10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012.

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 of Incorporation)	(I.R.S. Employer Identification No.)
4909 SE International Way, Portland, Oregon	97222-4679
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (503) 653-8881

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $.01 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     ¨  Yes    x  No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.     ¨  Yes    x  No

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.     x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.    x  Yes    ¨  No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    ¨  Yes    x  No

At June 30, 2012, the aggregate market value of the voting and non-voting common stock held by non-affiliates, computed by reference to the last sales price 14.65 as reported by the New York Stock Exchange, was $465,683,740 (affiliates being, for these purposes only, directors, executive officers, and holders of more than 10% of the registrant’s Common Stock).

The number of shares outstanding of $0.01 par value common stock as of February 26, 2013 was 49,146,484 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 23, 2013 are incorporated by reference in Part III.

BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES

Table of Contents

		Page
Part I
Item 1	Business		3
Item 1A	Risk Factors		9
Item 1B	Unresolved Staff Comments		15
Item 2	Properties		15
Item 3	Legal Proceedings		15
Item 4	Mine Safety Disclosures		15
Part II
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities		16
Item 6	Selected Consolidated Financial Data		17
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 7A	Quantitative and Qualitative Disclosures about Market Risk		38
Item 8	Financial Statements and Supplementary Data		40
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		80
Item 9A	Controls and Procedures		80
Item 9B	Other Information		80
Part III
Item 10	Directors, Executive Officers, and Corporate Governance of the Registrant		80
Item 11	Executive Compensation		81
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		81
Item 13	Certain Relationships and Related Transactions and Director Independence		81
Item 14	Principal Accountant Fees and Services		81
Part IV
Item 15	Exhibits and Financial Statement Schedules		81
Signatures			85

2

PART I

ITEM 1. BUSINESS

Overview. Blount International, Inc. (“Blount” or the “Company”) is a global industrial company. The Company designs, manufactures, and markets equipment, replacement and component parts, and accessories for professionals and consumers in select end-markets under our proprietary brand names. We also manufacture and market such items to original equipment manufacturers (“OEMs”) under private label brand names. We specialize in manufacturing cutting parts and equipment used in forestry, lawn, and garden; farming, ranching, and agricultural; and construction applications. We also purchase products manufactured by other suppliers that are aligned with the markets we serve and market them, typically under one of our brands, through our global sales and distribution network. Our products are sold in more than 115 countries and approximately 56% of our 2012 sales were shipped to customers outside of the United States of America (“U.S.”). Our Company is headquartered in Portland, Oregon and we have manufacturing operations in the U.S., Brazil, Canada, China, France, and Mexico. In addition, we operate marketing, sales, and distribution centers in Europe, North America, South America, and the Asia-Pacific region.

Our Company has undergone significant changes in recent years as we have disposed of certain business units and acquired others. On August 10, 2010, we acquired SP Companies, Inc. and SpeeCo, Inc. (collectively, “SpeeCo”), a manufacturer and supplier of log splitters, post-hole diggers, tractor three-point linkage parts and equipment, and farm, ranch, and agriculture accessories located in Golden, Colorado. On September 30, 2010, we sold our wholly-owned subsidiary Gear Products, Inc. (“Gear Products”), a manufacturer of mechanical power transmission components for original equipment manufacturers, located in Tulsa, Oklahoma.

On March 1, 2011, we acquired KOX GmbH and related companies (collectively “KOX”), a Germany-based direct-to-customer distributor of forestry-related replacement parts and accessories, primarily serving professional loggers and consumers in Europe. On August 5, 2011, we acquired Finalame SA, which included PBL SA and related companies (collectively “PBL”). PBL is a manufacturer of lawnmower blades and agricultural cutting blade component parts based in Civray, France, with a second manufacturing facility in Queretaro, Mexico. On September 7, 2011, we acquired GenWoods HoldCo, LLC and its wholly-owned subsidiary, Woods Equipment Company (collectively “Woods/TISCO”). Woods/TISCO, with operations primarily in the Midwestern U.S., is a manufacturer and marketer of tractor attachments, implements, and replacement parts, primarily for the agriculture, grounds maintenance, and construction end markets.

We operate in two primary business segments: the Forestry, Lawn, and Garden (“FLAG”) segment and the Farm Ranch and Agriculture (“FRAG”) segment. The FLAG segment manufactures and markets cutting chain, guide bars, and drive sprockets for chain saw use, and lawnmower and edger blades for outdoor power equipment. The FLAG segment also purchases replacement parts and accessories from other manufacturers and markets them, primarily under our brands, to our FLAG customers through our global sales and distribution network. The FLAG segment currently includes the operations of the Company that have historically served the forestry, lawn, and garden markets, as well as KOX and a portion of the PBL business.

The Company’s FRAG segment designs, manufactures, assembles and markets attachments and implements for tractors in a variety of mowing, cutting, clearing, material handling, landscaping and grounds maintenance applications, as well as log splitters, post-hole diggers, self-propelled lawnmowers, attachments for off-highway construction equipment applications, and other general purpose tractor attachments. In addition, the FRAG segment manufactures a variety of attachment cutting blade parts. The FRAG segment also purchases replacement parts and accessories from other manufacturers that we market to our FRAG customers through our sales and distribution network. The FRAG segment currently includes the operations of SpeeCo, Woods/TISCO, and a portion of the PBL business.

The Company also operates a concrete cutting and finishing equipment business that is reported within the Corporate and Other category. This business manufactures and markets diamond cutting chain and assembles and markets concrete cutting chain saws for the construction and utility markets.

3

Forestry, Lawn, and Garden Segment

Forestry Products. These products are sold under the Oregon^®, Carlton^®, KOX™, and Tiger™ brands, as well as under private labels for certain of our OEM customers. Manufactured product lines include a broad range of cutting chain, chain saw guide bars, and cutting chain drive sprockets used on portable gasoline and electric chain saws and on mechanical timber harvesting equipment. We also purchase and market replacement parts and other accessories for the forestry market, including chain saw engine replacement parts, safety equipment and clothing, lubricants, maintenance tools, hand tools, and other accessories used in forestry applications. Beginning in 2011, we also began marketing a line of cordless electric chain saws under the Oregon^® brand.

Lawn and Garden Products. These products are sold under the Oregon^® and PBL™ brand names, as well as private labels for certain of our OEM customers. Manufactured product lines include lawnmower and edger cutting blades designed to fit a wide variety of machines and cutting conditions, cutting blades for grass-cutting equipment, and garden tiller tines. We also purchase and market various cutting attachments, replacement parts, and accessories for the lawn and garden market, such as cutting line for line trimmers, air filters, spark plugs, lubricants, wheels, belts, grass bags, maintenance tools, hand tools, and accessories to service the lawn and garden equipment industry.

Our FLAG products are sold under both our own proprietary brands and private labels to OEMs for use on new chain saws and lawn and garden equipment, and to professionals and consumers as replacement parts through distributors, dealers, direct sales companies, and mass merchants. During 2012, approximately 23% of the FLAG segment’s sales were to OEMs, with the remainder sold into the replacement market.

Industry Overview. Our competitors for FLAG products include Ariens, Briggs & Stratton, Fisher Barton, Husqvarna, Jaekel, John Deere, MTD, Northern Tool, OEM Products, Rotary, Stens, Stihl, and TriLink, among others. In addition, new and existing competitors in recent years have expanded capacity or contracted with suppliers in China and other low-cost manufacturing locations, which has increased competition and pricing pressure, particularly for consumer-grade cutting chain and guide bars. We also supply products or components to some of our competitors in select limited markets.

Due to the high level of technical expertise and capital investment required to manufacture cutting chain and guide bars, we believe that we are able to produce durable, high quality cutting chain and guide bars more efficiently than most of our competitors. With the acquisition of PBL, we also believe we are able to produce consumer grade lawnmower and edger blades at prices comparable to our competitors. We also work with our OEM customers to improve the design and specifications of cutting chain, guide bars, and lawnmower blades used as original equipment on their products.

We believe we are the world’s largest producer of cutting chain for chain saws. Oregon^® and Carlton^® branded cutting chain and related products are used by professional loggers, farmers, arborists, and homeowners. We believe we are a leading manufacturer of guide bars and drive sprockets for chain saws. Our OEM customers include the majority of the world’s chain saw manufacturers, and we also produce replacement cutting chain and guide bars to fit virtually every chain saw currently sold today. We believe we are a leading supplier of lawnmower cutting blades in Europe. Additionally, our lawnmower blades are used by many of the world’s leading power equipment producers, and our Oregon^® branded replacement blades and lawnmower-related parts and accessories are used by commercial landscape companies and homeowners.

Weather and natural disasters can influence our FLAG sales cycle. For example, severe weather patterns and events, such as hurricanes, tornadoes, and storms, generally result in greater chain saw use and, therefore, stronger sales of cutting chain and guide bars. Seasonal rainfall plays a role in demand for our lawnmower blades and other lawn and garden equipment products. Above-average rainfall drives greater demand for products in this category, while drought conditions tend to reduce demand for these products. Temperature patterns also drive the demand for firewood, which in turn drives the demand for our cutting chain and other forestry products.

Within the FLAG segment the largest volume raw material we purchase is cold-rolled strip steel, which we obtain from multiple intermediate steel processors, but which can also be obtained from other sources. Changes in the price of steel can have a significant effect on the manufactured cost of our products and on the gross margin we earn from the sale of these products, particularly in the short term.

4

Our profitability in the FLAG segment is also affected by changes in currency exchange rates, changes in economic and political conditions in the various markets in which we operate, and changes in the regulatory environment in various jurisdictions. For additional information regarding the FLAG segment, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 17 of Notes to Consolidated Financial Statements.

Farm, Ranch, and Agriculture Segment

Equipment and Tractor Attachment Products. These products are sold under the Alitec^®, CF^®, Gannon^®, Oregon^®, PowerPro^®, SpeeCo^®, WainRoy^®, and Woods^® brand names, as well as under private labels for some of our OEM and retail customers. Product lines include attachments for tractors in a variety of mowing, cutting, clearing, material handling, landscaping and grounds maintenance applications, as well as log splitters, post-hole diggers, self-propelled lawnmowers, snow blowers, attachments for off-highway construction equipment applications, and other general purpose tractor attachments.

OEM and Aftermarket Parts. These products are sold under the PBL™, SpeeCo^®, TISCO^®, Tru-Power^®, Vintage Iron^®, and WoodsCare™ brand names, as well as under private labels for some of our OEM customers. The FRAG segment manufactures a variety of attachment cutting blade component parts sold to OEM customers for inclusion in original equipment, and as replacement parts. The FRAG segment also markets replacement parts and accessories purchased from other manufacturers, including tractor linkage, electrical, engine and hydraulic replacement parts, and other accessories used in the agriculture and construction equipment markets.

Industry Overview. Competitors for our equipment and tractor attachment products include Alamo Group, Champion, Doosan, Dover, Great Plains, John Deere, Koch Industries, Kubota, and MTD, among others. Competitors for our OEM and aftermarket parts include A&I, Herschel, Kondex, SMA, and Sparex, among others. In recent years, suppliers in China and other low-cost manufacturing locations have increased product availability, particularly for tractor accessory parts, which has increased competition and pressure on pricing in North America.

We believe we are a leading supplier of log splitters, tractor attachments, including rotary cutters and finish mowers, 3-point linkage parts, implements, and tractor repair parts in North America. Our products are used by large commodity and livestock farmers, small farmers, rural property owners, commercial landscape and yard care maintenance operators, construction contractors, and municipalities.

To help us compete in our markets, we have reduced costs by utilizing global sourcing for key components and products. In addition, we believe we are an industry leader in product innovation and design in our product categories. We also believe our long-standing relationships with key national retailers in North America have helped us maintain or grow our market share.

Weather can influence our FRAG sales cycle. For example, seasonal rainfall plays a role in demand for our agricultural and grounds maintenance products. Above-average rainfall drives greater demand for products in this category, while drought conditions tend to reduce demand for these products. For example, recent widespread drought conditions in North America reduced demand for our products during 2012. Increases in home heating fuel costs and changes in temperature patterns can also drive the demand for firewood, which in turn drives the demand for our forestry products and log splitters. Finally, demand for our products is affected by housing starts, crop prices, and disposable and farm income levels for our end consumers.

Increases in raw material prices, particularly for steel, can negatively affect profit margins in our FRAG business. Fluctuations in foreign exchange rates and transportation costs can also affect our profitability as we source a significant amount of our components from China and ship them to the U.S. for assembly and distribution. For example, during 2012, certain of these foreign suppliers were unable to provide us with critical components on a timely basis and the long lead times for delivery of such products caused us to incur additional freight and logistics costs in an attempt to meet current customer demand. We also lost sales in 2012 from our inability to obtain certain products to meet current customer demand. Our industry is highly competitive, making pricing pressure a potential threat to sustaining profit margins. For additional information regarding the FRAG segment, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 17 of Notes to Consolidated Financial Statements.

5

Concrete Cutting and Finishing Products

We operate a business in the specialized concrete cutting and finishing market. These products are sold primarily under the ICS^® brand. The principal product is a proprietary diamond-segmented chain, which is used on gasoline and hydraulic powered concrete cutting saws and equipment. We also market and distribute branded gasoline and hydraulic powered concrete cutting chain saws to our customers, which include contactors, rental equipment companies, and construction equipment dealers, primarily in the U.S. and Europe. The power heads for these saws are manufactured by third parties. Competition primarily comes from manufacturers of traditional circular concrete cutting saws, including Husqvarna and Stihl. We also supply diamond-segmented chain to certain of these competitors. We believe we are a market leader in diamond chain cutting products.

Corporate Operations

We maintain a centralized administrative staff at our headquarters in Portland, Oregon. This centralized administrative staff provides the executive leadership for the Company, as well as accounting, finance, information technology, and supply chain services, administering various health and welfare plans, providing risk management and insurance services, supervising the Company’s capital structure, and overseeing the regulatory, compliance, and legal functions. Operating expenses of this central administrative function are included in selling, general, and administrative expenses (“SG&A”) in the Consolidated Statements of Income. The cost of providing certain shared services is allocated to our business segments using various allocation drivers such as headcount, software licenses, purchase volume, shipping volume, sales revenue, square footage, and other factors.

Intellectual Property

Our proprietary brands include Alitec™, Carlton^®, CF™, EuroMAX^®, FORCE4^®, Fusion^®, Gannon™, Gator™, Gator Mulcher^®, ICS^®, INTENZ^®, Jet-Fit^®, Magnum Edger ™, Oregon^®, PBL™, PowerGrit^®, PowerSharp^®, Power-Match^®, PowerNow™, PowerPro™, RentMAX™, SealPro^®, SpeeCo^®, SpeedHook^®, Tiger^®, Tisco^®, Tru-Power^®, Vintage Farm™,WainRoy^®, Windsor^®, Woods™, and WoodsCare™. All of these are registered, pending, or common trademarks of Blount and its subsidiaries in the U.S. and/or other countries. Some forms of Windsor^® are used under license from affiliates of Snap-On, Inc.

The Company holds a number of patents, trademarks, and other intellectual property that are important to our business. From time to time we are involved in disputes, some of which lead to litigation, either in defense of our intellectual property or cases where others have alleged that we have infringed on their intellectual property rights. See further discussion under Item 1A, Risk Factors, within the heading “Litigation – We may have litigation liabilities that could result in significant costs to us.”

Discontinued Operations - Gear Products

On September 30, 2010, we sold Gear Products to Tulsa Winch, Inc., an operating unit of Dover Industrial Products, Inc., for net cash proceeds of $24.8 million. Gear Products was a manufacturer of mechanical power transmission components for OEMs, serving the utility, construction, forestry, marine, and mining markets. Under terms of the stock purchase agreement, the parties agreed to treat the stock sale as if it were an asset sale for income tax purposes, which resulted in an increase in the income tax expense we recognized on the sale. Gear Products results are reported as discontinued operations for all periods presented.

6

Capacity Utilization

Based on a five-day, three-shift work week, average capacity utilization is estimated as follows:

	Year Ended December 31,
	2012			2011
Forestry, lawn, and garden		82	%		93	%
Farm, ranch, and agriculture		40	%		40	%
Concrete cutting and finishing		60	%		60	%

Historically, the Company has operated its FLAG segment facilities at high capacity utilization levels. Capacity for our forestry products has been expanded in recent years with the establishment of our manufacturing plant in Fuzhou, China in 2005, the purchase of Carlton Holdings, Inc. and its subsidiaries (“Carlton”), a manufacturer of cutting chain for chain saws located near Portland, Oregon in 2008, and a significant expansion of our facility in Fuzhou, China beginning in 2011. The Company expects to meet future sales demand by expanding capacity at existing facilities through both productivity enhancements and capital investment. We are also evaluating a potential new manufacturing facility, to be located in Eastern Europe over the next several years, in order to meet anticipated future demand for our forestry and other products. We have also increased manufacturing capacity for FLAG lawn and garden products with the acquisition of PBL in 2011. The FRAG segment facilities were generally operated on a five-day, one-shift basis during 2012. During 2012, we consolidated our FRAG assembly operations formerly located in Golden, Colorado into a new larger facility in Kansas City, Missouri. We are currently expanding manufacturing capacity in our FRAG segment by investing in productivity enhancements and through capital investment.

Backlog

Our sales order backlog was as follows:

	As of December 31,
(Amounts in thousands)	2012		2011		2010
Forestry, lawn, and garden	$	167,875	$	182,414	$	125,987
Farm, ranch, and agriculture		31,480		30,756		6,671
Concrete cutting and finishing		443		562		1,059
Total sales order backlog	$	199,798	$	213,732	$	133,717

The total backlog as of December 31, 2012 is expected to be completed and shipped within twelve months.

Employees

At December 31, 2012, we employed approximately 4,700 individuals. None of our U.S. employees belong to a labor union. The number of foreign employees who belong to labor unions is not significant. We believe our relations with our employees are satisfactory, and we have not experienced any significant labor-related work stoppages in the last three years.

Environmental Matters

The Company’s operations are subject to comprehensive U.S. and foreign laws and regulations relating to the protection of the environment, including those governing discharges of pollutants into the air, ground, and water, the management and disposal of hazardous substances, and the cleanup of contaminated sites. Permits and environmental controls are required for certain of these operations, including those required to prevent or reduce air and water pollution, and our permits are subject to modification, renewal, and revocation by issuing authorities.

7

On an ongoing basis, we incur capital and operating costs to comply with environmental laws and regulations, as summarized in the following table.

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Expenses attributed to environmental compliance	$	2,200	$	2,300	$	2,200
Capital expenditures attributed to environmental compliance		500		600		200
Total attributed to environmental compliance	$	2,700	$	2,900	$	2,400

We expect to spend approximately $2.5 million to $3.0 million per year in capital and operating costs over the next three years for environmental compliance and anticipate continued spending at a similar level in subsequent years. The actual cost to comply with environmental laws and regulations may be greater than these estimated amounts.

In the manufacture of our products, we use certain chemicals and processes, including chrome and paints applied to some of our products, and oils used on metal-working machinery. Some of our current and former manufacturing facilities are located on properties with a long history of industrial use, including the use of hazardous substances. For certain of our former facilities, we retained responsibility for past environmental matters under certain conditions and pursuant to the terms of the agreements by which we sold the properties to third party purchasers. In addition, from time to time third parties have asserted claims against us for environmental remediation at former sites despite the absence of a contractual obligation. We have identified soil and groundwater contamination from these historical activities at certain of our current and former facilities, which we are currently investigating, monitoring, and in some cases, remediating. We have recognized the estimated costs of remediation in the Consolidated Financial Statements for all known contaminations that require remediation by us. As of December 31, 2012, the total recorded liability for environmental remediation was $3.5 million. Management believes that costs incurred to investigate, monitor, and remediate known contamination at these sites will not have a material adverse effect on our business, financial condition, results of operations or cash flows. We cannot be sure, however, that we have identified all existing contamination on our current and former properties or that our operations will not cause contamination in the future. As a result, we could incur material future costs to clean up environmental contamination.

From time to time we may be identified as a potentially responsible party under the U.S. Comprehensive Environmental Response, Compensation and Liability Act or similar state statutes with respect to sites at which we may have disposed of wastes. The U.S. Environmental Protection Agency (or an equivalent state agency) can either (a) allow potentially-responsible parties to conduct and pay for a remedial investigation and feasibility study and remedial action or (b) conduct the remedial investigation and action on its own and then seek reimbursement from the parties. Each party can be held liable for all of the costs, but the parties can then bring contribution actions against each other or potentially responsible third parties. As a result, we may be required to expend amounts on such remedial investigations and actions, which amounts cannot be determined at the present time, but which may ultimately prove to be material to the Consolidated Financial Statements.

In recent years, climate change has been discussed in various political and other forums throughout the world. We do not believe that climate change has had a significant impact on our business operations or results to this point, but we cannot be sure of the potential effects to our business from any future changes in regulations or laws concerning climate change. Any new regulations limiting the amount of timber that could be harvested would most likely have a negative impact on our sales of forestry products. If climate change were to result in significant shifts in crops grown in agricultural regions, or prolonged significant changes in weather patterns, it could adversely affect our agricultural product business.

For additional information regarding certain environmental matters, see Note 14 of Notes to Consolidated Financial Statements.

8

Financial Information about Industry Segments and Foreign and Domestic Operations

For financial information about industry segments and foreign and domestic operations, see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 17 of Notes to Consolidated Financial Statements.

Seasonality

The Company’s operations are somewhat seasonal in nature. Year-over-year and quarter-over-quarter operating results are impacted by economic and business trends within the respective industries in which we compete, as well as by seasonal weather patterns and the occurrence of natural disasters and storms. Shipping and sales volume for some of the Company’s products vary based upon the time of year, but the overall impact of seasonality is generally not significant.

Research and Development Activities

See Note 1 to Consolidated Financial Statements for information about our research and development activities.

Available Information

Our website address is www.blount.com. You may obtain free electronic copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, all amendments to those reports, and other U.S. Securities and Exchange Commission (“SEC”) filings by accessing the Investor Relations section of the Company’s website under the heading “SEC Filings”. These reports are available on our Investor Relations website as soon as reasonably practicable after we electronically file them with the SEC.

Once filed with the SEC, such documents may be read and/or copied at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549. Information regarding the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including Blount, who file electronically with the SEC.

ITEM 1A. RISK FACTORS

Competition—Competition may result in decreased sales, operating income, and cash flow.

The markets in which we operate are competitive. We believe that design features, product quality, customer service, delivery lead times, and price are the principal factors considered by our customers. Some of our competitors may have, or may develop, greater financial resources, lower costs, superior technology, or more favorable operating conditions than we do. For example, our competitors are expanding capacity or contracting with suppliers located in China and other low-cost manufacturing locations as a means to lower costs. Although we have also established a manufacturing facility in China, international competition from emerging economies has nevertheless been formidable and has, in some cases, negatively affected our business. We may not be able to compete successfully with our existing or any new competitors, and the competitive pressures we face may result in decreased sales, operating income, and cash flows. Competitors could also obtain knowledge of our proprietary manufacturing techniques and processes and reduce our competitive advantage by copying such techniques and processes. Certain of our customers also compete with us with certain products in selected markets, and they may expand their production and marketing of competing products in the future.

Key Customers—Loss of one or more key customers would substantially decrease our sales.

In 2012, none of our customers accounted for 10% or more of our total sales and our top three customers accounted for $147.3 million, or 15.9%, of our total sales. Aside from our top three customers, no other customer individually accounted for more than 2.0% of our total sales in 2012. While we expect these business relationships to continue, the loss of any of these key customers, or a substantial portion of their business, would most likely significantly decrease our sales, operating income, and cash flows. Certain customers may also decide to manufacture various components themselves that we currently sell to them, which would have an adverse effect on our business.

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Key Suppliers and Raw Materials Costs—The loss of a few key suppliers or increases in raw materials costs could substantially decrease our sales or increase our costs.

We purchase important materials and parts from a limited number of suppliers that meet our quality criteria. We generally do not operate under long-term written supply contracts with our suppliers. Although alternative sources of supply are available, the sudden elimination or disruption of certain suppliers could result in manufacturing delays, an increase in costs, a reduction in product quality, and a possible loss of sales in the short-term. In 2012, we purchased $26.5 million in products from our largest supplier and $75.6 million in products and raw materials from our top five suppliers. During 2012, we experienced difficulty in obtaining certain component parts on a timely basis from one of our key suppliers in the FRAG segment, and these supply disruptions in turn resulted in delayed and ultimately lost sales of some of our FRAG products, as well as higher costs to expedite delivery and service customer demand.

Some of these raw materials, in particular cold-rolled strip steel, are subject to price volatility over periods of time. In 2012 we purchased $97.8 million of steel. In addition to steel raw material, we also purchase components and subassemblies that are made with steel, and prices for these items are also subject to steel price volatility risk. We have not hedged against the price volatility of any raw materials. It has been our experience that raw material price increases are sometimes difficult to recover from our customers in the short-term through increased pricing. We estimate that a 10% change in the price of steel purchased as raw material, without a corresponding increase in selling prices, would have reduced 2012 income from continuing operations before taxes by $9.8 million.

Foreign Sales and Operations—We have substantial foreign sales, operations, and property, which could be adversely affected as a result of changes in local economic or political conditions, fluctuations in currency exchange rates, unexpected changes in regulatory environments, or potentially adverse tax consequences.

In 2012, approximately 56% of our sales were shipped to customers outside of the U.S. International sales and operations are subject to inherent risks, including changes in local economic or political conditions, instability of government institutions, the imposition of currency exchange restrictions, unexpected changes in legal and regulatory environments, nationalization of private property, and potentially adverse tax consequences. Under some circumstances, these factors could result in significant declines in international sales.

Some of our sales and expenses are denominated in local currencies that are affected by fluctuations in currency exchange rates in relation to the U.S. Dollar. Historically, our principal local currency exposures have been related to manufacturing costs and expenses in Canada, and local currency sales and expenses in Europe. From time to time, we manage some of our exposure to currency exchange rate fluctuations through derivative products. However, such derivative products merely reduce the short-term volatility of currency fluctuations, and do not eliminate their effects over the long-term. Any change in the exchange rates of currencies in jurisdictions into which we sell products or incur expenses could result in a significant decrease in reported sales and operating income. For example, we estimate that a 10% stronger Canadian Dollar in relation to the U.S. Dollar would have reduced our operating income by $6.1 million. We estimate that a 10% weaker Euro in relation to the U.S. Dollar would have reduced our sales by $11.2 million and operating income by $0.9 million in 2012. We estimate that the year-over-year movement of foreign exchange rates from 2011 to 2012, whereby the U.S. Dollar strengthened in relation to the Canadian Dollar and the Euro, decreased our sales by $13.8 million and decreased our operating income by $3.9 million.

Also, approximately 58% of our foreign sales in 2012 were denominated in U.S. Dollars. We may see a decline in sales during periods of a strengthening U.S. Dollar, which can make our prices less competitive in international markets. Furthermore, if the U.S. Dollar strengthens against foreign currencies, it becomes more costly for foreign customers to pay their U.S. Dollar balances owed. They may have difficulty in repaying these amounts, and in turn, our bad debt expense may increase.

In addition, we own substantial manufacturing facilities outside the U.S. As of December 31, 2012, 857,555, or 43%, of the total square feet of our owned facilities are located outside of the U.S., and 28% of our leased square footage is located outside the U.S. This foreign-based property, plant, and equipment is subject to inherent risks for the reasons cited above. Loss of these facilities or restrictions on our ability to use them would have an adverse effect on our manufacturing and distribution capabilities and would result in reduced sales, operating income, and cash flows.

10

Weather—Sales of many of our products are affected by weather patterns and the occurrence of natural disasters.

Sales of many of our products are influenced by weather patterns that are clearly outside our control. For example, drought conditions tend to reduce the demand for agricultural and yard care products, such as tractor attachments and lawnmower blades, and conversely, plentiful rain conditions stimulate demand for these products. During 2012, continuing drought conditions in North America resulted in lower sales of certain of our FRAG and lawn and garden products. Natural disasters such as hurricanes, typhoons, and ice and wind storms that knock down trees can stimulate demand for our forestry and log splitter products. Conversely, a relative lack of severe weather and natural disasters can result in reduced demand for these same products.

Financial Leverage—Due to our financial leverage, we could have difficulty operating our business and satisfying our debt obligations.

As of December 31, 2012, we have $793.8 million of total liabilities, including $516.8 million of debt. Our debt leverage is significant, and may have important consequences for us, including the following:

• A significant portion of our cash flow from operations is dedicated to the payment of interest expense and required principal repayments, which reduces the funds that would otherwise be available to fund operations and future business opportunities. Cash interest and mandatory debt principal payments totaled $31.6 million during 2012.

• A substantial decrease in net operating income and cash flows or a substantial increase in expenses may make it difficult for us to meet our debt service requirements or force us to modify our operations.

• Our substantial leverage may make us more vulnerable to economic downturns and competitive pressures.

• Our ability to obtain additional or replacement financing for working capital, capital expenditures, or other purposes, may be impaired, or such financing may not be available on terms favorable to us under current market conditions for credit.

We have available borrowing capacity under the revolving portion of our senior credit facilities of $61.8 million as of December 31, 2012. Our term loan facility does not allow the borrowing of additional principal amounts. If we or any of our subsidiaries incur additional indebtedness, the risks outlined above could worsen.

Our ability to make payments on our indebtedness and to fund planned capital expenditures and research and product development efforts will depend on our ability to generate cash in the future. Our ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.

Our historical financial results have been, and we anticipate that our future financial results will be, subject to fluctuations in customer orders, sales, operating results, and cash flows. Our business may not be able to generate sufficient cash flow from our operations or future borrowings may not be available to us in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs. An inability to pay our debts would require us to pursue one or more alternative strategies, such as selling assets, refinancing or restructuring our indebtedness, or selling equity capital. However, alternative strategies may not be feasible at the time or may not prove adequate, which could cause us to default on our obligations and would impair our liquidity. Also, some alternative strategies would require the prior consent of our secured lenders, which we may not be able to obtain. See also Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

11

Restrictive Covenants—The terms of our indebtedness contain a number of restrictive covenants, the breach of any of which could result in acceleration of payment of our senior credit facilities.

A breach of any of our restrictive debt covenants could result in acceleration of our obligations to repay our debt. An acceleration of our repayment obligations under our senior credit facilities could result in a payment or distribution of substantially all of our assets to our secured lenders, which would materially impair our ability to operate our business as a going concern. In addition, our senior credit facility agreement, among other things, restricts and/or limits our and certain of our subsidiaries’ ability to:

• incur debt;

• guarantee indebtedness of others;

• pay dividends on our stock;

• repurchase our stock;

• pursue strategic acquisitions;

• make certain types of investments;

• use assets as security in other transactions;

• sell certain assets or merge with or into other companies;

• enter into sale and leaseback transactions;

• enter into certain types of transactions with affiliates;

• enter into certain new businesses; and

• make certain payments in respect of subordinated indebtedness.

In addition, the senior credit facilities require us to maintain certain financial ratios and satisfy certain financial condition tests, which may require that we take actions to reduce debt or to act in a manner contrary to our business objectives. Our ability to meet those financial ratios and tests could be affected by events beyond our control, and there can be no assurance that we will continue to meet those ratios and tests. A breach of any of these covenants could, if uncured, constitute an event of default under the senior credit facilities. Upon the occurrence of an event of default under the senior credit facilities, the lenders could elect to declare all amounts outstanding under the senior credit facilities, together with any accrued interest and commitment fees, to be immediately due and payable. If we and certain of our subsidiaries were unable to repay those amounts, the lenders under the senior credit facilities could enforce the guarantees from the guarantors and proceed against the collateral securing the senior credit facilities. The assets of Blount, Inc., our wholly-owned subsidiary and issuer of the debt under our senior credit facilities, and the applicable guarantors could be insufficient to repay in full that indebtedness and our other indebtedness. See also Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Assets Pledged as Security on Credit Facilities—The majority of our assets and the capital stock of our wholly-owned subsidiary Blount, Inc. are pledged to secure obligations under our senior credit facilities.

The Company and all of its domestic subsidiaries other than Blount, Inc. guarantee Blount, Inc.’s obligations under the senior credit facilities. The obligations under the senior credit facilities are collateralized by a first priority security interest in substantially all of the assets of Blount, Inc. and its domestic subsidiaries, as well as a pledge of all of Blount, Inc.’s capital stock held by Blount International, Inc. and all of the stock of domestic subsidiaries held by Blount, Inc. Blount, Inc. has also pledged 65% of the stock of its direct non-domestic subsidiaries as additional collateral. An event of default under our senior credit facilities could trigger our lenders’ contractual rights to enforce their security interests in these assets.

Litigation—We may have litigation liabilities that could result in significant costs to us.

Our historical and current business operations have resulted in a number of litigation matters, including litigation involving personal injury or death, as a result of alleged design or manufacturing defects of our products, and litigation involving alleged patent infringement. Certain of these liabilities relating to certain of our discontinued operations were retained by us under terms of the relevant divestiture agreements. Some of these product liability suits seek significant or unspecified damages for serious personal injuries for which there are retentions or deductible amounts under our insurance policies. In the future, we may face additional lawsuits, and it is difficult to predict the amount and type of litigation that we may face. Litigation, insurance, and other related costs could result in future liabilities that are significant and that could significantly reduce our operating income, cash flows, and cash balances. See also Item 3, Legal Proceedings, and Note 14 to the Consolidated Financial Statements.

12

Environmental Matters—We face potential exposure to environmental liabilities and costs.

We are subject to various U.S. and foreign environmental laws and regulations relating to the protection of the environment, including those governing discharges of pollutants into the air and water, the management and disposal of hazardous substances, and the cleanup of contaminated sites. Violations of, or liabilities incurred under, these laws and regulations could result in an assessment of significant costs to us, including civil or criminal penalties, claims by third parties for personal injury or property damage, requirements to investigate and remediate contamination, and the imposition of natural resource damages. Furthermore, under certain environmental laws, current and former owners and operators of contaminated property or parties who sent waste to a contaminated site can be held liable for cleanup, regardless of fault or the lawfulness of the disposal activity at the time it was performed. This potential exposure to environmental liabilities and costs can apply to both our current and former operating facilities, including those related to our discontinued operations.

Future events, such as the discovery of additional contamination or other information concerning past releases of hazardous substances at our or other sites affected by our actions, changes in existing environmental laws or their interpretation, including changes related to climate change, and more rigorous enforcement by regulatory authorities may require additional expenditures by us to modify operations, install pollution control equipment, investigate and monitor contamination at sites, clean contaminated sites, or curtail our operations. These expenditures could significantly reduce our net income and cash flows. See also Item 1, Business-Environmental Matters, Item 3, Legal Proceedings, and Note 14 to the Consolidated Financial Statements.

General Economic Factors—We are subject to general economic factors that are largely out of our control, any of which could, among other things, result in a decrease in sales, net income, and cash flows, and an increase in our interest or other expenses.

Our business is subject to a number of general economic factors, many of which are largely out of our control, which may, among other effects, result in a decrease in sales, net income, and cash flows, and an increase in our interest or other expenses. These factors include recessionary economic cycles and downturns in customers’ business cycles, as well as downturns in the principal regional economies where our operations are located. Economic conditions may adversely affect our customers’ business levels and the amount of products that they need. Furthermore, customers encountering adverse economic conditions may have difficulty in paying for our products and actual bad debts may exceed our allowance for bad debts. World-wide economic conditions may also adversely affect our suppliers and they may not be able to provide us with the goods and services we need on a timely basis, which could adversely affect our ability to manufacture our products. Our senior credit facility borrowings are at variable interest rates. Increases in market reference interest rates could increase our interest expense payable under the senior credit facilities to levels in excess of what we currently expect. We estimate that an increase in our average interest rates in 2012 of 100 basis points would have increased our interest expense by $5.4 million. In addition, fluctuations in the market values of equity and debt securities held in the Company’s pension plan assets can adversely affect the funding status of our defined benefit pension plans. The expense and funding requirements for these plans may increase in the future as a result of reduced values of the plan assets. Furthermore, terrorist activities, anti-terrorist efforts, war, or other armed conflicts involving the U.S. or its interests abroad may result in a downturn in the U.S. and global economies and exacerbate the risks to our business described in this paragraph.

Key Employees—The loss of key employees could adversely affect our manufacturing efficiency.

Many of our manufacturing processes require a high level of expertise. For example, we build our own complex dies for use in cutting and shaping steel into components for our products. The design and manufacture of such dies are highly dependent on the expertise of key employees. We have also developed numerous proprietary manufacturing techniques that rely on the expertise of key employees. Our manufacturing efficiency and cost could be adversely affected if we are unable to retain these key employees or continue to train them or their replacements.

13

Common Stock Price—The price of our common stock may fluctuate significantly, and stockholders could lose all or part of their investment.

Volatility in the market price of our common stock may prevent stockholders from being able to sell their shares at or above the price paid for the shares. The market price of our common stock could fluctuate significantly for various reasons that include:

• our quarterly or annual earnings or those of other companies in our industries;

• the public’s reaction to events and results contained in our press releases, our other public announcements, and our filings with the SEC;

• changes in earnings estimates or recommendations by research analysts who track our common stock or the stock of other comparable companies;

• changes in general conditions in the U.S. and global economies, financial markets, or the industries we market our products to, including those resulting from war, incidents of terrorism, changes in technology or competition, or responses to such events;

• sales of common stock by our largest stockholders, directors, and executive officers; and

• the other factors described in these “Risk Factors.”

In addition, the stock market and our common stock have historically experienced price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies, including companies in our industries. The changes in prices frequently appear to occur without regard to the operating performance of these companies. For example, over the preceding two-year period, our highest closing stock price has exceeded our lowest closing stock price by 45%. The price of our common stock could fluctuate based upon factors that have little or nothing to do with our Company, and these fluctuations could materially reduce our stock price.

Common Stock Sales—Future sales of our common stock in the public market could lower our stock price.

Ownership and control of our common stock is concentrated in a relatively small number of institutional investors. As of December 31, 2012, approximately 44% of our outstanding common stock was owned or controlled by our five largest stockholders. We may sell additional shares of common stock in subsequent public offerings, or other stockholders with significant holdings of our common stock may also sell large amounts of shares they own in a secondary or open market stock offering. We may also issue additional shares of common stock to finance future transactions. We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares issued in connection with an acquisition or shares sold by existing stockholders), or the perception that such sales could occur, may adversely affect the prevailing market price of our common stock.

Computer Transaction Processing—An information technology system failure or breach of security may adversely affect our business.

We rely on information technology systems to transact our business. An information technology system failure due to computer viruses, internal or external security breaches, power interruptions, hardware failures, fire, natural disasters, human error, or other causes could disrupt our operations and prevent us from being able to process transactions with our customers, operate our manufacturing facilities, and properly report those transactions in a timely manner. A significant, protracted information technology system failure may result in a material adverse effect on our financial condition, results of operations, or cash flows.

In recent years we have increased the volume of sales transactions processed over the internet. As a result, sensitive information about our customers is stored in electronic media. If unauthorized access to this information were gained, we could be subject to penalties or claims by our customers, which could have an adverse effect on our business.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our corporate headquarters occupy executive offices at 4909 SE International Way, Portland, Oregon 97222-4679. Cutting chain, guide bar, and drive sprocket manufacturing facilities within our FLAG business segment are located in Portland, Oregon; Milwaukie, Oregon; Curitiba, Brazil; Guelph, Canada; and Fuzhou, China. Lawnmower blade manufacturing facilities within our FLAG business segment are located in Kansas City, Missouri; Civray, France; and Queretaro, Mexico. Assembly of log splitters and post-hole diggers within our FRAG business segment occurred in leased facilities in Kansas City, Missouri. Tractor attachment, construction attachment, riding lawnmowers, and other product manufacturing plants within our FRAG business segment are located in Oregon, Illinois; Kronenwetter, Wisconsin; and Sioux Falls, South Dakota. Sales offices and distribution centers are located in Coppell, Texas; Curitiba, Brazil; several locations in Europe; Fuzhou, China; Guelph, Canada; Nishi-ku, Yokohama, Japan; Kansas City, Missouri; Moscow, Russia; Nashville, Tennessee; Oregon, Illinois; Portland, Oregon; Rockford, Illinois; Sparks, Nevada; and Strongsville, Ohio. SpeeCo is headquartered in Golden, Colorado with design, engineering, sales, and marketing functions located in that facility. SpeeCo also operated an assembly, warehouse, and distribution center in Golden, Colorado through the end of 2011, but those operations were moved to Kansas City, Missouri in early 2012.

All of these facilities are in relatively good condition, are currently in normal operation, and are generally suitable and adequate for the business activity conducted therein. The approximate square footage of facilities located at our principal properties as of December 31, 2012 is as follows:

	Area in Square Feet
	Owned		Leased
Forestry, lawn, and garden segment		1,419,300		479,100
Farm, ranch, and agriculture segment		531,000		689,500
Corporate and other		50,700		34,400
Total		2,001,000		1,203,000

We currently lease 95,000 feet in Golden, Colorado that is presently idle and unoccupied and this leased property is not included in the preceding table.

ITEM 3. LEGAL PROCEEDINGS

For information regarding legal proceedings see Note 14 of Notes to Consolidated Financial Statements.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is traded on the New York Stock Exchange (ticker “BLT”). The following table presents the quarterly high and low closing prices for the Company’s common stock for the last two years. Cash dividends have not been declared for the Company’s common stock since 1999. The Company’s senior credit facility agreement limits the amount available to pay dividends or repurchase Company stock. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for further discussion. The Company had approximately 5,400 stockholders of record as of December 31, 2012. See information about the Company’s stock compensation plans in Note 16 to the Consolidated Financial Statements and also in Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The Company has not sold any registered or unregistered securities, or repurchased any shares of its common stock, during the three year period ended December 31, 2012.

The Company’s highest and lowest closing stock price for each of the last eight quarters is presented in the table below.

	Common Stock
	High		Low
Year Ended December 31, 2012:
First quarter	$	17.50	$	14.61
Second quarter		17.11		13.00
Third quarter		15.04		12.71
Fourth quarter		15.82		12.87
Year Ended December 31, 2011:
First quarter	$	16.46	$	14.45
Second quarter		17.47		15.36
Third quarter		18.37		12.98
Fourth quarter		16.29		13.02

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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

	Year Ended December 31,
(In thousands, except per share data)	2012		2011		2010		2009			2008
Statement of Income Data:		(1)		(2)		(3)		(4)
Sales	$	927,666	$	831,630	$	611,480	$	487,366		$	565,557
Operating income		79,280		97,953		85,555		54,526			84,386
Interest expense, net of interest income		17,206		18,550		25,517		24,501			25,705
Income from continuing operations before income taxes		61,790		74,950		52,611		30,266			60,485
Income from continuing operations		39,588		49,682		41,402		21,945			36,932
Income from discontinued operations		—		—		5,798		1,048			1,667
Net income		39,588		49,682		47,200		22,993			38,599
Earnings per share:
Basic income per share:
Continuing operations		0.81		1.02		0.86		0.46			0.78
Discontinued operations		—		—		0.13		0.02			0.03
Net income		0.81		1.02		0.99		0.48			0.81
Diluted income per share:
Continuing operations		0.79		1.01		0.85		0.46			0.77
Discontinued operations		—		—		0.12		0.02			0.03
Net income		0.79		1.01		0.97		0.48			0.80
Weighted average shares used:
Basic		49,170		48,701		47,917		47,758			47,510
Diluted		49,899		49,434		48,508		48,274			48,130
	As of December 31,
(In thousands)	2012		2011		2010		2009			2008
Balance Sheet Data:
Cash and cash equivalents	$	50,267	$	62,118	$	80,708	$	55,070		$	58,275
Working capital		252,190		235,860		187,547		149,547			127,986
Property, plant, and equipment, net		177,702		155,872		108,348		114,470			119,749
Total assets		905,291		884,207		580,887		483,566			499,684
Long-term debt		501,685		510,014		339,750		280,852			293,539
Total debt		516,757		530,362		350,000		285,865			325,520
Stockholders’ equity (deficit)		111,482		69,465		42,398		(6,740	)		(43,520	)

The table above gives effect to the sale of Gear Products on September 30, 2010 and treatment of this business unit as discontinued operations for all periods presented. In addition, the table reflects the acquisitions of Carlton on May 2, 2008, SpeeCo on August 10, 2010, KOX on March 1, 2011, PBL on August 5, 2011, and Woods/TISCO on September 7, 2011, and inclusion of their operations from their acquisition dates forward. The results above also reflect the related acquisition accounting effects of these acquisitions, as further described below in Item 7, Management’s Discussion and Analysis of Financial Condition and Operating Results.

(1) Income from continuing operations in 2012 includes a pre-tax charge of $7.4 million for facility closure and restructuring charges.

(2) Income from continuing operations in 2011 includes a pre-tax charge of $3.9 million for the early extinguishment of debt.

(3) Income from continuing operations in 2010 include a pre-tax charge of $7.0 million for the early extinguishment of debt.

(4) Operating income and income from continuing operations in 2009 include a pre-tax charge of $8.6 million for settlement of a litigation matter, fees associated with refinancing activities and costs associated with the transition of the Company’s CEO position; a pre-tax charge of $7.2 million for plant closure and severance costs; and a pre-tax gain of $2.7 million on the sale of land and building in Europe.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements included elsewhere in this report, as well as the information in Item 1, Business, and Item 6, Selected Consolidated Financial Data. See Item 1, Business, for an overview of the Company’s business, operating segments, the industries in which we compete, and general factors affecting our results. Our business has changed significantly over the past three years as a result of acquisitions and dispositions of several business units. See Item 1, Business, and Note 2 to the Consolidated Financial Statements for descriptions of these transactions.

Consolidated Operating Results

Year ended December 31, 2012 compared to year ended December 31, 2011

(Amounts in millions)
(Amounts may not sum due to rounding)	2012			2011			Change						Contributing Factor
Sales	$	927.7		$	831.6		$	96.0
										$	(42.6	)	Sales volume, excluding acquisitions
											139.3		Acquired sales volume
											13.1		Selling price and mix
											(13.8	)	Foreign currency translation
Gross profit		256.2			255.8			0.4
Gross margin		27.6	%		30.8	%					17.0		Sales volume, including acquisitions
											13.1		Selling price and mix
											(18.4	)	Product cost and mix
											0.6		Average steel costs
											(6.6	)	Incremental logistics costs
											(1.0	)	Facility closure costs
											(0.4	)	Acquisition accounting effects
											(3.9	)	Foreign currency translation
SG&A		170.5			157.9			12.7
As a percent of sales		18.4	%		19.0	%
											18.6		Incremental SG&A of acquisitions
											2.3		Compensation expense
											(7.3	)	Professional services
											2.4		Employee benefits
											1.1		Travel and personnel-related
											(3.5	)	Foreign currency translation
											(0.9	)	Other, net
Facility closure and restructuring costs		6.4			—			6.4
Operating income		79.3			98.0			(18.7	)
Operating margin		8.5	%		11.8	%					0.4		Increase in gross profit
											(12.7	)	Increase in SG&A
											(6.4	)	Facility closure and restructuring costs
Net income	$	39.6		$	49.7		$	(10.1	)
											(18.7	)	Decrease in operating income
											1.3		Decrease in net interest expense
											4.2		Change in other income (expense)
											3.1		Decrease in income tax provision

18

Sales increased by $96.0 million, or 11.5%, from 2011 to 2012, primarily due to incremental sales volume of $139.3 million from the companies we acquired during 2011. We report all incremental sales attributable to recent acquisitions as unit volume increase, up through the one year anniversary of the acquisition date. Excluding the effect of the incremental sales from these acquisitions, unit sales volume decreased by $42.6 million, or 5.1%. Changes in average selling prices and product mix increased sales revenue by $13.1 million on a year-over-year basis, excluding acquisitions. The translation of foreign currency-denominated sales transactions decreased consolidated sales by $13.8 million in 2012 compared to 2011, excluding acquisitions, given the relatively stronger U.S. Dollar in comparison to most foreign currencies. International sales decreased by $29.4 million, or 5.6%, including the adverse currency effect of $13.8 million, while domestic sales decreased by $13.8 million, or 4.5%, exclusive of sales from recent acquisitions.

Gross profit increased by $0.4 million, or 0.2%, from 2011 to 2012. Higher unit sales volume, including incremental volume from recent acquisitions, added $17.0 million of gross profit in 2012. In addition, the $13.1 million effect of higher average selling prices and product mix further increased gross profit. Partially offsetting these increases was $18.4 million in higher product cost and mix, reflecting reduced manufacturing efficiencies and overhead absorption due to lower production levels during 2012. Steel costs were an estimated $0.6 million lower on average in 2012 compared with 2011. Gross profit was also negatively affected by $6.6 million in incremental logistics costs, including $5.3 million of above normal freight costs, incurred in the FRAG segment, $1.0 million in facility closure and restructuring costs related to the consolidation of our former assembly and distribution center operations located in Golden, Colorado to our new facility in Kansas City, Missouri, and a slight increase in acquisition accounting effects of $0.4 million. Fluctuations in currency exchange rates decreased our gross profit in 2012 compared to 2011 by $3.9 million as the translation of weaker foreign currencies into a stronger U.S. Dollar resulted in lower reported foreign sales, only partially offset by lower reported foreign manufacturing costs.

Gross margin in 2012 was 27.6% of sales compared to 30.8% in 2011. Our gross margin has decreased over the last two and a half years as a result of the businesses we acquired in 2010 and 2011, which have lower gross margins than the gross margins of our historical businesses. The impact of acquisition accounting effects has further lowered our gross margins. Excluding the results of the companies acquired in 2010 and 2011, our gross margin would have been 35.2% in 2012 and 35.3% in 2011. Our strategies to improve gross margins are to leverage our recent acquisitions through cross selling opportunities to increase sales volume and manufacturing efficiencies, apply continuous improvement initiatives to their manufacturing and other processes, invest in automation and productivity improvements, and to utilize our global supply chain to drive down sourcing costs. In addition, the acquisition accounting effects for these business units will gradually diminish over time with a resulting improvement to the gross margins of these acquisitions. However, there can be no assurance that we will be able to achieve our objective of improving gross margins in the future.

SG&A was $170.5 million in 2012, compared to $157.9 million in 2011, representing an increase of $12.7 million, or 8.0%. As a percentage of sales, SG&A decreased from 19.0% in 2011 to 18.4% in 2012, primarily due to the effect of the acquisitions, which operate with a lower level of SG&A expenses. Incremental SG&A expense incurred at our recent acquisitions added $18.6 million of SG&A in 2012, prior to the one year anniversary date of each acquisition, representing 13.3% as a percentage of incremental sales. Compensation expense increased by $2.3 million on a comparative basis, reflecting annual wage increases, increased headcount, and higher non-cash stock-based compensation expense, partially offset by a reduction in accruals for incentive compensation plans. Costs for professional services were $7.3 million lower in 2012 compared to 2011 primarily because our level of acquisition due diligence and refinancing activity has significantly decreased. Costs of employee benefit programs reported in SG&A increased by $2.4 million, primarily due to increased amortization of actuarial losses caused by the decrease in discount rates used to measure our accumulated benefit obligations at the end of 2011. Travel and other personnel-related expenses increased by $1.1 million on a year-over-year basis. International operating expenses decreased by $3.5 million from the prior year due to the favorable movement in foreign currency exchange rates.

During 2012, we completed certain actions to consolidate our operations in the U.S. In Kansas City, Missouri, we moved into a new, larger North American distribution center, and closed our previous distribution center in that city. In Golden, Colorado, we closed our assembly, warehouse, and distribution operations and consolidated those functions into the new North American distribution center in Kansas City. During 2012, we recognized direct costs of $7.4 million associated with these two actions. These costs consisted of lease exit costs, charges to expense the book value of certain assets located in Golden and in the previous distribution center in Kansas City that will not be

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utilized in the new distribution center, temporary labor costs associated with moving inventory items and stabilizing distribution center operations, third party costs to move inventory and equipment, and rent expense on duplicate facilities during the transition period. Of these total costs, $1.0 million are reported in cost of sales in the Consolidated Statement of Income for the twelve months ended December 31, 2012. We do not expect to incur significant direct costs from these transitions in future periods.

We maintain defined benefit pension plans covering many of our employees and retirees in the U.S., Belgium, Canada, and France. We also maintain post-retirement medical and other benefit plans covering many of our employees and retirees in the U.S, and defined contribution retirement plans covering most of our employees in the U.S. and Canada. The costs of these post-employment benefit plans are included in cost of goods sold and SG&A, and are determined either on an actuarial basis, or on an accrual basis. The accounting effects and funding requirements for certain of these plans are subject to actuarial estimates, actual plan experience, and the assumptions we make regarding future trends and expectations. See further discussion of these key assumptions and estimates under “Critical Accounting Policies and Estimates.” Total expense recognized for all post-retirement benefit plans was $18.6 million in 2012 and $15.5 million in 2011. At December 31, 2012, we had $126.8 million of accumulated other comprehensive losses related to our pension and other post-employment benefit plans that will be amortized to expense over future years, including $7.7 million to be expensed in 2013. We expect our total expense for all post-retirement plans to be between $23 million and $24 million in 2013.

Operating income decreased by $18.7 million from 2011 to 2012. The decrease was due to increased SG&A expenses and the costs of the facility closure and restructuring activities, partially offset by slightly higher gross profit. Our operating margin decreased from 11.8% of sales in 2011 to 8.5% of sales in 2012. Non-cash acquisition accounting effects reduced our operating profit and operating margin by $16.0 million and 1.7% in 2012 and by $15.9 million and 1.9% in 2011, respectively.

Interest expense was $17.4 million in 2012 compared to $18.7 million in 2011. The $1.4 million decrease was due to lower average interest rates on our debt, partially offset by higher average outstanding debt balances in the comparable periods. The variable interest rates on our term loans decreased significantly when we amended and restated our senior credit facilities in June 2011, but our average borrowing level increased significantly in September 2011 with the acquisition of Woods/TISCO.

Other expense, net was $0.3 million in 2012 and $4.5 million in 2011. In 2011, we recognized $3.9 million in charges related to the fourth amendment and restatement of our senior credit facilities.

Net income in 2012 was $39.6 million, or $0.79 per diluted share, compared to $49.7 million, or $1.01 per diluted share, in 2011.

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Year ended December 31, 2011 compared to year ended December 31, 2010

(Amounts in millions)
(Amounts may not sum due to rounding)	2011			2010			Change					Contributing Factor
Sales	$	831.6		$	611.5		$	220.2
									$	64.0		Sales volume, excluding acquisitions
										132.5		Acquired sales volume
										17.2		Selling price and mix
										6.5		Foreign currency translation
Gross profit		255.8			204.0			51.8
Gross margin		30.8	%		33.4	%				54.7		Sales volume, including acquisitions
										17.2		Selling price and mix
										(3.5	)	Product cost and mix
										(3.8	)	Average steel costs
										(10.8	)	Acquisition accounting effects
										(2.0	)	Foreign currency translation
SG&A		157.9			118.5			39.4
As a percent of sales		19.0	%		19.4	%				19.3		Incremental SG&A of acquisitions
										4.9		Compensation expense
										4.8		Professional services
										3.6		Advertising
										1.5		Travel
										1.1		Employee benefits
										2.3		Foreign currency translation
										1.9		Other, net
Operating income		98.0			85.6			12.4
Operating margin		11.8	%		14.0	%				51.8		Increase in gross profit
										(39.4	)	Increase in SG&A
Income from continuing operations		49.7			41.4			8.3
										12.4		Increase in operating income
										7.0		Decrease in net interest expense
										3.0		Change in other income (expense)
										(14.1	)	Increase in income tax provision
Net income	$	49.7		$	47.2		$	2.5
										8.3		Increase in income from continuing operations
										(5.8	)	Discontinued operations

Sales increased by $220.2 million, or 36.0%, from 2010 to 2011, primarily due to incremental sales volume of $132.5 million from the companies we acquired during 2010 and 2011. We report all incremental sales attributable to recent acquisitions as unit volume increase, up through the one year anniversary of the acquisition date. Excluding the effect of these acquisitions, unit sales volume increased by $64.0 million, or 10.5%. Changes in average selling prices and product mix increased sales revenue by $17.2 million on a year-over-year basis, excluding acquisitions. The translation of foreign currency-denominated sales transactions increased consolidated sales by $6.5 million in 2011 compared to 2010, excluding acquisitions, given the relatively weaker U.S. Dollar in comparison to most foreign currencies. International sales increased by $75.1 million, or 18.0%, while domestic sales increased by $12.5 million, or 6.4%, both exclusive of sales from recent acquisitions.

Gross profit increased by $51.8 million, or 25.4%, from 2010 to 2011. Higher unit sales volume, including incremental volume from recent acquisitions, provided additional gross profit of $54.7 million. Higher average selling prices and product mix accounted for $17.2 million in additional gross profit. Partially offsetting these

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increases were an increase in acquisition accounting effects of $10.8 million, $3.5 million in higher product cost and mix, and a year-over-year increase in steel costs of $3.8 million. Fluctuations in currency exchange rates decreased our gross profit in 2011 compared to 2010 by $2.0 million on a consolidated basis. The translation of stronger foreign currencies in Canada and Brazil into a weaker U.S. Dollar resulted in higher reported manufacturing costs. This foreign currency effect at our international manufacturing locations more than offset the positive effect on translation of international sales revenue. Gross margin in 2011 was 30.8% of sales compared to 33.4% of sales in 2010. The decline in gross margin from 2010 is primarily the result of the lower average gross margins of acquired businesses and the related acquisition accounting effects.

SG&A was $157.9 million in 2011, compared to $118.5 million in 2010, representing an increase of $39.4 million, or 33.2%. As a percentage of sales, SG&A decreased from 19.4% in 2010 to 19.0% in 2011, primarily due to the increase in sales, which outpaced the increase in SG&A spending. Incremental SG&A expense incurred at our recent acquisitions added $19.3 million in 2011. Compensation expense increased by $4.9 million from 2010 to 2011, reflecting annual wage increases, increased headcount, and higher stock compensation expense, partially offset by reduced incentive compensation expense. Costs for professional services increased by $4.8 million, largely due to our acquisition program, as we acquired KOX, PBL, and Woods/TISCO in 2011 compared with SpeeCo in 2010. Advertising expense increased by $3.6 million, primarily due to advertising programs for new product introductions. Travel costs were $1.5 million higher in 2011 compared with 2010 as the Company continued to pursue its strategic initiatives. The cost of employee benefits increased $1.1 million year-over-year. International operating expenses increased by $2.3 million from the prior year due to the movement in foreign currency exchange rates. Costs of post-retirement benefit plans, including defined benefit pension plans, defined contribution plans, post-retirement medical plans, and other post-retirement plans, were $15.5 million in 2011 and $14.7 million in 2010. These costs are reported in cost of sales and in SG&A in the Consolidated Statements of Income.

Operating income increased by $12.4 million from 2010 to 2011. The increase was due to higher sales volume and gross profit, partially offset by increased SG&A expenses. Our operating margin decreased from 14.0% of sales in 2010 to 11.8% of sales in 2011. Acquisition accounting effects reduced our operating profit by $15.9 million and our operating margin by 1.9% in 2011. Acquisition accounting effects reduced our operating profit by $5.2 million and our operating margin by 0.8% in 2010.

Interest expense was $18.7 million in 2011 compared to $25.6 million in 2010. The decrease was due to lower average interest rates on our debt, partially offset by higher average outstanding debt balances in the comparable periods. The variable interest rates on our term loans decreased significantly when we amended and restated our senior credit facilities in June 2011, and our weighted average interest rate was also reduced when we repaid our senior subordinated notes in September 2010. However, our average outstanding debt balances increased significantly in September 2011 when we acquired Woods/TISCO.

Other expense, net was $4.5 million in 2011 and primarily consisted of $3.9 million in charges related to the fourth amendment and restatement of our senior credit facilities consummated in August 2011. Other expense, net was $7.4 million in 2010 and primarily consisted of $7.0 million in charges related to the third amendment and restatement of our senior credit facilities consummated in August 2010.

Income from continuing operations in 2011 was $49.7 million, or $1.01 per diluted share, compared to $41.4 million, or $0.85 per diluted share, in 2010.

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Income Tax Provision

The following table summarizes our income tax provision for continuing operations in 2012, 2011, and 2010:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Income from continuing operations before income taxes	$	61,790		$	74,950		$	52,611
Provision for income taxes		22,202			25,268			11,209
Income from continuing operations		39,588			49,682			41,402
Effective tax rate		35.9	%		33.7	%		21.3	%

See Note 10 to Consolidated Financial Statements for additional information about income taxes and a reconciliation of the U.S. federal statutory rate to the effective income tax rate recognized in each year above.

The 2012 effective tax rate was increased from the federal statutory rate by foreign withholding taxes, state income taxes, and additional deferred tax expense to establish a valuation allowance against deferred tax assets arising from certain foreign net operating loss (“NOL”) carryforwards. These increases to the 2012 effective tax rate were partially offset by lower taxes on our foreign operations and permanent differences, including the domestic production deduction. Taxes on our foreign operations are lower than in the U.S. because of lower statutory tax rates and increased deductions for tax purposes in foreign jurisdictions that are not recognized as expenses for book purposes.

The 2011 effective tax rate was reduced from the federal statutory rate by lower taxes on our foreign operations, permanent differences, including the domestic production deduction, and the release of previously provided income tax expense on uncertain tax positions resulting from the expiration of the statute of limitations for certain tax returns. These reductions to the 2011 effective tax rate were partially offset by foreign withholding taxes, state income taxes, and the unfavorable impact of nondeductible transaction costs incurred to facilitate the 2011 acquisitions of KOX, PBL, and Woods/TISCO.

The 2010 effective tax rate was reduced from the federal statutory rate by lower taxes on our foreign operations, federal and state research tax credits, permanent differences, including the domestic production deduction, and by the release of previously provided income tax expense on uncertain tax positions resulting from the conclusion of an audit with the U.S. Internal Revenue Service (“IRS”) and the expiration of the statute of limitations for certain tax returns. These reductions to the 2010 effective tax rate were partially offset by additional tax expense on repatriated earnings from certain of our foreign locations, foreign withholding taxes, state income taxes, and the tax impact of writing off the deferred tax asset related to the Medicare Part D subsidy in accordance with 2010 legislation which made the previously exempt subsidy subject to federal income tax beginning in 2013.

Discontinued Operations

Discontinued operations are summarized as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Operating income prior to disposition date	$	—	$	—	$	1,031
Gain on disposal		—		—		11,941
Income from discontinued operations before income taxes		—		—		12,972
Income tax expense		—		—		7,174
Income from discontinued operations	$	—	$	—	$	5,798

The results of discontinued operations in 2010 reflect the pre-disposition operating results and the gain on sale of Gear Products. Under terms of the stock purchase agreement, the parties agreed to treat the stock sale as if it were an asset sale for income tax purposes, which resulted in an increase in the income tax expense we recognized on the sale.

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Segment Results

The following table reflects results by segment.

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Sales:
FLAG	$	650,480		$	659,883		$	554,053
FRAG		250,845			147,475			34,200
Corporate and other		26,341			24,272			23,227
Total sales	$	927,666		$	831,630		$	611,480
Operating income (expense):
FLAG	$	108,255		$	115,597		$	104,113
FRAG		(7,495	)		4,474			1,671
Corporate and other		(21,480	)		(22,118	)		(20,229	)
Total operating income	$	79,280		$	97,953		$	85,555

Forestry, Lawn, and Garden Segment. The FLAG segment results in 2011 include the operations of the Company that have historically served the FLAG markets, as well as the results of KOX from the acquisition date of March 1, 2011 to the end of the year, and the results of the FLAG portion of PBL from the acquisition date of August 5, 2011 to the end of the year. The FLAG segment results in 2012 include the operations of all three business units for the entire year. The following table reflects the factors contributing to the change in sales and operating income in the FLAG segment between 2011 and 2012:

(Amounts in thousands)	Sales			Contribution to Operating Income
Year ended December 31, 2011	$	659,883		$	115,597
Unit sales volume, excluding acquisitions		(26,468	)		(12,448	)
Selling price and product mix		11,966			11,966
Product cost and mix		—			(9,203	)
SG&A expense, excluding acquisitions		—			9
Acquired businesses, excluding acquisition accounting effects		17,880			1,695
Decrease in acquisition accounting effects		—			923
Foreign currency translation		(12,781	)		(284	)
Year ended December 31, 2012	$	650,480		$	108,255

Sales in the FLAG segment decreased $9.4 million, or 1.4%, from 2011 to 2012. The acquisitions of KOX in March 2011 and the FLAG portion of the PBL business in August 2011 contributed $17.9 million of incremental sales volume during 2012 up through the one year anniversary of their respective acquisition dates. Excluding the incremental effect of these acquisitions, unit sales volume decreased by $26.5 million, or 4.0%. The lower unit sales volume is primarily due to reduced demand for our products in certain geographic regions as further described below. Changes in average selling prices, reflecting selected pricing actions taken in 2011 and 2012, and changes in product mix increased FLAG sales revenue by $12.0 million in 2012. The translation of foreign currency-denominated sales transactions decreased FLAG sales by $12.8 million, primarily due to the relatively stronger U.S. Dollar in comparison to most foreign currencies.

Excluding the effects of recent acquisitions, sales of forestry products were down 6.2%, while sales of lawn and garden products were up 8.4%. Excluding the effects of recent acquisitions, FLAG sales to OEMs were down

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12.5% while sales to the replacement market decreased by 2.5%. Excluding the effects of recent acquisitions, FLAG sales increased in North America by 3.7%. FLAG sales in Europe and Russia decreased 11.8%, reflecting economic weakness and uncertainty in that region during 2012, as well as the foreign currency translation effect of a relatively stronger U.S. Dollar in comparison to the Euro. FLAG sales decreased in the Asia-Pacific region by 4.3%, driven by relatively soft market conditions in that region. FLAG sales in South America increased by 7.3%, as customer demand in that geographic region was relatively strong during 2012.

Sales order backlog for the FLAG segment at December 31, 2012 was $167.9 million compared to $182.4 million at December 31, 2011. The reduction in sales order backlog reflects reduced demand for our FLAG products, particularly in Europe due to the recent weak economic conditions and uncertainty in that region.

Contribution to operating income from the FLAG segment decreased $7.3 million, or 6.4%, from 2011 to 2012. Lower unit sales volume reduced the FLAG contribution to operating income while average selling price and mix improvements positively affected the FLAG contribution to operating income. Higher product cost and mix reduced contribution to operating income from the FLAG segment by $9.2 million. The inclusion of the results of KOX and PBL for the periods after the one year anniversary of their acquisition dates has resulted in less favorable product mix as these business units operate at lower operating margins than our historical FLAG operations. In addition, lower production volumes during 2012 reduced overhead absorption and manufacturing efficiency. FLAG production facilities for 2012 were operated at an average of approximately 82% of capacity, compared to an average of approximately 93% of capacity during 2011. In addition, costs in the new distribution center in Kansas City were increased during the start-up and transition phase of that facility. Average steel costs were slightly lower in 2012 than in 2011. Excluding acquisitions, SG&A expense was flat from 2011 to 2012, reflecting the positive effects of foreign currency movements, reduced incentive compensation expense, and efforts to contain costs, offset by wage increases and increased headcount.

The effect of acquired sales volume and incremental SG&A of recent acquisitions contributed $1.7 million to operating income in 2012 in the FLAG segment, excluding acquisition costs. Acquisition accounting effects decreased for the FLAG segment by $0.9 million, reflecting the accelerated nature of the timing of recognition for such effects.

The FLAG segment results in 2011 include the operations of the Company that have historically served the FLAG markets, as well as the results of KOX from the acquisition date of March 1, 2011 to the end of the year, and the results of the FLAG portion of PBL from the acquisition date of August 5, 2011 to the end of the year. The FLAG segment results in 2010 include only the operations historically serving the FLAG markets. The following table reflects the factors contributing to the change in sales and operating income in the FLAG segment between 2010 and 2011:

(Amounts in thousands)	Sales		Contribution to Operating Income
Year ended December 31, 2010	$	554,053	$	104,113
Unit sales volume, excluding acquisitions		56,730		21,179
Selling price and product mix		15,596		15,596
Product cost and mix		—		459
Change in steel costs		—		(3,845	)
SG&A expense, excluding acquisitions		—		(12,884	)
Acquired businesses, excluding acquisition accounting effects		27,350		(1,657	)
Increase in acquisition accounting effects		—		(2,937	)
Foreign currency translation		6,154		(4,427	)
Year ended December 31, 2011	$	659,883	$	115,597

Sales in the FLAG segment increased $105.8 million, or 19.1%, from 2010 to 2011. The acquisitions of KOX in March 2011 and the FLAG portion of the PBL business in August 2011 contributed $27.4 million of incremental sales volume during 2011. Excluding the effect of these acquisitions, unit sales volume increased by $56.7 million, or 10.2%, as the global economic recovery continued and we experienced strong demand for our products. Changes

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in average selling prices, reflecting selected pricing actions taken, and changes in product mix increased FLAG sales revenue by $15.6 million in 2011. The translation of foreign currency-denominated sales transactions increased FLAG sales by $6.2 million, primarily due to the relatively weaker U.S. Dollar in comparison to most foreign currencies.

Excluding the effects of recent acquisitions, sales of forestry products were up 16.0% and sales of lawn and garden products were up 4.4%. Excluding the effects of recent acquisitions, sales to OEMs were up 6.7% and sales to the replacement market increased by 14.2%. Excluding the effects of recent acquisitions, FLAG sales increased by 5.9% in North America, 18.2% in Europe, 21.2% in the Asia-Pacific Region, and by 15.9% in South America.

Contribution to operating income from the FLAG segment increased $11.5 million, or 11.0%, from 2010 to 2011. Higher unit sales volume and improved average selling price and mix increased contribution to operating income of the FLAG segment in 2011. Higher average steel costs of $3.8 million negatively affected contribution to operating income. Excluding acquisitions, SG&A expense was $12.9 million higher in 2011 than in 2010 due to increased head count, wage increases, increased advertising expenses, and increased travel and other employee-related costs.

The effect of acquired sales volume and incremental SG&A of KOX and PBL reduced contribution to operating income in 2011 in the FLAG segment by $1.7 million. Transition costs and soft market conditions in late 2011 in Europe negatively affected the 2011 results of these business units. Acquisition accounting effects increased for the FLAG segment by $2.9 million, reflecting the acquisitions of KOX and PBL in 2011. Changes in foreign currency exchange rates reduced FLAG contribution to operating income by $4.4 million, as increased sales revenue was more than offset by higher production costs in our foreign manufacturing facilities.

Farm, Ranch, and Agriculture Segment. The FRAG segment results in 2011 include the full year activity of SpeeCo, plus the activity associated with the FRAG portion of the PBL business from the acquisition date of August 5, 2011 to the end of the year, and the activity of Woods/TISCO from the acquisition date of September 7, 2011 to the end of the year. The FRAG segment results include the results of all three business units during all of 2012.

The following table reflects the factors contributing to the change in sales and operating income in the FRAG segment between 2011 and 2012:

(Amounts in thousands)	Sales			Contribution to Operating Income
Year ended December 31, 2011	$	147,475		$	4,474
Unit sales volume, excluding acquisitions		(18,193	)		(5,482	)
Selling price and product mix		407			407
Product cost and mix		—			(8,628	)
Incremental logistics costs		—			(6,579	)
SG&A expense, excluding acquisitions		—			(3,919	)
Acquired businesses, excluding acquisition accounting effects		121,409			13,413
Increase in acquisition accounting effects		—			(1,280	)
Foreign currency translation		(253	)		99
Year ended December 31, 2012	$	250,845		$	(7,495	)

Sales in the FRAG segment increased $103.4 million, or 70.1%, from 2011 to 2012, driven by the acquisitions of PBL in August 2011 and Woods/TISCO in September 2011. Excluding the effect of sales from these acquired businesses occurring before the one year anniversary of their respective acquisition dates, FRAG unit sales volume decreased by $18.2 million, or 12.3%, from 2011 to 2012, primarily due to soft customer demand from continuing drought conditions in North America and above average temperatures, particularly in the Northeastern U.S., which has reduced demand for log splitters. Unit sales volume of log splitters and certain FRAG parts during the first half of 2012 was further negatively impacted by difficulty in obtaining certain component parts from suppliers on a timely basis. As a result, we were unable to meet all of our customer demand for FRAG products during the spring 2012 selling season, which resulted in lost sales.

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Excluding the effects of recent acquisitions, FRAG sales in North America decreased by 12.3%. North American FRAG sales represented 95.3% of segment sales in 2012. Sales order backlog for the FRAG segment at December 31, 2012 was $31.5 million compared to $30.8 million at December 31, 2011.

The contribution to operating income from the FRAG segment was $4.5 million in 2011 compared to a loss of $7.5 million in 2012. Reduced unit sales volume, higher product costs, increased logistics costs (see further discussion below), and increased SG&A expenses all reduced contribution to operating income from the FRAG segment. The higher product costs reflect incremental re-work and warranty costs on certain recently introduced log splitter products, and production and distribution inefficiencies incurred during the consolidation of our assembly and distribution centers.

The effect of acquired unit sales volume and incremental SG&A of recent acquisitions added $13.4 million to contribution to operating income in 2012 compared to 2011. Acquisition accounting effects were $1.3 million higher in 2012 than in 2011, reflecting the full year of ownership of the acquired businesses.

Most of our log splitter supply chain begins with unaffiliated suppliers in China. Under normal circumstances, component parts and resale products are shipped to our U.S. assembly and distribution center via ocean transport, which takes several weeks for delivery. During 2012, due to problems with obtaining certain components on a timely basis from certain of these suppliers, we fell behind on deliveries to our customers. In order to minimize service disruption to our customers, we elected to incur higher air and other freight costs to expedite the delivery of products and components from China to our assembly and distribution center in the U.S., where the component parts are assembled and the finished products are shipped to our customers. These higher freight costs were $5.3 million in 2012. We do not expect to incur significantly higher freight costs from expedited deliveries after 2012. We also incurred other incremental distribution costs of $1.3 million related to log splitter and other FRAG products in 2012. The FRAG results do not include the direct costs identified with the facility closure and restructuring activities, which are included in the Corporate and Other category.

The FRAG segment results in 2010 reflect the activity of SpeeCo from the acquisition date of August 10, 2010 to the end of the year. The FRAG segment results in 2011 reflect the full year activity of SpeeCo, plus the activity associated with the FRAG portion of the PBL business from the acquisition date of August 5, 2011 to the end of the year, and the activity of Woods/TISCO from the acquisition date of September 7, 2011 to the end of the year. The following table reflects the factors contributing to the change in sales and operating income in the FRAG segment between 2010 and 2011:

(Amounts in thousands)	Sales		Contribution to Operating Income
Year ended December 31, 2010	$	34,200	$	1,671
Unit sales volume, excluding acquisitions		6,871		2,122
Selling price and product mix		1,211		1,211
Product cost and mix		—		(1,885	)
SG&A expense, excluding acquisitions		—		(2,064	)
Acquired businesses, excluding acquisition accounting effects		105,193		11,290
Increase in acquisition accounting effects		—		(7,871	)
Year ended December 31, 2011	$	147,475	$	4,474

Sales in the FRAG segment increased $113.3 million, or 331.2%, from 2010 to 2011, driven by the acquisitions of SpeeCo in 2010 and Woods/TISCO and PBL in 2011. The incremental sales from SpeeCo for a full year versus a partial year in 2010, and all of the 2011 sales of Woods/TISCO and the PBL FRAG business, were $105.2 million. Excluding the effect of sales from acquired businesses occurring before the one year anniversary of their respective acquisition dates, FRAG sales volume increased by $6.9 million, or 20.1%, in 2011 compared to 2010, primarily due to new product introductions and strong product demand at SpeeCo. Changes in selling price and product mix added $1.2 million to FRAG sales revenue in 2011.

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The contribution to operating income from the FRAG segment increased $2.8 million, or 167.7%, from 2010 to 2011. Increased unit sales volume and increases in average selling prices and product mix positively affected the FRAG contribution to operating income. The effect of acquired unit sales volume and incremental SG&A of recent acquisitions added $11.3 million to contribution to operating income in 2011compared to 2010. Partially offsetting these favorable factors were increased acquisition accounting effects and increased SG&A expenses.

Corporate and Other. Sales of concrete cutting and finishing products increased 8.5% from 2011 to 2012, primarily due to improved demand for our products in North America. Contribution to operating income from Corporate and Other was a $0.6 million smaller loss in 2012 than in 2011, reflecting increased sales volume and improved price and mix for our concrete cutting and finishing products, partially offset by increased SG&A costs. SG&A expenses were higher in 2012 than in 2011, reflecting the $7.4 million of direct costs associated with the facility closure and restructuring activities during 2012, and increased costs of post-retirement benefit plans, partially offset by reduced costs of professional services and incentive compensation expenses.

Sales of concrete cutting and finishing products increased 4.5% from 2010 to 2011, reflecting stronger sales in Europe. Contribution to operating income from Corporate and Other was a $1.9 million larger loss, reflecting increases in SG&A expenses of $2.1 million, partially offset by increased sales of concrete cutting and finishing products. The increase in SG&A expenses was driven largely by increased costs of professional services, primarily related to the Company’s acquisition activity.

Financial Condition, Liquidity, and Capital Resources

Our debt has fluctuated significantly in recent years due to additional borrowings to fund acquisitions, repayments from operating cash flows, and repayments from the proceeds of the sale of Gear Products. We have also undertaken several refinancing transactions which have affected our borrowing capacity, borrowing rates, financial covenants, and other terms as further described in Note 9 to the Consolidated Financial Statements. General economic conditions and conditions in financial and credit markets have also significantly affected the terms of our debt, including the interest rates we pay.

Long-term debt is summarized as follows:

	As of December 31,
(Amounts in thousands)	2012			2011
Revolving credit facility borrowings	$	235,000		$	228,200
Term loans		281,250			296,250
Debt and capital lease obligation of PBL		507			5,912
Total debt		516,757			530,362
Less current maturities		(15,072	)		(20,348	)
Long-term debt, excluding current maturities	$	501,685		$	510,014
Weighted average interest rate at end of period		2.71	%		2.85	%

Senior Credit Facilities. The Company, through its wholly-owned subsidiary, Blount, Inc., maintains a senior credit facility with General Electric Capital Corporation as Agent for the Lenders and also as a lender, which has been amended and restated on several occasions. As of December 31, 2012, the senior credit facilities consisted of a revolving credit facility and a term loan.

The revolving credit facility provides for total available borrowings of up to $400.0 million, reduced by outstanding letters of credit, and further restricted by certain financial covenants. As of December 31, 2012, the Company had the ability to borrow an additional $61.8 million under the terms of the revolving credit agreement. The revolving credit facility bears interest at LIBOR plus 2.50% or at an index rate, as defined in the credit agreement, plus 1.50%, and matures on August 31, 2016. Interest is payable on the individual maturity dates for each LIBOR-based borrowing and monthly on index rate-based borrowings. Any outstanding principal is due in its entirety on the maturity date.

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The term loan facility also bears interest at LIBOR plus 2.50% or at the index rate plus 1.50% and matures on August 31, 2016. The term loan facility requires quarterly principal payments of $3.8 million with a final payment of $225.0 million due on the maturity date. Once repaid, principal under the term loan facility may not be re-borrowed.

The amended and restated senior credit facilities contain financial covenants including:

• Minimum fixed charge coverage ratio of 1.15, defined as earnings before interest, taxes, depreciation, amortization, and certain adjustments defined in the credit agreement (“Adjusted EBITDA”) divided by cash payments for interest, taxes, capital expenditures, scheduled debt principal payments, and certain other items, calculated on a trailing twelve-month basis.

• Maximum leverage ratio, defined as total debt divided by Adjusted EBITDA, calculated on a trailing twelve-month basis. The maximum leverage ratio is set at 4.25 through December 31, 2012, 4.00 through June 30, 2013, 3.75 through December 31, 2013, 3.50 through September 30, 2014, 3.25 through March 31, 2015, and 3.00 thereafter.

The status of financial covenants was as follows:

Financial Covenants	Requirement		As of December 31, 2012
Minimum fixed charge coverage ratio		1.15		1.27
Maximum leverage ratio		4.25		3.80

In addition, there are covenants, restrictions, or limitations relating to acquisitions, investments, loans and advances, indebtedness, dividends on our stock, the sale or repurchase of our stock, the sale of assets, and other categories. In the opinion of management, we were in compliance with all financial covenants as of December 31, 2012. Non-compliance with these covenants is an event of default under the terms of the credit agreement, and could result in severe limitations to our overall liquidity, and the term loan lenders could require immediate repayment of outstanding amounts, potentially requiring sale of a sufficient amount of our assets to repay the outstanding loans.

The amended and restated senior credit facilities may be prepaid at any time without penalty. There can also be additional mandatory repayment requirements related to the sale of Company assets, the issuance of stock under certain circumstances, or upon the Company’s annual generation of excess cash flow, as determined under the credit agreement. Our debt is not subject to any triggers that would require early payment due to any adverse change in our credit rating.

Our senior credit facility debt instruments and general credit are rated by both Standard & Poor’s and Moody’s. During 2012, Moody’s lowered our credit rating from Ba3/Stable to Ba3/Negative. There has been no change in our credit rating by Standard & Poor’s during 2012. As of December 31, 2012, the credit ratings for the Company were as follows:

	Standard & Poor’s		Moody’s
Senior credit facility		BB-/Stable		Ba3/Negative
General credit rating		BB-/Stable		Ba3/Negative

Debt and Capital Lease Obligation of PBL. In conjunction with the acquisition of PBL we assumed $13.5 million of PBL’s debt, consisting of current and long-term bank obligations, revolving credit facilities, and $0.6 million in capital lease obligations. As of December 31, 2012, we have repaid all of PBL’s bank debt.

We intend to fund working capital, operations, capital expenditures, acquisitions, debt service requirements, and obligations under our post-retirement benefit plans for the next twelve months through cash and cash equivalents, expected cash flows generated from operating activities, and amounts available under our revolving credit agreement. We expect our financial resources will be sufficient to cover any additional increases in working capital, capital expenditures, and acquisitions; however, there can be no assurance that these resources will be sufficient to meet our needs, particularly if we make significant acquisitions. We may also consider other options available to us in connection with future liquidity needs, including, but not limited to, the postponement of discretionary contributions to post-retirement benefit plans, the postponement of capital expenditures, restructuring of our credit facilities, and issuance of new debt or equity securities.

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Our interest expense may vary in the future because the revolving credit facility and term loan interest rates are variable. The Fourth Amendment and Restatement of our senior credit facilities include a requirement to cover 35% of the outstanding principal on our term loan with fixed or capped interest rates, and we entered into interest rate cap and swap agreements in the fourth quarter of 2011 to meet this requirement. See further discussion of these agreements in Item 7A, Quantitative and Qualitative Disclosures about Market Risk. The weighted average interest rate on all debt was 2.71% as of December 31, 2012 and 2.85% as of December 31, 2011.

Cash and cash equivalents at December 31, 2012 were $50.3 million compared to $62.1 million at December 31, 2011. As of December 31, 2012, $39.0 million of our cash and cash equivalents was held at our foreign locations.

Cash provided by operating activities is summarized in the following table:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Net income	$	39,588		$	49,682		$	47,200
Non-cash items		43,321			50,258			27,578
Subtotal		82,909			99,940			74,778
Changes in assets and liabilities, net		(31,638	)		(21,873	)		(18,900	)
Discontinued operations, net		—			(334	)		(6,712	)
Net cash provided by operating activities	$	51,271		$	77,733		$	49,166

Non-cash items consist of income from discontinued operations; early extinguishment of debt; depreciation; amortization; stock-based compensation; excess tax benefit from stock-based compensation; deferred income taxes; change in uncertain tax positions, loss on disposal of assets; and other non-cash charges. Net changes in assets and liabilities consist of those changes in assets and liabilities included in the cash flows from operating activities section of the Consolidated Statements of Cash Flows.

2012 net cash provided by operating activities of $51.3 million reflected the following significant items:

• Net income of $39.6 million, a year-over-year decrease from 2011 of $10.1 million, reflecting reduced operating results.

• Depreciation of property, plant, and equipment totaling $28.6 million, an increase of $5.1 million from 2011, reflecting a full year of depreciation for the companies we acquired in 2011 as well as an increase in capital expenditures. We expect depreciation expense to increase in the near term due to further planned increases in capital expenditures.

• Amortization of $16.5 million, an increase of $4.2 million from 2011, reflecting a full year of amortization for the companies we acquired in 2011.

• Stock-based compensation expense of $5.6 million compared to $4.4 million in 2011, reflecting grants made over the preceding three years.

• A net deferred tax benefit of $7.6 million, primarily due to differences in timing of amortization of acquisition intangibles, compared to net deferred tax expense of $2.3 million recognized in 2011.

• A decrease in accounts receivable of $5.0 million, reflecting a $7.0 million decrease in sales in the fourth quarter of 2012 compared with the fourth quarter of 2011.

• An increase of $25.5 million in inventories, reflecting a buildup due to production and purchases of inventory in expectation of increased sales in 2012 whereas actual sales were lower than expected.

• A decrease in other liabilities of $9.7 million, primarily from cash contributions made to our post-retirement benefit plan obligations.

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2011 net cash provided by operating activities of $77.7 million reflected the following significant items:

• Net income of $49.7 million, for a year-over-year increase from 2010 of $2.5 million, reflecting improved operating results and lower interest expense, partially offset by higher income taxes.

• A charge of $3.9 million for early extinguishment of debt, resulting from our August 2011 refinancing transactions.

• Depreciation of property, plant, and equipment totaling $23.5 million, an increase of $2.5 million from 2010, reflecting the additional depreciation of our recently acquired businesses as well as an increase in capital expenditures.

• Amortization of $12.3 million, an increase of $5.7 million from 2010 due to the acquisitions of KOX, PBL and Woods/TISCO during 2011, and a full year of amortization for SpeeCo, acquired in August 2010.

• Stock-based compensation expense of $4.4 million compared to $3.3 million in 2010, reflecting increased grant levels.

• Other non-cash charges of $5.0 million, including acquisition accounting charges related to adjustments to fair value of inventory and property, plant, and equipment totaling $4.3 million.

• An increase in accounts receivable of $12.1 million, reflecting increased sales in the fourth quarter of 2011 compared with the fourth quarter of 2010, including the effect of sales from our 2011 acquisitions.

• An increase of $6.6 million in accounts payable and accrued expenses, primarily the result of higher accrued taxes.

• A decrease in other liabilities of $16.4 million, primarily from cash contributions made to our post-retirement benefit plan obligations.

2010 net cash provided by operating activities of $49.2 million reflected the following significant items:

• Net income of $47.2 million, less the income generated by discontinued operations of $5.8 million.

• A charge of $7.0 million for early extinguishment of debt, resulting from our August 2010 refinancing transactions.

• Depreciation of property, plant, and equipment totaling $21.0 million.

• Amortization of $6.6 million.

• Stock-based compensation expense of $3.3 million.

• A benefit from the change in uncertain tax positions of $7.8 million due to the expiration of statutes on open tax years.

• An increase in inventories of $6.8 million, reflecting increased production levels in anticipation of sales growth in the following year.

• A net decrease of $3.2 million in accounts payable and accrued expenses, primarily the result of the timing of year-end disbursements.

• A decrease in other liabilities of $11.7 million, primarily from cash contributions made to our post-retirement benefit plan obligations.

• A net cash outflow for discontinued operations of $6.7 million, representing income taxes paid on the gain from the sale of Gear Products, partially offset by positive cash flow from operating Gear Products up to the date of sale.

Cash contributions for pension and other post-retirement benefit plans totaled $27.0 million in 2012, $28.2 million in 2011, and $26.0 million in 2010. Funding requirements for all such post-retirement benefit plans are expected to total between $20 million and $21 million during 2013. Funding requirements for post-retirement benefit plans can fluctuate significantly from year to year. See further discussion following under “Critical Accounting Policies and Estimates.” The Company intends to make contributions to our funded defined benefit pension plans in 2013 of between $7.5 million and $8.5 million. The amount of contributions required in subsequent years will depend, in part, on future investment returns on plan assets, changes in actuarial assumptions, regulatory requirements, and market interest rates.

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Cash used in investing activities is summarized as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Purchases of property, plant, and equipment, net of proceeds from sale of assets	$	(51,727	)	$	(39,406	)	$	(19,843	)
Acquisitions, net of cash acquired		—			(217,362	)		(90,854	)
Discontinued operations		—			—			25,176
Net cash used in investing activities	$	(51,727	)	$	(256,768	)	$	(85,521	)

Purchases of property, plant, and equipment are primarily for productivity improvements, expanded manufacturing capacity, and replacement of consumable tooling and equipment. Generally, about one-third of our capital spending has represented replacement of consumable tooling, dies, and existing equipment, with the remainder devoted to capacity and productivity improvements. During 2012, we invested a total of $51.9 million in property, plant, and equipment, compared to $40.4 million in 2011, and $20.0 million in 2010. The significant increase over this three-year period reflects a significant expansion of capacity at our manufacturing facility in Fuzhou, China, as well as the inclusion of activity at our recently acquired businesses. We also invested in equipment and racking at our new larger assembly and distribution center in Kansas City. We expect our purchases of property, plant, and equipment in 2013 to be between $45 million and $50 million, including continued investment in equipment at the expanded facility in Fuzhou, China, and modernization of our other manufacturing facilities and equipment in various locations. We also continue to investigate potential locations to build or acquire a new manufacturing facility in Eastern Europe. During 2011, we sold assets for $1.0 million, including our idle land and building in Milan, Tennessee.

In 2011 we also used $217.4 million of cash to acquire KOX, PBL, and Woods/TISCO, net of cash acquired. In 2010 we used $90.9 million of cash to acquire SpeeCo, net of cash acquired. We also sold Gear Products for $25.2 million in 2010.

Cash provided by (used in) financing activities is summarized as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Net borrowing (repayment) under revolving credit facility	$	6,800		$	228,200		$	(3,400	)
Proceeds from issuance of term debt		—			300,000			350,000
Repayment of term loan and PBL debt principal		(20,416	)		(361,563	)		(107,465	)
Repayment of 8 7/8% senior subordinated notes		—			—			(175,000	)
Debt issuance costs		(1,115	)		(6,509	)		(6,267	)
Stock-based compensation activity		2,217			1,651			3,405
Net cash provided by (used in) financing activities	$	(12,514	)	$	161,779		$	61,273

2012 activity included fees paid related to the amendment of our senior credit facilities and the following significant financing items:

• Net borrowing under the revolving credit facility of $6.8 million.

• Repayment of $15.0 million in term debt principal as required under the senior credit facility agreement.

• Repayment of $5.4 million in PBL debt principal as we eliminated all bank debt at this subsidiary.

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2011 activity included the Fourth Amendment and Restatement of our senior credit facilities and the following significant financing items:

• Net borrowing under the new revolving credit facility, of $228.2 million.

• Borrowing $300.0 million under the new term loan facility.

• Repayment of the previous term loan principal balances outstanding on the initial funding date in the amount of $342.3 million.

• Repayment of $7.7 million in additional term debt principal payments under the senior credit facilities.

• Repayment of principal outstanding under the new term loan in the amount of $3.8 million.

• $6.5 million in debt issuance costs related to the refinancing.

• Assumption of $13.5 million of PBL’s debt upon the acquisition of that entity and subsequent repayment of $7.8 million of such debt.

2010 activity included the Third Amendment and Restatement of our senior credit facilities and the following significant financing items:

• Borrowing $350.0 million under two new term loans.

• Repayment of $107.5 million of principal outstanding on our previous term loan B.

• Repayment of $175.0 million for the redemption of all of our 8 7/8% senior subordinated notes.

• $6.3 million in debt issuance costs and costs to redeem our 8 7/8% senior subordinated notes.

• The net repayment of all outstanding principal under our revolving credit facility.

• $2.4 million of proceeds from stock-based compensation and $1.0 million in related income taxes.

As of December 31, 2012, our contractual and estimated obligations are as follows:

(Amounts in thousands)	Total		2013		2014-2015		2016-2017		Thereafter
Debt obligations (1)	$	516,757	$	15,072	$	30,144	$	471,541	$	—
Estimated interest payments (2)		63,501		15,586		32,494		15,421		—
Operating lease obligations (3)		49,648		7,920		11,425		7,951		22,352
Other post-retirement obligations (4)		10,612		1,610		2,146		1,734		5,122
Defined benefit pension obligations (5)		7,511		7,511		—		—		—
Purchase commitments (6)		1,210		1,210		—		—		—
Other long-term liabilities (7)		75		75		—		—		—
Total contractual obligations	$	649,314	$	48,984	$	76,209	$	496,647	$	27,474

(1) Scheduled minimum principal payments on debt and minimum required payments under capital leases. Additional voluntary prepayments may also be made from time to time. Additional mandatory principal payments may be required under certain circumstances. See also Note 9 to Consolidated Financial Statements.

(2) Estimated future interest payments based on existing debt balances, timing of scheduled minimum principal payments, and estimated variable interest rates. See also Note 9 to Consolidated Financial Statements.

(3) See also Note 13 to Consolidated Financial Statements.

(4) Estimated payments for various non-qualified retirement benefits. The Company also has benefit payment obligations due under its post-retirement medical plan that are not required to be funded in advance, but are pay-as-you-go, and are not included herein. See also Note 12 to Consolidated Financial Statements.

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(5) Current minimum funding requirements for defined benefit pension plans. These amounts do not include future funding requirements for defined benefit pension plans which are not yet determined. Actual funding requirements may vary significantly in the future due to actual returns on assets, changes in assumptions, plan modifications, regulatory changes, and actuarial gains and losses. See additional discussion of these key assumptions and estimates under “Critical Accounting Policies and Estimates” as well as Note 11 to Consolidated Financial Statements. Additional voluntary funding payments may also be made from time to time.

(6) Does not include amounts recorded as current liabilities on the balance sheet.

(7) Consulting fees for a former officer of the Company.

As of December 31, 2012, our recorded liability for uncertain tax positions was $7.8 million. Due to the high degree of uncertainty regarding the timing of potential future cash flows associated with uncertain tax positions, we are unable to make a reasonable estimate of the amounts and periods in which these remaining liabilities might be paid. It is reasonably possible that the estimate of uncertain tax positions could change materially in the near term.

Off Balance Sheet Arrangements

At December 31, 2012 and 2011, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market, or credit risk that could arise had we engaged in such relationships.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on the Company’s Consolidated Financial Statements that have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, equity components, revenues, and expenses. We base our estimates on historical experience and various other assumptions that are believed to be reasonable and consistent with industry practice. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies affect our more significant judgments and estimates in the preparation of our Consolidated Financial Statements.

Sales Deductions. We record reductions to selling prices as products are shipped. These reductions are based on competitive and market conditions, promotional programs, and specific customer contracts in some instances. Some reductions are determined based on sales volumes or other measurements not yet finalized at the time of shipment. These reductions are estimated and recorded at the time of shipment either through a reduction to the invoice total or the establishment of a reserve or an accrual for settlement at a later date. The amount reserved or accrued may increase or decrease prior to payment due to customer performance and market conditions.

Doubtful Accounts. We maintain an allowance for doubtful accounts for estimated losses against our recorded accounts receivable. Such allowance is based on an ongoing review and analysis of customer payments against terms, discussions with customers, and a review of customers’ financial statements and conditions through monitoring services. Based on these reviews and analyses, the allowance is adjusted in the appropriate period whenever the estimated collectability of an account changes. Additional allowances may be required based on future events or as we obtain new information about our customers’ credit and financial situations.

Inventory Reserves. Specific industry market conditions can significantly increase or decrease the level of inventory on hand in any of our business units. We adjust for changes in demand by reducing or increasing production or procurement levels. We estimate the required inventory reserves for excess or obsolete inventory by assessing inventory turns and market selling prices on a product by product basis. We maintain such reserves until a product is sold or market conditions require a change in the reserves.

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Goodwill and Other Indefinite-Lived Intangible Assets. We perform an annual analysis for impairment of goodwill and other intangible assets with indefinite lives at the reporting unit level during the fourth quarter of every year. We also perform an impairment analysis of goodwill and other indefinite-lived intangible assets whenever circumstances indicate that impairment may have occurred. The impairment tests are performed in a multi-step process, beginning with a review of qualitative factors and business and market conditions to consider whether or not impairment may be indicated. If the possibility of impairment is indicated, further analysis is performed by estimating the fair values of the reporting units using a discounted projected cash flow model. We believe the discounted projected cash flow model is an appropriate valuation technique because these are established businesses with reasonably predictable future cash flows and because it has been our experience that this technique is generally used when valuing businesses in our industry.

We compare the estimated fair values based on discounted projected cash flows to the carrying values of the reporting units, including goodwill and other intangible assets. If the carrying amount of any reporting unit’s goodwill and other indefinite-lived intangible assets exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Through December 31, 2012, we have not recognized any impairment in the carrying value of goodwill and other indefinite-lived intangible assets.

However, the projection of future cash flows is subject to assumptions, uncertainties, and estimates, and the actual future cash flows may differ significantly from these projections. For example, many of the factors described in “Risk Factors” could have a material adverse effect on these businesses and their future cash flows. Assumptions about future profitability, growth rates, and the weighted average cost of capital used to discount the projected future cash flows to their net present value have a significant effect on the valuations. Events or changes in circumstances or business and market conditions may occur in the future that could create underperformance relative to projected future cash flows, which could result in the recognition of future impairments.

During 2012, we determined the estimated fair value of our recent acquisitions in accordance with the above described methodology. As expected, the excess of estimated fair value over the carrying value of net assets for these recent acquisitions is relatively low because these acquisitions were recorded at estimated fair value at their respective recent acquisition dates. The following table presents a summary of the 2012 analysis.

Dollar amounts in thousands	SpeeCo			KOX			PBL			Woods/TISCO
Goodwill and other indefinite-lived intangible assets	$	48,763		$	8,391		$	3,420		$	99,176
Percentage by which estimated fair value exceeds net asset carrying value		9.1	%		13.6	%		9.8	%		9.2	%

The estimated fair values are highly sensitive to changes in our assumptions. For example, a one percent increase in the discount rate used to calculate the present value of projected cash flows, or a one percent decrease in the assumed rates of growth in future cash flows for any of these business units would indicate an impairment of the intangible assets.

Product Liability Costs. We incur expenses in connection with product liability claims as a result of alleged product malfunctions or defects. Under terms of the related divestiture agreements, we remain contractually obligated, as between the buyer and us, to defend or settle product liability claims for products manufactured during our ownership period for certain discontinued operations. We maintain insurance for a portion of these exposures and record a liability for our estimated obligations. We estimate our product liability obligations on a case by case basis, in addition to a review of product performance trends and consideration of the potential liability for claims incurred but not yet reported or future claims on products we have previously manufactured. These estimated obligations are frequently increased or decreased as more information on specific cases becomes available or performance trends change.

Environmental Remediation Costs. We incur expenses in connection with compliance with environmental laws and regulations for investigation, monitoring and, in certain circumstances, remediation of environmental contamination at our current and certain of our former operating locations. Under terms of the related divestiture agreements, we remain contractually obligated, as between the buyer and us, for certain environmental claims for any contamination determined to have occurred during our ownership period for certain discontinued operations. In certain limited

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circumstances, we maintain insurance coverage for a portion of this exposure. We record a liability for our estimated obligations. We estimate our environmental remediation obligations on a situation by situation basis. These estimated obligations may be increased or decreased as more information on specific situations becomes available.

Workers’ Compensation Self-Insurance Costs. We incur expenses in connection with our self-insured program for workers’ compensation costs covering certain of our employees and former employees. Under terms of the related divestiture agreements, we remain contractually obligated, as between the buyer and us, for workers’ compensation claims for injuries that occurred during our ownership period for certain discontinued operations. We maintain insurance for a portion of this exposure and record a liability for our estimated obligations. We estimate our workers’ compensation obligations on a case by case basis, in addition to consideration of the potential liability for claims incurred but not yet reported. These estimated obligations are frequently increased or decreased as more information on specific cases becomes available or performance trends change.

Stock-Based Compensation. We determine the fair value of stock-based compensation awards using the Black-Scholes model. We use the simplified method described in SEC Staff Accounting Bulletin No. 107 for estimated lives of stock options and SARs. Assumptions for the risk-free interest rate, expected volatility, and dividend yield are based on historical information and management estimates.

Post-Retirement Obligations. We determine our post-retirement obligations on an actuarial basis that requires management to make certain assumptions. These assumptions include the long-term rate of return on plan assets for those plans that are funded, the discount rate to be used in calculating the applicable benefit obligation, and the anticipated inflation trend in future health care costs. These assumptions are reviewed on an annual basis and consideration is given to market conditions, applicable indices, historical results, changes in regulations, as well as to the requirements of Accounting Standards Codification (“ASC”) 715.

The net post-retirement obligation is included in employee benefit obligations on the Consolidated Balance Sheets. The total post-retirement obligations are reduced by the fair value of investment assets held in the related pension plan trusts. These pension assets consist of ownership interests in various mutual and commingled investment funds, which in turn hold investments in marketable debt and equity instruments and other investment assets. The fair value of these pension assets is determined in accordance with ASC 820. We determine the fair value of these assets by reference to quoted prices in active markets for identical assets and liabilities, where available (“Level 1”). Where Level 1 market prices are not available, we utilize significant observable inputs based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations for which all significant assumptions are observable (“Level 2”). Finally, if Level 2 measurements are not available, we utilize significant unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities (“Level 3”) to determine the fair values of such pension assets.

The weighted average assumed rate of return on pension plan assets was 7.6% for 2012. This assumed rate of return on plan assets is based on long-term historical rates of return achieved on similar investments, weighted in the same proportion as our current target weighting, which is 50% equity securities, 48% debt securities and 2% other for the U.S. plan, and 62% equities and 38% debt securities for the Canadian plan. To validate this assumption, we obtained a study of historical rates of return for similar investment categories that calculated actual returns for randomly selected 20-year periods of time over a much longer historical period. From this study, we determined the range of most likely results. We believe these assumed rates of return are reasonable given the asset composition, long-term historic trends, and current economic and financial market conditions.

A weighted average discount rate assumption of 4.2% was used to determine our plan liabilities at December 31, 2012, consisting of 4.00% for the U.S. plan and 4.50% for the Canadian plan. The difference in discount rates between the two plans is attributable to differences in the relevant bond indices and market interest rates between the U.S. and Canada as of December 31, 2012. We believe these discount rates are reasonable, given comparable rates for high quality corporate bonds with terms comparable to the projected cash flows for our respective plans. To validate this assumption we obtained published indices for such bonds. To further help establish an appropriate discount rate, we obtained the weighted average rate of return on hypothetical customized bond portfolios that more closely match the expected cash outflows of our benefit obligations. Our assumed discount rates are consistent with these customized bond portfolio rates of return and with the relevant indices for similar debt securities.

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We have assumed that health care costs will increase by 9% in 2013, 8% in 2014, 7% in 2015, 6% in 2016, and 5% in 2017 and thereafter. These assumptions are based on historical rates of inflation for health care costs and expectations for future increases in health care costs.

Our annual post-retirement expenses can be significantly impacted by changes in these assumptions. For example, a 1% change in the return on assets assumption would change annual pension expense by $2.2 million in 2013. A 1% decrease in the discount rate would increase pension expense by $3.9 million in 2013, and a 1% increase in the discount rate would decrease pension expense by $3.2 million in 2013. A 1% increase in the health care cost trend assumption for 2013 and beyond would increase annual post-retirement medical costs by approximately $0.3 million per year and a 1% decrease in the health care cost trend assumption for 2013 and beyond would decrease annual post-retirement medical costs by approximately $0.2 million a year.

The funded status of our defined benefit pension plans can fluctuate widely due to changes in the interest rates used to determine the discounted benefit obligations, actual returns on invested assets, the amount of contributions made by the Company, changes in regulations concerning required funding and contributions, and changes in actuarial estimates. Due to recent voluntary contributions made by the Company to the U.S. pension plan and the current funded status, there is no required minimum contribution to this plan for 2013. However, required funding in future years for this and other retirement plans may increase significantly.

Uncertain Tax Positions. We account for uncertain tax positions in accordance with ASC 740-10. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many assumptions and judgments regarding our income tax exposures. Interpretations of income tax laws and regulations and guidance surrounding them change over time. Changes in our assumptions and judgments can materially affect amounts recognized in the Consolidated Financial Statements.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Included in recorded tax liabilities are estimated amounts related to uncertain tax positions. Actual tax liabilities may differ materially from these estimates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. As of December 31, 2012, we have a deferred tax asset valuation allowance of $2.6 million, related to state and foreign net operating loss carryforwards.

Recent Accounting Pronouncements

In December 2011, the FASB issued new guidance on offsetting (netting) assets and liabilities. For derivatives and financial assets and liabilities, the new guidance requires disclosure of gross asset and liability amounts, amounts offset on the balance sheet, and amounts subject to the offsetting requirements but not offset on the balance sheet. The new guidance is effective for us on January 1, 2013 and will result in enhanced footnote disclosures about balance sheet offsetting and related arrangements.

In February 2013, the FASB issued new guidance on the presentation of amounts reclassified out of accumulated other comprehensive income. This guidance does not change the current requirements for reporting net income or other comprehensive income in financial statements. The new guidance requires an entity to present, either in a single note or parenthetically on the face of the financial statements, significant amounts reclassified from each component of accumulated other comprehensive income and the income statement line items affected by the reclassification. This revised guidance is effective for us on January 1, 2013.

Forward Looking Statements

“Forward looking statements,” as defined by the Private Securities Litigation Reform Act of 1995, used in this report, including without limitation our “outlook,” “guidance,” “expectations,” “intent,” “beliefs,” “plans,” “indications,” “estimates,” “anticipations,” and their variants, are based upon available information and upon assumptions that the Company believes are reasonable; however, these forward looking statements involve certain

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risks and uncertainties, including those set forth in Item 1A, Risk Factors, and should not be considered indicative of actual results that the Company may achieve in the future. Specifically, issues concerning foreign currency exchange rates, the cost to the Company of commodities in general, and of steel in particular, the anticipated level of applicable interest rates, tax rates, discount rates, rates of return, management’s intentions regarding debt repayments, capital expenditures, and contributions to post-retirement benefit plans, and the anticipated effects of discontinued operations involve estimates and assumptions. To the extent that these, or any other such assumptions, are not realized going forward, or other unforeseen factors arise, actual results for the periods subsequent to the date of this report may differ materially.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to market risk from changes in interest rates, foreign currency exchange rates, and prices for commodities such as steel and energy. We manage our exposure to these market risks through our regular operating and financing activities, and, when deemed appropriate, through the use of derivative financial instruments. When utilized, derivatives are used as risk management tools and not for trading or speculative purposes.

Interest Rate Risk. We manage our ratio of fixed to variable rate debt with the objective of achieving a mix that management believes is appropriate. We have, on occasion, entered into interest rate swap agreements to exchange fixed and variable interest rates based on agreed upon notional amounts and interest rate cap agreements that limit the maximum interest rate we can be charged on variable interest rate debt. During 2010, we redeemed in full our only fixed rate debt, the 8 7/8% senior subordinated notes. As of December 31, 2012, all of our outstanding debt is subject to variable interest rates. The senior credit facility agreement terms include a requirement to cover 35% of the outstanding principal on our term loan with fixed or capped interest rates. In October 2011, we entered into an interest rate cap agreement covering an initial notional amount of $103.7 million of term loan principal outstanding that caps the maximum interest rate at 7.50%. In October and November 2011, we also entered into a series of interest rate swap contracts whereby the interest rate we pay will be fixed at between 3.30% and 4.20% on $130.0 million of term loan principal for the period of June 2013 through varying maturity dates between December 2014 and August 2016.

The interest rate under our senior credit facility consists of a margin applied to either LIBOR or a defined index rate. As of December 31, 2012, a 100 basis point increase in LIBOR for the duration of one year would have increased interest expense by approximately $5.4 million in 2012. Additionally, the interest rates available in certain jurisdictions in which we hold excess cash may vary, thereby affecting the return we earn on cash equivalent short-term investments.

Foreign Currency Exchange Risk. Under contractual selling arrangements, many of our foreign sales are denominated in U.S. Dollars. However, approximately 22% of our sales and 31% of our operating costs and expenses were transacted in foreign currencies during 2012. As a result, fluctuations in exchange rates impact the amount of our reported sales and operating income. Historically, our principal exposures have been related to local currency revenues, purchases, and expenses in Brazil, Canada, China, Europe, and Japan.

We make regular payments to our wholly-owned subsidiary in Canada, Blount Canada Ltd. (“Blount Canada”) for contract manufacturing services performed on our behalf. We selectively hedged a portion of the anticipated payment transactions and underlying local currency denominated manufacturing conversion and operating costs with Blount Canada that are subject to foreign exchange exposure, using zero-cost collar option contracts to manage our exposure to Canadian Dollar exchange rates. These zero-cost collar instruments are designated as cash flow hedges and are recorded on the Consolidated Balance Sheets at fair value. The effective portion of the contracts’ gains or losses due to changes in fair value is initially recorded as a component of accumulated other comprehensive income and is subsequently reclassified into earnings when we settle the hedged payment to Blount Canada. We use the hypothetical derivative method under ASC 815 to determine the hedge effectiveness of our zero-cost collar option contracts. These contracts are highly effective in hedging the variability in future cash flows attributable to changes in Canadian Dollar exchange rates. As of December 31, 2012 and 2011, the total notional amount of such contracts outstanding was $45.5 million and $37.5 million, respectively. During 2012, we recognized losses of $0.1 million and during 2011 and 2010, we recognized gains of $0.8 million and $2.4 million, respectively, in earnings from these contracts as they matured. We have not recognized any amount in earnings in the years ended December 31, 2012, 2011, or 2010 due to ineffectiveness of these Canadian Dollar hedging instruments.

38

We may, in the future, decide to manage additional exposures to currency exchange rate fluctuations through derivative products. The following table illustrates the estimated effect on our 2012 operating results of a hypothetical 10% change in major currencies, defined as the Brazilian Real, Canadian Dollar, Chinese RMB, Euro, and Japanese Yen, in which we conduct sales transactions and incur operating expenses, and the Swiss Franc, in which we purchase certain products from a supplier.

	Effect of 10% Weaker U.S. Dollar – Increase  (Decrease)
(Amounts in thousands)	Sales		Cost of Sales		Operating Income
Brazilian Real	$	3,155	$	3,032	$	(364	)
Canadian Dollar		1,549		7,193		(6,082	)
Chinese RMB		772		1,565		(949	)
Euro		11,182		7,339		880
Japanese Yen		1,269		127		952
Swiss Franc		—		1,511		(1,511	)

Commodity Price Risk. We secure raw materials primarily through a centrally administered supply chain organization. Recently, we established an Asian sourcing office in Suzhou, China. These functions are staffed by professionals who determine the sourcing of materials by assessing quality, availability, price, and service of potential vendors. When possible, multiple vendors are utilized to ensure competitive prices and to minimize risk of lack of availability of materials. Some of these raw materials are subject to price volatility over time. We have not entered into derivative instruments to hedge against the price volatility of any raw materials during 2012, 2011, or 2010.

Raw material price volatility has not had a significant impact on our results in recent years, with the exception of steel pricing. We purchased approximately $97.8 million of steel in 2012, which was our largest sourced commodity. A hypothetical 10% change in the price of steel would have had an estimated $9.8 million effect on pre-tax income in 2012. We utilize multiple suppliers to purchase steel. We estimate the impact to cost of sales in the Consolidated Statements of Income from changes in our cost of purchased steel was a decrease of $3.8 million from 2009 to 2010, an increase of $3.8 million from 2010 to 2011, and a decrease of $0.6 million from 2011 to 2012. Some selling prices to our customers have been increased, in part to offset the increase in steel commodity costs. In addition to steel raw material, we also purchase components and subassemblies that are made with steel, and prices for these items are also subject to steel price volatility risk. We source many of our lawn and garden products, and our farm, ranch, and agriculture products, from Asia, in certain cases through brokers, and we anticipate expanding this practice in the future. We attempt to mitigate sourcing issues by securing multiple suppliers for products whenever practical.

Fluctuations in the cost of fuel used in transportation can affect the cost of freight we pay both for the acquisition of raw materials and for delivery of our products to our customers. In recent years, we have incurred energy surcharges from our freight vendors. We have on occasion passed a portion of these costs to our customers but a portion of these costs have also reduced our gross profit. Our total freight cost in 2012 was $52.8 million and a hypothetical 10% change in freight costs would have had an estimated $5.3 million effect on pre-tax income in 2012. We also use electricity and natural gas in the manufacture of our products and are subject to fluctuations in such utility costs. To date we have not undertaken any hedging activities against these energy-related exposures.

39

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Management of Blount International, Inc. is responsible for the information and representations contained in this report. The financial statements have been prepared in conformity with generally accepted accounting principles. Reasonable judgments and estimates have been made where necessary. Other financial information in this report is consistent with these financial statements.

Our accounting systems include controls designed to reasonably assure that assets are safeguarded from unauthorized use or disposition and that provide for the preparation of financial statements in conformity with generally accepted accounting principles. These systems are supplemented by the selection and training of qualified financial personnel and an organizational structure providing for appropriate segregation of duties.

Three directors of the Company, who are not members of management, serve as the Audit Committee of the Board of Directors and are the principal means through which the Board discharges its financial reporting responsibility. The Audit Committee is responsible for the appointment of the independent registered public accounting firm, and reviews with the independent registered public accounting firm, management, and the internal auditors, the scope and the results of the annual audit, the effectiveness of our internal controls over financial reporting, disclosure controls and procedures, and other matters relating to financial reporting and the financial affairs of Blount International, Inc. as they deem appropriate. The independent registered public accounting firm and the internal auditors have full access to the Committee, with and without the presence of management, to discuss any appropriate matters.

Management’s Report on Internal Controls over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rules 13a -15(f). Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the criteria set forth in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2012.

Internal controls over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of their inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

PricewaterhouseCoopers LLP, an independent registered public accounting firm that has audited the Consolidated Financial Statements, has also audited the effectiveness of our internal control over financial reporting as of December 31, 2012 as stated in their report which appears herein.

/s/ Joshua L. Collins	/s/ Calvin E. Jenness
Joshua L. Collins	Calvin E. Jenness
Chairman and	Senior Vice President and
Chief Executive Officer	Chief Financial Officer
	(Principal Financial Officer)

40

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Blount International, Inc.:

In our opinion, the Consolidated Financial Statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Blount International, Inc. and its subsidiaries at December 31, 2012 and December 31, 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related Consolidated Financial Statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Portland, Oregon

March 8, 2013

41

CONSOLIDATED STATEMENTS OF INCOME

Blount International, Inc. and Subsidiaries

	Year Ended December 31,
(Amounts in thousands, except per share data)	2012			2011			2010
Sales	$	927,666		$	831,630		$	611,480
Cost of sales		671,451			575,821			407,454
Gross profit		256,215			255,809			204,026
Selling, general, and administrative expenses		170,535			157,856			118,471
Facility closure and restructuring costs		6,400			—			—
Operating income		79,280			97,953			85,555
Interest income		158			171			119
Interest expense		(17,364	)		(18,721	)		(25,636	)
Other income (expense), net		(284	)		(4,453	)		(7,427	)
Income from continuing operations before taxes		61,790			74,950			52,611
Provision for income taxes		22,202			25,268			11,209
Income from continuing operations		39,588			49,682			41,402
Discontinued operations:
Income from discontinued operations before taxes		—			—			12,972
Provision for income taxes		—			—			7,174
Income from discontinued operations		—			—			5,798
Net income	$	39,588		$	49,682		$	47,200
Basic income per share:
Continuing operations	$	0.81		$	1.02		$	0.86
Discontinued operations		—			—			0.13
Net income	$	0.81		$	1.02		$	0.99
Diluted income per share:
Continuing operations	$	0.79		$	1.01		$	0.85
Discontinued operations		—			—			0.12
Net income	$	0.79		$	1.01		$	0.97
Weighted average shares used in per share calculations:
Basic		49,170			48,701			47,917
Diluted		49,899			49,434			48,508

The accompanying notes are an integral part of these Consolidated Financial Statements.

42

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Blount International, Inc. and Subsidiaries

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Net income	$	39,588		$	49,682		$	47,200
Unrealized gains (losses):
Unrealized holding gains (losses)		(2,242	)		(1,819	)		837
Gains (losses) reclassified to net income		75			(644	)		(2,353	)
Unrealized losses, net		(2,167	)		(2,463	)		(1,516	)
Foreign currency translation adjustment		1,434			(2,984	)		309
Pension liability adjustment:
Net loss		(14,358	)		(49,349	)		(9,351	)
Amortization of net loss		8,573			5,137			4,562
Amortization of prior service cost		(6	)		(6	)		(6	)
Pension liability adjustment		(5,791	)		(44,218	)		(4,795	)
Other comprehensive loss, before tax		(6,524	)		(49,665	)		(6,002	)
Income tax benefit on other comprehensive items		1,144			16,249			1,253
Other comprehensive loss, net of tax		(5,380	)		(33,416	)		(4,749	)
Comprehensive income	$	34,208		$	16,266		$	42,451

The accompanying notes are an integral part of these Consolidated Financial Statements.

43

CONSOLIDATED BALANCE SHEETS

Blount International, Inc. and Subsidiaries

	December 31,
(Amounts in thousands, except share and per share data)	2012			2011
Assets
Current assets:
Cash and cash equivalents	$	50,267		$	62,118
Accounts receivable, net		128,444			133,965
Inventories		174,816			149,825
Deferred income taxes		19,522			15,812
Other current assets		20,273			21,618
Total current assets		393,322			383,338
Property, plant, and equipment, net		177,702			155,872
Deferred income taxes		2,438			589
Intangible assets		143,161			158,085
Goodwill		165,175			165,084
Other assets		23,493			21,239
Total Assets	$	905,291		$	884,207
Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	15,072		$	20,348
Accounts payable		54,295			52,884
Accrued expenses		71,473			72,991
Deferred income taxes		292			1,255
Total current liabilities		141,132			147,478
Long-term debt, excluding current maturities		501,685			510,014
Deferred income taxes		40,501			42,455
Employee benefit obligations		93,086			96,974
Other liabilities		17,405			17,821
Total liabilities		793,809			814,742
Commitments and contingent liabilities
Stockholders’ equity:
Common stock: par value $0.01 per share, 100,000,000 shares authorized, 49,140,091 and 48,814,912 outstanding, respectively		491			488
Capital in excess of par value of stock		606,495			598,689
Accumulated deficit		(420,085	)		(459,673	)
Accumulated other comprehensive loss		(75,419	)		(70,039	)
Total stockholders’ equity		111,482			69,465
Total Liabilities and Stockholders’ Equity	$	905,291		$	884,207

The accompanying notes are an integral part of these Consolidated Financial Statements.

44

CONSOLIDATED STATEMENTS OF CASH FLOWS

Blount International, Inc. and Subsidiaries

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Cash flows from operating activities:
Net income	$	39,588		$	49,682		$	47,200
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations		—			—			(5,798	)
Early extinguishment of debt		—			3,871			7,010
Depreciation		28,586			23,482			20,971
Amortization		16,532			12,325			6,628
Stock-based compensation		5,592			4,441			3,290
Excess tax benefit from stock-based compensation		(1,187	)		(877	)		(1,340	)
Deferred income taxes		(7,589	)		2,331			2,658
Change in uncertain tax positions		(369	)		(1,240	)		(7,827	)
Loss on disposal of assets		955			899			1,202
Other non-cash charges, net		801			5,026			784
Changes in assets and liabilities, excluding acquisitions:
(Increase) decrease in accounts receivable		4,985			(12,057	)		1,048
(Increase) decrease in inventories		(25,487	)		2,188			(6,788	)
(Increase) decrease in other assets		(781	)		(2,228	)		1,741
Increase (decrease) in accounts payable		1,414			58			(6,883	)
Increase (decrease) in accrued expenses		(2,070	)		6,571			3,708
Increase (decrease) in other liabilities		(9,699	)		(16,405	)		(11,726	)
Discontinued operations		—			(334	)		(6,712	)
Net cash provided by operating activities		51,271			77,733			49,166
Cash flows from investing activities:
Purchases of property, plant, and equipment		(51,925	)		(40,373	)		(20,002	)
Proceeds from sale of assets		198			967			159
Acquisitions, net of cash acquired		—			(217,362	)		(90,854	)
Discontinued operations		—			—			25,176
Net cash used in investing activities		(51,727	)		(256,768	)		(85,521	)
Cash flows from financing activities:
Net borrowings (payments) under revolving credit facility		6,800			228,200			(3,400	)
Proceeds from issuance of term debt		—			300,000			350,000
Repayment of term loan principal		(15,000	)		(353,750	)		(107,465	)
Repayment of PBL debt principal		(5,416	)		(7,813	)		—
Repayment of 8 7/8% senior subordinated notes		—			—			(175,000	)
Debt issuance costs		(1,115	)		(6,509	)		(6,267	)
Excess tax benefit from stock-based compensation		1,187			877			1,340
Proceeds from stock-based compensation activity		1,152			1,041			2,398
Taxes paid under stock-based compensation activity		(122	)		(267	)		(333	)
Net cash provided by (used in) financing activities		(12,514	)		161,779			61,273
Effect of exchange rate changes		1,119			(1,334	)		720
Net increase (decrease) in cash and cash equivalents		(11,851	)		(18,590	)		25,638
Cash and cash equivalents at beginning of year		62,118			80,708			55,070
Cash and cash equivalents at end of year	$	50,267		$	62,118		$	80,708

The accompanying notes are an integral part of these Consolidated Financial Statements.

45

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

Blount International, Inc. and Subsidiaries

(Amounts in thousands)	Shares		Common Stock		Capital in Excess of Par		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total
Balance December 31, 2009		47,759	$	478	$	581,211	$	(556,555	)	$	(31,874	)	$	(6,740	)
Net income								47,200						47,200
Foreign currency translation adjustment											309			309
Unrealized losses											(963	)		(963	)
Pension liability adjustment											(4,095	)		(4,095	)
Stock options, stock appreciation rights, and restricted stock		477		4		3,393								3,397
Stock compensation expense						3,290								3,290
Balance December 31, 2010		48,236		482		587,894		(509,355	)		(36,623	)		42,398
Net income								49,682						49,682
Foreign currency translation adjustment											(2,984	)		(2,984	)
Unrealized losses											(1,554	)		(1,554	)
Pension liability adjustment											(28,878	)		(28,878	)
Acquisition of KOX		310		3		4,706								4,709
Stock options, stock appreciation rights, and restricted stock		269		3		1,648								1,651
Stock compensation expense						4,441								4,441
Balance December 31, 2011		48,815		488		598,689		(459,673	)		(70,039	)		69,465
Net income								39,588						39,588
Foreign currency translation adjustment											1,434			1,434
Unrealized losses											(1,364	)		(1,364	)
Pension liability adjustment											(5,450	)		(5,450	)
Stock options, stock appreciation rights, and restricted stock		325		3		2,214								2,217
Stock compensation expense						5,592								5,592
Balance December 31, 2012		49,140	$	491	$	606,495	$	(420,085	)	$	(75,419	)	$	111,482

The Company holds 382,380 shares of its common stock in treasury. These shares have been accounted for as constructively retired in the Consolidated Financial Statements, and are not included in the number of shares outstanding.

On March 1, 2011, we issued 309,834 shares of common stock valued at $4.7 million as part of the acquisition price of KOX.

The accompanying notes are an integral part of these Consolidated Financial Statements.

46

BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:  BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business. The Company is a global manufacturer and marketer of equipment, accessories, and replacement parts sold to consumers and professionals in select end-markets, including the forestry, lawn and garden, farm, ranch, agriculture, and construction sectors. The Company manufactures and markets branded products, serving professional loggers, arborists, construction workers, homeowners, equipment dealers, landscapers, farmers, rural land owners, and OEMs. The Company’s manufactured products include products such as cutting chain, guide bars, and sprockets for chain saw use, lawnmower and edger blades, grass and crop cutting equipment, electric and gas-powered log splitters, riding lawnmowers, tractor attachments, and concrete cutting and finishing equipment. The Company maintains manufacturing facilities in the U.S., Brazil, Canada, China, France, and Mexico. We also market and distribute other products and accessories closely aligned with the products that we manufacture, including cutting line and spools for line trimmers, safety equipment and clothing, small engine replacement parts, small tractor linkage parts and attachments, and other accessories used in the market sectors we serve. Many of the products we manufacture are sold to OEMs for use on new chain saws and landscaping equipment, or for private branding purposes, using the OEMs’ brands. See additional information about our business in Item 1, Business, included elsewhere in this report.

Basis of Presentation. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries and are prepared in conformity with accounting principles generally accepted in the U.S. All significant intercompany balances and transactions have been eliminated.

Foreign Currency. For foreign subsidiaries whose operations are principally conducted in U.S. Dollars, monetary assets and liabilities are translated into U.S. Dollars at the current exchange rate, while other assets (principally property, plant, and equipment and inventories) and related costs and expenses are generally translated at historic exchange rates. Sales and other costs and expenses are translated at the average exchange rate for the period and the resulting foreign exchange adjustments are recognized in income. Assets and liabilities of the remaining foreign operations are translated to U.S. Dollars at the current exchange rate and their statements of income are translated at the average exchange rate for the period. Gains and losses resulting from translation of the financial statements of these operations are reflected as “other comprehensive income (loss)” in stockholders’ equity and in the Consolidated Statements of Comprehensive Income. Foreign currency transaction gains and losses from settling transactions denominated in currencies other than the U.S. Dollar are recognized in the Consolidated Statements of Income when realized.

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles recognized in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the components of equity, and the disclosure of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses recognized during the reporting periods. Estimates are used when accounting for the allowance for doubtful accounts, inventory obsolescence, goodwill and other long-lived assets, product warranties, casualty insurance costs, product liability reserves and related expenses, other legal proceedings, employee benefit plans, income taxes and deferred tax assets and liabilities, and contingencies. It is reasonably possible that actual results could differ materially from these estimates and assumptions and significant changes to estimates could occur in the near term.

Cash and Cash Equivalents. All highly liquid temporary cash investments with maturities of 90 days or less at the date of investment that are readily convertible to known amounts of cash and present minimal risk of changes in value because of changes in interest rates are considered to be cash equivalents.

Allowance for Doubtful Accounts. The Company estimates the amount of accounts receivable that are not collectible and records an allowance for doubtful accounts which is presented net with accounts receivable on the Consolidated Balance Sheets. As of December 31, 2012 and 2011, the allowance for doubtful accounts was $3.1 million. It is reasonably possible that actual collection experience may differ significantly from management’s estimate.

47

Inventories. Inventories are valued at the lower of cost or market. The Company determines the cost of most raw materials, work in process, and finished goods inventories by standard cost, which approximates cost determined on the first in, first out (“FIFO”) method. The Company writes down its inventories for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.

Property, Plant, and Equipment. Property, plant, and equipment is stated at cost and is depreciated on the straight-line method over the estimated useful lives of the individual assets. The principal ranges of estimated useful lives for depreciation purposes are as follows:

Asset Category	Useful Life
Buildings and building improvements		10 to 45 years
Machinery and equipment		3 to 10 years
Furniture, fixtures, and office equipment		3 to 10 years
Transportation equipment		3 to 15 years

Gains or losses on disposal are reflected in income. Property, plant, and equipment under capital lease is capitalized, with the related obligations stated at the principal portion of future lease payments. Interest cost incurred during the period of construction of plant and equipment is capitalized. Capitalized interest was $0.5 million in 2012, $0.2 million in 2011, and $0.1 million in 2010.

Goodwill and Other Intangible Assets with Indefinite Useful Lives. The Company accounts for goodwill and other intangible assets with indefinite useful lives under ASC 350. Under the provisions of ASC 350, the Company evaluates annually in the fourth quarter, or whenever circumstances indicate, whether or not there are any qualitative indications of potential impairment of these assets. If there is indication of potential impairment, the Company performs a quantitative analysis. The quantitative analysis of impairment is performed by estimating the fair values of the reporting units using a discounted cash flow model and comparing those fair values to the carrying values of the reporting units, including goodwill. If the fair value of a reporting unit is less than its carrying value, the Company then allocates the fair value of the unit to all the assets and liabilities of that unit, including any unrecognized intangible assets, as if the reporting unit’s fair value were the price to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of the goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Events or changes in circumstances may occur that could cause underperformance relative to projected future cash flows that would create future impairments. No impairments have been recognized in 2012, 2011, or 2010 for goodwill or other intangible assets with indefinite useful lives ..

Impairment of Long-Lived Assets. The Company evaluates the carrying value of long-lived assets to be held and used, including finite-lived intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such asset are separately identifiable and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the projected cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for disposal costs. No significant impairment charges were recognized in 2012, 2011, or 2010.

Deferred Financing Costs. The Company capitalizes costs incurred in connection with borrowings or establishment of credit facilities. These costs are amortized as an adjustment to interest expense over the life of the borrowing or life of the credit facility using the straight line method, which approximates the effective interest rate method. In the case of early debt principal repayments, the Company adjusts the value of the corresponding deferred financing costs with a charge to other expense, and similarly adjusts the future amortization expense.

Income Taxes. In accordance with ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Included in recorded tax liabilities are estimated amounts related to uncertain tax

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positions. Actual tax liabilities may differ materially from these estimates. Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The American Jobs Creation Act of 2004 includes a deduction of up to 9 percent of “qualified production activities income,” as defined in the law and subject to certain limitations. The benefit of this deduction is accounted for as a special deduction when realized in accordance with ASC 740-10, Section 55. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense.

Product Liability. The Company monitors claims that relate to the alleged malfunction or defects of its products that may result in an injury to the equipment operator or others. The Company records an accrued liability and charge to cost of sales for its estimated obligation as claims are incurred and evaluated. The accrual may increase or decrease as additional information regarding claims develops.

Environmental Remediation Liabilities. The Company is conducting several testing, monitoring, and in some cases, remediation efforts regarding environmental matters at certain of its current and former operating sites. In addition, from time to time, regulatory bodies and third parties have asserted claims to the Company alleging responsibility for environmental remediation. The Company records an accrued liability and charge to expense for its estimated cost of environmental remediation as situations are evaluated. The accrual may increase or decrease as new information is received, regulatory changes are enacted, or changes in estimate are developed.

Insurance Accruals. It is the Company’s policy to retain a portion of expected losses related to general and product liability, workers’ compensation, and vehicle liability losses through retentions or deductibles under its risk management and insurance programs. Provisions for losses expected under these programs are recorded based on estimates of the ultimate undiscounted aggregate liabilities for claims incurred.

Warranty. The Company offers certain product warranties with the sale of its products. An estimate of warranty costs is recognized at the time the related revenue is recognized and the warranty obligation is recorded as a charge to cost of sales and as a liability on the balance sheet. Warranty cost is estimated using historical customer claims, supplier performance, and new product performance.

Derivative Financial Instruments. The Company accounts for derivative financial instruments in accordance with ASC 815. The Company’s earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, interest rates, and commodity prices. The Company’s risk management policy allows for the use of derivative financial instruments to manage foreign currency exchange rate, interest rate, and commodity price exposures. The policy specifies that derivatives are not to be used for speculative or trading purposes and formally designates the financial instruments used as a hedge of a specific underlying exposure or forecasted transaction. The Company formally assesses, both at inception and at least quarterly thereafter, using the hypothetical derivative method, whether the derivatives used qualify for hedge accounting and are effective at offsetting the related underlying exposure. All derivatives are recognized on the Consolidated Balance Sheets at their fair value. As of December 31, 2012 and 2011, derivatives consisted of foreign currency hedge instruments, interest rate swap agreements, and an interest rate cap agreement, all of which are designated as cash flow hedges. The effective portion of changes in the fair value of hedging derivative instruments is recognized in other comprehensive income (loss) until the instrument is settled, at which time the gain or loss is recognized in current earnings. Any ineffective portion of changes in the fair value of hedging derivative instruments, should it occur, would be recognized immediately in earnings. See further information in Note 19.

Revenue Recognition. The Company recognizes revenue when persuasive evidence that a sales arrangement exists, title and risk of loss have passed to the customer, the price to the customer is fixed or determinable, and collectability is reasonably assured, which has historically been upon the date of shipment of product for the majority of the Company’s sales transactions. There are a small number of shipments with FOB destination or similar shipping terms, for which revenue is not recognized until delivery has occurred.

Shipping and Handling Costs. The Company incurs expenses for the shipment of goods to customers. These expenses are recognized in the period in which they occur and are classified as revenue if billed to the customer and as cost of sales if incurred by the Company in accordance with ASC 605-45.

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Sales Incentives. The Company provides various sales incentives to customers in the form of coupons, rebates, discounts, free product, and advertising allowances. The estimated cost of such expenses is recorded at the time of revenue recognition and recorded as a reduction to revenue, except that free product is recorded as cost of sales, in accordance with ASC 605-50.

Advertising. Advertising costs are expensed as incurred, except for cooperative advertising allowances, which are accrued over the period the revenues are recognized. Advertising costs were $12.5 million, $12.8 million, and $7.3 million for 2012, 2011, and 2010, respectively.

Research and Development. Expenditures for research and development are expensed as incurred and include costs of direct labor, indirect labor, materials, overhead, and outside services. These costs were $17.0 million, $19.6 million, and $14.8 million for 2012, 2011, and 2010, respectively.

Reclassifications. Certain amounts in the prior period financial statements and footnotes may have been reclassified to conform to the current period presentation. Such reclassifications, if any, have no effect on previously reported net income, comprehensive income, total cash flows, or net stockholders’ equity.

Recent Accounting Pronouncements. In July 2012, the FASB issued revised guidance on how an entity tests indefinite-lived intangible assets for impairment. Under the new guidance, an entity is no longer required to calculate the fair value of the indefinite-lived intangible assets and perform the quantitative impairment test unless the entity determines, based on a qualitative assessment, that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. This revised guidance is effective on January 1, 2013. We elected to adopt this new guidance early and implemented it in 2012.

NOTE 2:  ACQUISITIONS

The Company accounts for acquisitions in accordance with ASC 805. Accordingly, assets acquired and liabilities assumed are recorded at their estimated fair values on the date of acquisition. The Company estimates the fair value of assets using various methods and considering, among other factors, projected discounted cash flows, replacement cost less an allowance for depreciation, recent comparable transactions, and historical book values. The Company estimates the fair value of inventory that is considered to be readily marketable by considering the estimated costs to complete the manufacturing, assembly, and selling processes, and the normal gross profit margin typically associated with its sale. The Company estimates the fair value of inventory that is not considered to be readily marketable by evaluating the estimated net realizable value for such inventory. The Company estimates the fair value of identifiable intangible assets based on discounted projected cash flows or estimated royalty avoidance costs. The Company estimates the fair value of liabilities assumed considering the historical book values and projected future cash outflows. The fair value of goodwill represents the residual enterprise value which does not qualify for separate recognition, including the value of the assembled workforce.

2010 Acquisition of SpeeCo

On August 10, 2010, we acquired SpeeCo, located in Golden, Colorado, a supplier of log splitters, post-hole diggers, tractor three-point linkage parts and equipment, and farm and ranch accessories. The acquisition of SpeeCo expanded our product offerings and broadened our customer base. The acquisition of SpeeCo also created opportunities for synergies in the areas of marketing, sales, assembly operations, distribution, and back office consolidation of support functions. We also believe there are opportunities to sell some of SpeeCo’s products into our FLAG distribution network domestically and internationally and began such sales in 2011. The opportunities for synergies were further enhanced when we acquired PBL and Woods/TISCO during 2011.

The purchase price was $91.7 million in cash, consisting of $90.0 million in negotiated enterprise value and a $1.7 million working capital adjustment. SpeeCo had $0.8 million of cash on the acquisition date, resulting in a net cash outflow of $90.9 million. We assumed none of SpeeCo’s debt in the transaction. In addition, we incurred legal and other third party fees totaling $1.0 million in conjunction with the acquisition that were expensed to SG&A in the Consolidated Statement of Income in 2010. The acquisition was financed with a combination of cash on hand and borrowing under the Company’s revolving credit facility.

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SpeeCo’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended July 31, 2010
Sales	$	77,077
Operating income		8,174
Depreciation and amortization		4,469

SpeeCo’s operating income for the twelve months ended July 31, 2010 includes $0.4 million in management fees charged by SpeeCo’s former owner.

2011 Establishment of Blount B.V.

On January 19, 2011, we acquired a dormant shelf company registered in the Netherlands and changed the name to Blount Netherlands B.V. (“Blount B.V.”). The acquisition price was $21 thousand, net of cash acquired, plus the assumption of certain liabilities. This acquisition, along with the formation of an additional holding entity named BI Holdings C.V., a limited partnership registered with the Dutch Trade Register with a Bermuda office address and parent of Blount B.V., increases our flexibility to make international acquisitions. Direct ownership of certain of our foreign subsidiaries was transferred from our wholly-owned subsidiary, Blount, Inc., to Blount B.V. through a series of transactions executed in February 2011.

2011 Acquisition of KOX

On March 1, 2011, we acquired KOX, a Germany-based direct-to-customer distributor of forestry-related replacement parts and accessories, primarily serving professional loggers and consumers in Europe. The acquisition of KOX increased our distribution capabilities and expanded our geographic presence in Europe. KOX has been a customer of Blount for over 30 years and purchased approximately $9.2 million of forestry replacement parts from Blount in 2010.

The total purchase price was $23.9 million, consisting of $19.2 million in cash and 309,834 shares of our common stock valued at $4.7 million based on the closing price of our stock on the acquisition date. KOX had $5.1 million of cash on the acquisition date, resulting in a net cash outflow of $14.1 million. We assumed none of KOX’s debt in the transaction. In addition, we incurred legal and other third party fees totaling $1.2 million in conjunction with the acquisition that were expensed to SG&A in the Consolidated Statements of Income during 2010 and 2011. The cash portion of the acquisition was funded from available cash on hand at Blount B.V. The common stock shares issued in the purchase were subject to certain restrictions through March 1, 2013 under terms of the related stock purchase agreement.

KOX’s pre-acquisition operating results (unaudited) for calendar year 2010 are summarized below.

(Amounts in thousands)	Year Ended December 31, 2010
Sales	$	34,889
Operating income		3,266
Depreciation		128

2011 Acquisition of PBL

On August 5, 2011, we acquired PBL, a manufacturer of lawnmower blades and agricultural cutting parts based in Civray, France, with a second manufacturing facility in Queretaro, Mexico. The acquisition of PBL increased our manufacturing capacity for lawnmower blades, increased our market share for lawnmower blades in Europe, and provided an entrance into the agricultural cutting parts market in Europe. We also expect to benefit from PBL’s low-cost manufacturing methods and technology utilized at its facilities in France and Mexico.

The purchase price consisted of $14.2 million in cash and the assumption of $13.5 million of PBL’s debt. PBL had $1.3 million of cash on the acquisition date, resulting in a net cash outflow of $13.0 million. In addition, we

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incurred legal and other third party fees totaling $0.9 million in conjunction with the acquisition that were expensed to SG&A in the Consolidated Statement of Income during 2011. The cash portion of the acquisition was funded from available cash on hand at Blount B.V.

The initial acquisition accounting for PBL included provisional amounts for inventory obsolescence reserves and income tax accounting, as we were not able to obtain sufficient details and complete our analysis of these matters at the time of the acquisition. During March and April 2012, we obtained additional details about PBL’s inventory and performed an analysis of obsolescence as of the acquisition date. This analysis supported the recognition of additional obsolescence reserves in the amount of $1.7 million to reduce the acquisition date inventory to fair value. Accordingly, we have revised the Consolidated Balance Sheet as of December 31, 2011 to reflect this adjustment to the PBL acquisition accounting. The effect of this revision was to reduce inventory by $1.7 million, increase goodwill by $1.1 million, and increase current deferred tax assets by $0.6 million as of December 31, 2011.

PBL’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended July 31, 2011
Sales	$	33,162
Operating income		1,804
Depreciation and amortization		2,857

2011 Acquisition of Woods/TISCO

On September 7, 2011, we acquired Woods/TISCO, with operations primarily in the Midwestern U.S., a manufacturer and marketer of equipment and replacement parts primarily for the agriculture end market. The acquisition of Woods/TISCO:

• Increased distribution for our FRAG segment, particularly in the agricultural dealer channel.

• Expanded our FRAG product line offerings of tractor attachments and aftermarket replacement parts.

• Provided opportunities to leverage our manufacturing and product development expertise and global distribution and supply chain network, particularly in the area of product sourcing.

• Enhanced our U.S. manufacturing and distribution capabilities through the addition of three manufacturing and five distribution facilities.

The purchase price was $190.5 million in cash, consisting of $185.0 million in negotiated enterprise value and a $5.5 million working capital adjustment. Woods/TISCO had $0.2 million of cash on the acquisition date, resulting in a net cash outflow of $190.3 million. We assumed none of Woods/TISCO’s debt in the transaction. In addition, we incurred legal and other third party fees totaling $2.0 million in conjunction with the acquisition that were expensed to SG&A in the Consolidated Statement of Income during 2011. The acquisition was funded from cash on hand and borrowing under the Company’s revolving credit facility.

The initial acquisition accounting for Woods/TISCO included provisional amounts for income tax accounting, as we were not able to obtain sufficient details and complete our analysis of these matters at the time of the acquisition. During September 2012, we obtained additional details about deferred income taxes at Woods/TISCO and, accordingly, we have revised the Consolidated Balance Sheet as of December 31, 2011. The effect of the adjustment was to reduce long-term deferred income tax liabilities by $0.4 million, reduce current deferred tax assets by $38 thousand, and reduce goodwill by the net amount of $0.3 million.

Woods/TISCO’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended August 31, 2011
Sales	$	164,810
Operating income		17,870
Depreciation and amortization		2,549

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Woods/TISCO’s operating income for the twelve months ended August 31, 2011 included expenses of $0.7 million related to Woods/TISCO’s former chief executive officer, $0.5 million in management fees charged by Woods/TISCO’s former owner, $0.4 million in expenses attributed to Woods/TISCO’s efforts to sell its business, $0.3 million in costs associated with the closure of a facility, and $0.3 million in fees associated with Woods/TISCO’s September 2010 refinancing transaction.

Purchase Price Allocations

We allocated the purchase price for each acquisition to the following assets and liabilities based on their estimated fair values.

(Amounts in thousands)	Woods/TISCO		PBL		KOX		SpeeCo
Cash	$	230	$	1,275	$	5,126	$	816
Accounts receivable		34,784		5,109		3,365		7,525
Inventories		38,512		9,729		8,879		18,868
Current intangible assets subject to amortization		—		157		—		401
Current deferred tax assets		3,716		608		—		657
Other current assets		3,057		1,162		268		625
Property, plant, and equipment		19,259		13,041		383		1,812
Non-current deferred tax assets		1,943		378		—		—
Non-current intangible assets subject to amortization		52,400		5,612		4,594		43,214
Non-current intangible assets not subject to amortization		44,330		470		5,241		5,968
Goodwill		54,846		3,301		3,709		42,794
Other non-current assets		3,474		—		—		—
Total assets acquired		256,551		40,842		31,565		122,680
Current liabilities		19,319		11,065		4,793		13,762
Long-term debt		—		13,304		—		—
Non-current deferred income tax liability		41,510		609		2,836		17,142
Other non-current liabilities		5,220		1,620		—		106
Total liabilities assumed		66,049		26,598		7,629		31,010
Acquisition price	$	190,502	$	14,244	$	23,936	$	91,670
Goodwill deductible for income tax purposes	$	9,255	$	—	$	—	$	6,998

The operating results of acquisitions are included in the Consolidated Statements of Income from the acquisition dates forward. These 2011 results, excluding the post-acquisition allocation of the cost of certain shared services and corporate support functions, are summarized in the following table.

	Year Ended December 31, 2011
(Amounts in thousands)	KOX			PBL			Woods/TISCO
Incremental net sales	$	21,639		$	9,679		$	55,464
Incremental income (loss) before income taxes		(2,864	)		(2,727	)		1,326
Acquisition accounting effects		2,152			1,734			4,913

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The 2010 results of SpeeCo, excluding the post-acquisition allocation of the cost of certain shared services and corporate support functions, are summarized in the following table.

	Year Ended December 31, 2010
(Amounts in thousands)	SpeeCo
Incremental net sales	$	34,200
Incremental income before income taxes		2,097
Acquisition accounting effects		3,368

Acquisition accounting effects included in the above tables represent non-cash charges included in cost of sales for amortization of intangible assets and adjustments to fair value on acquired property, plant, and equipment, as well as expensing of the step-up to fair value of acquired inventory. Acquisition accounting effects do not include transaction costs associated with the acquisitions.

The following table summarizes the acquisition accounting effects charged to cost of sales for the years indicated:

	Year Ending December 31,
(Amounts in thousands)	2012		2011		2010
SpeeCo	$	4,671	$	5,555	$	3,368
KOX		1,016		2,152		—
PBL		2,028		1,734		—
Woods/TISCO		7,013		4,913		—
Prior acquisitions		1,270		1,525		1,789
Total acquisition accounting effects	$	15,998	$	15,879	$	5,157

The following unaudited pro forma results present the estimated effect as if the acquisition of SpeeCo had occurred on January 1, 2009, and as if the acquisitions of KOX, PBL, and Woods/TISCO had occurred on January 1, 2010. The unaudited pro forma results include the historical results of each acquired business, pro forma elimination of sales from Blount to each acquired business, if any, pro forma acquisition accounting effects, pro forma interest expense effects of additional borrowings to fund each transaction, pro forma interest effects from reduced cash and cash equivalents following use of cash to fund each transaction, and the related pro forma income tax effects.

	Twelve Months  Ended December 31, 2011				Twelve Months  Ended December 31, 2010
(Amounts in thousands, except per share data)	As Reported		Pro Forma		As Reported		Pro Forma
Sales	$	831,630	$	975,455	$	611,480	$	863,014
Net income		49,682		58,192		47,200		47,487
Basic income per share	$	1.02	$	1.19	$	0.99	$	1.00
Diluted income per share	$	1.01	$	1.18	$	0.97	$	0.98

NOTE 3:  FACILITY CLOSURE AND RESTRUCTURING COSTS

During 2012, we completed certain actions to consolidate our operations in the U.S. In Kansas City, Missouri, we moved into a new, larger North American assembly and distribution center, and closed our previous distribution center in that city. In Golden, Colorado, we closed our assembly, warehouse, and distribution operations and consolidated those functions into the new North American facility in Kansas City. During 2012, we recognized direct costs of $7.4 million associated with these two actions. These costs consisted of lease exit costs, charges to expense the book value of certain assets located in Golden and in the previous distribution center in Kansas City that will not be utilized in the new distribution center, temporary labor costs associated with moving inventory items and stabilizing shipping activities, costs to move inventory and equipment, and rent expense on duplicate facilities during the transition period. Of these total costs, $1.0 million are reported in cost of sales in the Consolidated Statement of Income for the twelve months ended December 31, 2012.

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NOTE 4:  INVENTORIES

Inventories consisted of the following:

	December 31,
(Amounts in thousands)	2012		2011
Raw materials and supplies	$	22,815	$	24,022
Work in progress		19,388		16,006
Finished goods		132,613		109,797
Total inventories	$	174,816	$	149,825

NOTE 5:  PROPERTY, PLANT, AND EQUIPMENT, NET

Property, plant, and equipment, net consisted of the following:

	December 31,
(Amounts in thousands)	2012			2011
Land	$	9,081		$	9,081
Buildings and improvements		82,910			65,699
Machinery and equipment		262,058			239,882
Furniture, fixtures, and office equipment		42,498			33,342
Transportation equipment		1,126			1,105
Construction or equipment acquisitions in progress		23,075			30,568
Accumulated depreciation		(243,046	)		(223,805	)
Total property, plant, and equipment, net	$	177,702		$	155,872

NOTE 6:  DEFERRED FINANCING COSTS

Deferred financing costs represent costs incurred in conjunction with the Company’s debt financing activities and are amortized over the term of the related debt instruments. Deferred financing costs and the related amortization expense are adjusted when any pre-payments of principal are made to the related outstanding loan. See also Note 9. The following activity occurred during the years indicated:

	Year Ended December 31,
(Amounts in thousands)	2012			2011
Beginning balance	$	5,716		$	4,088
Financing costs deferred		1,115			4,006
Write off due to early extinguishment of debt		—			(1,368	)
Amortization		(1,336	)		(1,010	)
Ending balance	$	5,495		$	5,716

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Amortization expense, assuming no further cost deferrals or prepayments of principal, is expected to be as follows:

(Amounts in thousands)	Expected Annual Amortization
2013	$	1,499
2014		1,499
2015		1,499
2016		998
Total scheduled amortization	$	5,495

NOTE 7:  INTANGIBLE ASSETS

The following table summarizes intangible assets:

			December 31, 2012				December 31, 2011
	Life		Gross		Accumulated		Gross		Accumulated
(Amounts in thousands)	In Years		Amount		Amortization		Amount		Amortization
Goodwill		Indefinite	$	165,175	$	—	$	165,084	$	—
Trademarks and trade names		Indefinite		61,251		—		61,176		—
Total with indefinite lives				226,426		—		226,260		—
Covenants not to compete		2 - 4		1,112		985		1,112		843
Patents		11 - 13		5,320		1,554		5,320		1,121
Manufacturing technology		1		2,563		2,563		2,516		1,124
Customer relationships, including backlog		10 - 19		107,333		29,316		107,234		16,170
Total with finite lives				116,328		34,418		116,182		19,258
Total intangible assets			$	342,754	$	34,418	$	342,442	$	19,258

On the December 31, 2011 Consolidated Balance Sheet, $15 thousand of intangible assets, representing unamortized backlog, are included in other current assets.

Amortization expense for intangible assets included in the Consolidated Statements of Income was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Amortization expense	$	15,196	$	11,315	$	4,382

Amortization expense for these intangible assets is expected to total $14.2 million in 2013, $12.0 million in 2014, $10.5 million in 2015, $9.1 million in 2016, and $7.5 million in 2017.

Through December 31, 2012, no impairment of these assets has been recognized. A total of $38.3 million of goodwill is deductible for tax purposes, and is being amortized on the U.S. tax return. The accumulated tax amortization on this deductible goodwill was $26.3 million and $21.9 million at December 31, 2012 and 2011, respectively.

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NOTE 8:  ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,
(Amounts in thousands)	2012		2011
Salaries, wages, and related withholdings	$	21,095	$	29,275
Accrued taxes		9,769		5,758
Advertising		7,899		6,814
Employee benefits		6,550		8,425
Accrued customer incentive programs		4,933		6,020
Unrealized loss on derivative instruments		3,988		1,813
Product liability reserves		2,905		4,841
Accrued professional services fees		2,070		2,088
Product warranty reserve		1,914		1,539
Accrued interest		1,253		1,340
Other		9,097		5,078
Total accrued expenses	$	71,473	$	72,991

NOTE 9:  DEBT

Debt consisted of the following:

	As of December 31,
(Amounts in thousands)	2012			2011
Revolving credit facility borrowings	$	235,000		$	228,200
Term loans		281,250			296,250
Debt and capital lease obligation of PBL		507			5,912
Total debt		516,757			530,362
Less current maturities		(15,072	)		(20,348	)
Long-term debt, excluding current maturities	$	501,685		$	510,014
Weighted average interest rate at end of period		2.71	%		2.85	%

Minimum principal payments required are as follows:

(Amounts in thousands)	Payments
2013	$	15,072
2014		15,072
2015		15,072
2016		471,322
2017 and thereafter		219
Total debt	$	516,757

Senior Credit Facilities. The Company, through its wholly-owned subsidiary, Blount, Inc., maintains a senior credit facility with General Electric Capital Corporation as Agent for the Lenders and also as a lender, which has been amended and restated on several occasions. As of December 31, 2012 and 2011, the senior credit facilities consisted of a revolving credit facility and a term loan.

August 2010 Third Amendment and Restatement of Senior Credit Facilities. On August 9, 2010, the Company entered into the Third Amendment and Restatement of its senior credit facilities. The Third Amendment and

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Restatement included an increase in maximum borrowings available under the revolving credit facility to $75.0 million and an extension of its maturity date to August 2015, an increase of the term loan B facility to $275.0 million and an extension of its maturity date to August 2016, establishment of a new term loan A facility at $75.0 million with a maturity date of August 2015, and modification of the interest rates and certain financial and other covenants. The Company paid $6.3 million in fees and transaction costs in connection with this amendment.

The Company used the $350.0 million combined proceeds of the two term loans to repay the principal outstanding under its previous term loan B facility and its 8 7/8% senior subordinated notes originally due August 1, 2012. These 8 7/8% senior subordinated notes were redeemed in full on September 16, 2010, following the expiration of the required redemption notification period. In conjunction with the redemption of the 8 7/8% senior subordinated notes and the repayment of principal on the previous term loan B, the Company expensed $3.5 million in unamortized deferred financing costs.

January 2011 Amendment of Senior Credit Facilities. On January 28, 2011, the senior credit facility was amended to facilitate a foreign subsidiary reorganization and to allow additional flexibility for making foreign acquisitions.

June 2011 Fourth Amendment and Restatement of Senior Credit Facilities. On June 13, 2011, the Company entered into the Fourth Amendment and Restatement of its senior credit facilities with an initial funding date of August 9, 2011. The Fourth Amendment and Restatement included an increase in maximum borrowings under the revolving credit facility to $400.0 million, a new $300.0 million term loan facility, an extension of the maturity date on both facilities to August 31, 2016, a reduction in interest rates on both facilities, and the modification of certain financial and other covenants. The Company incurred $6.5 million in fees and transaction costs in connection with the Fourth Amendment and Restatement. On the initial funding date the Company expensed $3.9 million, consisting of unamortized deferred financing costs from previous modifications to the senior credit facilities as well as certain fees and transaction costs associated with the June 13, 2011 amendment.

August 2012 Amendment of Senior Credit Facilities. On August 3, 2012, the senior credit facilities were amended to modify the maximum leverage ratio covenant, as defined below. Certain other minor modifications to the credit agreement were made. The Company incurred $1.2 million in fees and transaction costs in connection with this amendment.

Current Terms of Senior Credit Facilities. The revolving credit facility provides for total available borrowings of up to $400.0 million, reduced by outstanding letters of credit, and further restricted by certain financial covenants. As of December 31, 2012, the Company had the ability to borrow an additional $61.8 million under the terms of the revolving credit agreement. The revolving credit facility bears interest at LIBOR plus 2.50% or at an index rate, as defined in the credit agreement, plus 1.50%, and matures on August 31, 2016. Interest is payable on the individual maturity dates for each LIBOR-based borrowing and monthly on index rate-based borrowings. Any outstanding principal is due in its entirety on the maturity date.

The term loan facility also bears interest at LIBOR plus 2.50% or at the index rate plus 1.50% and matures on August 31, 2016. The term loan facility requires quarterly principal payments of $3.8 million with a final payment of $225.0 million due on the maturity date. Once repaid, principal under the term loan facility may not be re-borrowed.

The amended and restated senior credit facilities contain financial covenants including:

• Minimum fixed charge coverage ratio of 1.15, defined as Adjusted EBITDA divided by cash payments for interest, taxes, capital expenditures, scheduled debt principal payments, and certain other items, calculated on a trailing twelve-month basis.

• Maximum leverage ratio, defined as total debt divided by Adjusted EBITDA, calculated on a trailing twelve-month basis. The maximum leverage ratio is set at 4.25 through December 31, 2012, 4.00 through June 30, 2013, 3.75 through December 31, 2013, 3.50 through September 30, 2014, 3.25 through March 31, 2015, and 3.00 thereafter.

In addition, there are covenants, restrictions, or limitations relating to acquisitions, investments, loans and advances, indebtedness, dividends on our stock, the sale or repurchase of our stock, the sale of assets, and other categories. In the opinion of management, we were in compliance with all financial covenants as of December 31, 2012. Non-compliance with these covenants is an event of default under the terms of the credit agreement, and could result in severe limitations to our overall liquidity, and the term loan lenders could require immediate repayment of outstanding amounts, potentially requiring sale of a sufficient amount of our assets to repay the outstanding loans.

58

The amended and restated senior credit facilities may be prepaid at any time without penalty. There can also be additional mandatory repayment requirements related to the sale of Company assets, the issuance of stock under certain circumstances, or upon the Company’s annual generation of excess cash flow, as determined under the credit agreement. Our debt is not subject to any triggers that would require early payment due to any adverse change in our credit rating.

Our senior credit facility debt is incurred by our wholly-owned subsidiary, Blount, Inc. Blount International, Inc. and all of its domestic subsidiaries other than Blount, Inc. guarantee Blount, Inc.’s obligations under the senior credit facilities. The obligations under the senior credit facilities are collateralized by a first priority security interest in substantially all of the assets of Blount, Inc. and its domestic subsidiaries, as well as a pledge of all of Blount, Inc.’s capital stock held by Blount International, Inc. and all of the stock of domestic subsidiaries held by Blount, Inc. Blount, Inc. has also pledged 65% of the stock of its direct non-domestic subsidiaries as additional collateral.

Debt and Capital Lease Obligation of PBL. In conjunction with the acquisition of PBL we assumed $13.5 million of PBL’s debt, consisting of current and long-term bank obligations, revolving credit facilities, and $0.6 million in capital lease obligations. As of December 31, 2012 we have repaid all of PBL’s bank debt. PBL’s outstanding bank debt was classified as current as of December 31, 2011 on the Consolidated Balance Sheet.

NOTE 10:  INCOME TAXES

The provision (benefit) for income taxes was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011		2010
Current
Federal	$	15,781		$	16,249	$	7,828
State		1,685			1,116		1,973
Foreign		12,325			5,572		4,521
Deferred
Federal		(6,598	)		155		2,846
State		(582	)		751		447
Foreign		(409	)		1,425		768
Provision for income taxes	$	22,202		$	25,268	$	18,383
The provision is reported as follows:
Continuing operations	$	22,202		$	25,268	$	11,209
Discontinued operations		—			—		7,174
Provision for income taxes	$	22,202		$	25,268	$	18,383

The Company also recorded the following deferred tax amounts directly to the components of stockholders’ equity:

	Year Ended December 31,
(Amounts in thousands)	2012		2011			2010
Pension liability adjustment	$	340	$	15,340		$	700
Change in unrealized losses (gains)		2,240		(2,180	)		261
Stock options exercised		1,187		877			1,340

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Income from continuing operations before income taxes was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Income before income taxes:
Domestic	$	28,122	$	50,357	$	27,521
Foreign		33,668		24,593		25,090
Total	$	61,790	$	74,950	$	52,611

The decrease in domestic income before taxes in 2012 reflects the decrease in profitability of our FRAG segment, which operates primarily in the U.S. The increase in foreign income before income taxes from 2011 to 2012 was primarily driven by strong profit growth in Brazil. The increase in domestic income before taxes from 2010 to 2011 reflects the overall improvement in the Company’s operating results as the domestic economy recovered and demand for our products increased, as well as the addition of results from Woods/TISCO and SpeeCo, both of which currently operate primarily in the U.S. See further discussion in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

A reconciliation of the U.S. federal statutory rate to the effective income tax rate for continuing operations is presented below.

	Percent of Income Before Tax
	2012			2011			2010
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Impact of earnings of foreign operations		(2.6	)		(2.2	)		(6.6	)
Repatriation of foreign earnings		—			0.3			1.7
Foreign withholding taxes		1.2			1.1			2.0
Federal and state research tax credits		—			(0.2	)		(1.7	)
State income taxes, net of federal tax benefit		1.4			2.2			0.9
Permanent differences		(1.5	)		(0.4	)		(1.4	)
Change in deferred taxes		—			2.3			3.3
Change in uncertain tax positions		(0.6	)		(4.6	)		(12.4	)
Acquisition transaction costs		—			1.9			0.6
Other		0.2			0.6			0.0
Effective income tax rate before valuation allowance		33.1			36.0			21.4
Valuation allowance		2.8			(2.3	)		(0.1	)
Effective income tax rate after valuation allowance		35.9	%		33.7	%		21.3	%

The tax rates that apply to our foreign locations can differ significantly from our domestic income tax rate. Also, the relative proportion of taxable income earned domestically versus internationally can fluctuate significantly from year to year. Movements in currency exchange rates can generate tax deductible foreign currency losses and taxable foreign currency gains at our foreign subsidiaries that are not recognized for book purposes, thus impacting the effective tax rate reported on our book income. Different allocations in the proportional taxable income among jurisdictions from year to year can also affect the impact of state income taxes. Changes in estimated tax contingencies and valuation allowances can also significantly impact our effective tax rate from year to year.

In 2012, we recognized income tax expense of $1.9 million to increase a valuation allowance against certain deferred tax assets arising from foreign NOL carryforwards. In 2011, we recognized an income tax benefit of $4.3 million, from the release of previously provided income tax expense on uncertain tax positions, resulting from the expiration of the statute of limitations for certain tax returns. In 2010, we recognized an income tax benefit of $6.8 million, from the release of previously provided income tax expense on uncertain tax positions, resulting from the conclusion of an audit with the IRS and the expiration of the statute of limitations for certain tax returns. In 2010, the Company also recognized income tax expense of $1.7 million to write off the deferred tax asset related to the Medicare Part D subsidy, reflecting new tax legislation which made the subsidy fully taxable beginning in 2013.

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The components of deferred income taxes applicable to temporary differences at December 31, 2012 and 2011 are as follows:

	December 31,
(Amounts in thousands)	2012			2011
Deferred tax assets:
Employee benefits and compensation	$	35,522		$	37,119
Other accrued expenses		16,507			13,505
State NOL carryforwards		516			741
Foreign		7,149			2,914
Gross deferred tax assets		59,694			54,279
Less valuation allowance		(2,552	)		(603	)
Deferred tax assets net of valuation allowance		57,142			53,676
Deferred tax liabilities:
Property, plant, and equipment asset basis differences		(15,379	)		(15,252	)
Intangible asset basis differences		(57,501	)		(60,497	)
Foreign		(3,095	)		(5,236	)
Total deferred tax liabilities		(75,975	)		(80,985	)
Net deferred tax liability	$	(18,833	)	$	(27,309	)

Foreign deferred tax assets include NOL carryforwards, timing differences related to retirement plans, and other differences. Certain of these foreign deferred tax assets are reduced by valuation allowances reflecting the expectation that they will expire before they are utilized to reduce cash taxes paid. In addition, a foreign tax credit carryforward of approximately $1.7 million expired unused in 2011, and was written off along with its related valuation allowance for no net effect. Our state NOL carryforwards expire at various dates beginning in 2013. Certain of our foreign NOL carryforwards expire at various dates beginning in 2017, and certain of our foreign NOL carryforwards have an indefinite carryforward period, although utilization is limited annually.

The periods from 2008 through 2012 remain open for U.S. income tax purposes and the U.S. income tax returns for years 2008 through 2010 are currently under examination by the IRS. In 2009, the Company entered into a Bilateral Advance Pricing Agreement (“BAPA”) with the Canada Revenue Agency (“CRA”) and the IRS. This BAPA brings relative certainty with respect to transfer pricing between the Company’s U.S. and Canada subsidiaries for the years 2002 through 2011, and the Company is currently working with the CRA and IRS to extend the agreement through 2016.

U.S. income taxes have not been provided on undistributed earnings of international subsidiaries. Management’s intention is to reinvest these earnings indefinitely. As of December 31, 2012, undistributed earnings of international subsidiaries were approximately $211.3 million. Repatriation of foreign earnings in 2011 and 2010 pertained to current earnings of one foreign subsidiary.

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A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Balance at beginning of period	$	6,454		$	11,905		$	29,754
Increase (decrease) for positions taken during a prior period		—			1,485			(1,458	)
Increase (decrease) for positions taken during the current period		(384	)		2,125			—
Settlements		—			—			(766	)
Statute of limitations expirations		(287	)		(9,061	)		(15,625	)
Balance at end of period	$	5,783		$	6,454		$	11,905

These unrecognized tax benefits are included in other liabilities on the Consolidated Balance Sheets.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2012 and 2011, the Company had recorded $2.1 million and $1.8 million of accrued interest and penalties related to uncertain tax positions, respectively. During the year ended December 31, 2012, the Company recognized a net income tax expense of $0.3 million for interest and penalties related to uncertain tax positions.

During the years ended December 31, 2011 and 2010, the Company recognized net income tax benefits of $0.4 million and $1.9 million, respectively, for interest and penalties related to uncertain tax positions.

The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized was $5.8 million as of December 31, 2012 and $6.5 million as of December 31, 2011. Based on current information, in the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, liquidity, or results of operations. However, the ultimate resolution of the Company’s global tax uncertainties could differ significantly from management’s expectations.

Based on the potential outcome of these uncertainties or the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the unrecognized tax benefits could decrease within the next twelve months. The associated net tax benefits, which would favorably impact the effective tax rate, excluding changes to valuation allowances, are estimated to range between zero and $0.4 million.

NOTE 11:  RETIREMENT PLANS

Funded Defined Benefit Pension Plans

The Company sponsors defined benefit pension plans covering employees in Canada and certain countries in Europe, and many of its employees and former employees in the U.S. The U.S. plan was frozen effective January 1, 2007. The changes in benefit obligations, plan assets, and funded status of these plans for the years ended December 31, 2012 and 2011 were as follows:

	Pension Benefits
(Amounts in thousands)	2012			2011
Change in benefit obligations:
Projected benefit obligations at beginning of year	$	(232,889	)	$	(198,180	)
Service cost		(4,066	)		(3,578	)
Interest cost		(10,532	)		(10,935	)
Actuarial losses		(24,804	)		(32,255	)
Benefits and plan expenses paid		11,717			12,541
Projected benefit obligation assumed in acquisitions		—			(482	)
Projected benefit obligations at end of year		(260,574	)		(232,889	)

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(Amounts in thousands)	2012			2011
Change in plan assets:
Fair value of plan assets at beginning of year		190,522			179,570
Actual return on plan assets		22,928			5,703
Company contributions		17,399			17,790
Benefits and plan expenses paid		(11,717	)		(12,541	)
Fair value of plan assets at end of year		219,132			190,522
Net funded status at end of year	$	(41,442	)	$	(42,367	)
Amounts recognized on the Consolidated Balance Sheets:
Non-current liabilities	$	(41,442	)	$	(42,367	)

The accumulated benefit obligations for the above defined benefit pension plans at December 31, 2012 and 2011 totaled $237.4 million and $216.7 million, respectively.

The fair value of plan assets was as follows:

	December 31, 2012
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Category:
Money market mutual funds	$	799	$	799	$	—	$	—
Guaranteed insurance contracts		3,452		—		3,452		—
U.S. large cap equity securities		50,915		—		50,915		—
U.S. small/mid cap equity securities		4,794		—		4,794		—
International equity securities		50,345		—		50,345		—
Emerging markets equity securities		4,324		—		4,324		—
U.S. debt securities		71,281		—		71,281		—
International debt securities		27,466		—		27,466		—
Hedge funds		5,756		—		—		5,756
Total fair value of plan assets	$	219,132	$	799	$	212,577	$	5,756

	December 31, 2011
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Category:
Money market mutual funds	$	639	$	639	$	—	$	—
Guaranteed insurance contracts		2,803		—		2,803		—
U.S. large cap equity securities		45,008		—		45,008		—
U.S. small/mid cap equity securities		4,116		—		4,116		—
International equity securities		41,399		—		41,399		—
Emerging markets equity securities		3,559		—		3,559		—
U.S. debt securities		64,001		—		64,001		—
International debt securities		23,482		—		23,482		—
Hedge funds		5,515		—		—		5,515
Total fair value of plan assets	$	190,522	$	639	$	184,368	$	5,515

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As specified in ASC 820, the framework for measuring fair value is based on independent observable inputs of market data and follows the following hierarchy:

Level 1 – Quoted prices in active markets for identical assets and liabilities.

Level 2 – Significant observable inputs based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations for which all significant assumptions are observable.

Level 3 – Significant unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.

When developing fair value measurements, it is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs.

The money market mutual funds are valued by reference to quoted market prices.

The guaranteed insurance contracts are valued based on information provided by the investment custodians.

The U.S. large cap equity securities consist of mutual funds and commingled pooled funds that invest in equity securities of U.S. companies with large market capitalizations. These funds seek long-term growth and invest in diversified portfolios across multiple industries. These funds are valued based on information provided by the plan’s investment custodians.

The U.S. small/mid cap equity securities consist of mutual funds and commingled pooled funds that invest in equity securities of U.S. companies with small to medium market capitalizations. These funds seek higher rates of long-term growth and invest in diversified portfolios across multiple industries. These funds are valued based on information provided by the plan’s investment custodians.

The international equity securities consist of mutual funds and commingled pooled funds that invest in equity securities of international companies in developed countries. These funds seek long-term growth and invest in diversified portfolios across multiple industries and geographic regions. These funds are valued based on information provided by the plan’s investment custodians.

The emerging markets equity securities consist of mutual funds and commingled pooled funds that invest in equity securities of international companies in developing countries with emerging economies. These funds seek higher rates of long-term growth and invest in diversified portfolios across multiple industries and geographic regions. These funds are valued based on information provided by the plan’s investment custodians.

The U.S. debt securities consist of mutual funds and commingled pooled funds that invest in debt securities of U.S. companies. These funds seek lower volatility than equity investments and invest in diversified portfolios across multiple industries and with varying maturity periods. These funds are valued based on information provided by the plan’s investment custodians.

The international debt securities consist of mutual funds and commingled pooled funds that invest in debt securities of companies outside the U.S. These funds seek lower volatility than international equity investments and invest in diversified portfolios across multiple industries and geographies, as well as with varying maturity periods. These funds are valued based on information provided by the plan’s investment custodians.

The hedge funds consist of investments in partnerships and other entities that in turn invest in portfolios of underlying securities. The fund manager seeks returns that move in the opposite direction of the securities to which they are hedged. These funds are valued based on information provided by the plan’s investment custodians.

The financial statements of the funds are audited annually by independent accountants. The value of the underlying investments is determined by the investment manager based on the estimated fair value of the various holdings of the portfolio as reported in the financial statements at net asset value. The preceding methods described may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair

64

values. Furthermore, although the plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The assets of these plans are invested in various investment securities. There were no significant concentrations of investment risk in plan assets. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amount of the plan assets.

There were no significant transfers between assets in Level 1 and Level 2, except for amounts moved from Level 2 to money market mutual funds for the purpose of making cash disbursements for plan expenses and benefit payments. The Level 1 and Level 2 plan assets above may generally be redeemed with 5 or fewer days’ notice. The Level 3 plan assets above may be redeemed with a minimum of 30 days’ notice and after certain other conditions are met.

The change in fair value of Level 3 plan assets was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011
Fair value at beginning of year	$	5,515	$	5,331
Actual return on assets:
Relating to assets still held at end of year		241		184
Relating to assets sold during the year		—		—
Purchases, sales, and settlements		—		—
Transfers in/out of Level 3		—		—
Fair value at end of year	$	5,756	$	5,515

The projected benefit payments for these plans over the next ten years are estimated as follows:

(Amounts in thousands)	Estimated Benefit Payments
2013	$	8,844
2014		9,319
2015		9,814
2016		10,330
2017		10,865
2018 – 2022		63,558
Total estimated benefit payments over next ten years	$	112,730

The Company annually contributes the required minimum amounts required by pension funding regulations. From time to time, the Company also makes additional voluntary contributions to these plans in order to increase the funding levels and reduce the amount of required future contributions, as well as to reduce the amount of expense recognized for these plans. The Company expects to contribute between $7.5 million and $8.5 million to its funded defined benefit pension plans in 2013.

Unfunded Supplemental Non-Qualified Retirement Plans

The Company sponsors various supplemental non-qualified retirement plans covering certain employees and former employees in the U.S. These plans were frozen effective January 1, 2007, and employees who were participants in these non-qualified plans on that date ceased accruing additional benefits. New employees are not eligible to participate in these plans. All retirement benefits accrued up to the time of the freeze were preserved.

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The changes in benefit obligations and funded status of these non-qualified plans for the years ended December 31, 2012 and 2011 were as follows:

	Unfunded Retirement Plans
(Amounts in thousands)	2012			2011
Change in Benefit Obligations:
Projected benefit obligations at beginning of year	$	(6,165	)	$	(5,700	)
Service cost		—			—
Interest cost		(254	)		(302	)
Actuarial losses		(235	)		(746	)
Benefits and plan expenses paid		576			583
Projected benefit obligations at end of year		(6,078	)		(6,165	)
Net unfunded status at end of year	$	(6,078	)	$	(6,165	)

	As of December 31,
(Amounts in thousands)	2012			2011
Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	$	(592	)	$	(558	)
Non-current liabilities		(5,486	)		(5,607	)
Net liability recognized on the Consolidated Balance Sheets	$	(6,078	)	$	(6,165	)

The Company accounts for its retirement plans in accordance with ASC 715. The net obligation is included in accrued expenses and employee benefit obligations on the Consolidated Balance Sheets.

Periodic Benefit Cost and Other Comprehensive Loss

The components of net periodic benefit cost and other comprehensive loss and the weighted average assumptions used in accounting for funded and unfunded pension benefits are as follows:

Pension Benefits

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Components of net periodic benefit cost:
Service cost	$	4,066		$	3,577		$	2,524
Interest cost		10,786			11,238			10,920
Expected return on plan assets		(14,547	)		(13,976	)		(12,258	)
Amortization of actuarial losses		7,213			4,294			3,702
Amortization of prior service cost		(6	)		(6	)		(6	)
Total net periodic benefit cost recognized in income statement	$	7,512		$	5,127		$	4,882
Recognized in accumulated other comprehensive loss:
Actuarial (gains) losses	$	8,231		$	37,491		$	3,936
Prior service cost		6			6			6
Total recognized in accumulated other comprehensive loss	$	8,237		$	37,497		$	3,942
Weighted average assumptions:
Discount rate used to determine net periodic benefit cost		4.7	%		5.6	%		6.1	%
Discount rate used to determine year end benefit obligations		4.2	%		4.6	%		5.6	%
Expected return on assets used to determine net periodic benefit cost		7.6	%		7.7	%		7.9	%
Rate of compensation increase		3.0	%		3.0	%		3.0	%

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Actuarial losses of $7.7 million included in accumulated other comprehensive loss are expected to be recognized as a component of net periodic benefit cost in 2013.

The Company annually evaluates and selects the discount rates to be used for its pension plans. Consideration is given to relevant indices for high quality fixed rate debt securities, as well as comparable rates for high quality corporate bonds with terms comparable to the projected cash flows for the respective plans, as of the measurement date. The expected long-term rate of return on assets was chosen from the range of likely results of compound average annual returns based on the current investment policies. The expected return and volatility for each asset class was based on historical equity, bond, and cash returns over a twenty year time horizon, based on repetitive modeling of outcomes using an extended period of historical actual results. While this approach gives appropriate consideration to recent fund performance and historical returns, the assumption is primarily a long-term, prospective rate.

The Company maintains target allocation percentages among various asset classes based on investment policies established for these plans. The target allocation is designed to achieve long-term objectives of return, while mitigating downside risk and considering expected cash flows. For the U.S. retirement plan the allocation of pension plan assets as of December 31, 2012 and 2011 and target allocation as of December 31, 2012 are as follows:

	Percentage of Plan Assets
	Actual Allocation December 31,						2012 Target Allocation
	2012			2011
Money market mutual funds		0.5	%		0.5	%		2.0	%
U.S. large cap equity securities		26.4	%		26.8	%		26.2	%
U.S. small/mid cap equity securities		3.2	%		3.1	%		3.0	%
International equity securities		15.3	%		13.6	%		14.3	%
Emerging markets equity securities		1.6	%		1.4	%		1.5	%
U.S. debt securities		47.1	%		48.4	%		46.0	%
International debt securities		2.1	%		2.0	%		2.0	%
Hedge funds		3.8	%		4.2	%		5.0	%

For the Canadian retirement plan the allocation of pension plan assets as of December 31, 2012 and 2011 and target allocation as of December 31, 2012 are as follows:

	Percentage of Plan Assets
	Actual Allocation December 31,						2012 Target Allocation
	2012			2011
U.S. large cap equity securities		17.0	%		17.2	%		17.0	%
International equity securities		42.3	%		42.3	%		42.0	%
Emerging markets equity securities		2.9	%		3.0	%		3.0	%
International debt securities		37.8	%		37.5	%		38.0	%

The funded defined benefit pension plans in Europe are invested wholly in guaranteed insurance contracts.

Defined Contribution Plans

The Company also sponsors a 401(k) plan covering substantially all U.S. employees and matches a portion of employee contributions as well as making an additional contribution to all employees based on years of service and regardless of whether or not the employee contributes to the plan. The Company also sponsors a similar defined contribution plan covering substantially all Canadian employees.

Total expense recognized for these defined contribution plans was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Expense	$	7,686	$	7,422	$	6,571

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NOTE 12:  OTHER POST-EMPLOYMENT BENEFIT PLANS

The Company sponsors two unfunded post-retirement medical programs covering many of its current and former employees in the U.S. and one post-retirement death benefit plan covering a limited number of former employees. The changes in benefit obligations, plan assets, and funded status of these plans for the years ended December 31, 2012 and 2011, were as follows:

	Other Post-Retirement Benefits
(Amounts in thousands)	2012			2011
Change in benefit obligations:
Projected benefit obligations at beginning of year	$	(45,665	)	$	(38,126	)
Service cost		(355	)		(261	)
Interest cost		(1,765	)		(1,972	)
Participant contributions		(1,932	)		(1,878	)
Actuarial gains (losses), net		1,706			(8,083	)
Benefits and plan expenses paid		4,002			4,655
Projected benefit obligations at end of year	$	(44,009	)	$	(45,665	)
Change in plan assets:
Fair value of plan assets at beginning of year	$	—		$	—
Company contributions		2,070			2,777
Participant contributions		1,932			1,878
Benefits and plan expenses paid		(4,002	)		(4,655	)
Fair value of plan assets at end of year		—			—
Net unfunded status at end of year	$	(44,009	)	$	(45,665	)
Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	$	(2,588	)	$	(2,713	)
Non-current liabilities		(41,421	)		(42,952	)
Net liability recognized on the Consolidated Balance Sheets	$	(44,009	)	$	(45,665	)

The projected benefit payments for these plans, net of the estimated Medicare Part D subsidy expected to be received by the Company over the next ten years, are estimated as follows:

(Amounts in thousands)	Estimated Gross Benefit Payments		Estimated Medicare Part D Subsidy		Estimated Net Benefit Payments
2013	$	2,847	$	207	$	2,640
2014		2,903		221		2,682
2015		2,922		231		2,691
2016		2,936		238		2,698
2017		2,931		243		2,688
2018 – 2022		14,289		1,250		13,039
Total estimated benefit payments over next ten years	$	28,828	$	2,390	$	26,438

The Company expects to meet funding requirements for its unfunded post-retirement medical and other benefit plans on a pay-as-you-go basis during 2013. The Company accounts for post-retirement medical plans in accordance with ASC 712. The obligation for these post-retirement benefit plans is reported in employee benefit obligations on the Consolidated Balance Sheets.

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Periodic Benefit Cost and Other Comprehensive Loss

The components of net periodic benefit cost and other comprehensive loss and the weighted average assumptions used in accounting for other post-retirement benefits were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Components of net periodic benefit cost:
Service cost	$	355		$	261		$	270
Interest cost		1,765			1,972			2,095
Amortization of actuarial losses		1,303			871			849
Total net periodic benefit cost recognized in Consolidated Statements of Income	$	3,423		$	3,104		$	3,214
Recognized in accumulated other comprehensive loss:
Actuarial (gains) losses	$	(3,009	)	$	7,212		$	424
Weighted average assumptions:
Discount rate used to determine net periodic benefit cost		4.3	%		5.5	%		5.8	%
Discount rate used to determine year-end benefit obligations		4.0	%		4.3	%		5.5	%

Actuarial losses of $1.4 million included in accumulated other comprehensive loss are expected to be recognized as a component of net periodic benefit cost in 2013.

The Company annually evaluates and selects the discount rates to be used in accounting for these plans. Consideration is given to relevant indices for high quality fixed rate debt securities and to specific debt securities with maturity dates similar to the expected timing of cash outflows for the plans as of the measurement date. The annual rate of increase in the cost of health care benefits was assumed to be 10% in 2012, 9% in 2011, and 10% in 2010. As of December 31, 2012, the annual rate of increase in cost of health care benefits is assumed to be 9% in 2013, declining by 1% per year until 5% is reached. A 1% change in assumed health care cost trend rates would have had the following effects for 2012:

(Amounts in thousands)	1% Increase		1% Decrease
Effect on service and interest cost components	$	300	$	(240	)
Effect on other post-retirement benefit obligations		4,843		(3,992	)

NOTE 13:  COMMITMENTS

The Company leases office space and equipment under operating leases expiring in one to 15 years. Most leases include renewal options and some contain purchase options and escalation clauses. Future minimum rental commitments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2012, are as follows:

(Amounts in thousands)	Future Minimum Operating Lease Commitments
2013	$	7,920
2014		6,664
2015		4,761
2016		4,034
2017		3,917
2018 – beyond		22,352
Total operating lease commitments	$	49,648

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Rentals charged to costs and expenses for continuing operations under cancelable and non-cancelable lease arrangements were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Rental charges	$	6,076	$	5,101	$	3,573

As of December 31, 2012 the Company did not have any material capital leases. See also Note 9.

Guarantees and other commercial commitments include the following:

(Amounts in thousands)	December  31, 2012
Product warranty reserves	$	1,914
Letters of credit outstanding		5,424
Other financial guarantees		3,192
Total	$	10,530

In addition to these amounts, the Company also guarantees certain debt of its subsidiaries. See also Note 9.

Changes in the warranty reserve were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Balance at beginning of period	$	1,539		$	616		$	125
Warranty reserve of acquired businesses		—			785			421
Warranty reserve related to discontinued operations		—			—			(40	)
Accrued warranty expense		3,215			631			1,495
Payments made (in cash or in-kind)		(2,840	)		(493	)		(1,385	)
Balance at end of period	$	1,914		$	1,539		$	616

The warranty reserve related to our discontinued operations, Gear Products, was assumed by the buyer under the terms of the stock purchase agreement. See also Note 20.

Other guarantees and claims arise during the ordinary course of business from relationships with suppliers and customers when we undertake an obligation to guarantee the performance of others if specified triggering events occur. Nonperformance of a contract could trigger an obligation of the Company. In addition, certain guarantees relate to contractual indemnification provisions in connection with transactions involving the purchase or sale of stock or assets. These claims include actions based upon intellectual property, environmental, product liability, and other indemnification matters. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the occurrence or, if triggered, final outcome of these claims. However, while the ultimate liabilities resulting from such claims may be potentially significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the Company’s consolidated financial position or liquidity. See also Note 14.

NOTE 14:  CONTINGENT LIABILITIES

The Company reserves for product liability, environmental remediation, and other legal matters as management becomes aware of such matters. A portion of these claims or lawsuits may be covered by insurance policies that generally contain both deductible and coverage limits. Management monitors the progress of each legal matter to ensure that the appropriate reserve for its obligation has been recognized and disclosed in the financial statements. Management also monitors trends in case types to determine if there are any specific issues that relate to the Company that may result in additional future exposure on an aggregate basis. As of December 31, 2012 and 2011, management believes the Company has appropriately recorded and disclosed all material costs for its obligations in

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regard to known matters. Management believes that the recoverability of the costs of claims from insurance companies will continue in the future. Management periodically assesses these insurance companies to monitor their ability to pay such claims.

The Company was named a potentially liable person (“PLP”) by the Washington State Department of Ecology (“WDOE”) in connection with the Pasco Sanitary Landfill Site (“Site”). This Site has been monitored by WDOE since 1988. From available records, the Company believes that it sent 26 drums of chromic hydroxide sludge in a non-toxic, trivalent state to the Site. The Company further believes that the Site contains more than 50,000 drums in total and millions of gallons of additional wastes, some potentially highly toxic in nature. Accordingly, based both on volume and on the nature of the waste, the Company believes that it is a de minimis contributor.

The current on-site monitoring program and required deliverables under various orders are being conducted and funded by certain PLPs, excluding the Company and several other PLPs, under the supervision of WDOE. The Company may or may not be required, in the future, to contribute to the costs of required deliverables or remediation activities. The Company is unable to estimate such costs, or the likelihood of being assessed any portion thereof. The Company incurred no costs during the years ended December 31, 2012, 2011, and 2010 in connection with the remediation efforts at the Site.

In March 2010, the Company received an offer from Region 9 of the Environmental Protection Agency of the U.S. (the “EPA”) to resolve its potential liability regarding the Operating Industries, Inc. Superfund Site in Monterey Park, California, involving a subsidiary of the former Omark Industries, Inc., which merged with the Company in 1985. The Company submitted its consent to enter into an administrative settlement agreement for the Company’s pro rata share of the site’s clean-up costs as a de minimis participant. Accordingly, the Company recognized a charge of $0.1 million in the first quarter of 2010 in settlement of this matter. In February 2011, the Company received notice from the EPA that the de minimis settlement agreement has been accepted by a sufficient number of parties and payment of $0.1 million was made to the EPA on March 1, 2011. In May 2011 the EPA notified the Company that the administrative order embodying the settlement was in full effect with respect to the Company.

With respect to certain proceedings involving Carlton, which the Company acquired on May 2, 2008, the Company has determined that in 1989 contamination of soil and groundwater by trichloroethylene (“TCE”) and other volatile organic compounds (“VOCs”) was discovered at Carlton’s facility located in Milwaukie, Oregon (the “Carlton Site”) in connection with the removal of two underground storage tanks. On November 19, 1990, Carlton entered into a Consent Order with the Oregon Department of Environmental Quality (“DEQ”), which was amended in 1996, 1997, and 2000, pursuant to which the Company continues to investigate, remediate, and monitor the contamination under the supervision of the DEQ. The Company recognized an initial reserve of $3.4 million at the time of its acquisition of Carlton, representing the estimated costs to remediate this site. Although there can be no assurance that the currently estimated cost and scope of remediation will not change in the future due to the imposition of additional remediation obligations by the DEQ, the detection of additional contamination in the future or other later discovered facts, the Company does not believe that any remediation will have a material adverse effect on its consolidated financial position, operating results or cash flows. In addition, beginning October 2010 and continuing through November 2012, the Company received insurance proceeds to reimburse certain of the expenditures for this remediation effort. The Company does not expect to receive additional insurance proceeds in this matter.

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. Some of these lawsuits arise out of the Company’s duty to indemnify certain purchasers of the Company’s discontinued operations for lawsuits involving products manufactured prior to the sale of certain of these businesses. In addition, the Company is a party to a number of other suits arising out of the normal course of its business, including suits concerning commercial contracts, employee matters, and intellectual property rights. In some instances the Company has been the plaintiff, and has sought recovery of damages. In others, the Company is a defendant against whom damages are sought. While there can be no assurance as to their ultimate outcome, management does not believe these lawsuits will have a material adverse effect on the Company’s consolidated financial position, operating results or cash flows in the future.

The Company accrues, by a charge to income, an amount representing management’s best estimate of the undiscounted probable loss related to any matter deemed by management and its counsel as a reasonably probable loss contingency in light of all of the then known circumstances.

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NOTE 15:  EARNINGS PER SHARE DATA

Shares used in the denominators of the basic and diluted earnings per share computations were as follows:

	Year Ended December 31,
(Shares in thousands)	2012			2011			2010
Actual weighted average shares outstanding		49,170			48,701			47,917
Dilutive effect of common stock equivalents		729			733			591
Diluted weighted average common shares outstanding		49,899			49,434			48,508
Options and SARs excluded from computation as anti-dilutive because they are out-of-the-money		1,783			1,337			961
Unvested restricted stock and restricted stock units (“RSUs”) considered to be participating securities		147			124			121
Effect of allocation of undistributed earnings to participating securities under the two class method:
Basic earnings per share	$	(0.01	)	$	—		$	(0.01	)
Diluted earnings per share	$	—		$	(0.01	)	$	—

No adjustment was required to reported amounts for inclusion in the numerators of the per share computations.

NOTE 16:  STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with ASC 718. All share-based compensation to employees, directors, and others who perform services for the Company is valued at estimated fair value on the date of grant and expensed over the applicable service period.

On April 25, 2006, the Company’s stockholders approved the Blount International, Inc. 2006 Equity Incentive Plan (the “2006 Plan”). The 2006 Plan provides for a variety of stock-based award instruments and terms. The maximum number of shares that may be awarded under the 2006 Plan was initially set at 4,236,919, of which 736,919 represented shares that remained unused under the Company’s previous plans that were transferred to the 2006 Plan. The maximum number of incentive stock options that may be issued under the 2006 Plan is 1,750,000. Recently issued stock awards generally vest over a three-year period and stock options and stock appreciation rights (“SARS”) generally carry a ten-year expiration term.

The fair values of options and stock-settled SARs were estimated on their respective grant dates using the Black-Scholes option valuation model. The estimated average life of SARs granted in 2012, 2011, and 2010 was derived from the “simplified” method, meaning one half the term of the instrument plus one additional year. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with the remaining term equal to the average life. The expected volatility factors used are based on the historical volatility of the Company’s stock. The expected dividend yield is based on historical information and management estimate. The Company generally applies an estimated average forfeiture rate on its broad-based stock awards granted to a diverse population of employees, which reduces the expense recognized. The estimated forfeiture rate is based on the historical forfeiture rate, and is adjusted to the actual forfeiture rate over the life of the stock awards.

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The following table summarizes the assumptions used and estimated fair value of SARs granted:

	Year Ended December 31,
	2012			2011			2010
Estimated average lives		6 years			6 years			6 years
Risk-free interest rate		1.2	%		2.4	%		2.8	%
Expected volatility		49.3% - 49.6	%		48.4% - 49.5	%		49.7	%
Weighted average volatility		49.6	%		47.5	%		49.7	%
Dividend yield		0.0	%		0.0	%		0.0	%
Estimated forfeiture rate		3.2	%		5.5	%		5.0	%
Weighted average exercise price	$	16.68		$	15.10		$	11.82
Weighted average grant date fair value	$	7.93		$	7.36		$	5.94

A summary of stock option and stock-settled SARs activity is presented in the following tables:

	Year Ended December 31, 2012
	Shares (in  000’s)			Weighted Average Exercise Price		Weighted Average Contractual Life (in years)		Aggregate Intrinsic Value (in 000’s)
Outstanding options and SARs at beginning of period		3,659		$	11.78
SARs granted		577			16.68
Options exercised		(311	)		3.69
SARs exercised		(78	)		11.87
Options forfeited or expired		—			—
SARs forfeited or expired		(37	)		15.42
Outstanding options and SARs at end of period		3,810		$	13.15		5.8	$	11,456
Outstanding options at end of period		1,432		$	10.82		4.7	$	7,492
Outstanding SARs at end of period		2,378			14.55		6.5		3,964
Options exercisable at end of period		1,432			10.82		4.7		7,492
SARs exercisable at end of period		892			14.39		3.9		1,704

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Intrinsic value of options exercised	$	3,522	$	2,655	$	3,512
Estimated fair value of options and SARs that vested		3,993		3,747		2,890
Stock-based compensation cost recognized in income		5,592		4,441		3,290
Total tax benefit on share-based compensation recognized		1,917		1,560		1,016
Total amount of cash received from exercises		1,152		1,041		2,398
Tax (expense) benefit realized from exercises		1,187		877		1,340
Cash used to settle equity instruments		—		—		—

As of December 31, 2012, the total compensation cost related to awards not yet recognized was $6.7 million. The weighted average period over which this expense is expected to be recognized is two years. The Company’s policy upon the exercise of options or SARs has been to issue new shares into the market place.

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Restricted Stock Awards. The following activity occurred in the periods indicated:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
RSUs awarded		117		112		119
Total fair value of RSUs awarded	$	1,957	$	1,695	$	1,413
Total expense recognized for RSUs		1,389		920		639

Tax Benefits. The Company has elected to use the transition short-cut method to determine its pool of windfall tax benefits in accordance with ASC 718. Tax attributes are determined under the tax law ordering method.

NOTE 17:  SEGMENT INFORMATION

We are a global industrial company that designs, manufactures, purchases, and markets equipment, replacement and component parts, and accessories to professionals and consumers in select end-markets and to OEMs for use on original equipment. Our products are sold in over 115 countries and approximately 56% of our 2012 sales were shipped to customers outside of the U.S.

The Company identifies operating segments primarily based on organizational structure, reporting structure, and the evaluation of the Chief Operating Decision Maker (Chief Executive Officer). Our organizational structure reflects our view of the end-user market segments we serve, and we currently operate in two primary business segments. The Forestry, Lawn, and Garden or FLAG segment, manufactures and markets cutting chain, guide bars, and drive sprockets for chain saw use, and lawnmower and edger blades for outdoor power equipment. The FLAG segment also purchases branded replacement parts and accessories from other manufacturers and markets them to our FLAG customers through our global sales and distribution network. The FLAG segment includes the operations of the Company that have historically served the FLAG markets, as well as KOX, and a portion of the PBL business. The FLAG segment represented 70.1% of our consolidated sales for the year ended December 31, 2012.

The Company’s Farm, Ranch, and Agriculture or FRAG segment manufactures and markets attachments for tractors in a variety of mowing, cutting, clearing, material handling, landscaping and grounds maintenance applications, as well as log splitters, post-hole diggers, self-propelled lawnmowers, attachments for off-highway construction equipment applications, and other general purpose tractor attachments. In addition, the FRAG segment manufactures a variety of attachment cutting blade component parts. The FRAG segment also purchases replacement parts and accessories from other manufacturers that we market to our FRAG customers through our sales and distribution network. The FRAG segment includes the operations of SpeeCo, Woods/TISCO, and a portion of the PBL business. The FRAG segment represented 27.0% of our consolidated sales for the year ended December 31, 2012.

The Company also operates a concrete cutting and finishing equipment business that represented 2.8% of consolidated sales for the year ended December 31, 2012, and is reported within the Corporate and Other category. This business manufactures and markets diamond cutting chain and assembles and markets concrete cutting chain saws and accessories for the construction equipment market.

The Corporate and Other category also includes the costs of providing certain centralized administrative functions including accounting, banking, our continuous improvement program, credit management, executive management, finance, information systems, insurance, legal, our mergers and acquisitions program, treasury, and other functions. Costs of centrally provided shared services are allocated to business units based on various drivers, such as revenues, purchases, headcount, computer software licenses, and other relevant measures of the use of such services. We also include the facility closure and restructuring costs recognized in 2012 within this Corporate and Other category, because we do not consider such events to be ongoing aspects of our business segments’ activities. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

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The following table reflects selected financial information by segment and sales by geographic region.

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Sales:
FLAG	$	650,480		$	659,883		$	554,053
FRAG		250,845			147,475			34,200
Corporate and other		26,341			24,272			23,227
Total sales	$	927,666		$	831,630		$	611,480
Operating income (expense):
FLAG	$	108,255		$	115,597		$	104,113
FRAG		(7,495	)		4,474			1,671
Corporate and other		(21,480	)		(22,118	)		(20,229	)
Total operating income	$	79,280		$	97,953		$	85,555
Depreciation and amortization:
FLAG	$	26,574		$	24,663		$	21,898
FRAG		16,341			9,941			3,135
Corporate and other		2,203			1,203			2,566
Total depreciation and amortization	$	45,118		$	35,807		$	27,599
Capital expenditures:
FLAG	$	45,050		$	38,767		$	19,693
FRAG		6,717			1,600			83
Corporate and other		158			6			226
Total capital expenditures	$	51,925		$	40,373		$	20,002
Sales by geographic region:
United States	$	407,967		$	308,593		$	194,416
Europe		241,884			229,103			166,960
China		44,412			45,134			38,967
Brazil		36,561			33,242			29,402
Canada		30,232			25,285			18,853
Russian Federation		26,040			23,375			23,669
All others, individually insignificant		140,570			166,898			139,213
Total sales	$	927,666		$	831,630		$	611,480

The geographic sales information is by country of destination. No customer accounted for 10% or more of sales in 2012 or 2011. One customer, Husqvarna AB, accounted for approximately 12% of sales in 2010.

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Balance Sheet Information by Segment	As of December 31,
(Amounts in thousands)	2012		2011
Assets:
FLAG	$	468,121	$	472,881
FRAG		374,856		370,057
Corporate and other		62,314		41,269
Total assets	$	905,291	$	884,207
Goodwill:
FLAG	$	66,297	$	66,223
FRAG		98,865		98,848
Corporate and other		13		13
Total goodwill	$	165,175	$	165,084
Property, plant, and equipment, net:
United States	$	91,446	$	86,677
China		41,610		22,706
Canada		20,473		18,572
European Union		12,154		14,461
Brazil		11,532		12,837
All other		487		619
Total property, plant, and equipment, net	$	177,702	$	155,872

Property, plant, and equipment is shown net of accumulated depreciation. Each of our business units purchases certain important materials from a limited number of suppliers that meet quality criteria. Although alternative sources of supply are available, the sudden elimination of certain suppliers could result in manufacturing delays, a reduction in product quality, and a possible loss of sales in the near term.

(Amounts in thousands)	FLAG		FRAG		Corporate and Other		Total
Goodwill:
December 31, 2011	$	66,223	$	98,848	$	13	$	165,084
Effect of changes in foreign currency translation rates		74		17		—		91
December 31, 2012	$	66,297	$	98,865	$	13	$	165,175

NOTE 18:  SUPPLEMENTAL CASH FLOW INFORMATION

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Interest paid	$	16,574	$	16,961	$	30,007
Income taxes paid, net		24,672		24,827		14,858

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NOTE 19:  CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

At December 31, 2012, approximately 47% of accounts receivable were from customers outside the U.S. One customer accounted for 7.3% and 4.8% at December 31, 2012 and 2011, respectively, of the total accounts receivable balance. No other customer accounted for more than 3% of accounts receivable at December 31, 2012 or 2011. Accounts receivable are principally from dealers, distributors, mass merchants, chain saw manufacturers, and other OEMs. The majority of accounts receivable are not collateralized.

The carrying amount of cash and cash equivalents approximates fair value because of the short-term maturity of those instruments. The carrying amount of accounts receivable approximates fair value because the maturity period is short and the Company has reduced the carrying amount to the estimated net realizable value with an allowance for doubtful accounts. The fair value of the senior credit facility principal outstanding is determined by reference to prices of recent transactions for similar debt. Derivative financial instruments are carried on the Consolidated Balance Sheets at fair value, as determined by reference to quoted terms for similar instruments. The carrying amount of other financial instruments approximates fair value because of the short-term maturity periods and variable interest rates associated with the instruments.

The estimated fair values of the senior credit facility loans at December 31, 2012 and 2011 are presented below. See also Note 9.

	December 31, 2012				December 31, 2011
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior credit facility debt	$	516,250	$	513,669	$	524,450	$	521,828

Derivative Financial Instruments and Foreign Currency Hedging. The Company has manufacturing and/or distribution operations in Brazil, Canada, China, Europe, Japan, Mexico, Russia, and the U.S. Foreign currency exchange rate movements create a degree of risk by affecting the U.S. Dollar value of certain balance sheet positions denominated in foreign currencies, and by affecting the translated amounts of revenues and expenses. Additionally, the interest rates available in certain jurisdictions in which the Company holds cash may vary, thereby affecting the return on cash equivalent investments. The Company makes regular cash payments to its foreign subsidiaries and is exposed to changes in exchange rates from these transactions, which may adversely affect its results of operations and financial position. Certain other foreign subsidiaries make regular cash payments to the Company and changes in exchange rates from these transactions can also expose the Company, which may adversely affect its results of operations and financial position.

The Company manages a portion of its foreign currency exchange rate exposures with derivative financial instruments. These instruments are designated as cash flow hedges and are recorded on the Consolidated Balance Sheets at fair value. The Company’s objective in executing these hedging instruments is to minimize earnings volatility resulting from conversion and the re-measurement of foreign currency denominated transactions. The effective portion of the gains or losses on these contracts due to changes in fair value is initially recorded as a component of accumulated other comprehensive loss and is subsequently reclassified into net earnings when the contracts mature and the Company settles the hedged payment. The classification of effective hedge results is the same in the Consolidated Statements of Income as that of the underlying exposure. These contracts are highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates.

The cumulative unrealized pre-tax loss on these derivative contracts included in accumulated other comprehensive loss on the Consolidated Balance Sheets was $28 thousand as of December 31, 2012 and $0.5 million as of December 31, 2011. The unrealized pre-tax loss included in accumulated other comprehensive loss is expected to be recognized in the Consolidated Statement of Income during the next twelve months.

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Amounts recognized in cost of sales in the Consolidated Statements of Income at the maturity of the related derivative financial instruments were as follows.

	Year Ended December 31,
(Amounts in thousands)	2012			2011		2010
Gain (loss) on foreign currency derivative financial instruments	$	(75	)	$	788	$	2,353

Gains and losses on these foreign currency derivative financial instruments are offset in net earnings by the effects of currency exchange rate changes on the underlying transactions. Through December 31, 2012, the Company has not recognized any amount from these contracts in earnings due to ineffectiveness. The aggregate notional amount of these foreign currency contracts outstanding was $45.5 million at December 31, 2012 and $37.5 million at December 31, 2011.

Derivative Financial Instruments and Interest Rates. The senior credit facility agreement terms include a requirement to cover 35% of the outstanding principal on our term loan with fixed or capped interest rates. In the first six months of 2011, we entered into interest rate cap agreements covering 35% of the outstanding principal on our term loans A and B that capped the maximum LIBOR used to determine the interest rate we pay at 5.00% through February 28, 2013. During the third quarter of 2011, following the Fourth Amendment and Restatement of our senior credit facilities, we terminated these interest rate cap contracts with a charge to expense of $0.1 million. In October 2011, we entered into an interest rate cap agreement covering an initial notional amount of $103.7 million of term loan principal outstanding that caps the maximum interest rate at 7.50%. In October and November 2011, we also entered into a series of interest rate swap contracts whereby the interest rate we pay will be fixed between 3.30% and 4.20% on $130.0 million of term loan principal for the period of June 2013 through varying maturity dates between December 2014 and August 2016. These interest rate swap and cap agreements are designated as cash flow hedges and are recorded on the Consolidated Balance Sheets at fair value. Through December 31, 2012, the Company has not recognized any amount from these contracts in earnings due to ineffectiveness.

Derivatives held by the Company are summarized as follows:

	Carrying Value on Consolidated Balance			Assets (Liabilities) Measured at Fair Value
(Amounts in thousands)	Sheets			Level 1		Level 2			Level 3
December 31, 2012:
Interest rate hedge agreements	$	(3,960	)	$	—	$	(3,960	)	$	—
Foreign currency hedge agreements		(28	)		—		(28	)		—
December 31, 2011:
Interest rate hedge agreements	$	(1,303	)	$	—	$	(1,303	)	$	—
Foreign currency hedge agreements		(505	)		—		(505	)		—

See Note 11 for a description of the framework for measuring fair value and Levels 1, 2, and 3. In accordance with ASC 820, the Company evaluates nonperformance risk of its counterparties in calculating fair value adjustments. As of December 31, 2012 and 2011, all outstanding derivative instruments were fully collateralized; therefore, the nonperformance risk is considered remote. The carrying values as of December 31, 2012 are included in accrued expenses on the Consolidated Balance Sheet.

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NOTE 20:  DISCONTINUED OPERATIONS

On September 30, 2010, we sold our indirect wholly-owned subsidiary Gear Products to Tulsa Winch, Inc., an operating unit of Dover Industrial Products, Inc., for net cash proceeds of $24.8 million. Under terms of the stock purchase agreement, the parties agreed to treat the stock sale as if it were an asset sale for income tax purposes, which resulted in an increase in income tax expense we recognized on the sale. Gear Products results up to the date of the sale are reported as discontinued operations for all periods presented, and are summarized below:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Sales	$	—	$	—	$	12,297
Operating income	$	—	$	—	$	1,031
Gain on sale of subsidiary		—		—		11,941
Income before income taxes		—		—		12,972
Income tax provision		—		—		7,174
Income from discontinued operations	$	—	$	—	$	5,798

SUPPLEMENTARY DATA

QUARTERLY RESULTS OF OPERATIONS

(Unaudited)

The following tables set forth a summary of the unaudited quarterly results of operations for 2012 and 2011.

	Year Ended December 31, 2012
(Amounts in thousands, except per share data)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
(Amounts may not sum due to rounding)
Sales	$	226,309	$	239,059	$	232,736	$	229,562	$	927,666
Gross profit		62,665		68,078		62,928		62,543		256,215
Net income		5,881		13,101		11,622		8,984		39,588
Net income per share:
Basic	$	0.12	$	0.27	$	0.24	$	0.18	$	0.81
Diluted		0.12		0.26		0.23		0.18		0.79
	Year Ended December 31, 2011
(Amounts in thousands, except per share data)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
(Amounts may not sum due to rounding)
Sales	$	180,874	$	201,337	$	212,904	$	236,515	$	831,630
Gross profit		60,048		64,188		65,560		66,013		255,809
Net income		15,622		13,752		10,805		9,502		49,682
Net income per share:
Basic	$	0.32	$	0.28	$	0.22	$	0.19	$	1.02
Diluted		0.31		0.28		0.22		0.19		1.01

Acquisition accounting effects included in the above quarterly results for 2012 totaled $4.4 million in the first quarter, $4.3 million in the second quarter, $3.7 million in the third quarter, and $3.7 million in the fourth quarter. Facility closure and restructuring costs during 2012 totaled $4.9 million in the first quarter, $1.7 million in the second quarter, and $0.8 million in the third quarter.

Results in all four quarters of 2011 reflect the acquisition of KOX in March. Results for the third and fourth quarters of 2011 also include the acquisitions of PBL and Woods/TISCO. Acquisition accounting effects included in the above quarterly results for 2011 totaled $2.1 million in the first quarter, $2.6 million in the second quarter, $4.2 million in the third quarter, and $6.7 million in the fourth quarter of 2011. In addition, net income in the third quarter of 2011 reflects a pretax charge of $3.9 million for the early extinguishment of debt.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Controls and Procedures

We maintain disclosure controls and procedures that are designed with the objective of providing reasonable assurance that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply their judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, an evaluation was performed on the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this annual report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of December 31, 2012.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Chief Executive Officer and Chief Financial Officer Certifications

The certifications of our Chief Executive Officer and Chief Financial Officer required under Section 302 of the Sarbanes-Oxley Act have been filed as Exhibits 31.1 and 31.2 to this report.

Management’s report on internal control over financial reporting and the audit report of PricewaterhouseCoopers LLP are included in Item 8 of this Report.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE OF THE REGISTRANT

See the “Election of Directors”, “Executive Officers”, and “Audit Committee Disclosure” sections of our Proxy Statement for the 2013 Annual Meeting of Stockholders, which sections are incorporated herein by reference.

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ITEM 11. EXECUTIVE COMPENSATION

See the “Compensation of Directors”, “Compensation Discussion and Analysis”, “Executive Compensation”, and “Employment Agreements” sections of our Proxy Statement for the 2013 Annual Meeting of Stockholders, which sections are incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

See the “Principal Stockholders” and “Equity Compensation Plan Information” sections of our Proxy Statement for the 2013 Annual Meeting of Stockholders, which sections are incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

See the “Election of Directors”, “The Board and Its Committees”, “Audit Committee Disclosure”, “Audit Committee Report”, and “Certain Transactions and Other Matters” sections of our Proxy Statement for the 2013 Annual Meeting of Stockholders, which sections are incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

See the “Ratification of the Appointment of Independent Registered Public Accounting Firm” section of our Proxy Statement for the 2013 Annual Meeting of Stockholders, which section is incorporated herein by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

	Page Reference
(A) Certain documents filed as part of Form 10-K
(1) Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm		41
Consolidated Statements of Income for the years ended December 31, 2012, 2011, and 2010		42
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011, and 2010		43
Consolidated Balance Sheets as of December 31, 2012 and 2011		44
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011, and 2010		45
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2012, 2011, and 2010		46
Notes to Consolidated Financial Statements		47
Supplementary Data		79
(2) Financial Statement Schedules
Schedule II – Consolidated Schedule of Valuation and Qualifying Accounts for the years ended December 31, 2012, 2011, and 2010		86

All other schedules have been omitted because they are not required or because the information is presented in the Notes to Consolidated Financial Statements.

81

(B) Exhibits required by Item 601 of Regulation S-K:

*3(a) Restated Certificate of Incorporation of Blount International, Inc. (included as Exhibit A to the Agreement and Plan of Merger and Recapitalization which is Exhibit 2.1) filed as part of the Proxy Statement-Prospectus which forms a part of the Registration Statement on Form S-4 filed by Blount International, Inc. on July 15, 1999 (Reg. No. 333-82973).

*3(b) By-laws of Blount International, Inc. filed as Exhibit 3.1 to Form 8-K filed by Blount International, Inc. on January 25, 2011 (Commission File No. 001-11549).

*4(a) Form of Stock Certificate of New Blount Common Stock filed as part of the Proxy Statement-Prospectus which forms a part of the Registration Statement on Form S-4 filed by Blount International, Inc. on July 15, 1999 (Reg. No. 333-82973).

*4(b) Fourth Amended and Restated Credit Agreement, dated as of June 13, 2011, by and among Blount Inc., a Delaware corporation, Omark Properties, Inc., an Oregon corporation, Windsor Forestry Tools LLC, the other Credit Parties signatory thereto; General Electric Capital Corporation, in its capacity as Agent for the Lenders; and the other Lenders party thereto filed as Exhibit 10.1 to the Quarterly Report of Blount International, Inc. on Form 10-Q for the period ended June 30, 2011 (Commission File No. 001-11549).

*4(c) First Amendment to Fourth Amended and Restated Credit Agreement dated August 3, 2012, by and among Blount Inc., a Delaware corporation, Omark Properties, Inc., an Oregon corporation, Windsor Forestry Tools LLC, the other Credit Parties signatory thereto; General Electric Capital Corporation, in its capacity as Agent for the Lenders; and the other Lenders party thereto filed as Exhibit 99.2 to the Current Report of Blount International, Inc. on Form 8-K dated August 7, 2012 (Commission File No. 001-11549).

*10(a) Supplemental Retirement and Disability Plan of Blount, Inc. which was filed as Exhibit 10(e) to the Annual Report of Blount, Inc., on Form 10-K for the fiscal year ended February 29, 1992 (Commission File No. 1-7002).

*10(b) Supplemental Retirement Savings Plan of Blount, Inc. which was filed as Exhibit 10(i) to the Annual Report of Blount, Inc. on Form 10-K for the fiscal year ended February 29, 1992 (Commission File No. 1-7002).

*10(c) Blount, Inc. Executive Benefit Plans Trust Agreement and Amendment to and Assumption of Blount, Inc. Executive Benefit Plans Trust filed as Exhibits 10(x)(i) and 10(x)(ii) to the Annual Report of Blount International, Inc. on Form 10-K for the fiscal year ended February 29, 1996 (Commission File No. 001-11549).

*10(d) Blount, Inc. Benefits Protection Trust Agreement and Amendment To And Assumption of Blount, Inc. Benefits Protection Trust filed as Exhibits 10(y)(i) and 10(y)(ii) to the Annual Report of Blount International, Inc. on Form 10-K for the fiscal year ended February 29, 1996 (Commission File No. 001-11549).

*10(e) The Blount Deferred Compensation Plan which was filed as Exhibit 10(cc) to the Annual Report of Blount International, Inc. on Form 10-K for the year ended December 31, 1998 (Commission File No. 001-11549).

*10(f) Blount International, Inc. 2006 Equity Incentive Plan, effective as of February 15, 2006, filed as Exhibit B to the Proxy Statement of Blount, International, Inc. for the Annual Meeting of Stockholders held April 25, 2006 (Commission File No. 001-11549), and the Amendment to the Blount International, Inc. 2006 Equity Incentive Plan dated February 23, 2007, filed as Exhibit 10.2 to the Registration Statement on Form S-8 file by Blount International, Inc., which became effective on March 7, 2008 (Reg. No. 333-149584).

*10(g) Employment Agreement by and between Blount International, Inc. and Andrew W. York dated as of February 13, 2012, filed as Exhibit 10(h) to Form 10-K filed by Blount International, Inc. on March 13, 2012 Commission File No. 001-11549).

82

*10(h) Employment Agreement by and between Blount International, Inc. and Joshua L. Collins dated September 28, 2009, filed as Exhibit 10.1 to Form 8-K filed by Blount International, Inc. on October 1, 2009 (Commission File No. 001-11549).

*10(i) Consulting Agreement by and between Blount International, Inc. and Russell L. German, dated as of July 2, 2010 filed as Exhibit 10(k) to the Annual Report of Blount International, Inc. on Form 10-K for the year ended December 31, 2010 (Commission File No. 001-11549).

*10(j) Amended and Restated Employment Agreement by and between Blount International, Inc. and Calvin E. Jenness dated as of December 30, 2010 filed as Exhibit 10(l) to the Annual Report of Blount International, Inc. on Form 10-K for the year ended December 31, 2010 (Commission File No. 001-11549).

*10(k) Amended and Restated Employment Agreement by and between Blount International, Inc. and Kenneth Owen Saito dated as of December 30, 2010 filed as Exhibit 10(m) to the Annual Report of Blount International, Inc. on Form 10-K for the year ended December 31, 2010 (Commission File No. 001-11549).

*10(l) Amended and Restated Employment Agreement by and between Blount International, Inc. and Cyrille Benoit Michel dated as of December 30, 2010 filed as Exhibit 10(o) to the Annual Report of Blount International, Inc. on Form 10-K for the year ended December 31, 2010 (Commission File No. 001-11549).

*10(m) Employment Agreement by and between Blount International, Inc. and David A. Willmott dated December 14, 2009, filed as Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2010 (Commission File No. 001-11549).

**10(n) Employment Agreement by and between Blount International, Inc. and Paul A. Valas dated October 10, 2012 and filed electronically herewith.

*10(o) Stock Purchase Agreement by and between Blount, Inc. and SpeeCo Companies L.L.C. dated as of August 9, 2010, filed as Exhibit 2.1 to Form 8-K filed by Blount International, Inc. on August 11, 2010 (Commission File No. 001-11549).

*10(p) Stock Purchase Agreement by and among Tulsa Winch, Inc., Blount, Inc. and Dover Industrial Products, Inc. dated as of September 30, 2010, filed as Exhibit 10.1 to Form 10-Q for the quarter ended September 30, 2010 (Commission File No. 001-11549).

*10(q) Agreement and Plan of Merger dated as of August 15, 2011, by and among SP Companies, Inc., Grenade LLC, Blount, Inc., and GenWoods HoldCo, LLC, filed as Exhibit 99.4 to Form 8-K/A filed by Blount International, Inc. on November 7, 2011 (Commission File No. 001-11549).

*14 Code of Ethics for Covered Officers as approved by Audit Committee on February 2, 2004, filed as Exhibit 14 to the Annual Report of Blount International, Inc. on Form 10-K for the year ended December 31, 2003 (Commission File No. 001-11549).

**21 A list of the significant subsidiaries of Blount International, Inc.

**23 Consent of Independent Registered Public Accounting Firm.

**31.1 Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 by Joshua L. Collins, Chairman and Chief Executive Officer.

**31.2 Certifications pursuant to section 302 of the Sarbanes-Oxley Act of 2002 by Calvin E. Jenness, Senior Vice President and Chief Financial Officer.

**32.1 Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 by Joshua L. Collins, Chairman and Chief Executive Officer.

83

**32.2 Certification pursuant to section 906 of the Sarbanes-Oxley Act of 2002 by Calvin E. Jenness, Senior Vice President and Chief Financial Officer.

***101.INS XBRL Instance Document

***101.SCH XBRL Taxonomy Extension Schema Document

***101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

***101.DEF XBRL Taxonomy Extension Definition Linkbase Document

***101.LAB XBRL Taxonomy Extension Label Linkbase Document

***101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

* Incorporated by reference

** Filed electronically herewith. Copies of such exhibits may be obtained upon written request to:

Blount International, Inc.

P.O. Box 22127

Portland, Oregon 97269-2127

*** Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities and Exchange Act of 1934, as amended and otherwise are not subject to liability under those sections.

84

SIGNATURES

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 duly authorized undersigned.

BLOUNT INTERNATIONAL, INC.

Registrant

Dated: March 8, 2013
/s/ Calvin E. Jenness	/s/ Mark V. Allred
Calvin E. Jenness	Mark V. Allred
Senior Vice President and	Vice President and Corporate Controller
Chief Financial Officer	(Principal Accounting Officer)
(Principal Financial Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report is signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Dated: March 8, 2013

/s/ Robert E. Beasley, Jr.	/s/ Ronald Cami
Robert E. Beasley, Jr.	Ronald Cami
Director	Director
/s/ Andrew C. Clarke	/s/ Joshua L. Collins
Andrew C. Clarke	Joshua L. Collins
Director	Chairman and Chief Executive Officer
	Director
/s/ Nelda J. Connors	/s/ Thomas J. Fruechtel
Nelda J. Connors	Thomas J. Fruechtel
Director	Director
/s/ E. Daniel James	/s/ Harold E. Layman
E. Daniel James	Harold E. Layman
Director	Director
/s/ David A. Willmott
David A. Willmott
President and Chief Operating Officer
Director

85

BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES

SCHEDULE II

CONSOLIDATED SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

(Amounts in thousands)
Column A	Column B		Column C					Column D			Column E
			Additions (Reductions)
Description	Balance at Beginning of Period		Charged (Credited) to Cost and Expenses			Business Acquisitions (Dispositions), Net		(Deductions) Recoveries			Balance at End of Period
Year Ended December 31, 2012:
Allowance for doubtful accounts receivable	$	3,142	$	98		$	—	$	(124	)	$	3,116
Inventory reserves		9,899		8,281			—		(6,454	)		11,726
Valuation allowance for deferred tax assets		603		1,949			—		—			2,552
Year Ended December 31, 2011:
Allowance for doubtful accounts receivable		1,490		608			1,097		(53	)		3,142
Inventory reserves		5,108		4,326			3,428		(2,963	)		9,899
Valuation allowance for deferred tax assets		2,314		(1,711	)		—		—			603
Year Ended December 31, 2010:
Allowance for doubtful accounts receivable		3,339		120			169		(2,138	)	$	1,490
Inventory reserves		3,706		2,449			704		(1,751	)		5,108
Valuation allowance for deferred tax assets		2,366		(52	)		—		—			2,314

86

The graph below matches the cumulative 5-year total return of holders of Blount International, Inc.‘s common stock with the cumulative total returns of the NYSE Composite index, and a customized peer group of companies that includes nine companies, which are Actuant, AGCO Corp., Alamo Group Inc., Briggs & Stratton Corp., Husqvarna AB, Kennametal Inc., Makita Corp., Snap-On Inc., and The Toro Company. The graph assumes that the value of the investment in the Company’s common stock, in each peer group, and the index (including reinvestment of dividends) was $100 on December 31, 2007 and tracks it through December 31, 2012.

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Year ended December 31,	2007		2008		2009		2010		2011		2012
Blount International, Inc.		100.00		77.01		82.04		128.03		117.96		128.52
NYSE Composite		100.00		60.14		77.32		87.86		84.54		98.19
Peer Group		100.00		54.28		72.63		96.25		78.37		104.53

87

EX-10.(N)

Exhibit 10(n)

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 10^th day of October, 2012, by and between BLOUNT INTERNATIONAL, INC., a Delaware corporation (the “Company”), and Paul A. Valas (“Executive”).

W I T N E S S E T H:

RECITALS

A. The Company desires to continue to employ and retain the unique experience, abilities, and services of Executive, and Executive desires to continue to be employed by the Company, subject to the terms and conditions of this Agreement.

B. As President of the Farm, Ranch, and Agriculture (“FRAG”) Segment of the Company, Executive will be engaged in administrative, executive, or professional work in connection with Executive’s employment with the Company. Executive will perform predominantly intellectual, managerial, or creative tasks and will earn a salary and be paid on a salary basis.

C. The Company will have a protectable interest in connection with Executive’s employment with the Company. Executive will have access to trade secrets or will have access to competitively sensitive confidential business and professional information that otherwise might not qualify as a trade secret, including product development plans, product launch plans, marketing strategy, or sales plans.

D. Executive’s employment is currently subject to an Employment Agreement dated December 14, 2009 (the “Old Agreement”). The parties intend for this Agreement to supersede the Old Agreement, except that Section 3(d), clause (i) of the Old Agreement, which contains a non-competition provision entered into upon commencement of Executive’s employment, shall continue in full force and effect, the language of which has been replicated in its entirety in Section 3(d) hereof.

AGREEMENT

1. Employment and Term.

(a) Subject to the terms and conditions of this Agreement, the Company hereby employs Executive, and Executive hereby accepts employment as the Company’s President of the FRAG Segment, and shall have such responsibilities, duties and authority that are consistent with such positions as may be from time to time assigned to Executive by the Chief Executive Officer (the “CEO”) (or the CEO’s designee). Executive will comply with the reasonable instructions, policies, and rules that the Company may establish from time to time. During the Term, Executive will devote Executive’s full time and attention to the performance of Executive’s duties under this Agreement and will discharge Executive’s duties to the best of Executive’s ability, in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner Executive reasonably believes to be in the best interests of the Company.

(b) Unless earlier terminated as provided herein, Executive’s employment under this Agreement shall be for a one-year term (the “Initial Term”) commencing on October 10, 2012 (the “Effective Date”). At the end of the Initial Term, this Agreement shall extend automatically without further action by either the Company or Executive for successive additional one (1) year periods (the Initial Term and the successive one-year extension periods are hereinafter referred to as the (“Term”) unless either party delivers to the other written notice of its decision not to extend this Agreement, in which event this the “Term” of this Agreement shall be the one-year period following the date of such notice and this Agreement shall terminate upon the expiration of such Term, further that the Term of this Agreement will cease to extend automatically one year prior to the date that Executive attains age 65. Following termination, those provisions that by their nature continue following termination, shall continue in full force and effect.

(c) Executive represents and warrants to the Company that the signing and delivery of this Agreement by Executive and the performance by Executive of all of Executive’s obligations under this Agreement will not (i) breach any agreement to which Executive is a party, or give any person the right to accelerate any obligation of Executive; (ii) violate any law, judgment, or order to which Executive is subject; or (iii) require the consent, authorization, approval of any person, including but not limited to any governmental body.

(d) Executive acknowledges that the terms of this employment relationship may be supplemented by policies adopted by the Company from time to time. The Company may revise its policies at any time in its sole discretion. In the event of any conflict between the terms of this Agreement and the Company’s policies, the terms of this Agreement shall govern.

(e) Executive understands that Executive’s employment relationship with the Company is “AT-WILL,” and that the Company may, subject to the terms and conditions of this Agreement, terminate the relationship at any time for any reason or no reason.

2. Compensation and Benefits. As compensation for Executive’s services during the Term of this Agreement, Executive shall be paid and receive the amounts and benefits set forth in subsections (a) through (d) below:

(a) An annual base salary (“Base Salary”) at a rate of Three Hundred and Fifty Thousand Dollars ($350,000.00) per year, prorated for any partial year of employment. Executive’s Base Salary shall be subject to annual review at such time as the Company conducts salary reviews for its executives generally and may be increased accordingly. Executive’s salary shall be payable in substantially equal installments on a semi-monthly basis, or in accordance with the regular payroll practices in effect and applicable to Executive from time to time.

(b) Executive shall be eligible to participate in the Company’s Executive Management Annual Incentive Program (“Incentive Program”). The Company will establish performance goals for Executive each calendar year under the Incentive Program, and Executive’s annual Target Bonus shall be 50% of Base Salary; the maximum award for exceeding the performance goals shall be established by the Company from time-to-time. The

Employment Agreement – Paul A. Valas

-2-

annual incentive bonus payable under this subsection (b) shall be payable as a lump sum at the same time bonuses are paid to other executives after certification by the Compensation Committee (or its designee) that the applicable performance objectives have been met, on or before March 15 of the following year. If permitted by the terms of the Incentive Program for the applicable calendar year, Executive may elect to defer all or a portion of the bonus by making such election deferral by June 30 of each year; provided, however, that for this first calendar year, the election, if permitted, must be within thirty (30) days of the Effective Date.

(c) Executive shall be entitled to participate in, or receive benefits under, any “employee benefit plan” (as defined in Section 3(3) of ERISA) or employee benefit arrangement made generally available by the Company to its executives from time to time, including plans providing 401(k) benefits, matching and Savings Plus benefits, deferred compensation, health care (including Exec-U-Care), dental and vision care, life insurance, disability, accidental death and similar benefits.

(d) Executive will be entitled to vacation in accordance with the Company’s applicable vacation policy. Executive will be promptly reimbursed by Company for all reasonable business expenses he incurs in carrying out his duties and responsibilities under this Agreement.

(e) Executive shall be eligible to participate in the annual Long Term Incentive Program (LTIP), as may be administered from time to time by the Compensation Committee, pursuant to the terms of the written agreement evidencing any award that is granted thereby.

(f) The Executive previously purchased certain restricted stock, which will continue to be governed by the terms and restrictions under which such stock was purchased.

3. Confidentiality and Noncompetition.

(a) For the purposes of this Section 3, Company shall include Blount International, Inc. and any of its subsidiaries and affiliates. Executive acknowledges that, prior to and during the Term of this Agreement, the Company has furnished and will furnish to Executive Confidential Information which could be used by Executive on behalf of a competitor of the Company to the Company’s substantial detriment. Moreover, the parties recognize that Executive, during the course of Executive’s employment with the Company, will develop important relationships with customers and others having valuable business relationships with the Company. In view of the foregoing, Executive acknowledges and agrees that the restrictive covenants contained in this Section are reasonably necessary to protect the Company’s legitimate business interests and goodwill. If it is determined that any term of this Section 3 is overly broad or unreasonable as applied to Executive, the parties agree that it is their mutual intention and agreement that these restrictive covenants be enforced to the fullest extent possible and the restrictive covenants shall be modified to the extent necessary to accomplish such purpose.

(b) Executive agrees that Executive shall protect the Company’s Confidential Information and shall not disclose to any Person, or otherwise use, except in connection with

Employment Agreement – Paul A. Valas

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Executive’s duties performed in accordance with this Agreement or otherwise for the Company, any Confidential Information at any time, including following the termination of Executive’s employment with the Company for any reason; provided, however, that Executive may make disclosures required by a valid order or subpoena issued by a court or administrative agency of competent jurisdiction, in which event Executive will promptly notify the Company of such order or subpoena to provide the Company an opportunity to protect its interests. Executive will promptly notify the Company of any unauthorized use or disclosure of Confidential Information, or any other breach of this Section 3 and assist the Company in every reasonable way to retrieve any Confidential Information that was used or disclosed by Executive without the Company’s specific prior written authorization and to mitigate the harm caused by the unauthorized use or disclosure. Executive’s obligations under this Section 3(b) shall survive any expiration or termination of this Agreement for any reason.

(c) Upon the termination or expiration of Executive’s employment hereunder, Executive agrees to deliver promptly to the Company all Company files, customer lists, management reports, memoranda, research, Company forms, financial data and reports and other documents supplied to or created by Executive in connection with Executive’s employment hereunder (including all copies of the foregoing) in Executive’s possession or control, and all of the Company’s equipment and other materials in Executive’s possession or control. Executive’s obligations under this Section 3(c) shall survive any expiration or termination of this Agreement.

(d) Executive shall comply with Section 3(d), clause (i) of the Old Agreement, provided the reference to “Section 4.1(a) below” shall refer to Section 4.2 of this Agreement and the reference to “this Agreement” shall refer to this Agreement instead of the Old Agreement. Executive reaffirms his continuing noncompetition obligations under Section 3(d), clause (i) of the Old Agreement and agrees that those provisions are valid, enforceable, and continuing in full force and effect. Section 3(d), clause (i) of the Old Agreement reads as follows:

“Upon the termination or expiration of his employment under this Agreement, Executive agrees that for a period of one (1) year from his Date of Termination or until the end of the period for which he is entitled to receive compensation under Section 4.1(a) below, whichever is longer, he shall not (i) be employed by or provide services to any company or business engaged in the design, manufacture, marketing or sale of any products similar to those produced or offered by the Company or its affiliates in the geographic areas of the world in which the Company conducts its principal manufacturing and sales operations, including China, Brazil, Germany, and North America, provided that this noncompetition restriction shall in no event extend longer than two years from Executive’s Date of Termination.”

(e) During the Term and for a period of one (1) year after Executive’s Date of Termination, Executive shall not (i) divert or attempt to divert any person, concern or entity which is furnished products or services by the Company, with whom Executive had dealings while employed by the Company, from doing business with the Company or otherwise cause any

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person, concern or entity with whom he had dealings while employed by the Company to change its relationship with the Company, or (ii) solicit, lure or attempt to hire away any of the employees of the Company with whom Executive interacted directly or indirectly, while employed with the Company.

(f) Executive acknowledges that if Executive breaches or threatens to breach this Section 3, Executive’s actions may cause irreparable harm and damage to the Company that cannot be compensated in damages. Accordingly, if Executive breaches or threatens to breach this Section 3, the Company shall be entitled to seek injunctive relief, in addition to any other rights or remedies available to the Company. This is an independent covenant on the part of Executive and the existence of any claim or cause of action by Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of Executive’s agreement under this Section 3(f).

4. Termination.

4.1 By Executive without Good Reason. Executive shall have the right to terminate Executive’s employment hereunder at any time by Notice of Termination (as described in Section 6). If Executive terminates Executive’s employment for any reason other than Good Reason (as defined in Section 4.2 below), the Company’s obligations under this Agreement shall cease as of the date of such termination and Executive shall not be entitled to any further compensation and benefits other than those due and payable as of the Date of Termination and as set forth in Sections 4.5 and 4.6.

4.2 By Executive for Good Reason. Executive may terminate Executive’s employment for “Good Reason” if: (i) (a) there is a material diminution in Executive’s authority, duties, and responsibilities, (b) the Company requires Executive to be located more than 50 miles from the Company’s offices in Denver, Colorado, except for reasonably required travel or expatriate services for Company business, (c) there is a material reduction in the Executive’s Base Salary or (d) the Company has materially breached this Agreement, and (ii) Executive has provided written notice of such breach to the Company within ninety (90) days after such breach occurring, (iii) such breach has not been cured within thirty (30) days after written notice of such breach is given by Executive to the Company, and (iv) Executive terminates employment within sixty (60) days of the expiration of such cure period by providing Notice of Termination. It shall not constitute Good Reason if Executive’s base salary or compensation and benefits are materially reduced in connection with an across-the-board reduction of pay or benefits for executives of similar status.

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(a) Severance. In the event Executive terminates employment with the Company for “Good Reason,” in addition to the rights under Sections 4.5, 4.6 and 4.7, Executive shall be entitled to receive a severance amount (the “Severance”) payable in equal installments over the Severance Period, subject to Sections 4.2(b) through (f). The “Severance Period” means the lesser of (i) the 12-month period commencing on Executive’s Date of Termination, or (ii) the time period remaining from Executive’s Date of Termination until the date he attains age 65. The payment of Severance shall cease in the event of Executive’s death after termination of employment. The aggregate amount of Severance shall be calculated as follows and shall be subject to withholding of all applicable taxes:

(i) Severance Base Salary – The amount of Base Salary that would have been paid to Executive over the Severance Period if Executive had been employed, based on the Base Salary in effect as of the Date of Termination;

(ii) Cash in Lieu of Health and Life Insurance Coverage – An amount equal to the amount the Company would have spent on health insurance and life insurance on behalf of Executive and Executive’s dependents during the Severance Period had Executive continued to be employed during the Severance Period, based on the rates and coverage provided to Executive and Executive’s dependents as of the Date of Termination; and

(iii) Cash in Lieu of Retirement Funds – An amount equal to the amount the Company would have contributed on behalf of Executive to any employee retirement plans and deferred compensation plans during the Severance Period, based on the terms of the plans as of the Date of Termination.

(b) Section 409A Treatment of Payments. Each installment payment under Section 4.2(a) is a separate payment and the structure of the Severance is intended to satisfy the “short-term deferral exception” and/or the “two times pay exception” of Section 409A of the Code; provided that, if such exceptions do not apply and Executive is determined by the Company to be a “specified employee” under Section 409A, no payments that are subject to Section 409A will be made under Section 4.2(a) until a date which is six (6) months after the Date of Termination (and on such date the payments that would otherwise have been made during such six-month period shall be made). In no event shall any payment of Severance that is considered deferred compensation under Section 409A be made to Executive unless Executive has incurred a separation from service (as defined in Code Section 409A(a)(1)(A)(i)).

(c) Release of Claims. To be entitled to the Severance in Section 4.2(a) Executive must sign a general release of claims in the form required by the Company, releasing the Company, its subsidiaries, affiliates, directors, officers, and employees from all claims, damages and liabilities related to Executive’s employment and any benefit plans or agreements. No payments shall be made under Section 4.2(a) until such release has been properly executed and delivered to the Company and until the expiration of the revocation period, if any, provided under the release. If the release is not properly executed by Executive and delivered to the Company within the reasonable time periods specified in the release, the Company’s obligations under Section 4.2(a) will terminate.

(d) No Post-Employment Breach. As a condition to receipt of any installment of the Severance under Section 4.2(a), Executive shall not have breached any post-employment obligation of Executive under this Agreement. If at any time Executive breaches this Agreement, in addition to any other remedies at law or in equity, all unpaid installments of Severance shall be forfeited and Executive shall be obligated to reimburse the Company for any installments of Severance that Executive previously received from the Company.

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(e) No Duty to Mitigate. The Company agrees that if Executive is entitled to Severance, Executive shall not be required to mitigate damages by seeking other employment, nor shall any amount Executive earns reduce the amount payable by the Company hereunder.

(f) Only Severance Benefits. Executive agrees that the Severance shall be the only severance benefit payable to Executive by the Company and Executive hereby waives Executive’s rights (if any) to any severance benefits under any other plan or program of the Company and its affiliates.

4.3 By Company for Cause, Death, or Disability. The Company shall have the right to terminate Executive’s employment under this Agreement at any time during the Term for Cause (defined in Section 5.2), upon Executive’s death, or due to Executive’s Disability (defined in Section 5.5). In the event of termination for Cause, death, or Disability, the Company’s obligations under this Agreement shall cease as of the Date of Termination; provided, however, that Executive will be entitled to whatever benefits are payable as of, or as a result of, such termination pursuant to the terms of any health, life insurance, disability, welfare, retirement or other plan or program maintained by the Company in which Executive participates, and Executive shall be entitled to the rights under Sections 4.6, and 4.7.

4.4 By Company Otherwise. If the Company terminates Executive’s employment during the Term of this Agreement other than for Cause, death or Disability pursuant to Section 4.3, Executive shall be entitled to receive the Severance pursuant to Section 4.2(a), subject to all of the terms and conditions of Sections 4.2(b) through (f).

4.5 Equity Awards/Stock Options. Under any circumstances of termination of Executive’s employment, the vesting and exercisability of stock options, stock appreciation rights, restricted stock, restricted stock units and other equity awards held by Executive, shall be determined in accordance with the agreements or plans for such awards.

4.6 Previously Earned Bonus. In the event of any termination, other than termination for Cause, Executive shall be entitled to be paid any bonus that Executive had previously earned from the Company with respect to a completed calendar year, but which may not yet have been paid as of the Date of Termination. Such bonus shall be payable on the date such amounts are payable to other executives and Executive’s termination shall not affect the payment of such bonus.

4.7 Accrued Obligations. In the event of any termination, Executive shall be entitled to be paid his Base Salary accrued through the Date of Termination, and any unreimbursed business expenses submitted in accordance with Company policy (collectively “Accrued Obligations”). All payments of Accrued Obligations shall be made to Executive within thirty (30) business days of the Date of Termination of Executive’s employment under this Agreement.

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4.8 Limitation on Payments. Notwithstanding anything in this Agreement to the contrary, any benefits payable or to be provided to Executive by the Company or its affiliates, whether pursuant to this Agreement or otherwise, which are treated as severance payments under Code (defined in Section 5.3) Section 280G (“Severance Payments”) shall be modified in the manner provided below to the extent necessary so that the benefits payable or to be provided to Executive under this Agreement that are treated as Severance Payments, as well as any payments or benefits provided outside of this Agreement that are so treated, shall not cause the Company to have paid an excess Severance Payment. In computing such amount, the parties shall take into account all provisions of Code Section 280G, and the regulations thereunder, including making appropriate adjustments to such calculation for amounts established to be reasonable compensation. In the event that the amount of any Severance Payments which would be payable to or for the benefit of Executive under this Agreement must be reduced to comply with this Section 4.7, the amount of the Severance described in Section 4.2(a) shall be reduced. This Section 4.7 shall be interpreted so as to avoid the imposition of excise taxes on Executive under Section 4999 of the Code or the disallowance of a deduction to the Company pursuant to Section 280G(a) of the Code with respect to amounts payable under this Agreement or otherwise. This determination will be made after reasonable consultation with a national accounting firm selected by the Company.

4.9 Section 409A Compliance. This Agreement shall at all times be interpreted and operated in good faith compliance in accordance with the requirements of Section 409A. Any action that may be taken (and, to the extent possible, any action actually taken) by the Company shall not be taken (or shall be void and without effect), if such action violates the requirements of Section 409A. Any provision in this Agreement that is determined to violate the requirements of Section 409A shall be void and without effect. In addition, any provision that is required to appear in this Agreement in accordance with Section 409A that is not expressly set forth herein shall be deemed to be set forth herein, and the Agreement shall be administered in all respects as if such provision were expressly set forth.

5. Definitions. For purposes of this Agreement the following terms shall have the meanings specified below:

5.1 “Board” or “Board of Directors”. The Board of Directors of the Company.

5.2 “Cause”. Any of the following are grounds for the Company’s termination of Executive for “Cause.”

(a) Any act by Executive which has been found in an applicable court of law to constitute a felony;

(b) Executive engages in any form of dishonesty or conduct involving moral turpitude related to Executive’s employment relationship with the Company or that substantially impacts the reputation or operations of the Company in an adverse manner, as determined in the good faith judgment of the CEO (or the CEO’s designee);

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(c) Executive’s breach of any contractual, fiduciary or other recognized duty of Executive to the Company or any of its affiliates, or any other conduct that is patently inimical to the interests of the Company or any of its affiliates;

(d) Executive materially breaches this Agreement; or

(e) The willful or continued failure by Executive substantially to perform Executive’s duties with the Company or to comply with policies of the Company (other than any such failure resulting from incapacity due to mental or physical illness not constituting a Disability, as defined herein) if the CEO (or CEO’s designee) has delivered to the Executive a notice setting forth (i) the performance failure or policy compliance problem, (ii) the reasonable action that would remedy such failure or problem, and (iii) the required time frame for remedying such failure or problem (which in the case of a failure or problem not capable of being remedied within thirty (30) days, the requirement that commencement of such remediation must occur within seven (7) days and be diligently pursued thereafter, or for a failure or problem capable of being remedied within thirty (30) days, such 30-day deadline), and Executive shall not have complied with the required remediation timeframe.

For purposes of this Agreement, no act or failure to act by Executive shall be deemed to be “willful” unless done or omitted to be done by Executive not in good faith and without reasonable belief that Executive’s action or omission was in the best interests of the Company.

5.3 “Code”. The Internal Revenue Code of 1986, as it may be amended from time to time.

5.4 “Confidential Information”. All technical, business, and other information relating to the business of the Company or its subsidiaries or affiliates, including, without limitation, technical or nontechnical data, formulae, compilations, programs, devices, methods, techniques, processes, financial data, financial plans, product plans, and lists of actual or potential customers or suppliers, that (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other Persons, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. Such information and compilations of information shall be contractually subject to protection under this Agreement whether or not such information constitutes a trade secret and is separately protectable at law or in equity as a trade secret. Two years after the expiration or termination of this Agreement, information that does not constitute a trade secret under applicable law, will not be considered Confidential Information.

5.5 “Disabled” or “Disability”. Executive’s inability to fully and competently perform Executive’s duties hereunder with or without a reasonable accommodation for a period of more than 120 continuous days or more than 180 nonconsecutive days in any twelve (12) month period due to a physical or mental impairment or Executive becomes eligible for benefits under a long-term disability policy or similar income replacement benefit offered by the Company.

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5.6 “Person”. Any individual, corporation, bank, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or other entity.

6. Termination Procedures. During the Term of this Agreement, any purported termination of Executive’s employment (other than by reason of death) shall be communicated by written notice (“Notice of Termination”) from one party hereto to the other party hereto in accordance with Section 11. A Notice of Termination for Cause is required to include the information supporting a finding of “Cause” as defined in Section 5.2. “Date of Termination,” with respect to any purported termination of Executive’s employment during the Term of this Agreement, shall mean (i) if Executive’s employment is terminated by Executive’s death, the date of Executive’s death, (ii) if Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that Executive shall not have returned to the full-time performance of Executive’s duties during such thirty (30) day period), and (iii) if Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days, except in the case of a termination for Cause in which case termination may be immediate; and in the case of a termination by Executive, the date specified in the Notice shall not be less than thirty (30) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given). If Executive terminates Executive’s employment under Section 4.1 or 4.2, the Company, in its sole discretion, may require that Executive’s employment terminate at any time after Executive has given Notice of Termination, which election shall not be deemed a termination by the Company under Section 4.4, provided that if the Company makes such an election, (i) in the case of termination under Section 4.1, the Base Salary shall be paid through the notice period, and (ii) in the case of termination under Section 4.2, the Severance Period shall be extended by one month. Likewise, if the Company terminates the Executive other than for Cause, in lieu of the applicable notice period, the Company may give notice of immediate termination and extend the Severance Period by one month.

7. Intellectual Property Rights.

7.1 Creative Work. Executive agrees that all creative work and work product, relating to the business of the Company or its subsidiaries or affiliates, including but not limited to all technology, designs, business management tools, processes, software, patents, trademarks, and copyrights developed by Executive during employment with the Company, regardless of when or where such work or work product was produced, constitutes work made for hire, all rights of which are owned by the Company.

7.2 Assignment. Executive hereby assigns to the Company all right, title and interest, whether by way of copyrights, trade secrets, trademark, patent, or otherwise, in all such creative work or work products, as defined in Section 7.1, regardless of whether the same is subject to protection by patent, trademark or copyright law. At the Company’s request and expense, Executive will sign such documents and take such actions that the Company deems reasonably necessary to perfect, protect, and evidence the Company’s right in the creative work.

8. Contract Non-Assignable. The parties acknowledge that this Agreement has been entered into due to, among other things, the special skills of Executive, and agree that this Agreement may not be assigned or transferred by Executive, in whole or in part, without the prior written consent of the Company.

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9. Successors; Binding Agreement.

9.1 In addition to any obligations imposed by law upon any successor to, or transferee of, the Company, the Company will require any successor to, or transferee of, all or substantially all of the business and/or assets of the Company or stock of the Company (whether direct or indirect, by purchase, merger, reorganization, liquidation, consolidation or otherwise) to expressly assume and agree to perform this Agreement, in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement.

9.2 This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees and by the Company’s successors and assigns. If Executive shall die while any amount would still be payable to Executive hereunder (other than amounts which, by their terms, terminate upon the death of Executive) if Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of Executive’s estate.

10. Other Agents. Nothing in this Agreement is to be interpreted as limiting the Company from employing other personnel on such terms and conditions as may be satisfactory to the Company.

11. Notices. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered or three (3) business days after mailing if mailed, first class, certified mail, postage prepaid:

To the Company	Blount International, Inc. 4909 SE International Way Portland, OR 97222 ATTN: General Counsel
To the Executive:	Paul A. Valas 5795 Oak Creek Lane Greenwood Village, Colorado 80121

Any party may change the address to which notices, requests, demands and other communications shall be delivered or mailed by giving notice thereof to the other party in the same manner provided herein.

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12. Provisions Severable. If any provision or covenant, or any part thereof, of this Agreement should be held by any court to be invalid, illegal or unenforceable, either in whole or in part, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of the remaining provisions or covenants, or any part thereof, of this Agreement, all of which shall remain in full force and effect.

13. Waiver. Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or the future performance of any such term or condition or of any other term or condition of this Agreement, unless such waiver is contained in a writing signed by the party making the waiver.

14. Indemnification. During the Term and after Executive’s termination, the Company shall indemnify Executive and hold Executive harmless from and against any claim, loss or cause of action arising from or out of Executive’s performance as an officer, director or employee of the Company or any of its subsidiaries or other affiliates or in any other capacity, including any fiduciary capacity, in which Executive serves at the Company’s request, in each case to the maximum extent permitted by law and under the Company’s Articles of Incorporation and Bylaws (the “Governing Documents”), provided that in no event shall the protection afforded to Executive hereunder be less than that afforded under the Governing Documents as in effect on the date of this Agreement except from changes mandated by law. During the Term and after Executive’s termination, Executive shall be covered by any policy of directors’ and officers’ liability insurance maintained by the Company for the benefit of its officers and directors.

15. Amendments and Modifications. This Agreement may be amended or modified only by a writing signed by both parties hereto.

16. Governing Law. The validity and effect of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Oregon.

17. Arbitration of Disputes; Expenses. All claims by Executive for compensation and benefits under this Agreement shall be directed to and determined by the Board (or its designee) and shall be in writing. Any denial by the Board (or its designee) of a claim for benefits under this Agreement shall be delivered to Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to Executive for a review of a decision denying a claim and shall further allow Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that Executive’s claim has been denied. Unless prohibited by applicable law, any dispute or controversy arising under or in connection with this Agreement or with Executive’s employment shall be settled exclusively in Denver, Colorado, in accordance with the then effective arbitration rules of the Arbitration Service of Portland, Inc. (or of the American Arbitration Association, if the Arbitration Service of Portland, Inc. no longer exists), with the exception of any rules allowing for class action arbitration. To the extent administratively practicable, the Company and the Executive agree to select an arbitrator who is an attorney with experience in employment law disputes. Judgment may be entered on the

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arbitrator’s award in any court having jurisdiction. The prevailing party shall, to the extent allowed by law, be entitled to attorney’s fees and costs, and any attorney’s fees and costs on appeal. However, nothing in this Section 17 will prohibit or otherwise prevent either party from seeking equitable or injunctive relief or an order to compel arbitration; and any such action shall be brought in a state or federal court located in Denver County, Denver. The parties hereto agree that they are subject to the jurisdiction of the federal and state courts of Denver for the purpose of such actions. Except to the extent provided in this Section 17, each party shall pay its own legal fees and other expenses associated with any dispute.

18. Entire Agreement. This Agreement contains the entire understanding of the parties regarding the subject matter of this Agreement and supersedes all prior and contemporaneous negotiations and agreements, whether written or oral, between the parties with respect to the subject matter of this Agreement, including the Old Agreement, except for Section 3(d) of the Old Agreement which will continue in full force and effect, as incorporated in Section 3(d) of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the day and year first above written.

EXECUTIVE:

/s/ Paul A. Valas

Paul A. Valas

COMPANY:
BLOUNT INTERNATIONAL, INC.
By	/s/ Joshua L. Collins
Joshua L. Collins, Chief Executive Officer

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EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

At December 31, 2012, consolidated, directly or indirectly, wholly-owned Significant Subsidiaries of Blount International, Inc. were deemed as follows:

NAME OF SUBSIDIARY	PLACE OF INCORPORATION/ORGANIZATION
BI Holdings, C.V.	Netherlands
Blount, Inc.	Delaware
Blount Canada Ltd.	Canada
Blount Europe, S.A.	Belgium
Blount Holdings France S.A.S.	France
Blount Holdings Ltd.	Canada
Blount Industrial Ltda.	Brazil
Blount Industries Company Ltd.	China
Blount Netherlands B.V.	Netherlands
KOX GmbH	Germany
PBL SA	France
SP Companies, Inc.	Delaware
SpeeCo, Inc.	Delaware
Woods Equipment Company	Delaware

The names of certain subsidiaries have been omitted because when considered in the aggregate or as a single subsidiary they would not constitute a “Significant Subsidiary” as of December 31, 2012.

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-168689) and Form S-8 (No. 333-149584) of Blount International, Inc. of our report dated March 8, 2013 relating to the financial statements, financial statement schedule, and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Portland, Oregon

March 8, 2013

EX-31.1

Exhibit 31.1

CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Joshua L. Collins, certify that:

1. I have reviewed this annual report on Form 10-K for the period ended December 31, 2012 of Blount International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2013

/s/ Joshua L. Collins

Joshua L. Collins

Chairman and

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Calvin E. Jenness, certify that:

1. I have reviewed this annual report on Form 10-K for the period ended December 31, 2012 of Blount International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2013

/s/ Calvin E. Jenness

Calvin E. Jenness

Senior Vice President and

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Blount International, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joshua L. Collins, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the report.

A signed original of this written statement required by Section 906 has been provided to Blount International, Inc. and will be retained by Blount International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Date: March 8, 2013

/s/ Joshua L. Collins

Joshua L. Collins

Chairman and

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Blount International, Inc. (the “Company”) on Form 10-K for the period ended December 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Calvin E. Jenness, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(i) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the report.

A signed original of this written statement required by Section 906 has been provided to Blount International, Inc. and will be retained by Blount International, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Date: March 8, 2013

/s/ Calvin E. Jenness

Calvin E. Jenness

Senior Vice President and

Chief Financial Officer

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Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2012

Accrued Expenses [Abstract]

Summary of accrued expenses

Accrued expenses consisted of the following:

	December 31,
(Amounts in thousands)	2012		2011
Salaries, wages, and related withholdings	$	21,095	$	29,275
Accrued taxes		9,769		5,758
Advertising		7,899		6,814
Employee benefits		6,550		8,425
Accrued customer incentive programs		4,933		6,020
Unrealized loss on derivative instruments		3,988		1,813
Product liability reserves		2,905		4,841
Accrued professional services fees		2,070		2,088
Product warranty reserve		1,914		1,539
Accrued interest		1,253		1,340
Other		9,097		5,078
Total accrued expenses	$	71,473	$	72,991

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Concentration of Credit Risk and Fair Value of Financial Instruments (Details 2) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Carrying Value on Consolidated Balance Sheet [Member] | Interest rate hedge agreements [Member]
Summary of derivatives held by the company
Fair value of derivatives	$ (3,960)	$ (1,303)
Carrying Value on Consolidated Balance Sheet [Member] | Foreign currency hedge agreements [Member]
Summary of derivatives held by the company
Fair value of derivatives	(28)	(505)
Assets (Liabilities) Measured at Fair Value [Member] | Level 1 [Member] | Interest rate hedge agreements [Member]
Summary of derivatives held by the company
Fair value of derivatives
Assets (Liabilities) Measured at Fair Value [Member] | Level 1 [Member] | Foreign currency hedge agreements [Member]
Summary of derivatives held by the company
Fair value of derivatives
Assets (Liabilities) Measured at Fair Value [Member] | Level 2 [Member] | Interest rate hedge agreements [Member]
Summary of derivatives held by the company
Fair value of derivatives	(3,960)	(1,303)
Assets (Liabilities) Measured at Fair Value [Member] | Level 2 [Member] | Foreign currency hedge agreements [Member]
Summary of derivatives held by the company
Fair value of derivatives	(28)	(505)
Assets (Liabilities) Measured at Fair Value [Member] | Level 3 [Member] | Interest rate hedge agreements [Member]
Summary of derivatives held by the company
Fair value of derivatives
Assets (Liabilities) Measured at Fair Value [Member] | Level 3 [Member] | Foreign currency hedge agreements [Member]
Summary of derivatives held by the company
Fair value of derivatives

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Acquisitions (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Jul. 31, 2010 Pre Acquisition [Member] SpeeCo [Member]	Dec. 31, 2010 Pre Acquisition [Member] KOX [Member]	Jul. 31, 2011 Pre Acquisition [Member] PBL [Member]	Aug. 31, 2011 Pre Acquisition [Member] Woods/TISCO [Member]
Schedule of pre-acquisition operating results
Sales	$ 229,562	$ 232,736	$ 239,059	$ 226,309	$ 236,515	$ 212,904	$ 201,337	$ 180,874	$ 927,666	$ 831,630	$ 611,480	$ 77,077	$ 34,889	$ 33,162	$ 164,810
Operating income									79,280	97,953	85,555	8,174	3,266	1,804	17,870
Depreciation and amortization									$ 45,118	$ 35,807	$ 27,599	$ 4,469	$ 128	$ 2,857	$ 2,549

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Supplemental Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2012

Supplemental Cash Flow Information [Abstract]

Schedule of supplemental cash flow information

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Interest paid	$	16,574	$	16,961	$	30,007
Income taxes paid, net		24,672		24,827		14,858

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Debt (Details 1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Summary of minimum principal payments
2013	$ 15,072
2014	15,072
2015	15,072
2016	471,322
2017 and thereafter	219
Total debt	$ 516,757	$ 530,362

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Acquisitions (Details 1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2012 Woods/TISCO [Member]	Sep. 07, 2011 Woods/TISCO [Member]	Dec. 31, 2012 PBL [Member]	Aug. 05, 2011 PBL [Member]	Dec. 31, 2012 KOX [Member]	Jan. 03, 2011 KOX [Member]	Dec. 31, 2010 KOX [Member]	Dec. 31, 2012 SpeeCo [Member]	Aug. 10, 2010 SpeeCo [Member]
Summary of Purchase Price Allocations
Cash		$ 230	$ 200	$ 1,275	$ 1,300	$ 5,126	$ 5,100		$ 816	$ 800
Accounts receivable		34,784		5,109		3,365			7,525
Inventories		38,512		9,729		8,879		9,200	18,868
Current intangible assets subject to amortization				157					401
Current deferred tax assets		3,716		608					657
Other current assets		3,057		1,162		268			625
Property, plant, and equipment		19,259		13,041		383			1,812
Non-current deferred tax assets		1,943		378
Non-current intangible assets subject to amortization		52,400		5,612		4,594			43,214
Non-current intangible assets not subject to amortization		44,330		470		5,241			5,968
Goodwill		54,846		3,301		3,709			42,794
Other non-current assets		3,474
Total assets acquired		256,551		40,842		31,565			122,680
Current liabilities		19,319		11,065		4,793			13,762
Long-term debt				13,304
Non-current deferred income tax liability		41,510		609		2,836			17,142
Other non-current liabilities		5,220		1,620					106
Total liabilities assumed		66,049		26,598		7,629			31,010
Acquisition price		190,502	190,500	14,244	14,200	23,936	23,900		91,670	91,700
Goodwill deductible for income tax purposes	$ 38,300	$ 9,255							$ 6,998

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Income Taxes (Details Textual) (USD $)	12 Months Ended
	Dec. 31, 2012 ForeignSubsidiary	Dec. 31, 2011	Dec. 31, 2010
Income Tax (Textual) [Abstract]
Unrecognized tax benefit that affect effective tax rate	$ 5,800,000	$ 6,500,000
Income Tax (Additional Textual) [Abstract]
Recognized income tax expense (benefit)	1,900,000	4,300,000	6,800,000
Provision for income taxes	22,202,000	25,268,000	11,209,000
Deferred tax expense related to Medicare Part D subsidy			1,700,000
Foreign tax credit carryforwards		1,700,000
CRA and IRS extend the agreement	2016
Undistributed earnings of international subsidiaries	211,300,000
Accrued interest and penalties related to uncertain tax position	2,100,000	1,800,000
Net income tax expense/benefit for interest and penalties related to uncertain tax positions	300,000	400,000	1,900,000
Possibility period of unrecognized tax benefits to decrease	12 months
Number of foreign subsidiary related to repatriation of foreign earnings	1
Foreign [Member]
Income Tax (Textual) [Abstract]
NOL carryforwards expiration year, Description	Beginning 2017
State and Local Jurisdiction [Member]
Income Tax (Textual) [Abstract]
NOL carryforwards expiration year, Description	Beginning 2013
Maximum [Member]
Income Tax (Textual) [Abstract]
Open tax year	2012
Tax year examination by IRS	2010
Certainty with respect to transfer pricing between the company's U.S. and Canada subsidiaries for year	2011
Unrecognized tax benefit that affect effective tax rate	400,000
Minimum [Member]
Income Tax (Textual) [Abstract]
Open tax year	2008
Tax year examination by IRS	2008
Certainty with respect to transfer pricing between the company's U.S. and Canada subsidiaries for year	2002
Unrecognized tax benefit that affect effective tax rate	$ 0

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Stock-Based Compensation (Details Textual) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Stock-Based Compensation (Textual) [Abstract]
Maximum number of shares that may be awarded under the 2006 Plan	4,236,919
Stock-Based Compensation (Additional Textual) [Abstract]
Vesting period of shares granted to employees	3 years
Total unrecognized stock-based compensation expense	$ 6.7
Weighted average period for recognition of stock-based compensation expense (months)	2 years
Shares remained unused under the Company's previous plans transferred to the 2006 Plan	736,919
Method of Deriving Estimated Average Life of Stock Appreciation Rights	The estimated average life of SARs granted in 2012, 2011, and 2010 was derived from the “simplified” method, meaning one half the term of the instrument plus one additional year.
Stock Appreciation Rights (SARs) [Member]
Stock-Based Compensation (Textual) [Abstract]
Term of shares granted (years)	10 years
Stock Option [Member]
Stock-Based Compensation (Textual) [Abstract]
Maximum number of shares that may be awarded under the 2006 Plan	1,750,000

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Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2012

Stock-Based Compensation [Abstract]

Assumptions used to estimate fair value of SARs issued

The following table summarizes the assumptions used and estimated fair value of SARs granted:

	Year Ended December 31,
	2012			2011			2010
Estimated average lives		6 years			6 years			6 years
Risk-free interest rate		1.2	%		2.4	%		2.8	%
Expected volatility		49.3% - 49.6	%		48.4% - 49.5	%		49.7	%
Weighted average volatility		49.6	%		47.5	%		49.7	%
Dividend yield		0.0	%		0.0	%		0.0	%
Estimated forfeiture rate		3.2	%		5.5	%		5.0	%
Weighted average exercise price	$	16.68		$	15.10		$	11.82
Weighted average grant date fair value	$	7.93		$	7.36		$	5.94

Summary of stock option and stock-settled SARs activity

A summary of stock option and stock-settled SARs activity is presented in the following tables:

	Year Ended December 31, 2012
	Shares (in  000’s)			Weighted Average Exercise Price		Weighted Average Contractual Life (in years)		Aggregate Intrinsic Value (in 000’s)
Outstanding options and SARs at beginning of period		3,659		$	11.78
SARs granted		577			16.68
Options exercised		(311	)		3.69
SARs exercised		(78	)		11.87
Options forfeited or expired		—			—
SARs forfeited or expired		(37	)		15.42
Outstanding options and SARs at end of period		3,810		$	13.15		5.8	$	11,456
Outstanding options at end of period		1,432		$	10.82		4.7	$	7,492
Outstanding SARs at end of period		2,378			14.55		6.5		3,964
Options exercisable at end of period		1,432			10.82		4.7		7,492
SARs exercisable at end of period		892			14.39		3.9		1,704

Summary of cash proceeds received from share based payment awards and other related activity

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Intrinsic value of options exercised	$	3,522	$	2,655	$	3,512
Estimated fair value of options and SARs that vested		3,993		3,747		2,890
Stock-based compensation cost recognized in income		5,592		4,441		3,290
Total tax benefit on share-based compensation recognized		1,917		1,560		1,016
Total amount of cash received from exercises		1,152		1,041		2,398
Tax (expense) benefit realized from exercises		1,187		877		1,340
Cash used to settle equity instruments		—		—		—

Summary of restricted stock awards activity

The following activity occurred in the periods indicated:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
RSUs awarded		117		112		119
Total fair value of RSUs awarded	$	1,957	$	1,695	$	1,413
Total expense recognized for RSUs		1,389		920		639

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Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Business and Summary of Significant Accounting Policies [Abstract]

Summary of estimated useful lives of property, plant, and equipment

The principal ranges of estimated useful lives for depreciation purposes are as follows:

Asset Category	Useful Life
Buildings and building improvements		10 to 45 years
Machinery and equipment		3 to 10 years
Furniture, fixtures, and office equipment		3 to 10 years
Transportation equipment		3 to 15 years

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Retirement Plans (Details) (Pension Benefits [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Benefits [Member]
Change in benefit obligations:
Projected benefit obligations at beginning of year	$ (232,889)	$ (198,180)
Service cost	(4,066)	(3,578)	(2,524)
Interest cost	(10,532)	(10,935)	(10,920)
Actuarial losses	(24,804)	(32,255)
Benefits and plan expenses paid	11,717	12,541
Projected benefit obligation assumed in acquisitions		(482)
Projected benefit obligations at end of year	(260,574)	(232,889)	(198,180)
Change in plan assets:
Fair value of plan assets at beginning of year	190,522	179,570
Actual return on plan assets	22,928	5,703
Company contributions	17,399	17,790
Benefits and plan expenses paid	(11,717)	(12,541)
Fair value of plan assets at end of year	219,132	190,522	179,570
Net funded status at end of year	(41,442)	(42,367)
Amounts recognized on the Consolidated Balance Sheets:
Non-current liabilities	$ (41,442)	$ (42,367)

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Consolidated Schedule of Valuation and Qualifying Accounts (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Allowance for doubtful accounts receivable [Member]
Consolidated schedule of valuation and qualifying accounts
Balance at Beginning of Period	$ 3,142	$ 1,490	$ 3,339
Charged (Credited) to Cost and Expenses	98	608	120
Business Acquisitions (Dispositions), Net		1,097	169
(Deductions) Recoveries	(124)	(53)	(2,138)
Balance at End of period	3,116	3,142	1,490
Valuation allowance for deferred tax assets [Member]
Consolidated schedule of valuation and qualifying accounts
Balance at Beginning of Period	603	2,314	2,366
Charged (Credited) to Cost and Expenses	1,949	(1,711)	(52)
Business Acquisitions (Dispositions), Net
(Deductions) Recoveries
Balance at End of period	2,552	603	2,314
Inventory reserves [Member]
Consolidated schedule of valuation and qualifying accounts
Balance at Beginning of Period	9,899	5,108	3,706
Charged (Credited) to Cost and Expenses	8,281	4,326	2,449
Business Acquisitions (Dispositions), Net		3,428	704
(Deductions) Recoveries	(6,454)	(2,963)	(1,751)
Balance at End of period	$ 11,726	$ 9,899	$ 5,108

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Income Taxes (Details 1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Deferred tax amounts directly to the components of stockholders' equity
Pension liability adjustment	$ 340	$ 15,340	$ 700
Change in unrealized losses (gains)	2,240	(2,180)	261
Stock options exercised	$ 1,187	$ 877	$ 1,340

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Other Post-Employment Benefit Plans (Details 1) (Other Post-Retirement Benefits [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Other Post-Retirement Benefits [Member]
Summary of projected benefit payments for these plans, net of the estimated Medicare Part D subsidy expected to be received by the Company over the next ten years
Estimated Gross Benefit Payments for year 2013	$ 2,847
Estimated Gross Benefit Payments for year 2014	2,903
Estimated Gross Benefit Payments for year 2015	2,922
Estimated Gross Benefit Payments for year 2016	2,936
Estimated Gross Benefit Payments for year 2017	2,931
Estimated Gross Benefit Payments for year 2018-2022	14,289
Total Estimated Gross Benefit Payments over next ten years	28,828
Estimated Medicare Part D Subsidy for year 2013	207
Estimated Medicare Part D Subsidy for year 2014	221
Estimated Medicare Part D Subsidy for year 2015	231
Estimated Gross Benefit Payments for year 2016	238
Estimated Medicare Part D Subsidy for year 2017	243
Estimated Medicare Part D Subsidy for year 2018-2022	1,250
Total Estimated Medicare Part D Subsidy over next ten years	2,390
Estimated Net Benefit Payments for year 2013	2,640
Estimated Net Benefit Payments for year 2015	2,691
Estimated Net Benefit Payments for year 2014	2,682
Estimated Net Benefit Payments for year 2016	2,698
Estimated Net Benefit Payments for year 2017	2,688
Estimated Net Benefit Payments for year 2018-2022	13,039
Total estimated benefit payments over next ten years	$ 26,438

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Acquisitions (Details 3) (Cost of sales [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Summary of acquisition accounting effects charged or expected to be charged to cost of sales
Total acquisition accounting effects 2012	$ 15,998	$ 15,879	$ 5,157
Woods/TISCO [Member]
Summary of acquisition accounting effects charged or expected to be charged to cost of sales
Total acquisition accounting effects 2012	7,013	4,913
PBL [Member]
Summary of acquisition accounting effects charged or expected to be charged to cost of sales
Total acquisition accounting effects 2012	2,028	1,734
KOX [Member]
Summary of acquisition accounting effects charged or expected to be charged to cost of sales
Total acquisition accounting effects 2012	1,016	2,152
SpeeCo [Member]
Summary of acquisition accounting effects charged or expected to be charged to cost of sales
Total acquisition accounting effects 2012	4,671	5,555	3,368
Prior acquisitions [Member]
Summary of acquisition accounting effects charged or expected to be charged to cost of sales
Total acquisition accounting effects 2012	$ 1,270	$ 1,525	$ 1,789

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Supplemental Cash Flow Information (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Supplemental cash flow information
Interest paid	$ 16,574	$ 16,961	$ 30,007
Income taxes paid, net	$ 24,672	$ 24,827	$ 14,858

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Income Taxes (Details 4) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deferred tax assets:
Employee benefits and compensation	$ 35,522	$ 37,119
Other accrued expenses	16,507	13,505
State net operating loss ("NOL") carryforwards	516	741
Foreign	7,149	2,914
Gross deferred tax assets	59,694	54,279
Less valuation allowance	(2,552)	(603)
Deferred tax assets net of valuation allowance	57,142	53,676
Deferred tax liabilities:
Property, plant, and equipment asset basis differences	(15,379)	(15,252)
Intangible asset basis differences	(57,501)	(60,497)
Foreign	(3,095)	(5,236)
Total deferred tax liabilities	(75,975)	(80,985)
Net deferred tax liability	$ (18,833)	$ (27,309)

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Retirement Plans (Details 7) (Pension Benefits [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Pension Benefits [Member]
Total expenses recognized for defined contribution plans
Expense	$ 7,686	$ 7,422	$ 6,571

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Retirement Plans (Details 2) (Pension Benefits [Member], USD $) In Thousands, unless otherwise specified				12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Significant Unobservable Inputs Level 3 [Member]	Dec. 31, 2011 Significant Unobservable Inputs Level 3 [Member]
Summary of change in fair value of Level 3 plan assets
Fair value of plan assets at beginning of year	$ 219,132	$ 190,522	$ 179,570	$ 5,515	$ 5,331
Actual return on assets:
Relating to assets still held at end of year				241	184
Relating to assets sold during the year
Purchases, sales, and settlements
Transfers in/out of Level 3
Fair value of plan assets at end of year	$ 219,132	$ 190,522	$ 179,570	$ 5,756	$ 5,515

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Retirement Plans (Details Textual) (Pension Benefits [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Retirement Plans (Textual) [Abstract]
Accumulated benefit obligations	$ 237.4	$ 216.7
Actuarial losses	7.7
Each asset class return period	20 years
Maximum [Member]
Retirement Plans (Textual) [Abstract]
Employers contribution to pension plans	8.5
Minimum [Member]
Retirement Plans (Textual) [Abstract]
Employers contribution to pension plans	$ 7.5
Quoted Price in Active Markets Inputs Level 1 [Member] | Maximum [Member]
Retirement Plans (Textual) [Abstract]
Plan assets redeemed	5 days
Significant Other Observable Inputs Level 2 [Member] | Maximum [Member]
Retirement Plans (Textual) [Abstract]
Plan assets redeemed	5 days
Significant Unobservable Inputs Level 3 [Member] | Minimum [Member]
Retirement Plans (Textual) [Abstract]
Plan assets redeemed	30 days

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Income Taxes (Details 5) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Reconciliation of the beginning and ending amount of unrecognized tax benefits
Balance at beginning of period	$ 6,454	$ 11,905	$ 29,754
Increase (decrease) for positions taken during a prior period		1,485	(1,458)
Increase (decrease) for positions taken during the current period	(384)	2,125
Settlements			(766)
Statute of limitations expirations	(287)	(9,061)	(15,625)
Balance at end of period	$ 5,783	$ 6,454	$ 11,905

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Debt (Details Textual) (USD $)				12 Months Ended				12 Months Ended		12 Months Ended		12 Months Ended		12 Months Ended		1 Months Ended	12 Months Ended		12 Months Ended				12 Months Ended			12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Revolving Credit Facility [Member]	Dec. 31, 2012 June 2011 term loan facility [Member]	Dec. 31, 2012 Term Loan A and Term Loan B [Member]	Aug. 09, 2010 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member] Revolving Credit Facility [Member]	Aug. 09, 2010 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member] Revolving Credit Facility [Member]	Dec. 31, 2012 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member] Term Loan B Facility [Member]	Aug. 09, 2010 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member] Term Loan B Facility [Member]	Dec. 31, 2012 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member] Term Loan A Facility [Member]	Aug. 09, 2010 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member] Term Loan A Facility [Member]	Dec. 31, 2012 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member] 8 7/8% senior subordinated note [Member]	Aug. 09, 2010 August 2010 Third Amendment and Restatement of Senior Credit Facilities [Member] 8 7/8% senior subordinated note [Member]	Jun. 30, 2011 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Jun. 13, 2011 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member] Revolving Credit Facility [Member]	Jun. 13, 2011 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member] Revolving Credit Facility [Member] Maximum [Member]	Dec. 31, 2012 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member] Revolving Credit Facility [Member] LIBOR [Member]	Dec. 31, 2012 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member] Revolving Credit Facility [Member] Index rate [Member]	Dec. 31, 2012 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member] June 2011 term loan facility [Member]	Jun. 13, 2011 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member] June 2011 term loan facility [Member]	Dec. 31, 2012 June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member] June 2011 term loan facility [Member] LIBOR [Member]	Dec. 31, 2012 August 2012 Amendment of Senior Credit Facilities [Member]	Dec. 31, 2012 Through December 31, 2012 [Member] June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 Through June 30, 2013 [Member] June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 Through December 31, 2013 [Member] June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 Through September 30, 2014 [Member] June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 Through March 31, 2015 [Member] June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 After March 31, 2015 [Member] June 2011 Fourth Amendment and Restatement of Senior Credit Facilities [Member]	Dec. 31, 2012 PBL [Member]
Debt (Textual) [Abstract]
Maximum borrowings									$ 75,000,000		$ 275,000,000		$ 75,000,000							$ 400,000,000				$ 300,000,000
Maturity date								Aug. 31, 2015		Aug. 31, 2016		Aug. 31, 2015		Aug. 01, 2012					Aug. 31, 2016				Aug. 31, 2016
Fees and transaction costs							6,300,000											6,500,000
Proceeds from term loan						350,000,000
Unamortized deferred financing costs	5,495,000	5,716,000	4,088,000								3,500,000							3,900,000
Initial date of senior credit facilities																Jun. 13, 2011
Total Available Borrowings through revolving credit facility																	400,000,000
Additional borrowings available																			61,800,000
Percentage of interest															8.875%						2.50%	1.50%	1.50%		2.50%
Quarterly principal payment required																							3,800,000
Final payment due on maturity date																							225,000,000
Fixed charge coverage ratio																	1.15
Maximum leverage ratio																											4.25	4.00	3.75	3.50	3.25	3.00
Expected fees and expenses related to amendment																										1,200,000
Percentage of pledge of stock as additional collateral																	65.00%
Debt assumed on acquisition																																	13,500,000
Capital lease obligations	$ 0																																$ 600,000
Revolving credit facility, interest rate terms				The revolving credit facility bears interest at LIBOR plus 2.50% or at the index rate, as defined in the credit agreement, plus 1.50%	The term loan facility also bears interest at LIBOR plus 2.50% or at the index rate plus 1.50%

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 16:  STOCK-BASED COMPENSATION

The Company accounts for stock-based compensation in accordance with ASC 718. All share-based compensation to employees, directors, and others who perform services for the Company is valued at estimated fair value on the date of grant and expensed over the applicable service period.

On April 25, 2006, the Company’s stockholders approved the Blount International, Inc. 2006 Equity Incentive Plan (the “2006 Plan”). The 2006 Plan provides for a variety of stock-based award instruments and terms. The maximum number of shares that may be awarded under the 2006 Plan was initially set at 4,236,919, of which 736,919 represented shares that remained unused under the Company’s previous plans that were transferred to the 2006 Plan. The maximum number of incentive stock options that may be issued under the 2006 Plan is 1,750,000. Recently issued stock awards generally vest over a three-year period and stock options and stock appreciation rights (“SARS”) generally carry a ten-year expiration term.

The fair values of options and stock-settled SARs were estimated on their respective grant dates using the Black-Scholes option valuation model. The estimated average life of SARs granted in 2012, 2011, and 2010 was derived from the “simplified” method, meaning one half the term of the instrument plus one additional year. The risk-free interest rate is based on the implied yield available on U.S. Treasury zero-coupon issues with the remaining term equal to the average life. The expected volatility factors used are based on the historical volatility of the Company’s stock. The expected dividend yield is based on historical information and management estimate. The Company generally applies an estimated average forfeiture rate on its broad-based stock awards granted to a diverse population of employees, which reduces the expense recognized. The estimated forfeiture rate is based on the historical forfeiture rate, and is adjusted to the actual forfeiture rate over the life of the stock awards.

The following table summarizes the assumptions used and estimated fair value of SARs granted:

	Year Ended December 31,
	2012			2011			2010
Estimated average lives		6 years			6 years			6 years
Risk-free interest rate		1.2	%		2.4	%		2.8	%
Expected volatility		49.3% - 49.6	%		48.4% - 49.5	%		49.7	%
Weighted average volatility		49.6	%		47.5	%		49.7	%
Dividend yield		0.0	%		0.0	%		0.0	%
Estimated forfeiture rate		3.2	%		5.5	%		5.0	%
Weighted average exercise price	$	16.68		$	15.10		$	11.82
Weighted average grant date fair value	$	7.93		$	7.36		$	5.94

A summary of stock option and stock-settled SARs activity is presented in the following tables:

	Year Ended December 31, 2012
	Shares (in  000’s)			Weighted Average Exercise Price		Weighted Average Contractual Life (in years)		Aggregate Intrinsic Value (in 000’s)
Outstanding options and SARs at beginning of period		3,659		$	11.78
SARs granted		577			16.68
Options exercised		(311	)		3.69
SARs exercised		(78	)		11.87
Options forfeited or expired		—			—
SARs forfeited or expired		(37	)		15.42
Outstanding options and SARs at end of period		3,810		$	13.15		5.8	$	11,456
Outstanding options at end of period		1,432		$	10.82		4.7	$	7,492
Outstanding SARs at end of period		2,378			14.55		6.5		3,964
Options exercisable at end of period		1,432			10.82		4.7		7,492
SARs exercisable at end of period		892			14.39		3.9		1,704

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Intrinsic value of options exercised	$	3,522	$	2,655	$	3,512
Estimated fair value of options and SARs that vested		3,993		3,747		2,890
Stock-based compensation cost recognized in income		5,592		4,441		3,290
Total tax benefit on share-based compensation recognized		1,917		1,560		1,016
Total amount of cash received from exercises		1,152		1,041		2,398
Tax (expense) benefit realized from exercises		1,187		877		1,340
Cash used to settle equity instruments		—		—		—

As of December 31, 2012, the total compensation cost related to awards not yet recognized was $6.7 million. The weighted average period over which this expense is expected to be recognized is two years. The Company’s policy upon the exercise of options or SARs has been to issue new shares into the market place.

Restricted Stock Awards. The following activity occurred in the periods indicated:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
RSUs awarded		117		112		119
Total fair value of RSUs awarded	$	1,957	$	1,695	$	1,413
Total expense recognized for RSUs		1,389		920		639

Tax Benefits. The Company has elected to use the transition short-cut method to determine its pool of windfall tax benefits in accordance with ASC 718. Tax attributes are determined under the tax law ordering method.

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Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2012

Discontinued Operations [Abstract]

Summary of discounted operations

Gear Products results up to the date of the sale are reported as discontinued operations for all periods presented, and are summarized below:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Sales	$	—	$	—	$	12,297
Operating income	$	—	$	—	$	1,031
Gain on sale of subsidiary		—		—		11,941
Income before income taxes		—		—		12,972
Income tax provision		—		—		7,174
Income from discontinued operations	$	—	$	—	$	5,798

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Retirement Plans (Tables)

12 Months Ended

Dec. 31, 2012

Retirement Plans [Abstract]

Changes in benefit obligations, plan assets, and funded status

The changes in benefit obligations, plan assets, and funded status of these plans for the years ended December 31, 2012 and 2011 were as follows:

	Pension Benefits
(Amounts in thousands)	2012			2011
Change in benefit obligations:
Projected benefit obligations at beginning of year	$	(232,889	)	$	(198,180	)
Service cost		(4,066	)		(3,578	)
Interest cost		(10,532	)		(10,935	)
Actuarial losses		(24,804	)		(32,255	)
Benefits and plan expenses paid		11,717			12,541
Projected benefit obligation assumed in acquisitions		—			(482	)
Projected benefit obligations at end of year		(260,574	)		(232,889	)

(Amounts in thousands)	2012			2011
Change in plan assets:
Fair value of plan assets at beginning of year		190,522			179,570
Actual return on plan assets		22,928			5,703
Company contributions		17,399			17,790
Benefits and plan expenses paid		(11,717	)		(12,541	)
Fair value of plan assets at end of year		219,132			190,522
Net funded status at end of year	$	(41,442	)	$	(42,367	)
Amounts recognized on the Consolidated Balance Sheets:
Non-current liabilities	$	(41,442	)	$	(42,367	)

Reconciliation of Fair Value of Plan Assets

The fair value of plan assets was as follows:

	December 31, 2012
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Category:
Money market mutual funds	$	799	$	799	$	—	$	—
Guaranteed insurance contracts		3,452		—		3,452		—
U.S. large cap equity securities		50,915		—		50,915		—
U.S. small/mid cap equity securities		4,794		—		4,794		—
International equity securities		50,345		—		50,345		—
Emerging markets equity securities		4,324		—		4,324		—
U.S. debt securities		71,281		—		71,281		—
International debt securities		27,466		—		27,466		—
Hedge funds		5,756		—		—		5,756
Total fair value of plan assets	$	219,132	$	799	$	212,577	$	5,756

	December 31, 2011
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Category:
Money market mutual funds	$	639	$	639	$	—	$	—
Guaranteed insurance contracts		2,803		—		2,803		—
U.S. large cap equity securities		45,008		—		45,008		—
U.S. small/mid cap equity securities		4,116		—		4,116		—
International equity securities		41,399		—		41,399		—
Emerging markets equity securities		3,559		—		3,559		—
U.S. debt securities		64,001		—		64,001		—
International debt securities		23,482		—		23,482		—
Hedge funds		5,515		—		—		5,515
Total fair value of plan assets	$	190,522	$	639	$	184,368	$	5,515

Summary of change in fair value of Level 3 plan assets

The change in fair value of Level 3 plan assets was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011
Fair value at beginning of year	$	5,515	$	5,331
Actual return on assets:
Relating to assets still held at end of year		241		184
Relating to assets sold during the year		—		—
Purchases, sales, and settlements		—		—
Transfers in/out of Level 3		—		—
Fair value at end of year	$	5,756	$	5,515

Summary of projected benefit payments for these plans over the next ten years

The projected benefit payments for these plans over the next ten years are estimated as follows:

(Amounts in thousands)	Estimated Benefit Payments
2013	$	8,844
2014		9,319
2015		9,814
2016		10,330
2017		10,865
2018 – 2022		63,558
Total estimated benefit payments over next ten years	$	112,730

Summary of changes in benefit obligations and funded status of these non qualified plans

The changes in benefit obligations and funded status of these non-qualified plans for the years ended December 31, 2012 and 2011 were as follows:

	Unfunded Retirement Plans
(Amounts in thousands)	2012			2011
Change in Benefit Obligations:
Projected benefit obligations at beginning of year	$	(6,165	)	$	(5,700	)
Service cost		—			—
Interest cost		(254	)		(302	)
Actuarial losses		(235	)		(746	)
Benefits and plan expenses paid		576			583
Projected benefit obligations at end of year		(6,078	)		(6,165	)
Net unfunded status at end of year	$	(6,078	)	$	(6,165	)

	As of December 31,
(Amounts in thousands)	2012			2011
Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	$	(592	)	$	(558	)
Non-current liabilities		(5,486	)		(5,607	)
Net liability recognized on the Consolidated Balance Sheets	$	(6,078	)	$	(6,165	)

Components of net periodic benefit cost and other comprehensive loss and the weighted average assumptions used in accounting for funded and unfunded pension benefits

The components of net periodic benefit cost and other comprehensive loss and the weighted average assumptions used in accounting for funded and unfunded pension benefits are as follows:

Pension Benefits

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Components of net periodic benefit cost:
Service cost	$	4,066		$	3,577		$	2,524
Interest cost		10,786			11,238			10,920
Expected return on plan assets		(14,547	)		(13,976	)		(12,258	)
Amortization of actuarial losses		7,213			4,294			3,702
Amortization of prior service cost		(6	)		(6	)		(6	)
Total net periodic benefit cost recognized in income statement	$	7,512		$	5,127		$	4,882
Recognized in accumulated other comprehensive loss:
Actuarial (gains) losses	$	8,231		$	37,491		$	3,936
Prior service cost		6			6			6
Total recognized in accumulated other comprehensive loss	$	8,237		$	37,497		$	3,942
Weighted average assumptions:
Discount rate used to determine net periodic benefit cost		4.7	%		5.6	%		6.1	%
Discount rate used to determine year end benefit obligations		4.2	%		4.6	%		5.6	%
Expected return on assets used to determine net periodic benefit cost		7.6	%		7.7	%		7.9	%
Rate of compensation increase		3.0	%		3.0	%		3.0	%

Allocation of pension plan assets & target for the U.S and Canadian retirement plan

For the U.S. retirement plan the allocation of pension plan assets as of December 31, 2012 and 2011 and target allocation as of December 31, 2012 are as follows:

	Percentage of Plan Assets
	Actual Allocation December 31,						2012 Target Allocation
	2012			2011
Money market mutual funds		0.5	%		0.5	%		2.0	%
U.S. large cap equity securities		26.4	%		26.8	%		26.2	%
U.S. small/mid cap equity securities		3.2	%		3.1	%		3.0	%
International equity securities		15.3	%		13.6	%		14.3	%
Emerging markets equity securities		1.6	%		1.4	%		1.5	%
U.S. debt securities		47.1	%		48.4	%		46.0	%
International debt securities		2.1	%		2.0	%		2.0	%
Hedge funds		3.8	%		4.2	%		5.0	%

For the Canadian retirement plan the allocation of pension plan assets as of December 31, 2012 and 2011 and target allocation as of December 31, 2012 are as follows:

	Percentage of Plan Assets
	Actual Allocation December 31,						2012 Target Allocation
	2012			2011
U.S. large cap equity securities		17.0	%		17.2	%		17.0	%
International equity securities		42.3	%		42.3	%		42.0	%
Emerging markets equity securities		2.9	%		3.0	%		3.0	%
International debt securities		37.8	%		37.5	%		38.0	%

Total expenses recognized for defined contribution plans

Total expense recognized for these defined contribution plans was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Expense	$	7,686	$	7,422	$	6,571

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Income Taxes (Details 3)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Reconciliation of the provision for income taxes from continuing operations
U.S. federal statutory income tax rate	35.00%	35.00%	35.00%
Impact of earnings of foreign operations	(2.60%)	(2.20%)	(6.60%)
Repatriation of foreign earnings		0.30%	1.70%
Foreign withholding taxes	1.20%	1.10%	2.00%
Federal and state research tax credits		(0.20%)	(1.70%)
State income taxes, net of federal tax benefit	1.40%	2.20%	0.90%
Permanent differences	(1.50%)	(0.40%)	(1.40%)
Change in deferred taxes		2.30%	3.30%
Change in uncertain tax positions	(0.60%)	(4.60%)	(12.40%)
Acquisition transaction costs		1.90%	0.60%
Other	0.20%	0.60%	0.00%
Effective income tax rate before valuation allowance	33.10%	36.00%	21.40%
Valuation allowance	2.80%	(2.30%)	(0.10%)
Effective income tax rate after valuation allowance	35.90%	33.70%	21.30%

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Commitments (Details Textual) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Commitments (Textual) [Abstract]
Material capital lease obligations	0
Maximum [Member]
Commitments (Textual) [Abstract]
Expiring period of Operating lease	15 years
Minimum [Member]
Commitments (Textual) [Abstract]
Expiring period of Operating lease	1 year

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Deferred Financing Costs (Tables)

12 Months Ended

Dec. 31, 2012

Deferred Financing Costs [Abstract]

Deferred financing costs and related amortization expense

The following activity occurred during the years indicated:

	Year Ended December 31,
(Amounts in thousands)	2012			2011
Beginning balance	$	5,716		$	4,088
Financing costs deferred		1,115			4,006
Write off due to early extinguishment of debt		—			(1,368	)
Amortization		(1,336	)		(1,010	)
Ending balance	$	5,495		$	5,716

Scheduled amortization, assuming no further cost deferrals or prepayments of principal

Amortization expense, assuming no further cost deferrals or prepayments of principal, is expected to be as follows:

(Amounts in thousands)	Expected Annual Amortization
2013	$	1,499
2014		1,499
2015		1,499
2016		998
Total scheduled amortization	$	5,495

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Business and Summary of Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2012
Building and Building Improvements [Member] | Maximum [Member]
Summary of estimated useful lives of property, plant, and equipment
Estimated Useful Life	45 years
Building and Building Improvements [Member] | Minimum [Member]
Summary of estimated useful lives of property, plant, and equipment
Estimated Useful Life	10 years
Machinery and equipment [Member] | Maximum [Member]
Summary of estimated useful lives of property, plant, and equipment
Estimated Useful Life	10 years
Machinery and equipment [Member] | Minimum [Member]
Summary of estimated useful lives of property, plant, and equipment
Estimated Useful Life	3 years
Furniture, fixtures, and office equipment [Member] | Maximum [Member]
Summary of estimated useful lives of property, plant, and equipment
Estimated Useful Life	10 years
Furniture, fixtures, and office equipment [Member] | Minimum [Member]
Summary of estimated useful lives of property, plant, and equipment
Estimated Useful Life	3 years
Transportation equipment [Member] | Maximum [Member]
Summary of estimated useful lives of property, plant, and equipment
Estimated Useful Life	15 years
Transportation equipment [Member] | Minimum [Member]
Summary of estimated useful lives of property, plant, and equipment
Estimated Useful Life	3 years

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Intangible Assets (Details Textual) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Intangible Assets (Textual) [Abstract]
Intangible assets unamortized backlog included in other current assets		$ 15,000
Amortization expense for intangible assets in 2013	14,200,000
Amortization expense for intangible assets in 2014	12,000,000
Amortization expense for intangible assets in 2015	10,500,000
Amortization expense for intangible assets in 2016	9,100,000
Amortization expense for intangible assets in 2017	7,500,000
Impairment charges	0	0	0
Deduction of goodwill for tax purpose	38,300,000
Accumulated tax amortization of deductible goodwill	$ 26,300,000	$ 21,900,000

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Concentration of Credit Risk and Fair Value of Financial Instruments (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of amounts recognized in cost of sales in Consolidated Statements of Income
Gain (loss) on foreign currency derivative financial instruments	$ (75)	$ 788	$ 2,353

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Inventories (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Components of inventories
Raw materials and supplies	$ 22,815	$ 24,022
Work in progress	19,388	16,006
Finished goods	132,613	109,797
Total inventories	$ 174,816	$ 149,825

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

Summary of selected financial information by segment

The following table reflects selected financial information by segment and sales by geographic region.

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Sales:
FLAG	$	650,480		$	659,883		$	554,053
FRAG		250,845			147,475			34,200
Corporate and other		26,341			24,272			23,227
Total sales	$	927,666		$	831,630		$	611,480
Operating income (expense):
FLAG	$	108,255		$	115,597		$	104,113
FRAG		(7,495	)		4,474			1,671
Corporate and other		(21,480	)		(22,118	)		(20,229	)
Total operating income	$	79,280		$	97,953		$	85,555
Depreciation and amortization:
FLAG	$	26,574		$	24,663		$	21,898
FRAG		16,341			9,941			3,135
Corporate and other		2,203			1,203			2,566
Total depreciation and amortization	$	45,118		$	35,807		$	27,599
Capital expenditures:
FLAG	$	45,050		$	38,767		$	19,693
FRAG		6,717			1,600			83
Corporate and other		158			6			226
Total capital expenditures	$	51,925		$	40,373		$	20,002
Sales by geographic region:
United States	$	407,967		$	308,593		$	194,416
Europe		241,884			229,103			166,960
China		44,412			45,134			38,967
Brazil		36,561			33,242			29,402
Canada		30,232			25,285			18,853
Russian Federation		26,040			23,375			23,669
All others, individually insignificant		140,570			166,898			139,213
Total sales	$	927,666		$	831,630		$	611,480

Financial Information by segments and geographic region

Balance Sheet Information by Segment	As of December 31,
(Amounts in thousands)	2012		2011
Assets:
FLAG	$	468,121	$	472,881
FRAG		374,856		370,057
Corporate and other		62,314		41,269
Total assets	$	905,291	$	884,207
Goodwill:
FLAG	$	66,297	$	66,223
FRAG		98,865		98,848
Corporate and other		13		13
Total goodwill	$	165,175	$	165,084
Property, plant, and equipment, net:
United States	$	91,446	$	86,677
China		41,610		22,706
Canada		20,473		18,572
European Union		12,154		14,461
Brazil		11,532		12,837
All other		487		619
Total property, plant, and equipment, net	$	177,702	$	155,872

Summary of changes in goodwill

(Amounts in thousands)	FLAG		FRAG		Corporate and Other		Total
Goodwill:
December 31, 2011	$	66,223	$	98,848	$	13	$	165,084
Effect of changes in foreign currency translation rates		74		17		—		91
December 31, 2012	$	66,297	$	98,865	$	13	$	165,175

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Consolidated Statement of Changes in Stockholders' Equity (Deficit) (Parenthetical) (KOX, USD $) In Thousands, except Share data, unless otherwise specified	1 Months Ended	12 Months Ended
	Mar. 31, 2011	Dec. 31, 2012
Constructively retired treasury shares		382,380
Acquisition of KOX, shares	309,834
Acquisition of KOX	$ 4,700

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Quarterly Results of Operations (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Summary of Unaudited Quarterly Results of Operations
Sales	$ 229,562	$ 232,736	$ 239,059	$ 226,309	$ 236,515	$ 212,904	$ 201,337	$ 180,874	$ 927,666	$ 831,630	$ 611,480
Gross profit	62,543	62,928	68,078	62,665	66,013	65,560	64,188	60,048	256,215	255,809	204,026
Net income	$ 8,984	$ 11,622	$ 13,101	$ 5,881	$ 9,502	$ 10,805	$ 13,752	$ 15,622	$ 39,588	$ 49,682	$ 47,200
Net income per share:
Basic	$ 0.18	$ 0.24	$ 0.27	$ 0.12	$ 0.19	$ 0.22	$ 0.28	$ 0.32	$ 0.81	$ 1.02	$ 0.99
Diluted	$ 0.18	$ 0.23	$ 0.26	$ 0.12	$ 0.19	$ 0.22	$ 0.28	$ 0.31	$ 0.79	$ 1.01	$ 0.97

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Property, Plant, and Equipment, Net (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Schedule of property, plant, and equipment
Accumulated depreciation	$ (243,046)	$ (223,805)
Total property, plant, and equipment, net	177,702	155,872
Land [Member]
Schedule of property, plant, and equipment
Property, plant, and equipment, gross	9,081	9,081
Buildings and improvements [Member]
Schedule of property, plant, and equipment
Property, plant, and equipment, gross	82,910	65,699
Machinery and equipment [Member]
Schedule of property, plant, and equipment
Property, plant, and equipment, gross	262,058	239,882
Furniture, fixtures, and office equipment [Member]
Schedule of property, plant, and equipment
Property, plant, and equipment, gross	42,498	33,342
Transportation equipment [Member]
Schedule of property, plant, and equipment
Property, plant, and equipment, gross	1,126	1,105
Construction or equipment acquisitions in progress [Member]
Schedule of property, plant, and equipment
Property, plant, and equipment, gross	$ 23,075	$ 30,568

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Other Post-Employment Benefit Plans (Tables)

12 Months Ended

Dec. 31, 2012

Other Post-Employment Benefit Plans [Abstract]

Changes in benefit obligations, plan assets, and funded status of plans

The changes in benefit obligations, plan assets, and funded status of these plans for the years ended December 31, 2012 and 2011, were as follows:

	Other Post-Retirement Benefits
(Amounts in thousands)	2012			2011
Change in benefit obligations:
Projected benefit obligations at beginning of year	$	(45,665	)	$	(38,126	)
Service cost		(355	)		(261	)
Interest cost		(1,765	)		(1,972	)
Participant contributions		(1,932	)		(1,878	)
Actuarial gains (losses), net		1,706			(8,083	)
Benefits and plan expenses paid		4,002			4,655
Projected benefit obligations at end of year	$	(44,009	)	$	(45,665	)
Change in plan assets:
Fair value of plan assets at beginning of year	$	—		$	—
Company contributions		2,070			2,777
Participant contributions		1,932			1,878
Benefits and plan expenses paid		(4,002	)		(4,655	)
Fair value of plan assets at end of year		—			—
Net unfunded status at end of year	$	(44,009	)	$	(45,665	)
Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	$	(2,588	)	$	(2,713	)
Non-current liabilities		(41,421	)		(42,952	)
Net liability recognized on the Consolidated Balance Sheets	$	(44,009	)	$	(45,665	)

Summary of projected benefit payments for these plans, net of the estimated Medicare Part D subsidy expected to be received by the Company over the next ten years

The projected benefit payments for these plans, net of the estimated Medicare Part D subsidy expected to be received by the Company over the next ten years, are estimated as follows:

(Amounts in thousands)	Estimated Gross Benefit Payments		Estimated Medicare Part D Subsidy		Estimated Net Benefit Payments
2013	$	2,847	$	207	$	2,640
2014		2,903		221		2,682
2015		2,922		231		2,691
2016		2,936		238		2,698
2017		2,931		243		2,688
2018 – 2022		14,289		1,250		13,039
Total estimated benefit payments over next ten years	$	28,828	$	2,390	$	26,438

Summary of components of net periodic benefit cost and other comprehensive loss and the weighted average assumptions used in accounting for other post-retirement benefits

The components of net periodic benefit cost and other comprehensive loss and the weighted average assumptions used in accounting for other post-retirement benefits were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Components of net periodic benefit cost:
Service cost	$	355		$	261		$	270
Interest cost		1,765			1,972			2,095
Amortization of actuarial losses		1,303			871			849
Total net periodic benefit cost recognized in Consolidated Statements of Income	$	3,423		$	3,104		$	3,214
Recognized in accumulated other comprehensive loss:
Actuarial (gains) losses	$	(3,009	)	$	7,212		$	424
Weighted average assumptions:
Discount rate used to determine net periodic benefit cost		4.3	%		5.5	%		5.8	%
Discount rate used to determine year-end benefit obligations		4.0	%		4.3	%		5.5	%

Change in assumed health care cost trend rates

A 1% change in assumed health care cost trend rates would have had the following effects for 2012:

(Amounts in thousands)	1% Increase		1% Decrease
Effect on service and interest cost components	$	300	$	(240	)
Effect on other post-retirement benefit obligations		4,843		(3,992	)

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Discontinued Operations

12 Months Ended

Dec. 31, 2012

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

NOTE 20:  DISCONTINUED OPERATIONS

On September 30, 2010, we sold our indirect wholly-owned subsidiary Gear Products to Tulsa Winch, Inc., an operating unit of Dover Industrial Products, Inc., for net cash proceeds of $24.8 million. Under terms of the stock purchase agreement, the parties agreed to treat the stock sale as if it were an asset sale for income tax purposes, which resulted in an increase in income tax expense we recognized on the sale. Gear Products results up to the date of the sale are reported as discontinued operations for all periods presented, and are summarized below:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Sales	$	—	$	—	$	12,297
Operating income	$	—	$	—	$	1,031
Gain on sale of subsidiary		—		—		11,941
Income before income taxes		—		—		12,972
Income tax provision		—		—		7,174
Income from discontinued operations	$	—	$	—	$	5,798

SUPPLEMENTARY DATA

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Concentration of Credit Risk and Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2012

Concentration of Credit Risk and Fair Value of Financial Instruments [Abstract]

CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 19:  CONCENTRATION OF CREDIT RISK AND FAIR VALUE OF FINANCIAL INSTRUMENTS

At December 31, 2012, approximately 47% of accounts receivable were from customers outside the U.S. One customer accounted for 7.3% and 4.8% at December 31, 2012 and 2011, respectively, of the total accounts receivable balance. No other customer accounted for more than 3% of accounts receivable at December 31, 2012 or 2011. Accounts receivable are principally from dealers, distributors, mass merchants, chain saw manufacturers, and other OEMs. The majority of accounts receivable are not collateralized.

The carrying amount of cash and cash equivalents approximates fair value because of the short-term maturity of those instruments. The carrying amount of accounts receivable approximates fair value because the maturity period is short and the Company has reduced the carrying amount to the estimated net realizable value with an allowance for doubtful accounts. The fair value of the senior credit facility principal outstanding is determined by reference to prices of recent transactions for similar debt. Derivative financial instruments are carried on the Consolidated Balance Sheets at fair value, as determined by reference to quoted terms for similar instruments. The carrying amount of other financial instruments approximates fair value because of the short-term maturity periods and variable interest rates associated with the instruments.

The estimated fair values of the senior credit facility loans at December 31, 2012 and 2011 are presented below. See also Note 9.

	December 31, 2012				December 31, 2011
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior credit facility debt	$	516,250	$	513,669	$	524,450	$	521,828

Derivative Financial Instruments and Foreign Currency Hedging. The Company has manufacturing and/or distribution operations in Brazil, Canada, China, Europe, Japan, Mexico, Russia, and the U.S. Foreign currency exchange rate movements create a degree of risk by affecting the U.S. Dollar value of certain balance sheet positions denominated in foreign currencies, and by affecting the translated amounts of revenues and expenses. Additionally, the interest rates available in certain jurisdictions in which the Company holds cash may vary, thereby affecting the return on cash equivalent investments. The Company makes regular cash payments to its foreign subsidiaries and is exposed to changes in exchange rates from these transactions, which may adversely affect its results of operations and financial position. Certain other foreign subsidiaries make regular cash payments to the Company and changes in exchange rates from these transactions can also expose the Company, which may adversely affect its results of operations and financial position.

The Company manages a portion of its foreign currency exchange rate exposures with derivative financial instruments. These instruments are designated as cash flow hedges and are recorded on the Consolidated Balance Sheets at fair value. The Company’s objective in executing these hedging instruments is to minimize earnings volatility resulting from conversion and the re-measurement of foreign currency denominated transactions. The effective portion of the gains or losses on these contracts due to changes in fair value is initially recorded as a component of accumulated other comprehensive loss and is subsequently reclassified into net earnings when the contracts mature and the Company settles the hedged payment. The classification of effective hedge results is the same in the Consolidated Statements of Income as that of the underlying exposure. These contracts are highly effective in hedging the variability in future cash flows attributable to changes in currency exchange rates.

The cumulative unrealized pre-tax loss on these derivative contracts included in accumulated other comprehensive loss on the Consolidated Balance Sheets was $28 thousand as of December 31, 2012 and $0.5 million as of December 31, 2011. The unrealized pre-tax loss included in accumulated other comprehensive loss is expected to be recognized in the Consolidated Statement of Income during the next twelve months.

Amounts recognized in cost of sales in the Consolidated Statements of Income at the maturity of the related derivative financial instruments were as follows.

	Year Ended December 31,
(Amounts in thousands)	2012			2011		2010
Gain (loss) on foreign currency derivative financial instruments	$	(75	)	$	788	$	2,353

Gains and losses on these foreign currency derivative financial instruments are offset in net earnings by the effects of currency exchange rate changes on the underlying transactions. Through December 31, 2012, the Company has not recognized any amount from these contracts in earnings due to ineffectiveness. The aggregate notional amount of these foreign currency contracts outstanding was $45.5 million at December 31, 2012 and $37.5 million at December 31, 2011.

Derivative Financial Instruments and Interest Rates. The senior credit facility agreement terms include a requirement to cover 35% of the outstanding principal on our term loan with fixed or capped interest rates. In the first six months of 2011, we entered into interest rate cap agreements covering 35% of the outstanding principal on our term loans A and B that capped the maximum LIBOR used to determine the interest rate we pay at 5.00% through February 28, 2013. During the third quarter of 2011, following the Fourth Amendment and Restatement of our senior credit facilities, we terminated these interest rate cap contracts with a charge to expense of $0.1 million. In October 2011, we entered into an interest rate cap agreement covering an initial notional amount of $103.7 million of term loan principal outstanding that caps the maximum interest rate at 7.50%. In October and November 2011, we also entered into a series of interest rate swap contracts whereby the interest rate we pay will be fixed between 3.30% and 4.20% on $130.0 million of term loan principal for the period of June 2013 through varying maturity dates between December 2014 and August 2016. These interest rate swap and cap agreements are designated as cash flow hedges and are recorded on the Consolidated Balance Sheets at fair value. Through December 31, 2012, the Company has not recognized any amount from these contracts in earnings due to ineffectiveness.

Derivatives held by the Company are summarized as follows:

	Carrying Value on Consolidated Balance			Assets (Liabilities) Measured at Fair Value
(Amounts in thousands)	Sheets			Level 1		Level 2			Level 3
December 31, 2012:
Interest rate hedge agreements	$	(3,960	)	$	—	$	(3,960	)	$	—
Foreign currency hedge agreements		(28	)		—		(28	)		—
December 31, 2011:
Interest rate hedge agreements	$	(1,303	)	$	—	$	(1,303	)	$	—
Foreign currency hedge agreements		(505	)		—		(505	)		—

See Note 11 for a description of the framework for measuring fair value and Levels 1, 2, and 3. In accordance with ASC 820, the Company evaluates nonperformance risk of its counterparties in calculating fair value adjustments. As of December 31, 2012 and 2011, all outstanding derivative instruments were fully collateralized; therefore, the nonperformance risk is considered remote. The carrying values as of December 31, 2012 are included in accrued expenses on the Consolidated Balance Sheet.

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Stock-Based Compensation (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Assumption used to estimate fair value of SARs issued
Estimated average lives	6 years	6 years	6 years
Risk-free interest rate	1.20%	2.40%	2.80%
Expected volatility			49.70%
Weighted average volatility	49.60%	47.50%	49.70%
Dividend yield	0.00%	0.00%	0.00%
Estimated forfeiture rate	3.20%	5.50%	5.00%
Weighted average exercise price	$ 16.68	$ 15.10	$ 11.82
Weighted average grant date fair value	$ 7.93	$ 7.36	$ 5.94
Minimum [Member]
Assumption used to estimate fair value of SARs issued
Expected volatility	49.30%	48.40%
Maximum [Member]
Assumption used to estimate fair value of SARs issued
Expected volatility	49.60%	49.50%

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Acquisitions (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 Woods/TISCO [Member]	Dec. 31, 2011 PBL [Member]	Dec. 31, 2011 KOX [Member]	Dec. 31, 2010 SpeeCo [Member]
Schedule of operating results of acquisitions included in Consolidated Statements of Income
Incremental net sales	$ 55,464	$ 9,679	$ 21,639	$ 34,200
Incremental income (loss) before income taxes	1,326	(2,727)	(2,864)	2,097
Acquisition accounting effects	$ 4,913	$ 1,734	$ 2,152	$ 3,368

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Commitments (Tables)

12 Months Ended

Dec. 31, 2012

Commitments [Abstract]

Future minimum rental commitments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year

Future minimum rental commitments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2012, are as follows:

(Amounts in thousands)	Future Minimum Operating Lease Commitments
2013	$	7,920
2014		6,664
2015		4,761
2016		4,034
2017		3,917
2018 – beyond		22,352
Total operating lease commitments	$	49,648

Rentals charged to costs and expenses for continuing operations under cancelable and non-cancelable lease arrangements

Rentals charged to costs and expenses for continuing operations under cancelable and non-cancelable lease arrangements were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Rental charges	$	6,076	$	5,101	$	3,573

Guarantees and other commercial commitments

Guarantees and other commercial commitments include the following:

(Amounts in thousands)	December  31, 2012
Product warranty reserves	$	1,914
Letters of credit outstanding		5,424
Other financial guarantees		3,192
Total	$	10,530

Changes in the warranty reserve

Changes in the warranty reserve were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Balance at beginning of period	$	1,539		$	616		$	125
Warranty reserve of acquired businesses		—			785			421
Warranty reserve related to discontinued operations		—			—			(40	)
Accrued warranty expense		3,215			631			1,495
Payments made (in cash or in-kind)		(2,840	)		(493	)		(1,385	)
Balance at end of period	$	1,914		$	1,539		$	616

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Quarterly Results of Operations

12 Months Ended

Dec. 31, 2012

Quarterly Results of Operations [Abstract]

QUARTERLY RESULTS OF OPERATIONS

QUARTERLY RESULTS OF OPERATIONS

(Unaudited)

The following tables set forth a summary of the unaudited quarterly results of operations for 2012 and 2011.

	Year Ended December 31, 2012
(Amounts in thousands, except per share data)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
(Amounts may not sum due to rounding)
Sales	$	226,309	$	239,059	$	232,736	$	229,562	$	927,666
Gross profit		62,665		68,078		62,928		62,543		256,215
Net income		5,881		13,101		11,622		8,984		39,588
Net income per share:
Basic	$	0.12	$	0.27	$	0.24	$	0.18	$	0.81
Diluted		0.12		0.26		0.23		0.18		0.79
	Year Ended December 31, 2011
(Amounts in thousands, except per share data)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
(Amounts may not sum due to rounding)
Sales	$	180,874	$	201,337	$	212,904	$	236,515	$	831,630
Gross profit		60,048		64,188		65,560		66,013		255,809
Net income		15,622		13,752		10,805		9,502		49,682
Net income per share:
Basic	$	0.32	$	0.28	$	0.22	$	0.19	$	1.02
Diluted		0.31		0.28		0.22		0.19		1.01

Acquisition accounting effects included in the above quarterly results for 2012 totaled $4.4 million in the first quarter, $4.3 million in the second quarter, $3.7 million in the third quarter, and $3.7 million in the fourth quarter. Facility closure and restructuring costs during 2012 totaled $4.9 million in the first quarter, $1.7 million in the second quarter, and $0.8 million in the third quarter.

Results in all four quarters of 2011 reflect the acquisition of KOX in March. Results for the third and fourth quarters of 2011 also include the acquisitions of PBL and Woods/TISCO. Acquisition accounting effects included in the above quarterly results for 2011 totaled $2.1 million in the first quarter, $2.6 million in the second quarter, $4.2 million in the third quarter, and $6.7 million in the fourth quarter of 2011. In addition, net income in the third quarter of 2011 reflects a pretax charge of $3.9 million for the early extinguishment of debt.

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Consolidated Schedule of Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2012

Consolidated Schedule of Valuation and Qualifying Accounts [Abstract]

CONSOLIDATED SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

CONSOLIDATED SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

(Amounts in thousands)
Column A	Column B		Column C					Column D			Column E
			Additions (Reductions)
Description	Balance at Beginning of Period		Charged (Credited) to Cost and Expenses			Business Acquisitions (Dispositions), Net		(Deductions) Recoveries			Balance at End of Period
Year Ended December 31, 2012:
Allowance for doubtful accounts receivable	$	3,142	$	98		$	—	$	(124	)	$	3,116
Inventory reserves		9,899		8,281			—		(6,454	)		11,726
Valuation allowance for deferred tax assets		603		1,949			—		—			2,552
Year Ended December 31, 2011:
Allowance for doubtful accounts receivable		1,490		608			1,097		(53	)		3,142
Inventory reserves		5,108		4,326			3,428		(2,963	)		9,899
Valuation allowance for deferred tax assets		2,314		(1,711	)		—		—			603
Year Ended December 31, 2010:
Allowance for doubtful accounts receivable		3,339		120			169		(2,138	)	$	1,490
Inventory reserves		3,706		2,449			704		(1,751	)		5,108
Valuation allowance for deferred tax assets		2,366		(52	)		—		—			2,314

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Consolidated Statements of Changes in Stockholders' Equity (Deficit) (USD $) In Thousands, except Share data	Total	Common Stock	Capital in Excess of Par	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Beginning Balance, value at Dec. 31, 2009	$ (6,740)	$ 478	$ 581,211	$ (556,555)	$ (31,874)
Beginning Balance, shares at Dec. 31, 2009		47,759,000
Net income	47,200			47,200
Foreign currency translation adjustment	309				309
Unrealized losses	(963)				(963)
Pension liability adjustment	(4,095)				(4,095)
Stock options, stock appreciation rights, and restricted stock, shares		477,000
Stock options, stock appreciation rights, and restricted stock	3,397	4	3,393
Stock compensation expense	3,290		3,290
Ending Balance, value at Dec. 31, 2010	42,398	482	587,894	(509,355)	(36,623)
Ending Balance, shares at Dec. 31, 2010		48,236,000
Net income	49,682			49,682
Foreign currency translation adjustment	(2,984)				(2,984)
Unrealized losses	(1,554)				(1,554)
Pension liability adjustment	(28,878)				(28,878)
Acquisition of KOX, shares		310,000
Acquisition of KOX	4,709	3	4,706
Stock options, stock appreciation rights, and restricted stock, shares		269,000
Stock options, stock appreciation rights, and restricted stock	1,651	3	1,648
Stock compensation expense	4,441		4,441
Ending Balance, value at Dec. 31, 2011	69,465	488	598,689	(459,673)	(70,039)
Ending Balance, shares at Dec. 31, 2011	48,814,912	48,815,000
Net income	39,588			39,588
Foreign currency translation adjustment	1,434				1,434
Unrealized losses	(1,364)				(1,364)
Pension liability adjustment	(5,450)				(5,450)
Stock options, stock appreciation rights, and restricted stock, shares		325,000
Stock options, stock appreciation rights, and restricted stock	2,217	3	2,214
Stock compensation expense	5,592		5,592
Ending Balance, value at Dec. 31, 2012	$ 111,482	$ 491	$ 606,495	$ (420,085)	$ (75,419)
Ending Balance, shares at Dec. 31, 2012	49,140,091	49,140,000

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Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Business and Summary of Significant Accounting Policies [Abstract]

Business

Business. The Company is a global manufacturer and marketer of equipment, accessories, and replacement parts sold to consumers and professionals in select end-markets, including the forestry, lawn and garden, farm, ranch, agriculture, and construction sectors. The Company manufactures and markets branded products, serving professional loggers, arborists, construction workers, homeowners, equipment dealers, landscapers, farmers, rural land owners, and OEMs. The Company’s manufactured products include products such as cutting chain, guide bars, and sprockets for chain saw use, lawnmower and edger blades, grass and crop cutting equipment, electric and gas-powered log splitters, riding lawnmowers, tractor attachments, and concrete cutting and finishing equipment. The Company maintains manufacturing facilities in the U.S., Brazil, Canada, China, France, and Mexico. We also market and distribute other products and accessories closely aligned with the products that we manufacture, including cutting line and spools for line trimmers, safety equipment and clothing, small engine replacement parts, small tractor linkage parts and attachments, and other accessories used in the market sectors we serve. Many of the products we manufacture are sold to OEMs for use on new chain saws and landscaping equipment, or for private branding purposes, using the OEMs’ brands. See additional information about our business in Item 1, Business, included elsewhere in this report.

Basis of Presentation

Basis of Presentation. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries and are prepared in conformity with accounting principles generally accepted in the U.S. All significant intercompany balances and transactions have been eliminated.

Foreign Currency

Foreign Currency. For foreign subsidiaries whose operations are principally conducted in U.S. Dollars, monetary assets and liabilities are translated into U.S. Dollars at the current exchange rate, while other assets (principally property, plant, and equipment and inventories) and related costs and expenses are generally translated at historic exchange rates. Sales and other costs and expenses are translated at the average exchange rate for the period and the resulting foreign exchange adjustments are recognized in income. Assets and liabilities of the remaining foreign operations are translated to U.S. Dollars at the current exchange rate and their statements of income are translated at the average exchange rate for the period. Gains and losses resulting from translation of the financial statements of these operations are reflected as “other comprehensive income (loss)” in stockholders’ equity and in the Consolidated Statements of Comprehensive Income. Foreign currency transaction gains and losses from settling transactions denominated in currencies other than the U.S. Dollar are recognized in the Consolidated Statements of Income when realized.

Use of Estimates

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles recognized in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the components of equity, and the disclosure of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses recognized during the reporting periods. Estimates are used when accounting for the allowance for doubtful accounts, inventory obsolescence, goodwill and other long-lived assets, product warranties, casualty insurance costs, product liability reserves and related expenses, other legal proceedings, employee benefit plans, income taxes and deferred tax assets and liabilities, and contingencies. It is reasonably possible that actual results could differ materially from these estimates and assumptions and significant changes to estimates could occur in the near term.

Cash and Cash Equivalents

Cash and Cash Equivalents. All highly liquid temporary cash investments with maturities of 90 days or less at the date of investment that are readily convertible to known amounts of cash and present minimal risk of changes in value because of changes in interest rates are considered to be cash equivalents.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts. The Company estimates the amount of accounts receivable that are not collectible and records an allowance for doubtful accounts which is presented net with accounts receivable on the Consolidated Balance Sheets. As of December 31, 2012 and 2011, the allowance for doubtful accounts was $3.1 million. It is reasonably possible that actual collection experience may differ significantly from management’s estimate.

Inventories

Inventories. Inventories are valued at the lower of cost or market. The Company determines the cost of most raw materials, work in process, and finished goods inventories by standard cost, which approximates cost determined on the first in, first out (“FIFO”) method. The Company writes down its inventories for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.

Property, Plant, and Equipment

Property, Plant, and Equipment. Property, plant, and equipment is stated at cost and is depreciated on the straight-line method over the estimated useful lives of the individual assets. The principal ranges of estimated useful lives for depreciation purposes are as follows:

Asset Category	Useful Life
Buildings and building improvements		10 to 45 years
Machinery and equipment		3 to 10 years
Furniture, fixtures, and office equipment		3 to 10 years
Transportation equipment		3 to 15 years

Gains or losses on disposal are reflected in income. Property, plant, and equipment under capital lease is capitalized, with the related obligations stated at the principal portion of future lease payments. Interest cost incurred during the period of construction of plant and equipment is capitalized. Capitalized interest was $0.5 million in 2012, $0.2 million in 2011, and $0.1 million in 2010.

Goodwill and other Intangible Assets with Indefinite Useful Lives

Goodwill and Other Intangible Assets with Indefinite Useful Lives. The Company accounts for goodwill and other intangible assets with indefinite useful lives under ASC 350. Under the provisions of ASC 350, the Company evaluates annually in the fourth quarter, or whenever circumstances indicate, whether or not there are any qualitative indications of potential impairment of these assets. If there is indication of potential impairment, the Company performs a quantitative analysis. The quantitative analysis of impairment is performed by estimating the fair values of the reporting units using a discounted cash flow model and comparing those fair values to the carrying values of the reporting units, including goodwill. If the fair value of a reporting unit is less than its carrying value, the Company then allocates the fair value of the unit to all the assets and liabilities of that unit, including any unrecognized intangible assets, as if the reporting unit’s fair value were the price to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of the goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Events or changes in circumstances may occur that could cause underperformance relative to projected future cash flows that would create future impairments. No impairments have been recognized in 2012, 2011, or 2010 for goodwill or other intangible assets with indefinite useful lives

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets. The Company evaluates the carrying value of long-lived assets to be held and used, including finite-lived intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such asset are separately identifiable and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the projected cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for disposal costs. No significant impairment charges were recognized in 2012, 2011, or 2010.

Deferred Financing Costs

Deferred Financing Costs. The Company capitalizes costs incurred in connection with borrowings or establishment of credit facilities. These costs are amortized as an adjustment to interest expense over the life of the borrowing or life of the credit facility using the straight line method, which approximates the effective interest rate method. In the case of early debt principal repayments, the Company adjusts the value of the corresponding deferred financing costs with a charge to other expense, and similarly adjusts the future amortization expense.

Income Taxes

Income Taxes. In accordance with ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Included in recorded tax liabilities are estimated amounts related to uncertain tax positions. Actual tax liabilities may differ materially from these estimates. Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The American Jobs Creation Act of 2004 includes a deduction of up to 9 percent of “qualified production activities income,” as defined in the law and subject to certain limitations. The benefit of this deduction is accounted for as a special deduction when realized in accordance with ASC 740-10, Section 55. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense.

Product Liability

Product Liability. The Company monitors claims that relate to the alleged malfunction or defects of its products that may result in an injury to the equipment operator or others. The Company records an accrued liability and charge to cost of sales for its estimated obligation as claims are incurred and evaluated. The accrual may increase or decrease as additional information regarding claims develops.

Environmental Remediation Liabilities

Environmental Remediation Liabilities. The Company is conducting several testing, monitoring, and in some cases, remediation efforts regarding environmental matters at certain of its current and former operating sites. In addition, from time to time, regulatory bodies and third parties have asserted claims to the Company alleging responsibility for environmental remediation. The Company records an accrued liability and charge to expense for its estimated cost of environmental remediation as situations are evaluated. The accrual may increase or decrease as new information is received, regulatory changes are enacted, or changes in estimate are developed.

Insurance Accruals

Insurance Accruals. It is the Company’s policy to retain a portion of expected losses related to general and product liability, workers’ compensation, and vehicle liability losses through retentions or deductibles under its risk management and insurance programs. Provisions for losses expected under these programs are recorded based on estimates of the ultimate undiscounted aggregate liabilities for claims incurred.

Warranty

Warranty. The Company offers certain product warranties with the sale of its products. An estimate of warranty costs is recognized at the time the related revenue is recognized and the warranty obligation is recorded as a charge to cost of sales and as a liability on the balance sheet. Warranty cost is estimated using historical customer claims, supplier performance, and new product performance.

Derivative Financial Instruments

Derivative Financial Instruments. The Company accounts for derivative financial instruments in accordance with ASC 815. The Company’s earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, interest rates, and commodity prices. The Company’s risk management policy allows for the use of derivative financial instruments to manage foreign currency exchange rate, interest rate, and commodity price exposures. The policy specifies that derivatives are not to be used for speculative or trading purposes and formally designates the financial instruments used as a hedge of a specific underlying exposure or forecasted transaction. The Company formally assesses, both at inception and at least quarterly thereafter, using the hypothetical derivative method, whether the derivatives used qualify for hedge accounting and are effective at offsetting the related underlying exposure. All derivatives are recognized on the Consolidated Balance Sheets at their fair value. As of December 31, 2012 and 2011, derivatives consisted of foreign currency hedge instruments, interest rate swap agreements, and an interest rate cap agreement, all of which are designated as cash flow hedges. The effective portion of changes in the fair value of hedging derivative instruments is recognized in other comprehensive income (loss) until the instrument is settled, at which time the gain or loss is recognized in current earnings. Any ineffective portion of changes in the fair value of hedging derivative instruments, should it occur, would be recognized immediately in earnings. See further information in Note 19.

Revenue Recognition

Revenue Recognition. The Company recognizes revenue when persuasive evidence that a sales arrangement exists, title and risk of loss have passed to the customer, the price to the customer is fixed or determinable, and collectability is reasonably assured, which has historically been upon the date of shipment of product for the majority of the Company’s sales transactions. There are a small number of shipments with FOB destination or similar shipping terms, for which revenue is not recognized until delivery has occurred.

Shipping and Handling Costs

Shipping and Handling Costs. The Company incurs expenses for the shipment of goods to customers. These expenses are recognized in the period in which they occur and are classified as revenue if billed to the customer and as cost of sales if incurred by the Company in accordance with ASC 605-45.

Sales Incentives

Sales Incentives. The Company provides various sales incentives to customers in the form of coupons, rebates, discounts, free product, and advertising allowances. The estimated cost of such expenses is recorded at the time of revenue recognition and recorded as a reduction to revenue, except that free product is recorded as cost of sales, in accordance with ASC 605-50.

Advertising

Advertising. Advertising costs are expensed as incurred, except for cooperative advertising allowances, which are accrued over the period the revenues are recognized. Advertising costs were $12.5 million, $12.8 million, and $7.3 million for 2012, 2011, and 2010, respectively.

Research and Development

Research and Development. Expenditures for research and development are expensed as incurred and include costs of direct labor, indirect labor, materials, overhead, and outside services. These costs were $17.0 million, $19.6 million, and $14.8 million for 2012, 2011, and 2010, respectively.

Reclassifications

Reclassifications. Certain amounts in the prior period financial statements and footnotes may have been reclassified to conform to the current period presentation. Such reclassifications, if any, have no effect on previously reported net income, comprehensive income, total cash flows, or net stockholders’ equity.

Recent Accounting Pronouncements

Recent Accounting Pronouncements. In July 2012, the FASB issued revised guidance on how an entity tests indefinite-lived intangible assets for impairment. Under the new guidance, an entity is no longer required to calculate the fair value of the indefinite-lived intangible assets and perform the quantitative impairment test unless the entity determines, based on a qualitative assessment, that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. This revised guidance is effective on January 1, 2013. We elected to adopt this new guidance early and implemented it in 2012.

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Retirement Plans (Details 4) (Defined Benefit Non Qualified Plan [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Defined Benefit Non Qualified Plan [Member]
Change in Benefit Obligations:
Projected benefit obligations at beginning of year	$ (6,165)	$ (5,700)
Service cost
Interest cost	(254)	(302)
Actuarial losses	(235)	(746)
Benefits and plan expenses paid	576	583
Projected benefit obligations at end of year	(6,078)	(6,165)
Net unfunded status at end of year	(6,078)	(6,165)
Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	(592)	(558)
Non-current liabilities	(5,486)	(5,607)
Net liability recognized on the Consolidated Balance Sheets	$ (6,078)	$ (6,165)

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Discontinued Operations (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Summary of discounted operations
Sales			$ 12,297
Operating income			1,031
Gain on sale of subsidiary			11,941
Income before income taxes			12,972
Income tax provision			7,174
Income from discontinued operations			$ 5,798

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Debt (Tables)

12 Months Ended

Dec. 31, 2012

Debt [Abstract]

Components of long-term debt

Debt consisted of the following:

	As of December 31,
(Amounts in thousands)	2012			2011
Revolving credit facility borrowings	$	235,000		$	228,200
Term loans		281,250			296,250
Debt and capital lease obligation of PBL		507			5,912
Total debt		516,757			530,362
Less current maturities		(15,072	)		(20,348	)
Long-term debt, excluding current maturities	$	501,685		$	510,014
Weighted average interest rate at end of period		2.71	%		2.85	%

Summary of minimum principal payments

Minimum principal payments required are as follows:

(Amounts in thousands)	Payments
2013	$	15,072
2014		15,072
2015		15,072
2016		471,322
2017 and thereafter		219
Total debt	$	516,757

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Business and Summary of Significant Accounting Policies (Details Textual) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Business and Summary of Significant Accounting Policies (Textual) [Abstract]
Allowance for doubtful accounts	$ 3.1	$ 3.1
Interest cost related to property, plant and equipment, capitalized	0.5	0.2	0.1
Impairment charges recognized for goodwill or other intangible assets	0	0	0
Deduction of qualified production activities income under law due to certain limitations, percentage	9.00%
Advertising costs	12.5	12.8	7.3
Research and Development Expense	$ 17.0	$ 19.6	$ 14.8

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current
Federal	$ 15,781	$ 16,249	$ 7,828
State	1,685	1,116	1,973
Foreign	12,325	5,572	4,521
Deferred
Federal	(6,598)	155	2,846
State	(582)	751	447
Foreign	(409)	1,425	768
Provision for income taxes	22,202	25,268	18,383
The provision is reported as follows:
Continuing operations	22,202	25,268	11,209
Discontinued operations			7,174
Provision for income taxes	$ 22,202	$ 25,268	$ 18,383

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Consolidated Statements of Income [Abstract]
Sales	$ 927,666	$ 831,630	$ 611,480
Cost of sales	671,451	575,821	407,454
Gross profit	256,215	255,809	204,026
Selling, general, and administrative expenses	170,535	157,856	118,471
Facility closure and restructuring costs	6,400
Operating income	79,280	97,953	85,555
Interest income	158	171	119
Interest expense	(17,364)	(18,721)	(25,636)
Other income (expense), net	(284)	(4,453)	(7,427)
Income from continuing operations before taxes	61,790	74,950	52,611
Provision for income taxes	22,202	25,268	11,209
Income from continuing operations	39,588	49,682	41,402
Discontinued operations:
Income from discontinued operations before income taxes			12,972
Provision for income taxes			7,174
Income from discontinued operations			5,798
Net income	$ 39,588	$ 49,682	$ 47,200
Basic income per share:
Continuing operations	$ 0.81	$ 1.02	$ 0.86
Discontinued operations			$ 0.13
Net income	$ 0.81	$ 1.02	$ 0.99
Diluted income per share:
Continuing operations	$ 0.79	$ 1.01	$ 0.85
Discontinued operations			$ 0.12
Net income	$ 0.79	$ 1.01	$ 0.97
Weighted average shares used in per share calculations:
Basic	49,170	48,701	47,917
Diluted	49,899	49,434	48,508

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Earnings Per Share Data (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share Data [Abstract]

Shares used in denominators of basic and diluted earnings per share computations

Shares used in the denominators of the basic and diluted earnings per share computations were as follows:

	Year Ended December 31,
(Shares in thousands)	2012			2011			2010
Actual weighted average shares outstanding		49,170			48,701			47,917
Dilutive effect of common stock equivalents		729			733			591
Diluted weighted average common shares outstanding		49,899			49,434			48,508
Options and SARs excluded from computation as anti-dilutive because they are out-of-the-money		1,783			1,337			961
Unvested restricted stock and restricted stock units (“RSUs”) considered to be participating securities		147			124			121
Effect of allocation of undistributed earnings to participating securities under the two class method:
Basic earnings per share	$	(0.01	)	$	—		$	(0.01	)
Diluted earnings per share	$	—		$	(0.01	)	$	—

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Commitments (Details 3) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Changes in the warranty reserve
Balance at beginning of period	$ 1,539	$ 616	$ 125
Warranty reserve of acquired businesses		785	421
Warranty reserve related to discontinued operations			(40)
Accrued warranty expense	3,215	631	1,495
Payments made (in cash or in-kind)	(2,840)	(493)	(1,385)
Balance at end of period	$ 1,914	$ 1,539	$ 616

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Concentration of Credit Risk and Fair Value of Financial Instruments (Details Textual) (USD $)	12 Months Ended				12 Months Ended		3 Months Ended
	Dec. 31, 2012 Customer	Dec. 31, 2011 Customer	Jun. 30, 2011	Dec. 31, 2012 Senior Credit Facility Agreement [Member]	Dec. 31, 2012 Foreign currency hedge agreements [Member]	Dec. 31, 2011 Foreign currency hedge agreements [Member]	Sep. 30, 2011 Interest rate cap [Member]	Oct. 31, 2011 Interest rate cap [Member]	Jun. 30, 2011 Interest rate cap [Member]	Dec. 31, 2012 Interest rate cap [Member] Minimum [Member]	Dec. 31, 2012 Interest rate cap [Member] Maximum [Member]	Oct. 31, 2011 Interest rate cap [Member] Maximum [Member]
Concentration of Credit Risk and Fair Value of Financial Instruments (Textual) [Abstract]
Unrealized pre-tax loss on derivative contracts included in other comprehensive loss					$ 28,000	$ 500,000
Aggregate notional amount of Foreign currency contracts outstanding					45,500,000	37,500,000
Percentage of outstanding principal on term loans comprising interest rate agreements				35.00%					35.00%
Interest rate payment determined by maximum LIBOR rate			5.00%									7.50%
Termination of interest rate cap contracts, charge to expense							100,000
Term loan principal outstanding notional amount								103,700,000
Interest rate swap contracts										3.30%	4.20%
Concentration of Credit Risk and Fair Value of Financial Instruments (Additional Textual) [Abstract]
Accounts receivable from customers of other countries	47.00%
Number of customer representing more than 3% of accounts receivable	0	0
Maximum Percentage of Accounts Receivable Represented by customers	3.00%	3.00%
Percentage of accounts receivable from major customer	7.30%	4.80%
Principal term loan	130,000,000
Derivative Instrument Maturity Date Earliest	2014-12
Derivative Instrument Maturity Date Latest	2016-08
Amount recognized from cash flow hedge due to ineffectiveness	$ 0

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Cash flows from operating activities:
Net income	$ 39,588	$ 49,682	$ 47,200
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations			(5,798)
Early extinguishment of debt		3,871	7,010
Depreciation	28,586	23,482	20,971
Amortization	16,532	12,325	6,628
Stock-based compensation	5,592	4,441	3,290
Excess tax benefit from stock-based compensation	(1,187)	(877)	(1,340)
Deferred income taxes	(7,589)	2,331	2,658
Change in uncertain tax positions	(369)	(1,240)	(7,827)
Loss on disposal of assets	955	899	1,202
Other non-cash charges, net	801	5,026	784
Changes in assets and liabilities, excluding acquisitions:
(Increase) decrease in accounts receivable	4,985	(12,057)	1,048
(Increase) decrease in inventories	(25,487)	2,188	(6,788)
(Increase) decrease in other assets	(781)	(2,228)	1,741
Increase (decrease) in accounts payable	1,414	58	(6,883)
Increase (decrease) in accrued expenses	(2,070)	6,571	3,708
Increase (decrease) in other liabilities	(9,699)	(16,405)	(11,726)
Discontinued operations		(334)	(6,712)
Net cash provided by operating activities	51,271	77,733	49,166
Cash flows from investing activities:
Purchases of property, plant, and equipment	(51,925)	(40,373)	(20,002)
Proceeds from sale of assets	198	967	159
Acquisitions, net of cash acquired		(217,362)	(90,854)
Discontinued operations			25,176
Net cash used in investing activities	(51,727)	(256,768)	(85,521)
Cash flows from financing activities:
Net borrowings (payments) under revolving credit facility	6,800	228,200	(3,400)
Proceeds from issuance of term debt		300,000	350,000
Repayment of term loan principal	(15,000)	(353,750)	(107,465)
Repayment of PBL debt principal	(5,416)	(7,813)
Repayment of 8 7/8% senior subordinated notes			(175,000)
Debt issuance costs	(1,115)	(6,509)	(6,267)
Excess tax benefit from stock-based compensation	1,187	877	1,340
Proceeds from stock-based compensation activity	1,152	1,041	2,398
Taxes paid under stock-based compensation activity	(122)	(267)	(333)
Net cash provided by (used in) financing activities	(12,514)	161,779	61,273
Effect of exchange rate changes	1,119	(1,334)	720
Net increase (decrease) in cash and cash equivalents	(11,851)	(18,590)	25,638
Cash and cash equivalents at beginning of year	62,118	80,708	55,070
Cash and cash equivalents at end of year	$ 50,267	$ 62,118	$ 80,708

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Commitments (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Rentals charged to costs and expenses for continuing operations under cancelable and non-cancelable lease arrangements
Rental charges	$ 6,076	$ 5,101	$ 3,573

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Acquisitions (Details Textual) (USD $)	12 Months Ended		1 Months Ended	12 Months Ended				8 Months Ended	12 Months Ended			1 Months Ended	3 Months Ended	12 Months Ended				12 Months Ended		1 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Sep. 30, 2011 Woods/TISCO [Member] Distribution Manufacturing	Dec. 31, 2012 Woods/TISCO [Member]	Aug. 31, 2011 Woods/TISCO [Member]	Dec. 31, 2011 Woods/TISCO [Member]	Sep. 07, 2011 Woods/TISCO [Member]	Aug. 31, 2011 PBL [Member]	Dec. 31, 2012 PBL [Member]	Dec. 31, 2011 PBL [Member]	Aug. 05, 2011 PBL [Member]	Mar. 31, 2011 KOX [Member]	Mar. 31, 2011 KOX [Member]	Dec. 31, 2012 KOX [Member]	Dec. 31, 2011 KOX [Member]	Jan. 03, 2011 KOX [Member]	Dec. 31, 2010 KOX [Member]	Dec. 31, 2012 BV [Member]	Jan. 19, 2011 BV [Member]	Aug. 31, 2010 SpeeCo [Member]	Dec. 31, 2012 SpeeCo [Member]	Jul. 31, 2010 SpeeCo [Member]	Aug. 10, 2010 SpeeCo [Member]
Acquisitions (Textual) [Abstract]
Date of acquisition				Sep. 07, 2011					Aug. 05, 2011					Mar. 01, 2011				Jan. 19, 2011			Aug. 10, 2010
Purchase price				$ 190,502,000			$ 190,500,000		$ 14,244,000		$ 14,200,000			$ 23,936,000		$ 23,900,000					$ 91,670,000		$ 91,700,000
Negotiated enterprise value							185,000,000																90,000,000
Working capital adjustment							5,500,000																1,700,000
Cash on hand of acquired entity				230,000			200,000		1,275,000		1,300,000			5,126,000		5,100,000					816,000		800,000
Net cash outflow	217,362,000	90,854,000	190,300,000					13,000,000				14,100,000								90,900,000
Legal and other third party fees in conjunction with the acquisition						2,000,000				900,000					1,200,000		1,200,000						1,000,000
Management Fees					500,000																	400,000
Goodwill				54,846,000					3,301,000					3,709,000							42,794,000
Period over which the acquired entity is a customer of the company (years)														30 years
Forestry replacement parts purchased from Blount				38,512,000					9,729,000					8,879,000			9,200,000				18,868,000
Acquisition price, cash paid																19,200,000			21,000
Shares of common stock issued as part of purchase price of acquisition													309,834
Value of common stock issued as part of purchase price of acquisition																4,700,000
Debt assumed on acquisition											13,500,000
Acquisition accounting, additional inventory obsolescence reserve										1,700,000
Acquisition accounting adjustments, impact on goodwill				300,000						1,100,000
Acquisition accounting adjustments, impact on current deferred tax assets				38,000						600,000
Acquisition accounting adjustments, impact on long term deferred income tax liabilities				400,000
Enhanced U.S Manufacturing facilities			3
Enhanced U.S distribution facilities			5
Expenses related to Woods/TISCO former CEO					700,000
Expenses attributed to Woods/TISCO					400,000
Costs associated with the closure of a facility					300,000
Fees associated with Woods/TISCO refinancing transaction					$ 300,000

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Earnings Per Share Data (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Shares used in denominators of the basic and diluted earnings per share computations
Actual weighted average shares outstanding	49,170	48,701	47,917
Dilutive effect of common stock equivalents	729	733	591
Diluted weighted average common shares outstanding	49,899	49,434	48,508
Options and SARs excluded from computation as anti-dilutive because they are out-of-the money	1,783	1,337	961
Unvested restricted stock and restricted stock units ("RSUs") considered to be participating securities	147	124	121
Effect of allocation of undistributed earnings to participating securities under the two class method:
Basic earnings per share	$ (0.01)		$ (0.01)
Diluted earnings per share		$ (0.01)

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Inventories (Tables)

12 Months Ended

Dec. 31, 2012

Inventories [Abstract]

Components of inventories

Inventories consisted of the following:

	December 31,
(Amounts in thousands)	2012		2011
Raw materials and supplies	$	22,815	$	24,022
Work in progress		19,388		16,006
Finished goods		132,613		109,797
Total inventories	$	174,816	$	149,825

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Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Summary of intangible assets
Total with finite lives, Gross Amount	116,328	116,182
Goodwill	165,175	165,084
Trademarks and trade names	61,251	61,176
Total with indefinite lives	226,426	226,260
Total intangible assets, Gross Amount	342,754	342,442
Total with finite lives, Accumulated Amortization	34,418	19,258
Covenants not to compete [Member]
Summary of intangible assets
Total with finite lives, Gross Amount	1,112	1,112
Total with finite lives, Accumulated Amortization	985	843
Covenants not to compete [Member] | Minimum [Member]
Summary of intangible assets
Life in Years	2 years	2 years
Covenants not to compete [Member] | Maximum [Member]
Summary of intangible assets
Life in Years	4 years	4 years
Patents [Member]
Summary of intangible assets
Total with finite lives, Gross Amount	5,320	5,320
Total with finite lives, Accumulated Amortization	1,554	1,121
Patents [Member] | Minimum [Member]
Summary of intangible assets
Life in Years	11 years	11 years
Patents [Member] | Maximum [Member]
Summary of intangible assets
Life in Years	13 years	13 years
Manufacturing technology [Member]
Summary of intangible assets
Life in Years	1 year	1 year
Total with finite lives, Gross Amount	2,563	2,516
Total with finite lives, Accumulated Amortization	2,563	1,124
Customer relationships, including backlog [Member]
Summary of intangible assets
Total with finite lives, Gross Amount	107,333	107,234
Total with finite lives, Accumulated Amortization	29,316	16,170
Customer relationships, including backlog [Member] | Minimum [Member]
Summary of intangible assets
Life in Years	10 years	10 years
Customer relationships, including backlog [Member] | Maximum [Member]
Summary of intangible assets
Life in Years	19 years	19 years

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Commitments

12 Months Ended

Dec. 31, 2012

Commitments [Abstract]

COMMITMENTS

NOTE 13:  COMMITMENTS

The Company leases office space and equipment under operating leases expiring in one to 15 years. Most leases include renewal options and some contain purchase options and escalation clauses. Future minimum rental commitments required under operating leases having initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2012, are as follows:

(Amounts in thousands)	Future Minimum Operating Lease Commitments
2013	$	7,920
2014		6,664
2015		4,761
2016		4,034
2017		3,917
2018 – beyond		22,352
Total operating lease commitments	$	49,648

Rentals charged to costs and expenses for continuing operations under cancelable and non-cancelable lease arrangements were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Rental charges	$	6,076	$	5,101	$	3,573

As of December 31, 2012 the Company did not have any material capital leases. See also Note 9.

Guarantees and other commercial commitments include the following:

(Amounts in thousands)	December  31, 2012
Product warranty reserves	$	1,914
Letters of credit outstanding		5,424
Other financial guarantees		3,192
Total	$	10,530

In addition to these amounts, the Company also guarantees certain debt of its subsidiaries. See also Note 9.

Changes in the warranty reserve were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Balance at beginning of period	$	1,539		$	616		$	125
Warranty reserve of acquired businesses		—			785			421
Warranty reserve related to discontinued operations		—			—			(40	)
Accrued warranty expense		3,215			631			1,495
Payments made (in cash or in-kind)		(2,840	)		(493	)		(1,385	)
Balance at end of period	$	1,914		$	1,539		$	616

The warranty reserve related to our discontinued operations, Gear Products, was assumed by the buyer under the terms of the stock purchase agreement. See also Note 20.

Other guarantees and claims arise during the ordinary course of business from relationships with suppliers and customers when we undertake an obligation to guarantee the performance of others if specified triggering events occur. Nonperformance of a contract could trigger an obligation of the Company. In addition, certain guarantees relate to contractual indemnification provisions in connection with transactions involving the purchase or sale of stock or assets. These claims include actions based upon intellectual property, environmental, product liability, and other indemnification matters. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the occurrence or, if triggered, final outcome of these claims. However, while the ultimate liabilities resulting from such claims may be potentially significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the Company’s consolidated financial position or liquidity. See also Note 14.

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Property Plant and Equipment Net (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant, and Equipment, Net [Abstract]

Schedule of property, plant, and equipment

Property, plant, and equipment, net consisted of the following:

	December 31,
(Amounts in thousands)	2012			2011
Land	$	9,081		$	9,081
Buildings and improvements		82,910			65,699
Machinery and equipment		262,058			239,882
Furniture, fixtures, and office equipment		42,498			33,342
Transportation equipment		1,126			1,105
Construction or equipment acquisitions in progress		23,075			30,568
Accumulated depreciation		(243,046	)		(223,805	)
Total property, plant, and equipment, net	$	177,702		$	155,872

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Contingent Liabilities (Details Textual) (USD $)	1 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2011	Mar. 31, 2010	Dec. 31, 2012 Tank Drums	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Contingent Liabilities (Textual) [Abstract]
Number of drums sent to Site			26
Aggregate number of drums the site contains			50,000
Costs incurred in connection with the remediation efforts at the Sit			$ 0	$ 0	$ 0
Number of underground storage tanks			2
Recognized settlements charges		100,000
Recognized settlements payment	100,000
Initial reserve recognized at the time of acquisition			3,400,000
Expense related to legal settlement recognized						$ 8,700,000

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Earnings Per Share Data

12 Months Ended

Dec. 31, 2012

Earnings Per Share Data [Abstract]

EARNINGS PER SHARE DATA

NOTE 15:  EARNINGS PER SHARE DATA

Shares used in the denominators of the basic and diluted earnings per share computations were as follows:

	Year Ended December 31,
(Shares in thousands)	2012			2011			2010
Actual weighted average shares outstanding		49,170			48,701			47,917
Dilutive effect of common stock equivalents		729			733			591
Diluted weighted average common shares outstanding		49,899			49,434			48,508
Options and SARs excluded from computation as anti-dilutive because they are out-of-the-money		1,783			1,337			961
Unvested restricted stock and restricted stock units (“RSUs”) considered to be participating securities		147			124			121
Effect of allocation of undistributed earnings to participating securities under the two class method:
Basic earnings per share	$	(0.01	)	$	—		$	(0.01	)
Diluted earnings per share	$	—		$	(0.01	)	$	—

No adjustment was required to reported amounts for inclusion in the numerators of the per share computations.

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Accrued Expenses (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Summary of accrued expenses
Salaries, wages, and related withholdings	$ 21,095	$ 29,275
Accrued taxes	9,769	5,758
Advertising	7,899	6,814
Employee benefits	6,550	8,425
Accrued customer incentive programs	4,933	6,020
Unrealized loss on derivative instruments	3,988	1,813
Product liability reserves	2,905	4,841
Accrued professional services fees	2,070	2,088
Product warranty reserve	1,914	1,539
Accrued interest	1,253	1,340
Other	9,097	5,078
Total accrued expenses	$ 71,473	$ 72,991

XML

Segment Information (Details Textual)	12 Months Ended
	Dec. 31, 2012 Customer Country Segment	Dec. 31, 2011	Dec. 31, 2010
Segment information (Textual) [Abstract]
Sales from other countries	56.00%
Number of operating segments	2
Concrete cutting and finishing equipment	2.80%
Percentage of revenue from major customer		10.00%	12.00%
Maximum representation percentage	10.00%
Product sold in countries	115
Number of customer representing 10% of revenue	0
FLAG [Member]
Segment Reporting Information [Line Items]
Percentage of consolidated sales	70.10%
FRAG [Member]
Segment Reporting Information [Line Items]
Percentage of consolidated sales	27.00%

XML

Consolidated Statements of Cash Flows (Parenthetical)	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Senior Subordinated Notes
Debt Instrument [Line Items]
Senior subordinated notes interest rate	8.875%	8.875%	8.875%

XML

Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 39,588	$ 49,682	$ 47,200
Unrealized gains (losses):
Unrealized holding gains (losses)	(2,242)	(1,819)	837
Gains (losses) reclassified to net income	75	(644)	(2,353)
Unrealized losses, net	(2,167)	(2,463)	(1,516)
Foreign currency translation adjustment	1,434	(2,984)	309
Pension liability adjustment:
Net loss	(14,358)	(49,349)	(9,351)
Amortization of net loss	8,573	5,137	4,562
Amortization of prior service cost	(6)	(6)	(6)
Pension liability adjustment	(5,791)	(44,218)	(4,795)
Other comprehensive loss, before tax	(6,524)	(49,665)	(6,002)
Income tax benefit on other comprehensive items	1,144	16,249	1,253
Other comprehensive loss, net of tax	(5,380)	(33,416)	(4,749)
Comprehensive income	$ 34,208	$ 16,266	$ 42,451

XML

Accrued Expenses

12 Months Ended

Dec. 31, 2012

Accrued Expenses [Abstract]

ACCRUED EXPENSES

NOTE 8:  ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,
(Amounts in thousands)	2012		2011
Salaries, wages, and related withholdings	$	21,095	$	29,275
Accrued taxes		9,769		5,758
Advertising		7,899		6,814
Employee benefits		6,550		8,425
Accrued customer incentive programs		4,933		6,020
Unrealized loss on derivative instruments		3,988		1,813
Product liability reserves		2,905		4,841
Accrued professional services fees		2,070		2,088
Product warranty reserve		1,914		1,539
Accrued interest		1,253		1,340
Other		9,097		5,078
Total accrued expenses	$	71,473	$	72,991

XML

Stock-Based Compensation (Details 3) (RSUs [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
RSUs [Member]
Summary of restricted stock awards activity
RSUs awarded	$ 117	$ 112	$ 119
Total fair value of RSUs awarded	1,957	1,695	1,413
Total expense recognized for RSUs	$ 1,389	$ 920	$ 639

XML

Commitments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Future minimum rental commitments required under operating leases
2013	$ 7,920
2014	6,664
2015	4,761
2016	4,034
2017	3,917
2018 - beyond	22,352
Total operating lease commitments	$ 49,648

XML

Other Post-Employment Benefit Plans (Details 3) (Other Post-Retirement Benefits [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Other Post-Retirement Benefits [Member]
Change in assumed health care cost trend rates
1 % increase in effect on service and interest cost components	$ 300
1 % decrease in effect on service and interest cost components	(240)
1 % increase in effect on other post-retirement benefit obligations	4,843
1 % decrease in effect on other post-retirement benefit obligations	$ (3,992)

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Feb. 26, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	BLOUNT INTERNATIONAL INC
Entity Central Index Key	0001001606
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 465,683,740
Entity Common Stock, Shares Outstanding		49,146,484

XML

Debt

12 Months Ended

Dec. 31, 2012

Debt [Abstract]

DEBT

NOTE 9:  DEBT

Debt consisted of the following:

	As of December 31,
(Amounts in thousands)	2012			2011
Revolving credit facility borrowings	$	235,000		$	228,200
Term loans		281,250			296,250
Debt and capital lease obligation of PBL		507			5,912
Total debt		516,757			530,362
Less current maturities		(15,072	)		(20,348	)
Long-term debt, excluding current maturities	$	501,685		$	510,014
Weighted average interest rate at end of period		2.71	%		2.85	%

Minimum principal payments required are as follows:

(Amounts in thousands)	Payments
2013	$	15,072
2014		15,072
2015		15,072
2016		471,322
2017 and thereafter		219
Total debt	$	516,757

Senior Credit Facilities. The Company, through its wholly-owned subsidiary, Blount, Inc., maintains a senior credit facility with General Electric Capital Corporation as Agent for the Lenders and also as a lender, which has been amended and restated on several occasions. As of December 31, 2012 and 2011, the senior credit facilities consisted of a revolving credit facility and a term loan.

August 2010 Third Amendment and Restatement of Senior Credit Facilities. On August 9, 2010, the Company entered into the Third Amendment and Restatement of its senior credit facilities. The Third Amendment and Restatement included an increase in maximum borrowings available under the revolving credit facility to $75.0 million and an extension of its maturity date to August 2015, an increase of the term loan B facility to $275.0 million and an extension of its maturity date to August 2016, establishment of a new term loan A facility at $75.0 million with a maturity date of August 2015, and modification of the interest rates and certain financial and other covenants. The Company paid $6.3 million in fees and transaction costs in connection with this amendment.

The Company used the $350.0 million combined proceeds of the two term loans to repay the principal outstanding under its previous term loan B facility and its 8 7/8% senior subordinated notes originally due August 1, 2012. These 8 7/8% senior subordinated notes were redeemed in full on September 16, 2010, following the expiration of the required redemption notification period. In conjunction with the redemption of the 8 7/8% senior subordinated notes and the repayment of principal on the previous term loan B, the Company expensed $3.5 million in unamortized deferred financing costs.

January 2011 Amendment of Senior Credit Facilities. On January 28, 2011, the senior credit facility was amended to facilitate a foreign subsidiary reorganization and to allow additional flexibility for making foreign acquisitions.

June 2011 Fourth Amendment and Restatement of Senior Credit Facilities. On June 13, 2011, the Company entered into the Fourth Amendment and Restatement of its senior credit facilities with an initial funding date of August 9, 2011. The Fourth Amendment and Restatement included an increase in maximum borrowings under the revolving credit facility to $400.0 million, a new $300.0 million term loan facility, an extension of the maturity date on both facilities to August 31, 2016, a reduction in interest rates on both facilities, and the modification of certain financial and other covenants. The Company incurred $6.5 million in fees and transaction costs in connection with the Fourth Amendment and Restatement. On the initial funding date the Company expensed $3.9 million, consisting of unamortized deferred financing costs from previous modifications to the senior credit facilities as well as certain fees and transaction costs associated with the June 13, 2011 amendment.

August 2012 Amendment of Senior Credit Facilities. On August 3, 2012, the senior credit facilities were amended to modify the maximum leverage ratio covenant, as defined below. Certain other minor modifications to the credit agreement were made. The Company incurred $1.2 million in fees and transaction costs in connection with this amendment.

Current Terms of Senior Credit Facilities. The revolving credit facility provides for total available borrowings of up to $400.0 million, reduced by outstanding letters of credit, and further restricted by certain financial covenants. As of December 31, 2012, the Company had the ability to borrow an additional $61.8 million under the terms of the revolving credit agreement. The revolving credit facility bears interest at LIBOR plus 2.50% or at an index rate, as defined in the credit agreement, plus 1.50%, and matures on August 31, 2016. Interest is payable on the individual maturity dates for each LIBOR-based borrowing and monthly on index rate-based borrowings. Any outstanding principal is due in its entirety on the maturity date.

The term loan facility also bears interest at LIBOR plus 2.50% or at the index rate plus 1.50% and matures on August 31, 2016. The term loan facility requires quarterly principal payments of $3.8 million with a final payment of $225.0 million due on the maturity date. Once repaid, principal under the term loan facility may not be re-borrowed.

The amended and restated senior credit facilities contain financial covenants including:

• Minimum fixed charge coverage ratio of 1.15, defined as Adjusted EBITDA divided by cash payments for interest, taxes, capital expenditures, scheduled debt principal payments, and certain other items, calculated on a trailing twelve-month basis.

• Maximum leverage ratio, defined as total debt divided by Adjusted EBITDA, calculated on a trailing twelve-month basis. The maximum leverage ratio is set at 4.25 through December 31, 2012, 4.00 through June 30, 2013, 3.75 through December 31, 2013, 3.50 through September 30, 2014, 3.25 through March 31, 2015, and 3.00 thereafter.

In addition, there are covenants, restrictions, or limitations relating to acquisitions, investments, loans and advances, indebtedness, dividends on our stock, the sale or repurchase of our stock, the sale of assets, and other categories. In the opinion of management, we were in compliance with all financial covenants as of December 31, 2012. Non-compliance with these covenants is an event of default under the terms of the credit agreement, and could result in severe limitations to our overall liquidity, and the term loan lenders could require immediate repayment of outstanding amounts, potentially requiring sale of a sufficient amount of our assets to repay the outstanding loans.

The amended and restated senior credit facilities may be prepaid at any time without penalty. There can also be additional mandatory repayment requirements related to the sale of Company assets, the issuance of stock under certain circumstances, or upon the Company’s annual generation of excess cash flow, as determined under the credit agreement. Our debt is not subject to any triggers that would require early payment due to any adverse change in our credit rating.

Our senior credit facility debt is incurred by our wholly-owned subsidiary, Blount, Inc. Blount International, Inc. and all of its domestic subsidiaries other than Blount, Inc. guarantee Blount, Inc.’s obligations under the senior credit facilities. The obligations under the senior credit facilities are collateralized by a first priority security interest in substantially all of the assets of Blount, Inc. and its domestic subsidiaries, as well as a pledge of all of Blount, Inc.’s capital stock held by Blount International, Inc. and all of the stock of domestic subsidiaries held by Blount, Inc. Blount, Inc. has also pledged 65% of the stock of its direct non-domestic subsidiaries as additional collateral.

Debt and Capital Lease Obligation of PBL. In conjunction with the acquisition of PBL we assumed $13.5 million of PBL’s debt, consisting of current and long-term bank obligations, revolving credit facilities, and $0.6 million in capital lease obligations. As of December 31, 2012 we have repaid all of PBL’s bank debt. PBL’s outstanding bank debt was classified as current as of December 31, 2011 on the Consolidated Balance Sheet.

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Retirement Plans (Details 1) (Pension Benefits [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	$ 219,132	$ 190,522	$ 179,570
Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	799	639
Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	212,577	184,368
Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	5,756	5,515	5,331
Money market mutual funds [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	799	639
Money market mutual funds [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	799	639
Money market mutual funds [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
Money market mutual funds [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
Guaranteed insurance contracts [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	3,452	2,803
Guaranteed insurance contracts [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
Guaranteed insurance contracts [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	3,452	2,803
Guaranteed insurance contracts [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
U.S. large cap equity securities [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	50,915	45,008
U.S. large cap equity securities [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
U.S. large cap equity securities [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	50,915	45,008
U.S. large cap equity securities [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
U.S. small/mid cap equity securities [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	4,794	4,116
U.S. small/mid cap equity securities [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
U.S. small/mid cap equity securities [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	4,794	4,116
U.S. small/mid cap equity securities [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
International equity securities [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	50,345	41,399
International equity securities [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
International equity securities [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	50,345	41,399
International equity securities [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
Emerging markets equity securities [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	4,324	3,559
Emerging markets equity securities [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
Emerging markets equity securities [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	4,324	3,559
Emerging markets equity securities [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
U.S. debt securities [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	71,281	64,001
U.S. debt securities [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
U.S. debt securities [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	71,281	64,001
U.S. debt securities [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
International debt securities [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	27,466	23,482
International debt securities [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
International debt securities [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	27,466	23,482
International debt securities [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
Hedge funds [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	5,756	5,515
Hedge funds [Member] | Quoted Price in Active Markets Inputs Level 1 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
Hedge funds [Member] | Significant Other Observable Inputs Level 2 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets
Hedge funds [Member] | Significant Unobservable Inputs Level 3 [Member]
Reconciliation of Fair Value of Plan Assets
Total fair value of plan assets	$ 5,756	$ 5,515

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Other Post-Employment Benefit Plans (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Components of net periodic benefit cost:
Amortization of actuarial losses	$ (8,573)	$ (5,137)	$ (4,562)
Other Post-Retirement Benefits [Member]
Components of net periodic benefit cost:
Service cost	355	261	270
Interest cost	1,765	1,972	2,095
Amortization of actuarial losses	1,303	871	849
Total net periodic benefit cost recognized in consolidated statements of income	3,423	3,104	3,214
Recognized in accumulated other comprehensive loss:
Actuarial (gains) losses	$ (3,009)	$ 7,212	$ 424
Weighted average assumptions:
Discount rate used to determine net periodic benefit cost	4.30%	5.50%	5.80%
Discount rate used to determine year-end benefit obligations	4.00%	4.30%	5.50%

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 50,267	$ 62,118
Accounts receivable, net	128,444	133,965
Inventories	174,816	149,825
Deferred income taxes	19,522	15,812
Other current assets	20,273	21,618
Total current assets	393,322	383,338
Property, plant, and equipment, net	177,702	155,872
Deferred income taxes	2,438	589
Intangible assets	143,161	158,085
Goodwill	165,175	165,084
Other assets	23,493	21,239
Total Assets	905,291	884,207
Current liabilities:
Current maturities of long-term debt	15,072	20,348
Accounts payable	54,295	52,884
Accrued expenses	71,473	72,991
Deferred income taxes	292	1,255
Total current liabilities	141,132	147,478
Long-term debt, excluding current maturities	501,685	510,014
Deferred income taxes	40,501	42,455
Employee benefit obligations	93,086	96,974
Other liabilities	17,405	17,821
Total liabilities	793,809	814,742
Commitments and contingent liabilities
Stockholders' equity:
Common stock: par value $0.01 per share, 100,000,000 shares authorized,49,140,091 and 48,814,912 outstanding, respectively	491	488
Capital in excess of par value of stock	606,495	598,689
Accumulated deficit	(420,085)	(459,673)
Accumulated other comprehensive loss	(75,419)	(70,039)
Total stockholders' equity	111,482	69,465
Total Liabilities and Stockholders' Equity	$ 905,291	$ 884,207

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Facility Closure and Restructuring Costs

12 Months Ended

Dec. 31, 2012

Facility Closure and Restructuring Costs [Abstract]

FACILITY CLOSURE AND RESTRUCTURING COSTS

NOTE 3:  FACILITY CLOSURE AND RESTRUCTURING COSTS

During 2012, we completed certain actions to consolidate our operations in the U.S. In Kansas City, Missouri, we moved into a new, larger North American assembly and distribution center, and closed our previous distribution center in that city. In Golden, Colorado, we closed our assembly, warehouse, and distribution operations and consolidated those functions into the new North American facility in Kansas City. During 2012, we recognized direct costs of $7.4 million associated with these two actions. These costs consisted of lease exit costs, charges to expense the book value of certain assets located in Golden and in the previous distribution center in Kansas City that will not be utilized in the new distribution center, temporary labor costs associated with moving inventory items and stabilizing shipping activities, costs to move inventory and equipment, and rent expense on duplicate facilities during the transition period. Of these total costs, $1.0 million are reported in cost of sales in the Consolidated Statement of Income for the twelve months ended December 31, 2012.

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Acquisitions

12 Months Ended

Dec. 31, 2012

Acquisitions [Abstract]

ACQUISITIONS

NOTE 2:  ACQUISITIONS

The Company accounts for acquisitions in accordance with ASC 805. Accordingly, assets acquired and liabilities assumed are recorded at their estimated fair values on the date of acquisition. The Company estimates the fair value of assets using various methods and considering, among other factors, projected discounted cash flows, replacement cost less an allowance for depreciation, recent comparable transactions, and historical book values. The Company estimates the fair value of inventory that is considered to be readily marketable by considering the estimated costs to complete the manufacturing, assembly, and selling processes, and the normal gross profit margin typically associated with its sale. The Company estimates the fair value of inventory that is not considered to be readily marketable by evaluating the estimated net realizable value for such inventory. The Company estimates the fair value of identifiable intangible assets based on discounted projected cash flows or estimated royalty avoidance costs. The Company estimates the fair value of liabilities assumed considering the historical book values and projected future cash outflows. The fair value of goodwill represents the residual enterprise value which does not qualify for separate recognition, including the value of the assembled workforce.

2010 Acquisition of SpeeCo

On August 10, 2010, we acquired SpeeCo, located in Golden, Colorado, a supplier of log splitters, post-hole diggers, tractor three-point linkage parts and equipment, and farm and ranch accessories. The acquisition of SpeeCo expanded our product offerings and broadened our customer base. The acquisition of SpeeCo also created opportunities for synergies in the areas of marketing, sales, assembly operations, distribution, and back office consolidation of support functions. We also believe there are opportunities to sell some of SpeeCo’s products into our FLAG distribution network domestically and internationally and began such sales in 2011. The opportunities for synergies were further enhanced when we acquired PBL and Woods/TISCO during 2011.

The purchase price was $91.7 million in cash, consisting of $90.0 million in negotiated enterprise value and a $1.7 million working capital adjustment. SpeeCo had $0.8 million of cash on the acquisition date, resulting in a net cash outflow of $90.9 million. We assumed none of SpeeCo’s debt in the transaction. In addition, we incurred legal and other third party fees totaling $1.0 million in conjunction with the acquisition that were expensed to SG&A in the Consolidated Statement of Income in 2010. The acquisition was financed with a combination of cash on hand and borrowing under the Company’s revolving credit facility.

SpeeCo’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended July 31, 2010
Sales	$	77,077
Operating income		8,174
Depreciation and amortization		4,469

SpeeCo’s operating income for the twelve months ended July 31, 2010 includes $0.4 million in management fees charged by SpeeCo’s former owner.

2011 Establishment of Blount B.V.

On January 19, 2011, we acquired a dormant shelf company registered in the Netherlands and changed the name to Blount Netherlands B.V. (“Blount B.V.”). The acquisition price was $21 thousand, net of cash acquired, plus the assumption of certain liabilities. This acquisition, along with the formation of an additional holding entity named BI Holdings C.V., a limited partnership registered with the Dutch Trade Register with a Bermuda office address and parent of Blount B.V., increases our flexibility to make international acquisitions. Direct ownership of certain of our foreign subsidiaries was transferred from our wholly-owned subsidiary, Blount, Inc., to Blount B.V. through a series of transactions executed in February 2011.

2011 Acquisition of KOX

On March 1, 2011, we acquired KOX, a Germany-based direct-to-customer distributor of forestry-related replacement parts and accessories, primarily serving professional loggers and consumers in Europe. The acquisition of KOX increased our distribution capabilities and expanded our geographic presence in Europe. KOX has been a customer of Blount for over 30 years and purchased approximately $9.2 million of forestry replacement parts from Blount in 2010.

The total purchase price was $23.9 million, consisting of $19.2 million in cash and 309,834 shares of our common stock valued at $4.7 million based on the closing price of our stock on the acquisition date. KOX had $5.1 million of cash on the acquisition date, resulting in a net cash outflow of $14.1 million. We assumed none of KOX’s debt in the transaction. In addition, we incurred legal and other third party fees totaling $1.2 million in conjunction with the acquisition that were expensed to SG&A in the Consolidated Statements of Income during 2010 and 2011. The cash portion of the acquisition was funded from available cash on hand at Blount B.V. The common stock shares issued in the purchase were subject to certain restrictions through March 1, 2013 under terms of the related stock purchase agreement.

KOX’s pre-acquisition operating results (unaudited) for calendar year 2010 are summarized below.

(Amounts in thousands)	Year Ended December 31, 2010
Sales	$	34,889
Operating income		3,266
Depreciation		128

2011 Acquisition of PBL

On August 5, 2011, we acquired PBL, a manufacturer of lawnmower blades and agricultural cutting parts based in Civray, France, with a second manufacturing facility in Queretaro, Mexico. The acquisition of PBL increased our manufacturing capacity for lawnmower blades, increased our market share for lawnmower blades in Europe, and provided an entrance into the agricultural cutting parts market in Europe. We also expect to benefit from PBL’s low-cost manufacturing methods and technology utilized at its facilities in France and Mexico.

The purchase price consisted of $14.2 million in cash and the assumption of $13.5 million of PBL’s debt. PBL had $1.3 million of cash on the acquisition date, resulting in a net cash outflow of $13.0 million. In addition, we incurred legal and other third party fees totaling $0.9 million in conjunction with the acquisition that were expensed to SG&A in the Consolidated Statement of Income during 2011. The cash portion of the acquisition was funded from available cash on hand at Blount B.V.

The initial acquisition accounting for PBL included provisional amounts for inventory obsolescence reserves and income tax accounting, as we were not able to obtain sufficient details and complete our analysis of these matters at the time of the acquisition. During March and April 2012, we obtained additional details about PBL’s inventory and performed an analysis of obsolescence as of the acquisition date. This analysis supported the recognition of additional obsolescence reserves in the amount of $1.7 million to reduce the acquisition date inventory to fair value. Accordingly, we have revised the Consolidated Balance Sheet as of December 31, 2011 to reflect this adjustment to the PBL acquisition accounting. The effect of this revision was to reduce inventory by $1.7 million, increase goodwill by $1.1 million, and increase current deferred tax assets by $0.6 million as of December 31, 2011.

PBL’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended July 31, 2011
Sales	$	33,162
Operating income		1,804
Depreciation and amortization		2,857

2011 Acquisition of Woods/TISCO

On September 7, 2011, we acquired Woods/TISCO, with operations primarily in the Midwestern U.S., a manufacturer and marketer of equipment and replacement parts primarily for the agriculture end market. The acquisition of Woods/TISCO:

• Increased distribution for our FRAG segment, particularly in the agricultural dealer channel.

• Expanded our FRAG product line offerings of tractor attachments and aftermarket replacement parts.

• Provided opportunities to leverage our manufacturing and product development expertise and global distribution and supply chain network, particularly in the area of product sourcing.

• Enhanced our U.S. manufacturing and distribution capabilities through the addition of three manufacturing and five distribution facilities.

The purchase price was $190.5 million in cash, consisting of $185.0 million in negotiated enterprise value and a $5.5 million working capital adjustment. Woods/TISCO had $0.2 million of cash on the acquisition date, resulting in a net cash outflow of $190.3 million. We assumed none of Woods/TISCO’s debt in the transaction. In addition, we incurred legal and other third party fees totaling $2.0 million in conjunction with the acquisition that were expensed to SG&A in the Consolidated Statement of Income during 2011. The acquisition was funded from cash on hand and borrowing under the Company’s revolving credit facility.

The initial acquisition accounting for Woods/TISCO included provisional amounts for income tax accounting, as we were not able to obtain sufficient details and complete our analysis of these matters at the time of the acquisition. During September 2012, we obtained additional details about deferred income taxes at Woods/TISCO and, accordingly, we have revised the Consolidated Balance Sheet as of December 31, 2011. The effect of the adjustment was to reduce long-term deferred income tax liabilities by $0.4 million, reduce current deferred tax assets by $38 thousand, and reduce goodwill by the net amount of $0.3 million.

Woods/TISCO’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended August 31, 2011
Sales	$	164,810
Operating income		17,870
Depreciation and amortization		2,549

Woods/TISCO’s operating income for the twelve months ended August 31, 2011 included expenses of $0.7 million related to Woods/TISCO’s former chief executive officer, $0.5 million in management fees charged by Woods/TISCO’s former owner, $0.4 million in expenses attributed to Woods/TISCO’s efforts to sell its business, $0.3 million in costs associated with the closure of a facility, and $0.3 million in fees associated with Woods/TISCO’s September 2010 refinancing transaction.

Purchase Price Allocations

We allocated the purchase price for each acquisition to the following assets and liabilities based on their estimated fair values.

(Amounts in thousands)	Woods/TISCO		PBL		KOX		SpeeCo
Cash	$	230	$	1,275	$	5,126	$	816
Accounts receivable		34,784		5,109		3,365		7,525
Inventories		38,512		9,729		8,879		18,868
Current intangible assets subject to amortization		—		157		—		401
Current deferred tax assets		3,716		608		—		657
Other current assets		3,057		1,162		268		625
Property, plant, and equipment		19,259		13,041		383		1,812
Non-current deferred tax assets		1,943		378		—		—
Non-current intangible assets subject to amortization		52,400		5,612		4,594		43,214
Non-current intangible assets not subject to amortization		44,330		470		5,241		5,968
Goodwill		54,846		3,301		3,709		42,794
Other non-current assets		3,474		—		—		—
Total assets acquired		256,551		40,842		31,565		122,680
Current liabilities		19,319		11,065		4,793		13,762
Long-term debt		—		13,304		—		—
Non-current deferred income tax liability		41,510		609		2,836		17,142
Other non-current liabilities		5,220		1,620		—		106
Total liabilities assumed		66,049		26,598		7,629		31,010
Acquisition price	$	190,502	$	14,244	$	23,936	$	91,670
Goodwill deductible for income tax purposes	$	9,255	$	—	$	—	$	6,998

The operating results of acquisitions are included in the Consolidated Statements of Income from the acquisition dates forward. These 2011 results, excluding the post-acquisition allocation of the cost of certain shared services and corporate support functions, are summarized in the following table.

	Year Ended December 31, 2011
(Amounts in thousands)	KOX			PBL			Woods/TISCO
Incremental net sales	$	21,639		$	9,679		$	55,464
Incremental income (loss) before income taxes		(2,864	)		(2,727	)		1,326
Acquisition accounting effects		2,152			1,734			4,913

The 2010 results of SpeeCo, excluding the post-acquisition allocation of the cost of certain shared services and corporate support functions, are summarized in the following table.

	Year Ended December 31, 2010
(Amounts in thousands)	SpeeCo
Incremental net sales	$	34,200
Incremental income before income taxes		2,097
Acquisition accounting effects		3,368

Acquisition accounting effects included in the above tables represent non-cash charges included in cost of sales for amortization of intangible assets and adjustments to fair value on acquired property, plant, and equipment, as well as expensing of the step-up to fair value of acquired inventory. Acquisition accounting effects do not include transaction costs associated with the acquisitions.

The following table summarizes the acquisition accounting effects charged to cost of sales for the years indicated:

	Year Ending December 31,
(Amounts in thousands)	2012		2011		2010
SpeeCo	$	4,671	$	5,555	$	3,368
KOX		1,016		2,152		—
PBL		2,028		1,734		—
Woods/TISCO		7,013		4,913		—
Prior acquisitions		1,270		1,525		1,789
Total acquisition accounting effects	$	15,998	$	15,879	$	5,157

The following unaudited pro forma results present the estimated effect as if the acquisition of SpeeCo had occurred on January 1, 2009, and as if the acquisitions of KOX, PBL, and Woods/TISCO had occurred on January 1, 2010. The unaudited pro forma results include the historical results of each acquired business, pro forma elimination of sales from Blount to each acquired business, if any, pro forma acquisition accounting effects, pro forma interest expense effects of additional borrowings to fund each transaction, pro forma interest effects from reduced cash and cash equivalents following use of cash to fund each transaction, and the related pro forma income tax effects.

	Twelve Months  Ended December 31, 2011				Twelve Months  Ended December 31, 2010
(Amounts in thousands, except per share data)	As Reported		Pro Forma		As Reported		Pro Forma
Sales	$	831,630	$	975,455	$	611,480	$	863,014
Net income		49,682		58,192		47,200		47,487
Basic income per share	$	1.02	$	1.19	$	0.99	$	1.00
Diluted income per share	$	1.01	$	1.18	$	0.97	$	0.98

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Contingent Liabilities

12 Months Ended

Dec. 31, 2012

Contingent Liabilities [Abstract]

CONTINGENT LIABILITIES

NOTE 14:  CONTINGENT LIABILITIES

The Company reserves for product liability, environmental remediation, and other legal matters as management becomes aware of such matters. A portion of these claims or lawsuits may be covered by insurance policies that generally contain both deductible and coverage limits. Management monitors the progress of each legal matter to ensure that the appropriate reserve for its obligation has been recognized and disclosed in the financial statements. Management also monitors trends in case types to determine if there are any specific issues that relate to the Company that may result in additional future exposure on an aggregate basis. As of December 31, 2012 and 2011, management believes the Company has appropriately recorded and disclosed all material costs for its obligations in regard to known matters. Management believes that the recoverability of the costs of claims from insurance companies will continue in the future. Management periodically assesses these insurance companies to monitor their ability to pay such claims.

The Company was named a potentially liable person (“PLP”) by the Washington State Department of Ecology (“WDOE”) in connection with the Pasco Sanitary Landfill Site (“Site”). This Site has been monitored by WDOE since 1988. From available records, the Company believes that it sent 26 drums of chromic hydroxide sludge in a non-toxic, trivalent state to the Site. The Company further believes that the Site contains more than 50,000 drums in total and millions of gallons of additional wastes, some potentially highly toxic in nature. Accordingly, based both on volume and on the nature of the waste, the Company believes that it is a de minimis contributor.

The current on-site monitoring program and required deliverables under various orders are being conducted and funded by certain PLPs, excluding the Company and several other PLPs, under the supervision of WDOE. The Company may or may not be required, in the future, to contribute to the costs of required deliverables or remediation activities. The Company is unable to estimate such costs, or the likelihood of being assessed any portion thereof. The Company incurred no costs during the years ended December 31, 2012, 2011, and 2010 in connection with the remediation efforts at the Site.

In March 2010, the Company received an offer from Region 9 of the Environmental Protection Agency of the U.S. (the “EPA”) to resolve its potential liability regarding the Operating Industries, Inc. Superfund Site in Monterey Park, California, involving a subsidiary of the former Omark Industries, Inc., which merged with the Company in 1985. The Company submitted its consent to enter into an administrative settlement agreement for the Company’s pro rata share of the site’s clean-up costs as a de minimis participant. Accordingly, the Company recognized a charge of $0.1 million in the first quarter of 2010 in settlement of this matter. In February 2011, the Company received notice from the EPA that the de minimis settlement agreement has been accepted by a sufficient number of parties and payment of $0.1 million was made to the EPA on March 1, 2011. In May 2011 the EPA notified the Company that the administrative order embodying the settlement was in full effect with respect to the Company.

With respect to certain proceedings involving Carlton, which the Company acquired on May 2, 2008, the Company has determined that in 1989 contamination of soil and groundwater by trichloroethylene (“TCE”) and other volatile organic compounds (“VOCs”) was discovered at Carlton’s facility located in Milwaukie, Oregon (the “Carlton Site”) in connection with the removal of two underground storage tanks. On November 19, 1990, Carlton entered into a Consent Order with the Oregon Department of Environmental Quality (“DEQ”), which was amended in 1996, 1997, and 2000, pursuant to which the Company continues to investigate, remediate, and monitor the contamination under the supervision of the DEQ. The Company recognized an initial reserve of $3.4 million at the time of its acquisition of Carlton, representing the estimated costs to remediate this site. Although there can be no assurance that the currently estimated cost and scope of remediation will not change in the future due to the imposition of additional remediation obligations by the DEQ, the detection of additional contamination in the future or other later discovered facts, the Company does not believe that any remediation will have a material adverse effect on its consolidated financial position, operating results or cash flows. In addition, beginning October 2010 and continuing through November 2012, the Company received insurance proceeds to reimburse certain of the expenditures for this remediation effort. The Company does not expect to receive additional insurance proceeds in this matter.

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. Some of these lawsuits arise out of the Company’s duty to indemnify certain purchasers of the Company’s discontinued operations for lawsuits involving products manufactured prior to the sale of certain of these businesses. In addition, the Company is a party to a number of other suits arising out of the normal course of its business, including suits concerning commercial contracts, employee matters, and intellectual property rights. In some instances the Company has been the plaintiff, and has sought recovery of damages. In others, the Company is a defendant against whom damages are sought. While there can be no assurance as to their ultimate outcome, management does not believe these lawsuits will have a material adverse effect on the Company’s consolidated financial position, operating results or cash flows in the future.

The Company accrues, by a charge to income, an amount representing management’s best estimate of the undiscounted probable loss related to any matter deemed by management and its counsel as a reasonably probable loss contingency in light of all of the then known circumstances.

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Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE 10:  INCOME TAXES

The provision (benefit) for income taxes was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011		2010
Current
Federal	$	15,781		$	16,249	$	7,828
State		1,685			1,116		1,973
Foreign		12,325			5,572		4,521
Deferred
Federal		(6,598	)		155		2,846
State		(582	)		751		447
Foreign		(409	)		1,425		768
Provision for income taxes	$	22,202		$	25,268	$	18,383
The provision is reported as follows:
Continuing operations	$	22,202		$	25,268	$	11,209
Discontinued operations		—			—		7,174
Provision for income taxes	$	22,202		$	25,268	$	18,383

The Company also recorded the following deferred tax amounts directly to the components of stockholders’ equity:

	Year Ended December 31,
(Amounts in thousands)	2012		2011			2010
Pension liability adjustment	$	340	$	15,340		$	700
Change in unrealized losses (gains)		2,240		(2,180	)		261
Stock options exercised		1,187		877			1,340

Income from continuing operations before income taxes was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Income before income taxes:
Domestic	$	28,122	$	50,357	$	27,521
Foreign		33,668		24,593		25,090
Total	$	61,790	$	74,950	$	52,611

The decrease in domestic income before taxes in 2012 reflects the decrease in profitability of our FRAG segment, which operates primarily in the U.S. The increase in foreign income before income taxes from 2011 to 2012 was primarily driven by strong profit growth in Brazil. The increase in domestic income before taxes from 2010 to 2011 reflects the overall improvement in the Company’s operating results as the domestic economy recovered and demand for our products increased, as well as the addition of results from Woods/TISCO and SpeeCo, both of which currently operate primarily in the U.S. See further discussion in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

A reconciliation of the U.S. federal statutory rate to the effective income tax rate for continuing operations is presented below.

	% of income (loss) before tax
	2012			2011			2010
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Impact of earnings of foreign operations		(2.6	)		(2.2	)		(6.6	)
Repatriation of foreign earnings		—			0.3			1.7
Foreign withholding taxes		1.2			1.1			2.0
Federal and state research tax credits		—			(0.2	)		(1.7	)
State income taxes, net of federal tax benefit		1.4			2.2			0.9
Permanent differences		(1.5	)		(0.4	)		(1.4	)
Change in deferred taxes		—			2.3			3.3
Change in uncertain tax positions		(0.6	)		(4.6	)		(12.4	)
Acquisition transaction costs		—			1.9			0.6
Other		0.2			0.6			0.0
Effective income tax rate before valuation allowance		33.1			36.0			21.4
Valuation allowance		2.8			(2.3	)		(0.1	)
Effective income tax rate after valuation allowance		35.9	%		33.7	%		21.3	%

The tax rates that apply to our foreign locations can differ significantly from our domestic income tax rate. Also, the relative proportion of taxable income earned domestically versus internationally can fluctuate significantly from year to year. Movements in currency exchange rates can generate tax deductible foreign currency losses and taxable foreign currency gains at our foreign subsidiaries that are not recognized for book purposes, thus impacting the effective tax rate reported on our book income. Different allocations in the proportional taxable income among jurisdictions from year to year can also affect the impact of state income taxes. Changes in estimated tax contingencies and valuation allowances can also significantly impact our effective tax rate from year to year.

In 2012, we recognized income tax expense of $1.9 million to increase a valuation allowance against certain deferred tax assets arising from foreign NOL carryforwards. In 2011, we recognized an income tax benefit of $4.3 million, from the release of previously provided income tax expense on uncertain tax positions, resulting from the expiration of the statute of limitations for certain tax returns. In 2010, we recognized an income tax benefit of $6.8 million, from the release of previously provided income tax expense on uncertain tax positions, resulting from the conclusion of an audit with the IRS and the expiration of the statute of limitations for certain tax returns. In 2010, the Company also recognized income tax expense of $1.7 million to write off the deferred tax asset related to the Medicare Part D subsidy, reflecting new tax legislation which made the subsidy fully taxable beginning in 2013.

The components of deferred income taxes applicable to temporary differences at December 31, 2012 and 2011 are as follows:

	December 31,
(Amounts in thousands)	2012			2011
Deferred tax assets:
Employee benefits and compensation	$	35,522		$	37,119
Other accrued expenses		16,507			13,505
State NOL carryforwards		516			741
Foreign		7,149			2,914
Gross deferred tax assets		59,694			54,279
Less valuation allowance		(2,552	)		(603	)
Deferred tax assets net of valuation allowance		57,142			53,676
Deferred tax liabilities:
Property, plant, and equipment asset basis differences		(15,379	)		(15,252	)
Intangible asset basis differences		(57,501	)		(60,497	)
Foreign		(3,095	)		(5,236	)
Total deferred tax liabilities		(75,975	)		(80,985	)
Net deferred tax liability	$	(18,833	)	$	(27,309	)

Foreign deferred tax assets include NOL carryforwards, timing differences related to retirement plans, and other differences. Certain of these foreign deferred tax assets are reduced by valuation allowances reflecting the expectation that they will expire before they are utilized to reduce cash taxes paid. In addition, a foreign tax credit carryforward of approximately $1.7 million expired unused in 2011, and was written off along with its related valuation allowance for no net effect. Our state NOL carryforwards expire at various dates beginning in 2013. Certain of our foreign NOL carryforwards expire at various dates beginning in 2017, and certain of our foreign NOL carryforwards have an indefinite carryforward period, although utilization is limited annually.

The periods from 2008 through 2012 remain open for U.S. income tax purposes and the U.S. income tax returns for years 2008 through 2010 are currently under examination by the IRS. In 2009, the Company entered into a Bilateral Advance Pricing Agreement (“BAPA”) with the Canada Revenue Agency (“CRA”) and the IRS. This BAPA brings relative certainty with respect to transfer pricing between the Company’s U.S. and Canada subsidiaries for the years 2002 through 2011, and the Company is currently working with the CRA and IRS to extend the agreement through 2016.

U.S. income taxes have not been provided on undistributed earnings of international subsidiaries. Management’s intention is to reinvest these earnings indefinitely. As of December 31, 2012, undistributed earnings of international subsidiaries were approximately $211.3 million. Repatriation of foreign earnings in 2011 and 2010 pertained to current earnings of one foreign subsidiary.

A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Balance at beginning of period	$	6,454		$	11,905		$	29,754
Increase (decrease) for positions taken during a prior period		—			1,485			(1,458	)
Increase (decrease) for positions taken during the current period		(384	)		2,125			—
Settlements		—			—			(766	)
Statute of limitations expirations		(287	)		(9,061	)		(15,625	)
Balance at end of period	$	5,783		$	6,454		$	11,905

These unrecognized tax benefits are included in other liabilities on the Consolidated Balance Sheets.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2012 and 2011, the Company had recorded $2.1 million and $1.8 million of accrued interest and penalties related to uncertain tax positions, respectively. During the year ended December 31, 2012, the Company recognized a net income tax expense of $0.3 million for interest and penalties related to uncertain tax positions.

During the years ended December 31, 2011 and 2010, the Company recognized net income tax benefits of $0.4 million and $1.9 million, respectively, for interest and penalties related to uncertain tax positions.

The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized was $5.8 million as of December 31, 2012 and $6.5 million as of December 31, 2011. Based on current information, in the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, liquidity, or results of operations. However, the ultimate resolution of the Company’s global tax uncertainties could differ significantly from management’s expectations.

Based on the potential outcome of these uncertainties or the expiration of the statute of limitations for specific jurisdictions, it is reasonably possible that the unrecognized tax benefits could decrease within the next twelve months. The associated net tax benefits, which would favorably impact the effective tax rate, excluding changes to valuation allowances, are estimated to range between zero and $0.4 million.

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Retirement Plans (Details 5) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Components of net periodic benefit cost:
Amortization of actuarial losses	$ (8,573)	$ (5,137)	$ (4,562)
Pension Benefits [Member]
Components of net periodic benefit cost:
Service cost	4,066	3,578	2,524
Interest cost	10,532	10,935	10,920
Expected return on plan assets	(14,547)	(13,976)	(12,258)
Amortization of actuarial losses	7,213	4,294	3,702
Amortization of prior service cost	(6)	(6)	(6)
Total net periodic benefit cost recognized in consolidated statements of income	7,512	5,127	4,882
Recognized in accumulated other comprehensive loss:
Actuarial (gains) losses	8,231	37,491	3,936
Prior service cost	6	6	6
Total recognized in accumulated other comprehensive loss	$ 8,237	$ 37,497	$ 3,942
Weighted average assumptions:
Discount rate used to determine net periodic benefit cost	4.70%	5.60%	6.10%
Discount rate used to determine year-end benefit obligations	4.20%	4.60%	5.60%
Expected return on assets used to determine net periodic benefit cost	7.60%	7.70%	7.90%
Rate of compensation increase	3.00%	3.00%	3.00%

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Deferred Financing Costs

12 Months Ended

Dec. 31, 2012

Deferred Financing Costs [Abstract]

DEFERRED FINANCING COSTS

NOTE 6:  DEFERRED FINANCING COSTS

Deferred financing costs represent costs incurred in conjunction with the Company’s debt financing activities and are amortized over the term of the related debt instruments. Deferred financing costs and the related amortization expense are adjusted when any pre-payments of principal are made to the related outstanding loan. See also Note 9. The following activity occurred during the years indicated:

	Year Ended December 31,
(Amounts in thousands)	2012			2011
Beginning balance	$	5,716		$	4,088
Financing costs deferred		1,115			4,006
Write off due to early extinguishment of debt		—			(1,368	)
Amortization		(1,336	)		(1,010	)
Ending balance	$	5,495		$	5,716

Amortization expense, assuming no further cost deferrals or prepayments of principal, is expected to be as follows:

(Amounts in thousands)	Expected Annual Amortization
2013	$	1,499
2014		1,499
2015		1,499
2016		998
Total scheduled amortization	$	5,495

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Facility Closure and Restructuring Costs (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Facility Closure and Restructuring Costs (Textual) [Abstract]
Costs associated in restructuring process	$ 7.4
Cost of sales [Member]
Facility Closure and Restructuring Costs (Textual) [Abstract]
Costs associated in restructuring process	$ 1.0

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Concentration of Credit Risk and Fair Value of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Estimated fair values of senior credit facility loans
Senior credit facility debt, Carrying Amount	$ 281,250	$ 296,250
Senior credit facility debt, Fair Value	$ 513,669	$ 521,828

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Inventories

12 Months Ended

Dec. 31, 2012

Inventories [Abstract]

INVENTORIES

NOTE 4:  INVENTORIES

Inventories consisted of the following:

	December 31,
(Amounts in thousands)	2012		2011
Raw materials and supplies	$	22,815	$	24,022
Work in progress		19,388		16,006
Finished goods		132,613		109,797
Total inventories	$	174,816	$	149,825

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Property, Plant, and Equipment, Net

12 Months Ended

Dec. 31, 2012

Property, Plant, and Equipment, Net [Abstract]

PROPERTY, PLANT, AND EQUIPMENT, NET

NOTE 5:  PROPERTY, PLANT, AND EQUIPMENT, NET

Property, plant, and equipment, net consisted of the following:

	December 31,
(Amounts in thousands)	2012			2011
Land	$	9,081		$	9,081
Buildings and improvements		82,910			65,699
Machinery and equipment		262,058			239,882
Furniture, fixtures, and office equipment		42,498			33,342
Transportation equipment		1,126			1,105
Construction or equipment acquisitions in progress		23,075			30,568
Accumulated depreciation		(243,046	)		(223,805	)
Total property, plant, and equipment, net	$	177,702		$	155,872

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Intangible Assets

12 Months Ended

Dec. 31, 2012

Intangible Assets [Abstract]

INTANGIBLE ASSETS

NOTE 7:  INTANGIBLE ASSETS

The following table summarizes intangible assets:

			December 31, 2012				December 31, 2011
	Life		Gross		Accumulated		Gross		Accumulated
(Amounts in thousands)	In Years		Amount		Amortization		Amount		Amortization
Goodwill		Indefinite	$	165,175	$	—	$	165,084	$	—
Trademarks and trade names		Indefinite		61,251		—		61,176		—
Total with indefinite lives				226,426		—		226,260		—
Covenants not to compete		2 - 4		1,112		985		1,112		843
Patents		11 - 13		5,320		1,554		5,320		1,121
Manufacturing technology		1		2,563		2,563		2,516		1,124
Customer relationships, including backlog		10 - 19		107,333		29,316		107,234		16,170
Total with finite lives				116,328		34,418		116,182		19,258
Total intangible assets			$	342,754	$	34,418	$	342,442	$	19,258

On the December 31, 2011 Consolidated Balance Sheet, $15 thousand of intangible assets, representing unamortized backlog, are included in other current assets.

Amortization expense for intangible assets included in the Consolidated Statements of Income was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Amortization expense	$	15,196	$	11,315	$	4,382

Amortization expense for these intangible assets is expected to total $14.2 million in 2013, $12.0 million in 2014, $10.5 million in 2015, $9.1 million in 2016, and $7.5 million in 2017.

Through December 31, 2012, no impairment of these assets has been recognized. A total of $38.3 million of goodwill is deductible for tax purposes, and is being amortized on the U.S. tax return. The accumulated tax amortization on this deductible goodwill was $26.3 million and $21.9 million at December 31, 2012 and 2011, respectively.

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Deferred Financing Costs (Details 1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Scheduled amortization, assuming no further cost deferrals or prepayments of principal
2013	$ 1,499
2014	1,499
2015	1,499
2016	998
Total scheduled amortization	$ 5,495	$ 5,716	$ 4,088

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Retirement Plans (Details 6) (Pension Benefits [Member])	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Money market mutual funds [Member] | U.S. retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	0.50%	0.50%
Target Allocation	2.00%
U.S. large cap equity securities [Member] | U.S. retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	26.40%	26.80%
Target Allocation	26.20%
U.S. large cap equity securities [Member] | Canadian retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	17.00%	17.20%
Target Allocation	17.00%
U.S. small/mid cap equity securities [Member] | U.S. retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	3.20%	3.10%
Target Allocation	3.00%
International equity securities [Member] | U.S. retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	15.30%	13.60%
Target Allocation	14.30%
International equity securities [Member] | Canadian retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	42.30%	42.30%
Target Allocation	42.00%
Emerging markets equity securities [Member] | U.S. retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	1.60%	1.40%
Target Allocation	1.50%
Emerging markets equity securities [Member] | Canadian retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	2.90%	3.00%
Target Allocation	3.00%
U.S. debt securities [Member] | U.S. retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	47.10%	48.40%
Target Allocation	46.00%
International debt securities [Member] | U.S. retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	2.10%	2.00%
Target Allocation	2.00%
International debt securities [Member] | Canadian retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	37.80%	37.50%
Target Allocation	38.00%
Hedge funds [Member] | U.S. retirement plan [Member]
Allocation of Pension Plan Assets and Target allocation
Percentage of Plan Assets Actual Allocation	3.80%	4.20%
Target Allocation	5.00%

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Intangible Assets (Details 1) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of amortization expense for intangible assets
Amortization expense	$ 16,532	$ 12,325	$ 6,628

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Stock-Based Compensation (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Summary of cash proceeds received from share based payment awards and other related activity
Intrinsic value of options exercised	$ 3,522	$ 2,655	$ 3,512
Estimated fair value of options and SARs that vested	3,993	3,747	2,890
Stock-based compensation	5,592	4,441	3,290
Total tax benefit related to share-based compensation recognized	1,917	1,560	1,016
Total amount of cash received from exercises	1,152	1,041	2,398
Tax (expense) benefit realized from exercises	1,187	877	1,340
Cash used to settle equity instruments

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Deferred Financing Costs (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Deferred financing costs and the related amortization expense
Beginning balance	$ 5,716	$ 4,088
Financing costs deferred	1,115	4,006
Write off due to early extinguishment of debt		(1,368)
Amortization	(1,336)	(1,010)
Ending balance	$ 5,495	$ 5,716

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Other Post-Employment Benefit Plans (Details Textual) (Other Post-Retirement Benefits [Member], USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012 Plan	Dec. 31, 2011	Dec. 31, 2010
Other Post-Retirement Benefits [Member]
Other Post-Employment Benefit Plans (Textual) [Abstract]
Number of unfunded post-retirement medical programs	2
Number of post-retirement death benefit plan	1
Accumulated other comprehensive loss expected to be recognized as a component of net periodic benefit cost	$ 1.4
Rate of increase in the cost of health care benefits	10.00%	9.00%	10.00%
Rate of increase in the cost of health care benefits for next fiscal year	9.00%
Annual rate of increase in cost of health care benefits	9.00%
Minimum declining rate of cost of health care benefits	1.00%
Maximum declining rate of cost of health care benefits	5.00%
Change in assumed health care cost trend rates	1.00%

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Acquisitions (Tables)

12 Months Ended

Dec. 31, 2012

Business Acquisition [Line Items]

Summary of Purchase Price Allocations

We allocated the purchase price for each acquisition to the following assets and liabilities based on their estimated fair values.

(Amounts in thousands)	Woods/TISCO		PBL		KOX		SpeeCo
Cash	$	230	$	1,275	$	5,126	$	816
Accounts receivable		34,784		5,109		3,365		7,525
Inventories		38,512		9,729		8,879		18,868
Current intangible assets subject to amortization		—		157		—		401
Current deferred tax assets		3,716		608		—		657
Other current assets		3,057		1,162		268		625
Property, plant, and equipment		19,259		13,041		383		1,812
Non-current deferred tax assets		1,943		378		—		—
Non-current intangible assets subject to amortization		52,400		5,612		4,594		43,214
Non-current intangible assets not subject to amortization		44,330		470		5,241		5,968
Goodwill		54,846		3,301		3,709		42,794
Other non-current assets		3,474		—		—		—
Total assets acquired		256,551		40,842		31,565		122,680
Current liabilities		19,319		11,065		4,793		13,762
Long-term debt		—		13,304		—		—
Non-current deferred income tax liability		41,510		609		2,836		17,142
Other non-current liabilities		5,220		1,620		—		106
Total liabilities assumed		66,049		26,598		7,629		31,010
Acquisition price	$	190,502	$	14,244	$	23,936	$	91,670
Goodwill deductible for income tax purposes	$	9,255	$	—	$	—	$	6,998

Schedule of operating results of acquisitions included in Consolidated Statements of Income

These 2011 results, excluding the post-acquisition allocation of the cost of certain shared services and corporate support functions, are summarized in the following table.

	Year Ended December 31, 2011
(Amounts in thousands)	KOX			PBL			Woods/TISCO
Incremental net sales	$	21,639		$	9,679		$	55,464
Incremental income (loss) before income taxes		(2,864	)		(2,727	)		1,326
Acquisition accounting effects		2,152			1,734			4,913

The 2010 results of SpeeCo, excluding the post-acquisition allocation of the cost of certain shared services and corporate support functions, are summarized in the following table.

	Year Ended December 31, 2010
(Amounts in thousands)	SpeeCo
Incremental net sales	$	34,200
Incremental income before income taxes		2,097
Acquisition accounting effects		3,368

Summary of acquisition accounting effects charged or expected to be charged to cost of sales

The following table summarizes the acquisition accounting effects charged to cost of sales for the years indicated:

	Year Ending December 31,
(Amounts in thousands)	2012		2011		2010
SpeeCo	$	4,671	$	5,555	$	3,368
KOX		1,016		2,152		—
PBL		2,028		1,734		—
Woods/TISCO		7,013		4,913		—
Prior acquisitions		1,270		1,525		1,789
Total acquisition accounting effects	$	15,998	$	15,879	$	5,157

Schedule of Pro Forma Results of Acquisitions

The following unaudited pro forma results present the estimated effect as if the acquisition of SpeeCo had occurred on January 1, 2009, and as if the acquisitions of KOX, PBL, and Woods/TISCO had occurred on January 1, 2010.

	Twelve Months  Ended December 31, 2011				Twelve Months  Ended December 31, 2010
(Amounts in thousands, except per share data)	As Reported		Pro Forma		As Reported		Pro Forma
Sales	$	831,630	$	975,455	$	611,480	$	863,014
Net income		49,682		58,192		47,200		47,487
Basic income per share	$	1.02	$	1.19	$	0.99	$	1.00
Diluted income per share	$	1.01	$	1.18	$	0.97	$	0.98

SpeeCo [Member]

Business Acquisition [Line Items]

Schedule of pre-acquisition operating results

SpeeCo’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended July 31, 2010
Sales	$	77,077
Operating income		8,174
Depreciation and amortization		4,469

KOX [Member]

Business Acquisition [Line Items]

Schedule of pre-acquisition operating results

KOX’s pre-acquisition operating results (unaudited) for calendar year 2010 are summarized below.

(Amounts in thousands)	Year Ended December 31, 2010
Sales	$	34,889
Operating income		3,266
Depreciation		128

PBL [Member]

Business Acquisition [Line Items]

Schedule of pre-acquisition operating results

PBL’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended July 31, 2011
Sales	$	33,162
Operating income		1,804
Depreciation and amortization		2,857

Woods/TISCO [Member]

Business Acquisition [Line Items]

Schedule of pre-acquisition operating results

Woods/TISCO’s pre-acquisition operating results (unaudited) for the twelve months preceding the acquisition date are summarized below.

(Amounts in thousands)	Twelve Months Ended August 31, 2011
Sales	$	164,810
Operating income		17,870
Depreciation and amortization		2,549

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Quarterly Results of Operations (Tables)

12 Months Ended

Dec. 31, 2012

Quarterly Results of Operations [Abstract]

Summary of Unaudited Quarterly Results of Operations

The following tables set forth a summary of the unaudited quarterly results of operations for 2012 and 2011.

	Year Ended December 31, 2012
(Amounts in thousands, except per share data)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
(Amounts may not sum due to rounding)
Sales	$	226,309	$	239,059	$	232,736	$	229,562	$	927,666
Gross profit		62,665		68,078		62,928		62,543		256,215
Net income		5,881		13,101		11,622		8,984		39,588
Net income per share:
Basic	$	0.12	$	0.27	$	0.24	$	0.18	$	0.81
Diluted		0.12		0.26		0.23		0.18		0.79
	Year Ended December 31, 2011
(Amounts in thousands, except per share data)	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter		Total
(Amounts may not sum due to rounding)
Sales	$	180,874	$	201,337	$	212,904	$	236,515	$	831,630
Gross profit		60,048		64,188		65,560		66,013		255,809
Net income		15,622		13,752		10,805		9,502		49,682
Net income per share:
Basic	$	0.32	$	0.28	$	0.22	$	0.19	$	1.02
Diluted		0.31		0.28		0.22		0.19		1.01

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Other Post-Employment Benefit Plans

12 Months Ended

Dec. 31, 2012

Other Post-Employment Benefit Plans [Abstract]

OTHER POST-EMPLOYMENT BENEFIT PLANS

NOTE 12:  OTHER POST-EMPLOYMENT BENEFIT PLANS

The Company sponsors two unfunded post-retirement medical programs covering many of its current and former employees in the U.S. and one post-retirement death benefit plan covering a limited number of former employees. The changes in benefit obligations, plan assets, and funded status of these plans for the years ended December 31, 2012 and 2011, were as follows:

	Other Post-Retirement Benefits
(Amounts in thousands)	2012			2011
Change in benefit obligations:
Projected benefit obligations at beginning of year	$	(45,665	)	$	(38,126	)
Service cost		(355	)		(261	)
Interest cost		(1,765	)		(1,972	)
Participant contributions		(1,932	)		(1,878	)
Actuarial gains (losses), net		1,706			(8,083	)
Benefits and plan expenses paid		4,002			4,655
Projected benefit obligations at end of year	$	(44,009	)	$	(45,665	)
Change in plan assets:
Fair value of plan assets at beginning of year	$	—		$	—
Company contributions		2,070			2,777
Participant contributions		1,932			1,878
Benefits and plan expenses paid		(4,002	)		(4,655	)
Fair value of plan assets at end of year		—			—
Net unfunded status at end of year	$	(44,009	)	$	(45,665	)
Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	$	(2,588	)	$	(2,713	)
Non-current liabilities		(41,421	)		(42,952	)
Net liability recognized on the Consolidated Balance Sheets	$	(44,009	)	$	(45,665	)

The projected benefit payments for these plans, net of the estimated Medicare Part D subsidy expected to be received by the Company over the next ten years, are estimated as follows:

(Amounts in thousands)	Estimated Gross Benefit Payments		Estimated Medicare Part D Subsidy		Estimated Net Benefit Payments
2013	$	2,847	$	207	$	2,640
2014		2,903		221		2,682
2015		2,922		231		2,691
2016		2,936		238		2,698
2017		2,931		243		2,688
2018 – 2022		14,289		1,250		13,039
Total estimated benefit payments over next ten years	$	28,828	$	2,390	$	26,438

The Company expects to meet funding requirements for its unfunded post-retirement medical and other benefit plans on a pay-as-you-go basis during 2013. The Company accounts for post-retirement medical plans in accordance with ASC 712. The obligation for these post-retirement benefit plans is reported in employee benefit obligations on the Consolidated Balance Sheets.

Periodic Benefit Cost and Other Comprehensive Loss

The components of net periodic benefit cost and other comprehensive loss and the weighted average assumptions used in accounting for other post-retirement benefits were as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Components of net periodic benefit cost:
Service cost	$	355		$	261		$	270
Interest cost		1,765			1,972			2,095
Amortization of actuarial losses		1,303			871			849
Total net periodic benefit cost recognized in Consolidated Statements of Income	$	3,423		$	3,104		$	3,214
Recognized in accumulated other comprehensive loss:
Actuarial (gains) losses	$	(3,009	)	$	7,212		$	424
Weighted average assumptions:
Discount rate used to determine net periodic benefit cost		4.3	%		5.5	%		5.8	%
Discount rate used to determine year-end benefit obligations		4.0	%		4.3	%		5.5	%

Actuarial losses of $1.4 million included in accumulated other comprehensive loss are expected to be recognized as a component of net periodic benefit cost in 2013.

The Company annually evaluates and selects the discount rates to be used in accounting for these plans. Consideration is given to relevant indices for high quality fixed rate debt securities and to specific debt securities with maturity dates similar to the expected timing of cash outflows for the plans as of the measurement date. The annual rate of increase in the cost of health care benefits was assumed to be 10% in 2012, 9% in 2011, and 10% in 2010. As of December 31, 2012, the annual rate of increase in cost of health care benefits is assumed to be 9% in 2013, declining by 1% per year until 5% is reached. A 1% change in assumed health care cost trend rates would have had the following effects for 2012:

(Amounts in thousands)	1% Increase		1% Decrease
Effect on service and interest cost components	$	300	$	(240	)
Effect on other post-retirement benefit obligations		4,843		(3,992	)

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Discontinued Operations (Details Textual) (Gear Products [Member], USD $) In Millions, unless otherwise specified	1 Months Ended
	Sep. 30, 2010
Gear Products [Member]
Discontinued Operations (Textual) [Abstract]
Net proceeds from sale of wholly owned subsidiary	$ 24.8

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Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

SEGMENT INFORMATION

NOTE 17:  SEGMENT INFORMATION

We are a global industrial company that designs, manufactures, purchases, and markets equipment, replacement and component parts, and accessories to professionals and consumers in select end-markets and to OEMs for use on original equipment. Our products are sold in over 115 countries and approximately 56% of our 2012 sales were shipped to customers outside of the U.S.

The Company identifies operating segments primarily based on organizational structure, reporting structure, and the evaluation of the Chief Operating Decision Maker (Chief Executive Officer). Our organizational structure reflects our view of the end-user market segments we serve, and we currently operate in two primary business segments. The Forestry, Lawn, and Garden or FLAG segment, manufactures and markets cutting chain, guide bars, and drive sprockets for chain saw use, and lawnmower and edger blades for outdoor power equipment. The FLAG segment also purchases branded replacement parts and accessories from other manufacturers and markets them to our FLAG customers through our global sales and distribution network. The FLAG segment includes the operations of the Company that have historically served the FLAG markets, as well as KOX, and a portion of the PBL business. The FLAG segment represented 70.1% of our consolidated sales for the year ended December 31, 2012.

The Company’s Farm, Ranch, and Agriculture or FRAG segment manufactures and markets attachments for tractors in a variety of mowing, cutting, clearing, material handling, landscaping and grounds maintenance applications, as well as log splitters, post-hole diggers, self-propelled lawnmowers, attachments for off-highway construction equipment applications, and other general purpose tractor attachments. In addition, the FRAG segment manufactures a variety of attachment cutting blade component parts. The FRAG segment also purchases replacement parts and accessories from other manufacturers that we market to our FRAG customers through our sales and distribution network. The FRAG segment includes the operations of SpeeCo, Woods/TISCO, and a portion of the PBL business. The FRAG segment represented 27.0% of our consolidated sales for the year ended December 31, 2012.

The Company also operates a concrete cutting and finishing equipment business that represented 2.8% of consolidated sales for the year ended December 31, 2012, and is reported within the Corporate and Other category. This business manufactures and markets diamond cutting chain and assembles and markets concrete cutting chain saws and accessories for the construction equipment market.

The Corporate and Other category also includes the costs of providing certain centralized administrative functions including accounting, banking, our continuous improvement program, credit management, executive management, finance, information systems, insurance, legal, our mergers and acquisitions program, treasury, and other functions. Costs of centrally provided shared services are allocated to business units based on various drivers, such as revenues, purchases, headcount, computer software licenses, and other relevant measures of the use of such services. We also include the facility closure and restructuring costs recognized in 2012 within this Corporate and Other category, because we do not consider such events to be ongoing aspects of our business segments’ activities. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The following table reflects selected financial information by segment and sales by geographic region.

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Sales:
FLAG	$	650,480		$	659,883		$	554,053
FRAG		250,845			147,475			34,200
Corporate and other		26,341			24,272			23,227
Total sales	$	927,666		$	831,630		$	611,480
Operating income (expense):
FLAG	$	108,255		$	115,597		$	104,113
FRAG		(7,495	)		4,474			1,671
Corporate and other		(21,480	)		(22,118	)		(20,229	)
Total operating income	$	79,280		$	97,953		$	85,555
Depreciation and amortization:
FLAG	$	26,574		$	24,663		$	21,898
FRAG		16,341			9,941			3,135
Corporate and other		2,203			1,203			2,566
Total depreciation and amortization	$	45,118		$	35,807		$	27,599
Capital expenditures:
FLAG	$	45,050		$	38,767		$	19,693
FRAG		6,717			1,600			83
Corporate and other		158			6			226
Total capital expenditures	$	51,925		$	40,373		$	20,002
Sales by geographic region:
United States	$	407,967		$	308,593		$	194,416
Europe		241,884			229,103			166,960
China		44,412			45,134			38,967
Brazil		36,561			33,242			29,402
Canada		30,232			25,285			18,853
Russian Federation		26,040			23,375			23,669
All others, individually insignificant		140,570			166,898			139,213
Total sales	$	927,666		$	831,630		$	611,480

The geographic sales information is by country of destination. No customer accounted for 10% or more of sales in 2012 or 2011. One customer, Husqvarna AB, accounted for approximately 12% of sales in 2010.

Balance Sheet Information by Segment	As of December 31,
(Amounts in thousands)	2012		2011
Assets:
FLAG	$	468,121	$	472,881
FRAG		374,856		370,057
Corporate and other		62,314		41,269
Total assets	$	905,291	$	884,207
Goodwill:
FLAG	$	66,297	$	66,223
FRAG		98,865		98,848
Corporate and other		13		13
Total goodwill	$	165,175	$	165,084
Property, plant, and equipment, net:
United States	$	91,446	$	86,677
China		41,610		22,706
Canada		20,473		18,572
European Union		12,154		14,461
Brazil		11,532		12,837
All other		487		619
Total property, plant, and equipment, net	$	177,702	$	155,872

Property, plant, and equipment is shown net of accumulated depreciation. Each of our business units purchases certain important materials from a limited number of suppliers that meet quality criteria. Although alternative sources of supply are available, the sudden elimination of certain suppliers could result in manufacturing delays, a reduction in product quality, and a possible loss of sales in the near term.

(Amounts in thousands)	FLAG		FRAG		Corporate and Other		Total
Goodwill:
December 31, 2011	$	66,223	$	98,848	$	13	$	165,084
Effect of changes in foreign currency translation rates		74		17		—		91
December 31, 2012	$	66,297	$	98,865	$	13	$	165,175

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Commitments (Details 2) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Guarantees and other commercial commitments
Product warranty reserves	$ 1,914
Letters of credit outstanding	5,424
Other financial guarantees	3,192
Total	$ 10,530

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Concentration of Credit Risk and Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2012

Concentration of Credit Risk and Fair Value of Financial Instruments [Abstract]

Estimated fair values of senior credit facility loans

The estimated fair values of the senior credit facility loans at December 31, 2012 and 2011 are presented below. See also Note 9.

	December 31, 2012				December 31, 2011
(Amounts in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Senior credit facility debt	$	516,250	$	513,669	$	524,450	$	521,828

Schedule of amounts recognized in cost of sales in Consolidated Statements of Income

Amounts recognized in cost of sales in the Consolidated Statements of Income at the maturity of the related derivative financial instruments were as follows.

	Year Ended December 31,
(Amounts in thousands)	2012			2011		2010
Gain (loss) on foreign currency derivative financial instruments	$	(75	)	$	788	$	2,353

Summary of derivatives held by the company

Derivatives held by the Company are summarized as follows:

	Carrying Value on Consolidated Balance			Assets (Liabilities) Measured at Fair Value
(Amounts in thousands)	Sheets			Level 1		Level 2			Level 3
December 31, 2012:
Interest rate hedge agreements	$	(3,960	)	$	—	$	(3,960	)	$	—
Foreign currency hedge agreements		(28	)		—		(28	)		—
December 31, 2011:
Interest rate hedge agreements	$	(1,303	)	$	—	$	(1,303	)	$	—
Foreign currency hedge agreements		(505	)		—		(505	)		—

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Summary of selected financial information by segment
Sales	$ 229,562	$ 232,736	$ 239,059	$ 226,309	$ 236,515	$ 212,904	$ 201,337	$ 180,874	$ 927,666	$ 831,630	$ 611,480
Operating income (expense)									79,280	97,953	85,555
Depreciation and amortization									45,118	35,807	27,599
Capital expenditures	51,925				40,373				51,925	40,373	20,002
United States [Member]
Summary of selected financial information by segment
Sales									407,967	308,593	194,416
Europe [Member]
Summary of selected financial information by segment
Sales									241,884	229,103	166,960
China [Member]
Summary of selected financial information by segment
Sales									44,412	45,134	38,967
Brazil [Member]
Summary of selected financial information by segment
Sales									36,561	33,242	29,402
Canada [Member]
Summary of selected financial information by segment
Sales									30,232	25,285	18,853
Russian Federation [Member]
Summary of selected financial information by segment
Sales									26,040	23,375	23,669
All others, individually insignificant [Member]
Summary of selected financial information by segment
Sales									140,570	166,898	139,213
FLAG [Member]
Summary of selected financial information by segment
Sales									650,480	659,883	554,053
Operating income (expense)									108,255	115,597	104,113
Depreciation and amortization									26,574	24,663	21,898
Capital expenditures	45,050				38,767				45,050	38,767	19,693
FRAG [Member]
Summary of selected financial information by segment
Sales									250,845	147,475	34,200
Operating income (expense)									(7,495)	4,474	1,671
Depreciation and amortization									16,341	9,941	3,135
Capital expenditures	6,717				1,600				6,717	1,600	83
Concrete Cutting and Finishing [Member]
Summary of selected financial information by segment
Sales									26,341	24,272	23,227
Corporate and other [Member]
Summary of selected financial information by segment
Operating income (expense)									(21,480)	(22,118)	(20,229)
Depreciation and amortization									2,203	1,203	2,566
Capital expenditures	$ 158				$ 6				$ 158	$ 6	$ 226

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

The provision benefit for income taxes

The provision (benefit) for income taxes was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011		2010
Current
Federal	$	15,781		$	16,249	$	7,828
State		1,685			1,116		1,973
Foreign		12,325			5,572		4,521
Deferred
Federal		(6,598	)		155		2,846
State		(582	)		751		447
Foreign		(409	)		1,425		768
Provision for income taxes	$	22,202		$	25,268	$	18,383
The provision is reported as follows:
Continuing operations	$	22,202		$	25,268	$	11,209
Discontinued operations		—			—		7,174
Provision for income taxes	$	22,202		$	25,268	$	18,383

Deferred tax amounts directly to the components of stockholders equity

The Company also recorded the following deferred tax amounts directly to the components of stockholders’ equity:

	Year Ended December 31,
(Amounts in thousands)	2012		2011			2010
Pension liability adjustment	$	340	$	15,340		$	700
Change in unrealized losses (gains)		2,240		(2,180	)		261
Stock options exercised		1,187		877			1,340

Summary of Income from continuing operations before income taxes

Income from continuing operations before income taxes was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Income before income taxes:
Domestic	$	28,122	$	50,357	$	27,521
Foreign		33,668		24,593		25,090
Total	$	61,790	$	74,950	$	52,611

Reconciliation of the provision for income taxes from continuing operations

A reconciliation of the U.S. federal statutory rate to the effective income tax rate for continuing operations is presented below.

	% of income (loss) before tax
	2012			2011			2010
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
Impact of earnings of foreign operations		(2.6	)		(2.2	)		(6.6	)
Repatriation of foreign earnings		—			0.3			1.7
Foreign withholding taxes		1.2			1.1			2.0
Federal and state research tax credits		—			(0.2	)		(1.7	)
State income taxes, net of federal tax benefit		1.4			2.2			0.9
Permanent differences		(1.5	)		(0.4	)		(1.4	)
Change in deferred taxes		—			2.3			3.3
Change in uncertain tax positions		(0.6	)		(4.6	)		(12.4	)
Acquisition transaction costs		—			1.9			0.6
Other		0.2			0.6			0.0
Effective income tax rate before valuation allowance		33.1			36.0			21.4
Valuation allowance		2.8			(2.3	)		(0.1	)
Effective income tax rate after valuation allowance		35.9	%		33.7	%		21.3	%

Summary of components of deferred income taxes applicable to temporary differences

The components of deferred income taxes applicable to temporary differences at December 31, 2012 and 2011 are as follows:

	December 31,
(Amounts in thousands)	2012			2011
Deferred tax assets:
Employee benefits and compensation	$	35,522		$	37,119
Other accrued expenses		16,507			13,505
State NOL carryforwards		516			741
Foreign		7,149			2,914
Gross deferred tax assets		59,694			54,279
Less valuation allowance		(2,552	)		(603	)
Deferred tax assets net of valuation allowance		57,142			53,676
Deferred tax liabilities:
Property, plant, and equipment asset basis differences		(15,379	)		(15,252	)
Intangible asset basis differences		(57,501	)		(60,497	)
Foreign		(3,095	)		(5,236	)
Total deferred tax liabilities		(75,975	)		(80,985	)
Net deferred tax liability	$	(18,833	)	$	(27,309	)

Reconciliation of the beginning and ending amount of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits are as follows:

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Balance at beginning of period	$	6,454		$	11,905		$	29,754
Increase (decrease) for positions taken during a prior period		—			1,485			(1,458	)
Increase (decrease) for positions taken during the current period		(384	)		2,125			—
Settlements		—			—			(766	)
Statute of limitations expirations		(287	)		(9,061	)		(15,625	)
Balance at end of period	$	5,783		$	6,454		$	11,905

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Segment Information (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Summary of changes in goodwill
Beginning balance	$ 165,084
Current period acquisitions
Effect of changes in foreign currency translation rates	91
Ending balance	165,175
FLAG [Member]
Summary of changes in goodwill
Beginning balance	66,223
Current period acquisitions
Effect of changes in foreign currency translation rates	74
Ending balance	66,297
FRAG [Member]
Summary of changes in goodwill
Beginning balance	98,848
Current period acquisitions
Effect of changes in foreign currency translation rates	17
Ending balance	98,865
Corporate and other [Member]
Summary of changes in goodwill
Beginning balance	13
Current period acquisitions
Effect of changes in foreign currency translation rates
Ending balance	$ 13

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Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares outstanding	49,140,091	48,814,912

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Other Post-Employment Benefit Plans (Details) (Other Post-Retirement Benefits [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Other Post-Retirement Benefits [Member]
Change in benefit obligations:
Projected benefit obligations at beginning of year	$ (45,665)	$ (38,126)
Service cost	(355)	(261)	(270)
Interest cost	(1,765)	(1,972)	(2,095)
Participant contributions	(1,932)	(1,878)
Actuarial gains (losses), net	1,706	(8,083)
Benefits and plan expenses paid	4,002	4,655
Projected benefit obligations at end of year	(44,009)	(45,665)	(38,126)
Change in plan assets:
Fair value of plan assets at beginning of year
Company contributions	2,070	2,777
Participant contributions	1,932	1,878
Benefits and plan expenses paid	(4,002)	(4,655)
Fair value of plan assets at end of year
Net unfunded status at end of year	(44,009)	(45,665)
Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	(2,588)	(2,713)
Non-current liabilities	(41,421)	(42,952)
Net liability recognized on the Consolidated Balance Sheets	$ (44,009)	$ (45,665)

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Business and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Business and Summary of Significant Accounting Policies [Abstract]

BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1:  BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business. The Company is a global manufacturer and marketer of equipment, accessories, and replacement parts sold to consumers and professionals in select end-markets, including the forestry, lawn and garden, farm, ranch, agriculture, and construction sectors. The Company manufactures and markets branded products, serving professional loggers, arborists, construction workers, homeowners, equipment dealers, landscapers, farmers, rural land owners, and OEMs. The Company’s manufactured products include products such as cutting chain, guide bars, and sprockets for chain saw use, lawnmower and edger blades, grass and crop cutting equipment, electric and gas-powered log splitters, riding lawnmowers, tractor attachments, and concrete cutting and finishing equipment. The Company maintains manufacturing facilities in the U.S., Brazil, Canada, China, France, and Mexico. We also market and distribute other products and accessories closely aligned with the products that we manufacture, including cutting line and spools for line trimmers, safety equipment and clothing, small engine replacement parts, small tractor linkage parts and attachments, and other accessories used in the market sectors we serve. Many of the products we manufacture are sold to OEMs for use on new chain saws and landscaping equipment, or for private branding purposes, using the OEMs’ brands. See additional information about our business in Item 1, Business, included elsewhere in this report.

Basis of Presentation. The Consolidated Financial Statements include the accounts of the Company and its subsidiaries and are prepared in conformity with accounting principles generally accepted in the U.S. All significant intercompany balances and transactions have been eliminated.

Foreign Currency. For foreign subsidiaries whose operations are principally conducted in U.S. Dollars, monetary assets and liabilities are translated into U.S. Dollars at the current exchange rate, while other assets (principally property, plant, and equipment and inventories) and related costs and expenses are generally translated at historic exchange rates. Sales and other costs and expenses are translated at the average exchange rate for the period and the resulting foreign exchange adjustments are recognized in income. Assets and liabilities of the remaining foreign operations are translated to U.S. Dollars at the current exchange rate and their statements of income are translated at the average exchange rate for the period. Gains and losses resulting from translation of the financial statements of these operations are reflected as “other comprehensive income (loss)” in stockholders’ equity and in the Consolidated Statements of Comprehensive Income. Foreign currency transaction gains and losses from settling transactions denominated in currencies other than the U.S. Dollar are recognized in the Consolidated Statements of Income when realized.

Use of Estimates. The preparation of financial statements in conformity with generally accepted accounting principles recognized in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and the components of equity, and the disclosure of contingent assets and liabilities at the dates of the financial statements, as well as the reported amounts of revenues and expenses recognized during the reporting periods. Estimates are used when accounting for the allowance for doubtful accounts, inventory obsolescence, goodwill and other long-lived assets, product warranties, casualty insurance costs, product liability reserves and related expenses, other legal proceedings, employee benefit plans, income taxes and deferred tax assets and liabilities, and contingencies. It is reasonably possible that actual results could differ materially from these estimates and assumptions and significant changes to estimates could occur in the near term.

Cash and Cash Equivalents. All highly liquid temporary cash investments with maturities of 90 days or less at the date of investment that are readily convertible to known amounts of cash and present minimal risk of changes in value because of changes in interest rates are considered to be cash equivalents.

Allowance for Doubtful Accounts. The Company estimates the amount of accounts receivable that are not collectible and records an allowance for doubtful accounts which is presented net with accounts receivable on the Consolidated Balance Sheets. As of December 31, 2012 and 2011, the allowance for doubtful accounts was $3.1 million. It is reasonably possible that actual collection experience may differ significantly from management’s estimate.

Inventories. Inventories are valued at the lower of cost or market. The Company determines the cost of most raw materials, work in process, and finished goods inventories by standard cost, which approximates cost determined on the first in, first out (“FIFO”) method. The Company writes down its inventories for estimated obsolete or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.

Property, Plant, and Equipment. Property, plant, and equipment is stated at cost and is depreciated on the straight-line method over the estimated useful lives of the individual assets. The principal ranges of estimated useful lives for depreciation purposes are as follows:

Asset Category	Useful Life
Buildings and building improvements		10 to 45 years
Machinery and equipment		3 to 10 years
Furniture, fixtures, and office equipment		3 to 10 years
Transportation equipment		3 to 15 years

Gains or losses on disposal are reflected in income. Property, plant, and equipment under capital lease is capitalized, with the related obligations stated at the principal portion of future lease payments. Interest cost incurred during the period of construction of plant and equipment is capitalized. Capitalized interest was $0.5 million in 2012, $0.2 million in 2011, and $0.1 million in 2010.

Goodwill and Other Intangible Assets with Indefinite Useful Lives. The Company accounts for goodwill and other intangible assets with indefinite useful lives under ASC 350. Under the provisions of ASC 350, the Company evaluates annually in the fourth quarter, or whenever circumstances indicate, whether or not there are any qualitative indications of potential impairment of these assets. If there is indication of potential impairment, the Company performs a quantitative analysis. The quantitative analysis of impairment is performed by estimating the fair values of the reporting units using a discounted cash flow model and comparing those fair values to the carrying values of the reporting units, including goodwill. If the fair value of a reporting unit is less than its carrying value, the Company then allocates the fair value of the unit to all the assets and liabilities of that unit, including any unrecognized intangible assets, as if the reporting unit’s fair value were the price to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of the goodwill. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Events or changes in circumstances may occur that could cause underperformance relative to projected future cash flows that would create future impairments. No impairments have been recognized in 2012, 2011, or 2010 for goodwill or other intangible assets with indefinite useful lives .

Impairment of Long-Lived Assets. The Company evaluates the carrying value of long-lived assets to be held and used, including finite-lived intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying value of a long-lived asset is considered impaired when the total projected undiscounted cash flows from such asset are separately identifiable and are less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the projected cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for disposal costs. No significant impairment charges were recognized in 2012, 2011, or 2010.

Deferred Financing Costs. The Company capitalizes costs incurred in connection with borrowings or establishment of credit facilities. These costs are amortized as an adjustment to interest expense over the life of the borrowing or life of the credit facility using the straight line method, which approximates the effective interest rate method. In the case of early debt principal repayments, the Company adjusts the value of the corresponding deferred financing costs with a charge to other expense, and similarly adjusts the future amortization expense.

Income Taxes. In accordance with ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Included in recorded tax liabilities are estimated amounts related to uncertain tax positions. Actual tax liabilities may differ materially from these estimates. Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax laws or rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The American Jobs Creation Act of 2004 includes a deduction of up to 9 percent of “qualified production activities income,” as defined in the law and subject to certain limitations. The benefit of this deduction is accounted for as a special deduction when realized in accordance with ASC 740-10, Section 55. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense.

Product Liability. The Company monitors claims that relate to the alleged malfunction or defects of its products that may result in an injury to the equipment operator or others. The Company records an accrued liability and charge to cost of sales for its estimated obligation as claims are incurred and evaluated. The accrual may increase or decrease as additional information regarding claims develops.

Environmental Remediation Liabilities. The Company is conducting several testing, monitoring, and in some cases, remediation efforts regarding environmental matters at certain of its current and former operating sites. In addition, from time to time, regulatory bodies and third parties have asserted claims to the Company alleging responsibility for environmental remediation. The Company records an accrued liability and charge to expense for its estimated cost of environmental remediation as situations are evaluated. The accrual may increase or decrease as new information is received, regulatory changes are enacted, or changes in estimate are developed.

Insurance Accruals. It is the Company’s policy to retain a portion of expected losses related to general and product liability, workers’ compensation, and vehicle liability losses through retentions or deductibles under its risk management and insurance programs. Provisions for losses expected under these programs are recorded based on estimates of the ultimate undiscounted aggregate liabilities for claims incurred.

Warranty. The Company offers certain product warranties with the sale of its products. An estimate of warranty costs is recognized at the time the related revenue is recognized and the warranty obligation is recorded as a charge to cost of sales and as a liability on the balance sheet. Warranty cost is estimated using historical customer claims, supplier performance, and new product performance.

Derivative Financial Instruments. The Company accounts for derivative financial instruments in accordance with ASC 815. The Company’s earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates, interest rates, and commodity prices. The Company’s risk management policy allows for the use of derivative financial instruments to manage foreign currency exchange rate, interest rate, and commodity price exposures. The policy specifies that derivatives are not to be used for speculative or trading purposes and formally designates the financial instruments used as a hedge of a specific underlying exposure or forecasted transaction. The Company formally assesses, both at inception and at least quarterly thereafter, using the hypothetical derivative method, whether the derivatives used qualify for hedge accounting and are effective at offsetting the related underlying exposure. All derivatives are recognized on the Consolidated Balance Sheets at their fair value. As of December 31, 2012 and 2011, derivatives consisted of foreign currency hedge instruments, interest rate swap agreements, and an interest rate cap agreement, all of which are designated as cash flow hedges. The effective portion of changes in the fair value of hedging derivative instruments is recognized in other comprehensive income (loss) until the instrument is settled, at which time the gain or loss is recognized in current earnings. Any ineffective portion of changes in the fair value of hedging derivative instruments, should it occur, would be recognized immediately in earnings. See further information in Note 19.

Revenue Recognition. The Company recognizes revenue when persuasive evidence that a sales arrangement exists, title and risk of loss have passed to the customer, the price to the customer is fixed or determinable, and collectability is reasonably assured, which has historically been upon the date of shipment of product for the majority of the Company’s sales transactions. There are a small number of shipments with FOB destination or similar shipping terms, for which revenue is not recognized until delivery has occurred.

Shipping and Handling Costs. The Company incurs expenses for the shipment of goods to customers. These expenses are recognized in the period in which they occur and are classified as revenue if billed to the customer and as cost of sales if incurred by the Company in accordance with ASC 605-45.

Sales Incentives. The Company provides various sales incentives to customers in the form of coupons, rebates, discounts, free product, and advertising allowances. The estimated cost of such expenses is recorded at the time of revenue recognition and recorded as a reduction to revenue, except that free product is recorded as cost of sales, in accordance with ASC 605-50.

Advertising. Advertising costs are expensed as incurred, except for cooperative advertising allowances, which are accrued over the period the revenues are recognized. Advertising costs were $12.5 million, $12.8 million, and $7.3 million for 2012, 2011, and 2010, respectively.

Research and Development. Expenditures for research and development are expensed as incurred and include costs of direct labor, indirect labor, materials, overhead, and outside services. These costs were $17.0 million, $19.6 million, and $14.8 million for 2012, 2011, and 2010, respectively.

Reclassifications. Certain amounts in the prior period financial statements and footnotes may have been reclassified to conform to the current period presentation. Such reclassifications, if any, have no effect on previously reported net income, comprehensive income, total cash flows, or net stockholders’ equity.

Recent Accounting Pronouncements. In July 2012, the FASB issued revised guidance on how an entity tests indefinite-lived intangible assets for impairment. Under the new guidance, an entity is no longer required to calculate the fair value of the indefinite-lived intangible assets and perform the quantitative impairment test unless the entity determines, based on a qualitative assessment, that it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. This revised guidance is effective on January 1, 2013. We elected to adopt this new guidance early and implemented it in 2012.

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Acquisitions (Details 4) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Schedule of Pro Forma Results of Acquisitions
Sales, As Reported	$ 229,562	$ 232,736	$ 239,059	$ 226,309	$ 236,515	$ 212,904	$ 201,337	$ 180,874	$ 927,666	$ 831,630	$ 611,480
Net income, As Reported	8,984	11,622	13,101	5,881	9,502	10,805	13,752	15,622	39,588	49,682	47,200
Basic income per share, As Reported	$ 0.18	$ 0.24	$ 0.27	$ 0.12	$ 0.19	$ 0.22	$ 0.28	$ 0.32	$ 0.81	$ 1.02	$ 0.99
Diluted income per share, As Reported	$ 0.18	$ 0.23	$ 0.26	$ 0.12	$ 0.19	$ 0.22	$ 0.28	$ 0.31	$ 0.79	$ 1.01	$ 0.97
Sales, Pro Forma										975,455	863,014
Net income, Pro Forma										$ 58,192	$ 47,487
Basic income per share, Pro Forma										$ 1.19	$ 1.00
Diluted income per share, Pro Forma										$ 1.18	$ 0.98

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Retirement Plans (Details 3) (Pension Benefits [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Pension Benefits [Member]
Summary of projected benefit payments for these plans over the next ten years
2013	$ 8,844
2014	9,319
2015	9,814
2016	10,330
2017	10,865
2018 - 2022	63,558
Total estimated benefit payments over next ten years	$ 112,730

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Segment Information (Details 1) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financial Information by segments and geographic region
Assets	$ 905,291	$ 884,207
Goodwill	165,175	165,084
Property, plant, and equipment, net	177,702	155,872
United States [Member]
Financial Information by segments and geographic region
Property, plant, and equipment, net	91,446	86,677
China [Member]
Financial Information by segments and geographic region
Property, plant, and equipment, net	41,610	22,706
Canada [Member]
Financial Information by segments and geographic region
Property, plant, and equipment, net	20,473	18,572
European Union [Member]
Financial Information by segments and geographic region
Property, plant, and equipment, net	12,154	14,461
Brazil [Member]
Financial Information by segments and geographic region
Property, plant, and equipment, net	11,532	12,837
All other [Member]
Financial Information by segments and geographic region
Property, plant, and equipment, net	487	619
FLAG [Member]
Financial Information by segments and geographic region
Assets	468,121	472,881
Goodwill	66,297	66,223
FRAG [Member]
Financial Information by segments and geographic region
Assets	374,856	370,057
Goodwill	98,865	98,848
Corporate and other [Member]
Financial Information by segments and geographic region
Assets	62,314	41,269
Goodwill	$ 13	$ 13

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Debt (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Components of long-term debt
Revolving credit facility borrowings	$ 235,000	$ 228,200
Term loans	281,250	296,250
Debt and capital lease obligation of PBL	507	5,912
Total debt	516,757	530,362
Less current maturities	(15,072)	(20,348)
Long-term debt, net of current maturities	$ 501,685	$ 510,014
Weighted average interest rate at end of period	2.71%	2.85%

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Supplemental Cash Flow Information

12 Months Ended

Dec. 31, 2012

Supplemental Cash Flow Information [Abstract]

SUPPLEMENTAL CASH FLOW INFORMATION

NOTE 18:  SUPPLEMENTAL CASH FLOW INFORMATION

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Interest paid	$	16,574	$	16,961	$	30,007
Income taxes paid, net		24,672		24,827		14,858

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Quarterly Results of Operations (Details Textual) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Quarterly Results of Operations (Textual) [Abstract]
Net income, As Reported	$ 8,984,000	$ 11,622,000	$ 13,101,000	$ 5,881,000	$ 9,502,000	$ 10,805,000	$ 13,752,000	$ 15,622,000	$ 39,588,000	$ 49,682,000	$ 47,200,000
Facility closure and restructuring costs		800,000	1,700,000	4,900,000
Early extinguishment of debt						3,900,000				3,871,000	7,010,000
Business Acquisition Acquiree [Member]
Quarterly Results of Operations (Textual) [Abstract]
Net income, As Reported	$ 3,700,000	$ 3,700,000	$ 4,300,000	$ 4,400,000	$ 6,700,000	$ 4,200,000	$ 2,600,000	$ 2,100,000

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Income Taxes (Details 2) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income before income taxes:
Domestic	$ 28,122	$ 50,357	$ 27,521
Foreign	33,668	24,593	25,090
Income from continuing operations before taxes	$ 61,790	$ 74,950	$ 52,611

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2012

Intangible Assets [Abstract]

Summary of intangible assets

The following table summarizes intangible assets:

			December 31, 2012				December 31, 2011
	Life		Gross		Accumulated		Gross		Accumulated
(Amounts in thousands)	In Years		Amount		Amortization		Amount		Amortization
Goodwill		Indefinite	$	165,175	$	—	$	165,084	$	—
Trademarks and trade names		Indefinite		61,251		—		61,176		—
Total with indefinite lives				226,426		—		226,260		—
Covenants not to compete		2 - 4		1,112		985		1,112		843
Patents		11 - 13		5,320		1,554		5,320		1,121
Manufacturing technology		1		2,563		2,563		2,516		1,124
Customer relationships, including backlog		10 - 19		107,333		29,316		107,234		16,170
Total with finite lives				116,328		34,418		116,182		19,258
Total intangible assets			$	342,754	$	34,418	$	342,442	$	19,258

Schedule of amortization expense for intangible assets

Amortization expense for intangible assets included in the Consolidated Statements of Income was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Amortization expense	$	15,196	$	11,315	$	4,382

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Retirement Plans

12 Months Ended

Dec. 31, 2012

Retirement Plans [Abstract]

RETIREMENT PLANS

NOTE 11:  RETIREMENT PLANS

Funded Defined Benefit Pension Plans

The Company sponsors defined benefit pension plans covering employees in Canada and certain countries in Europe, and many of its employees and former employees in the U.S. The U.S. plan was frozen effective January 1, 2007. The changes in benefit obligations, plan assets, and funded status of these plans for the years ended December 31, 2012 and 2011 were as follows:

	Pension Benefits
(Amounts in thousands)	2012			2011
Change in benefit obligations:
Projected benefit obligations at beginning of year	$	(232,889	)	$	(198,180	)
Service cost		(4,066	)		(3,578	)
Interest cost		(10,532	)		(10,935	)
Actuarial losses		(24,804	)		(32,255	)
Benefits and plan expenses paid		11,717			12,541
Projected benefit obligation assumed in acquisitions		—			(482	)
Projected benefit obligations at end of year		(260,574	)		(232,889	)

(Amounts in thousands)	2012			2011
Change in plan assets:
Fair value of plan assets at beginning of year		190,522			179,570
Actual return on plan assets		22,928			5,703
Company contributions		17,399			17,790
Benefits and plan expenses paid		(11,717	)		(12,541	)
Fair value of plan assets at end of year		219,132			190,522
Net funded status at end of year	$	(41,442	)	$	(42,367	)
Amounts recognized on the Consolidated Balance Sheets:
Non-current liabilities	$	(41,442	)	$	(42,367	)

The accumulated benefit obligations for the above defined benefit pension plans at December 31, 2012 and 2011 totaled $237.4 million and $216.7 million, respectively.

The fair value of plan assets was as follows:

	December 31, 2012
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Category:
Money market mutual funds	$	799	$	799	$	—	$	—
Guaranteed insurance contracts		3,452		—		3,452		—
U.S. large cap equity securities		50,915		—		50,915		—
U.S. small/mid cap equity securities		4,794		—		4,794		—
International equity securities		50,345		—		50,345		—
Emerging markets equity securities		4,324		—		4,324		—
U.S. debt securities		71,281		—		71,281		—
International debt securities		27,466		—		27,466		—
Hedge funds		5,756		—		—		5,756
Total fair value of plan assets	$	219,132	$	799	$	212,577	$	5,756

	December 31, 2011
(Amounts in thousands)	Total		Level 1		Level 2		Level 3
Category:
Money market mutual funds	$	639	$	639	$	—	$	—
Guaranteed insurance contracts		2,803		—		2,803		—
U.S. large cap equity securities		45,008		—		45,008		—
U.S. small/mid cap equity securities		4,116		—		4,116		—
International equity securities		41,399		—		41,399		—
Emerging markets equity securities		3,559		—		3,559		—
U.S. debt securities		64,001		—		64,001		—
International debt securities		23,482		—		23,482		—
Hedge funds		5,515		—		—		5,515
Total fair value of plan assets	$	190,522	$	639	$	184,368	$	5,515

As specified in ASC 820, the framework for measuring fair value is based on independent observable inputs of market data and follows the following hierarchy:

Level 1 – Quoted prices in active markets for identical assets and liabilities.

Level 2 – Significant observable inputs based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuations for which all significant assumptions are observable.

Level 3 – Significant unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.

When developing fair value measurements, it is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs.

The money market mutual funds are valued by reference to quoted market prices.

The guaranteed insurance contracts are valued based on information provided by the investment custodians.

The U.S. large cap equity securities consist of mutual funds and commingled pooled funds that invest in equity securities of U.S. companies with large market capitalizations. These funds seek long-term growth and invest in diversified portfolios across multiple industries. These funds are valued based on information provided by the plan’s investment custodians.

The U.S. small/mid cap equity securities consist of mutual funds and commingled pooled funds that invest in equity securities of U.S. companies with small to medium market capitalizations. These funds seek higher rates of long-term growth and invest in diversified portfolios across multiple industries. These funds are valued based on information provided by the plan’s investment custodians.

The international equity securities consist of mutual funds and commingled pooled funds that invest in equity securities of international companies in developed countries. These funds seek long-term growth and invest in diversified portfolios across multiple industries and geographic regions. These funds are valued based on information provided by the plan’s investment custodians.

The emerging markets equity securities consist of mutual funds and commingled pooled funds that invest in equity securities of international companies in developing countries with emerging economies. These funds seek higher rates of long-term growth and invest in diversified portfolios across multiple industries and geographic regions. These funds are valued based on information provided by the plan’s investment custodians.

The U.S. debt securities consist of mutual funds and commingled pooled funds that invest in debt securities of U.S. companies. These funds seek lower volatility than equity investments and invest in diversified portfolios across multiple industries and with varying maturity periods. These funds are valued based on information provided by the plan’s investment custodians.

The international debt securities consist of mutual funds and commingled pooled funds that invest in debt securities of companies outside the U.S. These funds seek lower volatility than international equity investments and invest in diversified portfolios across multiple industries and geographies, as well as with varying maturity periods. These funds are valued based on information provided by the plan’s investment custodians.

The hedge funds consist of investments in partnerships and other entities that in turn invest in portfolios of underlying securities. The fund manager seeks returns that move in the opposite direction of the securities to which they are hedged. These funds are valued based on information provided by the plan’s investment custodians.

The financial statements of the funds are audited annually by independent accountants. The value of the underlying investments is determined by the investment manager based on the estimated fair value of the various holdings of the portfolio as reported in the financial statements at net asset value. The preceding methods described may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values. Furthermore, although the plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The assets of these plans are invested in various investment securities. There were no significant concentrations of investment risk in plan assets. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amount of the plan assets.

There were no significant transfers between assets in Level 1 and Level 2, except for amounts moved from Level 2 to money market mutual funds for the purpose of making cash disbursements for plan expenses and benefit payments. The Level 1 and Level 2 plan assets above may generally be redeemed with 5 or fewer days’ notice. The Level 3 plan assets above may be redeemed with a minimum of 30 days’ notice and after certain other conditions are met.

The change in fair value of Level 3 plan assets was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011
Fair value at beginning of year	$	5,515	$	5,331
Actual return on assets:
Relating to assets still held at end of year		241		184
Relating to assets sold during the year		—		—
Purchases, sales, and settlements		—		—
Transfers in/out of Level 3		—		—
Fair value at end of year	$	5,756	$	5,515

The projected benefit payments for these plans over the next ten years are estimated as follows:

(Amounts in thousands)	Estimated Benefit Payments
2013	$	8,844
2014		9,319
2015		9,814
2016		10,330
2017		10,865
2018 – 2022		63,558
Total estimated benefit payments over next ten years	$	112,730

The Company annually contributes the required minimum amounts required by pension funding regulations. From time to time, the Company also makes additional voluntary contributions to these plans in order to increase the funding levels and reduce the amount of required future contributions, as well as to reduce the amount of expense recognized for these plans. The Company expects to contribute between $7.5 million and $8.5 million to its funded defined benefit pension plans in 2013.

Unfunded Supplemental Non-Qualified Retirement Plans

The Company sponsors various supplemental non-qualified retirement plans covering certain employees and former employees in the U.S. These plans were frozen effective January 1, 2007, and employees who were participants in these non-qualified plans on that date ceased accruing additional benefits. New employees are not eligible to participate in these plans. All retirement benefits accrued up to the time of the freeze were preserved.

The changes in benefit obligations and funded status of these non-qualified plans for the years ended December 31, 2012 and 2011 were as follows:

	Unfunded Retirement Plans
(Amounts in thousands)	2012			2011
Change in Benefit Obligations:
Projected benefit obligations at beginning of year	$	(6,165	)	$	(5,700	)
Service cost		—			—
Interest cost		(254	)		(302	)
Actuarial losses		(235	)		(746	)
Benefits and plan expenses paid		576			583
Projected benefit obligations at end of year		(6,078	)		(6,165	)
Net unfunded status at end of year	$	(6,078	)	$	(6,165	)

	As of December 31,
(Amounts in thousands)	2012			2011
Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	$	(592	)	$	(558	)
Non-current liabilities		(5,486	)		(5,607	)
Net liability recognized on the Consolidated Balance Sheets	$	(6,078	)	$	(6,165	)

The Company accounts for its retirement plans in accordance with ASC 715. The net obligation is included in accrued expenses and employee benefit obligations on the Consolidated Balance Sheets.

Periodic Benefit Cost and Other Comprehensive Loss

The components of net periodic benefit cost and other comprehensive loss and the weighted average assumptions used in accounting for funded and unfunded pension benefits are as follows:

Pension Benefits

	Year Ended December 31,
(Amounts in thousands)	2012			2011			2010
Components of net periodic benefit cost:
Service cost	$	4,066		$	3,577		$	2,524
Interest cost		10,786			11,238			10,920
Expected return on plan assets		(14,547	)		(13,976	)		(12,258	)
Amortization of actuarial losses		7,213			4,294			3,702
Amortization of prior service cost		(6	)		(6	)		(6	)
Total net periodic benefit cost recognized in income statement	$	7,512		$	5,127		$	4,882
Recognized in accumulated other comprehensive loss:
Actuarial (gains) losses	$	8,231		$	37,491		$	3,936
Prior service cost		6			6			6
Total recognized in accumulated other comprehensive loss	$	8,237		$	37,497		$	3,942
Weighted average assumptions:
Discount rate used to determine net periodic benefit cost		4.7	%		5.6	%		6.1	%
Discount rate used to determine year end benefit obligations		4.2	%		4.6	%		5.6	%
Expected return on assets used to determine net periodic benefit cost		7.6	%		7.7	%		7.9	%
Rate of compensation increase		3.0	%		3.0	%		3.0	%

Actuarial losses of $7.7 million included in accumulated other comprehensive loss are expected to be recognized as a component of net periodic benefit cost in 2013.

The Company annually evaluates and selects the discount rates to be used for its pension plans. Consideration is given to relevant indices for high quality fixed rate debt securities, as well as comparable rates for high quality corporate bonds with terms comparable to the projected cash flows for the respective plans, as of the measurement date. The expected long-term rate of return on assets was chosen from the range of likely results of compound average annual returns based on the current investment policies. The expected return and volatility for each asset class was based on historical equity, bond, and cash returns over a twenty year time horizon, based on repetitive modeling of outcomes using an extended period of historical actual results. While this approach gives appropriate consideration to recent fund performance and historical returns, the assumption is primarily a long-term, prospective rate.

The Company maintains target allocation percentages among various asset classes based on investment policies established for these plans. The target allocation is designed to achieve long-term objectives of return, while mitigating downside risk and considering expected cash flows. For the U.S. retirement plan the allocation of pension plan assets as of December 31, 2012 and 2011 and target allocation as of December 31, 2012 are as follows:

	Percentage of Plan Assets
	Actual Allocation December 31,						2012 Target Allocation
	2012			2011
Money market mutual funds		0.5	%		0.5	%		2.0	%
U.S. large cap equity securities		26.4	%		26.8	%		26.2	%
U.S. small/mid cap equity securities		3.2	%		3.1	%		3.0	%
International equity securities		15.3	%		13.6	%		14.3	%
Emerging markets equity securities		1.6	%		1.4	%		1.5	%
U.S. debt securities		47.1	%		48.4	%		46.0	%
International debt securities		2.1	%		2.0	%		2.0	%
Hedge funds		3.8	%		4.2	%		5.0	%

For the Canadian retirement plan the allocation of pension plan assets as of December 31, 2012 and 2011 and target allocation as of December 31, 2012 are as follows:

	Percentage of Plan Assets
	Actual Allocation December 31,						2012 Target Allocation
	2012			2011
U.S. large cap equity securities		17.0	%		17.2	%		17.0	%
International equity securities		42.3	%		42.3	%		42.0	%
Emerging markets equity securities		2.9	%		3.0	%		3.0	%
International debt securities		37.8	%		37.5	%		38.0	%

The funded defined benefit pension plans in Europe are invested wholly in guaranteed insurance contracts.

Defined Contribution Plans

The Company also sponsors a 401(k) plan covering substantially all U.S. employees and matches a portion of employee contributions as well as making an additional contribution to all employees based on years of service and regardless of whether or not the employee contributes to the plan. The Company also sponsors a similar defined contribution plan covering substantially all Canadian employees.

Total expense recognized for these defined contribution plans was as follows:

	Year Ended December 31,
(Amounts in thousands)	2012		2011		2010
Expense	$	7,686	$	7,422	$	6,571

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Stock-Based Compensation (Details 1) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Summary of stock option and stock-settled SARs activity
Outstanding options and SARs at beginning of period, shares	3,659
SARs granted, shares	577
Options exercised, shares	(311)
SARs exercised, shares	(78)
Options forfeited or expired, shares
SARs forfeited or expired, shares	(37)
Outstanding options and SARs at ending of period, shares	3,810
Outstanding options at end of period, shares	1,432
Outstanding SARs at end of period, shares	2,378
Options exercisable at end of period, shares	1,432
SARs exercisable at end of period	892
Outstanding options and SARs at beginning of period weighted average exercise price	$ 11.78
SARs granted weighted average exercise price	$ 16.68
Options exercised weighted average exercise price	$ 3.69
SARs exercised weighted average exercise price	$ 11.87
Options forfeited or expired weighted average exercise price
SARs forfeited or expired weighted average exercise price	$ 15.42
Outstanding options and SARs at ending of period weighted average exercise price	$ 13.15
Outstanding options at end of period	$ 10.82
Outstanding SARs at end of period weighted average exercise price	$ 14.55
Options exercisable at end of period weighted average exercise price	$ 10.82
SARs exercisable at end of period	$ 14.39
Outstanding options and SARs at end of period weighted average contractual life (in years)	5 years 9 months 18 days
Outstanding options at end of period weighted average contractual life (in years)	4 years 8 months 12 days
Outstanding SARs at end of period weighted average contractual life (in years)	6 years 6 months
Options exercisable at end of period weighted average contractual life (in years)	4 years 8 months 12 days
SARs exercisable at end of period weighted average contractual life (in years)	3 years 10 months 24 days
Outstanding options and SARs at end of period aggregate intrinsic value	$ 11,456
Outstanding options at end of period aggregate intrinsic value	7,492
Outstanding SARs at end of period aggregate intrinsic value	3,964
Options exercisable at end of period aggregate intrinsic value	7,492
SARs exercisable at end of period aggregate intrinsic value	$ 1,704