SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
December 7, 2001
------------------------
Blount International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-11549 63-0780521
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
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 or former address, if changed since last report)
Page 1
Item 2. Acquisition or Disposition of Assets.
On November 6, 2001, Blount International, Inc. (the "Company") entered into
an agreement ("the Purchase Agreement") to sell its sporting equipment
business ("SEG") to Alliant Techsystems ("ATK"). SEG was one of the Company's
three operating segments and manufactured and distributed ammunition and
related products. SEG was comprised of the then wholly-owned subsidiaries of
Federal Cartridge Company, Estate Cartridge, Inc., Simmons Outdoor
Corporation, and Ammunition Accessories Inc. The latter was formed on December
4, 2001 to facilitate the sale of SEG. The Company contributed certain assets
and liabilities of its sporting equipment division to Ammunition Accessories
Inc. in exchange for all the authorized stock of Ammunition Accessories Inc.
On December 7, 2001, the sale of SEG was completed. On this date, the
outstanding stock of Ammunition Accessories Inc., Federal Cartridge Company,
Estate Cartridge, Inc., and Simmons Outdoor Corporation were transferred to
ATK in exchange for 3,048,780 shares of ATK common stock and $10,000 in cash.
The purchase price is subject to a post-closing adjustment on a
dollar-for-dollar basis to the extent net book value of SEG is greater or less
than approximately $203 million. Such adjustment to the purchase price will be
determined after the completion of a closing balance sheet of SEG as of
December 7, 2001, which will be audited by the Company's auditors. Such
closing balance sheet must be delivered to ATK by the Company within 60 days
of December 7, 2001. Any dispute between the Company and ATK with respect to
the final balance sheet will be subject to a review by an independent
accounting firm and binding arbitration.
The Purchase Agreement contains customary representations, warranties, and
covenants. The Company has agreed that for a period of five years it will not
compete with ATK in any business now conducted by SEG. The Company and ATK
have agreed to indemnify each other for breaches of our respective
representations, warranties, and covenants in the Purchase Agreement. The
Company has placed $25 million in escrow to support certain indemnification
obligations that may arise under the Purchase Agreement. The Company retained
certain third-party product liability claims and certain environmental
compliance and remediation liabilities that occurred prior to the closing
date. The maximum indemnification obligation of each party related to breaches
of representations and warranties is $25 million. Furthermore, the Company
will indemnify ATK against environmental matters for $30 million less (i) any
other indemnification payments made for breaches of representations and
warranties and (ii) any payments by a third party under a pre-existing
indemnification agreement between the Company and the third party, which was
assigned to ATK. ATK is obligated to pursue this third party indemnification
for those environmental claims covered by the prior agreement. The
environmental indemnification extends for five years from December 7, 2001.
The non-environmental representations and warranties indemnification
obligations have time limits that range from two years to the applicable
statute of limitations.
Prior to the sale of SEG, the Company entered into an underwriting agreement
with Lehman Brothers, Inc. to sell the shares received from ATK in a secondary
offering facilitated by a registration rights agreement between the Company
and ATK. The shares were purchased from the Company at $77.65 per share,
yielding gross proceeds of $237 million. After this transaction, the Company
does not own any shares of ATK stock.
On December 4, 2001, the Company entered into an amendment to the credit
agreement with its senior lenders. This amendment addresses, among other
things, the repayment of a portion of the outstanding indebtedness from the
net proceeds of the ATK stock sale and a revision to the financial covenant
ratios for the next two years to reflect the sale of SEG. The agreement became
Page 2
effective with the completion of the sale of SEG to ATK. This agreement also
cures any event of default under the credit agreement that had been
communicated to the lenders on October 30, 2001. The Company is in compliance
with all the terms of the credit agreement as of October 31, 2001.
On December 7, 2001, the Company reduced its outstanding indebtedness by
$170.5 million by repaying a portion of its term loans. The remaining funds
generated from the sale of the ATK stock have been or will be utilized for the
establishment of the cash escrow required for any indemnification obligations,
payment of underwriting fees, payment of income taxes, various professional
fees, lender amendment fees, and anticipated post-closing adjustments.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
The unaudited pro forma financial statements attached hereto as Exhibit 99.2
and Exhibit 99.3 are hereby incorporated by this reference.
Exhibit 99.2 Unaudited Consolidated Pro Forma Balance Sheet as of
September 30, 2001.
Exhibit 99.3 Unaudited Consolidated Pro Forma Statements of Income
(Loss) for the nine months ended September 30, 2001 and the
years ended December 31, 2000, 1999, and 1998.
The unaudited consolidated pro forma balance sheet as of September 30, 2001
presents the Company's financial position assuming the sale of SEG had been
completed on that date. The unaudited consolidated pro forma statements of
income (loss) for the nine months ended September 30, 2001 and the year ended
December 31, 2000 presents the Company's results of continuing operations
assuming that the sale of SEG had been completed on January 1, 2000. In the
opinion of the Company's management, these statements include all material
adjustments necessary to reflect, on a pro forma basis, the impact of the sale
of SEG on the historical financial information of the Company. The adjustments
are described in the accompanying notes and are set forth in the "Pro Forma
Adjustments" column. The unaudited pro forma financial statements incorporated
in this filing are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or future results of
operations of the Company which would have actually occurred had the sale of
SEG been in effect as of the date or for the periods presented. The unaudited
pro forma consolidated financial statements should be read in conjunction with
the historical financial statements and related notes of the Company.
For accounting purposes, the Company will treat SEG as a discontinued
operation in accordance with Accounting Principles Board Opinion No. 30.
Accordingly, the unaudited 1999 and 1998 pro forma financial information
reflects the exclusion of the results of operations of SEG.
(c) Exhibits.
99.1 Press release announcing completion of sale of SEG.
99.2 Unaudited Consolidated Pro Forma Balance Sheet as of September 30,
2001.
Page 3
99.3 Unaudited Consolidated Pro Forma Statements of Income (Loss) for the
nine months ended September 30, 2001 and the years ended December 31,
2000, 1999 and 1998.
Forward-looking statements in this release, as defined by the Private
Securities Litigation Reform Law of 1995, involve certain risks and actual
results subsequent to the date of this announcement may differ materially.
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
undersigned hereunto duly authorized.
BLOUNT INTERNATIONAL, INC.
- ----------------------------------
Registrant
Date: December 21, 2001
/s/ Rodney W. Blankenship
---------------------------------------
Rodney W. Blankenship
Senior Vice President and
Chief Financial Officer
Page 4