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 June 30, 2000
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, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock June 30, 2000
--------------------- -----------------
$.01 Par Value 30,795,882 shares
Page 1
<PAGE>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page No.
------------
Part I. Financial Information
Condensed Consolidated Statements of Operations -
three months and six months ended
June 30, 2000 and 1999 3
Condensed Consolidated Balance Sheets -
June 30, 2000 and December 31, 1999 4
Condensed Consolidated Statements of Cash Flows -
six months ended June 30, 2000 and 1999 5
Condensed Consolidated Statements of
Changes in Stockholders' Equity (Deficit) -
three months and six months ended
June 30, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis 16
Part II. Other Information 22
Page 2
<PAGE>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share data)
Three Months Six Months
Ended June 30, Ended June 30,
------------------- -------------------
2000 1999 2000 1999
---------------------------------- -------- -------- -------- --------
(Unaudited) (Unaudited)
Sales $201.3 $183.2 $410.6 $368.3
Cost of sales 137.9 131.4 285.5 263.3
---------------------------------- ------ ------ ------ ------
Gross profit 63.4 51.8 125.1 105.0
Selling, general and
administrative expenses 34.2 32.5 69.9 69.1
Merger expenses 1.6 2.3
---------------------------------- ------ ------ ------ ------
Income from operations 29.2 17.7 55.2 33.6
Interest expense (24.8) (3.6) (49.0) (7.1)
Interest income 0.3 0.4 0.8 1.0
Other income (expense), net 5.6 5.8 (0.1)
---------------------------------- ------ ------ ------ ------
Income before income taxes 10.3 14.5 12.8 27.4
Provision for income taxes 3.3 5.6 4.4 9.7
---------------------------------- ------ ------ ------ ------
Net income $ 7.0 $ 8.9 $ 8.4 $ 17.7
---------------------------------- ====== ====== ====== ======
Basic earnings per share $ 0.23 $ 0.12 $ 0.27 $ 0.24
---------------------------------- ====== ====== ====== ======
Diluted earnings per share $ 0.23 $ 0.12 $ 0.27 $ 0.23
---------------------------------- ====== ====== ====== ======
The accompanying notes are an integral part of these statements.
Page 3
<PAGE>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
June 30, December 31,
2000 1999
------------- ------------
(Unaudited)
ASSETS
------------------------------------------------
Current assets:
Cash and cash equivalents $ 3.9 $ 10.5
Accounts receivable, net of allowance for
doubtful accounts of $4.7 and $4.2 173.2 171.9
Inventories 149.9 117.0
Deferred income taxes 21.1 21.1
Other current assets 9.0 15.5
------------------------------------------------ -------- --------
Total current assets 357.1 336.0
Property, plant and equipment, net of accumulated
depreciation of $233.8 and $230.4 166.1 172.3
Cost in excess of net assets of acquired businesses, net 109.5 111.5
Other assets 67.3 68.9
------------------------------------------------ -------- --------
Total Assets $ 700.0 $ 688.7
------------------------------------------------ ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------------------
Current liabilities:
Notes payable and current maturities of long-term debt $ 9.5 $ 6.5
Accounts payable 38.7 51.0
Accrued expenses 90.8 91.0
------------------------------------------------ -------- --------
Total current liabilities 139.0 148.5
Long-term debt, exclusive of current maturities 822.1 809.7
Deferred income taxes 8.6 8.8
Other liabilities 44.4 43.4
------------------------------------------------ -------- --------
Total liabilities 1,014.1 1,010.4
------------------------------------------------ -------- --------
Commitments and Contingent Liabilities
Stockholders' equity (deficit):
Common stock (par value $.01 per share, 100,000,000
shares authorized, 30,795,882 outstanding) 0.3 0.3
Capital in excess of par value of stock 417.3 417.3
Retained earnings (deficit) (739.5) (747.9)
Accumulated other comprehensive income 7.8 8.6
------------------------------------------------ -------- --------
Total stockholders' equity (deficit) (314.1) (321.7)
------------------------------------------------ -------- --------
Total Liabilities and Stockholders' Equity (Deficit) $ 700.0 $ 688.7
------------------------------------------------ ======== ========
The accompanying notes are an integral part of these statements.
Page 4
<PAGE>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Six Months
Ended June 30,
-------------------
2000 1999
------------------------------------------------------ -------- --------
(Unaudited)
Cash Flows From Operating Activities:
Net income $ 8.4 $ 17.7
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and other
noncash charges 16.4 16.3
Deferred income taxes (0.2) 0.2
Gain on disposals of property, plant and equipment (5.7)
Changes in assets and liabilities:
(Increase) in accounts receivable (1.3) (26.3)
(Increase) in inventories (32.9) (10.2)
Decrease in other assets 5.5 3.3
Increase (decrease) in accounts payable (12.2) 8.6
(Decrease) in accrued expenses (0.3) (4.2)
Increase in other liabilities 0.6 1.5
------------------------------------------------------ ------ ------
Net cash provided by (used in) operating activities (21.7) 6.9
------------------------------------------------------ ------ ------
Cash Flows From Investing Activities:
Proceeds from sales of property, plant and equipment 16.6 0.1
Purchases of property, plant and equipment (16.2) (6.7)
Acquisitions of businesses and product lines (0.3)
Other (3.3)
------------------------------------------------------ ------ ------
Net cash provided by (used in) investing activities 0.1 (9.9)
------------------------------------------------------ ------ ------
Cash Flows From Financing Activities:
Net increase in short-term borrowings 3.0 0.3
Issuance of long-term debt 13.9
Reduction of long-term debt (1.7) (0.2)
Decrease in restricted funds 0.2
Dividends paid (5.2)
Other (0.2) 0.8
------------------------------------------------------ ------ ------
Net cash provided by (used in)
financing activities 15.0 (4.1)
------------------------------------------------------ ------ ------
Net decrease in cash and cash equivalents (6.6) (7.1)
Cash and cash equivalents at beginning of period 10.5 45.1
------------------------------------------------------ ------ ------
Cash and cash equivalents at end of period $ 3.9 $ 38.0
------------------------------------------------------ ====== ======
The accompanying notes are an integral part of these statements.
Page 5
<PAGE>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited)
(In millions)
<TABLE>
<CAPTION>
Accumulated
Common Stock Capital Retained Other
Common ---------------- In Excess Earnings Comprehensive Treasury
Stock Class A Class B of Par (Deficit) Income Stock Total
------ ------- ------- --------- --------- ------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
THREE MONTHS AND SIX MONTHS
ENDED JUNE 30, 2000:
Balance, March 31, 2000 $ 0.3 $417.3 $ (746.5) $ 8.5 $ (320.4)
Net income 7.0 7.0
Other comprehensive income (loss), net (0.7) (0.7)
---------
Comprehensive income 6.3
----- ------ --------- ------ ---------
Balance, June 30, 2000 $ 0.3 $417.3 $ (739.5) $ 7.8 $ (314.1)
===== ====== ========= ====== =========
Balance, December 31, 1999 $ 0.3 $417.3 $ (747.9) $ 8.6 $ (321.7)
Net income 8.4 8.4
Other comprehensive income (loss) net (0.8) (0.8)
---------
Comprehensive income 7.6
----- ------ --------- ------ ---------
Balance June 30, 2000 $ 0.3 $417.3 $ (739.5) $ 7.8 $ (314.1)
===== ====== ========= ====== =========
THREE MONTHS AND SIX MONTHS
ENDED JUNE 30, 1999:
Balance, March 31, 1999 $ 0.3 $ 0.1 $ 38.7 $ 355.1 $ 7.2 $(40.9) $ 360.5
Net income 8.9 8.9
Other comprehensive income (loss), net 0.0
---------
Comprehensive income 8.9
Dividends (2.6) (2.6)
Other 0.1 (0.2) 0.8 0.7
----- ----- ------ --------- ------ ------ ---------
Balance, June 30, 1999 $ 0.3 $ 0.1 $ 38.8 $ 361.2 $ 7.2 $(40.1) $ 367.5
===== ===== ====== ========= ====== ====== =========
Balance, December 31, 1998 $ 0.3 $ 0.1 $ 38.7 $ 348.9 $ 7.6 $(41.0) $ 354.6
Net income 17.7 17.7
Other comprehensive income (loss) net (0.4) (0.4)
---------
Comprehensive income 17.3
Dividends (5.2) (5.2)
Other 0.1 (0.2) 0.9 0.8
----- ----- ------ --------- ------ ------ ---------
Balance June 30, 1999 $ 0.3 $ 0.1 $ 38.8 $ 361.2 $ 7.2 $(40.1) $ 367.5
===== ===== ====== ========= ====== ====== =========
</TABLE>
The accompanying notes are an integral part of these statements.
Page 6
<PAGE>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 In the opinion of management, the accompanying unaudited condensed
consolidated financial statements of Blount International, Inc. and Subsidiaries
("the Company") contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position at June 30, 2000,
and the results of operations and cash flows for the periods ended June 30, 2000
and 1999. These financial statements should be read in conjunction with the
notes to the financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999. The results of operations for
the periods ended June 30, 2000 and 1999, are not necessarily indicative of the
results to be expected for the twelve months ended December 31, 2000, due to the
seasonal nature of certain of the Company's operations.
On August 19, 1999, Blount International, Inc., a Delaware corporation, merged
with Red Dog Acquisition, Corp., a Delaware corporation and a wholly-owned
subsidiary of Lehman Brothers Merchant Banking Partners II L.P. The merger was
completed pursuant to an Agreement and Plan of Merger and Recapitalization dated
as of April 18, 1999. This transaction was accounted for as a recapitalization
under generally accepted accounting principles. Accordingly, the historical
basis of the Company's assets and liabilities has not been impacted by the
transaction. See Note 1 to the Consolidated Financial Statements included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999,
for additional information related to the merger.
Certain amounts in the prior year's financial statements have been reclassified
to conform with the current year's presentation.
The Company's Internet home page is http://www.blount.com.
NOTE 2 During the first quarter of 1999, the Company donated art with a book
value of $1.5 million and an appraised value of $4.7 million to a charitable
foundation. On an after-tax basis, this donation had no significant effect on
net income.
NOTE 3 Inventories consist of the following (in millions):
June 30, December 31,
2000 1999
--------------------------------- ------------ ------------
Finished goods $ 87.7 $ 67.1
Work in process 27.5 21.3
Raw materials and supplies 34.7 28.6
--------------------------------- ------ ------
$149.9 $117.0
--------------------------------- ====== ======
Page 7
<PAGE>
NOTE 4 Segment information is as follows (in millions):
Three Months Six Months
Ended June 30, Ended June 30,
------------------- -------------------
2000 1999 2000 1999
---------------------------------- -------- -------- -------- --------
Sales:
Outdoor Products $ 90.3 $ 84.3 $183.9 $160.5
Sporting Equipment 71.7 71.2 145.1 141.5
Industrial and Power Equipment 39.3 27.7 81.6 66.3
---------------------------------- ------ ------ ------ ------
$201.3 $183.2 $410.6 $368.3
---------------------------------- ====== ====== ====== ======
Operating income (loss):
Outdoor Products $ 20.5 $ 19.6 $ 42.5 $ 35.7
Sporting Equipment 9.8 9.6 16.2 15.1
Industrial and Power Equipment 1.7 (5.9) 3.0 (5.0)
---------------------------------- ------ ------ ------ ------
Operating income from segments 32.0 23.3 61.7 45.8
Corporate office expenses (2.8) (4.0) (6.5) (9.9)
Merger expenses (1.6) (2.3)
---------------------------------- ------ ------ ------ ------
Income from operations 29.2 17.7 55.2 33.6
Interest expense (24.8) (3.6) (49.0) (7.1)
Interest income 0.3 0.4 0.8 1.0
Other income (expense), net 5.6 5.8 (0.1)
---------------------------------- ------ ------ ------ ------
Income before income taxes $ 10.3 $ 14.5 $ 12.8 $ 27.4
---------------------------------- ====== ====== ====== ======
NOTE 5 Under the provisions of Washington State environmental laws, the
Washington State Department of Ecology ("WDOE") has notified the Company that it
is one of many companies named as a Potentially Liable Party ("PLP"), for the
Pasco Sanitary Landfill site, Pasco, Washington ("the Site"). Although the
clean-up costs are believed to be substantial, accurate estimates will not be
available until the environmental studies have been completed at the Site.
However, based upon the total documented volume of waste sent to the Site, the
Company's waste volume compared to that total waste volume should cause the
Company to be classified as a "de minimis" PLP. In July 1992, the Company and
thirty-eight other PLPs entered into an Administrative Agreed Order with WDOE to
perform a Phase I Remedial Investigation at the Site. In October 1994, WDOE
issued an administrative Unilateral Enforcement Order to all PLPs to complete a
Phase II Remedial Investigation and Feasibility Study ("RI/FS") under the Scope
of Work established by WDOE. Based on results of the RI/FS, WDOE has issued a
new administrative Unilateral Enforcement Order to all PLPs to perform several
years of cleanup action at the Site. The Company is unable to determine, at
this time, the level of cleanup demands that may be ultimately placed on it.
Management believes that, given the number of PLPs named with respect to the
Site and their financial condition, the Company's potential response costs
associated with the Site will not have a material adverse effect on consolidated
financial condition or operating results.
The Company 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 retentions or deductible amounts under the
Company's insurance policies. In addition, the Company 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
Page 8
<PAGE>
lawsuits will have a material adverse effect on consolidated financial condition
or operating results.
See Note 7 to the Consolidated Financial Statements included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, for other
commitments and contingencies of the Company which have not changed
significantly since that date.
NOTE 6 During the six months ended June 30, 2000, a net tax refund of $0.5
million was received, while in the six months ended June 30, 1999, tax payments
of $11.2 million were made. Interest paid during the six months ended June 30,
2000 and 1999, was $43.7 million and $6.0 million.
During the second quarter of 2000, the Company disposed of some non-core assets,
an airplane, and a manufacturing facility in North Carolina that was part of the
1999 plant rationalization and production realignment efforts of the Industrial
and Power Equipment segment. The resulting pre-tax gain on the sales of $4.7
million is included in "Other Income (Expense)." The remaining other income
results from realized gains on securities held in two rabbi trusts (see Note 6
to the Consolidated Financial Statements included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999, for information regarding
these two trusts).
NOTE 7 For the three months and six months ended June 30, 2000 and 1999, net
income and shares used in the earnings per share ("EPS") computations were the
following amounts:
Three Months Six Months
Ended June 30, Ended June 30,
---------------------- ----------------------
2000 1999 2000 1999
------------------------------ ---------- ---------- ---------- ----------
Net income (in millions) $ 7.0 $ 8.9 $ 8.4 $ 17.7
------------------------------ ========== ========== ========== ==========
Shares:
Basic EPS - weighted average
common shares outstanding 30,795,882 74,154,786 30,795,882 74,138,904
Dilutive effect of stock
options 2,195,144 2,095,830
------------------------------ ---------- ---------- ---------- ----------
Diluted EPS 30,795,882 76,349,930 30,795,882 76,234,734
------------------------------ ========== ========== ========== ==========
Options to purchase 60,000 shares were granted during the first six months of
2000 under the 1999 Blount Long-Term Executive Stock Option Plan.
NOTE 8 The following consolidating financial information sets forth condensed
consolidating statements of operations, and the balance sheets and cash flows of
Blount International, Inc., Blount, Inc., the Guarantor Subsidiaries and the
Non-Guarantor Subsidiaries (in millions).
Page 9
<PAGE>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
For The Six Months
Ended June 30, 2000
<TABLE>
<CAPTION>
Blount Non-
International, Blount, Guarantor Guarantor
Inc. Inc. Subsidiaries Subsidiaries Eliminations Consolidated
-------------- ------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
-----------------------
Sales $ 233.1 $155.0 $ 97.1 $ (74.6) $410.6
Cost of sales 175.9 116.2 66.7 (73.3) 285.5
-------- ------ ------ --------- ------
Gross profit 57.2 38.8 30.4 (1.3) 125.1
Selling, general and administrative expenses $ 0.5 29.5 20.0 19.9 69.9
------ -------- ------ ------ --------- ------
Income (loss) from operations (0.5) 27.7 18.8 10.5 (1.3) 55.2
Interest expense (48.8) (6.3) (0.3) 6.4 (49.0)
Interest income 0.1 6.7 0.2 0.1 (6.3) 0.8
Other income (expense), net 6.1 (0.1) (0.2) 5.8
------ -------- ------ ------ --------- ------
Income (loss) before income taxes (0.4) (8.3) 12.6 10.1 (1.2) 12.8
Provision (benefit) for income taxes (0.2) (4.2) 4.8 4.0 4.4
------ -------- ------ ------ --------- ------
Income (loss) before earnings of
affiliated companies (0.2) (4.1) 7.8 6.1 (1.2) 8.4
Equity in earnings of affiliated companies, net 8.6 12.7 (0.1) (21.2)
------ -------- ------ ------ --------- ------
Net income (loss) $ 8.4 $ 8.6 $ 7.7 $ 6.1 $ (22.4) $ 8.4
====== ======== ====== ====== ========= ======
For The Three Months
Ended June 30, 2000
STATEMENT OF OPERATIONS
-----------------------
Sales $ 113.3 $ 78.2 $ 45.7 $ (35.9) $201.3
Cost of sales 84.3 56.7 32.0 (35.1) 137.9
-------- ------ ------ --------- ------
Gross profit 29.0 21.5 13.7 (0.8) 63.4
Selling, general and administrative expenses $ 0.2 14.2 10.1 9.7 34.2
------ -------- ------ ------ --------- ------
Income (loss) from operations (0.2) 14.8 11.4 4.0 (0.8) 29.2
Interest expense (24.9) (3.5) (0.1) 3.7 (24.8)
Interest income 3.9 (3.6) 0.3
Other income (expense), net 5.5 0.1 5.6
------ -------- ------ ------ --------- ------
Income (loss) before income taxes (0.2) (0.7) 8.0 3.9 (0.7) 10.3
Provision (benefit) for income taxes (0.1) (1.4) 3.1 1.7 3.3
------ -------- ------ ------ --------- ------
Income (loss) before earnings of
affiliated companies (0.1) 0.7 4.9 2.2 (0.7) 7.0
Equity in earnings of affiliated companies, net 7.1 6.4 (13.5)
------ -------- ------ ------ --------- ------
Net income (loss) $ 7.0 $ 7.1 $ 4.9 $ 2.2 $ (14.2) $ 7.0
====== ======== ====== ====== ========= ======
Page 10
<PAGE>
June 30, 2000
</TABLE>
<TABLE>
<CAPTION>
Blount Non-
International, Blount, Guarantor Guarantor
Inc. Inc. Subsidiaries Subsidiaries Eliminations Consolidated
-------------- ------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
-------------
ASSETS
Current assets:
Cash and cash equivalents $ 0.3 $ (3.0) $ 6.6 $ 3.9
Accounts receivable, net 69.2 90.3 13.7 173.2
Intercompany receivables 249.9 77.2 4.9 $ (332.0)
Inventories 56.1 75.6 18.2 149.9
Deferred income taxes 21.1 21.1
Other current assets 7.3 0.7 1.0 9.0
-------- ------ ------ --------- ---------
Total current assets 403.9 240.8 44.4 (332.0) 357.1
Investments in affiliated companies $ 18.0 405.8 0.2 (424.0)
Property, plant and equipment, net 67.6 73.3 25.2 166.1
Cost in excess of net assets of acquired
businesses, net 31.8 70.7 7.0 109.5
Intercompany notes receivable 6.2 (6.2)
Other assets 62.7 1.3 3.3 67.3
------ -------- ------ ------ --------- ---------
Total Assets $ 18.0 $ 971.8 $386.1 $ 86.3 $ (762.2) $ 700.0
====== ======== ====== ====== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable and current maturities
of long-term debt $ 3.4 $ 6.1 $ 9.5
Accounts payable $ 0.1 14.4 $ 18.1 $ 6.1 38.7
Intercompany payables 332.0 $ (332.0)
Accrued expenses 62.6 19.7 8.5 90.8
------ -------- ------ ------ --------- ---------
Total current liabilities 332.1 80.4 37.8 20.7 (332.0) 139.0
Long-term debt, exclusive of current maturities 821.9 0.2 822.1
Intercompany notes payable 6.2 (6.2)
Deferred income taxes, exclusive of
current portion 7.1 1.5 8.6
Other liabilities 38.2 5.4 0.8 44.4
------ -------- ------ ------ --------- ---------
Total liabilities 332.1 953.8 43.2 23.2 (338.2) 1,014.1
Stockholders' equity (deficit) (314.1) 18.0 342.9 63.1 (424.0) (314.1)
------ -------- ------ ------ --------- ---------
Total Liabilities and
Stockholders' Equity (Deficit) $ 18.0 $ 971.8 $386.1 $ 86.3 $ (762.2) $ 700.0
====== ======== ====== ====== ========= =========
</TABLE>
Page 11
<PAGE>
For The Six Months
Ended June 30, 2000
<TABLE>
<CAPTION>
Blount Non-
International, Blount, Guarantor Guarantor
Inc. Inc. Subsidiaries Subsidiaries Eliminations Consolidated
-------------- ------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS
-----------------------
Net cash provided by (used in) operating
activities $ 374.8 $ (33.3) $ 10.8 $ 1.6 $ (375.6) $ (21.7)
--------- -------- ------ ------ --------- ---------
Cash flows from investing activities:
Proceeds from sale of property, plant and
equipment 15.1 1.5 16.6
Purchases of property, plant and equipment (10.6) (3.3) (2.3) (16.2)
Acquisitions of product lines (0.3) (0.3)
--------- -------- ------ ------ --------- ---------
Net cash used in investing activities 4.5 (2.1) (2.3) 0.1
--------- -------- ------ ------ --------- ---------
Cash flows from financing activities:
Net increase in short-term borrowings 3.0 3.0
Issuance of long-term debt 13.9 13.9
Reduction of long-term debt (1.7) (1.7)
Dividends paid (375.0) (0.6) 375.6
Advances from (to) affiliated companies (374.8) 386.8 (12.0)
Other (0.2) (0.2)
--------- -------- ------ ------ --------- ---------
Net cash provided by (used in) financing
activities (374.8) 23.8 (12.0) 2.4 375.6 15.0
--------- -------- ------ ------ --------- ---------
Net increase (decrease) in cash and cash
equivalents (5.0) (3.3) 1.7 (6.6)
Cash and cash equivalents at beginning of period 5.3 0.3 4.9 10.5
--------- -------- ------ ------ --------- ---------
Cash and cash equivalents at end of period $ $ 0.3 $ (3.0) $ 6.6 $ $ 3.9
========= ======== ====== ====== ========= =========
</TABLE>
Page 12
<PAGE>
December 31, 1999
<TABLE>
<CAPTION>
Blount Non-
International, Blount, Guarantor Guarantor
Inc. Inc. Subsidiaries Subsidiaries Eliminations Consolidated
-------------- ------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
-------------
ASSETS
Current assets:
Cash and cash equivalents $ 5.3 $ 0.3 $ 4.9 $ 10.5
Accounts receivable, net 77.6 79.3 15.0 171.9
Intercompany receivables 613.7 86.9 6.0 $ (706.6)
Inventories 47.5 55.2 14.3 117.0
Deferred income taxes 21.2 (0.1) 21.1
Other current assets 13.1 1.6 0.8 15.5
-------- ------ ------ --------- ---------
Total current assets 778.4 223.3 41.0 (706.7) 336.0
Investments in affiliated companies $385.0 386.4 0.2 (771.6)
Property, plant and equipment, net 71.6 75.9 24.8 172.3
Cost in excess of net assets of acquired
businesses, net 32.7 71.7 7.1 111.5
Intercompany notes receivable 3.0 (3.0)
Other assets 64.9 1.9 2.1 68.9
------ -------- ------ ------ --------- ---------
Total Assets $385.0 $1,334.0 $372.8 $ 78.2 $(1,481.3) $ 688.7
====== ======== ====== ====== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Notes payable and current maturities
of long-term debt $ 3.4 $ 3.1 $ 6.5
Accounts payable 24.9 $ 21.0 5.1 51.0
Intercompany payables $706.7 $ (706.7)
Accrued expenses 63.5 20.4 7.1 91.0
------ -------- ------ ------ --------- ---------
Total current liabilities 706.7 91.8 41.4 15.3 (706.7) 148.5
Long-term debt, exclusive of current maturities 809.5 0.2 809.7
Intercompany notes payable 3.0 (3.0)
Deferred income taxes, exclusive of
current portion 7.3 1.5 8.8
Other liabilities 37.4 5.2 0.8 43.4
------ -------- ------ ------ --------- ---------
Total liabilities 706.7 949.0 46.6 17.8 (709.7) 1,010.4
Stockholders' equity (deficit) (321.7) 385.0 326.2 60.4 (771.6) (321.7)
------ -------- ------ ------ --------- ---------
Total Liabilities and
Stockholders' Equity (Deficit) $385.0 $1,334.0 $372.8 $ 78.2 $(1,481.3) $ 688.7
====== ======== ====== ====== ========= =========
</TABLE>
Page 13
<PAGE>
For The Six Months
Ended June 30, 1999
<TABLE>
<CAPTION>
Blount Non-
International, Blount, Guarantor Guarantor
Inc. Inc. Subsidiaries Subsidiaries Eliminations Consolidated
-------------- ------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
-----------------------
Sales $ 200.3 $151.0 $ 78.7 $ (61.7) $368.3
Cost of sales 156.8 113.5 53.5 (60.5) 263.3
-------- ------ ------ --------- ------
Gross profit 43.5 37.5 25.2 (1.2) 105.0
Selling, general and administrative expenses $ 0.6 32.7 17.4 18.4 69.1
Merger expenses 2.3 2.3
------ -------- ------ ------ --------- ------
Income (loss) from operations (0.6) 8.5 20.1 6.8 (1.2) 33.6
Interest expense (7.0) (3.7) 3.6 (7.1)
Interest income 4.3 0.2 0.1 (3.6) 1.0
Other income (expense), net (0.1) 0.2 (0.2) (0.1)
------ -------- ------ ------ --------- ------
Income (loss) before income taxes (0.6) 5.7 16.8 6.7 (1.2) 27.4
Provision (benefit) for income taxes (0.2) 0.1 6.4 3.4 9.7
------ -------- ------ ------ --------- ------
Income (loss) before earnings of
affiliated companies (0.4) 5.6 10.4 3.3 (1.2) 17.7
Equity in earnings of affiliated companies, net 18.1 12.5 (30.6)
------ -------- ------ ------ --------- ------
Net income (loss) $ 17.7 $ 18.1 $ 10.4 $ 3.3 $ (31.8) $ 17.7
====== ======== ====== ====== ========= ======
For The Three Months
Ended June 30, 1999
STATEMENT OF OPERATIONS
-----------------------
Sales $ 96.8 $ 77.6 $ 38.2 $ (29.4) $183.2
Cost of sales 76.8 57.5 25.7 (28.6) 131.4
-------- ------ ------ --------- ------
Gross profit 20.0 20.1 12.5 (0.8) 51.8
Selling, general and administrative expenses $ 0.3 14.6 8.3 9.3 32.5
Merger expenses 1.6 1.6
------ -------- ------ ------ --------- ------
Income (loss) from operations (0.3) 3.8 11.8 3.2 (0.8) 17.7
Interest expense (3.6) (2.1) 2.1 (3.6)
Interest income 2.4 0.1 (2.1) 0.4
Other income (expense), net (0.1) 0.1
------ -------- ------ ------ --------- ------
Income (loss) before income taxes (0.3) 2.5 9.9 3.2 (0.8) 14.5
Provision (benefit) for income taxes (0.1) 0.3 3.8 1.6 5.6
------ -------- ------ ------ --------- ------
Income (loss) before earnings of
affiliated companies (0.2) 2.2 6.1 1.6 (0.8) 8.9
Equity in earnings of affiliated companies, net 9.1 6.9 (16.0)
------ -------- ------ ------ --------- ------
Net income (loss) $ 8.9 $ 9.1 $ 6.1 $ 1.6 $ (16.8) $ 8.9
====== ======== ====== ====== ========= ======
</TABLE>
Page 14
<PAGE>
For The Six Months
Ended June 30, 1999
<TABLE>
<CAPTION>
Blount Non-
International, Blount, Guarantor Guarantor
Inc. Inc. Subsidiaries Subsidiaries Eliminations Consolidated
-------------- ------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF CASH FLOWS
-----------------------
Net cash provided by (used in) operating
activities $ 24.6 $ 24.1 $(18.8) $ 3.2 $ (26.2) $ 6.9
------ -------- ------ ------ --------- ------
Cash flows from investing activities:
Proceeds from sales of property, plant and
equipment 0.1 0.1
Purchases of property, plant and equipment (2.3) (2.5) (1.9) (6.7)
Other (3.3) (3.3)
------ -------- ------ ------ --------- ------
Net cash used in investing activities (5.6) (2.5) (1.8) (9.9)
------ -------- ------ ------ --------- ------
Cash flows from financing activities:
Net increase in short-term borrowings 0.3 0.3
Reduction of long-term debt (0.2) (0.2)
Decrease in restricted funds 0.2 0.2
Dividends paid (5.2) (25.0) (1.2) 26.2 (5.2)
Advances from (to) affiliated companies (20.2) (2.4) 22.6
Other 0.8 0.8
------ -------- ------ ------ --------- ------
Net cash provided by (used in) financing
activities (24.6) (27.2) 22.6 (1.1) 26.2 (4.1)
------ -------- ------ ------ --------- ------
Net increase (decrease) in cash and cash
equivalents -- (8.7) 1.3 0.3 -- (7.1)
Cash and cash equivalents at beginning of period 39.7 (1.5) 6.9 45.1
------ -------- ------ ------ --------- ------
Cash and cash equivalents at end of period $ -- $ 31.0 $ (0.2) $ 7.2 $ -- $ 38.0
====== ======== ====== ====== ========= ======
</TABLE>
Page 15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating Results
Sales for the three months and six months ended June 30, 2000, were $201.3
million and $410.6 million compared to $183.2 million and $368.3 million for the
comparable periods of the prior year. Net income for the second quarter and
first half of 2000 was $7.0 million and $8.4 million compared to net income of
$8.9 million and $17.7 million for the comparable periods of the prior year.
These results reflect a significant increase in sales and operating income from
both the Outdoor Products segment and the Industrial and Power Equipment
segment. The Outdoor Products segment reflects good market conditions including
the effect of storm damage in Europe, partially offset by the negative impact of
the U.S. dollar's strength. The Industrial and Power Equipment segment reflects
an improving market and the effects of plant rationalization and cost reduction
actions taken in 1999. In addition, the Sporting Equipment segment reflects
improved results. Corporate expenses for the second quarter and first half of
1999 include $1.6 million and $2.3 million of expenses associated with the
merger. In addition, the first half of 1999 includes $1.5 million for a
donation of art (see Note 2 of Notes to the Condensed Consolidated Financial
Statements). Excluding the expenses associated with the merger and donation of
art, selling, general and administrative expenses increased by $1.7 million and
$2.3 million during the second quarter and first half of 2000 as compared to the
same periods in the prior year. These increases primarily reflect costs
associated with the increased volume in Outdoor Products. Higher interest
expense during the three months and six months ended June 30, 2000, reflects
higher long-term debt levels during the current year resulting from the
transaction described in Note 1 of Notes to the Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999. The Company's effective income tax rate was lower in the
second quarter of 2000 principally from reassessment of the portion of merger
expenses deductible in the current year, while the effective tax rate for the
six months of 1999 was lower principally as a result of the donation of art.
The principal reasons for these results and the status of the Company's
financial condition are set forth below and should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 1999.
Sales for the Outdoor Products segment for the second quarter and first six
months of 2000 were $90.3 million and $183.9 million compared to $84.3 million
and $160.5 million during the corresponding periods of 1999. Operating income
was $20.5 million for the second quarter and $42.5 million for the first half of
2000 compared to $19.6 million and $35.7 million in the comparable periods of
the prior year. Sales reflect a significantly higher volume of sales of chain
saw components, particularly in Europe and Southeast Asia. Sales of lawn mowers
and accessories were unfavorably impacted by weather conditions in certain of
their markets. Sales by the segment's principal product groups were as follows
(in millions):
Page 16
<PAGE>
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
% Increase % Increase
(Decrease) (Decrease)
2000 1999 in 2000 2000 1999 in 2000
--------------------------- ------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Chain saw components $ 55.5 $ 49.3 12.6% $115.6 $ 94.9 21.8%
Lawn mowers and accessories 24.5 24.9 (1.6) 46.9 45.3 3.5
Other 10.3 10.1 2.0 21.4 20.3 5.4
--------------------------- ------ ------ ------ ------
Total segment sales $ 90.3 $ 84.3 7.1% $183.9 $160.5 14.6%
--------------------------- ====== ====== ====== ======
</TABLE>
The improvement in operating income is primarily due to the higher sales of
chain saw components. Operating income for the first six months of 2000
compared to 1999 was negatively affected by an additional $1.5 million from
unfavorable exchange rates.
Sales for the Sporting Equipment segment were up modestly to $71.7 million for
the second quarter and $145.1 million for the first half of 2000 as compared to
$71.2 million and $141.5 million during the same periods last year. This
performance reflects increased law enforcement and international sales,
partially offset by declines in rimfire ammunition and optics sales which were
somewhat impacted by Y2K purchasing in 1999. Operating income increased to $9.8
million and $16.2 million in the current year's second quarter and first six
months from $9.6 million and $15.1 million for the same periods during the prior
year. Both periods reflect higher volume, particularly for ammunition and
related products, which have slightly higher margins. Sales by the segment's
principal product groups were as follows (in millions):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
% Increase % Increase
(Decrease) (Decrease)
2000 1999 in 2000 2000 1999 in 2000
--------------------------- ------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Ammunition and related products $ 54.3 $ 53.5 1.5% $108.5 $105.0 3.3%
Sports optical products 7.7 8.5 (9.4) 16.6 16.7 (0.6)
Other 9.7 9.2 5.4 20.0 19.8 1.0
--------------------------- ------ ------ ------ ------
Total segment sales $ 71.7 $ 71.2 0.7% $145.1 $141.5 2.5%
--------------------------- ====== ====== ====== ======
</TABLE>
The Company's Industrial and Power Equipment segment is a cyclical, capital
goods business whose results are closely linked to the strength of the forestry
industry in general, particularly in the Company's most important market (the
Southeastern United States), as well as the need to offer discounts in response
to extremely aggressive competitive pricing for available sales. Operating
results for the Industrial and Power Equipment segment in the second quarter and
first half of 2000, while improved over the prior year, were still affected by
soft market conditions. Dry weather conditions in the Southeastern United
States, coupled with an overhang of used equipment in certain dealers'
inventories, continue to negatively impact sales of new equipment. Sales of
Gear components and rotation bearings were essentially flat for the second
quarter and first half as increased sales to the utility market were offset by
decreases to the construction equipment market. Sales by the segment's
principal product groups were as follows (in millions):
Page 17
<PAGE>
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
% Increase % Increase
(Decrease) (Decrease)
2000 1999 in 2000 2000 1999 in 2000
--------------------------- ------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Timber harvesting and loading
equipment $ 32.6 $ 20.8 56.7% $ 68.5 $ 53.5 28.0%
Gear components and rotation
bearings 6.7 6.9 (2.9) 13.1 12.8 2.3
--------------------------- ------ ------ ------ ------
Total segment sales $ 39.3 $ 27.7 41.9% $ 81.6 $ 66.3 23.1%
--------------------------- ====== ====== ====== ======
</TABLE>
This segment had operating income of $1.7 million and $3.0 million during the
second quarter and first six months of 2000, compared to an operating loss of
$5.9 million and $5.0 million during the comparable periods of 1999, primarily
due to increased demand for its timber harvesting equipment. During the first
half of 2000, in response to the weak market conditions, the Company implemented
a program of production realignments, temporary plant shutdowns and layoffs, and
reduced working hours in this segment to lower costs and match production to
demand. One manufacturing facility was closed during the first half of 1999
with its production shifted to other Company plants. Costs of approximately
$1.3 million and $1.9 million for this closure were charged to operations during
the second quarter and first six months of 1999. With recent pulp price
increases to $700 per metric ton compared to $520 per metric ton a year ago,
more favorable weather conditions, and lower pulp inventories, coupled with
declining levels of used equipment, the expectation in the industry is for a
market improvement later this year, although the extent and timing of any
improvement is uncertain.
The Company's total backlog increased to $114.7 million at June 30, 2000, from
$85.6 million at December 31, 1999, and $90.9 million at June 30, 1999, as
follows (in millions):
Backlog
----------------------------------------
June 30, December 31, June 30,
2000 1999 1999
------------------------------------ ------------ ------------ ------------
Outdoor Products $ 59.0 $ 41.9 $ 29.9
Sporting Equipment 35.9 17.9 31.2
Industrial and Power Equipment 19.8 25.8 29.8
------------------------------------ ------ ------ ------
$114.7 $ 85.6 $ 90.9
------------------------------------ ====== ====== ======
Financial Condition, Liquidity and Capital Resources
At June 30, 2000, the Company had significant amounts of debt, with interest
payments on notes and interest and principal payments under credit facilities
representing significant obligations for the Company. The notes require semi-
annual interest payments and the term loan facilities under the new credit
facilities required payments of principal that commenced on December 31, 1999.
Interest on the term loan facilities and amounts outstanding under the revolving
credit facility are payable in arrears according to varying interest periods.
The Company's remaining liquidity needs relate to working capital, capital
expenditures and potential acquisitions.
Page 18
<PAGE>
The Company intends to fund working capital, capital expenditures and debt
service requirements through cash flows generated from operations and from the
revolving credit facility. At June 30, 2000, the Company had $14.0 million
outstanding borrowings under its $100.0 million revolving credit facility.
Letters of credit issued under the revolving credit facility which reduced the
amount available under the revolving credit facility were $6.8 million at June
30, 2000. The revolving credit facility matures August 19, 2004.
Management believes that cash generated from operations, together with amounts
available under the revolving credit facility, will be sufficient to meet the
Company's working capital, capital expenditure and other cash needs, including
financing for acquisitions, in the foreseeable future. There can be no
assurance, however, that this will be the case. The Company may also consider
other options available to it in connection with future liquidity needs.
The Company has senior notes outstanding in the principal amount of $150 million
which mature in 2005. The Company also has senior subordinated notes
outstanding in the principal amount of $325 million which mature in 2009 and
senior term loans outstanding in the principal amount of $337.5 million which
mature at various dates through 2006. See Note 3 of Notes to the Consolidated
Financial Statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999, for the terms and conditions of the senior
notes, senior subordinated notes, and senior term loans.
Cash balances at June 30, 2000, were $3.9 million compared to $10.5 million at
December 31, 1999. Cash used in operating activities was $21.7 million in the
first six months of 2000 compared to cash provided by operating activities of
$6.9 million during the prior year's first six months, principally due to a net
income decrease of $9.3 million, higher cash usage of $22.7 million for
inventory and $37.7 million higher interest payments, partially offset by $25.0
million lower receivables reflecting the Industrial and Power Equipment
segment's improved market and $11.7 million lower tax payments. Working capital
increased to $218.1 million at June 30, 2000, compared to $187.5 million at
December 31, 1999. Accounts receivable increased by $1.3 million, inventories
increased by $32.9 million, other current assets decreased by $6.5 million,
notes payable and current maturities of long-term debt increased by $3.0
million, accounts payable decreased by $12.3 million, and accrued expenses
decreased by $0.2 million. The higher inventories reflect increases of $21.0
million at the Sporting Equipment segment resulting from a seasonal build-up in
anticipation of sales during the fall season and to address delivery and
production costs during the upcoming peak, and $9.1 million for the Industrial
and Power Equipment segment, reflecting somewhat improved sales and the effect
of long lead times on certain products. The notes payable and current
maturities of long-term debt increase reflects $3.0 million short-term
borrowings. The accounts payable decrease reflects reduced raw material
purchases principally related to lower sales in the second quarter of 2000 than
in the fourth quarter of 1999. The accounts receivable increase principally
reflects higher sales and longer payment terms used as a marketing tool by the
Sporting Equipment segment, partially offset by lower receivables in the
Industrial and Power Equipment group as second quarter sales are historically
lower than fourth quarter sales.
Accounts receivable at June 30, 2000, and December 31, 1999, and sales by
segment for the second quarter of 2000 compared to the fourth quarter of 1999
were as follows (in millions):
Page 19
<PAGE>
June 30, December 31, Increase
2000 1999 (Decrease)
------------------------------------ ------------ ------------ ------------
Accounts Receivable:
Outdoor Products $ 63.4 $ 65.6 $ (2.2)
Sporting Equipment 80.2 64.8 15.4
Industrial and Power Equipment 29.3 40.9 (11.6)
------------------------------------ ------ ------ ------
Total segment receivables $172.9 $171.3 $ 1.6
------------------------------------ ====== ====== ======
Three Months Ended
June 30, December 31, Increase
2000 1999 (Decrease)
------------------------------------ ------------ ------------ ------------
Sales:
Outdoor Products $ 90.3 $ 84.3 $ 6.0
Sporting Equipment 71.7 83.8 (12.1)
Industrial and Power Equipment 39.3 53.9 (14.6)
------------------------------------ ------ ------ ------
Total segment sales $201.3 $222.0 $(20.7)
------------------------------------ ====== ====== ======
The Company's Outdoor Products segment includes Oregon Cutting Systems,
Frederick Manufacturing and Dixon Industries. The higher sales by the Outdoor
Products segment and an increased mix of sales to original equipment
manufacturers, who generally require shorter payment terms in comparison to
other customers, result in a decrease in that segment's receivables as compared
to year-end. Because of the seasonal nature of the sporting equipment business,
the need to produce and ship efficiently in order to ensure an adequate supply
during peak sales periods and in response to competitor programs, the Company
offers extended payment terms within its Sporting Equipment segment in advance
of the fall hunting season. As a result, receivables tend to peak in September
and reach their low point in January. At June 30, 2000, extended term
receivables were $26.5 million greater than at December 31, 1999. The
Industrial and Power Equipment segment lower receivables primarily reflect the
lower sales in the second quarter of 2000 compared to the fourth quarter of
1999.
The Company has absorbed the increased inventory through operating cash flows
and short-term borrowings under its revolving credit agreement. Given the
historically stronger second half operating cash flows (in 1999, excluding
merger expenses, first half operating cash flows were $9.2 million and second
half operating cash flows were $79.7 million), the Company expects operating
cash flows and amounts available under its revolving credit facility will be
sufficient to cover any further increases until market conditions in the
Industrial and Power Equipment segment improve and payment terms return to those
normally extended. No material adverse effect on the operations, liquidity or
capital resources of the Company is expected as a result of the extended terms.
There was no cash used in investing activities in the first six months of 2000
as the $16.6 million for purchases of property, plant and equipment was offset
by a like amount received from the sale of property, plant and equipment,
principally the Company's corporate aircraft. Cash provided by financing
activities in the first six months of 2000 was $15.0 million, principally
reflecting $14.0 million from the utilization of the revolving credit facility.
The Company is substantially leveraged which may adversely affect its
operations.
Page 20
<PAGE>
This substantial leverage could have important consequences for the Company,
including the following:
1. the ability to obtain additional financing for working capital, capital
expenditures or other purposes may be impaired or may not be available on
favorable terms;
2. a substantial portion of cash flows available from operations will be
dedicated to the payment of principal and interest expense, which will reduce
the funds that would otherwise be available for operations and future business
opportunities;
3. a substantial decrease in net income and cash flows or an increase in
expenses may make it difficult to meet debt service requirements or force the
Company to modify operations; and
4. substantial leverage may make the Company more vulnerable to economic
downturns and competitive pressure.
New Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivatives and hedging. It requires that all
derivatives be recognized as either assets or liabilities at fair value and
establishes specific criteria for the use of hedge accounting. The Company's
required adoption date is January 1, 2001. SFAS No. 133 is not to be applied
retroactively to financial statements of prior periods. The Company expects no
material adverse effect on consolidated results of operations, financial
position or cash flows upon adoption of SFAS No. 133, but does expect a small
reduction in stockholders' deficit.
On December 3, 1999, the staff of the Securities and Exchange Commission (SEC)
issued Staff Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in
Financial Statements." SAB 101 summarizes some of the staff's interpretations
of the application of generally accepted accounting principles to revenue
recognition. SAB 101 was originally required to be adopted no later than the
first quarter of the fiscal year beginning after December 15, 1999. However,
SAB 101A extended the implementation date for certain registrants with fiscal
years that begin between December 16, 1999, and March 15, 2000, to report a
change in accounting principle no later than their second quarter of the fiscal
year beginning after December 15, 1999. SAB 101B extended the implementation
date until the fourth quarter of the fiscal year beginning after December 15,
1999. Management is in the process of evaluating this accounting bulletin and
has not yet determined the future impact on the Company's financial statements.
Forward Looking Statements
Forward looking statements in this report, as defined by the Private Securities
Litigation Reform Law of 1995, involve certain risks and uncertainties that may
cause actual results to differ materially from expectations as of the date of
this report.
Page 21
<PAGE>
Part II. Other Information
Item 6(a) Exhibits
**10(t) Amendment to Employment Agreement between Blount
International, Inc. and Harold E. Layman.
** Filed electronically herewith. Copies of this exhibit may be obtained upon
written request from:
Blount International, Inc.
P. O. Box 949
Montgomery, AL 36101-0949
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: August 9, 2000 /s/ Rodney W. Blankenship
-------------------------------------
Rodney W. Blankenship
Senior Vice President and
Chief Financial Officer
Page 22
</TEXT
