fvc valuation

7/25/2019 FVC Valuation

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Exhibit 10

FLINDER VALVES AND CONTROLS INC.

Forecast of Financial Statements for Flinder Valves and Controls

(dollars in thousands)

Actual

00! 00"

Sales #$%&'$ #%&00

Cost of *oods sold '!&0$$ $'&"1

+ross ,rofit 1&'0 1&!"$

Sellin*& *eneral& and administrative &%' '&1

" $0

-ncome before taxes %&1 1&$1.axes $&0'! $&%

/et income #&! #!&$$!

e,reciation #1&0" #1&0

/et PPE #1"&" #&0

PPE

/et or2in* ca,ital #1&"$0 #0&''1

FCFF

/3PA. #!&$$!

#&$$"

4ess5 -ncrease in /6C #'&$%1

Free Cash 7#1&$%

.erminal Value

FCFF8.erminal Value 7#1&$%/PV #1&%$9'$

E:uit; Value #$&$

Par Value ,er Share #1%90"$


2/36

>SE to FVC Share Conversion 2.000

Dilution in Case o Sto!" #u!%ase

Projected >SE Earnin*s #1!&!01

Combined Earnin*s #1!&1$"

3utstandin* >SE Shares(=efore Ac:uirin*) $&$1&%1%

Projected >SE EPS(=efore Ac:uirin*) #90

3utstandin* >SE Shares (After Ac:uirin*) %&%&%1%

Projected >SE EPS(After Ac:uirin*) #9"Dilution 2.9&'

Dilution in !ase o !as% (u!%ase

Projected >SE Earnin*s after interest ex,ense #1'&0%

Projected EPS #9'$

Dilution 2.6)9'


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"9

Avera*e of ,ast dividend *roths

Projected

00% 010 011 01 01'(Stead; State)

#&000 #!'&00 #"1&00 #%0&000

$"&!0 $&10$ %&%" &00

1!&0 1%&0% 1&$ '&"00

$&1$ $&$ &0 &%

$ "" '0 '

1'&'%0 1$&"0 1&10 1"&$0&' &%" &0$ !&'"$

#"&0'$ #"&"% #%&%0 #11&0!

#1&"" #&01 #&1 #&$'

#$&$$ #!&0"" #'0&0$% #''&'0

#&1 #$&%!1 #!&!00 #'0&!0

#"&0'$ #"&"% #%&%0 #11&0!

#$&1% #$&! #&1!' #&"%

#&1"$ #&$ #&!% #'&00

#1&$ #1&!0 #&00$ #&'" #&%1

#"'&!

#1&$ #1&!0 #&00$ #"&%

in* C'")

Stea*+ State,o-t% Rate


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#1&'! #1$&!$ #1!1&0%" #1!'&!$$

#1!$&!1 #1!'&1 #1"1&00$ #1"$&"0

#9" #9 #9 #9!0

#91 #91 #91 #9!2.' 2.02' &.66' &.&2'

Avera*e ilution 90

#11&!$$ #10&' #1&0 #1%&

#91 #9$% #9% #9'

2.)0' 2.)3' 2.63' 2.9'

Avera*e ilution 9$


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FVC /ACC Calulation

m7>f !90 Arithmetic SE for ever; 1 share of FVC or


6/36

Premium &0.9'

SE are ver; ,articular a

Sin!e t%e *ilution in E#S is %i%e in !ase o !as% (u!%ase1 sto!" (u!%ase is (eee*

Sensitiit+Consi*ee*

Sensitive ate


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(After convertin* Preferred Stoc2 to Common Stoc2)

$&0)12621400.00


8/36

and a safe bet

out this


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Exhibit 10




Actual

00! 00"

Sales #$%&'$ #%&00


+ross ,rofit 1&'0 1&!"$


" $0

-ncome before taxes %&1 1&$1

.axes $&0'! $&%/et income #&! #!&$$!


/et PPE #1"&" #&0

PPE

/et or2in* ca,ital #1&"$0 #0&''1

FCFF

/3PA. #!&$$!

#&$$"


Free Cash 7#1&$%

.erminal Value

FCFF8.erminal Value 7#1&$%

/PV #1&%$9'$E:uit; Value #$&$

Par Value ,er Share #1%90"$


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3utstandin* >SE Shares (After Ac:uirin*) %&%0&%1%

Projected >SE EPS(After Ac:uirin*) #91

Dilution 3.)6'


Projected >SE Earnin*s after interest ex,ense #1&$"Projected EPS #9

Dilution 3.0&3'


11/36

"9


Projected

00% 010 011 01 01'(Stead; State)

#&000 #!'&00 #"1&00 #%0&000

$"&!0 $&10$ %&%" &00

1!&0 1%&0% 1&$ '&"00

$&1$ $&$ &0 &%

$ "" '0 '

1'&'%0 1$&"0 1&10 1"&$0

&' &%" &0$ !&'"$#"&0'$ #"&"% #%&%0 #11&0!

#1&"" #&01 #&1 #&$'

#$&$$ #!&0"" #'0&0$% #''&'0

#&1 #$&%!1 #!&!00 #'0&!0

#"&0'$ #"&"% #%&%0 #11&0!

#$&1% #$&! #&1!' #&"%

#&1"$ #&$ #&!% #'&00

#1&$ #1&!0 #&00$ #&'" #&%1

#"'&!

#1&$ #1&!0 #&00$ #"&%

#1&'! #1$&!$ #1!1&0%" #1!'&!$$

#1!$ !1 #1!' 1 #1"1 00$ #1"$ "0



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#9" #9 #9 #9!0

#9$% #9$" #9% #9$

3.40' 2.' 2.2' &.9'

Avera*e ilution 9%0"

#11&1"' #1%&!0 #1&0$ #1"&%0#90 #9$" #9" #9

3.04' 3.0)' 2.9' 2.9&'

Avera*e ilution 9%%!


13/36

FVC /ACC Calulation

m7>f !90 Arithmetic


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Bustifications

S!enaio 3,timistic

Assumin* an o,timistic Scenario here e ex,ect FVC to overcome SE to FVC Share conversion factor

A conversion factor of 9 for ever; FVC share ould ease the ,ractical issues related to ac:

ence a conversion factor of 9 and an unaltered mar2et to boo2 ratio of 9 ould be an o

6e also ma2e sure that the EPS dilution is less than & as the directors of >SE are ver; ,arti

Sin!e t%e *ilution in E#S is %i%e in !ase o !as% (u!%ase1 sto!" (u!%ase is (eee*

Sensitiit+Consi*ee*

Stable ate


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hibit %

Exhibit %


#10&!0&00900


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troducin* ne innovative ,roducts and imorovin* international sales

uisistion

timistic bet

cular about this


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Exhibit 10




Actual

00! 00"

Sales #$%&'$ #%&00


Cost Savin*s 1&00

+ross ,rofit 1&'0 1!&"$


" $0

-ncome before taxes %&1 1'&%1

.axes $&0'! &

/et income #&! #"&'$!


/et PPE #1"&" #&0

PPE

/et or2in* ca,ital #1&"$0 #0&''1

FCFF

/3PA. #"&'$!

#&$$"


Free Cash 7#%

.erminal Value

Economic Value of 6idenin* +;re

FCFF8.erminal Value 7#%

/PV #%&!'9'

E:uit; Value #%1&$0$

Par Value ,er Share #'!9$1


18/36





3utstandin* >SE Shares (After Ac:uirin*) !0&1&%1%

Projected >SE EPS(After Ac:uirin*) #90

Dilution 4.&0'


Projected >SE Earnin*s after interest ex,ense #1&0"

Projected EPS #91

Dilution 3.34'


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"9


Projected

00% 010 011 01 01'(Stead; State)

#&000 #!'&00 #"1&00 #%0&000

$"&!0 $&10$ %&%" &00

'&000 '&000 '&000 '&000

0&0 &0% $&$ &"00

$&1$ $&$ &0 &%

$ "" '0 '

1&'%0 1!&"0 1%&10 1&$0

& !&1" !&"0$ "&"$

#%&"'$ #10&% #11&!0 #1&"!

#1&"" #&01 #&1 #&$'

#$&$$ #!&0"" #'0&0$% #''&'0

#&1 #$&%!1 #!&!00 #'0&!0

#%&"'$ #10&% #11&!0 #1&"!

#$&1% #$&! #&1!' #&"%

#&1"$ #&$ #&!% #'&00

#'&$$ #'&0 #'&"0$ #$&1" #$&$

#1$&'!

#&000 (Conservative A,,roach o

#'&$$ #'&0 #'&"0$ #1&"



20/36

#1&'! #1$&!$ #1!1&0%" #1!'&!$$

#1!&0!1 #1!&$1 #1"&"0$ #1"&0

#9" #9 #9 #9!0

#90 #9$% #9% #9

3.2' 2.)2' 2.40' &.'

Avera*e ilution 9"!

#10&1 #1%&10% #1&$"' #1"&1%

#9$%' #9$!0 #9% #910

3.3' 3.4&' 3.2' 3.23'

Avera*e ilution '9''0


21/36

FVC /ACC Calulation

m7>f !90 Arithmetic


22/36

esource mana*em

6e also loo2 the >SE to FVC Share conversion factor

A conversion factor of 9 for ever; FVC share ould ease the ,

ence both the factors combined to*ether& e arrive at 9 conv

6e also ma2e sure that the EPS dilution is less than & as the d

Sin!e t%e *ilution in E#S is %i%e in !ase o !as% (u!%ase1 s


23/36

hibit %

Exhibit %


# 1'$&0!"&000900


24/36

and ,rofits from 6idenin* +;re

nt S;stem& and the additional transition costs to match the s;ner*; benefits& 6e reduce th

actical issues related to ac:uisistion

rsion factor and 19 atio ('' loer)

rectors of >SE are ver; ,articular about this

to!" (u!%ase is (eee*


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Exhibit 10




Actual

00! 00"

Sales #$%&'$ #%&00


Cost Savin*s 1&00

+ross ,rofit 1&'0 1!&"$


" $0-ncome before taxes %&1 1'&%1

.axes $&0'! &

/et income #&! #"&'$!


/et PPE #1"&" #&0

PPE

/et or2in* ca,ital #1&"$0 #0&''1

FCFF

/3PA. #"&'$!

#&$$"


Free Cash 7#%

.erminal ValueEconomic Value of 6idenin* +;re

FCFF8.erminal Value 7#%

/PV #10&0%9'

E:uit; Value #%!&1$%

Par Value ,er Share #'%9"1

for @ears Endin* ecember '1& 00"1

3ther income

net

4ess5 Ca,ital ex,enditures(Chan*e in /et PPE 8e,reciation)


28/36

SE to FVC Share Conversion 2.)0

Dilution in Case o Sto!" #u!%ase





3utstandin* >SE Shares (After Ac:uirin*) !1&1&%1%

Projected >SE EPS(After Ac:uirin*) #9$"

Dilution 4.93'


Projected >SE Earnin*s after interest ex,ense #11&$

Projected EPS #90!

Dilution 3.63'


29/36

"9


Projected

00% 010 011 01 01'(Stead; State)

#&000 #!'&00 #"1&00 #%0&000

$"&!0 $&10$ %&%" &00

'&000 '&000 '&000 '&000

0&0 &0% $&$ &"00

$&1$ $&$ &0 &%

$ "" '0 '1&'%0 1!&"0 1%&10 1&$0

& !&1" !&"0$ "&"$

#%&"'$ #10&% #11&!0 #1&"!

#1&"" #&01 #&1 #&$'

#$&$$ #!&0"" #'0&0$% #''&'0

#&1 #$&%!1 #!&!00 #'0&!0

#%&"'$ #10&% #11&!0 #1&"!

#$&1% #$&! #&1!' #&"%

#&1"$ #&$ #&!% #'&00

#'&$$ #'&0 #'&"0$ #$&1" #$&$

#1$&'!#1&000 (Su,er 3,timistic A,,roac

#'&$$ #'&0 #'&"0$ #1&"



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#1&'! #1$&!$ #1!1&0%" #1!'&!$$

#1!&0!1 #1!&$1 #1"&"0$ #1"&0

#9" #9 #9 #9!0

#9$" #9$! #9! #9

4.0' 3.6' 3.24' 2.)2'

Avera*e ilution '9!0'

#10&00 #1"&$! #1$&% #1!&!

#9$" #9$1 #90 #901

3.)2' 3.)' 3.6&' 3.6'Avera*e ilution '9'


31/36

FVC /ACC Calulation

m7>f !90 Arithmetic


32/36

9! Shares of >SE for ever; 1 share of FVC or # 1$!&$"&"00900

Premium 2.06'

esource mana*ement S;s

6e also loo2 the >SE to FVC Share conversion factor

A conversion factor of 9! for ever; FVC share ould ease the ,ractic

ence both the factors combined to*ether& e arrive at 9! conversion

6e also ma2e sure that the EPS dilution is less than & as the directors

.his is our al2aa; ,rice as there are no more :uanitifiable benefits to

and the EPS dilution ould *o be;ond in 00" in case of a hi*her o

.his ill not be considered favorable b; >SE =oard

Sin!e t%e *ilution in E#S is lo-e in !ase o !as% (u!%ase1 -e o o


33/36

d Stoc2 to Common Stoc2)


34/36

;ner*; 8 ?ncertain 6idenin* +;re Project

em& and the additional transition costs to match the s;ner*; benefits& 6e reduce the SE are ver; ,articular about this

consider

fer ,rice

!as% (u!%ase


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fvc valuation

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