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Case Exhibit 1 W 2004 2005 2006 Revenue 291,940 307,964 342,251 Less: Cost of'Goods Sold M 2211.193 Gross Prot 87,676 37,731 92,453 Less:...

1.    Do you believe Blaine's current capital structure and payout policies are appropriate? Why or why not?

2.    Should Dubinski recommend a large share repurchase to Blaine's board? What are the primary advantages and disadvantages of such a move?

3.    Consider the following share repurchase proposal: Blaine will use $209 million of cash from its balance sheet and $50 million in new debt-bearing interest at the rate of 6.75% to repurchase 14 million shares at a price of $18.50 per share. How would such a buyback affect Blaine? Consider the impact on, among other things, BKI's earnings per share and ROE, its interest coverage and debt ratios, the family's ownership interest and the company's cost of capital.

4.    As a member of Blaine's controlling family, would you be in favor of this proposal? Would you be in favor of it as a non-family shareholder?

5.    How does the proposal sketched above differ from a special dividend of $4.39 per share?




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Case Exhibit 1 W 2004 2005 2006
Revenue 291,940 307,964 342,251 Less: Cost of'Goods Sold M 2211.214. 259.193
Gross Profit 87,676 37,731 92,453
Less: Selling,General & Administrative 25,293 22,049 28,512
Operating Income Plus: Depreciation & Amortization
EBITDA 69,3 70 68,895 73,860 EBIT 62,383 60,682 63,946
Plus: Other Income (expense)
Earnings Before Tax Less: Taxes Net Income
Dividends Revenue Growth 3.2% 5 .5 % Gross Margin 30.0% 28.5%
EBITMargin 21.4% 19.7%
EBI'IDAMargin 23.8% 22.4%
Effective Tax Rate (1) 32.0% 31.2%
Net Income Margin 18.2% 12.0% Dividend a out ratio 35.0% 43.6% 52.9% (1) B] aine's fiJture tax rate is assumed to revert to the statutory rate of 40%

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Case Exhibit 2 Am; 2004 2005 2006
Cash&Cash Equivalents 67,391 111,353 66,557
Marketable Securities 218,403 196,763 164,309
Accounts Receivable 40,709 43 ,2 35 48,780
Inventory 47,262 49,728 54,874
Other CurrentAssets 2,586 3,871 5,157
Total Current Assets 376,351 364,449 339,678
Property, Plant 85 Equipment 99,402 138,546 174,321
Goodwill 3,134 211,439 33,231
Other Assets 13,331 21,394 39,913
Total Assets 497,217 550,829 592,2 53
[18011-23251 & Si! REE & Q MEET E31393. Accounts Payable 26,106 28 ,5 89 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 1,194 3,151 4,314
Deferred Taxes 15,111 18,434 22,495
Total Liabilities 19,343 92,293 103,393
Shareholder 5‘ Equity 411,311 458 ,5 58 488,163 Total Liabilities 81. Shareholders' Equity 497,217 550,829 592,253 Note: Many items in BKI‘s historical balance sheets, e.g. Property, Plant 85 Equipment
have been affected by the firm‘s acquisitions.

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Exhibit 3 _——=—
—————— —
—_5--t'-—-I-—I Revenue ——————_ EBIT ——————I— EBI‘IDA ——IEEEl—————I Net income ——————I ——————I—
Cash dc securities $536,999 $153,689 —- $230,866 Net werkin ca- ital“ ——————I
Net fixed assets ——————I
Total assets ——————= —————— —
Net debt 1—————-_-I
Total debt —————I_
Beak -suit ——————I ——————I—
Marketcatitalizatiun 776,427 13,973,375 5290,145 3,962,730 413,749 I 959,596
Ent' trisevalue C $1,127,226 $13,415,639 $6,240,947 $4,200,336 $353,949 $723,730 -utt beta ———m 0.92 —Im
L'I'MTradln_ Multl .1es ————I—
MVIClRevenue _flfl—————I
MVICIEBIT —EE}‘JI——_——MI WOEBI‘IDA —————_I
Market/Book -.. uit ——————I Net Debtf’luit 45.18% 31.74% 17.97% 6.01% -15.47% I -24.06%
Net Debt/But -rise Val —————I 91.68%
3 Net workin ca- ital excludes cash and securities ———I— 1 Net debt is total Ion term and short term debt less excess cash. ———I—

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