Consolidated Income Statement

2007E

Revenue
Cost of goods sold
Gross profit
Gross margin
SG&A
EBIT
Interest expense
Write-downs
pretax income
Taxes
Net Income
EBITDA
% Marging
Debt service
Capital expenditures
EBITDA/Debt service
(EBITDA-Capital expenditures)/Interest

166.0
(97.0)
69.0
42%
(50.0)
19.0
(7.0)

$
$

12.0
(4.9)
7.1
27.2
16.4%

Years Ending December 31

2008E
2009E

182.2

(109.0)
73.2
40%
(63.0)
10.2
(8.2)
(2.0)

-$

(1.0)
1.0

2010E

179.1

(112.8)
66.3
37%
(68.6)
(2.3)
(8.6)
(15.0)

-$

9.4
16.5

164.4
(107.8)
56.6
34%
(62.4)
(5.8)
(8.0)
(2.0)

-$

5.4
10.4

22.8
12.5%

10.9
6.1%

7.6
4.6%

20.2
5.6

20.6
3.6

19.8
4.6

1.1
2.1

0.5
0.9

0.4
0.4

Consolidated Balance Sheet

Year ending December 31
2008E
Assets:
Accounts Receivable
Inventory
Total Current Assets

$
$
$

24.8
28.6
53.4

Net fixed assets

Intangible Assets
Total Assets

$
$
$

61.0
49.0
163.4

16.8

$
$
$
$
$
$
$

32.2
31.2
29.2
92.6
109.4
54.0
163.4

Liabilities
Total current liabilities
Bank Debt
Revolver
term
Equipment Loans
Total Bank debt
Total Liabilties
Shareholders equity
Total liabilities and S/holders equity

Year ending December 31

2009E

2010E

$
$
$

27.0
32.2
59.2

$
$
$

16.4
25.6
42.0

$
$
$

55.2
33.2
147.6

$
$
$

49.8
29.4
121.2

24.8

29.4

$
$
$
$
$
$
$

36.8
26.0
22.6
85.4
110.2
37.4
147.6

$
$
$
$
$
$
$

28.2
20.8
15.8
64.8
94.2
27.0
121.2

Ruffco Adjusted Income Statement

2007E

Revenue

130.0

Cost of goods sold

Gross profit
Gross margin

(77.0)
53.0
40.8%

SG&A
EBIT
Manufacturing depreciation
EBITDA
% Margin

(39.2)
13.8
6.0
19.8

Adjustments
Cost of Goods Sold
Nonrecurring Professional Fees
Extraordinary Marketing/PR costs
Lease cost adjustments
Excess Salaries
Adjuested EBIT
Adjusted EBITDA
% Margin

1.0
1.0
15.8
21.8
16.8%

2008E

Year ending December 31,

2010A

2009E

139.8

144.0

136.8

2011E

150.5

2012E

158.0

(82.8)
57.0
40.8%

(85.3)
58.7
40.8%

(88.9)
47.9
35.0%

(96.3)
54.2
36.0%

(99.5)
58.5
37.0%

(46.8)
10.2
6.8
17.0

(53.5)
5.2
7.2
12.4

(49.1)
(1.2)
7.4
6.2
4.5%

(46.4)
7.8
7.8
15.6
10.4%

(46.8)
11.7
8.3
20.0
12.7%

1.0
1.0
1.0
13.2
20.0
14.3%

2.0
1.0
2.0
1.0
1.0
12.2
19.4
13.5%

2.0
2.0
2.0
1.0
1.0
6.8
14.2
10.4%

2013E

162.7
(100.0)
62.7
38.5%
(48.2)
14.5
7.3
21.8
13.4%

Ruffco Gold Balance Sheet after Peter Putter Sale,

Adjustments & Write-Offs
12/31/2010
Assets:
Total Assets
Liabilities
Total Current Liabilities
Bank debt
Revolver
Term
Equipment Loans
Total bank debt
Total Liabilities
Shareholders equity
Total liabilities and S/hoders equity

115.2

29.4
25.8
20.8
15.8
62.4
91.8
23.4
115.2

Sale Adjustments
Debit
Credit

52.5

Pro Forma
12/31/2010

62.7

5.2

24.2

21.8
20.8
12.2
54.8
79.0
-16.3
62.7

3.6
-39.7

Revolver Availability
FYE 2010
16.4
5%
85%
13.2

Accounts Receivable
% Ineligable
Advance rate
Net Availability
Raw materials
% Ineligible
Advance rate
Net availability

5.6
0%
70%
3.9

Finished goods
% Ineligible
Advance rate
Net availability

17
5%
60%
9.7

Inventory - Net availability

Sublimit
Inventory availability

13.6
20
13.6

Total borrowing base

indicated Revolver Balance

26.9
28.2

Indicated Availability

-1.3

Preliminary Market Multiples Valuation Analysis

Representative
Levels
Recast 2010 EBITDA
Forecast FY 2012 EBITDA

$
$

14.20
20.00

Preliminary Valuation Range

Working Capital Adjustments to Value

Normal
Account Receivable
Inventory
Accounts Payable
Accrued Espenses

N/A
N/A
6.6
4.6

Asset Purchase Adjustments to Value

Normalized A/P

6.6

Resumption Schedule of
Incremental A/P
NPV @ 16%

Market Approach Valuation

1
1.10
1.09
$

6.3

Average Enterprise Value Conclusion

Working Capital Adjustments
- Accounts Receivable
- Inventory
- Accounts Payable
- Accrued Expenses
Deferred Capital Expenditures
Adjusted Market Valuation

Selected Multiple Range/Discount

Rate
3.5
3.5
20%

5.0
5.0
16%

Indicative Valuation

$
$

Current

49.2 -

High
$
$

71.0
74.3

72.7

Adjustments

N/A
N/A
16.2
7.8

N/A
N/A
-9.6
-3.2

2
1.10
1.07

3
1.10
1.06

Current
Liabilities
Assumed

Low
49.7
48.6

Asset Only

4
1.10
1.05

5
1.10
1.03

61.0

N/A
N/A
(9.6)
(3.2)
N/A
$

48.2

61.0
N/A
N/A
6.3
N/A

67.3

6
1.10
1.02

Liquidation approach Valuation

Liquidation

Amount

Assumed
Recovery

Accounts Receivable
Inventory
Raw Material
Finished Goods
PP&E
Land & Buildings
Equipment
Leases
Intellectual Property

10.9

80%

4.8
6

60%
40%

12.4
25.8

80%
15%

Total Before Expenses

59.9

46.4%

(1) Appraised Value

Value
8.7
2.9
2.4
9.9
3.9

27.8

(1)
(1)

Discounted Cash Flow

EBITDA

2012E
15.6

Changes in W/C (1)

Capital Expenditures
Taxes @ 40%

(23.8)
(4.0)
(3.0)

Debt-free cash flows

-$

15.2

$
$
$
$
$

3.50
50.1
47.9
45.8
43.8
42.0

WACCAnalysis
Industry WACC
Adjusted RuffCo Gold WACC (2)

Discount

Valuation

16%
17%
18%
19%
20%

Preliminary Valuation Range (Current

Liabilities Assumed)
Adjustments for an asset-only transaction (4)
Account Payable
Accrued Expenses
Adjusted Valuation Range

(1) Assumes current liabilities are assumed and are paid down to norm
(2) After restructuring premiums for financial and operating distress, a
(3) Simple terminla value scenario. Other use Gordon growth Methdo
(4) See "Market Approach section for calculation. Accounts Payable ar

Projections For Year Ended December 31

2013E
2014E
2015E
$
20.0
$
21.8
$
22.4
(1.2)
(4.4)
(4.6)
$

(0.6)
(4.6)
(5.8)

9.8

Low

10.8

$
$
$
$
$

4.50
61.1
58.4
55.9
53.5
51.2

$
$
$
$
$

5.00
66.6
63.7
60.9
58.3
55.8

58.4

Selected
Valuation
$
53.6

16%

20%

4.00
55.6
53.2
50.9
48.7
46.6

48.7

$
$
$
$
$

15.9
3.2
$

10.6

13%

Terminal EBITDA Multiple

67.8

(3)

15.9
3.2
-

(0.8)
(4.6)
(6.4)
$

High
15%

77.5

$
$

15.9
3.2

72.7

2016E
23.0
(0.8)
(4.6)
(7.4)

10.2

umed and are paid down to normalize working capital position, which was substantial cash in the first y
nancial and operating distress, among others.
her use Gordon growth Methdo to illustrate the impact of growth and discount eates on Terminal Value
calculation. Accounts Payable are adjusted to reflect normalized levels and the net present value of ree

tantial cash in the first year

eates on Terminal Value

net present value of reestablished trade debt

Valuation

DCF

Working Capital
Assumed by buyer
$
53.6

Market Multiple

48.2

Liquidation Value
Bank Debt
Unsecured Liabilities

$
$
$

27.8
54.8
79.0

Liquidation Value
0 $
27.8
2 $
27.8

Bank Debt
0 $
2 $

54.8
54.8

Unsecured Liabilities
0 $
79.0
2 $
79.0

Adjustments
$
19.1
$

19.1

Valuation Me
Asset Only
Transaction
$
72.7
$

67.3

DC
Working Capital Assumed by Buyer
Bank Debt

aluation Methodologies

med by Buyer

DCF

Market Multiple
Asset only transaction
Unsecured Liabilities

Liquidation Value