UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A
(Mark One)
{X} ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 001-11549
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BLOUNT INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 63-0780521
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4520 Executive Park Drive, Montgomery, Alabama 36116-1602
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (334) 244-4000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Class A Common Stock $.01 Par Value New York Stock Exchange
Class B Common Stock $.01 Par Value New York Stock Exchange
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Securities registered pursuant to Section 12(g) of the Act: None
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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.
Yes X No
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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 registrant's knowledge, in the definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
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Page 1
State the aggregate market value of the voting common stock held by
nonaffiliates of the registrant. The aggregate market value shall be computed
by reference to the price at which the common stock was sold, or the average bid
and asked prices of such common stock, as of a specified date within 60 days
prior to the date of filing.
Aggregate market value of voting common stock held by nonaffiliates as of
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February 1, 1999: $593,569,000
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Common Stock $.01 par value, as of February 1, 1999: 25,580,571 shares
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Class B Common Stock $.01 par value, as of February 1, 1999: 11,479,471 shares
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DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes.
Portions of proxy statement for the annual meeting of stockholders to be held
April 19, 1999, are incorporated by reference in Part III.
Page 2
PART II
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
This discussion and analysis should be read in conjunction with the consolidated
financial statements and related notes. All references to earnings per share
included in this discussion are to diluted earnings per share.
OPERATING RESULTS
TWELVE MONTHS ENDED DECEMBER 31, 1998 (AUDITED) COMPARED TO TWELVE MONTHS
ENDED DECEMBER 31, 1997 (AUDITED)
Despite economic problems in some markets, the Company achieved record results
in 1998. Sales in 1998 were $831.9 million compared to $716.9 million in 1997.
Income before extraordinary loss was $63.3 million ($1.65 per share) in 1998
compared to $59.1 million ($1.53 per share) in 1997. Net income of $61.3
million ($1.60 per share) for 1998 reflects a net extraordinary loss of $2.0
million ($.05 per share) on the redemption of long-term debt. The higher sales
and improved operating results in 1998 are primarily due to the full year
contribution to the Sporting Equipment segment by Federal Cartridge Company
("Federal") which was acquired during the fourth quarter of 1997.
Selling, general and administrative expenses were 17% of sales in 1998 compared
to 19% in 1997. Total selling, general and administrative expenses increased by
$10.0 million in 1998 primarily due to Federal being included in operating
results for the entire year. Higher interest expense in 1998 reflects higher
debt levels during the current year, principally due to the Federal acquisition.
Total backlog was $61.3 million at December 31, 1998, compared to $117.9 million
at December 31, 1997. The current year backlog is lower at each of the
Company's operating segments with the largest decrease at the Industrial and
Power Equipment segment, principally reflecting reduced demand for timber
harvesting and industrial equipment. The Company expects that 1999 will be a
challenging year as, for the near term, poor economic conditions in Southeast
Asia and the Far East will likely continue to affect the Outdoor Products
segment and low pulp prices and high mill inventories will impact the demand for
the Industrial and Power Equipment segment's timber harvesting equipment. The
Industrial and Power Equipment segment has implemented production and cost
control measures to help mitigate the effect of the reduction in demand. In
1999, the Sporting Equipment segment should continue to benefit from the
acquisition of Federal and related consolidation and cost reduction activities.
Sales and operating income for the Outdoor Products segment for 1998 were $315.4
million and $68.4 million, respectively, compared to $319.3 million and $67.1
million during 1997. The operating results for this segment reflect a decrease
in sales and operating income of $10.0 million and $1.3 million, respectively,
at the Company's Oregon Cutting Systems Division ("Oregon") and higher sales and
operating income at Dixon Industries, Inc. ("Dixon"). Oregon's 1998 results
reflect an approximate $11.5 million sales decrease in Southeast Asia and the
Far East, primarily due to the economic problems in those areas, which has
contributed to an approximate 4% reduction in the sales volume of cutting chain
and chain saw guide bars, Oregon's principal products. Oregon has foreign
manufacturing or distribution operations in Canada, Europe, Brazil, Japan and
Russia. The Company estimates that foreign currency exchange rates in 1998, as
compared to 1997, provided a favorable impact on operating income of
approximately $1.5 million. During 1998, operating income from Brazil was $3.1
million compared to $2.6 million during 1997. Dixon's sales and operating
income improved in 1998 compared to the prior year due to higher volume and more
favorable weather conditions.
Page 3
Sales and operating income for the Sporting Equipment segment were $286.7
million and $36.1 million, respectively, in 1998 compared to $158.5 million and
$18.1 million in 1997. The significant improvement in sales and operating
income reflect the sales and income added by Federal which was acquired during
the fourth quarter of 1997. Total sales and operating income at other Sporting
Equipment operations were flat in 1998 as compared to the prior year.
Sales and operating income for the Industrial and Power Equipment segment were
down to $229.8 million and $27.9 million, respectively, in 1998 from $239.1
million and $32.7 million in 1997. The results for 1998 reflect reduced demand
for timber harvesting equipment resulting principally from sharply lower pulp
prices since mid-year and higher mill inventories, higher competitive discounts
and higher warranty costs. The operating results for this segment's Gear
Products, Inc. subsidiary ("Gear") improved slightly in 1998 compared to 1997.
TWELVE MONTHS ENDED DECEMBER 31, 1997 (AUDITED) COMPARED TO TWELVE MONTHS ENDED
DECEMBER 31, 1996 (UNAUDITED)
In April 1996, the Company changed its fiscal year from one ending on the last
day of February to one ending on December 31. See Note 1 of Notes to
Consolidated Financial Statements. This discussion and analysis includes a
discussion of 1997 compared to the twelve-month period ended December 31, 1996
("1996").
Sales in 1997 were $716.9 million compared to $649.3 million in 1996. Income
from continuing operations improved to $59.1 million ($1.53 per share) in 1997
from $53.8 million ($1.38 per share) during the prior year. Net income for 1996
included income of $1.4 million ($.03 per share) from discontinued operations.
The sales increase reflected higher sales in 1997 by each operating segment,
while the income increase resulted primarily from improved performance by the
Outdoor Products segment.
Selling, general and administrative expenses were 19% of sales in 1997 compared
to 20% in 1996. Total selling, general and administrative expenses increased by
$4.6 million in 1997 principally due to the acquisitions of Federal and
Frederick Manufacturing Company and Orbex, Inc. ("Frederick-Orbex"). See Note 4
of Notes to Consolidated Financial Statements. Other income was higher in 1997
as a result of gains on sales of securities.
Sales and operating income for the Outdoor Products segment for 1997 were $319.3
million and $67.1 million, respectively, compared to $292.7 million and $61.4
million during 1996. The operating results for this segment reflect an increase
in sales and operating income of $25.7 million and $7.2 million, respectively,
at Oregon and flat sales and lower operating income at Dixon. Oregon's results
reflect a 7% increase in the sales volume of cutting chain and a 15% increase in
the sales volume of chain saw guide bars, Oregon's two principal products,
partially offset by lower average selling prices, due to a higher percentage of
lower priced sales to original equipment manufacturers and unfavorable exchange
rates. Additionally, the acquisition of Frederick-Orbex increased sales by 7.5%
in 1997. Approximately 24% and 36% of Oregon's sales and operating costs and
expenses, respectively, were transacted in foreign currencies in 1997. The
Company estimates that unfavorable exchange rates in 1997, as compared to 1996,
reduced operating income by approximately $2.0 million. During 1997, operating
income from Brazil was $2.6 million compared to $0.3 million during 1996,
principally as a result of improved economic conditions. Dixon's operating
results in 1997 compared to the prior year reflect the effects of reduced volume
and higher costs, partially offset by higher average selling prices.
Page 4
Sales for the Sporting Equipment segment were $158.5 million in 1997 compared to
$147.1 million in 1996. Operating income was $18.1 million during 1997,
compared to $19.8 million during 1996. Sales reflected a higher volume of
ammunition products sales and the contribution by Federal since acquisition in
November 1997, partially offset by a lower volume of sales of sports optics.
Operating income was lower in 1997 as lower sports optics sales offset the
effect of higher ammunition products sales. Additionally, operating income for
the prior year included the positive effect of reduced environmental cost
estimates of $1.9 million resulting from the resolution of an environmental
matter.
Sales and operating income for the Industrial and Power Equipment segment were
$239.1 million and $32.7 million, respectively, in 1997 compared to $209.5
million and $31.9 million in 1996. The higher sales during 1997 are principally
due to a higher volume of forestry equipment sold as a result of improved market
conditions and higher average selling prices. Operating income increased by
$0.8 million during 1997 as higher forestry equipment product and warranty costs
offset much of the effect of the sales increase. The operating results for Gear
continued to improve in 1997 as its sales and operating income increased by 8%
and 15%, respectively, primarily due to higher volume.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998, the Company had senior notes ("the senior notes")
outstanding in the principal amount of $150.0 million which are due in 2005 and
no amounts outstanding under its $150 million revolving credit agreement. At
December 31, 1998, the Company's long-term debt to equity ratio was 0.5 to 1
compared to a ratio of 0.4 to 1 at December 31, 1997. See Note 3 of Notes to
Consolidated Financial Statements for a description of the terms and conditions
of the senior notes and the $150 million revolving credit agreement.
Working capital increased to $232.2 million at December 31, 1998, from $171.1
million at December 31, 1997, principally due to working capital provided by
operations. Inventories decreased by $11.9 million, primarily due to production
and inventory control efforts. Accounts payable decreased by $26.2 million
since the prior year end, reflecting reduced purchasing associated with the
production and inventory control efforts and the payment of an approximate $13.6
million post-closing adjustment for the purchase of Federal. The Company's
operating cash flows for the year ended December 31, 1998 were $88.9 million
compared to $80.3 million in 1997. Cash and cash equivalent balances were $45.1
million at December 31, 1998, compared to $4.8 million at December 31, 1997, as
the Company's cash flows from operations exceeded cash expenditures for
investing and financing activities. Acquisition expenditures and the purchase
of treasury stock were lower in 1998.
Management believes that the Company will generate sufficient future taxable
income to realize all deferred income tax assets.
The Company believes that its operating cash flows and $150 million revolving
credit facility will provide both short-term and long-term liquidity.
The Company and its operations are subject to various environmental laws and
regulations. See Note 7 of Notes to Consolidated Financial Statements for a
description of certain environmental matters.
Management believes that the impact of domestic inflation on the Company has not
been material in recent years as inflation rates have remained low.
Page 5
MARKET RISK
The Company is exposed to market risk from changes in interest rates, foreign
currency exchange rates and commodity prices. The Company manages its exposure
to these market risks through its regular operating and financing activities,
and, when deemed appropriate, through the use of derivatives. When utilized,
derivatives are used as risk management tools and not for trading purposes.
Interest Rate Risk:
The Company manages its ratio of fixed to variable rate debt with the objective
of achieving a mix that management believes is appropriate. Historically, the
Company has, on occasion, entered into interest rate swap agreements to exchange
fixed and variable interest rates based on agreed upon notional amounts and has
entered into interest rate lock contracts to hedge the interest rate of an
anticipated debt issue. At December 31, 1998, no derivative financial
instruments were outstanding to hedge interest rate risk. A hypothetical
immediate 10% increase in interest rates would decrease the fair value of the
Company's fixed rate long-term debt outstanding at December 31, 1998, by $5.3
million. A hypothetical 10% increase in the interest rates on the Company's
variable rate long-term debt for a duration of one year would increase interest
expense by less than $0.1 million in 1999.
Foreign Currency Exchange Risk:
Approximately 36% of Oregon's sales and 42% of its operating costs and expenses
were transacted in foreign currencies in 1998. As a result, fluctuations in
exchange rates impact the amount of Oregon's reported sales and operating
income. Historically, the Company's principal exposures have been related to
local currency operating costs and expenses in Canada and local currency sales
in Europe (principally France and Germany). During the past three years, the
Company has not used derivatives to manage any significant foreign currency
exchange risk and, at December 31, 1998, no foreign currency exchange
derivatives were outstanding.
Commodity Price Risk:
During 1998, the Company purchased approximately 10.9 million pounds of brass
for use in its Sporting Equipment operations. The price risk of approximately
40% of these purchases was hedged through the use of copper and zinc futures
contracts. In the near future, the Company expects to decrease its use of
futures contracts to manage this price risk. An immediate hypothetical 10%
decrease in the futures prices of copper and zinc contracts outstanding at
December 31, 1998, would decrease their fair value by $0.3 million. In
addition, a large quantity of other metals (principally lead) were purchased by
Sporting Equipment operations in 1998. Derivatives were not used to manage this
price risk.
IMPACT OF YEAR 2000 ISSUE
The Company has been evaluating its internal date-sensitive systems and
equipment for Year 2000 compliance. The assessment phase of the Year 2000
project is substantially complete and included both information technology
equipment and non-information technology equipment. Based on its assessment,
the Company determined that it was necessary to modify or replace a portion of
its information systems and other equipment. As of December 31, 1998, the
Company is approximately 76% complete in the modification or replacement and
testing of the critical software, hardware and equipment requiring remediation.
The Company believes that the above modifications and replacements should
mitigate the effect of the Year 2000 issue. However, if such modifications and
replacements are not made, or fail to correct date-sensitive problems, the Year
Page 6
2000 issue could have a material impact on the Company's operations by
disrupting its ability to manufacture and ship products, process financial
transactions or engage in similar normal business activities. The Company does
not believe that the effect of the Year 2000 issue on non-information technology
systems is likely to have a material adverse impact. Finally, the Company has
reviewed its own products and believes that it has no significant Year 2000
issues for those products.
The total estimated cost of the Year 2000 project, including system upgrades,
is approximately $5.5 million and is being funded by operating cash flows. As
of December 31, 1998, costs of $3.7 million had been incurred. Of the total
cost of the project, approximately $2.9 million is attributable to new
software and equipment, which will be capitalized. The remaining costs will
be expensed as incurred.
With respect to third parties, the Company has identified and communicated with
third parties with which its systems interface or on which it relies to
determine the extent to which those companies are addressing their Year 2000
compliance. The Company has developed a program for evaluating their readiness
and assessing the impact on the Company if they are not compliant on a timely
basis, including identification of alternate sources of materials and supplies
where appropriate. The Company initiated third party surveys in mid-1998 and of
the 50 key third parties identified, all have responded that they expect to be
compliant on a timely basis. Of the approximately 2,500 non-key third parties
surveyed, 33% have not yet responded adequately. Of those that have responded,
the majority have indicated that they are now or will be compliant by September
30, 1999. The Company expects to complete its evaluation and assessment of
third party readiness by September 30, 1999. To date, the Company is not aware
of any problems that would materially impact results of operations, liquidity
or capital resources.
Although the Company has not finalized its contingency plans for possible Year
2000 issues, it has completed initial communication with key third parties and
non-key third parties as noted above and is presently evaluating and assessing
risks including identification of alternate sources of materials and supplies
where appropriate. The Company has completed testing on all critical systems.
Where needed, the Company will establish contingency plans based on results of
its testing, its evaluation and assessment of third party responses and other
outside risks. The Company anticipates the majority of its contingency plans
to be in place by September 30, 1999.
The costs of the Year 2000 issue and completion dates are based on management's
best estimates, which were derived utilizing numerous assumptions of future
events including the continued availability of certain resources, third-party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those plans.
The above statement in its entirety is designated a Year 2000 readiness
disclosure under the Year 2000 Information and Readiness Disclosure Act.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivatives and hedging. It requires that all
derivatives be recognized as either assets or liabilities at fair value and
establishes specific criteria for the use of hedge accounting. The Company's
required adoption date is January 1, 2000. SFAS No. 133 is not to be applied
retroactively to financial statements of prior periods. The Company expects no
material adverse effect on consolidated results of operations, financial
position or cash flows upon adoption of SFAS No. 133, but does expect a small
reduction in stockholders' equity.
Page 7
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF
THE REGISTRANT
ELECTION OF DIRECTORS
DIRECTORS
The By-laws of the Corporation, which may be amended by the Board, presently
provide that the number of directors that shall constitute the whole Board shall
be not less than 3 nor more than 14, with the exact number to be determined from
time to time by resolution of the Board. The Board has set the exact number at
11 effective April 19, 1999, with 3 members to be elected by the holders of
Class A Common Stock and 8 members to be elected by the holders of Class B
Common Stock. Class A Common Stock proxies may not be voted for more than 3
persons, and the Class B Common Stock proxies may not be voted for more than
8 persons.
The Board intends to nominate and, unless contrary instructions are
specified, to vote, as appropriate, all proxies received by the Board FOR the
election of the persons named below as directors of the Corporation.
Each director to be elected shall hold office until the next Annual Meeting of
Stockholders of the Corporation or until his or her successor is elected and
qualified or until his or her earlier resignation or removal. Should any nominee
fail to accept election, it is expected that the Board will cast all proxies, as
appropriate, received by it in favor of the election of such other person for
the office of director as the Board may recommend. The Board has no reason to
believe that any of the persons named below will fail to accept election as a
director.
BIOGRAPHICAL INFORMATION
The following biographical information is furnished with respect to each
nominee for election as director at the Meeting:
NOMINEES -- CLASS A COMMON STOCK
HALEY BARBOUR, Age 51.
Director since September 1997; member of the Audit Committee and the Finance
Committee.
Rejoined law firm of Barbour Griffith & Rogers with offices in Washington, DC
and Yazoo City, Mississippi in 1997; Chairman of the Republican National
Committee from 1993 to 1997.
Mr. Barbour is Chairman of Policy Impact Communications, Washington, DC; Vice
Chairman of International Equity Partners, LP, Washington, DC; and a Managing
Director of National Environmental Strategies, Washington, DC.
Mr. Barbour is also a director of Skytel Communications, Inc., Jackson,
Mississippi; and Mississippi Chemical Corporation, Yazoo City, Mississippi.
Page 8
C. TODD CONOVER, Age 59.
Director since September 1992; member of the Audit Committee and the Finance
Committee.
Managing Director, Starmont Asset Management, San Francisco, California
(investment counselors) since May 1998; President and Chief Executive Officer
of The Vantage Company, Los Altos, California (management consulting) since
July 1992; formerly General Manager of the Finance Industry Group of Tandem
Computers Incorporated, Cupertino, California from January 1994 to April
1995. He served as Comptroller of the Currency of the United States from
December 1981 through May 1985.
Mr. Conover is also a director of PacifiCorp and PacifiCorp Group Holdings,
Portland, Oregon.
ANDREW A. SORENSEN, Age 60.
Director since April 1997; member of the Audit Committee and the Finance
Committee.
President of The University of Alabama since July 1996; formerly Provost and
Vice-President for Academic Affairs at the University of Florida from July
1990 to July 1996; Executive Director of the AIDS Institute of the Johns
Hopkins Medical Institutions from 1986 to 1990; prior to July 1986, Director
of the School of Public Health of the University of Massachusetts at Amherst.
Dr. Sorensen is also President of the Capstone Foundation, Tuscaloosa, Alabama;
Vice-Chairman of the Board of Directors of the Chautauqua Institution,
Chautauqua, New York; a director of the Alabama Shakespeare Festival,
Montgomery, Alabama; The Alabama Technical Network, Montgomery, Alabama; and
the Bryant-Jordan Student Athlete Foundation, Birmingham, Alabama.
NOMINEES -- CLASS B COMMON STOCK
SAMUEL R. BLOUNT, Age 51.
Director since April 1998; member of the Executive Committee, the Acquisition
Committee, and the Compensation and Management Development Committee.
Chairman of the Board of MeadowCraft, Inc., Birmingham, Alabama (manufacturer
of wrought iron furniture), since 1985. Formerly President and Chief
Executive Officer of HBC, Incorporated, Montgomery, Alabama (holding company)
from 1979 to 1985. Prior to 1979, Mr. Blount served in various positions at
Blount, Inc. and Western River Expeditions, Inc.
Mr. Blount is also a director of the Alabama Shakespeare Theatre, Montgomery,
Alabama; the McWane Center, Birmingham, Alabama; and The Eye Foundation,
Birmingham, Alabama; and Trustee of the University of the South, Sewanee,
Tennessee. He formerly served as a director of Darlington School, Rome,
Georgia, and president of the Advisory Board of Darlington School.
Mr. Blount is a son of Winton M. Blount.
W. HOUSTON BLOUNT, Age 77.
Director since September 1949(1); Chairman of the Acquisition Committee, member
of the Compensation and Management Development Committee.
Chairman of the Board Emeritus of Vulcan Materials Company, Birmingham, Alabama
(crushed stone and chemicals), since May 1992; Chairman of the Board from May
1986 to May 1992.
Mr. Blount is also a director emeritus of VF Corporation, Reading, Pennsylvania.
Mr. Blount is the brother of Winton M. Blount and the uncle of Samuel R. Blount.
Page 9
WINTON M. BLOUNT, Age 78.
Director since September 1949(1), except from January 1969 through October 1971
during which period he served as Postmaster General of the United States;
Chairman of the Executive Committee.
Chairman of the Board since June 1993; Chairman of the Board and Chief
Executive Officer of the Corporation throughout the 5 years preceding June
1993 except from December 1990 to October 1991 during which period he served
as Chairman of the Board.
Mr. Blount is also a director of the Alabama Shakespeare Festival, Montgomery,
Alabama; Montgomery Museum of Fine Arts, Montgomery, Alabama; Americans for
the Arts, New York, New York; and Business Committee for the Arts, New York,
New York; President of the National Actors Theatre, New York, New York;
Chairman of the Advisory Committee of the National Postal Museum, Washington,
DC; Trustee Emeritus of the University of Alabama; and Life Trustee of Rhodes
College, Memphis, Tennessee.
Mr. Blount is the brother of W. Houston Blount and the father of Samuel R.
Blount.
R. EUGENE CARTLEDGE, Age 69.
Director since September 1994; Chairman of the Compensation and Management
Development Committee, member of the Acquisition Committee, the Audit
Committee, and the Executive Committee.
Past Chairman of the Board of Savannah Foods and Industries, Inc., Savannah,
Georgia (sugar processing) from 1996 to 1997. Formerly Chairman of the Board
and Chief Executive Officer of Union Camp Corporation, Wayne, New Jersey 1986
to 1994; prior to 1986, President and Chief Operating Officer of Union Camp
Corporation.
Mr. Cartledge is also a director of Union Camp Corporation, Delta Air Lines,
Inc., Sun Company, Chase Brass Industries, and UCAR International, Inc.
H. CORBIN DAY, Age 61.
Director since June 1992; Chairman of the Finance Committee, member of the
Executive Committee, the Acquisition Committee, and the Compensation and
Management Development Committee.
Chairman of Jemison Investment Co., Inc., Birmingham, Alabama (diversified
holding company) since May 1988 and limited partner of Goldman, Sachs & Co.,
New York, New York (investment bankers) since 1986.
Mr. Day is also a director of Jemison Investment Co., Inc. and its affiliated
companies, Birmingham, Alabama; Champion International Corporation,
Stamford, Connecticut; Altec Industries, Inc., Birmingham, Alabama; American
Heritage Life Insurance Company, Jacksonville, Florida; Hughes Supply, Inc.,
Orlando, Florida; Birmingham Museum of Art, Birmingham, Alabama; Birmingham-
Southern College, Birmingham, Alabama; The University of Alabama Health
Services Foundation, Birmingham, Alabama; and Vice Chairman of the Alabama
Symphony.
MARY D. NELSON, Age 65.
Director since June 1986; member of the Audit Committee and the Finance
Committee.
President of Nelson & Co., Cincinnati, Ohio (consulting actuaries) throughout
the past 5 years.
Mrs. Nelson is also a director of Cincinnati Bell, Inc., Cincinnati, Ohio and
a director of Union Central Life Insurance Co., Cincinnati, Ohio.
Page 10
JOHN M. PANETTIERE, Age 61.
Director since May 1992; member of the Executive Committee.
President and Chief Executive Officer since June 1993, President and Chief
Operating Officer from May 1992 to June 1993 of the Corporation; formerly
Chairman, President and Chief Executive Officer from January 1990 to May
1992, President and Chief Executive Officer from January 1988, Senior
Executive Vice President and Chief Operating Officer from August 1986 of
Grove Worldwide Company, Shady Grove, Pennsylvania (mobile hydraulic cranes
and aerial work platforms).
Mr. Panettiere is also a director of Altec Industries, Inc., Birmingham,
Alabama; the Alabama Shakespeare Festival, Montgomery, Alabama; and the
Montgomery Area Chamber of Commerce; a member of the Committee of 100; a
Trustee of Westminster College, Fulton, Missouri; and a Churchill Fellow.
He is a Life Honorary Director and Past Chairman of the Construction Industry
Manufacturers Association, Milwaukee, Wisconsin.
ARTHUR P. RONAN, Age 69.
Director since June 1993; Chairman of the Audit Committee, member of the
Acquisition Committee and the Compensation and Management Development
Committee.
Retired since February 1992; formerly Corporate Vice President from 1982 and
President from June 1985 of the Automotive Operations of Rockwell
International Corporation, Troy, Michigan (automotive components).
Mr. Ronan was Chairman and President of Western Highway Institute, Bruno,
California from 1991 to 1993; Vice Chairman of Highway Users Federation,
Washington, D.C. from 1990 to 1992; Trustee of General Motors Institute,
Flint, Michigan from 1984 to 1992; member of the Board of Advisors of
Oakland University, Rochester, Michigan from 1984 to 1992; and Trustee of
Marygrove College, Detroit, Michigan from 1975 to 1979.
Mr. Ronan is also a director of O&S Corporation, Lancaster, South Carolina;
and Straits Corp., Bay City, Michigan.
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(1) Includes the period for which the person served as a director of Blount
Brothers Corporation. The Corporation was organized in February 1971,
and on March 1, 1971, the stockholders of Blount Brothers Corporation
exchanged their stock in Blount Brothers Corporation for stock in
Blount, Inc. Blount Brothers Corporation was merged into Blount, Inc.
on February 29, 1988.
Page 11
EXECUTIVE OFFICERS
The executive officers of the Corporation, in addition to those who are
also Director nominees, as of February 19, 1999 are:
YEAR FIRST
ELECTED TO FAMILY
NAME OFFICE SUCH OFFICE AGE RELATIONSHIP
Gerald W. Bersett President - Sporting 1998 58 None
Equipment Group
Richard H. Irving, III Senior Vice President and 1995 55 None
General Counsel of the
Corporation
Harold E. Layman Executive Vice President- 1997 52 None
Finance Operations and
Chief Financial Officer
of the Corporation
D. Joseph McInnes Executive Vice President- 1997, 55 None
Administration and 1994
Chief Administrative and
Officer of the 1982
Corporation, Corporate
Secretary and President
of The Blount Foundation,
Inc.
James S. Osterman President - Outdoor 1997 61 None
Products Group
Donald B. Zorn President - Industrial 1997 62 None
and Power Equipment Group
Each of these executive officers serves at the pleasure of the
Board. There were no arrangements or understandings with any other person
pursuant to which any officer was elected. The executive officers of the
Corporation may also be directors or officers of subsidiaries of the
Corporation.
Gerald W. Bersett was elected President of the Sporting Equipment Group
in April 1998. From April, 1995 to February 1998, he served as President and
Chief Operating Officer of Sturm, Ruger and Company, Inc. at which time he
retired. Sturm, Ruger and Company, Inc. is a New York Stock Exchange Company
engaged in the manufacture of sporting equipment. Mr. Bersett was President of
Winchester Ammunition Division of Olin Corporation from 1988 to April,
1995.Prior to that date, he served as Vice President and General Manager of
the Winchester Division.
Richard H. Irving, III was elected Senior Vice President and General
Counsel in April 1995. Prior to that date, he served since 1986 as Vice
President, General Counsel and Secretary of Duchossois Industries, Inc., a
diversified privately held company headquartered in Elmhurst, Illinois. Mr.
Irving also served as Associate General Counsel of Union Camp Corporation from
1979 to 1986, and Assistant General Counsel of Rockwell International from
1974 to 1979.
Page 12
Harold E. Layman was elected Executive Vice President -- Finance
Operations and Chief Financial Officer of the Corporation in February 1997.
Prior to that date, he served as Senior Vice President and Chief Financial
Officer of the Corporation from January 1993. Prior to January 1993, he served
as Senior Vice President C Finance and Administration and was a member of the
Executive Committee of VME Group, N.V., The Netherlands, a manufacturer of
automotive components and industrial equipment, from September 1988.
D. Joseph McInnes was elected Executive Vice President - Administration
and Chief Administrative Officer of the Corporation in February 1997. Prior to
that date, he served as Senior Vice President -- Administration and Secretary
of the Corporation from May 1994. Prior to May 1994, he served as Senior Vice
President -- Administration of the Corporation from October 1991, and Vice
President -- Human Resources of the Corporation from March 1983. In addition,
he was elected President of The Blount Foundation, Inc., a charitable
foundation funded by the Corporation, in April 1982. He also continues to
serve as Corporate Secretary.
James S. Osterman was elected President, Outdoor Products Group in
January 1997. Prior to that date, he served as President of the Oregon Cutting
Systems Division of the Corporation from January 1987.
Donald B. Zorn was elected President, Industrial and Power Equipment
Group in January 1997. Prior to that date, he served as President of the
Forestry and Industrial Equipment Division of the Corporation since January
1994. Prior to January 1994, he served as President and Chief Operating
Officer of GroveCranes, a division of Grove Worldwide Company, Shady Grove,
Pennsylvania(manufacturer of mobile hydraulic cranes and aerial work
platforms) from March 1988.
FILING DISCLOSURE
Section 16(a) of the Securities Exchange Act of 1934 and the rules
thereunder require the Corporation's directors, executive officers and persons
who beneficially own more than 10% of any class of equity securities of the
Corporation to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange and to
furnish the Corporation with copies.
Based on the review of copies of such forms received by it, or written
representations from certain reporting persons, the Corporation believes that,
during 1998 all filing requirements were complied with which were applicable
to its directors, officers and greater than 10% beneficial owners.
Page 13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
PRINCIPAL STOCKHOLDERS
The following table sets forth as of February 19, 1999, to the best knowledge
of the Corporation, information as to (a) beneficial ownership of more than 5%
of the Class A Common Stock and Class B Common Stock of the Corporation by
certain persons (other than director nominees); and (b) beneficial ownership
of Class A Common Stock and Class B Common Stock of the Corporation by (i) each
director nominee, (ii) each executive officer named in the Summary Compensation
Table other than director nominees, and (iii) all director nominees and
executive officers of the Corporation as a group. Except as otherwise
indicated, all beneficial ownership stated in the table represents sole voting
and investment power.
Shares Percent Percent
Name and Address of Beneficially of of Total
Beneficial Owners Title of Class Owned Class Votes(1)
(a) Holders of more than 5% of
Class A Common Stock and
Class B Common Stock
(other than director
nominees and executive
officers named in the
Summary Compensation Table)
--------------------------
The Blount Holding Company, L.P. Class A Common Stock 2,892,144(2) 11.30% 2.06%
4520 Executive Park Drive Class B Common Stock 8,409,696(2) 73.29% 59.93%
Montgomery, Alabama 36116
BHP, Inc. Class A Common Stock 2,892,144(3) 11.30% 2.06%
4520 Executive Park Drive Class B Common Stock 8,409,696(3) 73.29% 59.93%
Montgomery, Alabama 36116
The Northern Trust Company Class A Common Stock 2,860,973(4) 11.18% 2.04%
50 South LaSalle Street Class B Common Stock None
Chicago, Illinois 60675
Portfolio H Investors, L.P. Class A Common Stock 2,761,200 10.79% 1.97%
201 Main St., Suite 3200 Class B Common Stock None
Fort Worth, Texas 76102
The Prudential Insurance Class A Common Stock 1,474,515 5.76% 1.05%
Company of America Class B Common Stock None
751 Broad Street
Newark, New Jersey 07102-3777
(b)(i) Nominees - Class A Common Stock
--------------------------
Haley Barbour Class A Common Stock 1,271(5) * *
Class B Common Stock None
C. Todd Conover Class A Common Stock 5,000 * *
Class B Common Stock None
Andrew A. Sorensen Class A Common Stock 1,294 * *
Class B Common Stock None
Page 14
Shares Percent Percent
Name and Address of Beneficially of of Total
Beneficial Owners Title of Class Owned Class Votes(1)
Nominees - Class B Common Stock
------------------------
Samuel R. Blount Class A Common Stock 819,334(6) 3.20% *
Class B Common Stock 124,032(6) 1.08% *
Winton M. Blount Class A Common Stock 3,124,803(7) 12.17% 2.23%
Class B Common Stock 9,713,914(7) 84.65% 69.22%
W. Houston Blount Class A Common Stock 4,554 * *
Class B Common Stock 2,664 * *
R. Eugene Cartledge Class A Common Stock 5,000 * *
Class B Common Stock None
H. Corbin Day Class A Common Stock 26,912(8) * *
Class B Common Stock None
Mary D. Nelson Class A Common Stock 8,244 * *
Class B Common Stock None
John M. Panettiere Class A Common Stock 982,839(9) 3.71% *
Class B Common Stock None
Arthur P. Ronan Class A Common Stock 2,000 * *
Class B Common Stock None
(ii) Executive Officers named in
the Summary Compensation Table
(other than director nominees)
------------------------
James S. Osterman Class A Common Stock 197,433(10) * *
Class B Common Stock None
Harold E. Layman Class A Common Stock 376,010(11) 1.45% *
Class B Common Stock None
D. Joseph McInnes Class A Common Stock 322,164(12) 1.25% *
Class B Common Stock None
(iii) All director nominees and Class A Common Stock 6,180,966(13) 22.34% 4.34%
executive officers as a group Class B Common Stock 9,840,610(13) 85.76% 70.12%
(17 persons)
-------------------
* Less than 1.0% of class or total votes.
(1) Percent of total votes on all matters other than the election of
directors.
(2) The Blount Holding Company, L.P. is a limited partnership whose sole
general partner is BHP, Inc., a Delaware corporation controlled by
Winton M. Blount.
(3) Includes 2,892,144 shares of Class A Common Stock and 8,409,696 shares
of Class B Common Stock owned by the Blount Holding Company, L.P.
Page 15
(4) The Northern Trust Company serves as the Master Trustee for the
Corporation's 401(k) Retirement Savings Plan [the "401(k) Plan"]. The
shares listed are held for the benefit of the participants in the 401(k)
Plan. Under the terms of the 401(k) Plan, as amended, and the Trust,
the Trustee is to vote the allocated shares held by the 401(k) Plan in
accordance with the instructions received from 401(k) Plan participants
and to dispose of the allocated shares in connection with tender offers
in accordance with directions received from 401(k) Plan participants.
If no voting instructions or invalid voting instructions are received
with respect to allocated shares, the Trustee is to vote such shares in
the same manner and in the same proportions as the allocated shares with
respect to which the Trustee received valid voting instructions are
voted. Also, with respect to allocated shares, if no directions or
invalid directions are received in connection with tendering shares, the
Trustee is to treat such allocated shares as if 401(k) Plan participants
instructed the Trustee not to dispose of such shares. With respect to
unallocated shares, the Trustee is to vote such shares, or dispose of
such shares in connection with tender offers, in the same manner and in
the same proportion as the allocated shares with respect to which the
Trustee received valid voting instructions or directions are voted or
disposed. The Northern Trust Company, as Trustee, expressly denies
beneficial ownership in the shares listed.
(5) Includes 200 shares of Class A Common Stock (less than 1.0% of class and
total votes) owned by Haley Barbour's wife.
(6) -Includes 21,546 shares of Class A Common Stock (less than 1.0% of class
and total votes) and 19,434 shares of Class B Common Stock (less than
1.0% of class and total votes) held by Samuel R. Blount as Custodian for
his children.
-Includes 796,910 shares of Class A Common Stock (3.11% of class and less
than 1.0% of total votes) held by SRB-BLTA, L.L.C. and 104,598 shares of
Class B Common Stock (less than 1.0% of class and total votes) held by
SRB-BLTB, L.L.C. of which Samuel R. Blount is the managing member and of
which Samuel R. Blount and his wife are the sole members.
(7) -Includes 122,828 shares of Class A Common Stock (less than 1.0% of class
and total votes) and 2,718 shares of Class B Common Stock (less than 1.0%
of class and total votes) owned by Winton M. Blount's wife.
-Includes the 2,892,144 shares of Class A Common Stock (11.30% of class,
2.06% of total votes) and 8,409,696 shares of Class B Common Stock
(73.29% of class, 59.93% of total votes) shown in the table as owned by
the Blount Holding Company, L.P.
-Includes the 100,000 shares of Class A Common Stock (less than 1.0% of
class and total votes) which are subject to a right to acquire beneficial
ownership within 60 days under the 1995 Blount Long-Term Executive Stock
Option Plan.
(8) Includes 15,000 shares of Class A Common Stock (less than 1.0% of class
and total votes) held by the Day Family Foundation of which H. Corbin
Day is a trustee and shares disposition and voting rights with his wife,
the only other trustee.
(9) Includes 907,001 shares of Class A Common Stock (3.42% of class and less
than 1.0% of total votes) which are subject to a right to acquire
beneficial ownership within 60 days under the 1994 Blount Executive Stock
Option Plan, the 1995 Blount Long-Term Executive Stock Option Plan, and
the 1998 Blount Long-Term Executive Stock Option Plan.
Page 16
(10) Includes 158,834 shares of Class A Common Stock (less than 1.0% of class
and total votes) which are subject to a right to acquire beneficial
ownership within 60 days under the 1992 Blount Incentive Stock Option
Plan, the 1995 Blount Long-Term Executive Stock Option Plan, and the
1998 Blount Long-Term Executive Stock Option Plan.
(11) Includes 367,500 shares of Class A Common Stock (1.42% of class and
less than 1.0% of total votes) which are subject to a right to acquire
beneficial ownership within 60 days under the 1992 Blount Incentive Stock
Option Plan, the 1994 Blount Executive Stock Option Plan, the 1995
Blount Long-Term Executive Stock Option Plan, and the 1998 Blount Long-
Term Executive Stock Option Plan.
(12) Includes 277,500 shares of Class A Common Stock (1.07% of class and less
than 1.0% of total votes) which are subject to a right to acquire
beneficial ownership within 60 days under the 1994 Blount Executive Stock
Option Plan, the 1995 Blount Long-Term Executive Stock Option Plan, and
the 1998 Blount Long-Term Executive Stock Option Plan.
(13) Includes 2,080,756 shares of Class A Common Stock (7.52% of class, 1.46%
of total votes) which are subject to a right to acquire beneficial
ownership within 60 days under the 1992 Blount Incentive Stock Option
Plan, the 1994 Blount Executive Stock Option Plan, the 1995 Blount Long-
Term Executive Stock Option Plan, and the 1998 Blount Long-Term Executive
Stock Option Plan.
Page 17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BLOUNT INTERNATIONAL, INC.
By: /s/ Harold E. Layman
Harold E. Layman
Executive Vice President Finance Operations
and Chief Financial Officer
Dated: July 15, 1999
Page 18