BLAINE KITCHENWARE

TN Exhbit 1
Effects of the Proposed Repurchase on Blaine's 2006 Balance Sheet ($ in Thousands)

Shares Repurchased 14,000 Purchase Price

Rearrange 2006 B/S Restate 2006 B/S showing effect of Repo

2006
Cash 230,866 Cash
NWC 32,231 NWC
NFA 174,321 NFA
Other, net 50,945 Other, net
Total 488,363 Total

Debt 0 Debt
Equity 488,363 Equity
Total 488,363 Total

Note: The post-transaction equity figure should be (488,363 - (18.50*14,000)), which is a reduction equal to $259MM

Exhibit 3 Selected Operating and Financial Data for Public Kitchenware Producers

Home & HearthAutoTech

Design Appliances
XQL Corp. Bunkerhill, Inc.
EasyLiving Systems
Revenue $589,747 $18,080,000 $4,313,300 $3,671,100 $188,955
BLAINE KITCHENWARE Pro Forma Results
Harvard Business Publishing
BLAINE KITCHENWARE Pro Forma Results

TN Exhibit 2: Effect of Repurchase on Blaine's 2006 Income Statement ($ in Thousands)

TN Exhibit 3: Comparison of 2006 Distributable Funds with and without the Repurchase ($
Restate 2006 I/S to give effect to the repo 2006 2006
2006 BLAINE's ACCOUNT w/o Repo with Repo Tax Bill
Post-Repo Int. Rate 6.75% EBITDA 73,860 73,860
EBIT 63,946 less depreciation (9,914) (9,914)
Plus: Other Income 0 EBIT 63,946 63,946
Less: Interest expense 3,375 EBIT/Int 18.9 Plus: Other Income 13,506 0
Earnings Before Tax 60,571 Coverage Less: Interest expense 0 (3,375)
Less: Taxes 18,629 Earnings Before Tax 77,451 60,571
Net Income 41,942 Less: Taxes 31% (23,821) (18,656) (5,165)
Post-Repo Pre-Repo Net Income 53,630 41,915
Net Income 41,942 53,630
Shares 45,052 59,052 SHAREHOLDERS' ACCOUNT
EPS $ 0.93 $ 0.91 Dividends @ 100% payout 53,630 41,915
Book Equity 229,363 488,363 Earnings on excess cash 0 13,506
ROE 18.3% 11.0% Pre-tax income 53,630 55,421
2006 taxes 18,656 23,821 taxes delta = (5,165) Taxes @ 36% 36% (19,307) (19,951) 644
Net 34,323 35,469
Value Creation
LENDERS ACCOUNT
Tax Shield ('thousands) Interest earned 0 3,375
Change in debt 259,000 $ 14.98 Taxes 0 (1,038) 1,038
Tax Rate 30.80% Net 0 2,337
Value created 79,772
Shares 59,052 DISTRIBUTABLE FUNDS Difference
Tax shield gain/sh $ 1.35 Shareholders after tax 34,323 35,469 1,146
Share price before repo $ 16.25 Lenders after tax 0 2,337 2,337
Share price + gain $ 17.60 3,483
Purchase price $ 18.50 Total taxes (43,128) (39,645) 3,483
Premium paid 12,588 Thousand Note: for simplicity, shareholders' personal tax rate is assumed to be 36%; lenders' tax rate is assumed
Final share price $ 16.70 752,447 to equal Blaine's 30.8%

PROS Better EPS

Better ROE
Family Control
Tax Shields
CONS Jeopardizes acquisitions program
Vulnerable to product setbacks
Increased expected costs of financial distress
E(CFD) = Prob(financial distress)x(Cost of financial distress|distress)
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orma Results

ut the Repurchase ($ in Thousands)

8.220% Return on Excess Marketable Securities

50MM x 6.75%

Tax rate from case document

Assumes shareholders can invest at the same rate as Blaine

Assuming 30.8% Tax Rate

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BLAINE KITCHENWARE Weighted Average Cost of Capital

Debt #####
Shares ##### Tax rate 40%
EV #########

675

Part of Tn Exhibit 5: Computing Minimum WACC for Blaine over a Range of Capital Structures
Cost Cost
Debt / Debt / Unlevered Levered of of Assumptions
Debt Cap. Equity Beta Beta Equity Debt WACC Marginal Tax Rate 30.80%
Existing 1 (230,866) -31.7% -24.1% 0.74 0.56 7.82% 5.02% 9.20% Risk-Free Rate 5.02%
Proposal 50,000 674,788 6.899% 7.4% 0.74 0.78 8.87% 6.75% 8.54% Market Risk Premium 5.00%

AAA 84,041 11.4% 12.8% 0.74 0.80 9.03% 5.67% 8.45% Debt Beta 0.00
AA- 14.2% 16.6% 0.74 0.82 9.13% 5.82% 8.40%
A 20.8% 26.2% 0.74 0.87 9.38% 5.87% 8.27% Cash to employ 209,000
BBB+ 22.3% 28.8% 0.74 0.88 9.44% 6.85% 8.39%
BB 28.3% 39.5% 0.74 0.94 9.72% 8.00% 8.53%
B+ 30.9% 44.6% 0.74 0.97 9.85% 9.12% 8.76%

Note: Re-levered beta calculation is based on a constant capital structure

1
Un-levered beta is the weighted average of the operating asset beta and the beta of cash, and is
βa = βOperations(Operating Assets/Enterprise Value) + βCash(Cash/Enterprise Value). This is equivalent to
βe(Equity Value/Enterprise Value). ($ in Thousands.)

Part of TN Exhibit 5
Blaine Debt Waterfall:
10-year Treasury 5.02% Debt Relationships: Proposal AAA AA- A BBB+ BB B+
Interest FY 2006 EBIT 73,860 73,860 73,860 73,860 73,860 73,860 73,860
Coverage Debt Default Interest Expense 3,375 4,765 6,423 9,232 12,310 16,413 19,696
Ratio Rating Spread Coverage Ratio 21.9x 15.5x 11.5x 8.0x 6.0x 4.5x 3.8x
>13.0 AAA 0.65%
9.5 - 12.0 AA- 0.80%
7.0 - 9.5 A 0.85% Estimated Cost of Debt 6.75% 5.67% 5.82% 5.87% 6.85% 8.00% 9.12%
5.0 - 7.00 BBB+ 1.83%
4.0 - 5.0 BB 2.98% Implied Debt 50,000 84,041 110,354 157,282 179,707 205,166 215,964
2.50 - 4.0 B+ 4.10%
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INCOME STATEMENT BALANCE SHEET

Case Exhibit 1 Case Exhibit 2

Operating Results: 2004 2005 2006 Assets:

Revenue 291,940 307,964 342,251 Cash & Cash Equivalents
Less: Cost of Goods Sold 204,265 220,234 249,794 Marketable Securities
Gross Profit 87,676 87,731 92,458 Accounts Receivable
Less: Selling, General & Administrative 25,293 27,049 28,512 Inventory
Operating Income 62,383 60,682 63,946 Other Current Assets
Plus: Depreciation & Amortization 6,987 8,213 9,914 Total Current Assets
EBITDA 69,370 68,895 73,860
Property, Plant & Equipment
EBIT 62,383 60,682 63,946 Goodwill
Plus: Other Income (expense) 15,719 16,057 13,506 Other Assets
Earnings Before Tax 78,101 76,738 77,451 Total Assets
Less: Taxes 24,989 24,303 23,821
Net Income 53,112 52,435 53,630 Liabilities & Shareholders' Equity:
Dividends 18,589 22,871 28,345 Accounts Payable
Accrued Liabilities
Taxes Payable
Margins: Total Current Liabilities
Revenue Growth 3.2% 5.5% 11.1% Other liabilities
Gross Margin 30.0% 28.5% 27.0% Deferred Taxes
EBIT Margin 21.4% 19.7% 18.7% Total Liabilities
EBITDA Margin 23.8% 22.4% 21.6% Shareholders' Equity
Effective Tax Rate (1) 32.0% 31.7% 30.8% Total Liabilities & Shareholders' Equity
Net Income Margin 18.2% 17.0% 15.7%
Dividend payout ratio 35.0% 43.6% 52.9%
Note: Many items in BKI's historical balance sheets, e.g
(1) Blaine's future tax rate is assumed to revert to the statutory rate of 40%. have been affected by the firm's acquisitions.
 SIMPLIFIED BALANCE SHEET
Case Exhibit 2

2004 2005 2006 Assets: 2004 2005 2006

67,391 70,853 66,557 Cash & Marketable Securities 67,391 70,853 230,866
218,403 196,763 164,309 Net Working Capital 218,403 196,763 32,231
40,709 43,235 48,780 Net Fixed Assets 40,709 43,235 174,321
47,262 49,728 54,874 Other, net 47,262 49,728 50,945
2,586 3,871 5,157 Total Assets 373,765 360,578 488,363
376,351 364,449 339,678
Debt 0 0 0
99,402 138,546 174,321 Equity 417,377 458,538 488,363
8,134 20,439 38,281 Total Liabilities & Shareholders' Equity 417,377 458,538 488,363
13,331 27,394 39,973
497,217 550,829 592,253

eholders' Equity:
26,106 28,589 31,936
22,605 24,921 27,761
14,225 17,196 16,884
62,935 70,705 76,581
1,794 3,151 4,814
15,111 18,434 22,495
79,840 92,290 103,890
417,377 458,538 488,363
& Shareholders' Equity 497,217 550,829 592,253

in BKI's historical balance sheets, e.g. Property, Plant & Equipment Note: Many items in BKI's historical balance sheets, e.g. Property, Plant & Equipment
by the firm's acquisitions. have been affected by the firm's acquisitions.