Analyze the case give me one page executive summary and fill out the excel sheet

analyze the case give me one page executive summary and fill out the excel sheet

BLAINE KITCHENWARE	Draft	Historical Income Statement
Project:	BLAINE KITCHENWARE
Analysis:	Historical Income Statement
Draft:	Y
Footer:	Harvard Business School Publishing
BLAINE KITCHENWARE	Historical Income Statement
Case Exhibit 1
Operating Results:	2004	2005	2006
Revenue	291,940	307,964	342,251
Less: Cost of Goods Sold	204,265	220,234	249,794
Gross Profit	87,676	87,731	92,458
Less: Selling, General & Administrative	25,293	27,049	28,512
Operating Income	62,383	60,682	63,946
Plus: Depreciation & Amortization	6,987	8,213	9,914
EBITDA	69,370	68,895	73,860
EBIT	62,383	60,682	63,946
Plus: Other Income (expense)	15,719	16,057	13,506
Earnings Before Tax	78,101	76,738	77,451
Less: Taxes	24,989	24,303	23,821
Net Income	53,112	52,435	53,630
Dividends	18,589	22,871	28,345
Margins:
Revenue Growth	3.2%	5.5%	11.1%
Gross Margin	30.0%	28.5%	27.0%
EBIT Margin	21.4%	19.7%	18.7%
EBITDA Margin	23.8%	22.4%	21.6%
Effective Tax Rate (1)	32.0%	31.7%	30.8%
Net Income Margin	18.2%	17.0%	15.7%
Dividend payout ratio	35.0%	43.6%	52.9%
(1) Blaine’s future tax rate is assumed to revert to the statutory rate of 40%.
Tax Rate
Harvard Business School Publishing

BLAINE KITCHENWARE	Historical Balance Sheet
Project:	BLAINE KITCHENWARE
Analysis:	Historical Balance Sheet
Draft:	Y
Footer:	Harvard Business School Publishing
Harvard Business School Publishing
BLAINE KITCHENWARE	Draft	Historical Balance Sheet
Case Exhibit 2
Assets:	2004	2005	2006
Cash & Cash Equivalents	67,391	70,853	66,557
Marketable Securities	218,403	196,763	164,309
Accounts Receivable	40,709	43,235	48,780
Inventory	47,262	49,728	54,874
Other Current Assets	2,586	3,871	5,157
Total Current Assets	376,351	364,449	339,678
Property, Plant & Equipment	99,402	138,546	174,321
Goodwill	8,134	20,439	38,281
Other Assets	13,331	27,394	39,973
Total Assets	497,217	550,829	592,253
Liabilities & Shareholders’ Equity:
Accounts Payable	26,106	28,589	31,936
Accrued Liabilities	22,605	24,921	27,761
Taxes Payable	14,225	17,196	16,884
Total Current Liabilities	62,935	70,705	76,581
Other liabilities	1,794	3,151	4,814
Deferred Taxes	15,111	18,434	22,495
Total Liabilities	79,840	92,290	103,890
Shareholders’ Equity	417,377	458,538	488,363
Total Liabilities & Shareholders’ Equity	497,217	550,829	592,253
Note: Many items in BKI’s historical balance sheets, e.g. Property, Plant & Equipment
have been affected by the firm’s acquisitions.
Harvard Business School Publishing

Exhibit 3
Home & Hearth Design	AutoTech Appliances	XQL Corp.	Bunkerhill, Inc.	EasyLiving Systems	Blaine Kitchenware
Revenue	$589,747	$18,080,000	$4,313,300	$3,671,100	$188,955	$342,251
EBIT	106,763	2,505,200	721,297	566,099	19,613	63,946
EBITDA	119,190	3,055,200	796,497	610,399	23,356	73,860
Net income	$53,698	$1,416,012	$412,307	$335,073	$13,173	$53,630
Cash & securities	$21,495	$536,099	$21,425	$153,680	$242,102	$230,866
Net working capital*	54,316	1,247,520	353,691	334,804	21,220	32,231
Net fixed assets	900,803	7,463,564	3,322,837	815,304	68,788	174,321
Total assets	$976,613	$9,247,183	$3,697,952	$1,303,788	$332,110	$592,253
Net debt (1)	$350,798	$4,437,314	$950,802	$238,056	($64,800)	($230,866)
Total debt	372,293	4,973,413	972,227	391,736	177,302	– 0
Book equity	$475,377	$3,283,000	$2,109,400	$804,400	$94,919	$488,363
Market capitalization	776,427	13,978,375	5,290,145	3,962,780	418,749	959,596
Enterprise value (MVIC)	$1,127,226	$18,415,689	$6,240,947	$4,200,836	$353,949	$728,730
Equity beta	1.03	1.24	0.96	0.92	0.67	0.56
LTM Trading Multiples
MVIC/Revenue	1.91x	1.02x	1.45x	1.14x	1.87x	2.13x
MVIC/EBIT	10.56x	7.35x	8.65x	7.42x	18.05x	11.40x
MVIC/EBITDA	9.46x	6.03x	7.84x	6.88x	15.15x	9.87x
Market/Book equity	1.63x	4.26x	2.51x	4.93x	4.41x	1.96x
PE	14.46x	9.87x	12.83x	11.83x	31.79x	17.89x
Net Debt/Equity	45.18%	31.74%	17.97%	6.01%	-15.47%	-24.06%
Net Debt/Enterprise Value	31.12%	24.10%	15.23%	5.67%	-18.31%	-31.68%
* Net working capital excludes cash and securities
(1) Net debt is total long term and short term debt less excess cash.

Exhibit 4	Contemporaneous Capital Market Data: April 21, 2007
Yields on US Treasury Securities
Maturity	Yield
30 days	4.55%
60 days	4.73%
90 days	4.91%
1 year	4.90%
5 years	4.91%
10 years	5.02%
20 years	5.26%
30 years	5.10%
Default (credit) spread	Change in Default Spread
Seasoned corporate bond yields
Moody’s Aaa	5.88%	0.86%
Aa	6.04%	1.02%	0.16%
A	6.35%	1.33%	0.31%
Baa	6.72%	1.70%	0.37%
Ba	7.88%	2.86%	1.16%
B	8.94%	3.92%	1.06%
Investment banking guidance for Blaine	5-Year	10-Year
S&P Rating	Default (credit) spread	Debt/ Equity (Book Value)	EBIT/I	Rate = UST + Default Spread	Rate = UST + Default Spread
AA-	1.10%	20-40%	>15X
A	1.33%	40-60%	10-15X
BBB-	2.23%	60-80%	5-10X
BB-	2.98%	80-120%	3-4X
B+	4.23%	Over 120%	<2X

EBIT-EPS Analysis: Blaine Kitchenware
Year 2006
Current shares
Current EBIT
Other (interest) income
Tax rate
Repurchased shares	0
Repurchase price	$ 18.50	At a premium to current price
Repurchase cost= #shr x price
Cash contribution
New debt	Decision variable
Debt/equity	New debt/(existing equity less repurchase)
Interest rate	A function of leverage: UST + DRP; iterative process Exhibit 4
Interest
EBIT/I
Breakeven EBIT (before-tax)	$ 74,142	Use Goal Seek on this cell to make the difference between EPS =0 by changing B19
No debt EPS (using b19)	= (EBIT + Other interest income)*(1-t)/shares outstanding
With Debt EPS (using B19)	=(EBIT- interest expense)*(1-t)/new shares outstanding (assume that interest income = 0 with cash used to fund share repurchase)
Difference	– 0	Use Goal Seek on this cell to make the difference between EPS =0 by changing B14
Rating Agency Guidance
S&P Rating	Buyback Shares	Default spread	Borrowing rate Jonathan Scott: From Exhibit 4 based on maturity you select	Debt/ Equity	EBIT/I	Breakeven EBIT	Feasible?
AA-	14,000	1.10%	20-40%	>15X	Yes if current EBIT is larger than the breakeven EBIT
A	16,000	1.33%	40-60%	10-15X
BBB-	18,000	2.23%	60-80%	5-10X
BB-	20,000	2.98%	80-120%	3-5X
B+	22,000	4.23%	Over 120%	<3X

Blaine Kitchenware	Alternative #1	Alternative #2	Alternative #3
Capital Structure Analysis	Shares repurchased	14,000	18,000	20,000	Decision variable
Price	$ 18.50	$ 18.50	$ 18.50
Total repurchase
Cash contribution	209,000	209,000	209,000
Net new debt	Decision variable
Current Balance Sheet (2006)	Borrowing rate	scottjon: Obtain from Exhibit 4 and EBIT-EPS analysis	See iterative process Ex. 4
Cash+Mkt Securities	230,866
NWC	32,231 scottjon: Receivables + Inventory + Other current assets – current liabilities	Restated Balance Sheet
NFA	174,321	Cash
Other, net	50,945 scottjon: Goodwill + Other assets – Deferred taxes – Other liabilities	NWC	32,231
Total	488,363	NFA	174,321
Other, net	50,945
Debt	0	Total
Equity	488,363
Total	488,363	Debt
Equity (BV)
Total
Current income statement (2006)
EBIT	63,946
+ Other income	13,506 Jonathan Scott: Primarily interest earned on cash	Restated Income Statement
-Interest expense	EBIT	63,946	63, 946	63, 946
Earning before tax	77,451	+ Other income	0	0	0
Taxes	23,821	-Interest expense
Net income	53,630	Earning before tax
Taxes
Shares outstanding	59052	Net income
EPS	$ 0.908
ROE	11.0%	Shares outstanding
EBIT/Interest	NA	EPS
ROE
Share price	$ 16.25	EBIT/interest
Market cap	959,595
Debt/equity (MV)	Share price	$ 16.25	$ 16.25	$ 16.25
Market cap
Beta	0.56	Debt/equity (MV)
RUST	5.02%	Debt/equity (BV)
MRP	7.00%	Beta (levered)	Betalevered = Betaunlevered(1+ (1-t)D/E)
Re	8.9400%	RUST	5.02%	5.02%	5.02%
Rd	0.00%	MRP	7.00%	7.00%	7.00%
wD	0.0%	Re
wE	100.0%	Rd
tax rate	31.0%	wD
WACC	8.94%	wE
Tax rate	31.0%	31.0%	31.0%
WACC