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 November 30, 1994
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 1-7002
BLOUNT, INC.
(Exact name of registrant as specified in its charter)
Delaware 63-0593908
(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)
(205) 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 November 30, 1994
--------------------- -----------------
Class A Common Stock $1.00 Par Value 8,508,445 shares
Class B Common Stock $1.00 Par Value 4,042,494 shares
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BLOUNT, INC. AND SUBSIDIARIES
INDEX
Page No.
------------
Part I. Financial Information
Consolidated Balance Sheets -
November 30, 1994 and February 28, 1994 3
Consolidated Statements of Income -
three months and nine months ended
November 30, 1994 and 1993 4
Consolidated Statements of Cash Flows -
nine months ended November 30, 1994 and 1993 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis 12
Exhibit 11 - Computation of Net Income
Per Common Share 15
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BLOUNT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
November 30, February 28,
1994 1994
---------- ----------
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents, including short-term
investments of $54,048 and $48,810 $ 57,188 $ 52,213
Accounts receivable, net of allowances for
doubtful accounts of $2,799 and $2,238 136,552 134,458
Inventories 66,044 60,180
Deferred income taxes 15,636 17,742
Other current assets 15,618 12,812
-------- --------
Total current assets 291,038 277,405
Property, plant and equipment, net of accumulated
depreciation of $141,703 and $135,694 136,791 140,422
Cost in excess of net assets of acquired
businesses, net 69,632 60,171
Other assets 17,429 14,903
-------- --------
Total Assets $514,890 $492,901
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Notes payable and current maturities of
long-term debt $ 7,939 $ 2,082
Accounts payable 61,571 74,267
Accrued expenses 109,647 83,757
Billings in excess of costs and recognized
profits on uncompleted contracts 4,844 12,953
-------- --------
Total current liabilities 184,001 173,059
Long-term debt, exclusive of current maturities 95,743 107,651
Deferred income taxes, exclusive of current portion 11,737 13,499
Other liabilities 28,364 31,839
-------- --------
Total liabilities 319,845 326,048
-------- --------
Commitments and Contingent Liabilities
Shareholders' equity:
Common Stock: par value $1.00 per share
Class A: 8,508,445 and 8,273,035 shares issued 8,508 8,273
Class B: 4,042,494 and 4,178,197 shares issued 4,043 4,178
Capital in excess of par value of stock 10,543 9,515
Retained earnings 163,951 137,440
Accumulated translation adjustment 8,000 7,447
-------- --------
Total shareholders' equity 195,045 166,853
-------- --------
Total Liabilities and Shareholders' Equity $514,890 $492,901
======== ========
The accompanying notes are an integral part of these statements.
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BLOUNT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
Three months ended Nine months ended
November 30, November 30,
---------------------- ----------------------
1994 1993* 1994 1993*
---------- ---------- ---------- ----------
(Unaudited) (Unaudited)
Sales $ 157,459 $ 128,030 $ 441,924 $ 363,870
Cost of sales 104,496 85,230 293,348 247,675
---------- ---------- ---------- ----------
Gross profit 52,963 42,800 148,576 116,195
Selling, general and
administrative expenses 29,992 27,255 89,582 76,364
---------- ---------- ---------- ----------
Income from operations 22,971 15,545 58,994 39,831
Interest expense (2,733) (2,805) (8,387) (8,373)
Interest income 599 356 1,620 954
Other expense, net (561) (604) (1,203) (1,728)
---------- ---------- ---------- ----------
Income before income taxes 20,276 12,492 51,024 30,684
Provision for income taxes 7,940 4,230 19,981 10,901
---------- ---------- ---------- ----------
Income from continuing
operations before
extraordinary gain 12,336 8,262 31,043 19,783
Discontinued operations:
Loss from operations, net (1,591) (9,463)
---------- ---------- ---------- ----------
Income before extraordinary
gain 12,336 6,671 31,043 10,320
Extraordinary gain on
repurchase of debt, net 92
---------- ---------- ---------- ----------
Net income $ 12,336 $ 6,671 $ 31,043 $ 10,412
========== ========== ========== ==========
Income (loss) per share
of common stock:
Continuing operations $ .95 $ .65 $ 2.40 $ 1.56
Discontinued operations (.13) (.75)
---------- ---------- ---------- ----------
Income before
extraordinary gain .95 .52 2.40 .81
Extraordinary gain .01
---------- ---------- ---------- ----------
Net income $ .95 $ .52 $ 2.40 $ .82
========== ========== ========== ==========
Weighted average number of
common shares outstanding 12,944,875 12,757,610 12,910,578 12,681,567
========== ========== ========== ==========
Cash dividends paid
per share:
Class A Common Stock $ .1250 $ .1125 $ .3750 $ .3375
========== ========== ========== ==========
Class B Common Stock $ .1125 $ .1000 $ .3375 $ .3000
========== ========== ========== ==========
* Certain items have been reclassified for comparative purposes.
The accompanying notes are an integral part of these statements.
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BLOUNT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine months ended November 30,
-----------------------------
1994 1993
-------- --------
(Unaudited)
Cash Flows From Operating Activities:
Net Income $ 31,043 $ 10,412
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary gain (92)
Depreciation, amortization and other
noncash charges 17,280 17,675
Deferred income taxes 529 (2,678)
Loss on disposals of property, plant and equipment 473 1,227
Changes in assets and liabilities, net of effect
of business acquisitions:
Decrease in aggregate balance of
accounts receivable sold (17,637)
(Increase) decrease in accounts receivable (370) 7,966
(Increase) decrease in inventories (2,140) 2,022
(Increase) decrease in other assets (1,619) 10,812
Increase (decrease) in accounts payable (13,597) 5,108
Increase in accrued expenses 19,774 7,220
Decrease in other liabilities (11,090) (5,092)
-------- --------
Net cash provided by operating activities 40,283 36,943
-------- --------
Cash Flows From Investing Activities:
Proceeds from sales of property, plant and equipment 2,947 494
Purchases of property, plant and equipment (6,113) (5,017)
Acquisitions of businesses (10,103)
-------- --------
Net cash used in investing activities (13,269) (4,523)
-------- --------
Cash Flows From Financing Activities:
Net increase (reduction) in short-term borrowings (630) (2,767)
Issuance of long-term debt 6,000 97,388
Reduction of long-term debt (18,728) (75,168)
Increase in restricted funds (5,020)
Dividends paid (4,532) (3,982)
Issuance of stock under stock option and
dividend reinvestment plans 871 615
-------- --------
Net cash provided by (used in)
financing activities (22,039) 16,086
-------- --------
Net increase in cash and cash equivalents 4,975 48,506
Cash and cash equivalents at beginning of period 52,213 17,723
-------- --------
Cash and cash equivalents at end of period $ 57,188 $ 66,229
======== ========
The accompanying notes are an integral part of these statements.
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BLOUNT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position at
November 30, 1994 and the results of operations and cash flows for the periods
ended November 30, 1994 and 1993. These financial statements should be read in
conjunction with the notes to the financial statements included in Blount,
Inc.'s Annual Report to Shareholders for the year ended February 28, 1994. The
results of operations for the periods ended November 30, 1994 and 1993 are not
necessarily indicative of the results to be expected for the full fiscal year,
due to the seasonal nature of certain of the Company's operations.
NOTE 2 Inventories consist of the following (in thousands):
November 30, February 28,
1994 1994
------------ ------------
Finished goods $ 28,398 $ 27,169
Work in process 13,074 13,329
Raw materials and supplies 24,572 19,682
-------- --------
$ 66,044 $ 60,180
======== ========
NOTE 3 The principal assets and liabilities of the discontinued construction
operations included in the Company's consolidated balance sheets are as follows
(in thousands):
November 30, February 28,
1994 1994
------------ ------------
Accounts receivable $ 48,643 $ 59,265
Other current assets 9,090 7,922
Other assets 5,477 6,013
Accounts payable (28,077) (38,503)
Accrued expenses (10,889) (11,106)
Other current liabilities (4,848) (13,015)
Other liabilities (5,157) (7,312)
NOTE 4 In April 1994, the Company acquired all the outstanding capital stock of
CTR Manufacturing, Inc. ("CTR"). CTR manufactures automated forestry harvesting
equipment. In November 1994, the Company acquired the operating assets of Ram-
Line, Inc. ("Ram-Line"), a manufacturer of stocks, magazines, lens caps and
other products for the shooting sports markets. The purchase price paid for the
two businesses was approximately $18.5 million, including notes issued of $7.5
million. Both transactions have been accounted for by the purchase method and,
accordingly, the net assets and results of operations of the acquired businesses
have been included in the Company's consolidated financial statements since the
dates of acquisition. The excess of the purchase price over the fair value of
the net assets acquired is being amortized on a straight-line basis over 40
years. The company's consolidated results of operations for the nine months
ended November 30, 1994 and 1993 would not have been materially different from
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reported amounts if the acquisitions had occurred at the beginning of either
period. The combined sales and pre-tax income of CTR and Ram-Line for their
most recent fiscal years were approximately $17.1 million and $1.6 million,
respectively.
NOTE 5 During the first nine months of fiscal 1995, the Company repurchased
$18.3 million of its 9% subordinated notes with no significant gain or loss.
In December 1994, the company replaced its three-year $60 million revolving
credit agreement expiring in December 1995 with a new five-year $100 million
revolving credit agreement with a group of five banks expiring December 1999.
At November 30, 1994, no amounts were outstanding under the $60 million
agreement. The $100 million agreement provides for interest rates to be
determined at the time of borrowings based on a choice of formulas as specified
in the agreement. The interest rates may vary based on cash flow and leverage
ratios or, at the Company's irrevocable option, the debt rating for senior
unsecured long-term debt of the Company. In addition, a commitment fee which
varies to a maximum of 1/2% is charged on the total commitment. The new
agreement contains covenants relating to liens, subsidiary debt, transactions
with affiliates, acquisitions, consolidations, mergers and sales of assets, and
requires the Company to maintain certain specified debt to equity and fixed
charge coverage ratios.
The Company's $25 million receivable sale agreement (see Note 3 to the
Consolidated Financial Statements included in Blount, Inc.'s Annual Report to
Shareholders for the year ended February 28, 1994) expiring December 1994 has
been extended until February 6, 1995. The Company plans to negotiate a
replacement agreement.
During the third quarter of fiscal 1995, the Company entered into two industrial
development revenue bond arrangements to finance future capital expenditures.
The related variable rate bonds of $6 million issued by the governmental units
are due in fiscal 2005 and are recorded as long-term debt. The proceeds from
the bonds are held in trust and released as qualified capital expenditures are
made. The Company is negotiating similar additional arrangements for
approximately $10 million which it plans to finalize in the fourth quarter of
fiscal 1995.
NOTE 6 The Company announced in January 1989, that a pocket of a cleaning
solvent, trichloroethylene ("TCE"), had been detected under the concrete floor
of the Company's cutting systems division plant in Milwaukie, Oregon. TCE was
detected in the City of Milwaukie drinking water wells. The Company's deep
wells, which are surrounded by the City of Milwaukie wells, draw from the same
aquifer and show TCE amounts less than those of the City's wells. On December
6, 1989, the Company entered into a Stipulation and Consent Agreement ("SCA")
for facility investigation with the Department of Environmental Quality ("DEQ")
of the State of Oregon and agreed to investigate the TCE contamination beneath
the plant and take appropriate measures to remediate potential adverse effects
from such contamination. In November 1992, the Company submitted a Facility
Investigation Final Report ("Report") to the DEQ for the Milwaukie, Oregon
plant. The Report states that the contamination has affected a limited portion
of the saturated engineered fill under the building. Since monitoring began in
1988, the contaminant plume in the engineered fill has not migrated. Through
treatment, the concentration of the contaminants in the plume has been reduced
by greater than 50% since 1989. The TCE plume has not migrated off Company
property. The Company believes the contaminants pose no risk to Company
employees or the community because the groundwater within the shallow alluvium
is not used and the contaminants are not migrating towards the drinking water
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supply aquifer. There is no evidence that the Company's operations have
affected the drinking water supply aquifer. On August 16, 1994, the DEQ found
that the Company had fulfilled the requirements of the SCA and terminated its
provisions. The Company will continue to remediate, the future cost of which is
not material.
The United States Environmental Protection Agency ("EPA") has designated a
predecessor of the Company 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 the
Company. It is the view of the Company that because its predecessor corporation
purchased assets rather than stock, the Company does not have successor
liability and is not properly a PRP. However, the EPA has indicated it does not
accept this position. The Company believes the EPA is wrong on the successor
liability issue. However, with other PRP's, the Company 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. The Company denies
that it is a PRP and is unable to determine any other party's share of total
remediation costs. The Company does not know the financial status of the other
PRP's and other parties that, while not named by the EPA as PRP's, may have
liability with respect to the Site. The Company does not expect the situation
to have a material adverse effect on the Company's financial condition.
On December 20, 1989, the Company sold to Asea Brown Boveri Ltd. ("ABB") all the
stock of W+E Umwelttechnik AG, then an engineering subsidiary of the Company in
the waste-to-energy business located in Zurich, Switzerland. On July 26, 1993,
ABB filed a Request for Arbitration with the Zurich Chamber of Commerce. The
request contained statements that ABB had or anticipated having losses on two
projects which were underway at the time of sale. While it was not clear, ABB
appeared to be claiming approximately 100 million Swiss francs and rescission of
the purchase agreement based on the Company's alleged wilful failure to disclose
material facts and that ABB made a fundamental mistake in entering into the
purchase agreement. The Company believed it had valid defenses based on the
terms of the purchase agreement, the facts and the law. In March 1994, the
Company filed a lawsuit against ABB and two of its subsidiaries in the Circuit
Court of Jefferson County, Alabama seeking declaratory judgment and injunctive
relief as well as money damages for (i) intentional interference with the
Company's business relationships and (ii) abuse of process. ABB filed a
separate lawsuit against Blount in the U.S. District Court in Birmingham to
compel arbitration and removed the lawsuit filed by Blount to the Federal Court.
These two lawsuits were consolidated. In December 1994, the Company and ABB
settled all issues with respect to the sale and purchase of the stock of W+E
Umwelttechnik AG. In addition to prior accruals, the Company recorded
anticipated litigation and settlement costs related to this matter of $3.5
million and $7.1 million during the third quarter and first nine months,
respectively, of fiscal 1995.
The Company is closing a 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 process, the Company is required by the State
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of Idaho to undertake RCRA corrective action at the facility. This will require
the Company 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 where investigation and sampling are
required. In order to effect the investigation, the Company and the State of
Idaho entered into an Administrative Consent Order which governs the completion
of the corrective action activities. As a result of initial testing, some
contamination of the uppermost groundwater beneath the facility has been
encountered. This uppermost groundwater is not the drinking water supply source
and does not appear to be connected to the drinking water aquifer. Further
investigation is ongoing. The Company does not expect the situation to have a
material adverse effect on its financial condition.
The Company is a defendant in a number of product liability lawsuits involving
serious injuries for which there are significant self-insured retentions, some
of which seek significant or unspecified damages. 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, the Company does
not believe these lawsuits will have a material adverse effect on its financial
condition.
The Company's contingencies include normal liabilities for performance and
completion of construction contracts. At November 30, 1994, the Company had
outstanding bank letters of credit in the approximate amount of $21.3 million
issued principally in connection with various construction contracts for which
the Company is contingently liable to the issuing banks in the event payment is
demanded by the holder.
The Company is contingently liable for the remaining rental payments, net of the
value of the leased equipment, under certain leases transferred to the buyer of
a former subsidiary. The leases have rental payments remaining of approximately
$8.8 million which expire in 1999. The Company has received indemnification
against liabilities arising from the leases from the purchaser of the former
subsidiary.
The Company enters into foreign exchange forward contracts with major banks to
reduce the effect of exchange rate fluctuations on anticipated future foreign
currency cash flows. These contracts are accounted for at market value, with
the resulting gains or losses recognized in income. At November 30, 1994, the
Company had foreign exchange forward contracts maturing through August 31, 1995,
in the absolute amount of approximately $75.6 million. The market value of
these contracts and the resulting gain or loss was not material at November 30,
1994.
See Notes 4 and 8 to the Consolidated Financial Statements included in Blount,
Inc.'s Annual Report to Shareholders for the year ended February 28, 1994 for
other commitments and contingencies of the Company which have not changed
significantly since year-end.
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NOTE 7 Segment information is as follows (in thousands):
Three Months Nine Months
Ended November 30, Ended November 30,
------------------- -------------------
1994 1993 1994 1993
-------- -------- -------- --------
Sales:
Outdoor products $ 73,938 $ 63,426 $204,337 $181,199
Industrial and power equipment 52,685 41,612 154,391 119,736
Sporting equipment 30,836 22,992 83,196 62,935
-------- -------- -------- --------
$157,459 $128,030 $441,924 $363,870
======== ======== ======== ========
Operating income:
Outdoor products $ 18,463 $ 11,972 $ 38,704 $ 26,131
Industrial and power equipment 9,328 6,635 24,949 17,878
Sporting equipment 5,518 4,007 15,640 10,114
-------- -------- -------- --------
Operating income from segments 33,309 22,614 79,293 54,123
Corporate office expenses (10,338) (7,069) (20,299) (14,292)
-------- -------- -------- --------
Income from operations 22,971 15,545 58,994 39,831
Interest expense (2,733) (2,805) (8,387) (8,373)
Interest income 599 356 1,620 954
Other expense, net (561) (604) (1,203) (1,728)
-------- -------- -------- --------
Income before income taxes $ 20,276 $ 12,492 $ 51,024 $ 30,684
======== ======== ======== ========
NOTE 8 Income taxes paid during the nine months ended November 30, 1994 and
1993 were $16.2 million and $11.0 million. Interest paid during the nine months
ended November 30, 1994 and 1993 was $5.9 million and $7.8 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.
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NOTE 10 Selected quarterly information for fiscal 1994 is as follows (in
thousands, except share data):
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
-------- -------- -------- -------- --------
Sales $117,386 $118,454 $128,030 $124,175 $488,045
======== ======== ======== ======== ========
Income from continuing
operations before
extraordinary gain $ 4,864 $ 6,657 $ 8,262 $ 4,521 $ 24,304
-------- -------- -------- -------- --------
Discontinued operations:
Loss from operations, net (3,657) (4,215) (1,591) (203) (9,666)
Loss on disposal, net (650) (650)
-------- -------- -------- -------- --------
Total loss from
discontinued operations (3,657) (4,215) (1,591) (853) (10,316)
-------- -------- -------- -------- --------
Income before extraordinary
gain 1,207 2,442 6,671 3,668 13,988
Extraordinary gain 92 92
-------- -------- -------- -------- --------
Net income $ 1,207 $ 2,534 $ 6,671 $ 3,668 $ 14,080
======== ======== ======== ======== ========
Income (loss) per share
of common stock:
Income from continuing
operations before
extraordinary gain $ .39 $ .52 $ .65 $ .35 $ 1.91
Discontinued operations (.29) (.33) (.13) (.06) (.81)
-------- -------- -------- -------- --------
Income before
extraordinary gain .10 .19 .52 .29 1.10
Extraordinary gain .01 .01
-------- -------- -------- -------- --------
Net income $ .10 $ .20 $ .52 $ .29 $ 1.11
======== ======== ======== ======== ========
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Operating Results
Sales for the third quarter and first nine months of fiscal 1995 were $157.5
million and $441.9 million compared to $128.0 million and $363.9 million for the
third quarter and first nine months of fiscal 1994. Net income for the third
quarter and first nine months of fiscal 1995 was $12.3 million ($.95 per share)
and $31.0 million ($2.40 per share) compared to net income of $6.7 million ($.52
per share) and $10.4 million ($.82 per share) for the comparable periods of
fiscal 1994. Last year's third quarter and first nine months included a loss
from discontinued operations of $1.6 million ($.13 per share) and $9.5 million
($.75 per share). In addition, the first nine months of fiscal 1994 included an
extraordinary gain on repurchase of debt of $92 thousand ($.01 per share). The
improved operating results reflect continued strong performance by each of the
Company's manufacturing segments. 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 1994 Form 10-K and 1994 Annual Report
to Shareholders.
Sales for the Outdoor Products segment in the third quarter and first nine
months of fiscal 1995 were $73.9 million and $204.3 million compared to $63.4
million and $181.2 million during the third quarter and first nine months of
fiscal 1994. Operating income increased to $18.5 million and $38.7 million
during the third quarter and first nine months of fiscal 1995 from $12.0 million
and $26.1 million in the comparable periods of the prior fiscal year. The sales
and operating income increases were principally attributable to a higher volume
of saw chain and saw bars sold and higher average selling prices at the
Company's Oregon Cutting Systems Division in the first three quarters of the
current fiscal year, and improved margins and demand for the Company's riding
lawn mowers.
Sales for the Industrial and Power Equipment segment were $52.7 million and
$154.4 million during the third quarter and first nine months of fiscal 1995
compared to $41.6 million and $119.7 million during the same periods of fiscal
1994. Operating income increased to $9.3 million and $24.9 million during the
third quarter and first nine months of fiscal 1995 from $6.6 million and $17.9
million during the comparable periods of fiscal 1994. The improvement in sales
and operating income resulted principally from an increase in the volume of
forestry and industrial loaders sold and the contribution from CTR
Manufacturing, Inc. acquired on April 28, 1994 (see Note 4 of notes to the
attached consolidated financial statements).
Sales for the Sporting Equipment segment increased to $30.8 million and $83.2
million in the third quarter and first nine months of fiscal 1995 from $23.0
million and $62.9 million in the comparable periods of fiscal 1994, reflecting
increases in the volume of ammunition, reloading equipment, powerloads, primers
and percussion caps sold. Operating income during the third quarter and first
nine months of fiscal 1995 increased to $5.5 million and $15.6 million from $4.0
million and $10.1 million during the third quarter and first nine months of
fiscal 1994. The increase in operating income was principally due to increased
sales volume.
Selling, general and administrative expenses were 19.0 percent and 20.3 percent
of sales in the third quarter and first nine months of fiscal 1995 compared to
21.3 percent and 21.0 percent of sales in the comparable periods of the prior
year. The increase in the amount of selling, general and administrative
expenses in fiscal 1995 over comparable periods of fiscal 1994 reflects the
increased sales level and higher corporate expenses, principally due to accruals
for anticipated litigation and settlement costs related to the sale of a former
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subsidiary (see Note 6 of notes to the attached consolidated financial
statements).
The Company's total backlog at November 30, 1994 was $147.3 million compared to
$147.1 million at February 28, 1994 and $142.6 million at November 30, 1993.
Financial Condition, Liquidity and Capital Resources
At November 30, 1994, the Company had no amounts outstanding under its
uncommitted short-term lines of credit, its $25 million receivable sale
agreement or its existing $60 million revolving credit agreement. As more fully
described in Note 5 of notes to the attached consolidated financial statements,
the Company (i) replaced the $60 million revolving credit agreement with a $100
million revolving credit agreement in December 1994; (ii) extended the $25
million receivable sale agreement until February 1995 and plans to negotiate a
replacement agreement; and (iii) has entered into $6 million industrial
development revenue bond arrangements with plans to finalize arrangements for an
additional $10 million prior to fiscal year-end. The Company's total
capitalization at November 30, 1994 consists of $95.7 million long-term debt and
equity of $195.0 million for a long-term debt to equity ratio of .5 to 1 as
compared to a ratio of .6 to 1 at February 28, 1994. At November 30, 1994, the
Company had 9% subordinated notes outstanding in the principal amount of $81.7
million maturing in 2003. See Note 3 of Notes to the Consolidated Financial
Statements included in Blount, Inc.'s 1994 Annual Report to Shareholders for the
terms and conditions of the $60 million revolving credit agreement, the
receivable sale agreement and the 9% subordinated notes.
Working capital was $107.0 million at November 30, 1994 compared to $104.3
million at February 28, 1994. The increase resulted principally from the
Company's improved earnings. The Company's operating cash flows for the first
nine months of fiscal 1995 were $40.3 million compared to $36.9 million in the
first nine months of fiscal 1994. Operating cash flows for the prior year were
reduced by $17.6 million as a result of the Company ceasing sales of accounts
receivable under its $25 million receivable sale agreement during fiscal 1994
and increased by $21.2 million as a result of distributions from a foreign joint
venture. Cash and cash equivalent balances increased to $57.2 million from
$52.2 million at February 28, 1994 as the Company's operating cash flows were
partially offset by cash expenditures to acquire CTR Manufacturing, Inc. and the
operating assets of Ram-Line, Inc., repurchase $18.3 million of the Company's 9%
subordinated notes (see Notes 4 and 5 of notes to the attached consolidated
financial statements), and pay dividends.
Restrictions on the Company's ability to pay cash dividends are contained in the
indenture related to the Company's 9% subordinated notes and in certain
financial covenants of the revolving credit agreement. Under the most
restrictive requirement, retained earnings of approximately $27.3 million were
available for the payment of dividends at November 30, 1994. In September 1994,
the Company's Board of Directors approved an increase in the Company's quarterly
dividends, effective with the January 2, 1995 dividend payment. The improved
quarterly dividends will be $.1425 per share for Class A stock and $.13 per
share for Class B stock.
Page 13
<PAGE>
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, INC.
- ----------------------
Registrant
Date: January 13, 1995 /s/ Harold E. Layman
---------------------------------
Harold E. Layman
Senior Vice President &
Chief Financial Officer
Page 14
<PAGE>
<TABLE>
PART I - EXHIBIT 11
BLOUNT, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(In thousands, except share data)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended November 30, Ended November 30,
------------------------ -----------------------
1994 1993 1994 1993
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Primary:
Income from continuing operations $ 12,336 $ 8,262 $ 31,043 $ 19,783
Discontinued operations - loss from
operations, net (1,591) (9,463)
---------- ---------- ---------- ----------
Income before extraordinary gain 12,336 6,671 31,043 10,320
Extraordinary gain on repurchase of debt, net 92
---------- ---------- ---------- ----------
Net Income $ 12,336 $ 6,671 $ 31,043 $ 10,412
========== ========== ========== ==========
Shares:
Weighted average common shares outstanding 12,550,759 12,348,746 12,547,693 12,324,506
Dilutive effect of stock options 394,116 408,864 362,885 357,061
---------- ---------- ---------- ----------
Average common shares outstanding
as adjusted 12,944,875 12,757,610 12,910,578 12,681,567
========== ========== ========== ==========
Per Common Share:
Continuing operations $ .95 $ .65 $ 2.40 $ 1.56
Discontinued operations (.13) (.75)
---------- ---------- ---------- ----------
Income before extraordinary gain .95 .52 2.40 .81
Extraordinary gain .01
---------- ---------- ---------- ----------
Net Income $ .95 $ .52 $ 2.40 $ .82
========== ========== ========== ==========
Assuming Full Dilution:
Income from continuing operations $ 12,336 $ 8,262 $ 31,043 $ 19,783
Discontinued operations - loss from
operations, net (1,591) (9,463)
---------- ---------- ---------- ----------
Income before extraordinary gain 12,336 6,671 31,043 10,320
Extraordinary gain 92
---------- ---------- ---------- ----------
Net Income $ 12,336 $ 6,671 $ 31,043 $ 10,412
========== ========== ========== ==========
Shares:
Average common shares as adjusted
for primary computation 12,944,875 12,757,610 12,910,578 12,681,567
Additional dilutive effect of stock options 9,132 48,193 39,629 99,996
---------- ---------- ---------- ----------
Average common shares outstanding
as adjusted 12,954,007 12,805,803 12,950,207 12,781,563
========== ========== ========== ==========
Per Common Share:
Continuing operations $ .95 $ .65 $ 2.40 $ 1.56
Discontinued operations (.13) (.75)
---------- ---------- ---------- ----------
Income before extraordinary gain .95 .52 2.40 .81
Extraordinary gain .01
---------- ---------- ---------- ----------
Net Income $ .95 $ .52 $ 2.40 $ .82
========== ========== ========== ==========
</TABLE>
Page 15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-1995
<PERIOD-END> NOV-30-1994
<CASH> 57,188
<SECURITIES> 0
<RECEIVABLES> 139,351
<ALLOWANCES> 2,799
<INVENTORY> 66,044
<CURRENT-ASSETS> 291,038
<PP&E> 278,494
<DEPRECIATION> 141,703
<TOTAL-ASSETS> 514,890
<CURRENT-LIABILITIES> 184,001
<BONDS> 95,743
<COMMON> 12,551
0
0
<OTHER-SE> 182,494
<TOTAL-LIABILITY-AND-EQUITY> 514,890
<SALES> 441,924
<TOTAL-REVENUES> 441,924
<CGS> 293,348
<TOTAL-COSTS> 293,348
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,387
<INCOME-PRETAX> 51,024
<INCOME-TAX> 19,981
<INCOME-CONTINUING> 31,043
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,043
<EPS-PRIMARY> 2.40
<EPS-DILUTED> 2.40
</TABLE>
