IntroductionThis spreadsheet supports the STUDENT analysis of the case "Flinder Valves and Controls Inc." (UVA-F-1573). September 15, 2008 Copyright © 2008 by the University of Virginia Darden School Foundation. All rights reserved. Exh1Exhibit 1FLINDER VALVES AND CONTROLS INC.Balance Sheet as of December 31, 2007, for Flinder Valves and Controls Inc.(dollars in thousands)AssetsCash$1,884U.S. Treasury tax notes and other Treasury obligations9,328Due from U.S. government868Accounts receivable net2,316Inventories, at lower of cost or market6,888Other current assets116 Total current assets$21,400 Investments1,768Land92Buildings6,240Equipment18,904Less: allowance for depreciation7,056 Total plant, property, and equipment—gross18,180Construction in process88 Total plant, property, and equipment—net*18,268 Patents156 Cash value of life insurance376 Deferred assets156 Total assets42,124Liabilities and Stockholders’ EquityAccounts payable2,016Wages and salaries accrued504Employees’ pension cost accrued208Tax accrued72Dividends payable560Provision for federal income tax1,200 Total current liabilities4,560 Deferred federal income tax800Common stock at par (shares authorized and outstanding 2,440,000 shares)1,220Capital surplus7,180Earned surplus28,364Total equity36,764Total liabilities and stockholders’ equity42,124* Equivalent land in the area had a market value of $320,000, and the building had an estimated market worth of $16,800,000. Equipment had a replacement cost of approximately $24,000,000 but a market value of about $16,000,000 in an orderly liquidation. Exh2Exhibit 2FLINDER VALVES AND CONTROLS INC.Summary of Earnings and Dividends for Flinder Valves and Controls Inc.(dollars in thousands)(Unaudited)Three months ended 3/302003200420052006200720072008Sales$36,312$34,984$35,252$45,116$49,364$11,728$14,162Cost of goods sold25,92424,20024,30031,58037,0448,73010,190Gross profit10,38810,78410,95213,53612,3202,9983,972Selling, general, and administrative2,0202,1002,2522,6282,936668896Other income—net925721087222814198Income before taxes8,4609,2568,80810,9809,6122,3443,274Taxes3,2763,9813,6204,7214,0371,0091,391Net income5,1845,2755,1886,2595,5751,3351,883Cash dividends1,6802,0082,0162,3042,304576753Depreciation7849241,0881,2801,508364394Capital expenditures1,4861,8262,0112,2132,433580640Working capital needs1,8993,492-1,2004,2894,7571,1301,365Ratio analysisSales100.0100.0100.0100.0100.0100.0100.0Cost of goods sold71.469.268.970.075.074.472.0Gross profit28.630.831.130.025.025.628.0Selling, general, and administrative5.66.06.45.85.95.76.3Other income—net0.31.60.30.20.50.11.4Income before federal taxes23.326.525.024.319.520.023.1Net income14.315.114.713.911.311.413.3 Exh3Exhibit 3FLINDER VALVES AND CONTROLS INC.Consolidated Balance Sheet for RSE International as of December 31, 2007(dollars in thousands except per-share figures)AssetsCash$46,480U.S. government securities, at cost117,260Trade accounts receivable241,760Inventories, at.

1. IntroductionThis spreadsheet supports the STUDENT analysis
of the case "Flinder Valves and Controls Inc." (UVA-F-1573).
September 15, 2008 Copyright © 2008 by the University of
Virginia Darden School Foundation. All rights reserved.
Exh1Exhibit 1FLINDER VALVES AND CONTROLS
INC.Balance Sheet as of December 31, 2007, for Flinder Valves
and Controls Inc.(dollars in thousands)AssetsCash$1,884U.S.
Treasury tax notes and other Treasury obligations9,328Due
from U.S. government868Accounts receivable
net2,316Inventories, at lower of cost or market6,888Other
current assets116 Total current assets$21,400
Investments1,768Land92Buildings6,240Equipment18,904Less:
allowance for depreciation7,056 Total plant, property, and
equipment—gross18,180Construction in process88 Total plant,
property, and equipment—net*18,268 Patents156 Cash value
of life insurance376 Deferred assets156 Total
assets42,124Liabilities and Stockholders’ EquityAccounts
payable2,016Wages and salaries accrued504Employees’ pension
cost accrued208Tax accrued72Dividends payable560Provision
for federal income tax1,200 Total current liabilities4,560
Deferred federal income tax800Common stock at par (shares
authorized and outstanding 2,440,000 shares)1,220Capital
surplus7,180Earned surplus28,364Total equity36,764Total
liabilities and stockholders’ equity42,124* Equivalent land in
the area had a market value of $320,000, and the building had
an estimated market worth of $16,800,000. Equipment had a
replacement cost of approximately $24,000,000 but a market
value of about $16,000,000 in an orderly liquidation.
Exh2Exhibit 2FLINDER VALVES AND CONTROLS
INC.Summary of Earnings and Dividends for Flinder Valves and
Controls Inc.(dollars in thousands)(Unaudited)Three months
ended
3/302003200420052006200720072008Sales$36,312$34,984$35,
252$45,116$49,364$11,728$14,162Cost of goods

2. sold25,92424,20024,30031,58037,0448,73010,190Gross
profit10,38810,78410,95213,53612,3202,9983,972Selling,
general, and
administrative2,0202,1002,2522,6282,936668896Other
income—net925721087222814198Income before
taxes8,4609,2568,80810,9809,6122,3443,274Taxes3,2763,9813,
6204,7214,0371,0091,391Net
income5,1845,2755,1886,2595,5751,3351,883Cash
dividends1,6802,0082,0162,3042,304576753Depreciation78492
41,0881,2801,508364394Capital
expenditures1,4861,8262,0112,2132,433580640Working capital
needs1,8993,492-1,2004,2894,7571,1301,365Ratio
analysisSales100.0100.0100.0100.0100.0100.0100.0Cost of
goods sold71.469.268.970.075.074.472.0Gross
profit28.630.831.130.025.025.628.0Selling, general, and
administrative5.66.06.45.85.95.76.3Other income—
net0.31.60.30.20.50.11.4Income before federal
taxes23.326.525.024.319.520.023.1Net
income14.315.114.713.911.311.413.3
Exh3Exhibit 3FLINDER VALVES AND CONTROLS
INC.Consolidated Balance Sheet for RSE International as of
December 31, 2007(dollars in thousands except per-share
figures)AssetsCash$46,480U.S. government securities, at
cost117,260Trade accounts receivable241,760Inventories, at
lower of cost or market179,601Prepaid taxes and
insurance2,120 Total current assets587,221Investment in
wholly-owned Canadian subsidiary158,080Investment in
supplier corporation104,000Cash value of life
insurance3,920Miscellaneous assets2,160Property, plant, and
equipment, at cost: Buildings, machinery, equipment671,402
Less: allowances for depreciation and amortization260,001
Property, plant, and equipment—net411,402Land22,082
Property, plant, equipment, and land—net433,484Patents, at
cost, less amortization1,120 Total assets$1,289,985Liabilities
and Stockholders’ EquityNotes payable to bank$5,795Accounts
payable and accrued expenses90,512Payrolls and other

3. compensation38,399Taxes other than taxes on
income3,052Provision for federal taxes on income refund,
estimated32,662Current maturities of long-term debt30,900
Total current liabilities201,320Note payable to
bank1119,100Deferred federal income taxes29,6682 %
cumulative convertible preferred stock, $20 par,27,783
1,389,160 shares outstanding2Common stock, $2 par;
96,000,000 shares authorized; 125,38962,694,361 shares
issuedCapital surplus321,904Retained earnings764,821 Total
equity939,897 Total liabilities and stockholders’
equity$1,289,9851 $150,000,000 note, payable semiannually
beginning June 30, 2008; $30,900,000 due within one year,
shown in current liabilities. One covenant required the company
not to pay cash dividends, except on preferred stock, or to make
other distribution on its shares or acquire any stock, after
December 31, 1999, in excess of net earnings after that date.2
Issued in January 2007; convertible at rate of 1.24 common
share to one preferred share; redeemable beginning in 2012;
sinking fund beginning in 2016.3 Resulting principally from the
excess of par value of 827,800 shares of preferred stock over
the pay value of common share issues in conversion in 2007.
Exh4Exhibit 4FLINDER VALVES AND CONTROLS
INC.Summary of Consolidated Earnings and Dividends for RSE
International(dollars in thousands)20032004200520062007Net
sales$1,623,963$1,477,402$1,498,645$1,980,801$2,187,208Cos
t of products
sold1,271,5631,180,4441,140,4691,642,0841,793,511Gross
profit352,400296,958358,176338,717393,697Selling, general,
and administrative58,46369,43874,93287,155120,296Earnings
before federal income
taxes293,937227,520283,244251,562273,401Tax
expense126,39395,558116,130101,883109,360Net
earnings167,544131,962167,114149,679164,041Depreciation19,
16020,00021,48024,20026,800Cash dividends
declared85,75477,05253,11677,34092,238
Exh5Exhibit 5FLINDER VALVES AND CONTROLS

4. INC.Forecast Financial Statements for RSE Internationalfor the
Years Ending December 31, 2007–12(dollars in thousands
except per-share
figures)ActualProjected200720082009201020112012Sales$2,18
7,208$2,329,373$2,480,785$2,642,037$2,813,769$2,996,658Co
st of goods
sold1,793,5101,920,0852,064,2432,216,4702,367,2902,537,259
Gross
profit393,698409,288416,542425,567446,479459,399Selling,
general, and
admin.120,296129,786139,481151,027161,315169,826Income
before tax273,402279,502277,061274,540285,164289,573Tax
expense109,361111,801110,824109,816114,066115,829Net
income164,041167,701166,237164,724171,098173,744Cash
dividends92,238102,082108,714115,779125,185133,313Depreci
ation26,80027,95029,77031,70033,17035,960Net
PPE389,321426,522459,404498,497541,109587,580Net working
capital422,597447,956486,428528,407574,238624,303Earnings
per share1$2.62$2.60$2.58$2.56$2.66$2.70Divs. per share
common stock1$1.42$1.58$1.69$1.80$1.94$2.07Div. per share
preferred stock2$0.401 62,694,361 common shares in 2007.
Thereafter, 64,416,919 shares reflecting conversion of the
preferred stock.2 1,389,160 preferred shares in 2007.
Conversion into 1,722,558 shares of common stock assumed in
2008.
Exh6Exhibit 6FLINDER VALVES AND CONTROLS
INC.Market Prices of Flinder Valves and RSE International
CorporationFlinder Valves and ControlsRSE International
CorporationCommon StockCommon StockPreferred StockHigh
Low CloseHigh Low CloseHigh Low
2003$16.25$8.75$15.00$12.31$10.05$11.88200424.7514.0022.6
314.3611.7713.16200525.0020.0022.2512.819.2711.132006
Quarter Ended:March 3124.3820.7521.5014.1312.8313.95June
3022.7520.3821.0013.6912.0411.78September
3022.7520.3821.5012.8310.4811.26December
3124.3620.1321.0012.3911.2611.872007 Quarter Ended:March

5. 3123.5020.0021.7511.6010.2010.6713.6112.21June
3023.6319.8822.0011.6010.9010.9013.1512.04September
3022.7520.0022.5013.6111.1313.6114.2212.37December
3130.0022.2528.5017.0113.3016.7817.3213.772008 Quarter
Ended:March
3132.1326.0031.5020.7315.0820.6917.3213.98May 1,
2008$39.75$38.90$39.75$22.58$18.30$21.98$17.63$15.35
Exh7Exhibit 7FLINDER VALVES AND CONTROLS
INC.Market Information on Firms in the Industrial Machinery
SectorExpected Price/Growth EarningsDividendRate Ratio
Beta Yield to 2010 Debt/CapitalCascade Corp.Manufactures
loading engagement devices10.50.951.7%5.1%29%Curtiss-
Wright CorporationManufactures highly engineered, advanced
technologiesthat perform critical
functions17.21.00.712.336%Flowserve Corp.Makes, designs,
and markets fluid handlingequipment (pumps, valves, and
mechanical seals)20.81.31.027.030%Gardner
DenverManufacturers stationary air compressors, vacuum
products, and blowers10.91.3NilNMF19%Idex
Corp.Manufactures a wide range of pumps and machinery
products16.11.051.510.822%Roper IndustriesManufacturers
energy systems and controls, imaging equipment, and radio
frequency products19.71.20.510.829%Tecumseh
ProductsManufactures compressors, condensers, and pumps
38.21.05NilNMF8%Watts IndustriesManufactures and sells and
extensive line of valves for the plumbing and heating and water
quality markets151.31.58.432%NMF = not meaningful
figure.Source: Value Line Investment Survey, April 25, 2008.
Exh8Exhibit 8FLINDER VALVES AND CONTROLS
INC.Information on Selected Recent Related MergersEffective
DateAcquirerBusinessTargetBusiness5/25/06Armor Holdings
Inc.Law enforcement equipStewart & StevensonTurbine-driven
products6/26/06Bouygues S.A.ConstructionAlstom SAPower
generation equip9/20/06Boeing Co.AircraftAviall IncVehicle
parts11/10/06Daikin Industries Ltd.Air conditioning sysOYL
Industries BhdAirconditioners12/8/06Oshkosh Truck

6. Corp.Heavy duty trucksJLG Industries
IncExcavators/telehandlers4/11/07Rank Group Ltd.Investment
holding coSIG Holding AGPackaging/plastics
machinery6/22/07Meggitt PLCAerospace/defense systemK&F
Industries HoldingsAircraft braking systems7/31/07BAE
Systems Inc.Electronic systemsArmor Holdings IncLaw
enforcement equip12/3/07Carlyle Group LLCPrivate equity
firmSequa CorpAircraft engine component12/20/07ITT
Corp.Pumps/valvesEDO CorpElectn system
products2/6/08London Acquisition BVInvestment holding
coStork NVComponents6/5/08Ingersoll-Rand Co Ltd.Industrial
machinery/equipTrane IncAirconditioners
Exh8 cont'dExhibit 8 (Continued)FLINDER VALVES AND
CONTROLS INC.Information on Selected Recent Related
MergersAcquirerTargetTransaction Size ($mm)Target Net Sales
Last 12 Months ($mm)Equity Value/ Target Net
IncomeEnterprise Value/ Target Net SalesEnterprise Value/
Target Operating IncomeEnterprise Value/ Target Cash
FlowPremium 4 Weeks Prior to Announcement Date (%)Armor
Holdings Inc.Stewart &
Stevenson1,12372665.31.1233.123.740.6Bouygues S.A.Alstom
S.A.2,46717,679nmf1.4877.922.5-1.2Boeing Co.Aviall
Inc.2,0571,37128.91.5318.714.927.2Daikin Industries Ltd.OYL
Industries Bhd1,1521,58127.61.4121.516.819.4Oshkosh Truck
Corp.JLG Industries Inc.3,2522,28920.51.3011.910.752.3Rank
Group Ltd.SIG Holding
AG2,3141,41838.61.5664.814.219.3Meggitt PLCK&F Industries
Holdings1,80242420.34.2613.110.813.5BAE Systems Inc.Armor
Holdings Inc.4,3282,80530.51.7117.114.329.3Carlyle Group
LLCSequa Corp.2,0072,18134.41.2520.612.563.3ITT Corp.EDO
Corp.1,67894586.81.9934.023.940.5London Acquisition
BVStork NV2,3472,15317.10.02nana35.2Ingersoll-Rand Co.
Ltd.Trane Inc.9,7518,32821.21.3914.911.6na
Exh9Exhibit 9FLINDER VALVES AND CONTROLS
INC.Capital Market Interest Rates and Stock Price Indexes
(averages per annum, except April 2008, which offers closing

7. values for April 25, 2008)20062007 April 2008U.S. Treasury
Yields3-month bills4.70%4.40%1.28%30-year
bonds5.00%4.91%4.52%Corporate Bond Yields by
RatingAaa5.59%5.56%5.58%Aa5.80%5.90%5.96%A6.06%6.09
%6.32%Baa6.48%6.48%6.98%Stock MarketS&P 500
Index1,4181,4681,398Price/earnings
ratio17.7×18.3×17.4×Industrial Machinery StocksPrice/earnings
ratio13.9×14.0×Dividend yield1.4%1.4%Historical return
premium of equity over government debt (1926-2007)
Geometric average5.5% Arithmetic average7.2%Data Source:
Value Line Investment Survey, April 25, 2008; Federal Reserve
Bulletin; Compustat
Exh10Exhibit 10FLINDER VALVES AND CONTROLS
INC.Forecast of Financial Statements for Flinder Valves and
Controlsfor Years Ending December 31, 2008–12(dollars in
thousands)ActualProjected200720082009201020112012Sales$4
9,364$59,600$66,000$73,200$81,200$90,000Cost of goods
sold37,04443,81648,75054,10459,95866,200Gross
profit12,32015,78417,25019,09621,24223,800Selling, general,
and administrative2,9363,6124,1244,5645,0525,692Other
income—net228240264288320352Income before
taxes9,61212,41213,39014,82016,51018,460Taxes4,0374,9655,3
565,9286,6047,384Net
income$5,575$7,447$8,034$8,892$9,906$11,076Depreciation$1
,508$1,660$1,828$2,012$2,212$2,432Net
PPE$18,268$22,056$24,424$27,088$30,049$33,306Net working
capital$16,840$20,331$22,515$24,971$27,700$30,702