FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1995
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 001-11549
BLOUNT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 63-0780521
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4520 Executive Park Drive 36116-1602
Montgomery, Alabama (Zip Code)
(Address of principal executive offices)
(334) 244-4000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes No X
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding as of
Class of Common Stock November 3, 1995
--------------------- -----------------
Class A Common Stock $.01 Par Value 13,122,867 shares
Class B Common Stock $.01 Par Value 5,925,825 shares
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BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
------------
Part I. Financial Information
Consolidated Balance Sheets -
August 31, 1995 and February 28, 1995 3
Consolidated Statements of Income -
three months and six months ended
August 31, 1995 and 1994 4
Consolidated Statements of Cash Flows -
six months ended August 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis 11
Exhibit 11 - Computation of Net Income
Per Common Share 14
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BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
August 31, February 28,
1995 1995*
---------- ------------
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents, including short-term
investments of $62,285 and $40,266 $ 65,077 $ 43,390
Accounts receivable, net of allowances for doubtful
accounts of $2,753 and $2,611 110,553 130,774
Inventories 74,927 77,075
Deferred income taxes 25,056 25,068
Other current assets 4,844 16,153
-------- --------
Total current assets 280,457 292,460
Property, plant and equipment, net of accumulated
depreciation of $151,453 and $145,561 124,164 134,368
Cost in excess of net assets of acquired businesses, net 67,232 68,762
Other assets 23,875 25,202
-------- --------
Total Assets $495,728 $520,792
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable and current maturities of long-term debt $ 5,648 $ 7,791
Accounts payable 42,235 64,880
Accrued expenses 75,779 91,835
Other current liabilities 1,248 4,658
-------- --------
Total current liabilities 124,910 169,164
Long-term debt, exclusive of current maturities 95,245 98,254
Deferred income taxes, exclusive of current portion 19,111 19,214
Other liabilities 26,127 26,446
-------- --------
Total liabilities 265,393 313,078
-------- --------
Commitments and Contingent Liabilities
Shareholders' equity (Note 2):
Common Stock: par value $.01 per share
Class A: 13,101,358 and 12,844,179 shares issued 131 128
Class B, convertible: 5,926,089 and 6,045,636
shares issued 59 60
Capital in excess of par value of stock 30,483 28,681
Retained earnings 191,390 170,595
Accumulated translation adjustment 8,272 8,250
-------- --------
Total shareholders' equity 230,335 207,714
-------- --------
Total Liabilities and Shareholders' Equity $495,728 $520,792
======== ========
* Restated. See Note 2.
The accompanying notes are an integral part of these statements.
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BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
Three months ended Six months ended
August 31, August 31,
---------------------- ----------------------
1995 1994* 1995* 1994*
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Sales $ 147,166 $ 138,781 $ 311,355 $ 284,465
Cost of sales 98,414 91,687 207,551 188,852
---------- ---------- ---------- ----------
Gross profit 48,752 47,094 103,804 95,613
Selling, general and
administrative expenses 30,389 29,387 59,663 59,736
---------- ---------- ---------- ----------
Income from operations 18,363 17,707 44,141 35,877
Interest expense (2,613) (2,791) (5,232) (5,614)
Interest income 1,094 580 1,764 1,169
Other income, net 1,003 42 538 630
---------- ---------- ---------- ----------
Income before income taxes 17,847 15,538 41,211 32,062
Provision for income taxes 7,313 6,035 16,854 12,714
---------- ---------- ---------- ----------
Net income $ 10,534 $ 9,503 $ 24,357 $ 19,348
========== ========== ========== ==========
Net income per common share $ .54 $ .49 $ 1.25 $ 1.00
========== ========== ========== ==========
Weighted average number of
common and common equivalent
shares outstanding (as
adjusted for the effect of
the merger and the 3 for 2
common stock exchange ratio,
See Note 2) 19,478,880 19,360,194 19,472,706 19,311,846
========== ========== ========== ==========
Cash dividends declared
per share (as adjusted for
the effect of the merger and
the 3 for 2 common stock
exchange ratio, See Note 2)
Class A common stock $ .095 $ .083 $ .190 $ .167
========== ========== ========== ==========
Class B common stock $ .087 $ .075 $ .173 $ .150
========== ========== ========== ==========
* Restated. See Note 2.
The accompanying notes are an integral part of these statements.
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BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six months ended August 31,
---------------------------
1995 1994
-------- --------
(Unaudited)
Cash Flows From Operating Activities:
Net income $ 24,357 $ 19,348
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and other
noncash charges 11,091 11,573
Deferred income taxes (91) 2,629
Loss on disposals of property, plant and equipment 117 218
Changes in assets and liabilities, net of effects
of businesses acquired and sold:
Decrease in accounts receivable 11,100 10,532
(Increase) decrease in inventories 1,968 (1,591)
(Increase) decrease in other assets 10,512 (4,529)
Decrease in accounts payable (14,412) (10,868)
Decrease in accrued expenses (14,972) (2,689)
Decrease in other liabilities (2,723) (6,815)
-------- --------
Net cash provided by operating activities 26,947 17,808
-------- --------
Cash Flows From Investing Activities:
Proceeds from sales of businesses and property,
plant and equipment 4,770 2,882
Purchases of property, plant and equipment (4,355) (3,973)
Acquisitions of businesses (5,103)
-------- --------
Net cash provided by (used in)
investing activities 415 (6,194)
-------- --------
Cash Flows From Financing Activities:
Net increase (reduction) in short-term borrowings 107 (4,420)
Reduction of long-term debt (5,259) (12,383)
Decrease in restricted funds 1,235
Dividends paid (3,562) (3,014)
Issuance of stock under Blount, Inc. stock option
and dividend reinvestment plans 1,804 522
-------- --------
Net cash used in financing activities (5,675) (19,295)
-------- --------
Net increase (decrease) in cash and cash equivalents 21,687 (7,681)
Cash and cash equivalents at beginning of period 43,390 54,088
-------- --------
Cash and cash equivalents at end of period $ 65,077 $ 46,407
======== ========
The accompanying notes are an integral part of these statements.
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BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 In the opinion of management, the accompanying unaudited consolidated
financial statements, which include the accounts of Blount International, Inc.
("BII") and Blount, Inc. and its Subsidiaries, contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
financial position at August 31, 1995 and the results of operations and cash
flows for the periods ended August 31, 1995 and 1994. These financial
statements should be read in conjunction with the notes to BII's consolidated
financial statements for the year ended February 28, 1995, as included in BII's
registration statement on Form S-4 filed on October 3, 1995 (See Note 2). The
results of operations for the periods ended August 31, 1995 and 1994 are not
necessarily indicative of the results to be expected for the full fiscal year,
due to the seasonal nature of certain operations.
NOTE 2 As of August 31, 1995, BII was owned 100% by Blount, Inc.'s Chairman of
the Board, Winton M. Blount, and members of his family. At August 31, 1995, BII
owned an approximate 62% voting interest and approximately 38% of the shares of
Blount, Inc.'s Common Stock outstanding. Except for this 38% equity interest in
Blount, Inc., BII has had no other operations or business since February 1993.
On November 3, 1995, the stockholders of Blount, Inc. approved a merger
agreement dated August 17, 1995, among BII, Blount, Inc., and a wholly-owned
subsidiary of BII ("the subsidiary"). As a result, i) the subsidiary was merged
with and into Blount, Inc., ii)Blount, Inc. was the surviving corporation in the
merger and became a wholly-owned subsidiary of BII, iii) Blount, Inc.
stockholders received three shares of BII Class A common stock in exchange for
each two shares held of Blount, Inc. Class A common stock and three shares of
BII Class B common stock in exchange for each two shares held of Blount, Inc.
Class B common stock, and iv) BII assumed all Blount, Inc. stock option plans.
BII filed a Form S-4 registration statement with the Securities and Exchange
Commission on October 3, 1995, for the shares to be issued as a result of the
merger. Immediately following the merger, the equity ownership of BII was the
same as that which previously existed for Blount, Inc. Blount, Inc. was
delisted from the American Stock Exchange effective November 3, 1995, and BII
began trading on the New York Stock Exchange on November 6, 1995.
At the effective date of the merger, the authorized capital stock of BII
consisted of 60 million shares of Class A Common Stock, 14 million shares of
Class B Common Stock and 4,456,855 shares of Preferred Stock, each with a par
value of $.01 per share. Immediately following the merger, 13,122,867 shares of
Class A Common Stock and 5,925,825 shares of Class B Common Stock were issued
and outstanding (as adjusted for the 3 for 2 common stock exchange ratio), and
no shares of Preferred Stock were outstanding. The Class A Common Stock is
entitled to elect 25% of BII's Board of Directors, is entitled to one-tenth of
one vote per share on all other matters and will receive an additional dividend
of $.00833 in any quarter that a cash dividend is declared on the Class B Common
Stock. The Class B Common Stock is entitled to elect 75% of BII's Board of
Directors and is entitled to one vote per share on all other matters. Each
share of Class B Common Stock is convertible at any time at the option of the
shareholder into one share of Class A Common Stock.
The merger has been accounted for in a manner similar to that in pooling of
interests accounting. The consolidated financial statements, and all related
share data, of BII and Subsidiaries for the period ended August 31, 1995 have
been adjusted to reflect the merger and the 3 for 2 common stock exchange ratio.
Additionally, the consolidated financial statements and share data for all prior
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periods have been restated in a similar manner. The assets and liabilities of
BII, Blount, Inc. and its Subsidiaries are stated at their historical recorded
amounts. As of the date of the merger, the consolidated assets and liabilities
of BII and Subsidiaries did not differ materially from those of Blount, Inc. and
Subsidiaries. For the three months ended August 31, 1995, BII incurred
approximately $1.5 million of selling, general and administrative expenses
associated with the merger. Such expenses were borne by BII, not Blount, Inc.
The results of Blount, Inc.'s operations for the three months and six months
ended August 31, 1995 and 1994 were as follows (in thousands, except share
data):
Three months ended Six months ended
August 31, August 31,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Sales $ 147,166 $ 138,781 $ 311,355 $ 284,465
Cost of sales 98,414 91,687 207,551 188,852
---------- ---------- ---------- ----------
Gross profit 48,752 47,094 103,804 95,613
Selling, general and
administrative expenses 28,849 29,324 57,600 59,590
---------- ---------- ---------- ----------
Income from operations 19,903 17,770 46,204 36,023
Interest expense (2,646) (2,816) (5,299) (5,654)
Interest income 900 569 1,510 1,021
Other income (expense), net 1,001 211 542 (642)
---------- ---------- ---------- ----------
Income before income taxes 19,158 15,734 42,957 30,748
Provision for income taxes 7,336 6,035 16,856 12,041
---------- ---------- ---------- ----------
Net income $ 11,822 $ 9,699 $ 26,101 $ 18,707
========== ========== ========== ==========
Net income per common share
(as adjusted for the
3 for 2 common stock
exchange ratio) $ .61 $ .50 $ 1.34 $ .97
========== ========== ========== ==========
NOTE 3 Inventories consist of the following (in thousands):
August 31, February 28,
1995 1995
------------ ------------
Finished goods $ 32,500 $ 35,769
Work in process 13,116 14,075
Raw materials and supplies 29,311 27,231
-------- --------
$ 74,927 $ 77,075
======== ========
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NOTE 4 The principal assets and liabilities of the discontinued construction
operations included in the consolidated balance sheets are as follows (in
thousands):
August 31, February 28,
1995 1995
------------ ------------
Accounts receivable $ 19,856 $ 45,706
Other current assets 1,120 11,911
Other assets 1,424 5,203
Accounts payable (10,501) (24,588)
Accrued expenses (6,629) (12,578)
Other current liabilities (1,248) (4,659)
Other liabilities (2,203) (2,849)
During the first quarter of fiscal 1996, Pozzo Construction Company, part of the
remaining discontinued construction operations, and the Injection Molding Metal
Products operations were sold. These transactions were not material to the
consolidated financial condition of BII and Subsidiaries.
NOTE 5 In August 1995, Blount, Inc. entered into agreements expiring August 31,
1998 with certain financial organizations under which it may sell up to $25
million of undivided interests in a pool of eligible accounts receivable in
which the purchasers retain a security interest. The purchasers' level of
investment may fluctuate based on the level of the eligible receivables in the
pool. As of August 31, 1995, no receivables have been sold under this
agreement.
At August 31, 1995 and February 28, 1995, $8.9 million and $10.1 million,
representing the unexpended proceeds from industrial development revenue bonds
issued in fiscal 1995, was held in trust and is included in "Other assets" in
the consolidated balance sheets.
NOTE 6 The United States Environmental Protection Agency ("EPA") has designated
a predecessor of Blount, Inc. as a potentially responsible party ("PRP") with
respect to the Onalaska Municipal Landfill in Onalaska, Wisconsin (the "Site").
The waste complained of was placed in the landfill prior to 1981 by a
corporation, some of whose assets were purchased in 1981 by a predecessor of
Blount, Inc. It is the view of management that because Blount, Inc.'s
predecessor corporation purchased assets rather than stock, Blount, Inc. does
not have successor liability and is not properly a PRP. However, the EPA has
indicated it does not accept this position. Management believes the EPA is
wrong on the successor liability issue. However, with other PRP's, Blount, Inc.
made a good faith offer to the EPA to pay a portion of the clean-up costs. The
offer was rejected and the EPA is proceeding with the clean-up. The estimated
past and future clean-up costs are approximately $12 million. In 1989 the EPA
named four PRP's. One of the PRP's, the Town of Onalaska (the "Town") and the
EPA and State of Wisconsin negotiated a consent decree under which the Town
would have been released from future liability in return for paying $110
thousand, granting access to the Site and adjacent properties and performing
some future maintenance work. The United States District Court for the District
of Wisconsin found, on December 21, 1994, that the settlement was not fair,
reasonable or in the public interest, and refused to approve and confirm it as
the order of the Court. Blount, Inc. denies that it is a PRP and is unable to
determine any other party's share of total remediation costs. Blount, Inc. does
not know the financial status of the other PRP's and other parties that, while
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not named by the EPA as PRP's, may have liability with respect to the Site.
Management does not expect the situation to have a material adverse effect on
consolidated financial condition or operating results.
Blount, Inc. is closing the Resource Conservation and Recovery Act ("RCRA") Part
B Storage Permit at its Sporting Equipment Division's CCI operations facility in
Lewiston, Idaho. As part of the closure process, Blount, Inc. is required by
the State of Idaho to undertake RCRA correction action at the facility. This
requires Blount, Inc. to investigate all areas at the facility where solid waste
and hazardous waste have historically been managed. The facility has been
operating since the 1950s. There are several areas which require investigation
and environmental sampling. In order to effect the investigation, Blount, Inc.
and the State of Idaho entered into an Administrative Consent Order which
governs the completion of the corrective action activities. The RCRA Facility
Investigation has commenced and the soils investigation is complete.
Environmental sampling indicates the presence of lead contamination in a limited
number of shallow surface soils. Blount, Inc. is proposing to excavate this
limited lead contamination and dispose of it at a RCRA permitted landfill.
There is also some trichloroethylene and perchloroethylene contamination of the
uppermost groundwater beneath the facility. This uppermost groundwater is not
the drinking water supply source and does not appear to be connected to the
deeper drinking water aquifer. Further groundwater investigation is ongoing.
It is expected that the range of remediation costs is from $2.8 million to $6.2
million. Management does not expect the situation to have a material adverse
effect on consolidated financial condition or operating results beyond amounts
accrued.
The EPA has designated a former subsidiary of BII as a PRP with respect to the
New Lyme Landfill in Ohio. In October 1989, the EPA brought a civil action
against 13 PRPs who brought in an additional 24 PRPs. The former subsidiary has
not been named as a defendant in this litigation. No claim has been asserted
against the former subsidiary. Management believes the likelihood of a claim
being asserted is low.
Blount, Inc. is a defendant in a number of product liability lawsuits, some of
which seek significant or unspecified damages, involving serious personal
injuries for which there are large deductible amounts under insurance policies.
In addition, Blount, Inc. is a party to a number of other suits arising out of
the conduct of its business. While there can be no assurance as to their
ultimate outcome, management does not believe these lawsuits will have a
material adverse effect on consolidated financial condition or operating
results.
Contingencies include normal liabilities for performance and completion of its
remaining construction contracts. At August 31, 1995, there were outstanding
bank letters of credit in the approximate amount of $15.6 million issued
principally in connection with various foreign construction contracts for which
Blount, Inc. is contingently liable to the issuing banks in the event payment is
demanded by the holder.
See Notes 4 and 8 to BII's Consolidated Financial Statements for the year ended
February 28, 1995, included in the Form S-4 registration statement filed on
October 3, 1995 (See Note 2), for other commitments and contingencies which have
not changed significantly since year-end.
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NOTE 7 Segment information is as follows (in thousands):
Three Months Six Months
Ended August 31, Ended August 31,
------------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
Sales:
Outdoor products $ 66,969 $ 61,879 $143,662 $130,399
Industrial and power equipment 56,416 49,409 114,265 101,706
Sporting equipment 23,781 27,493 53,428 52,360
-------- -------- -------- --------
$147,166 $138,781 $311,355 $284,465
======== ======== ======== ========
Operating income:
Outdoor products $ 12,753 $ 10,189 $ 28,609 $ 20,241
Industrial and power equipment 9,719 7,794 19,614 15,621
Sporting equipment 1,816 5,451 6,511 10,122
-------- -------- -------- --------
Operating income from segments 24,288 23,434 54,734 45,984
Corporate overhead expenses (5,925) (5,727) (10,593) (10,107)
-------- -------- -------- --------
Income from operations 18,363 17,707 44,141 35,877
Interest expense (2,613) (2,791) (5,232) (5,614)
Interest income 1,094 580 1,764 1,169
Other income, net 1,003 42 538 630
-------- -------- -------- --------
Income before income taxes $ 17,847 $ 15,538 $ 41,211 $ 32,062
======== ======== ======== ========
NOTE 8 Income taxes paid during the six months ended August 31, 1995 and 1994
were $22.7 million and $13.0 million. Interest paid during the six months ended
August 31, 1995 and 1994 was $5.0 million and $5.4 million.
NOTE 9 Net income per common share is based on the weighted average number of
common and common equivalent shares (stock options) outstanding in each period,
as adjusted for the merger and the 3 for 2 common stock exchange ratio (See Note
2).
NOTE 10 On November 13, 1995, BII announced the acquisition of all of the
outstanding common stock of Simmons Outdoor Corporation ("Simmons"), subject to
certain government approvals and Simmons shareholders' acceptance of the offer.
The purchase price will be approximately $38 million and the acquisition will be
accounted for as a purchase. For its most recent fiscal year, Simmons reported
sales and operating income of approximately $52.0 million and $5.4 million,
respectively.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating Results
BII and Subsidiaries reported improved net income for the three months and six
months ended August 31, 1995. Sales for the second quarter and first half of
fiscal 1996 were $147.2 million and $311.4 million compared to $138.8 million
and $284.5 million for the comparable periods of fiscal 1995. Net income was
$10.5 million ($.54 per share) and $24.4 million ($1.25 per share) for the
second quarter and first half of fiscal 1996 compared to $9.5 million ($.49 per
share) and $19.3 million ($1.00 per share) for the comparable periods of the
prior year. These operating results reflect continued strong performance by the
Outdoor Products segment and Industrial and Power Equipment segment, partially
offset by reduced earnings from the Sporting Equipment segment. The principal
reasons for these results and the status of consolidated financial condition are
set forth below and should be read in conjunction with the consolidated
financial statements of BII and Subsidiaries for the year ended February 28,
1995, included in BII's Form S-4 registration statement filed on October 3, 1995
(See Note 2 of Notes to Consolidated Financial Statements).
Sales for the Outdoor Products segment for the second quarter and first half of
fiscal 1996 were $67.0 million and $143.7 million compared to $61.9 million and
$130.4 million during the second quarter and first half of fiscal 1995.
Operating income increased by 25% to $12.8 million and by 41% to $28.6 million
during the second quarter and first six months, respectively, of fiscal 1996 in
comparison to the prior fiscal year. The sales and operating income increases
were principally attributable to a higher volume and increased average selling
prices of saw chain and saw bars sold in foreign markets by the Oregon Cutting
Systems Division and an increase in the volume of riding lawn mowers shipped by
Dixon Industries, Inc.
Sales for the Industrial and Power Equipment segment were $56.4 million and
$114.3 million during the second quarter and the first six months of fiscal 1996
compared to $49.4 million and $101.7 million during the comparable periods of
fiscal 1995. Operating income increased to $9.7 million and $19.6 million for
the three months and six months ended August 31, 1995 from $7.8 million and
$15.6 million during the same periods of the prior fiscal year. The improved
operating results were principally due to higher average selling prices for
timber harvesting equipment, improved sales and operating income by CTR
Manufacturing, Inc., acquired on April 28, 1994, and its inclusion for the full
six months in the current year, and improved sales and operating income by the
Gear Products, Inc. subsidiary, primarily due to higher volume.
The Sporting Equipment segment experienced a downturn during the second quarter
of fiscal 1996. In the aftermath of last year's booming domestic market, a
result of concern over the possibility of Congressional legislation adverse to
the shooting sports industry, an industry slowdown occurred. Management expects
a return to market conditions which more nearly approximate its normal
historical levels during the latter half of fiscal 1996. Sales for the Sporting
Equipment segment declined to $23.8 million for the second quarter of fiscal
1996 from $27.5 million during the prior year's second quarter, while current
year-to-date sales of $53.4 million were slightly above last year's level for
the comparable period. Operating income was down to $1.8 million and $6.5
million for the second quarter and first six months of fiscal 1996 as compared
to $5.5 million and $10.1 million during the same periods of fiscal 1995. These
results reflect the reduced demand, higher raw material costs, costs associated
with temporary plant shutdowns and a loss from the Ram-Line operation acquired
late in fiscal 1995.
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Selling, general and administrative expenses for the second quarter of fiscal
1996 include transaction costs of $1.5 million associated with the merger (See
Note 2 of Notes to Consolidated Financial Statements). Total backlog at August
31, 1995 was approximately $125.5 million compared to $125.0 million at May 31,
1995 and $134.4 million at February 28, 1995.
Financial Condition, Liquidity and Capital Resources
At August 31, 1995, no amounts were outstanding under the $100 million revolving
credit agreement. In August 1995, Blount, Inc. entered into new receivable
sales agreements under which up to $25 million in receivables may be sold (See
Note 5 of Notes to Consolidated Financial Statements). As of August 31, 1995,
no receivables had been sold under these agreements. The total capitalization
at August 31, 1995 consists of $95.2 million long-term debt and equity of $230.3
million for a long-term debt to equity ratio of .4 to 1 as compared to a ratio
of .5 to 1 at February 28, 1995. At August 31, 1995, 9% subordinated notes were
outstanding in the principal amount of $78.6 million maturing in 2003. See Note
3 of Notes to the Consolidated Financial Statements for BII and Subsidiaries for
the year ended February 28, 1995 for the terms and conditions of the $100
million revolving credit agreement and the 9% subordinated notes.
Working capital was $155.5 million at August 31, 1995 compared to $123.3 million
at February 28, 1995. The increase resulted principally from earnings for the
six months ended August 31, 1995. Accounts receivable, accounts payable and
accrued expenses decreased by $20.2 million, $22.6 million and $16.1 million,
respectively, since February 28, 1995. The primary reason for the decrease in
receivables is the reduction in balances attributable to the discontinued
construction segment as those operations either wind down or are sold (See Note
4 of Notes to Consolidated Financial Statements). The reductions in accounts
payable and accrued expenses also reflect the reduced construction activity, the
sale of the Injection Molding Metal Products operations and higher estimated tax
payments resulting from the higher earnings. Operating cash flows for the first
six months of fiscal 1996 were $26.9 million compared to $17.8 million in the
first six months of fiscal 1995, while cash and cash equivalent balances
increased by $21.7 million since February 28, 1995. The improved operating cash
flows reflect the improved income from manufacturing operations and cash flows
of approximately $12.2 million from the discontinued construction segment,
partially offset by higher corporate expenditures for estimated income tax
payments, employee benefit plans, management incentive plans and charitable
contributions which were accrued in the prior year.
The ability of BII to pay dividends is dependent upon Blount, Inc.'s ability to
pay dividends to BII. Restrictions on the ability of Blount, Inc. to pay cash
dividends are contained in the indenture related to the 9% subordinated notes
and in certain financial covenants of the revolving credit agreement. Under the
most restrictive requirement, Blount, Inc. retained earnings of approximately
$51.4 million were available for the payment of dividends at August 31, 1995.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLOUNT INTERNATIONAL, INC.
- ----------------------------------
Registrant
Date: November 20, 1995 /s/ Harold E. Layman
---------------------------------
Harold E. Layman
Senior Vice President &
Chief Financial Officer
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PART I - EXHIBIT 11
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(In thousands, except share data)
(Unaudited)
Three Months Six Months
Ended August 31, Ended August 31,
----------------------- -----------------------
1995 1994* 1995* 1994*
---------- ---------- ---------- ----------
Primary:
Net income $ 10,534 $ 9,503 $ 24,357 $ 19,348
========== ========== ========== ==========
Shares (See Note 2):
Weighted average common
shares outstanding 19,027,193 18,774,482 19,026,734 18,770,523
Dilutive effect of stock
options 451,687 585,712 445,972 541,323
---------- ---------- ---------- ----------
Average common shares
outstanding as adjusted 19,478,880 19,360,194 19,472,706 19,311,846
========== ========== ========== ==========
Primary net income per
common share $ .54 $ .49 $ 1.25 $ 1.00
========== ========== ========== ==========
Assuming Full Dilution:
Net income $ 10,534 $ 9,503 $ 24,357 $ 19,348
========== ========== ========== ==========
Shares (See Note 2):
Average common shares
as adjusted for primary
computation 19,478,880 19,360,194 19,472,706 19,311,846
Additional dilutive effect
of stock options 44,766 13,764 48,170 57,099
---------- ---------- ---------- ----------
Average common shares
outstanding as adjusted 19,523,646 19,373,958 19,520,876 19,368,945
========== ========== ========== ==========
Net income per common share
assuming full dilution $ .54 $ .49 $ 1.25 $ 1.00
========== ========== ========== ==========
* Restated. See Note 2.
Page 14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BLOUNT INTERNATIONAL, INC. FOR THE PERIOD ENDED
AUGUST 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
STATEMENTS.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1996
<PERIOD-END> AUG-31-1995
<CASH> 65,077
<SECURITIES> 0
<RECEIVABLES> 113,306
<ALLOWANCES> 2,753
<INVENTORY> 74,927
<CURRENT-ASSETS> 280,457
<PP&E> 275,617
<DEPRECIATION> 151,453
<TOTAL-ASSETS> 495,728
<CURRENT-LIABILITIES> 124,910
<BONDS> 95,245
<COMMON> 190
0
0
<OTHER-SE> 230,145
<TOTAL-LIABILITY-AND-EQUITY> 495,728
<SALES> 311,355
<TOTAL-REVENUES> 311,355
<CGS> 207,551
<TOTAL-COSTS> 207,551
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,232
<INCOME-PRETAX> 41,211
<INCOME-TAX> 16,854
<INCOME-CONTINUING> 24,357
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,357
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
</TABLE>
