-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, eiD0M7Ss2s1pfGO5a7qDmTXrUbgNqKnxFnH8oHHsR9ZoyGIxIa6oYWvn0SszXpx5 zw640BEypQgBAPA1M+l7Ng== 0000012707-95-000008.txt : 199507130000012707-95-000008.hdr.sgml : 19950713 ACCESSION NUMBER: 0000012707-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950531 FILED AS OF DATE: 19950712 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLOUNT INC CENTRAL INDEX KEY: 0000012707 STANDARD INDUSTRIAL CLASSIFICATION: GENERAL BUILDING CONTRACTORS - NONRESIDENTIAL BUILDINGS [1540] IRS NUMBER: 630593908 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07002 FILM NUMBER: 95553346 BUSINESS ADDRESS: STREET 1: 4520 EXECUTIVE PK DR CITY: MONTGOMERY STATE: AL ZIP: 36116 BUSINESS PHONE: 2052444000 MAIL ADDRESS: STREET 1: P.O. BOX 949 STREET 2: 4520 EXECUTIVE PARK DRIVE CITY: MONTGOMERY STATE: AL ZIP: 36109-0949 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------------------ {X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1995 OR { } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file number 1-7002 BLOUNT, INC. (Exact name of registrant as specified in its charter) Delaware 63-0593908 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4520 Executive Park Drive 36116-1602 Montgomery, Alabama (Zip Code) (Address of principal executive offices) (334) 244-4000 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Class of Common Stock May 31, 1995 --------------------- ----------------- Class A Common Stock $1.00 Par Value 8,646,149 shares Class B Common Stock $1.00 Par Value 3,978,492 shares Page 1 BLOUNT, INC. AND SUBSIDIARIES INDEX Page No. ------------ Part I. Financial Information Consolidated Balance Sheets - May 31, 1995 and February 28, 1995 3 Consolidated Statements of Income - three months ended May 31, 1995 4 Consolidated Statements of Cash Flows - three months ended May 31, 1995 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis 9 Exhibit 11 - Computation of Net Income Per Common Share 12 Page 2 BLOUNT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) May 31, February 28, 1995 1995 ---------- ---------- (Unaudited) ASSETS ------ Current assets: Cash and cash equivalents, including short-term investments of $38,731 and $39,458 $ 42,945 $ 42,576 Accounts receivable, net of allowances for doubtful accounts of $2,672 and $2,611 129,371 130,665 Inventories 75,212 77,075 Deferred income taxes 25,030 25,068 Other current assets 6,357 16,153 -------- -------- Total current assets 278,915 291,537 Property, plant and equipment, net of accumulated depreciation of $147,024 and $145,519 126,306 134,289 Cost in excess of net assets of acquired businesses, net 67,770 68,762 Other assets 26,777 23,200 -------- -------- Total Assets $499,768 $517,788 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------ Current liabilities: Notes payable and current maturities of long-term debt $ 5,611 $ 7,791 Accounts payable 39,695 64,793 Accrued expenses 93,117 92,190 Other current liabilities 2,687 4,658 -------- -------- Total current liabilities 141,110 169,432 Long-term debt, exclusive of current maturities 97,170 99,754 Deferred income taxes, exclusive of current portion 19,075 19,214 Other liabilities 26,144 26,321 -------- -------- Total liabilities 283,499 314,721 -------- -------- Commitments and Contingent Liabilities Shareholders' equity: Common Stock: par value $1.00 per share Class A: 8,646,149 and 8,562,786 shares issued 8,646 8,563 Class B, convertible: 3,978,492 and 4,030,424 shares issued 3,979 4,030 Capital in excess of par value of stock 11,209 10,964 Retained earnings 183,794 171,260 Accumulated translation adjustment 8,641 8,250 -------- -------- Total shareholders' equity 216,269 203,067 -------- -------- Total Liabilities and Shareholders' Equity $499,768 $517,788 ======== ======== The accompanying notes are an integral part of these statements. Page 3 BLOUNT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share data) Three months ended May 31, -------------------------- 1995 1994 ----------- ----------- (Unaudited) Sales $ 164,189 $ 145,684 Cost of sales 109,137 97,165 ----------- ----------- Gross profit 55,052 48,519 Selling, general and administrative expenses 28,751 30,266 ----------- ----------- Income from operations 26,301 18,253 Interest expense (2,653) (2,838) Interest income 610 452 Other expense, net (459) (853) ----------- ----------- Income before income taxes 23,799 15,014 Provision for income taxes 9,520 6,006 ----------- ----------- Net income $ 14,279 $ 9,008 =========== =========== Net income per common share $ 1.10 $ .70 =========== =========== Weighted average number of common shares outstanding 12,954,389 12,853,894 =========== =========== Cash dividends declared per share: Class A Common Stock $ .1425 $ .1250 =========== =========== Class B Common Stock $ .1300 $ .1125 =========== =========== The accompanying notes are an integral part of these statements. Page 4 BLOUNT, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three months ended May 31, -------------------------- 1995 1994 -------- -------- (Unaudited) Cash Flows From Operating Activities: Net Income $ 14,279 $ 9,008 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other noncash charges 5,603 5,811 Deferred income taxes (101) 2,112 Loss on disposals of property, plant and equipment (14) 27 Changes in assets and liabilities, net of effects of acquisitions of business: (Increase) decrease in accounts receivable (7,340) 8,690 Decrease in inventories 1,683 1,030 (Increase) decrease in other assets 5,148 (6,214) Decrease in accounts payable (17,292) (10,571) Increase (decrease) in accrued expenses 1,427 (2,821) Decrease in other liabilities (547) (1,786) -------- -------- Net cash provided by operating activities 2,846 5,286 -------- -------- Cash Flows From Investing Activities: Proceeds from sales of businesses and property, plant and equipment 4,987 347 Purchases of property, plant and equipment (1,816) (1,405) Acquisitions of businesses (5,053) -------- -------- Net cash provided by (used in) investing activities 3,171 (6,111) -------- -------- Cash Flows From Financing Activities: Net increase in short-term borrowings 60 26 Reduction of long-term debt (4,824) (6,789) Decrease in restricted funds 584 Dividends paid (1,745) (1,505) Issuance of stock under stock option and dividend reinvestment plans 277 361 -------- -------- Net cash used in financing activities (5,648) (7,907) -------- -------- Net increase (decrease) in cash and cash equivalents 369 (8,732) Cash and cash equivalents at beginning of period 42,576 52,213 -------- -------- Cash and cash equivalents at end of period $ 42,945 $ 43,481 ======== ======== The accompanying notes are an integral part of these statements. Page 5 BLOUNT, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position at May 31, 1995 and the results of operations and cash flows for the period ended May 31, 1995. These financial statements should be read in conjunction with the notes to the financial statements included in Blount, Inc.'s Annual Report to Shareholders for the year ended February 28, 1995. The results of operations for the period ended May 31, 1995 are not necessarily indicative of the results to be expected for the full fiscal year, due to the seasonal nature of certain of the Company's operations. NOTE 2 Inventories consist of the following (in thousands): May 31, February 28, 1995 1995 ------------ ------------ Finished goods $ 33,573 $ 35,769 Work in process 14,266 14,075 Raw materials and supplies 27,373 27,231 -------- -------- $ 75,212 $ 77,075 ======== ======== NOTE 3 The principal assets and liabilities of the discontinued construction operations included in the Company's consolidated balance sheets are as follows (in thousands): May 31, February 28, 1995 1995 ------------ ------------ Accounts receivable $ 28,138 $ 45,706 Other current assets 4,416 11,911 Other assets 3,847 5,203 Accounts payable (12,170) (24,588) Accrued expenses (11,731) (12,578) Other current liabilities (2,687) (4,659) Other liabilities (2,560) (2,849) During the first quarter of fiscal 1996, the Company sold Pozzo Construction Company, part of its remaining discontinued construction operations, and its Injection Molding Metal Products operations, headquartered in Oregon. The transactions were not material to the Company's financial condition or operating results. NOTE 4 The Company's $25 million receivable sale agreement (see Note 3 to the Consolidated Financial Statements included in Blount, Inc.'s Annual Report to Shareholders for the year ended February 28, 1995) expired in December 1994 and has been extended until June 30, 1995. The Company plans to negotiate a replacement agreement. Page 6 At May 31, 1995 and February 28, 1995, $9.5 million and $10.1 million, representing the unexpended proceeds from issues of industrial development revenue bonds in fiscal 1995, was held in trust and is included in "Other assets" in the Company's consolidated balance sheets. NOTE 5 The United States Environmental Protection Agency ("EPA") has designated a predecessor of the Company as a potentially responsible party ("PRP") with respect to the Onalaska Municipal Landfill in Onalaska, Wisconsin (the "Site"). The waste complained of was placed in the landfill prior to 1981 by a corporation, some of whose assets were purchased in 1981 by a predecessor of the Company. It is the view of the Company that because its predecessor corporation purchased assets rather than stock, the Company does not have successor liability and is not properly a PRP. However, the EPA has indicated it does not accept this position. The Company believes the EPA is wrong on the successor liability issue. However, with other PRP's, the Company made a good faith offer to the EPA to pay a portion of the clean-up costs. The offer was rejected and the EPA is proceeding with the clean-up. The estimated past and future clean-up costs are approximately $12 million. In 1989 the EPA named four PRP's. One of the PRP's, the Town of Onalaska (the "Town") and the EPA and State of Wisconsin negotiated a consent decree under which the Town would have been released from future liability in return for paying $110 thousand, granting access to the Site and adjacent properties and performing some future maintenance work. The United States District Court for the District of Wisconsin found, on December 21, 1994, that the settlement was not fair, reasonable or in the public interest, and refused to approve and confirm it as the order of the Court. The Company denies that it is a PRP and is unable to determine any other party's share of total remediation costs. The Company does not know the financial status of the other PRP's and other parties that, while not named by the EPA as PRP's, may have liability with respect to the Site. The Company does not expect the situation to have a material adverse effect on the Company's financial condition or operating results. The Company is closing a Resource Conservation and Recovery Act ("RCRA") Part B Storage Permit at its Sporting Equipment Division's CCI operations facility in Lewiston, Idaho. As part of the process, the Company is required by the State of Idaho to undertake RCRA corrective action at the facility. This will require the Company to investigate all areas at the facility where solid waste and hazardous waste have historically been managed. The facility has been operating since the 1950s. There are several areas where investigation and sampling are required. In order to effect the investigation, the Company and the State of Idaho entered into an Administrative Consent Order which governs the completion of the corrective action activities. As a result of initial testing, some contamination of the uppermost groundwater beneath the facility has been encountered. This uppermost groundwater is not the drinking water supply source and does not appear to be connected to the drinking water aquifer. Further investigation is ongoing. It is expected that the range of remediation costs is from $2.8 million to $6.2 million. The Company does not expect the situation to have a material adverse effect on its financial condition or operating results beyond amounts accrued. 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 large deductible amounts under the Company's insurance programs. In addition, the Company is a party to a number of other suits arising out of the conduct of its business. While there can be no assurance as to their ultimate outcome, the Company does not believe these lawsuits will have a material adverse effect on its financial condition or operating results. Page 7 The Company's contingencies include normal liabilities for performance and completion of its remaining construction contracts. At May 31, 1995, the Company had outstanding bank letters of credit in the approximate amount of $17.3 million issued principally in connection with various foreign construction contracts for which the Company is contingently liable to the issuing banks in the event payment is demanded by the holder. See Notes 4 and 8 to the Consolidated Financial Statements included in Blount, Inc.'s Annual Report to Shareholders for the year ended February 28, 1995 for other commitments and contingencies of the Company which have not changed significantly since year-end. NOTE 6 Segment information is as follows (in thousands): Three Months Ended May 31, ------------------- 1995 1994 -------- -------- Sales: Outdoor products $ 76,693 $ 68,520 Industrial and power equipment 57,849 52,297 Sporting equipment 29,647 24,867 -------- -------- $164,189 $145,684 ======== ======== Operating income: Outdoor products $ 15,856 $ 10,052 Industrial and power equipment 9,895 7,827 Sporting equipment 4,695 4,671 -------- -------- Operating income from segments 30,446 22,550 Corporate office expenses (4,145) (4,297) -------- -------- Income from operations 26,301 18,253 Interest expense (2,653) (2,838) Interest income 610 452 Other expense, net (459) (853) -------- -------- Income before income taxes $ 23,799 $ 15,014 ======== ======== NOTE 7 Income taxes paid during the three months ended May 31, 1995 and 1994 were $3.2 million and $5.2 million. Interest paid during the three months ended May 31, 1995 and 1994 was $696 thousand and $494 thousand. NOTE 8 Net income per common share is based on the weighted average number of common and common equivalent shares (stock options) outstanding in each period. Page 8 MANAGEMENT'S DISCUSSION AND ANALYSIS Operating Results The Company reported record first quarter sales and net income for the three months ended May 31, 1995. Sales for the first quarter of fiscal 1996 were $164.2 million compared to $145.7 million for the first quarter of fiscal 1995. Net income for the first quarter of fiscal 1996 was $14.3 million ($1.10 per share) compared to net income of $9.0 million ($.70 per share) for the comparable period of fiscal 1995. These operating results reflect continued strong performance by each of the Company's manufacturing segments. The principal reasons for these results and the status of the Company's financial condition are set forth below and should be read in conjunction with the Company's 1995 Form 10-K and 1995 Annual Report to Shareholders. Sales for the Outdoor Products segment for the first three months of fiscal 1996 were $76.7 million compared to $68.5 million during the first three months of fiscal 1995. Operating income increased by 58% to $15.9 million during the first quarter of fiscal 1996 from $10.1 million in the comparable period of the prior fiscal year. The sales and operating income increases were principally attributable to a higher volume of saw chain and saw bars sold in foreign markets by the Company's Oregon Cutting Systems Division and a 16% increase in the volume of riding lawn mowers shipped by Dixon Industries, Inc. Sales for the Industrial and Power Equipment segment were $57.8 million during the first quarter of fiscal 1996 compared to $52.3 million during the same period of fiscal 1995. Operating income increased to $9.9 million during the first three months of fiscal 1996 from $7.8 million during the comparable period of fiscal 1995. The improved operating results were principally due to the inclusion of CTR Manufacturing, Inc., acquired on April 28, 1994, for the full quarter in the current year and improved sales and operating income by the Company's Gear Products, Inc. subsidiary, primarily due to higher volume. Sales for the Sporting Equipment segment increased to $29.6 million in the first three months of fiscal 1996 from $24.9 million in the comparable period of fiscal 1995, while operating income was flat at $4.7 million during the first quarter of fiscal 1996. These results reflect lower margins due to reduced average selling prices to maintain market share and some increase in product costs, and a small loss from the Company's Ram-Line unit acquired late in fiscal 1996. The Company's total backlog at May 31, 1995 was $125.0 million compared to $134.4 million at February 28, 1995. Orders received increased during the first quarter of this year over last year to $170 million versus $163 million and production levels increased, as reflected in the higher shipping levels. Financial Condition, Liquidity and Capital Resources At May 31, 1995, the Company had no amounts outstanding under its $100 million revolving credit agreement or its $25 million receivable sale agreement. The Company's total capitalization at May 31, 1995 consists of $97.2 million long-term debt and equity of $216.3 million for a long-term debt to equity ratio of .4 to 1 as compared to a ratio of .5 to 1 at February 28, 1995. At May 31, 1995, the Company had 9% subordinated notes outstanding in the principal amount of $80.1 million maturing in 2003. See Note 3 of Notes to the Consolidated Financial Statements included in Blount, Inc.'s 1995 Annual Report to Shareholders for the terms and conditions of the $100 million revolving credit agreement, the receivable sale agreement and the 9% subordinated notes. Page 9 Working capital was $137.8 million at May 31, 1995 compared to $122.1 million at February 28, 1995. The increase resulted principally from the Company's improved earnings. The Company's operating cash flows for the first three months of fiscal 1996 were $2.8 million compared to $5.3 million in the first three months of fiscal 1995. This decrease reflects higher receivables at each manufacturing segment principally due to higher sales and marketing programs. Cash flows from discontinued construction operations were substantially offset by higher corporate expenditures due to the timing of management incentive payments, higher charitable contributions which were accrued in the prior year and increased payments to employee benefit plans. Restrictions on the Company's ability to pay cash dividends are contained in the indenture related to the Company's 9% subordinated notes and in certain financial covenants of the revolving credit agreement. Under the most restrictive requirement, retained earnings of approximately $45.7 million were available for the payment of dividends at May 31, 1995. Page 10 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BLOUNT, INC. - ---------------------- Registrant Date: July 12, 1995 /s/ Harold E. Layman -------------------------------- Harold E. Layman Senior Vice President & Chief Financial Officer Page 11 EX-11 2 PART I - EXHIBIT 11 BLOUNT, INC. AND SUBSIDIARIES COMPUTATION OF NET INCOME PER COMMON SHARE (In thousands, except share data) (Unaudited) Three Months Ended May 31, -------------------------- 1995 1994 ----------- ----------- Primary: Net income $ 14,279 $ 9,008 =========== =========== Shares: Weighted average common shares outstanding 12,624,384 12,494,242 Dilutive effect of stock options 330,005 359,652 ----------- ----------- Average common shares outstanding as adjusted 12,954,389 12,853,894 =========== =========== Primary net income per common share $ 1.10 $ .70 =========== =========== Assuming Full Dilution: Net income $ 14,279 $ 9,008 =========== =========== Shares: Average common shares as adjusted for primary computation 12,954,389 12,853,894 Additional dilutive effect of stock options 38,965 ----------- ----------- Average common shares outstanding as adjusted 12,954,389 12,892,859 =========== =========== Net income per common share assuming full dilution $ 1.10 $ .70 =========== =========== Page 12 EX-27 3
5 1000 3-MOS FEB-29-1996 MAY-31-1995 42,945 0 132,043 2,672 75,212 278,915 273,330 147,024 499,768 141,110 97,170 12,625 0 0 203,644 499,768 164,189 164,189 109,137 109,137 0 0 2,653 23,799 9,520 14,279 0 0 0 14,279 1.10 1.10
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