management comments suggest a refinancing is not imminent. Therefore, because of the high coupon, we see the bonds as attractive short-duration paper.

Updated 01/25/12

0

200

400

600

800

1,000

1,200

1,400

1,600

2012 2013 2014 2015+

VWR is a global distributor of laboratory supplies and equipment (including chemicals, glassware, and protective clothing). The company also provides ancillary services such as calibration and inventory management, in many cases with a VWR employee on the customer site. The supply chain is highly fragmented, with many specialized suppliers and many customers. The average order size is less than $500. Major competitors are Thermo Fisher and Sigma Aldrich. VWR was purchased by CDR in April 2004 and by Madison Dearborn in June 2007.

Year to date, VWR has made several acquisitions, including EBOS and Alfalab (a distributor in Poland) in 3Q2010; Amresco (a domestic distributor, $50 mn of sales) in 1Q2011; Trenka ($10 mn of sales) and BioExpress during 2Q2011; Anachemia ($65 mn of sales) which closed in 3Q2011 and LabPartners, which is expected to close in 4Q2011. Management has commented that its acquisition pipeline is still robust despite the recent increased pace. Management expects to fund future acquisitions out of CFO, as it has done recently. In November 2011, VWR entered into a new $200 mn A/R securitization facility ($165 mn is available, currently undrawn) in order to provide additional liquidity.

Key Dates/Catalysts:- Quarterly earnings- Possible refinancing

Investment Strengths:- Diversified customer base and end markets: pharma and biotech (together 35%), universities (12% of revenue), chemicals, food, and consumer product companies. No customer accounts for more than 2.6% of revenue.

- Opportunities to enhance EBITDA growth – particularly growth in higher-margin private-label products, sourcing from India and China, and outsourcing back office to low-cost countries.

- International exposure and diversity of VWR's customer base offset the company's exposure to the US recession.

- Largest customer group is relatively recession-resistant: Laboratory spending by the pharmaceutical industry – VWR’s largest customer group – has historically increased even during a recession.

Investment Risks:- Economic recession could continue to affect customer spending and hurt VWR's revenues.

- Low-margin, low-barriers-to-entry distribution business.

- Highly levered.

- Sponsor equity is in the form of a preferred, with an 8% dividend yield that can be paid in cash at the discretion of the board (though it is limited by the credit agreement).

Company Description



W&T Offshore (WTI) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM

Bond Summary



$600 8.500% Sr. 6/15/2019 Caa1/B 6/15/2015 $0.000 $105.75 7.19% 642


Revenue $1,185 $606 $696 $944 $1,001


Free Operating Cash Flow $220 ($118) $285 $277 $222


CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E WTI 1.2x 15.8x Caa1/B

Total Debt/EBITDA (LTM) 0.8x 1.4x 1.0x 1.2x 1.1x SGY 1.0x 33.5x Caa2/CCC+

EBITDA/Interest Expense (LTM) 16.5x 6.7x 10.0x 15.8x 151.6x MMR 2.0x 15.5x Caa1/B


Capitalization








Preferred Equity $0

Common Equity $546


Maturities:

Next Call

W&T Offshore is focused on exploration and production activities in the US Gulf, particularly in the conventional shelf. The company acquired its first deepwater interest in 2000, and has continued to increase its deepwater exposure over time.

W&T Offshore was founded in 1983 with $12,000 by CEO Tracy Krohn. Krohn still owns over 50% of the shares. The company has made six significant acquisitions since 1999. In August 2006, WTI purchased 362bcf of proven gas reserves from Anadarko/Kerr-McGee for approximately $1 bn. The Kerr-McGee transaction included interests in 100 fields on 242 offshore blocks, 88 of which are undeveloped. The majority of the acreage is in water depths <1,000'. Following the addition of 1.1 mn acres from the acquisition, WTI became the third-largest shelf acreage holder in the US Gulf. Prior to the KMG transaction, WTI's largest acquisitions had been divestitures from ConocoPhillips (2003; 95bcfe) and Burlington (2002; 120bcfe). In January 2008, WTI closed the acquisition of Apache's Ship Shoal lease blocks for $116 mn. In November 2010, W&T announced that it would acquire interest in six offshore fields in the Gulf of Mexico from Shell for $450 mn. Subsequently, BP exercised its preferential rights to purchase on two of the four fields. As a result, WTI paid $193 mn for the other four fields. In April 2011, W&T announced the acquisition of 21,500 net acres in the Permian Basin for $366 mn, marking the company's first foray onshore.

Investment Strengths:• Track record of consistency in the Gulf of Mexico, with 78%/90% average exploration/development success rates • Commitment to funding capex with cash flow• Management has historically issued equity when necessary to preserve balance sheet strength• High insider ownership: CEO Tracy Krohn holds a 51% stake

Investment Risks:• Exposure to GOM, which is facing increased regulation following the Macondo oil spill• Company has historically made cash-financed acquisitions• Drillbit F&D costs have been very high

Key Dates/Catalysts:• Additional acquisitions, particularly onshore• Results from Permian activity

Company Description

0

100

200

300

400

500

600

700

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Warner Chilcott (WCRX) Erin Blum 212-855-7718


UNDERPERFORM

Bond Summary



$1,250 7.750% Sr 15-Sep-18 B3/B+ $103.875 9/15/2014 $105.000 6.479% 575


Revenue $1,436 $2,826 $2,743 $694 $655 $661

EBITDA 704 1,383 1,410 359 352 322


Cash Taxes 45 136 116 45 43 23

CapEx 44 95 60 21 8 24

Free Cash Flow 458 852 957 312 243 210

Total Debt 3,039 4,669 3,848 4,669 3,883 3,848 LTM Comps Leverage Coverage

Agency Ratings

Cash 539 402 490 402 316 490 Warner Chilcott (WCRX) 2.7x 5.8x B3/B+

Net Debt 2,500 4,267 3,357 4,267 3,567 3,357 Valeant (VRX) 4.3x 4.6x B1/BB-

Key Credit Statistics Mylan (MYL) 3.1x 4.6x B1/BB-

Total Debt/EBITDA 4.3x 3.4x 2.7x Elan (ELN) 4.8x 2.4x B2/BNet Debt/EBITDA 3.6x 3.1x 2.4x Alere (ALR) sub 5.0x 3.4x B3/B-

Endo (ENDP) 3.6x 4.9x Ba3/BB-


EBITDA margin 49.0% 49.0% 51.4% 51.6% 53.7% 48.8%

Capitalization

Description Size

Debt to LTM

EBITDA*

Debt to 2011E

EBITDA Liquidity

Revolver 0 Revolver Size $250

New TLA due 3/3/2016 1,188 Letters of Credit 2

New TLB due 3/3/2018 1,446 Borrowings 0


7.75% Sr Notes due 2018 1,250 Cash $316

Total Sr debt 1,250 2.7x 2.8x Total Liquidity $564

Other 0


Market Cap 4,207

Enterprise Value 7,774 5.4x 5.5x

Maturities:

Next Call

We rate WCRX Underperform as we believe re-levering is likely. We believe the company may be reaching a peak in its credit cycle. We see growth in new products as unlikely to offset revenue declines in legacy products, making debt-funded acquisitions more likely. In addition, on its recent investor call, WCRX stated that it could raise up to another 2 turns of EBITDA, and if for an acquisition, up to “several billion” of debt.

Updated 01/25/12

Warner Chilcott is a global specialty pharmaceutical that focuses on gastroenterology, women's healthcare, dermatology, and urology in North America and Western Europe. WCRX's main drug is Actonel, which contributes 34% to the top line. Its second-largest drug, Asacol, is 25% of revenues. Actonel is a non-injectable drug for osteoporosis, while Asacol (400mg and 800mg) is used to treat ulcerative colitis. WCRX acquired the Prescription Drug Business of P&G in October 2009, acquiring Actonel and Asacol, and issued over $2.5 bn of term loans in order to fund the deal.

In August and September 2010, WCRX issued a total of $2.75 bn in term loans and bonds in order to fund a $2.14 bn special dividend, as well as to fund the purchase of the US rights to Enablex from Novartis for $400 mn. In mid-March 2011, WCRX refinanced $3 bn of its credit facility, reducing its interest payments and effectively paying down another $200 mn of principal. In September 2011, WCRX received a PIV challenge from Zydus on Asacol HD. WCRX also recently obtained approval of dual scored Doryx 150mg and a motion from the District court of New Jersey for a preliminary injunction (PI) against MYL from launching a generic. The court later vacated the PI.

Key Dates/Catalysts:- Quarterly earnings. Focus will be on top-line growth of new products.- Potential debt-financed acquisitions or shareholder-friendly re-levering. At a recent conference, management stated that it sees the ability to lever up 1-2x EBITDA (roughly $3 bn) and perhaps more if it is for an acquisition.- Potential litigation outcomes related to patent challenges.

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2012 2013 2014 2015+

Investment Strengths:- Solid PF FCF/debt at 30% as of 3Q2011.

- WCRX focuses on products that target therapeutic areas with established regulatory guidance. This results in less development and regulatory risk, and thus shorter timelines to market.

- WCRX has exhibited good product life cycle management by extending patent life through next-generation versions of its existing products (e.g., Asacol HD, Atelvia).

Investment Risks:- Approximately 60% of WCRX's top line depends on two drugs (Actonel and Asacol), which are in competitive therapeutic categories.

- WCRX may be considered shareholder friendly, having paid a debt-funded $2.14 billion special dividend. In a recent conference call, WCRX also indicated that it would consider re-levering to return cash to shareholders if it deemed that the company was underutilizing its balance sheet.

Company Description



Whiting Petroleum (WLL) Updated: 1/26/12 Jason Gilbert (212) 902-3585


OUTPERFORM

Bond Summary



$350 6.500% Sr. 10/1/2018 Ba3/BB+ 10/1/2014 $0.000 $106.00 5.04% 427


Revenue $1,213 $912 $1,458 $1,811 $2,078

EBITDA (Adj for non-cash items) $790 $568 $1,022 $1,294 $1,540

Free Operating Cash Flow ($129) $28 $258 ($532) $140

Capital Expenditures $892 $407 $739 $1,700 $1,224

CompsLeverage

('11E)Coverage


Credit Ratios 2008A 2009A 2010A 2011E 2012E WLL 1.2x 22.0x Ba3/BB+

Total Debt/EBITDA (LTM) 1.6x 1.4x 0.8x 1.2x 1.0x FST 2.8x 4.0x B1/B

EBITDA/Interest Expense (LTM) 12.2x 8.8x 17.3x 22.0x 26.5x PXP 4.0x 7.0x B1/BB

Debt to Capitalization % 41% 26% 24% 33% 29% DNR 1.9x 7.9x B1/BB-

Capitalization








Preferred Equity $0



Maturities:

Next Call

Whiting Petroleum is an E&P based in Denver, with oil and gas properties in the Permian Basin, Rocky Mountains, Mid-Continent, Gulf Coast, and Michigan, with the focus on the Permian and Bakken. After making numerous acquisitions in 2005/2006, Whiting is focused on the development of its Bakken Shale, and CO2 floods at Postle and North Ward Estes (TX/OK) fields.

Whiting Petroleum was founded in 1980 by Ken Whiting and Bert Ladd. In 1992, the company was acquired by Alliant Energy, a utility, for $30 mn. In November 2003, Alliant decided to monetize its non-regulated operations through the 100% IPO of Whiting for $230 mn. Whiting has historically been acquisitive and focused on long-lived, high PDP properties. In 2005/2006, Whiting closed five acquisitions for $924 million. During that time, WLL also recorded negative reserve revisions of 14 mmboe. Historically, Whiting has allocated 75% of capital spending toward development and 25% toward exploration. The company has maintained balance sheet discipline, with a debt/cap target of 40% and widespread use of hedges to protect cash flows. In April 2008, the company completed the IPO of Whiting USA Trust I, a royalty trust in which WLL retains 16% unit ownership. In May 2008, the company announced the acquisition of 11.5k net Uinta Basin acres (Flat Rock field) from Chicago Energy Associates for $365 mn in cash.

Investment Strengths:• Strong leverage to crude oil (around 80% of production)• Long life production associated with CO2 oil fields; RP of 14 years• Bakken Oil Shale and Piceance gas provide production growth potential• Good asset diversity for the rating• 38% hedged on 2012E production

Investment Risks:• CO2 projects require long lead time capital spending• F&D costs have been above peer group average• Management has historically been acquisitive

Key Dates/Catalysts:• Potential bolt-on acquisitions; Eagle Ford Shale may be of interest• Continued Bakken lateral well results; results of Three Forks wells• Updates on horizontal oil projects

Company Description

0

50

100

150

200

250

300

350

400

450

500

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Deb

t mat

uriti

es (

$ m

n)



Windstream Corporation (WIN) Updated 1/20/12 Jason Kim 212-902-2233


IN-LINEWe believe WIN's current trading levels fairly reflect its industry-leading operational metrics and solid profile, offset by the relatively acquisitive nature of the management team's strategy.

Bond Summary



$700 7.750 Sr Nts 15-Oct-20 Ba3/B+ 103.875 15-Oct-15 107.25 6.40 567

Financial Profile * FY09A FY10A 2Q11A 3Q11A 4Q11E 2011E

Voice Access Lines ('000s) 3,182 3,046 2,986 2,948 2,912 2,912

YoY % Change NA (4.3%) (4.3%) (4.5%) (4.4%) (4.4%)

HSD Customers ('000s) 1,224 1,303 1,337 1,346 1,359 1,359

YoY % Change NA 6.5% 4.8% 4.3% 4.3% 4.3%

Total Access Lines ('000s) 3,440 3,314 3,261 3,224 3,193 3,193

YoY % Change NA (3.7%) (3.6%) (3.9%) (3.6%) (3.6%)

Revenue $4,231 $4,139 $1,030 $1,023 $1,021 $4,098

EBITDA 2,069 2,064 513 508 517 2,050

FCF Post Dividends/Sh Rep. 264 215 76 28 135 164

Agency


Cash 1,063 42 52 34 20 20

Net Debt 5,272 7,321 7,336 7,323 7,193 7,193 FTR 3.3x 3.7x Ba2/BB

Key Credit Statistics Charter - CCOH 4.3x 2.8x B1/BB-

Total Debt/EBITDA 3.7x 3.6x 3.6x 3.6x 3.5x 3.5x CVC Corp 4.0x 3.2x B1/B+


EBITDA Margin 48.9% 49.9% 49.8% 49.6% 50.6% 50.0%

* Operating metrics, revenue and EBITDA figures shown are pro forma for the latest acquisitions as of the reported period.

Capitalization *

Debt /


Subsidiary Debt $132 Revolver Size $1,250

Total Subsidiary / Other Debt $132 Letters of Credit (11)

Secured RC ($1.25bn Facility)** 662 Borrowings (662)

Secured Term Loan A-2 177 Revolver Availability $578

Secured Term Loan B 285

Secured Term Loan B-2 1,056 Cash $34

Total Secured Debt $2,312 1.1x Total Liquidity $612

Sr Nts $5,050

Total WIN Debt $7,362 3.6x


Market Cap $6,009


*Capitalization reflects Windstream's stand-alone based on LTM 3Q2011.

*Pro forma for November 2011 refinancing.

Maturities:

Windstream Corporation (Windstream) was formed from the spin-off of Alltel Corporation’s landline business and the merger with VALOR Communications Group in 2006. Headquartered in Little Rock, Ark., Windstream has operations in 29 states and the District of Columbia. It has about $4 billion in annual revenues and provides services to approximately 3.2 million total access lines and 1.3 million high-speed data customers.

The company’s product offerings include voice, high-speed data, and digital television services to residential customers located primarily in rural areas, IP-based voice and data services, MPLS networking, data center and managed hosting services, and communication systems to businesses and government agencies. Windstream operates a local and long-haul fiber network spanning approximately 60,000 route miles.

On December 1, 2011, Windstream completed its $2.3bn acquisition of PAETEC Holding Corp. Windstream assumed approximately $1.4bn of net debt from PAETEC in the deal.


32

1,276

11

1,683

4,360

0

500

1,000

1,500

2,0002,500

3,000

3,500

4,0004,500

5,000

2012 2013 2014 2015 2016+

Investment Strengths:(1) Industry-leading operating metrics: WIN exhibits some of the best access line loss rates, revenue trends, and EBITDA margins in the RLEC/ILEC space.

(2) Attractive rural footprint: WIN has less than 20 access lines per square mile versus approximately130 for non-rural LEC. This means WIN faces less cable competition than most of its peers.

(3) Strong management team: WIN's management team has a strong track record of carrying out innovative marketing plans and of integrating acquisitions successfully.

Investment Risks:(1) Competitive pressure from cable and wireless substitution.

(2) Regulatory changes: WIN derived 14% of its revenues from revenues tied to regulation (USF and ICC). Since status quo is probably the best-case scenario for WIN, we believe regulatory reforms would likely affect WIN's revenue and EBITDA negatively.

(3) Acquisitive management team and execution risk from integrating PAETEC.

Company Description



Wynn Las Vegas (WYNN) Updated 1/23/12 Kevin Coyne 212- 357-9918


IN-LINE: We believe WYNN is one of the best global gaming operators, but we believe this is priced into the notes at current levels. We believe the bonds are fairly

priced vs. MGM secured notes. We believe the first lien secured gaming paper of Caesars Ent. Operating Company (HET, OP) provides better risk/reward for investors.

Bond Summary

Size Coupon Agency Bid YTW STW Z Spread 5-year

(MM) (%) Priority Maturity Ratings Price Date Price (%) (bp) (bp) CDS

$1,320 7.750 Sr Sec 15-Aug-20 Ba2 / BBB- 103.875 15-Aug-15 112.500 4.88 458 418 395

Consolidated Results of Wynn Resorts (includes Macau):


Net revenues $4,185 $1,260 $1,367 $1,298 $1,314 $5,240

EBITDA 1,163 405 447 381 355 1,588


Cash Taxes 1 - - - 5 5

CapEx 284 32 19 35 55 141

Free Cash Flow 655 314 370 289 244 1,217


Cash (excl. restricted) 1,258 1,447 1,784 1,910 2,049 2,049 WYNN 1.9x 6.6x Ba2 / BBB-

Net Debt 2,009 1,720 1,362 1,193 1,053 1,053 HST 5.7x 3.9x Ba1/BB+

Key Credit Statistics PENN 2.8x 6.5x B1/BB

Total Debt/LTM EBITDA 2.8x 2.4x 2.1x 1.9x 2.0x 2.0x IGT 2.3x 6.0x Baa2/BBB

Net Debt/EBITDA 1.7x 1.3x 1.0x 0.8x 0.7x 0.7x BORGAT 5.2x 1.8x B2/BB-


EBITDA margin 27.8% 32.1% 32.7% 29.4% 27.0% 30.3%

Capitalization Liquidity Enterprise Value (Wynn Resorts)


Wynn Las Vegas LLC Wynn LV revolver 367 Shares OS (mm) 125.0

7.875% first mortgage notes due 2017 500 Letters of Credit 20 Stock Price 120.42$

7.875% first mortgage notes due 2020 352 Borrowings - Market Cap 15,047

7.75% first mortgage notes due 2020 1,320 Revolver Availability 347 Net Debt 1,193

Wynn LV revolver due 2013 / 2015 - Minority interest 287

Wynn LV term loan due 2013 / 2015 371 Wynn LV cash 157 Enterprise Value 16,527

Note payable due April 2017 & other 48 Wynn LV liquidity 504

Total Wynn Las Vegas debt 2,591 Wynn Macau revolver 1,000 EV/ LTM EBITDA 10.3x

Macau term loan due 2014 513 Borrowings -

Macau revolver (US$1 billion) due 2012 - Revolver availability 1,000

Total Wynn Resorts Ltd. debt 3,104 1.9x

Cash (non-Las Vegas) 1,753

Restricted cash -

Total liquidity 3,258

Maturities (Consolidated): Wynn Las Vegas Segment Results

$mm 4Q10A 1Q11A 2Q11A 3Q11A

Revenue 325.1 395.0 391.0 347.3

EBITDA 68.3 132.1 132.7 85.1

EBITDA margin 21.0% 33.4% 33.9% 24.5%

Interest Expense 50.7 50.3 50.3 50.3

Cash Taxes 1.0 1.0 2.0 2.0

CapEx 48.4 22.0 12.7 10.1

Free Cash Flow (31.7) 58.8 67.6 22.7

Debt 2,621.5 2,621.5 2,601.4 2,597.4

Cash 52.5 87.2 138.5 157.0

Leverage 9.7x 7.7x 6.3x 6.2x

Net leverage 9.5x 7.4x 6.0x 5.8x

Next Call

0

500

1000

1500

2000

2500

2012 2013 2014 2015 2016 2017+

Wynn Resorts is a luxury hotel and destination hotel operator. It owns and operates Wynn Las Vegas on the Las Vegas Strip and Wynn Macau in the Macau Special Administrative Region of the People's Republic of China. Between the two locations, Wynn Resorts maintains 3,316 rooms and 222,000 square feet of gaming floor. The locations also feature 76,000 square feet of high-end retail space, including on-site Ferrari and Maserati dealerships. Significant equity holders include Universal Entertainment (20%), Waddell & Reed (15%), Steve Wynn (8%), Elaine Wynn (8%), and Marisco Capital (6%), according to Bloomberg.

Key Dates/Catalysts:- 3Q2010 conference call: Expects to spend $2.5 bn on a Cotai property, which is expected to open in 2015. The casino is expected to include 1,500 rooms, and a convention, retail, restaurants, and entertainment space. In September 2011, WYNN paid $193 mn to Macau government for rights to build on 52 acres.- November 2011: Declared special cash dividend of $5.00 per share, or $625 mn in total.- December 2011: WYNN in talks to partner with New England Patriots owner Robert Kraft in bidding on a Massachusetts gaming license and building a new casino near Gillette Stadium in Foxboro, MA.- January 2012: Former Director Kazuo Okada files lawsuit against the company seeking more access to the books and records of the company. WYNN called the lawsuit "preposterous."

Investment Strengths:- Visionary industry leader, proven track record.- Successfully launched expansion plans to capture robust growth in Macau.- Solid asset coverage and security interest supported by excess land occupied by the golf course.- Macau IPO frees up additional capital at the holdco to support the US business, which may be used for expansion efforts.- Between 3Q10 and 1Q11, renovated all 2,700 rooms and villas at Las Vegas property.- Strong liquidity position.- Manageable near-term maturities.

Investment Risks:- Competitive Las Vegas operating environment. CityCenter opened in 4Q2009; Cosmopolitan Casino opened in December 2010.- History of paying special dividends.- Cash at parent company could be used to fund other projects outside of the bond restricted group. Potential projects include expansion in Asia or new US jurisdictions such as Massachusetts, if gaming is legalized.- Macau government might limit expansion opportunities in Cotai.

Company Description



The Yankee Candle Co. (YCC) Karen Eltrich 212-902-6957


IN-LINE

Bond Summary



$325 8.50 Sr Notes 15-Feb-15 B2/B $102.13 15-Feb-12 102.25 6.23% 575

$200 9.75 Sr Sub 15-Feb-17 B3/CCC+ $104.88 15-Feb-12 98.50 10.14% 912


Revenue 688.0 750.3 792.2 291.6 323.1

EBITDA 179.5 194.0 188.6 108.4 112.8


Cash Taxes 15.4 23.7 30.1 29.7 33.8

CapEx 15.9 17.4 24.7 3.8 5.0

Free Cash Flow 62.1 77.2 34.2 58.1 50.1

Total Debt 989.1 901.1 1,158.2 901.1 1,158.2 Comps Yield Leverage Coverage Ratings

Cash 9.1 12.7 5.1 12.7 5.1 Michaels 8.27% 4.3x 2.8x Caa2/CCC

Net Debt 980.0 888.4 1,153.1 888.4 1,153.1 Neiman 7.66% 4.6x 3.5x Caa1/B-

Key Credit Statistics Yankee 10.14% 4.5x 1.9x B3/CCC+




EBITDA margin 26.1% 25.9% 23.8% 37.2% 34.9%



Liquidity 3Q11A

L+200 Revolver due 2013 0.0 Revolver Size 140.0

L+200 Term Loan due 2014 336.1 Letters of Credit 2.1

Total Sr Sec debt 336.1 1.8x Borrowings 117.0


8.5% Sr Notes due 2015 325.0 3.5x

9.75% Sr Sub due 2017 188.0 4.5x

Total Sr debt 513.0 4.5x

10.25%/11% Holdco Sr Nts due 2/15/16 309.1

Total Holdco debt 309.1 6.1x

Cash 4.3

Total Debt 1,158.2 6.1x Total Liquidity 25.1

Market Cap NA

Enterprise Value NA

Maturities:

Updated: 1/26/12

Next Call

Yankee Candle designs, manufactures, and distributes premium scented candles and home fragrances under the Yankee Candle brand. It offers a wide range of products in over 400 fragrances, including jar candles, votives, pillars, electric home fragrances, scented oils, reed diffusers, and room sprays. Its products are sold through company-owned retail stores (over 500 stores throughout the US) and through a diversified base of third-party retailers (over 19,000 stores, including more than 2,500 international stores). Yankee operates two flagship stores: one in South Deerfield, MA, and the other in Williamsburg, VA. Products are also sold directly to consumers through direct mail catalogs and the company's web sites. Yankee Candle became a private company through its acquisition by Madison Dearborn Partners in February 2007.

Key Dates/Catalysts:Early March– quarterly earnings release

Investment Strengths:- Well-known brand with a leading market share in premium-scented candle industry- Consumable nature of products and loyal customer base enable recurring sales- Diversified wholesale customer base, with no one retailer accounting for more than 5% of sales

Investment Risks:- Narrow product focus, with broad exposure to economic downturns given discretionary/home/gift-related products; mall/retail traffic trends and buying patterns/credit quality of wholesale accounts can influence results- Exposure to raw materials (fuel, wax)- Highly competitive home fragrance and giftware industries, with low barriers to entry; competing products sold by premium retailers, smaller premium competitors, mass-market competitors, and large consumer goods companies- Highly seasonal business, with majority of sales coming in the fourth quarter

Company Description

0

200

400

600

800

1,000

1,200

2012 2013 2014+



Goldman Sachs Credit Research

Director of Credit Research

Anne Brennan, CFA

1-212-902-9757

High Yield Research

Airlines, Metals & Mining, Shipping

Justine Fisher 1-212-357-6711

Joshua Pinkerton 1-212-357-9774

Autos

Brian Jacoby, CFA 1-212-902-3258

Cody Sauer, CFA 1-212-855-8553

Building Materials

Carly Mattson 1-212-902-6712

Mike Adler 1-212-902-9761

Cable, Satellite & Towers, Telecom

Jason Kim 1-212-902-2233

Satya Tagat 1-212-902-4427

Chemicals, Homebuilders

Kristen McDuffy 1-212-357-6157

Adam Goodwin 1-212-902-0459

Energy

Jason Gilbert 1-212-902-3585

Sarah Yanes 1-212-357-5869

Food & Beverage, Retail, Restaurants

Karen Eltrich 1-212-902-6957

Jordan Hughes 1-212-357-7875

Gaming, Lodging & Leisure, Consumer & Apparel

Kevin Coyne 1-212-357-9918

Celeste Everett 1-212-902-4751

Healthcare

Erin Blum 1-212-855-7718Cindy Guan 1-212-902-9758

Industrials

James Kitchell 1-212-902-9813

Paper & Forest Products, Packaging & Containers

Joseph Stivaletti 1-212-902-3299

James Kitchell 1-212-902-9813

Technology, Rental Services, Auto Suppliers

Franklin Jarman 1-212-902-7537

Karl Blunden 1-212-357-2769

Utilities, Power & Project Finance

Raymond M. Leung 1-212-357-5764

Abayomi A. Adigun, Ph.D. 1-212-902-9355

Investment Grade Research

Aerospace & Defense, Autos, Capital Goods, Diversified Industrials, Transportation(Rails)

Brian Jacoby, CFA 1-212-902-3258

Cody Sauer, CFA 1-212-855-8553

Basic Industries, Building Materials

Carly Mattson 1-212-902-6712

Mike Adler 1-212-902-9761

Energy

Jason Gilbert 1-212-902-3585

Sarah Yanes 1-212-357-5869

Global Banks & Finance, Real Estate (REITs)

Louise Pitt 1-212-902-3644

Ron Perrotta 1-212-902-7885

Healthcare

Amanda Lynam, CPA 1-212-902-9238

Healthcare REITs

Erin Blum 1-212-855-7718Cindy Guan 1-212-902-9758

Life and Non-Life (Re)Insurance, and Managed Care

Donna Halverstadt 1-212-902-3281

Amanda Lynam, CPA 1-212-902-9238

Retail, Consumer, Technology

Gregory Chwatko 1-212-902-0673

Annalee Bloomfield 1-212-902-8028

Telecom, Media & Cable

Scott Marchakitus, CFA 1-212-902-9760

Scott Wipperman, CFA 1-212-357-9922

Utilities, Power & Project Finance

Raymond M. Leung 1-212-357-5764

Abayomi A. Adigun, Ph.D. 1-212-902-9355

Credit Strategy and Economics

US Credit Strategy

Charlie Himmelberg 1-917-343-3218

Lotfi Karoui 1-917-343-1548

Annie Chu 1-212-357-5522

US Economics

Jan Hatzius 1-212-902-0394

Andrew Tilton 1-212-357-2619

Administrator Production

Maria Lipes 1-212-902-9759 Lisa Messemer 1-212-902-0097

William Tompkins 1-212-902-6415

E-mail: [email protected]



Financial advisory disclosures

Goldman Sachs is acting as financial advisor to another party in an announced strategic

transaction which may be material to Pharmerica Corporation.

Goldman Sachs is acting as financial advisor to another party in an announced strategic

transaction which may be material to Alcatel Lucent.



Disclosure Appendix

Reg AC

We, Erin Blum, Gregory J. Chwatko, Kevin Coyne, Karen Eltrich, Justine Fisher, Jason Gilbert, Brian Jacoby, CFA, Franklin Jarman, Jason Kim,

Raymond M. Leung, Amanda Lynam, CPA, Kristen McDuffy, Joshua Pinkerton, Joe Stivaletti and Scott Wipperman, CFA, hereby certify that all of the

views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also

certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this

report.

Each equity, credit and strategy research report excerpted herein was certified under Reg AC by the analyst primarily responsible for such report as

follows: I, Name of Analyst, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject

company or companies and its or their securities. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the

specific recommendations or views expressed in this report.

Disclosures

Company-specific regulatory disclosures

Compendium report: please see disclosures at http://www.gs.com/research/hedge.html. Disclosures applicable to the companies included in this

compendium can be found in the latest relevant published research.

Regulatory disclosures

Disclosures required by United States laws and regulations

See company-specific regulatory disclosures above for any of the following disclosures required as to companies referred to in this report: manager

or co-manager in a pending transaction; 1% or other ownership; compensation for certain services; types of client relationships; managed/co-

managed public offerings in prior periods; directorships; for equity securities, market making and/or specialist role. Goldman Sachs usually makes a

market in fixed income securities of issuers discussed in this report and usually deals as a principal in these securities.

The following are additional required disclosures: Ownership and material conflicts of interest: Goldman Sachs policy prohibits its analysts,

professionals reporting to analysts and members of their households from owning securities of any company in the analyst's area of coverage.

Analyst compensation: Analysts are paid in part based on the profitability of Goldman Sachs, which includes investment banking revenues. Analyst as officer or director: Goldman Sachs policy prohibits its analysts, persons reporting to analysts or members of their households from serving as an

officer, director, advisory board member or employee of any company in the analyst's area of coverage. Non-U.S. Analysts: Non-U.S. analysts may

not be associated persons of Goldman, Sachs & Co. and therefore may not be subject to NASD Rule 2711/NYSE Rules 472 restrictions on

communications with subject company, public appearances and trading securities held by the analysts.

Additional disclosures required under the laws and regulations of jurisdictions other than the United States

The following disclosures are those required by the jurisdiction indicated, except to the extent already made above pursuant to United States laws

and regulations. Australia: Goldman Sachs Australia Pty Ltd and its affiliates are not authorised deposit-taking institutions (as that term is defined in

the Banking Act 1959 (Cth)) in Australia and do not provide banking services, nor carry on a banking business, in Australia. This research, and any

access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act, unless otherwise agreed by Goldman

Sachs. Brazil: Disclosure information in relation to CVM Instruction 483 is available at http://www.gs.com/worldwide/brazil/area/gir/index.html. Where

applicable, the Brazil-registered analyst primarily responsible for the content of this research report, as defined in Article 16 of CVM Instruction 483, is

the first author named at the beginning of this report, unless indicated otherwise at the end of the text. Canada: Goldman, Sachs & Co. has approved

of, and agreed to take responsibility for, this research in Canada if and to the extent it relates to equity securities of Canadian issuers. Analysts may

conduct site visits but are prohibited from accepting payment or reimbursement by the company of travel expenses for such visits. Hong Kong: Further information on the securities of covered companies referred to in this research may be obtained on request from Goldman Sachs (Asia) L.L.C.

India: Further information on the subject company or companies referred to in this research may be obtained from Goldman Sachs (India) Securities

Private Limited; Japan: See below. Korea: Further information on the subject company or companies referred to in this research may be obtained

from Goldman Sachs (Asia) L.L.C., Seoul Branch. Russia: Research reports distributed in the Russian Federation are not advertising as defined in the

Russian legislation, but are information and analysis not having product promotion as their main purpose and do not provide appraisal within the

meaning of the Russian legislation on appraisal activity. Singapore: Further information on the covered companies referred to in this research may

be obtained from Goldman Sachs (Singapore) Pte. (Company Number: 198602165W). Taiwan: This material is for reference only and must not be

reprinted without permission. Investors should carefully consider their own investment risk. Investment results are the responsibility of the individual

investor. United Kingdom: Persons who would be categorized as retail clients in the United Kingdom, as such term is defined in the rules of the

Financial Services Authority, should read this research in conjunction with prior Goldman Sachs research on the covered companies referred to

herein and should refer to the risk warnings that have been sent to them by Goldman Sachs International. A copy of these risks warnings, and a

glossary of certain financial terms used in this report, are available from Goldman Sachs International on request.

European Union: Disclosure information in relation to Article 4 (1) (d) and Article 6 (2) of the European Commission Directive 2003/126/EC is available

at http://www.gs.com/disclosures/europeanpolicy.html which states the European Policy for Managing Conflicts of Interest in Connection with

Investment Research.



Japan: Goldman Sachs Japan Co., Ltd. is a Financial Instrument Dealer under the Financial Instrument and Exchange Law, registered with the Kanto

Financial Bureau (Registration No. 69), and is a member of Japan Securities Dealers Association (JSDA) and Financial Futures Association of Japan

(FFAJ). Sales and purchase of equities are subject to commission pre-determined with clients plus consumption tax. See company-specific

disclosures as to any applicable disclosures required by Japanese stock exchanges, the Japanese Securities Dealers Association or the Japanese

Securities Finance Company.

Ratings, coverage groups and views and related definitions

Credit Research assigns ratings to designated on-the-run ("OTR") debt securities of issuing companies. Definitions of Ratings: OP = Outperform. We expect the total return to outperform the median total return for the analyst's coverage group over the next 6 months. IL = In-Line. We expect the

total return to perform in line with the median total return for the analyst's coverage group over the next 6 months. U = Underperform. We expect

the total return to underperform the median total return for the analyst's coverage group over the next 6 months. TB = Trading Buy. We expect the

total return to outperform in the short term (3 months). TS = Trading Sell. We expect the total return to underperform in the short term (3 months).

NR = Not Rated. The investment rating, if any, has been removed pursuant to Goldman Sachs policy when to Goldman Sachs is acting in an

advisory capacity in a merger or strategic transaction involving this company and in certain other circumstances. NC = Not Covered. Goldman Sachs

does not cover this company. RS = Rating Suspended. Goldman Sachs Research has suspended the investment rating for this credit, because there

is not a sufficient fundamental basis for determining, or there are legal, regulatory or policy constraints around publishing, an investment rating. The

previous investment rating is no longer in effect for this credit and should not be relied upon. CS = Coverage Suspended. Goldman Sachs has

suspended coverage of this company. NA = Not Available or Not Applicable. The information is not available for display or is not applicable.

Coverage views: The coverage view represents each analyst's or analyst team's investment outlook on his/her/their coverage group(s). The coverage

view will consist of one of the following designations: Attractive (A). The investment outlook over the following 6 months is favorable relative to the

coverage group's historical fundamentals and/or valuation. Neutral (N). The investment outlook over the following 6 months is neutral relative to the

coverage group's historical fundamentals and/or valuation. Cautious (C). The investment outlook over the following 6 months is unfavorable relative

to the coverage group's historical fundamentals and/or valuation.

Global product; distributing entities

The Global Investment Research Division of Goldman Sachs produces and distributes research products for clients of Goldman Sachs on a global

basis. Analysts based in Goldman Sachs offices around the world produce equity research on industries and companies, and research on

macroeconomics, currencies, commodities and portfolio strategy. This research is disseminated in Australia by Goldman Sachs Australia Pty Ltd

(ABN 21 006 797 897); in Brazil by Goldman Sachs do Brasil Banco Múltiplo S.A.; in Canada by Goldman, Sachs & Co. regarding Canadian equities

and by Goldman, Sachs & Co. (all other research); in Hong Kong by Goldman Sachs (Asia) L.L.C.; in India by Goldman Sachs (India) Securities Private

Ltd.; in Japan by Goldman Sachs Japan Co., Ltd.; in the Republic of Korea by Goldman Sachs (Asia) L.L.C., Seoul Branch; in New Zealand by

Goldman Sachs New Zealand Limited; in Russia by OOO Goldman Sachs; in Singapore by Goldman Sachs (Singapore) Pte. (Company Number:

198602165W); and in the United States of America by Goldman, Sachs & Co. Goldman Sachs International has approved this research in connection

with its distribution in the United Kingdom and European Union.

European Union: Goldman Sachs International, authorized and regulated by the Financial Services Authority, has approved this research in

connection with its distribution in the European Union and United Kingdom; Goldman Sachs AG, regulated by the Bundesanstalt für

Finanzdienstleistungsaufsicht, may also distribute research in Germany.

General disclosures

This research is for our clients only. Other than disclosures relating to Goldman Sachs, this research is based on current public information that we

consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. We seek to update our research as

appropriate, but various regulations may prevent us from doing so. Other than certain industry reports published on a periodic basis, the large

majority of reports are published at irregular intervals as appropriate in the analyst's judgment.

Goldman Sachs conducts a global full-service, integrated investment banking, investment management, and brokerage business. We have

investment banking and other business relationships with a substantial percentage of the companies covered by our Global Investment Research

Division. Goldman, Sachs & Co., the United States broker dealer, is a member of SIPC (http://www.sipc.org).

Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients and our

proprietary trading desks that reflect opinions that are contrary to the opinions expressed in this research. Our asset management area, our

proprietary trading desks and investing businesses may make investment decisions that are inconsistent with the recommendations or views

expressed in this research.

We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in,

act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.

This research is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be

illegal. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of

individual clients. Clients should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, if

appropriate, seek professional advice, including tax advice. The price and value of investments referred to in this research and the income from them

may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.

Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments.

Certain transactions, including those involving futures, options, and other derivatives, give rise to substantial risk and are not suitable for all investors.

Investors should review current options disclosure documents which are available from Goldman Sachs sales representatives or at

http://www.theocc.com/about/publications/character-risks.jsp. Transaction costs may be significant in option strategies calling for multiple purchase

and sales of options such as spreads. Supporting documentation will be supplied upon request.

In producing research reports, members of the Global Investment Research Division of Goldman Sachs Australia may attend site visits and other

meetings hosted by the issuers the subject of its research reports. In some instances the costs of such site visits or meetings may be met in part or in

whole by the issuers concerned if Goldman Sachs Australia considers it is appropriate and reasonable in the specific circumstances relating to the

site visit or meeting.

All research reports are disseminated and available to all clients simultaneously through electronic publication to our internal client websites. Not all

research content is redistributed to our clients or available to third-party aggregators, nor is Goldman Sachs responsible for the redistribution of our



research by third party aggregators. For all research available on a particular stock, please contact your sales representative or go to

http://360.gs.com.

Disclosure information is also available at http://www.gs.com/research/hedge.html or from Research Compliance, 200 West Street, New York, NY

10282.

© 2012 Goldman Sachs.

No part of this material may be (i) copied, photocopied or duplicated in any form by any means or (ii) redistributed without the prior written consent of The Goldman Sachs Group, Inc.

HY One Pagers Goldman Sachs

Documents

Transcript of HY One Pagers Goldman Sachs