UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                                    FORM 10-K
(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, 2001
                                       OR
{ }   TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934


Commission file number 001-11549
                       ---------

                           BLOUNT INTERNATIONAL, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            Delaware                                     63-0780521
----------------------------------          ------------------------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                       Identification No.)

4520 Executive Park Drive, Montgomery, Alabama                 36116-1602
----------------------------------------------          ------------------------
(Address of principal executive offices)                     (Zip Code)

Registrant's telephone number, including area code (334) 244-4000
                                                   --------------

Securities registered pursuant to Section 12(b) of the Act:
                                                  Name of each exchange
        Title of each class                        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 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
          -------       -------

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.

          -------
                                      Page 1
<page>
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
-------------------------------------------------------------------------
February 1, 2002:  $13,236,322
------------------------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Common Stock $.01 par value, as of February 1, 2002:  30,795,882 shares
                                                      ----------

                     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 16, 2002, are incorporated by reference in Part III.
                                      Page 2
<page>
PART I

ITEM 1.  BUSINESS

Blount International, Inc. is an international manufacturing and marketing
company with sales in over 100 countries and operations in two business
segments:  Outdoor Products and Industrial and Power Equipment.

The following text contains various trademarks of Blount, Inc., a wholly-owned
subsidiary of the Company, and its subsidiaries.

OUTDOOR PRODUCTS

The Company's Outdoor Products segment is comprised of the Oregon Cutting
Systems Division ("Oregon"), Dixon Industries, Inc. ("Dixon") and Frederick
Manufacturing Corporation ("Frederick").  Oregon produces a wide variety of
cutting chain, chain saw guide bars, cutting chain drive sprockets and
maintenance tools for use primarily on portable gasoline and electric chain
saws, and mechanical timber harvesting equipment.  The Oregon trademark is well
known to end-users and the Company believes that it is the world leader in the
production of cutting chain.  Oregon's cutting chain and related products are
used primarily by professional loggers, construction workers, farmers, arborists
and homeowners.  Oregon markets an Industrial Cutting System ("ICS").  ICS, a
diamond-segmented cutting system for concrete (including steel-reinforced
concrete), is a faster and more flexible concrete cutting method than others
currently employed in the construction and demolition industries.

Oregon sells to distributors, dealers and mass merchandisers serving the retail
replacement market.  In addition, Oregon currently sells its products to more
than 30 original equipment manufacturers ("OEMs").  In 2001, approximately 15%
of the sales by the Outdoor Products segment were to one customer.
Approximately 51% of this segment's sales were outside of the United States in
2001.  Due to the high level of technical expertise and capital investment
required to manufacture cutting chain and guide bars, the Company believes that
it is able to produce durable, high-quality cutting chain and guide bars more
efficiently than most of its competitors.  The use of Oregon cutting chain as
original equipment on chain saws is also promoted through cooperation with OEMs
in improving the design and specifications of chain and saws.

The Outdoor Products segment's businesses are affected to some extent by severe
weather.  For example, severe weather patterns and events such as hurricanes,
tornadoes or ice storms generally result in greater chain saw use and,
therefore, stronger sales of saw chain and guide bars.

Oregon's marketing personnel are located throughout the United States and in a
number of foreign countries.  Oregon manufactures cutting chain and related
products in Milwaukie, Oregon; Milan and Dyer, Tennessee; Guelph, Ontario,
Canada; and Curitiba, Parana, Brazil.

Oregon's products compete with other cutting chain manufacturers as well as a
small number of international chain saw manufacturers, some of whom are also
customers.  This segment's principal raw material, strip steel, is generally
purchased from two vendors, and can be obtained from other sources.

Sales by Oregon accounted for 77% of sales attributable to the Outdoor Products
segment in the year ended December 31, 2001.

Dixon, located in Coffeyville, Kansas, was acquired in 1990 and has manufactured
ZTR (zero turning radius) lawn mowers and related attachments since 1974.  Dixon
pioneered the development of ZTR and is the only manufacturer to offer a full
                                      Page 3
<page>
line of ZTR lawn mowers for both homeowner and commercial applications.  The
Company believes Dixon is the leading manufacturer of residential zero turning
radius lawn mowers.

The key element that differentiates Dixon from its competitors is its unique
mechanical transaxle.  The transaxle transmits power independently to the rear
drive wheels and enables the operator to move the back wheels at different
speeds and turn the mower in a circle no wider than the machine, a "zero radius
turn".  This unique transmission enables the Dixon mower to out-maneuver
conventional "tractor style" ride-on products available in the market today and
provides a cost advantage over the more expensive hydrostatic drives used by
competitors in the zero turning radius market.  The mechanical drive works best
on smaller and mid-size units.  As the equipment line grows in size of cutting
area and horsepower, there is an increased need to offer hydrostatic versions of
zero turn.  Thus, Dixon's latest product additions are in the hydrostatic
portion of the product line.  In late 1997, Dixon introduced the "Estate Line"
featuring mowers that are designed for large homeowner lawns and are lower
priced than commercial hydrostatic units.  Models are available in 42-inch, 50-
inch and 60-inch sizes.  Expanding on the Estate Line, Dixon introduced a low-
cost hydro line, IZT (integrated zero turn), in 1998.  The IZT is positioned
between Dixon's normal hydrostatic and transaxle models geared for the
residential user.  It features models with cut widths of 42 inches, 50 inches,
and 60 inches.  In 2000, Dixon did a complete redesign of its residential and
estate product lines.  In 2001, a new commercial model was added that allows for
large cut widths up to 72 inches.  Dixon also offers an array of options for its
products including attachments for grass collection, mulching, and snow removal.
Dixon sells its products through distribution channels comprised of full-service
dealers, North American distributors and export distributors.

Dixon's competitors include general lawn mower manufacturers such as John Deere
and Snapper, as well as zero turning radius lawn mower manufacturers such as
Ariens, Simplicity, Toro, MTD, Cadet and Yardman.

Frederick, located in Kansas City, Missouri, was acquired in January 1997.
Frederick is a well-known and highly respected manufacturer that supplies
quality Silver Streak brand accessories for lawn mowers and other outdoor
products.  Frederick fits well into the Company's operations and is provided
international sales opportunities through Oregon's worldwide distribution
outlets.  Frederick's products are sold through dealers and distributors.
Frederick competes in a highly fragmented industry where many competitors
manufacture replacement products as one part of a larger business.

Sales by Dixon and Frederick in the year ended December 31, 2001, accounted for
23% of sales of the Outdoor Products segment.

INDUSTRIAL AND POWER EQUIPMENT

The Company's Industrial and Power Equipment segment manufactures equipment for
the timber harvesting industry and for industrial use, industrial tractors for
land and utility right-of-way clearing, and components for the gear industry.
Major users of these products include logging contractors, harvesters, land
reclamation companies, utility contractors, building materials distributors,
scrap yard operators and original equipment manufacturers of hydraulic
equipment.

The Company believes that it is a world leader in the manufacture of hydraulic
timber harvesting equipment, which includes a line of truck-mounted, trailer-
mounted, stationary-mounted and self-propelled loaders and crawler feller
bunchers (tractors with hydraulic attachments for felling timber) under the
Prentice brand name; a line of rubber-tired feller bunchers and related
                                      Page 4
<page>
attachments under the Hydro-Ax brand name; and a line of delimbers, slashers and
firewood processors under the CTR brand name.  The Company is also a leading
manufacturer of cut-to-length harvesting equipment including forwarders,
harvesters, and harvester heads under the Fabtek brand.

The Company is a competitive force in the gear industry, selling power
transmissions and gear components under the Gear Products brand name.

The Company sells its timber harvesting products through a network of
approximately 100 dealers in over 300 locations in the United States and
currently has an additional 16 offshore dealers, primarily in the timber
harvesting regions of South America and Southeast Asia.  Gear Products, Inc.
sells its products to over 300 original equipment manufacturers servicing the
utility, construction, forestry and marine industries.  Over 90% of this
segment's sales in 2001 were in the United States, primarily in the southeastern
and south central states.  In 2001, approximately 32% of the sales by the
Industrial and Power Equipment segment were to two customers.

The Company places a strong emphasis on the quality, safety, comfort, durability
and productivity of its products and on the after-market service provided by its
distribution and support network.

The timber harvesting equipment market faces cyclicality due to its reliance on
customers in the lumber, pulp, and paper markets.  In the past, as pulp prices
have dropped and inventory levels have increased, pulp manufacturers postponed
purchases of new timber harvesting equipment as their existing machinery
provided them sufficient capacity to meet near-term demand.

Competition in markets served by the Industrial and Power Equipment segment is
based largely on quality, price, brand recognition and product support.  The
segment's primary competition in timber harvesting equipment includes Deere and
Company, which also markets the Timberjack brand, Caterpillar, which
participates in certain market niches, and numerous smaller manufacturers
including Barko, Tigercat, Hood, Franklin, Bell, and Morbark.  Gear Products'
competitors in this fragmented industry include SKF, Avon, Kaydon, Rotec,
Fairfield, Auburn, Tulsa Winch, and Braden.

The Company attempts to capitalize on its technological and manufacturing
expertise to increase its participation in the market for replacement parts for
products which it manufactures and to develop new product applications both
within and beyond the timber, material handling, scrap, land clearing and gear
industries.  The Company is committed to continuing research and development in
this segment to respond quickly to increasing mechanization and environmental
awareness in the timber harvesting industry.

Gear Products, acquired in 1991, is a leading manufacturer of rotational system
components for mobile heavy equipment.  Its primary products are bearings, winch
drives and swing drives used to provide hydraulic power transmission in heavy
equipment used in the forestry, construction and utilities industries.  Due to
extreme wear-and-tear on its products, Gear Products sells its products in the
replacement parts market in addition to its sales to OEMs.  Gear Products
accounted for approximately 16% of the Industrial and Power Equipment segment's
sales in 2001.

The Company's Industrial and Power Equipment segment has manufacturing
facilities in Menominee, Michigan; Owatonna, Minnesota; Prentice, Wisconsin;
Tulsa, Oklahoma; and a parts warehouse in Zebulon, North Carolina.  A majority
of the components used in the Company's products are obtained from a number of
domestic manufacturers.
                                     Page 5
<page>
CAPACITY UTILIZATION

Based on a five-day, three-shift work week, the Outdoor Products and Industrial
and Power Equipment segments utilized approximately 90% and 37% of their
respective production capacity in the year ended December 31, 2001.

BACKLOG

The backlog for each of the Company's business segments as of the end of each of
its last four reporting periods was as follows (in millions):

                                                        December 31,
                                              ---------------------------------
                                               2001     2000     1999     1998
------------------------------------------    ------   ------   ------   ------
Outdoor Products                              $ 36.0   $ 49.0   $ 41.9   $ 30.2
Industrial and Power Equipment                  12.9     15.0     25.8     16.0
------------------------------------------    ------   ------   ------   ------
                                              $ 48.9   $ 64.0   $ 67.7   $ 46.2
------------------------------------------    ======   ======   ======   ======

The total backlog as of December 31, 2001, is expected to be completed and
shipped within twelve months.

ACQUISITIONS AND DISPOSITIONS

On December 7, 2001, the Company sold its Sporting Equipment Group ("SEG") to
Alliant Techsystems, Inc. ("ATK").  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 being formed
on December 4, 2001 by contributing certain assets and liabilities of the
Company's former Sporting Equipment Division to facilitate the sale to ATK.  In
exchange for the stock of these subsidiaries, ATK provided the Company with
3,048,786 shares of ATK common stock and $10,000.  The Company has subsequently
sold all the ATK shares.  The gross proceeds of the ATK stock sale were $236.7
million.  These gross proceeds were reduced by estimated post closing
adjustments, as defined in the Purchase Agreement with ATK, of $14.4 million,
underwriting expenses of $5.1 million, and other estimated expenses including
income taxes of $21.7 million to arrive at net proceeds of $195.5 million.  The
net proceeds were further reduced by the establishment of a $25.0 million cash
escrow to cover certain potential indemnification matters in connection with the
SEG sale.  The Company reduced its outstanding indebtedness after the sale by
$170.5 million with the repayment of a portion of its term loan.

In conjunction with the sale of SEG, the Company and its lenders amended that
certain Credit Agreement dated August 19, 1999, as previously amended as of
January 31, 2001, relating to the outstanding term loans.  As part of this
amendment, the financial coverage ratios covenants were adjusted to reflect the
exclusion of the SEG financial results for the year ended December 31, 2001.  In
addition to excluding SEG's operating income and EBITDA from the ratio
calculations, the interest coverage ratio is calculated on pro forma cash
interest expense after giving effect to the repayment of $170.5 million of debt
and the establishment of the $25.0 million escrow as follows:
                                    Page 6
<page>
                                           Year Ended December 31, 2001
                                       ------------------------------------
                                       As Reported    SEG Sale    Pro Forma
     --------------------------        -----------    --------    ---------
     Interest Expense                    $ (95.9)      $ 15.5      $ (80.4)
     Interest Income                         1.4          1.0          2.4
     --------------------------          -------       ------      -------
     Net Interest                        $ (94.5)      $ 16.5      $ (78.0)
     --------------------------          =======       ======      =======

The pro forma interest amount of $78.0 million includes $8.4 million of non-cash
interest expense which is excluded for financial ratio calculations.

On September 22, 2000, the Company purchased the assets of Fabtek, Inc., a
manufacturer of timber harvesting equipment.  On October 16, 2000, the Company
purchased the assets of Windsor Forestry Tools, Inc., a manufacturer of cutting
chain and guide bars for chain saws and timber harvesting equipment from Snap-on
Incorporated.  On October 20, 2000, the Company purchased all the outstanding
stock of Estate Cartridge, Inc., a manufacturer of sporting shotshell
ammunition.  Estate Cartridge, Inc. was sold on December 7, 2001 as part of the
SEG transaction.  The aggregate purchase price of these acquisitions was $41.3
million and the combined sales and operating loss for the last twelve months
prior to acquisition were $47.1 million and $0.6 million, respectively.
These acquisitions have been accounted for by the purchase method of accounting.
The excess of the purchase price over the fair value of the net assets acquired
has been amortized on a straight-line basis over a period of 40 years.

See Note 4 of Notes to Consolidated Financial Statements on page 33.

EMPLOYEES

At December 31, 2001, the Company employed approximately 3,200 individuals.
None of the Company's domestic employees is unionized; the number of foreign
employees who belong to unions is not significant.  The Company believes its
relations with its employees are satisfactory.

ENVIRONMENTAL MATTERS

For information regarding certain environmental matters, see Note 7 of Notes to
Consolidated Financial Statements on pages 39 through 41.

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 and water, the management and
disposal of hazardous substances and the cleanup of contaminated sites.  Permits
and environmental controls are required for certain of those operations to
prevent or reduce air and water pollution, and these permits are subject to
modification, renewal and revocation by issuing authorities.

On an ongoing basis, the Company incurs capital and operating costs to comply
with environmental laws.  We expect to spend approximately $0.2 million in 2002,
$0.2 million in 2003, and $0.3 million in 2004 on environmental compliance.
Environmental laws and regulations generally have become stricter in recent
years, and the cost to comply with new laws and regulations may be greater than
these estimated amounts.

Some of the Company's manufacturing facilities are located on properties with a
long history of industrial use, including the use of hazardous substances.  The
Company has identified soil and groundwater contamination from these historical
activities at several of its properties, which it is currently investigating,
                                     Page 7
<page>
monitoring or remediating.  Management believes that costs incurred to
investigate, monitor and remediate known contamination at these sites will not
have a material adverse effect on the business, financial condition or results
of operations.  The Company cannot be sure, however, that it has identified all
existing contamination on its properties or that its operations will not cause
contamination in the future.  As a result, the Company could incur material
costs to cleanup contamination.  Remediation liabilities are not discounted.

From time to time the Company may be identified as a potentially responsible
party with respect to a Superfund site.  The United States Environmental
Protection Agency (or a state) can either (a) allow such a party to conduct and
pay for a remedial investigation and feasibility study and remedial action or
(b) conduct the remedial investigation and action and then seek reimbursement
from the parties.  Each party can be held jointly, severally and strictly liable
for all costs, but the parties can then bring contribution actions against each
other or third parties under certain circumstances.  As a result of the
Superfund Act, the Company may be required to expend amounts on such remedial
investigations and actions which amounts cannot be determined at the present
time but may ultimately prove to be significant.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS AND FOREIGN AND DOMESTIC
OPERATIONS

For information about industry segments and foreign and domestic operations, see
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" on pages 11 through 19 and Note 9 of Notes to Consolidated Financial
Statements on pages 41 through 43.

SEASONALITY

The Company's two operating segments are somewhat seasonal in nature and quarter
to quarter operating results are impacted by economic and business trends within
the respective industries in which they compete.

ITEM 2.  PROPERTIES

The corporate headquarters of the Company occupy executive offices at 4520
Executive Park Drive, Montgomery, Alabama.

The other principal properties of the Company and its subsidiaries are as
follows:

Cutting chain and accessories manufacturing plants are located in Milwaukie,
Oregon; Milan and Dyer, Tennessee; Guelph, Ontario, Canada; and Curitiba,
Parana, Brazil, and sales and distribution offices are located in Europe, Japan
and Russia.  Lawn mowers and related accessories are manufactured at plants in
Coffeyville, Kansas and Kansas City, Missouri.  Log loaders, feller bunchers,
harvesters, forwarders, and accessories for automated forestry equipment are
manufactured at plants in Prentice, Wisconsin; Owatonna, Minnesota; and
Menominee, Michigan.  Rotation bearings and mechanical power transmission
components are manufactured at a plant in Tulsa, Oklahoma.

All of these facilities are in good condition, are currently in normal operation
and are generally suitable and adequate for the business activity conducted
therein.  Approximate square footage of principal properties is as follows:
                                    Page 8
<page>
                                          Area in Square Feet
                                         ---------------------
                                           Owned       Leased
     -------------------------------     ---------    --------
     Outdoor Products                    1,079,779     287,691
     Industrial and Power Equipment        738,740           0
     Corporate Office                      191,660           0
     -------------------------------     ---------     -------
          Total                          2,010,179     287,691
     -------------------------------     =========     =======

ITEM 3.  LEGAL PROCEEDINGS

For information regarding legal proceedings see Note 7 of Notes to Consolidated
Financial Statements on pages 39 through 41.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.


PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is traded on the New York Stock Exchange.  The
following table presents for the Company's last two years, the quarterly high
and low prices.  Cash dividends have not been declared for the Company's common
stock in the last two years.  The Company had approximately 6,804 shareholders
as of February 1, 2002.

                                                  Common Stock
                                               ------------------
                                                 High      Low
     ----------------------------------        --------  --------
     Year Ended December 31, 2001

     First quarter                              $ 8.13    $ 4.40
     Second quarter                               4.46      2.45
     Third quarter                                2.54      2.01
     Fourth quarter                               3.62      2.32

     Year Ended December 31, 2000

     First quarter                              $15.88    $12.00
     Second quarter                              14.81      7.63
     Third quarter                               11.25      7.44
     Fourth quarter                              11.25      7.50
     ----------------------------------         ------    ------
                                     Page 9
<page>
ITEM 6.  SELECTED FINANCIAL DATA
<table>
                                                                 Twelve Months Ended
                                                                     December 31,
Dollar amounts in millions,                        ------------------------------------------------
except per share data                                2001      2000      1999      1998      1997
----------------------------------------------     --------  --------  --------  --------  --------

                                                <c>       <c>       <c>       <c>       <c>
Operating Results (1):
Sales                                              $  468.7  $  513.9  $  486.2  $  545.2  $  558.4
Operating income from segments                         68.6      82.1      70.7      96.4      99.8
Income (loss) from continuing operations
  before extraordinary loss                           (32.1)    (11.7)    (46.8)     41.0      47.9
Net income (loss)                                     (43.6)     10.8     (21.8)     61.3      59.1
Earnings per share:
  Basic:
    Income (loss) from continuing
      operations before extraordinary loss            (1.04)    (0.38)    (0.80)     0.55      0.64
    Net income (loss)                                 (1.42)     0.35     (0.37)     0.82      0.79
  Diluted:
    Income (loss) from continuing
      operations before extraordinary loss            (1.04)    (0.38)    (0.80)     0.53      0.62
    Net income (loss)                                 (1.42)     0.35     (0.37)     0.80      0.77
----------------------------------------------     --------  --------  --------  --------  --------
End of Period Financial Position:
Total assets                                        $ 444.8   $ 703.9   $ 688.7   $ 668.8   $ 637.8
Working capital                                        82.7     191.8     187.5     232.2     171.1
Property, plant and equipment-gross                   281.4     428.1     402.7     392.8     376.8
Property, plant and equipment-net                      96.2     177.4     172.3     182.9     188.5
Long-term debt                                        632.5     824.5     809.7     161.6     138.8
Total debt                                            641.0     833.0     816.2     162.3     140.3
Stockholders' equity (deficit)                       (349.9)   (312.2)   (321.7)    354.6     316.1
Current ratio                                      1.7 to 1  2.3 to 1  2.3 to 1  3.4 to 1  2.3 to 1
----------------------------------------------     --------  --------  --------  --------  --------
Other Data:
Property, plant and equipment additions(2)         $   11.5  $   39.8  $   18.5  $   21.7  $   78.5
Depreciation and amortization                          23.6      32.7      34.0      30.9      25.0
Interest expense, net of interest income               94.5      98.2      41.1      11.8       7.0
Stock price (3):                  Common high          8.13     15.88     17.69
                                  Common low           2.01      7.44     10.50
Stock price (3):                  Class A high                            14.97     17.19     13.44
                                  Class A low                             11.94      9.47      9.41
Stock price (3):                  Class B high                            14.78     16.13     13.50
                                  Class B low                             11.91      9.75      9.38
Per common share dividends (3):   Class A                                  .072      .143      .131
                                  Class B                                  .067      .134      .122
Shares used in earnings per share
  computations (in millions) (3): Basic                30.8      30.8      58.2      74.7      75.3
                                  Diluted              30.8      30.8      58.2      76.8      77.1
Employees (approximate continuing operations) (1)     3,209     3,455     3,461     3,454     3,753
----------------------------------------------     --------  --------  --------  --------  --------
(1)  Gives effect to the sale of the Company's Sporting Equipment Group on December 7, 2001.
(2)  Includes property, plant, and equipment of acquired companies at date of purchase of $11.3
million, $0.7 million and $59.8 million in the twelve months ended December 31, 2000, 1999, and
1997.  Also includes property, plant, and equipment purchases of the Sporting Equipment Group which
was sold on December 7, 2001 for all years prior to 2001.
(3)  Gives effect to merger and recapitalization on August 19, 1999, described in Note 1 of Notes to
Consolidated Financial Statements.
</table>
                                              Page 10
<page>
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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management's discussion and analysis of its financial condition and results of
operations are based on the Company's consolidated financial statements which
have been prepared in accordance with generally accepted accounting principles.
The preparation of these financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues, and expenses.  The Company bases its 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.

The Company believes the following critical accounting policies affect its more
significant judgments and estimates in the preparation of its consolidated
financial statements.  The Company records reductions to selling prices as
product and goods are shipped.  These reductions are based on competitive and
market conditions, in addition to specific customer contracts in some instances.
These reductions are recorded at the time of shipment either through a reduction
to invoice or the establishment of an accrual for payment at a later date.  The
Company maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of its customers to make payments.  Such allowance
is based on an ongoing review of customer payments against terms and a review of
customer financials through monitoring services.  Based on these reviews,
additional allowances may be required and are recorded in the appropriate
period.  The Company also maintains a reserve to reduce the value of inventory
to net realizable value.  Specific industry market conditions can significantly
increase or decrease the level of inventory on hand in any of the Company's
business units.  The Company will adjust for changes in demand by reducing or
increasing production levels.  The Company estimates the required inventory
reserve by assessing inventory turns and market selling prices on a product by
product basis and may increase or decrease the reserve based on these
assessments.  The Company offers certain warranties with the sale of its
products.  The warranty obligation is recorded as a liability on the balance
sheet and is estimated through historical customer claims, supplier performance,
and new product performance.  Should a change in trend occur in customer claims,
an increase or decrease in the warranty liability may be necessary.  The Company
incurs expenses in the form of product liability claims as the result of product
malfunctions or misuse.  The Company maintains insurance for a portion of this
exposure and records a liability for its non-insured obligations.  The Company
estimates its product liability obligations on a case by case basis in addition
to a review of product performance trends.  These estimated obligations may be
increased or decreased as more information on specific cases becomes available
or issues with product performance occur.

OPERATING RESULTS

TWELVE MONTHS ENDED DECEMBER 31, 2001 COMPARED TO TWELVE MONTHS ENDED DECEMBER
31, 2000

Sales for 2001 were $468.7 million compared to $513.9 million for 2000.  Net
loss from continuing operations before extraordinary loss for the year was $21.8
million ($.71 per share) before accounting for after-tax nonrecurring
restructuring costs of $10.3 million ($.33 per share) related to a plant closure
                                      Page 11
<page>
within the Industrial and Power Equipment segment, the modifications of certain
employee benefit plans, and a reduction in headcount within the Company,
compared to a net loss from continuing operations before extraordinary loss of
$11.7 million ($.38 per share) in 2000.  These results reflect lower sales and
operating income in our operating segments, principally due to reduced demand
associated with weaker market conditions, partially offset by decreased
corporate expenses.

Total selling, general and administrative expenses, excluding the nonrecurring
restructuring costs, were $95.5 million in 2001 compared to $102.3 million in
2000.  The decrease in expenses reflect a reduction of headcount within the
Industrial and Power Equipment segment, as well as at the corporation's
headquarters.  Interest expense in 2001 was $95.9 million in comparison to $99.7
million in 2000.  The lower interest expense is due to lower interest rates,
partially offset by higher borrowing levels during the year.  The principal
reasons for these results and the status of the Company's financial condition
are set forth below.

Sales for the Outdoor Products segment for 2001 were $348.1 million compared to
$360.7 million in 2000.  Operating income in 2001 was $70.3 million compared to
$81.0 million in 2000.  The decline in sales is primarily the result of lower
lawn mower unit sales as reflected in the following table (in millions):

                                                                      % Increase
                                                                      (Decrease)
                                                   2001      2000      in 2001
------------------------------------------        ------    ------    ----------
Chain saw components                              $230.3    $230.8      (0.2)%
Lawn mowers and accessories                         78.8      89.6     (12.1)
Other                                               39.0      40.3      (3.2)
------------------------------------------        ------    ------
     Total segment sales                          $348.1    $360.7      (3.5)%
------------------------------------------        ======    ======

The decline in operating income in 2001 reflects the lower unit sales of Dixon
lawn mowers, reflective of a weak industry demand and reduced sales and
profitability within the European market due primarily to the strong United
States dollar.

The Company's Industrial and Power Equipment segment is a cyclical, capital
goods business whose results are closely linked to the performance of the
forestry industry in general, particularly in the Company's most important
market (the Southeastern United States).  Throughout 2001, the forestry industry
operated within a cyclical downturn environment which resulted in weak demand
for new equipment sales.  Sales of gear components and rotation bearings
declined in 2001 from the prior year as demand declined with a slowdown in the
utility and construction markets that the segment serves.  Sales by the
segment's principal product groups were as follows (in millions):

                                                                      % Increase
                                                                      (Decrease)
                                                   2001      2000      in 2001
------------------------------------------        ------    ------    ----------
Timber harvesting and loading equipment           $101.7    $127.8      (20.4)%
Gear components and rotation bearings               18.9      25.4      (25.6)
------------------------------------------        ------    ------
     Total segment sales                          $120.6    $153.2      (21.3)%
------------------------------------------        ======    ======
                                    Page 12
<page>
During 2001, the segment had an operating loss of $1.7 million compared to an
operating profit of $1.1 million in 2000.  The decline in profitability is
predominantly the result of the reduced sales level offset by reduced SG&A
expenses of $3.7 million resulting from a plant closure and significant
headcount reduction actions taken in 2001.

Income from discontinued operations in 2001 includes the results of SEG which
was sold on December 7, 2001.  Net income in 2001 was $2.5 million compared to
$22.5 million in 2000.  The decline in profitability is due to a decline in
sales from $314.3 million in 2000 to $244.4 million in 2001.  This performance
reflects lower sales of ammunition to the retail market sector due to high
distributor inventory levels, caused in part by the carryover effects of Y2K
buying, lower competitive selling prices on optics products, and reduced
shipments due to the December 7, 2001 sale of this segment to ATK (see Note 1 of
Notes to Consolidated Financial Statements).  Net income was impacted by lower
ammunition volume and selling prices due to customer and product shift, lower
optics selling prices, and reduced sale of accessories, partially offset by
lower selling, general, and administrative expense.

The loss on disposal of $8.5 million in 2001 reflects the sale of SEG and
primarily results from income tax expense due to the difference in book and tax
basis of assets.  The 2001 extraordinary loss of $5.5 million represents the
writeoff net of tax of unamortized deferred financing costs together with
prepayment penalties related to the early payment of debt with the net proceeds
generated from the sale of SEG.

TWELVE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO TWELVE MONTHS ENDED DECEMBER
31, 1999

Sales for 2000 were $513.9 million compared to $486.2 million for 1999.
Operating income from segments for 2000 was $82.1 million compared to $70.7
million for 1999.  For 2000, net loss from continuing operations was $11.7
million ($.38 per share) compared to 1999 net income of $9.1 million ($.15 per
share) before accounting for after-tax merger and recapitalization costs of
$53.6 million ($.90 per share) and non-recurring costs of $2.3 million ($.03 per
share).  Had the merger and recapitalization occurred on January 1, 1999, the
net loss for 1999 from continuing operations reflecting the full-year effect
would have been $25.6 million ($.83 per share).  The 2000 results reflect
increased sales and operating income from the Outdoor Products segment and lower
sales and higher operating income in the Industrial and Power Equipment segment.
The improved results in the Outdoor Products segment is indicative of favorable
market conditions including the effects of storm damage in Europe, partially
offset by the negative impact of the U.S. dollar's strength on overseas sales.
The Industrial and Power Equipment segment reflects the effects of plant
rationalization actions taken in 1999 and the introduction of new products,
partially offset by a downturn in market conditions during 2000.  Corporate
expenses in 1999 include $1.5 million for the donation of art (see Note 1 of
Notes to Consolidated Financial Statements).  Excluding the expenses associated
with the recapitalization and merger and the donation of art, selling, general
and administrative expenses were equal in 2000 and 1999.  This was the result of
reduced corporate expenditures related to cost reduction actions and lower
incentive compensation expenses, partially offset by higher expenses within the
Outdoor Products segment related to higher sales volumes.  Higher interest
expense for 2000 reflects higher long-term debt levels during the current year
resulting from the merger and recapitalization transaction highlighted in Note 1
of Notes to Consolidated Financial Statements.  The Company's effective tax rate
was higher in 2000 in comparison to 1999, primarily the result of the non-
deductible portions of the merger and recapitalization expenses.  The principal
reasons for these results and the status of the Company's financial condition
are set forth below.
                                     Page 13
<page>
Sales in the Outdoor Products segment for 2000 were $360.7 million compared to
$327.6 million in 1999.  Operating income was $81.0 million in 2000 compared to
$71.8 million in 1999.  Sales reflect a significantly higher volume of sales of
chain saw components, particularly in Europe and the United Sates, with smaller
increases in sales in other product lines as indicated in the table following
(in millions):
                                                                      % Increase
                                                                      (Decrease)
                                                   2000      1999      in 2000
------------------------------------------        ------    ------    ----------
Chain saw components                              $230.8    $201.1       14.8%
Lawn mowers and accessories                         89.6      87.2        2.8
Other                                               40.3      39.3        2.5
------------------------------------------        ------    ------
     Total segment sales                          $360.7    $327.6       10.1%
------------------------------------------        ======    ======

The improvement in operating income was primarily due to the higher sales of
chain saw components, partially offset by higher lawn mower manufacturing costs.
Operating income in 2000 compared to 1999 was negatively affected by an
additional $2.9 million from unfavorable foreign currency exchange.

The Company's Industrial and Power Equipment segment is a cyclical, capital
goods business whose results are closely linked to the strength of the forestry
industry in general, particularly in the Company's most important market (the
Southeastern United States), as well as the need to offer discounts in response
to extremely aggressive competitive pricing for available sales.  Segment sales
in 2000 decreased to $153.2 million from $158.6 million as the market for
forestry equipment weakened significantly in the second half of the year.  Soft
market conditions related to low wood prices, paper mill consolidations, higher
fuel prices, and unfavorable weather conditions for a majority of the year,
coupled with an overhang of used equipment in certain dealers' inventories,
continue to impact sales of new equipment.  Sales of gear components and
rotation bearings were essentially flat for the year as increased sales to the
utility market were offset by decreases to the construction and forestry
equipment markets.  Sales by the segment's principal product groups were as
follows (in millions):
                                                                      % Increase
                                                                      (Decrease)
                                                   2000      1999      in 2000
------------------------------------------        ------    ------    ----------
Timber harvesting and loading equipment           $127.8    $133.1       (4.0)%
Gear components and rotation bearings               25.4      25.5       (0.4)
------------------------------------------        ------    ------
     Total segment sales                          $153.2    $158.6       (3.4)%
------------------------------------------        ======    ======

Segment operating income was $1.1 million, which compares to an operating loss
of $1.1 million in 1999.  The improved operating income is primarily due to the
inclusion of Fabtek, which was acquired in September 2000, and lower
manufacturing costs than 1999, which included $3.0 million expense related to
the closure of two facilities, partially offset by the impact of lower unit
shipments.  Market conditions were extremely weak in the fourth quarter of 2000
and resulted in a segment operating loss of $4.3 million for the quarter in
comparison to an operating profit of $4.7 million in the fourth quarter of 1999.
These market dynamics continued throughout 2001 and management does not
anticipate any significant improvement in the first half of 2002.  If current
market conditions were to continue, it would be unlikely this segment could
achieve historical levels of sales and profitability.
                                       Page 14
<page>
Net income from discontinued operations reflects the results of SEG which was
sold in 2001.  Net income declined to $22.5 million in 2000 from $25.0 million
in 1999.  Sales during the same periods declined to $314.3 million from $323.7
million.  This performance reflects lower sales of ammunition which was somewhat
impacted by Y2K buying in 1999 and lower competitive selling prices on optical
products in 2000, partially offset by increased sales to law enforcement and
international markets.  The decrease in net income was the result of the lower
sales, partially offset by lower selling, general and administrative expenses.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2001, as a result of the merger and recapitalization
transactions (see Note 1 of Notes to Consolidated Financial Statements), the
Company has significant amounts of debt, with interest payments on the notes and
interest and principal payments under the new credit facilities representing
significant obligations for the Company.  The notes require semi-annual interest
payments and the term loan facilities under the new credit facilities require
payments of principal through 2005.  In conjunction with the sale of SEG on
December 7, 2001, the Company utilized $170.5 million of proceeds to reduce the
term loan facilities.  At December 31, 2001, the term loan outstanding was
$146.2 million.  Payments of $3.4 million annually through 2004 and $136.0
million in 2005 are required.  Interest on the term loan facilities and amounts
outstanding under the revolving credit facility are payable in arrears according
to varying interest periods.  The Company's remaining liquidity needs relate to
working capital needs, capital expenditures and potential acquisitions.

The Company intends to fund working capital, capital expenditures and debt
service requirements through cash flows generated from operations and from the
revolving credit facility.  The revolving credit facility has an availability of
up to $75.0 million.  Letters of credit issued under the revolving credit
facility which reduce the amount available under the facility were $12.2 million
at December 31, 2001.  The revolving credit facility will mature August 19,
2004.

Certain customers of the Company's Outdoor Products and Industrial and Power
Equipment segments finance their purchases through third party finance
companies.  Under the terms of these financing arrangements, the Company may be
required to repurchase certain equipment from the finance companies.  The
aggregate repurchase amount included in the agreements outstanding as of
December 31, 2001 is $3.2 million.  These arrangements have not had a material
adverse effect on the Company's operating results in the past.  The Company does
not expect to incur any material charges related to these agreements in future
periods, as any repurchase of equipment will likely be resold.  The Company also
sold certain trade account receivables to a third party in 2001 with value of
$0.2 million with minimal recourse (approximately 10% of value).

At December 31, 2001 and 2000, the Company did not have any other 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 other contractually narrow or limited purposes.  As such, the Company is not
materially exposed to any financing, liquidity market or credit risk that could
arise if the Company had engaged in such relationships.

Management believes that cash generated from operations, together with amounts
available under the revolving credit facility, will be sufficient to meet the
Company's working capital, capital expenditure and other cash needs, including
financing for acquisitions, in the foreseeable future.  There can be no
assurance, however, that this will be the case.  The Company may also consider
other options available to it in connection with future liquidity needs.
                                     Page 15
<page>
The Company has senior notes outstanding in the principal amount of $150 million
which mature in 2005.  The Company also has senior subordinated notes
outstanding in the principal amount of $325 million which mature in 2009.  See
Note 3 of Notes to Consolidated Financial Statements for the terms and
conditions of the senior notes, the senior subordinated notes, and the senior
term loans.

In conjunction with the sale of SEG, the Company and its lenders amended the
credit agreement relating to the outstanding term loans.  Among other things,
this amendment adjusted the financial coverage ratios covenants to reflect the
sale of SEG and 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 covenants or other requirements set forth in its credit
agreement or indentures.  Further, the Company does not have any rating triggers
that would accelerate repayment of outstanding debt.

Cash balances at December 31, 2001 were $47.6 million compared to $4.8 million
at December 31, 2000.  The year end 2001 cash balance increased primarily from
the December 7, 2001 sale of SEG which resulted in proceeds of $32.1 million
after the repayment of $170.5 million of outstanding debt and a portion of the
transaction expenses.  The cash on hand at the end of the year will be utilized
in part to pay in the first quarter of 2002 outstanding expenses related to the
SEG transaction.  Cash provided by continuing operating activities was $18.0
million compared to $7.0 million last year.  The increase is due to increased
cash generated by reduced inventory $35.1 million, offset by lower net income
from continuing operations of $20.4 million, reduced cash from accounts
receivable of $8.5 million, and the impact of deferred taxes of $12.7 million.
Cash provided by the operating activities of discontinued operations was $29.8
million in 2001 compared to $22.8 million in 2000.  The increase is due to
reduced working capital, partially offset by lower net income.  Cash generated
from investing activities was $189.1 million compared to a use of $51.7 million
last year.  This year's investing activities include the proceeds from the sale
of SEG.  Last year's investing activities included $32.6 million for the
acquisitions discussed in Note 4.  Cash used for financing activities was $194.1
million compared to a source of $16.2 million in 2000.  The increase in use
primarily reflects the repayment of debt from the SEG sale proceeds and
operating activities.  The proceeds of the SEG sale to ATK generated cash of
$202.6 million in 2001, with anticipated net proceeds of $170.5 million after
the payment in 2002 of $32.1 million outstanding transaction expenses.  Working
capital at December 31, 2001 was $82.7 million compared to $191.8 million last
year.  The decrease is due to the sale of SEG that resulted in a year over year
decrease of $80.6 million in working capital offset by a $42.8 million increase
in cash.  Excluding the impact of the SEG sale, accounts receivable declined by
$21.8 million and inventories declined by $19.1 million from 2000.  These
decreases reflect a reduction in production output in line with market demand in
order to minimize inventory levels.

Accounts receivable at December 31, 2001, and December 31, 2000, and sales by
segment for the fourth quarter of 2001 compared to the fourth quarter of 2000
were as follows (in millions):

                                          December 31,  December 31,   Increase
                                              2001          2000      (Decrease)
------------------------------------      ------------  ------------  ----------
Accounts Receivable:
  Outdoor Products                           $ 39.2        $ 56.8       $(17.6)
  Industrial and Power Equipment               16.6          21.9         (5.3)
------------------------------------         ------        ------       ------
    Total segment receivables                $ 55.8        $ 78.7       $(22.9)
------------------------------------         ======        ======       ======
                                        Page 16
<page>
                                             Three Months Ended
                                          December 31,  December 31,   Increase
                                              2001          2000      (Decrease)
------------------------------------      ------------  ------------  ----------
Sales:
  Outdoor Products                           $ 85.7        $ 88.4       $ (2.7)
  Industrial and Power Equipment               33.3          31.3          2.0
------------------------------------         ------        ------       ------
    Total segment sales                      $119.0        $119.7       $ (0.7)
------------------------------------         ======        ======       ======

The Company's Outdoor Products segment includes Oregon Cutting Systems,
Frederick Manufacturing, and Dixon Industries.  The decrease from last year in
Outdoor Products accounts receivable is reflective of the third-party dealer
financing offered by Dixon and proportionately an increase of domestic sales of
Oregon Cutting Systems products which generally require shorter payment terms.
Accounts receivable within the Industrial and Power Equipment segment declined
from last year due to improved collection efforts and a reduction in extended
term receivables offered in response to market and competitive factors.  At
December 31, 2001, there were approximately $0.1 million in receivables with
extended terms compared to $2.1 million at December 31, 2000.

The Company expects the cash flow from operations and the amounts available
under its revolving credit agreements will be sufficient to cover any additional
increases in working capital until market conditions improve in the Industrial
and Power Equipment segment.  No material adverse effect on the operations,
liquidity or capital resources of the Company is expected as a result of the
extended terms program.  During 2001, the Company would not have been in
compliance with certain of its debt covenants except for the fact that, in
connection with the sale of SEG, the Company and its lenders amended the
covenants; accordingly, the Company was in compliance with all debt covenants as
of and for the year ended December 31, 2001.  While there can be no assurance,
management believes the Company will comply with all debt covenants during 2002.
Should the Company not comply with the covenants during 2002, additional
significant actions will be required.  These actions may include, among others,
attempting to renegotiate its debt facilities, sales of assets, additional
restructurings and reductions in capital expenditures.

Immediately after the merger and recapitalization transaction described in Note
1 of Notes to Consolidated Financial Statements, the Company became
substantially leveraged which may adversely affect its operations.

This substantial leverage could have important consequences for the Company,
including the following:

1.  the ability to obtain additional financing for working capital, capital
expenditures or other purposes may be impaired or may not be available on
favorable terms;

2.  a substantial portion of cash flows available from operations will be
dedicated to the payment of principal and interest expense, which will reduce
the funds that would otherwise be available for operations and future business
opportunities;

3.  a substantial decrease in net income and cash flows or an increase in
expenses may make it difficult to meet debt service requirements or force the
Company to modify operations; and

4.  substantial leverage may make the Company more vulnerable to economic
downturns and competitive pressure.
                                    Page 17
<page>
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.  See
Interest Rate Risk and Commodity Price Risk below for discussion of expectations
as regards to future use of interest rate and commodity price derivatives.

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, 2001, no significant 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,
2001, by $19.1 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 approximately $1.0 million in 2002.

Under its Credit Agreement, the Company was required to enter into hedge
agreements within 180 days of the borrowing and maintain such hedge agreements
in place until the second anniversary of the borrowing, such that at least 33%
of the aggregate principal amount of the borrowings are subject to a fixed rate
of interest.  This requirement expired on August 19, 2001.

Foreign Currency Exchange Risk:
Approximately 31% of Oregon's sales and 51% of its operating costs and expenses
were transacted in foreign currencies in 2001.  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
and expenses 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, 2001, no foreign currency exchange
derivatives were outstanding.

Commodity Price Risk:
The Company purchases certain raw materials for the manufacture of products.
Some of these raw materials are subject to price volatility over periods of
time.  The Company has not hedged against the price change within its continuing
operations segments with any derivative instruments.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141, "Business Combinations," ("SFAS 141")
and Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," ("SFAS 142").  SFAS 141 requires business combinations
initiated after June 30, 2001 to be accounted for using the purchase method of
accounting and broadens the criteria for recording intangible assets separate
from goodwill.  Recorded goodwill and intangibles will be evaluated against this
new criteria.  SFAS 142 requires the use of a nonamortization approach to
account for purchased goodwill and certain intangibles.  These items will not be
amortized into results of operations, but instead would be reviewed for
impairment and written down through charges to results of operations in the
                                     Page 18
<page>
periods in which their recorded value of goodwill is more than their fair value.
The provisions of each statement which apply to goodwill and intangible assets
acquired prior to June 30, 2001 will be adopted by the Company on January 1,
2002.  The Company expects the adoption of these accounting standards to reduce
annual continuing operations amortization of goodwill and intangibles by
approximately $3.0 million commencing January 1, 2002.

The Company is in the process of preparing for its adoption of SFAS 142 and is
making the determination as to what reporting units are and what amounts of
goodwill, intangible assets, and other liabilities should be allocated to those
reporting units.  SFAS 142 requires that goodwill be tested annually for
impairment, using a two-step process.  The first step is to identify a potential
impairment as of the beginning of the year.  The Company expects to complete
this first step of the goodwill impairment test within the SFAS 142 requirement
of within six months of adoption.  The second step of the goodwill impairment
test measures the amount of the impairment loss and must be completed by the end
of the Company's fiscal year.  The Company has not determined what effect these
impairment tests will have on the Company's earnings and financial position.

In June 2001, the FASB issued Statement of Financial Accounting Standards No.
143, "Accounting for Asset Retirement Obligations," ("SFAS 143").  SFAS 143
requires that obligations associated with the retirement of tangible long-term
assets are to be recorded as a liability when the obligations are incurred.  The
statement is effective for fiscal years beginning after June 15, 2002, with
earlier adoption encouraged.  The Company does not expect any material impact on
the results of operations upon implementation of SFAS 143.

In August 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-lived Assets," ("SFAS
144").  This statement establishes a single accounting model for long-lived
assets to be disposed of by sale based on the framework established by SFAS 121.
The statement is effective for fiscal years beginning after December 15, 2001.
The Company is currently assessing this new standard.

RELATED PARTY TRANSACTIONS

As a result of the Merger and Recapitalization, Lehman Brothers Holdings, Inc.,
through its affiliates, owns approximately 85% of the Company's stock.  By
virtue of such ownership, Lehman Brothers Holdings, Inc. is able significantly
to influence the business and affairs of the Company with respect to matters
requiring stockholder approval.  From time to time, Lehman Brothers Holdings,
Inc. or its affiliates also receive customary fees for services to the Company
in connection with other financings, divestitures, acquisitions, and certain
other transactions, including in 2001 $10.1 million in underwriting fees to
Lehman and CS First Boston of which ATK reimbursed $5.0 million in connection
with the sale of the Sporting Equipment segment on December 7, 2001.

FORWARD LOOKING STATEMENTS

Forward looking statements in this report (including without limitation
management's "Assumptions," "Beliefs," "Estimates," "Expectations" or
"Projections" and variants of each), as defined by the Private Securities
Litigation Reform Law of 1995, involve certain risks and uncertainties that may
cause actual results to differ materially from expectations as of the date of
this report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See "Management's Discussion and Analysis of Results of Operations and Financial
Condition - Market Risk" on page 18.
                                       Page 19
<page>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                      REPORT OF INDEPENDENT ACCOUNTANTS
                      ---------------------------------


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

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) present fairly, in all material respects, the
financial position of  Blount International, Inc. and its subsidiaries at
December 31, 2001 and 2000, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States of
America.  In addition, in our opinion, the financial statement schedules listed
in the index appearing under Item 14(a)(2) present fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.  These financial statements and
financial statement schedules are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.  We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement.  An audit includes 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.
We believe that our audits provide a reasonable basis for the opinion expressed
above.



PricewaterhouseCoopers LLP

Atlanta, Georgia
January 28, 2002
                                        Page 20
<page>
                          MANAGEMENT RESPONSIBILITY

All information contained in the consolidated financial statements of Blount
International, Inc. has been prepared by management, which is responsible for
the accuracy and internal consistency of the information.  Generally accepted
accounting principles have been followed.  Reasonable judgments and estimates
have been made where necessary.

Management is responsible for establishing and maintaining a system of internal
accounting controls designed to provide reasonable assurance as to the integrity
and reliability of financial reporting.  The system of internal accounting
controls is tested by the independent auditors to the extent deemed necessary in
accordance with generally accepted auditing standards and through an internal
audit program administered in conjunction with management.  Management believes
the system of internal controls has been effective during the Company's most
recent fiscal year and that no matters have arisen which indicate a material
weakness in the system.  Management follows the policy of responding to the
recommendations concerning the system of internal controls made by the
independent auditors.  Management implements those recommendations that it
believes would improve the system of internal controls and be cost justified.

Three directors of the Company, not members of management, serve as the Audit
Committee of the Board and are the principal means through which the Board
discharges its financial reporting responsibility.  The Audit Committee meets
with management personnel and the Company's independent auditors each year to
consider the results of external audits of the Company and to discuss internal
accounting control, auditing and financial reporting matters.  At these
meetings, the Audit Committee also meets privately with the independent auditors
of the Company to ensure free access by the independent auditors to the
committee.

The Company's independent auditors, PricewaterhouseCoopers LLP, audited the
financial statements prepared by the Company.  Their opinion on these statements
appears herein.


HAROLD E. LAYMAN                              RODNEY W. BLANKENSHIP
President and                                 Senior Vice President
Chief Executive Officer                       and Chief Financial Officer




                                      Page 21
<page>
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Blount International, Inc. and Subsidiaries

                                                        Twelve Months Ended
                                                            December 31,
(Dollar amounts in millions,                         --------------------------
except per share data)                                2001      2000      1999
------------------------------------------------     ------    ------    ------
Sales                                                $468.7    $513.9    $486.2
Cost of sales                                         312.3     339.8     329.0
------------------------------------------------     ------    ------    ------
Gross profit                                          156.4     174.1     157.2
Selling, general and administrative expenses           95.5     102.3     103.8
Merger expenses                                                            76.1
Restructuring expenses                                 16.2
------------------------------------------------     ------    ------    ------
Income (loss) from operations                          44.7      71.8     (22.7)
Interest expense                                      (95.9)    (99.7)    (44.8)
Interest income                                         1.4       1.5       3.7
Other income (expense)                                 (0.7)      6.6       0.8
------------------------------------------------     ------    ------    ------
Loss from continuing operations before income taxes   (50.5)    (19.8)    (63.0)
Benefit for income taxes                              (18.4)     (8.1)    (16.2)
------------------------------------------------     ------    ------    ------
Loss from continuing operations before
  extraordinary loss                                  (32.1)    (11.7)    (46.8)
Discontinued operations:
  Net income from operations, net of taxes of
    $2.3, $14.5 and $15.4                               2.5      22.5      25.0
  Loss on disposal, net of taxes of $16.2              (8.5)
------------------------------------------------     ------    ------    ------
Income (loss) before extraordinary items              (38.1)     10.8     (21.8)
Extraordinary loss, net of taxes of $2.9               (5.5)
------------------------------------------------     ------    ------    ------
Net income (loss)                                    $(43.6)   $ 10.8    $(21.8)
------------------------------------------------     ------    ------    ------
Basic earnings (loss) per share:
  Continuing operations                              $(1.04)   $(0.38)   $(0.80)
  Discontinued operations                             (0.20)     0.73      0.43
  Extraordinary loss                                  (0.18)
------------------------------------------------     ------    ------    ------
  Net income (loss)                                  $(1.42)   $ 0.35    $(0.37)
------------------------------------------------     ------    ------    ------
Diluted earnings (loss) per share:
  Continuing operations                              $(1.04)   $(0.38)   $(0.80)
  Discontinued operations                             (0.20)     0.73      0.43
  Extraordinary loss                                  (0.18)
------------------------------------------------     ------    ------    ------
  Net income (loss)                                  $(1.42)   $ 0.35    $(0.37)
------------------------------------------------     ------    ------    ------

The accompanying notes are an integral part of the audited financial statements.
                                     Page 22
<page>
CONSOLIDATED BALANCE SHEETS
Blount International, Inc. and Subsidiaries

                                                                December 31,
                                                             ------------------
(Dollar amounts in millions, except per share data)            2001      2000
-----------------------------------------------------------  --------  --------
Assets
-----------------------------------------------------------  --------  --------
Current assets:
  Cash and cash equivalents                                  $   47.6  $    4.8
  Accounts receivable, net of allowance for
    doubtful accounts of $3.5 and $3.8                           57.3     149.0
  Inventories                                                    68.1     150.7
  Deferred income taxes                                          22.9      23.8
  Other current assets                                            8.2       7.1
-----------------------------------------------------------  --------  --------
    Total current assets                                        204.1     335.4
Property, plant and equipment, net of accumulated
  depreciation of $185.2 and $250.7                              96.2     177.4
Cost in excess of net assets of acquired businesses, net         76.9     128.3
Other assets                                                     67.6      62.8
-----------------------------------------------------------  --------  --------
Total Assets                                                 $  444.8  $  703.9
-----------------------------------------------------------  --------  --------
Liabilities and Stockholders' Equity (Deficit)
-----------------------------------------------------------  --------  --------
Current liabilities:
  Notes payable and current maturities of long-term debt     $    8.5  $    8.5
  Accounts payable                                               19.7      44.0
  Accrued expenses                                               93.2      91.1
-----------------------------------------------------------  --------  --------
    Total current liabilities                                   121.4     143.6
Long-term debt, exclusive of current maturities                 632.5     824.5
Deferred income taxes, exclusive of current portion               2.8       4.7
Other liabilities                                                38.0      43.3
-----------------------------------------------------------  --------  --------
    Total liabilities                                           794.7   1,016.1
-----------------------------------------------------------  --------  --------
Commitments and Contingent Liabilities
-----------------------------------------------------------  --------  --------
Stockholders' equity (deficit):
Common stock: par value $.01 per share, 100,000,000 shares
  authorized, 30,795,882 outstanding                              0.3       0.3
Capital in excess of par value of stock                         424.3     417.3
Accumulated deficit                                            (780.6)   (737.1)
Accumulated other comprehensive income                            6.1       7.3
-----------------------------------------------------------  --------  --------
    Total stockholders' deficit                                (349.9)   (312.2)
-----------------------------------------------------------  --------  --------
Total Liabilities and Stockholders' Equity (Deficit)         $  444.8  $  703.9
-----------------------------------------------------------  --------  --------

The accompanying notes are an integral part of the audited financial statements.
                                      Page 23
<page>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Blount International, Inc. and Subsidiaries
<table>
                                                                                       Twelve Months Ended December 31,
                                                                                       --------------------------------
(Dollar amounts in millions)                                                             2001        2000       1999
------------------------------------------------------------------------------------   --------    --------   ---------

                                                                                     <c>         <c>       <c>
Cash flows from operating activities:
Net income (loss)                                                                       $ (43.6)    $  10.8   $   (21.8)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
  (Income) loss from discontinued operations                                                6.0       (22.5)      (25.0)
  Extraordinary loss                                                                        5.5
  Depreciation, amortization and other noncash charges                                     25.6        21.2        22.9
  Deferred income taxes                                                                   (19.5)       (6.8)       (3.1)
  Gain (loss) on disposals of property, plant and equipment                                 0.5        (5.9)       (0.5)
  Changes in assets and liabilities, net of effects of businesses acquired and sold:
    (Increase) decrease in accounts receivable                                             21.8        30.3       (16.1)
    (Increase) decrease in inventories                                                     19.1       (16.0)        2.4
    (Increase) decrease in other assets                                                     9.7         8.2        (4.5)
    Increase (decrease) in accounts payable                                                (5.4)       (6.7)        9.5
    Increase (decrease) in accrued expenses                                                (2.7)       (3.6)       22.8
    Increase (decrease) in other liabilities                                                1.0        (2.0)       (1.1)
------------------------------------------------------------------------------------    -------     -------   ---------
  Net cash provided by (used in) continuing operations                                     18.0         7.0       (14.5)
  Net cash provided by discontinued operations                                             29.8        22.8        33.5
------------------------------------------------------------------------------------    -------     -------   ---------
  Net cash provided by operating activities                                                47.8        29.8        19.0
------------------------------------------------------------------------------------    -------     -------   ---------
Cash flows from investing activities:
Proceeds from sales of property, plant and equipment                                        2.7        17.1         0.8
Proceeds from sale of discontinued operations                                             202.6
Purchases of property, plant and equipment                                                (11.5)      (20.6)       (9.7)
Acquisitions of businesses                                                                 (1.3)      (32.6)       (0.7)
Other                                                                                                              (3.3)
------------------------------------------------------------------------------------    -------     -------   ---------
  Net cash  provided by (used in) continuing operations                                   192.5       (36.1)      (12.9)
  Net cash used in discontinued operations                                                 (3.4)      (15.6)       (8.4)
------------------------------------------------------------------------------------    -------     -------   ---------
  Net cash provided by (used in) investing activities                                     189.1       (51.7)      (21.3)
------------------------------------------------------------------------------------    -------     -------   ---------
Cash flows from financing activities:
Net increase in short-term borrowings                                                                   2.0         3.0
Issuance of long-term debt                                                                 13.0        18.1       696.9
Reduction of long-term debt                                                              (211.2)       (3.5)      (74.6)
Capital contribution                                                                        7.0
Decrease in restricted funds                                                                                        3.5
Dividends paid                                                                                                     (7.8)
Redemption of common stock                                                                                     (1,068.8)
Capital contribution                                                                                              417.5
Other                                                                                      (2.9)       (0.4)       (2.0)
------------------------------------------------------------------------------------    -------     -------   ---------
  Net cash provided by (used in) financing activities                                    (194.1)       16.2       (32.3)
------------------------------------------------------------------------------------    -------     -------   ---------
Net increase (decrease) in cash and cash equivalents                                       42.8        (5.7)      (34.6)
------------------------------------------------------------------------------------    -------     -------   ---------
Cash and cash equivalents at beginning of period                                            4.8        10.5        45.1
------------------------------------------------------------------------------------    -------     -------   ---------
Cash and cash equivalents at end of period                                              $  47.6     $   4.8   $    10.5
------------------------------------------------------------------------------------    -------     -------   ---------
</table>
The accompanying notes are an integral part of the audited financial statements.
                                                Page 24
<page>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Blount International, Inc. and Subsidiaries
<table>
                                                                                                   Accumulated
                                                        Common Stock         Capital   Retained      Other
(Dollar amounts in millions,                      ------------------------  In Excess  Earnings   Comprehensive  Treasury
shares in thousands)                              Common  Class A  Class B    of Par   (Deficit)     Income       Stock      Total
-------------------------------------------       ------  -------  -------  ---------  ---------  -------------  --------   -------

                                                <c>      <c>      <c>       <c>      <c>               <c>     <c>       <c>
Balance, December 31, 1998                                  $ 0.3    $ 0.1     $ 38.7   $  348.9          $ 7.6   $ (41.0)  $ 354.6
Net income (loss)                                                                          (21.8)                             (21.8)
Other comprehensive income, net:
  Foreign currency translation adjustment                                                                  (0.5)               (0.5)
  Unrealized gains on securities                                                                            1.0                 1.0
  Minimum pension liability adjustment                                                                      0.5                 0.5
                                                                                                                            -------
        Comprehensive income (loss)                                                                                           (20.8)
Redemption of common stock, 48,475 shares
  of Class A and 22,776 shares of Class B                    (0.3)    (0.1)             (1,068.4)                          (1,068.8)
Capital Contributions (27,833 shares)              $ 0.2                        417.3                                         417.5
Exchange of Class A for 2,963 shares of Common       0.1                                                                        0.1
Conversion of Class B to Class A (183 shares)
Retire treasury stock (3,605 Class A)                                           (38.8)      (1.1)                    39.9
Dividends                                                                                   (5.2)                              (5.2)
Other - principally stock options exercised                                       0.1       (0.3)                     1.1       0.9
-------------------------------------------       ------  -------  -------  ---------  ---------  -------------  --------   -------
Balance, December 31, 1999                           0.3                        417.3     (747.9)           8.6              (321.7)
Net income (loss)                                                                           10.8                               10.8
Other comprehensive income, net:
  Foreign currency translation adjustment                                                                  (0.8)               (0.8)
  Unrealized losses                                                                                        (0.5)               (0.5)
                                                                                                                            -------
        Comprehensive income                                                                                                    9.5
-------------------------------------------       ------  -------  -------  ---------  ---------  -------------  --------   -------
Balance, December 31, 2000                           0.3                        417.3     (737.1)           7.3              (312.2)
Net income (loss)                                                                          (43.6)                             (43.6)
Other comprehensive income, net:
  Foreign currency translation adjustment                                                                  (0.7)               (0.7)
  Unrealized losses                                                                                        (0.5)               (0.5)
                                                                                                                            -------
        Comprehensive income                                                                                                  (44.8)
Capital contribution                                                              7.0                                           7.0
-------------------------------------------       ------  -------  -------  ---------  ---------  -------------  --------   -------
Balance, December 31, 2001                         $ 0.3                       $424.3   $ (780.6)         $ 6.1             $ 349.9
-------------------------------------------       ------  -------  -------  ---------  ---------  -------------  --------   -------
</table>
The accompanying notes are an integral part of the audited financial statements.
                                                            Page 25
<page>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Blount International, Inc. and Subsidiaries

NOTE 1:
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:
The consolidated financial statements include the accounts of Blount
International, Inc. and its subsidiaries ("the Company").  All significant
intercompany balances and transactions are eliminated in consolidation.

Merger and Recapitalization:
On August 19, 1999, Blount International, Inc., a Delaware corporation, merged
with Red Dog Acquisition, Corp., a Delaware corporation and a wholly-owned
subsidiary of Lehman Brothers Merchant Banking Partners II L.P. ("Lehman").  The
merger was completed pursuant to an Agreement and Plan of Merger and
Recapitalization dated as of April 18, 1999.  Lehman is a $2.0 billion
institutional merchant banking fund focused on investments in established
operating companies.  This transaction was accounted for as a recapitalization
under generally accepted accounting principles.  Accordingly, the historical
basis of the Company's assets and liabilities has not been impacted by the
transaction.

As a result of the proration and stock election procedures related to the
merger, approximately 1.5 million shares of Blount International's pre-merger
outstanding common stock were retained by existing shareholders and exchanged,
on a two-for-one basis, for 3.0 million shares of post-merger outstanding common
stock.  All share and per share information for periods prior to the merger have
been restated to reflect the split.  Lehman and certain members of Company
management made a capital contribution of approximately $417.5 million and
received approximately 27.8 million shares of post-merger outstanding common
stock.  Lehman controls approximately 85% of the 30.8 million shares outstanding
following the merger.

The merger was financed by the equity contribution of $417.5 million, senior
term loans of $400 million and senior subordinated notes of $325 million issued
by Blount, Inc., a wholly-owned subsidiary of Blount International, Inc.  The
new credit facilities have an aggregate principal amount of $500.0 million,
comprised of a $60.0 million Tranche A Term Loan (none of which was outstanding
at December 31, 2001) and a $340.0 million Tranche B Term Loan ($146.2 million
of which was outstanding at December 31, 2001), and a $100.0 million revolving
credit facility (none of which was outstanding at December 31, 2001).  See Note
3.  The amounts available under the revolving credit facility were reduced to
$75 million after an amendment to the credit agreement on December 7, 2001.

Basis of Presentation:
On December 7, 2001, the Company sold its Sporting Equipment Group ("SEG") to
Alliant Techsystems, Inc. ("ATK").  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 SEG to Ammunition Accessories, Inc. in exchange for
all the authorized stock of Ammunition Accessories Inc.  The Company received
approximately 3 million shares of ATK stock and $10,000 in cash for the sale of
SEG.  The Company has subsequently sold the ATK stock and received gross
proceeds of $236.7 million.  Net proceeds of approximately $170.5 million are
anticipated after the payment of $10.1 million in underwriting fees to Lehman
and CS First Boston of which ATK reimbursed $5.0 million and $36.1 million in
other transaction related costs and income taxes and the establishment of $25.0
million escrow amount which is included in Other Assets as defined by the
                                    Page 26
<page>
Purchase Agreement between the Company and ATK.  The results of operations for
SEG have been reclassified to discontinued operations for 2001 and all prior
years as presented in the consolidated statement of income (loss).  The
consolidated balance sheet for the year ended December 31, 2001 reflects the
sale of SEG on December 7, 2001.  The consolidated balance sheet for the year
ended December 31, 2000 includes the net assets of SEG and is comprised of:

                                                     December 31, 2000
     -------------------------------------------     -----------------
     Current assets                                       $133.7
     Property, plant and equipment                          74.7
     Goodwill and other intangible assets                   50.4
     Other assets                                            1.2
     Current liabilities                                   (42.6)
     Other liabilities                                      (8.1)
     -------------------------------------------          ------
     Net assets of discontinued operations                $209.3
     -------------------------------------------          ------

Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Estimates are used when accounting for the allowance for doubtful accounts,
inventory obsolescence, long-lived assets, product warranty expenses, casualty
insurance costs, product liability expenses, other legal proceedings, employee
benefit plans, income taxes, discontinued operations and contingencies.  It is
reasonably possible that actual results could differ significantly from those
estimates and significant changes to estimates could occur in the near term.

Cash and Cash Equivalents:
The Company considers all highly liquid temporary cash investments that are
readily convertible to known amounts of cash and present minimal risk of changes
in value because of changes in interest rates to be cash equivalents.

Inventories:
Inventories are stated at the lower of first-in, first-out cost or market.

Property, Plant and Equipment:
These assets are stated at cost and are depreciated principally 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:  buildings and improvements - 5 years to 45 years; machinery and
equipment - 3 years to 10 years; furniture, fixtures and office equipment - 3
years to 10 years; and transportation equipment - 3 years to 15 years.  Gains or
losses on disposal are reflected in income. Property, plant and equipment held
under leases which are essentially installment purchases are capitalized with
the related obligations stated at the principal portion of future lease
payments. Depreciation charged to continuing operations costs and expenses was
$14.4 million, $13.5 million, and $17.9 million in 2001, 2000, and 1999,
respectively.

Interest cost incurred during the period of construction of plant and equipment
is capitalized. No material amounts of interest were capitalized on plant and
equipment during the three years ended December 31, 2001.

Cost in excess of net assets of acquired businesses:
The excess cost is amortized by the straight-line method over periods ranging
                                     Page 27
<page>
from 5 to 40 years.  Accumulated amortization was $34.7 million and $42.3
million as of December 31, 2001 and 2000.

Impaired Assets:
The company reviews the carrying values of long-lived assets, identifiable
intangibles, and goodwill for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.  An impairment loss for an asset to be held and used is recognized
when the fair value of the asset, generally based on discounted estimated future
cash flows, is less than the carrying value of the asset.  An impairment loss
for assets to be disposed of is recognized when the fair value of the asset,
less costs to dispose, is less than the carrying value of the asset.

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

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 into 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" in stockholders' equity. The amount of income taxes allocated to this
translation adjustment is not significant.  Foreign exchange adjustments to
pretax income were not material in 2001, 2000, and 1999.

Derivative Financial Instruments:
On January 1, 2001, the Company adopted SFAS 133, as amended by SFAS 138,
"Accounting for Derivative Instruments and Hedging Activities."  The adoption
did not have a material impact on the results of operations.  As of December 31,
2001, the Company did not have any material derivative contracts outstanding.

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.

Revenue Recognition:
The Company's policy is to record sales when title is passed, which is generally
when orders are shipped.

Shipping and Handling Costs:
The Company incurs expenses for the delivery of incoming goods and services and
the shipment of goods to customers.  These expenses are recognized in the period
in which they occur and are classified as gross revenues if billed and cost of
goods sold if incurred by the Company in the financial statements in accordance
with the Financial Accounting Standards Board's Emerging Issues Task Force's
Issue (EITF) 00-10, "Accounting for Shipping and Handling Fees and Costs."
                                     Page 28
<page>
Sales Incentives:
The Company provides various sales incentives to customers in the form of
coupons, rebates, discounts, free product, and advertising allowances.  The cost
of such expenses is recorded at the time of sale and revenue recognition and are
recorded as a reduction to revenue in accordance with EITF 00-14, "Accounting
for Certain Sales Incentives."

Advertising:
Advertising costs are expensed as incurred except for cooperative advertising
which is accrued over the period the revenues are recognized and sales materials
such as brochures and catalogs which are accounted for as prepaid supplies and
expensed over the period used.  Advertising costs from continuing operations
were $7.0 million, $9.3 million, and $7.7 million for 2001, 2000, and 1999,
respectively.

Research and Development:
Expenditures for research and development are expensed as incurred. These costs
from continuing operations were $2.5 million, $4.9 million, and $3.0 million for
2001, 2000, and 1999, respectively.

Contributions:
During the first quarter of 1999, the Company donated art with a book value of
$1.5 million and an appraised value of $4.7 million to The Blount Foundation,
Inc., a charitable foundation.  On an after-tax basis, this donation had no
significant effect on net income.

Restructuring Expense:
During the first quarter of 2001, the Company incurred a restructuring expense
of $16.2 million.  The expense includes $0.6 million related to the closure of a
manufacturing facility in Zebulon, North Carolina.  The remaining $15.6 million
in restructuring expense relates to the modification of certain employee benefit
plans and a reduction in headcount and expenses principally at the corporate
headquarters.  As of December 31, 2001, the accrued restructuring reserve was
$3.1 million.


NOTE 2:
INCOME TAXES

The provision (benefit) for income taxes attributable to income (loss) from
continuing operations is as follows:

                                                         Twelve Months Ended
                                                             December 31,
                                                       ------------------------
(Dollar amounts in millions)                            2001     2000     1999
------------------------------------------------       ------   ------   ------
Current provision (benefit):
   Federal                                             $(24.7)  $ (8.8)  $(17.2)
   State                                                 (0.4)     1.0      1.1
   Foreign                                                6.4      6.0      5.0
Deferred provision (benefit):
   Federal                                                1.3     (7.0)    (5.0)
   State                                                 (0.3)    (0.4)    (0.5)
   Foreign                                               (0.7)     1.1      0.4
------------------------------------------------       ------   ------   ------
                                                       $(18.4)  $ (8.1)  $(16.2)
------------------------------------------------       ------   ------   ------
                                    Page 29
<page>
A reconciliation of the provision (benefit) for income taxes to the amount
computed by applying the statutory federal income tax rate to income (loss)
before extraordinary loss and income taxes is as follows:

                                                         Twelve Months Ended
                                                             December 31,
                                                       ------------------------
(Dollar amounts in millions)                            2001     2000     1999
------------------------------------------------       ------   ------   ------
Income (loss) before income taxes:
   Domestic                                            $(68.8)  $(35.4)  $(72.3)
   Foreign                                               18.3     15.6      9.3
------------------------------------------------       ------   ------   ------
                                                       $(50.5)  $(19.8)  $(63.0)
------------------------------------------------       ------   ------   ------
                                                            %        %        %
Statutory tax rate                                      (35.0)   (35.0)   (35.0)
Impact of earnings of foreign operations                 (1.1)     2.1      3.0
State income taxes, net of federal tax benefit            0.1      1.0      0.1
Merger expenses                                                             9.0
Contributions                                                              (1.0)
Permanent differences                                     1.4      7.0      2.0
Other items, net                                         (1.8)   (16.0)    (3.8)
------------------------------------------------       ------   ------   ------
Effective income tax rate                               (36.4)   (40.9)   (25.7)
------------------------------------------------       ------   ------   ------

All years reflect the allocation of substantially all corporate office expenses
and interest expense to domestic operations.

As of December 31, 2001 and 2000, deferred income tax assets were $50.1 million
and $48.2 million and deferred income tax liabilities were $30.7 million and
$29.2 million. Deferred income tax assets (liabilities) applicable to temporary
differences at December 31, 2001 and 2000, are as follows:

(Dollar amounts in millions)                                     2001     2000
------------------------------------------------------------    ------   ------
Property, plant and equipment basis differences                 $(16.3)  $(15.9)
Employee benefits                                                 24.1     22.3
Other accrued expenses                                            20.4     22.9
Other - net                                                       (8.8)   (10.3)
------------------------------------------------------------    ------   ------
                                                                $ 19.4   $ 19.0
------------------------------------------------------------    ------   ------

In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized.  Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income and tax planning
strategies in making this assessment.  The Company expects the deferred tax
assets at December 31, 2001 to be realized as a result of the reversal of
existing taxable temporary differences.

Deferred income taxes of approximately $3.0 million have not been provided on
undistributed earnings of foreign subsidiaries in the amount of $30.6 million as
the earnings are considered to be permanently reinvested.

The Company has settled its issues with the Internal Revenue Service through the
1997 fiscal year with no material adverse effect.  The periods from fiscal 1998
through 2001 are still open for review.
                                     Page 30
<page>
NOTE 3:
DEBT AND FINANCING AGREEMENTS

Long-term debt at December 31, 2001 and 2000, consists of the following:

(Dollar amounts in millions)                                     2001     2000
------------------------------------------------------------    ------   ------
13% Senior subordinated notes, maturing on
  August 1, 2009                                                $325.0   $325.0
7% Senior notes (net of discount), maturing on
  June 15, 2005                                                  149.2    149.0
Tranche B senior term loans, maturing at various dates
  through December 31, 2005, interest rate varies with LIBOR,
  prime or CD rate depending upon borrowing option selected      146.2    335.8
$75 million revolving credit agreement maturing
  August 19, 2004, interest rate varies with LIBOR, prime
  or CD rate depending upon borrowing option selected              0.0     18.1
12% Lehman Brothers preferred equivalent security                 15.5      0.0
Lease purchase obligations, interest at varying
  rates, payable in installments to 2003                           0.1      0.1
------------------------------------------------------------    ------   ------
                                                                 636.0    828.0
Less current maturities                                           (3.5)    (3.5)
------------------------------------------------------------    ------   ------
                                                                $632.5   $824.5
------------------------------------------------------------    ======   ======

Maturities of long-term debt and the principal and interest payments on long-
term capital leases are as follows:

                                                 Capital Leases
                                              ---------------------     Total
(Dollar amounts in millions)        Debt      Principal    Interest    Payments
-------------------------------    ------     ---------    --------    --------
2002                               $  3.4       $ 0.1                   $  3.5
2003                                  3.4                                  3.4
2004                                  3.4                                  3.4
2005                                285.2                                285.2
2006                                  0.0                                  0.0
2007 and beyond                     340.5                                340.5
-------------------------------    ------       -----       -----       ------
                                   $635.9       $ 0.1       $ 0.0       $636.0
-------------------------------    ------       -----       -----       ------

In June 1998, Blount, Inc., a wholly-owned subsidiary of Blount International,
Inc., issued senior notes ("the 7% senior notes") with a stated interest rate of
7% in the principal amount of $150 million maturing on June 15, 2005.  The
senior notes are fully and unconditionally guaranteed by Blount International,
Inc.  Approximately $8.3 million, reflecting the price discount and the cost to
extinguish an interest rate contract accounted for as a hedge of future interest
on the debt, is being amortized to expense over the life of the senior notes.
The senior notes are redeemable at a premium, in whole or in part, at the option
of the Company at any time.  The debt indenture contains restrictions on secured
debt, sale and lease-back transactions, and the consolidation, merger and sale
of assets.

In August 1999, Blount, Inc., a wholly-owned subsidiary of Blount International,
Inc., issued senior subordinated notes (the "senior subordinated notes") with an
interest rate of 13% in the principal amount of $325 million.  The senior
subordinated notes provide for a premium for the redemption of an aggregate of
                                     Page 31
<page>
35% of the senior subordinated notes until August 1, 2002, and for redemption at
a premium of all or part of the senior subordinated notes after August 1, 2004,
until August 1, 2007, when the senior subordinated notes are redeemable at par.
In connection with the $325 million senior subordinated notes, the Company filed
a registration statement on Form S-4 on July 15, 1999.  Blount, Inc. also
entered into new credit facilities with an aggregate principal amount of $500.0
million, comprised of a $60.0 million Tranche A Term Loan (which has been paid
in full), a $340.0 million Tranche B Term Loan ($146.2 million outstanding at
December 31, 2001), and a $100.0 million revolving credit facility.  On December
7, 2001, the Company amended the credit agreement to incorporate the impact of
the sale of SEG to ATK.  The amendment addressed, among other things, the
repayment of a portion of the outstanding debt with the net proceeds from the
SEG sale, revisions to the consolidated leverage and interest coverage ratios, a
reduction in the revolving credit facility to $75 million, and certain
prepayment and amendment fees.  The agreement also cures any event of default
under the credit agreement that had been communicated to the lenders on October
30, 2001.  At December 31, 2001, there was $146.2 million outstanding on Tranche
B Term Loans.

The Tranche B Term Loan repayments as a result of the amendment are $850,000
each quarter until June 30, 2005, then increasing to $80.0 million on September
30, 2005, and a final payment of $54.3 million on December 31, 2005.  The
Tranche B borrowings can be repaid, in whole or in part, at anytime.  The
Company and all of the Company's domestic subsidiaries other than Blount, Inc.
guarantee Blount, Inc.'s obligations under the debt issued to finance the merger
and recapitalization of August 19, 1999.  In addition, Blount, Inc. has pledged
65% of the stock of its non-domestic subsidiaries as further collateral.
Blount, Inc.'s obligations and its domestic subsidiaries' guarantee obligations
under the new credit facilities are collateralized by a first priority security
interest in substantially all of their respective assets.  The Company's
guarantee obligations in respect of the new credit facilities are collateralized
by a pledge of all of Blount, Inc.'s capital stock.  The 7.0% senior notes share
equally and ratably in certain of the collateral securing the new credit
facilities.  The Company was required to enter into hedge agreements within 180
days of the Tranche B borrowing and maintain such hedge agreements in place
until the second anniversary of the Tranche B borrowing such that at least 33%
of the aggregate principal amount of the Tranche B borrowing is subject to a
fixed rate of interest.  The Company had in place an interest rate cap at an
immaterial cost to comply with this requirement.

In August 1999, the Company replaced its $150 million revolving credit agreement
expiring April 1, 2002, with a new $100 million revolving credit agreement
expiring on August 19, 2004.  The amount available under the revolving credit
agreement was reduced by amendment on December 7, 2001 to $75 million.  At
December 31, 2001, there were no amounts outstanding under the revolving credit
agreement.  The revolving credit agreement provides for interest rates to be
determined at the time of borrowings based on a choice of formulas as specified
in the agreement.  The interest rates may vary based on LIBOR and base interest
rates.  The revolving credit agreement and the term loan facilities contain
covenants relating to indebtedness, liens, mergers, consolidations, disposals of
property, payment of dividends, capital expenditures, investments, optional
payments and modifications of the agreements, transactions with affiliates,
sales and leasebacks, changes in fiscal periods, negative pledges, subsidiary
distributions, lines of business, hedge agreements, and activities of the
Company and requires the Company to maintain certain leverage and interest
coverage ratios.  In January 2001, the Company amended the credit agreement in
part to avoid a possible default under the leverage and interest coverage ratios
of the credit facilities.
                                    Page 32
<page>
On March 2, 2001, in connection with the amendment, the Company's principal
shareholder, an affiliate of Lehman Brothers Merchant Banking Partners II L.P.,
invested $20 million in the form of preferred equivalent securities with
warrants to acquire 1,000,000 shares of Blount common stock (or approximately 3%
of the Company) that are exercisable immediately at a price of $0.01 a share.
The security can be converted into convertible preferred stock at the option of
the holder as a result of the Company's stockholders passing an amendment to the
Certificate of Incorporation authorizing the issuance of preferred stock.  The
Company recorded the fair value of the warrants of $7 million as a credit to
additional paid-in capital and a debt discount to the $20 million security.  The
debt portion of this security at December 31, 2001 is $15.5 million and
increased during 2001 through the accretion of the discount and the accrual of
interest.

During 2001, the Company would not have been in compliance with certain of its
debt covenants except for the fact that, in connection with the sale of SEG, the
Company and its lenders amended the covenants; accordingly, the Company was in
compliance with all debt covenants as of and for the year ended December 31,
2001.  While there can be no assurance, management believes the Company will
comply with all debt covenants during 2002.  Should the Company not comply with
the covenants during 2002, additional significant actions will be required.
These actions may include, among others, attempting to renegotiate its debt
facilities, sales of assets, additional restructurings and reductions in capital
expenditures.

The weighted average interest rate on outstanding foreign short-term borrowings
on December 31, 2001 and 2000 was 3.3% and 7.2%.


NOTE 4:
ACQUISITIONS AND DISPOSALS

The Company has accounted for acquisitions by the purchase method, and the net
assets and results of operations of the acquired companies have been included in
the Company's consolidated financial statements since the dates of acquisition.
The excess of the purchase price over the fair value of the net assets acquired
is being amortized on a straight-line basis over a period of between 5 and 40
years.

On September 26, 2000, the Company purchased the assets of Fabtek, Inc., a
manufacturer of timber harvesting equipment.  On October 16, 2000, the Company
purchased the assets of Windsor Forestry Tools, Inc., a manufacturer of cutting
chain and guide bars for chain saws and timber harvesting equipment, from Snap-
on Incorporated.  On October 20, 2000, the Company purchased all the outstanding
stock of Estate Cartridge, Inc., a manufacturer of sporting shotshell
ammunition.  The aggregate purchase price of these acquisitions was $40.1
million and the combined sales and operating loss for the last twelve months
prior to acquisition were $47.1 million and $0.6 million.  The cost in excess of
net assets acquired was $20.8 million and has been amortized over a period of 40
years.  Assuming these transactions had occurred on January 1, 2000, the
consolidated pro forma results for 2000 would not be materially different from
the reported results.

On December 7, 2001, the Company sold its Sporting Equipment Group ("SEG") to
Alliant Techsystems, Inc. ("ATK").  See Note 1 for transaction details.
                                      Page 33
<page>
NOTE 5:
CAPITAL STOCK, STOCK OPTIONS AND EARNINGS PER SHARE DATA

The Company has authorized 100 million shares of common stock.

The number of shares used in the denominators of the basic and diluted earnings
(loss) per share computations were as follows (in thousands):

                                                         Twelve Months Ended
                                                             December 31,
                                                       ------------------------
                                                        2001     2000     1999
------------------------------------------------       ------   ------   ------
Shares for basic earnings (loss) per share
  computation - weighted average
  common shares outstanding                            30,796   30,796   58,185
Dilutive effect of stock options
------------------------------------------------       ------   ------   ------
Shares for diluted earnings (loss) per
  share computation                                    30,796   30,796   58,185
------------------------------------------------       ------   ------   ------

No adjustment was required to reported income amounts for inclusion in the
numerators of the earnings (loss) per share computations.

Prior to the merger and recapitalization described in Note 1, the Company had
granted options to purchase its Class A common stock to certain officers and key
employees under four fixed stock option plans.  Under these plans, options could
be granted up to 13,500,000 shares.  Each plan provided for the granting of
options with an option price per share not less than the fair market value of
one share of Class A common stock on the date of grant.  The options granted
were exercisable for a period of up to ten years under each plan and vested in
installments over periods determined by the Compensation and Management
Development Committee of the Board of Directors.  Options to purchase 1,121,200
shares were granted during the first quarter of 1999 under the 1998 Blount Long-
Term Executive Stock Option Plan.  As a result of the merger described in Note
1, all outstanding options were canceled through payments associated with the
merger to the holders of such options.  During 1999 and 2000, the Company's
Board of Directors adopted new stock option plans under which options, either
incentive stock options or nonqualified stock options, to purchase the Company's
common stock may be granted to employees, directors, and other persons who
perform services for the Company.  The number of shares which may be issued
under these plans may not exceed 5,875,000 shares.  The option price per share
for incentive stock options may not be less than 100% of the average closing
sale price for ten consecutive trading days ended on the trading day immediately
prior to the date of grant.  The option price for each grant of a nonqualified
stock option shall be established on the date of grant and may be less than the
fair market value of one share of common stock on the date of grant.  In 1999,
options were granted to purchase 2,301,320 shares at the price of $15 per share.
In 2000, options were granted to purchase 120,000 shares at an average price of
$11.52 per share.  In 2001, options were granted to purchase 634,700 shares at
an average price of $4.96 per share.  As of December 31, 2001, 2000, and 1999,
there were options for 3,733,500 shares, 3,603,680 shares, and 623,680 shares
available for grant.
                                      Page 34
<page>
A summary of the status of the Company's fixed stock option plans as of December
31, 2001, 2000, and 1999, and changes during the periods ending on those dates
is presented below:
<table>
                                                       Twelve Months
                                                     Ended December 31,
                         --------------------------------------------------------------------------
                                  2001                      2000                      1999
                         ----------------------    ----------------------    ----------------------
                                      Weighted-                 Weighted-                 Weighted-
                                       Average                   Average                   Average
                           Shares     Exercise       Shares     Exercise       Shares     Exercise
                         (in 000's)     Price      (in 000's)     Price      (in 000's)     Price
--------------------     ----------   ---------    ----------   ---------    ----------   ---------

                           <c>        <c>            <c>        <c>           <c>         <c>
Outstanding at
beginning of period           2,271      $14.82         2,251      $15.00         7,288      $ 8.19
   Granted                      635        4.96           120       11.52         3,422       14.27
   Exercised                                                                       (100)       8.81
   Forfeited                   (765)      13.67          (100)      15.00          (106)      13.15
   Canceled                                                                      (8,253)      (8.78)
--------------------     ----------   ---------    ----------   ---------    ----------   ---------
Outstanding at
end of period                 2,141      $12.30         2,271      $14.82         2,251      $15.00
--------------------     ----------   ---------    ----------   ---------    ----------   ---------
Options exercisable
at end of period                829                       289                         0
--------------------     ----------                ----------                ----------
</table>
Options outstanding at December 31, 2001, have an average exercise price of
$12.30 per share, vest over periods to six years and have a remaining
contractual life of approximately 8.1 years.

The Company applies APB Opinion 25 and related interpretations in accounting for
fixed stock option plans.  Accordingly, no compensation cost has been
recognized.  Had compensation cost been determined based on the estimated fair
value at the grant dates for awards under the Company's plans, consistent with
the method of SFAS No. 123, the Company's net income (loss) and earnings (loss)
per share would have been the pro forma amounts indicated below:

                                                         Twelve Months Ended
                                                             December 31,
(Dollar amounts in millions,                           ------------------------
except per share data)                                  2001     2000     1999
------------------------------------------------       ------   ------   ------
Net income (loss):
   As reported                                         $(43.6)  $ 10.8   $(21.8)
   Pro forma                                            (44.3)     8.8      4.1
Earnings (loss) per share:
   As reported:
     Basic                                              (1.42)    0.35    (0.37)
     Diluted                                            (1.42)    0.35    (0.37)
   Pro forma:
     Basic                                              (1.44)    0.28     0.07
     Diluted                                            (1.44)    0.28     0.07
------------------------------------------------       ------   ------   ------
                                    Page 35
<page>
For purposes of computing the pro forma amounts above, the Black-Scholes option-
pricing model was used with the following weighted-average assumptions:

                                                         Twelve Months Ended
                                                             December 31,
                                                       ------------------------
                                                        2001     2000     1999
------------------------------------------------       ------   ------   ------
Estimated lives of plan options                       5 years  6 years  6 years
Risk-free interest rates                                 4.8%     6.3%     5.8%
Expected volatility                                     37.0%    33.0%    30.0%
Dividend yield                                           0.0%     0.0%     0.5%
------------------------------------------------       ------   ------   ------

The weighted average estimated fair value of options granted during 2001, 2000,
and 1999 was $2.01, $4.92, and $5.47, respectively.

On March 2, 2001, an affiliate of Lehman Brothers, Inc., the Company's principal
shareholder, invested $20 million in the Company in the form of a mezzanine
security with warrants to acquire 1,000,000 shares of Blount common stock that
are exercisable immediately at $0.01 a share.
                                     Page 36
<page>
NOTE 6:
PENSION AND POSTRETIREMENT BENEFIT PLANS

The changes in the benefit obligations, changes in plan assets, and funded
status of the Company's defined benefit pension plans and other postretirement
medical and life benefit plans for the periods ended December 31, 2001 and 2000,
were as follows:
<table>
                                                                             Other
                                                         Pension         Postretirement
                                                         Benefits           Benefits
FUNDED PLANS                                         ----------------   ----------------
(Dollar amounts in millions)                          2001      2000     2001      2000
------------------------------------------------     ------    ------   ------    ------

                                                 <c>       <c>       <c>       <c>
Change in Benefit Obligation:
Benefit obligation at beginning of period           $(139.5)  $(127.6)  $ (3.1)   $ (1.9)
Service cost                                           (5.9)     (5.9)
Interest cost                                         (10.1)     (9.9)    (0.2)     (0.2)
Plan participants' contributions                                          (0.1)     (0.2)
Actuarial gains (losses)                               (6.1)     (0.7)    (0.9)     (1.3)
Benefits and plan expenses paid                         5.3       4.6      0.4       0.5
Curtailment/settlement                                 50.5
------------------------------------------------    -------   -------   ------    ------
Benefit obligation at end of period                  (105.8)   (139.5)    (3.9)     (3.1)
------------------------------------------------    -------   -------   ------    ------

Change in Plan Assets:
Fair value of plan assets at beginning of period      131.0     138.3      1.8       1.9
Actual return on plan assets                          (14.7)     (3.9)     0.1       0.2
Company contributions                                   2.7       1.2
Plan participants' contributions                                           0.1       0.2
Benefits and plan expenses paid                        (5.3)     (4.6)              (0.5)
Settlements                                           (29.2)              (0.4)
------------------------------------------------    -------   -------   ------    ------
Fair value of plan assets at end of period             84.5     131.0      1.6       1.8
------------------------------------------------    -------   -------   ------    ------
Funded status                                         (21.3)     (8.5)    (2.3)     (1.3)
Unrecognized actuarial (gains) losses                  17.0       5.2      2.3       1.3
Unrecognized transition asset                          (0.1)     (0.3)
Unrecognized prior service cost                         0.1      (0.3)
------------------------------------------------    -------   -------   ------    ------
Net amount recognized                               $  (4.3)  $  (3.9)  $  0.0    $  0.0
------------------------------------------------    -------   -------   ------    ------

Net amount recognized:
Prepaid benefits                                    $   3.2   $   3.5
Accrued benefits                                       (7.5)     (7.4)
------------------------------------------------    -------   -------   ------    ------
                                                    $  (4.3)  $  (3.9)  $  0.0    $  0.0
------------------------------------------------    -------   -------   ------    ------
</table>
                                             Page 37
<page>
<table>
                                                                             Other
                                                         Pension         Postretirement
                                                         Benefits           Benefits
OTHER PLANS                                          ----------------   ----------------
(Dollar amounts in millions)                          2001      2000     2001      2000
------------------------------------------------     ------    ------   ------    ------

                                                  <c>       <c>      <c>       <c>
Change in Benefit Obligation:
Benefit obligation at beginning of period            $(12.6)   $(13.5)  $(19.6)   $(15.8)
Service cost                                           (0.8)     (0.8)    (0.5)     (0.4)
Interest cost                                          (1.1)     (0.9)    (1.9)     (1.4)
Plan participants' contributions                                          (0.9)     (0.8)
Actuarial gains (losses)                               (2.2)      1.5     (8.1)     (3.6)
Benefits and plan expenses paid                         0.5       1.1      2.4       2.4
Curtailment/settlement                                  7.3                6.7
------------------------------------------------     ------    ------   ------    ------
Benefit obligation at end of period                    (8.9)    (12.6)   (21.9)    (19.6)
Unrecognized actuarial (gains) losses                   1.3       0.4      6.6       0.5
Unrecognized prior service cost                         1.8       3.0      0.1       0.1
------------------------------------------------     ------    ------   ------    ------
Net amount recognized                                $ (5.8)   $ (9.2)  $(15.2)   $(19.0)
------------------------------------------------     ------    ------   ------    ------

Net amount recognized:
Accrued benefits                                     $ (7.0)   $(11.4)  $(15.2)   $(19.0)
Intangible asset                                        1.2       2.2
----------------------------------------             ------    ------   ------    ------
                                                     $ (5.8)   $ (9.2)  $(15.2)   $(19.0)
----------------------------------------             ------    ------   ------    ------
</table>
The accumulated pension benefit obligation of supplemental non-qualified defined
benefit pension plans was $7.9 million and $10.5 million at December 31, 2001
and 2000, respectively.  Two Rabbi Trusts, whose assets are not included in the
table above, have been established to fund part of these non-qualified benefits.

These two Rabbi Trusts required the funding of certain executive benefits upon a
change in control or threatened change in control such as the merger and
recapitalization described in Note 1 of Notes to Consolidated Financial
Statements.  At December 31, 2001 and 2000, approximately $11.1 million and
$21.5 million, respectively, were held in these trusts and is included in "Other
assets" in the Consolidated Balance Sheet.

The curtailment and settlement amounts are the result of the sale of SEG to ATK.
As defined in the Purchase Agreement, ATK will retain the obligation for all
active employees of SEG as of December 7, 2001 and retired employees of the
Federal Cartridge Company.  The Company will retain the obligation for the
remaining retired employees of SEG.
                                        Page 38
<page>
The components of net periodic benefit cost and the weighted average assumptions
used in accounting for pension and other postretirement benefits follow:
<table>
                                                         Pension Benefits           Other Postretirement Benefits
                                                  ------------------------------    ------------------------------
                                                       Twelve Months Ended               Twelve Months Ended
                                                           December 31,                      December 31,
                                                  ------------------------------    ------------------------------
(Dollar amounts in millions)                        2001       2000       1999        2001       2000       1999
-------------------------------------------       --------   --------   --------    --------   --------   --------

                                                <c>        <c>        <c>         <c>        <c>        <c>
Components of net periodic benefit cost:
Service cost                                       $  6.7     $  6.7     $  7.5      $  0.5     $  0.4     $  0.4
Interest cost                                        11.1       10.8        9.8         2.1        1.6        1.3
Expected return on plan assets                      (11.6)     (12.3)     (10.8)       (0.1)      (0.1)      (0.1)
Amortization of actuarial (gains) losses              0.4       (0.2)      (0.2)        0.4        0.1
Amortization of transition asset                     (0.1)      (0.1)      (0.1)
Amortization of prior service cost                    1.0        1.0        1.0
Curtailment/settlement (gain) loss                   (0.1)
                                                   ------     ------     ------      ------     ------     ------
                                                   $  7.4     $  5.9     $  7.2      $  2.9     $  2.0     $  1.6
                                                   ------     ------     ------      ------     ------     ------
Weighted average assumptions:
Discount rate                                        7.2%       7.4%       7.4%        7.2%       7.5%       7.5%
Expected return on plan assets                       8.9%       8.9%       8.9%        9.0%       9.0%       9.0%
Rate of compensation increase                        3.6%       4.0%       4.0%
-------------------------------------------        ------     ------     ------      ------     ------     ------
</table>

A 7.0% annual rate of increase in the cost of health care benefits was assumed
for 2001; the rate was assumed to decrease 1.0% per year until 4.0% is reached.
For 2002, a 13.0% increase in the cost of health care benefits will be assumed;
the rate will decrease to 5.0% by 2007.  A 1% change in assumed health care cost
trend rates would have the following effects:

(Dollar amounts in millions)                          1% Increase   1% Decrease
------------------------------------------------      -----------   -----------
Effect on service and interest cost components           $ 0.2        $ (0.2)
Effect on other postretirement benefit obligations         2.3          (2.0)
------------------------------------------------      -----------   -----------


The Company sponsors a defined contribution 401(k) plan and matches a portion of
employee contributions.  The expense for the match was $4.6 million, $4.7
million, and $4.9 million in 2001, 2000, and 1999.


NOTE 7:
COMMITMENTS AND CONTINGENT LIABILITIES

The Company leases office space and equipment under operating leases expiring in
1 to 5 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 noncancelable lease terms in
excess of one year as of December 31, 2001, are as follows (in millions): 2002--
$1.9; 2003--$1.6; 2004--$1.0; 2005--$0.8; 2006--$0.2; and 2007 and beyond--$0.1.
Rentals charged to continuing operations costs and expenses under cancelable and
noncancelable lease arrangements were $2.7 million, $2.3 million, and $2.3
million for 2001, 2000, and 1999, respectively.
                                      Page 39
<page>
Certain customers of the Company's Outdoor Products and Industrial and Power
Equipment segments finance their purchases through third party finance
companies.  Under the terms of these financing arrangements, the Company may be
required to repurchase certain equipment from the finance companies.  The
aggregate repurchase amount included in the agreements outstanding as of
December 31, 2001 is $3.2 million.  These arrangements have not had a material
adverse effect on the Company's operating results in the past.  The Company does
not expect to incur any material charges related to these agreements in future
periods, as any repurchased equipment will likely be resold.  The Company also
sold certain trade account receivables to a third party in 2001 with value of
$0.2 million with minimal recourse (approximately 10% of value).

Under the provisions of Washington State environmental laws, the Washington
State Department of Ecology ("WDOE") has notified the Company that it is one of
many companies named as a Potentially Liable Party ("PLP") for the Pasco
Sanitary Landfill site, Pasco, Washington ("the Site").  Although the clean-up
costs are believed to be substantial, accurate estimates will not be available
until the environmental studies have been completed at the Site.  However, based
upon the total documented volume of waste sent to the Site, the Company's waste
volume compared to that total waste volume should result in the Company being
classified as a "de minimis" PLP.  In July 1992, the Company and thirty-eight
other PLPs entered into an Administrative Agreed Order with WDOE to perform a
Phase I Remedial Investigation at the Site.  In October 1994, WDOE issued an
administrative Unilateral Enforcement Order to all PLPs to complete a Phase II
Remedial Investigation and Feasibility Study ("RI/FS") under the Scope of Work
established by WDOE.  Based on results of the RI/FS, WDOE has issued a new
administrative Unilateral Enforcement Order to all PLPs to perform several years
of cleanup action at the Site.  The Company is unable to determine, at this
time, the level of cleanup demands that may be ultimately placed on it.
Management believes that, given the number of PLPs named with respect to the
Site and their financial condition, the Company's potential response costs
associated with the Site will not have a material adverse effect on consolidated
financial condition or operating results.

On or about July 26, 2001, the Company's former Federal Cartridge Company
subsidiary received notice from the Region 5 Office of the United States
Environmental Protection Agency ("EPA") that it intended to file an
administrative proceeding for civil penalties totaling $255,400 in connection
with alleged violations of applicable statutes, rules, and regulations or permit
conditions at Federal's Anoka, Minnesota, ammunition manufacturing site.  These
include the allegedly (i) unpermitted treatment of hazardous wastes, (ii)
improper management of hazardous wastes, (iii) permit violations, and (iv)
improper training of certain responsible personnel.  Blount has retained the
liability for this notice under the terms of the sale of SEG including Federal
Cartridge to ATK.

The Company plans to correct certain cited activities and pay the fines
associated with these activities.  On November 6, 2001, the Company began
discussions with EPA representatives in an effort to contest or mitigate other
allegations and the corresponding fines.  The Company is also discussing
potential indemnification with a prior owner for certain portions of the
activities cited.  Until the Company has completed these discussions, it cannot
be certain as to the final outcome of this matter; nonetheless, at the current
time the Company does not believe payment of the civil penalties sought by the
EPA and the costs to correct the alleged violations will have a materially
adverse effect on its consolidated financial condition or operating results.

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
                                     Page 40
<page>
Company's insurance policies. 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, management does not believe these
lawsuits will have a material adverse effect on consolidated financial condition
or operating results.


NOTE 8:
FINANCIAL INSTRUMENTS AND CREDIT RISK CONCENTRATION

The Company has manufacturing or distribution operations in Brazil, Canada,
Europe, Japan, Russia and the United States.  The Company sells to customers in
these locations, primarily in the United States, and other countries throughout
the world (see Note 9).  At December 31, 2001, approximately 59% of trade
accounts receivable were from customers within the United States.  Trade
accounts receivable are principally from service and dealer groups,
distributors, mass merchants, and chain saw and other original equipment
manufacturers, and are normally not collateralized.  The Company has an
arrangement through a third-party financing company where Dixon and Industrial
and Power Equipment customers can finance purchases of equipment with minimal
recourse to the Company.

The estimated fair values of certain financial instruments at December 31, 2001
and 2000, are as follows:

                                             2001                  2000
                                     --------------------  --------------------
                                     Carrying     Fair     Carrying     Fair
(Dollar amounts in millions)          Amount      Value     Amount      Value
----------------------------------   ---------  ---------  ---------  ---------
Cash and short-term investments        $  47.6    $  47.6    $   4.8    $   4.8
Other assets (restricted trust
  funds and notes receivable)             12.1       12.1       23.2       23.1
Notes payable and long-term debt
  (see Note 3)                           641.0      443.3     (833.0)    (725.9)
----------------------------------     -------    -------    -------    -------

The carrying amount of cash and short-term investments approximates fair value
because of the short maturity of those instruments.  The fair value of notes
receivable is estimated based on the discounted value of estimated future cash
flows. The fair value of restricted trust funds approximates the carrying amount
for short-term instruments and is estimated by obtaining market quotes for
longer term instruments.  The fair value of long-term debt is estimated based on
recent market transaction prices or on current rates available for debt with
similar terms and maturities.


NOTE 9:
SEGMENT INFORMATION

The Company identifies operating segments based on management responsibility.
The Company has two reportable segments:  Outdoor Products and Industrial and
Power Equipment.  Outdoor Products produces or markets chain saw components
(chain, bars and sprockets), lawn mowers and related products, and other outdoor
care products.  Industrial and Power Equipment produces timber harvesting and
industrial loading equipment and power transmission and gear components.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies.  Intersegment sales are not
significant.
                                      Page 41
<page>
Information on Segments:

                                                        Twelve Months Ended
                                                            December 31,
                                                     --------------------------
(Dollar amounts in millions)                          2001      2000      1999
------------------------------------------------     ------    ------    ------
Sales:
   Outdoor products                                  $348.1    $360.7    $327.6
   Industrial and power equipment                     120.6     153.2     158.6
------------------------------------------------     ------    ------    ------
                                                     $468.7    $513.9    $486.2
------------------------------------------------     ------    ------    ------
Operating income (loss):
   Outdoor products                                  $ 70.3    $ 81.0    $ 71.8
   Industrial and power equipment                      (1.7)      1.1      (1.1)
------------------------------------------------     ------    ------    ------
   Operating income from segments                      68.6      82.1      70.7
Corporate office expenses                              (7.7)    (10.3)    (17.3)
Merger expenses                                                           (76.1)
Restructuring expenses                                (16.2)
------------------------------------------------     ------    ------    ------
Income (loss) from continuing operations               44.7      71.8     (22.7)
Interest expense                                      (95.9)    (99.7)    (44.8)
Interest income                                         1.4       1.5       3.7
Other income (expense), net                            (0.7)      6.6       0.8
------------------------------------------------     ------    ------    ------
Loss from continuing operations before income taxes  $(50.5)   $(19.8)   $(63.0)
------------------------------------------------     ------    ------    ------


Identifiable assets:
   Outdoor products                                  $203.4    $224.7    $210.6
   Industrial and power equipment                      94.3     117.5     109.2
   Corporate office/discontinued operations           147.1     361.7     368.9
------------------------------------------------     ------    ------    ------
                                                     $444.8    $703.9    $688.7
------------------------------------------------     ------    ------    ------
Depreciation and amortization:
   Outdoor products                                  $ 12.4    $ 10.8    $ 13.9
   Industrial and power equipment                       4.5       4.1       4.9
   Corporate office                                     6.7       6.3       4.1
------------------------------------------------     ------    ------    ------
                                                     $ 23.6    $ 21.2    $ 22.9
------------------------------------------------     ------    ------    ------
Capital expenditures:
   Outdoor products                                  $ 10.5    $ 12.4    $  9.3
   Industrial and power equipment                       1.0       2.3       1.3
   Corporate office                                               5.9       0.1
------------------------------------------------     ------    ------    ------
                                                     $ 11.5    $ 20.6    $ 10.7
------------------------------------------------     ------    ------    ------
                                  Page 42
<page>
Information on Sales By Significant Product Groups:

                                                        Twelve Months Ended
                                                            December 31,
                                                     --------------------------
(Dollar amounts in millions)                          2001      2000      1999
------------------------------------------------     ------    ------    ------
Chain saw components                                 $230.3    $230.8    $201.1
Timber harvesting and loading equipment               101.7     127.8     133.1
Lawn mowers and related products                       78.8      89.6      87.2
All others, less than 5% each                          57.9      65.7      64.8
------------------------------------------------     ------    ------    ------
                                                     $468.7    $513.9    $486.2
------------------------------------------------     ======    ======    ======


Information on Geographic Areas:
                                                        Twelve Months Ended
                                                            December 31,
                                                     --------------------------
(Dollar amounts in millions)                          2001      2000      1999
------------------------------------------------     ------    ------    ------
Sales:
  United States                                      $280.8    $308.6    $306.5
  Canada                                               18.8      22.0      24.1
  Germany                                              20.1      21.5      19.0
  France                                               15.0      18.3      15.6
  Sweden                                               16.3      19.7      15.7
  All others, less than 3% each                       117.7     123.8     105.3
------------------------------------------------     ------    ------    ------
                                                     $468.7    $513.9    $486.2
------------------------------------------------     ------    ------    ------

Long-Lived Assets:
  United States                                      $ 64.0    $148.7    $156.1
  Canada                                               22.4      20.3      20.1
  Brazil                                                4.1       3.9       3.7
  Belgium                                               4.5       3.3       2.0
  All others, less than 1% each                         1.2       1.2       1.0
------------------------------------------------     ------    ------    ------
                                                     $ 96.2    $177.4    $182.9
------------------------------------------------     ------    ------    ------

The geographic sales information is by country of destination.  Long-lived
assets exclude the cost in excess of net assets of acquired businesses.  One
customer accounted for more than 11% of consolidated sales in 2001 and no
customer accounted for more than 10% in 2000 or 1999.  In 2001, approximately
15% of sales by Outdoor Products were to one customer and 32% of Industrial and
Power Equipment sales were to two customers.  While the Company expects these
business relationships to continue, the loss of any of these customers could
affect the operations of the segments.  Each of the Company's segments 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.
                                    Page 43
<page>
NOTE 10:
CONSOLIDATING FINANCIAL INFORMATION

The following consolidating financial information sets forth condensed
consolidating statements of operations, and the balance sheets and cash flows of
Blount International, Inc., Blount, Inc., the Guarantor Subsidiaries and the
Non-Guarantor Subsidiaries (in millions).

BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL INFORMATION

For The Twelve Months
Ended December 31, 2001
<table>
                                                 Blount                               Non-
                                             International,  Blount,   Guarantor    Guarantor
                                                  Inc.        Inc.    Subsidiaries Subsidiaries Eliminations Consolidated
                                             --------------  -------  ------------ ------------ ------------ ------------
STATEMENT OF OPERATIONS
-----------------------

                                              <c>         <c>         <c>          <c>         <c>          <c>
Sales                                                        $  301.5    $123.8       $160.2      $  (116.8)   $468.7
Cost of sales                                                   205.8      97.6        124.3         (115.4)    312.3
                                                             --------    ------       ------      ---------    ------
Gross profit                                                     95.7      26.2         35.9           (1.4)    156.4
Selling, general and administrative expenses     $  0.7          54.4      20.6         19.8                     95.5
Restructuring expenses                                           16.2                                            16.2
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) from operations                      (0.7)         25.1       5.6         16.1           (1.4)     44.7
Interest expense                                  (31.6)        (93.0)     (0.8)        (0.4)          29.9     (95.9)
Interest income                                     0.1          30.4       0.2          0.6          (29.9)      1.4
Other income (expense), net                                       1.2      (1.3)        (0.6)                    (0.7)
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) from continuing operations
  before income taxes                             (32.2)        (36.3)      3.7         15.7           (1.4)    (50.5)
Provision (benefit) for income taxes              (11.7)        (14.5)      1.5          6.3                    (18.4)
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) from continuing operations          (20.5)        (21.8)      2.2          9.4           (1.4)    (32.1)
Discontinued operations:
  Net income (loss) from operations                               2.8      (0.3)                                  2.5
  Income (loss) on disposal, net                                 (2.3)     (6.2)                                 (8.5)
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) before extraordinary items          (20.5)        (21.3)     (4.3)         9.4           (1.4)    (38.1)
  Extraordinary loss                                             (5.5)                                           (5.5)
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) before earnings (losses)
  of affiliated companies                         (20.5)        (26.8)     (4.3)         9.4           (1.4)    (43.6)
Equity in earnings (losses) of
  affiliated companies, net                       (23.1)          3.7      (0.3)                       19.7
                                                 ------      --------    ------       ------      ---------    ------
Net income                                       $(43.6)     $  (23.1)   $ (4.6)      $  9.4      $    18.3    $(43.6)
                                                 ======      ========    ======       ======      =========    ======
</table>
                                                     Page 44
<page>
For The Twelve Months
Ended December 31, 2000
<table>
                                                 Blount                               Non-
                                             International,  Blount,   Guarantor    Guarantor
                                                  Inc.        Inc.    Subsidiaries Subsidiaries Eliminations Consolidated
                                             --------------  -------  ------------ ------------ ------------ ------------
STATEMENT OF OPERATIONS
-----------------------

                                              <c>         <c>         <c>          <c>         <c>          <c>
Sales                                                        $  328.8    $133.7       $190.2      $  (138.8)   $513.9
Cost of sales                                                   252.6      94.5        131.8         (139.1)    339.8
                                                             --------    ------       ------      ---------    ------
Gross profit                                                     76.2      39.2         58.4            0.3     174.1
Selling, general and administrative expenses     $  0.9          42.6      19.8         39.0                    102.3
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) from operations                      (0.9)         33.6      19.4         19.4            0.3      71.8
Interest expense                                  (34.0)        (99.3)     (2.7)        (0.4)          36.7     (99.7)
Interest income                                     0.2          37.3       0.4          0.3          (36.7)      1.5
Other income (expense), net                                       8.5      (1.6)        (0.3)                     6.6
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) before income taxes                 (34.7)        (19.9)     15.5         19.0            0.3     (19.8)
Provision (benefit) for income taxes              (15.3)         (6.0)      6.1          7.1                     (8.1)
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) from continuing operations          (19.4)        (13.9)      9.4         11.9            0.3     (11.7)
Discontinued operations:
  Net income (loss) from operations                               8.9      13.6                                  22.5
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) before earnings (losses)
  of affiliated companies                         (19.4)         (5.0)     23.0         11.9            0.3      10.8
Equity in earnings (losses) of
  affiliated companies, net                        30.2          35.2      (0.3)                      (65.1)
                                                 ------      --------    ------       ------      ---------    ------
Net income                                       $ 10.8      $   30.2    $ 22.7       $ 11.9      $   (64.8)   $ 10.8
                                                 ======      ========    ======       ======      =========    ======
</table>
                                                   Page 45
<page>
For The Twelve Months
Ended December 31, 1999
<table>
                                                 Blount                               Non-
                                             International,  Blount,   Guarantor    Guarantor
                                                  Inc.        Inc.    Subsidiaries Subsidiaries Eliminations Consolidated
                                             --------------  -------  ------------ ------------ ------------ ------------
STATEMENT OF OPERATIONS
-----------------------

                                              <c>         <c>         <c>          <c>         <c>          <c>
Sales                                                        $  333.8    $124.1       $167.1      $  (138.8)   $486.2
Cost of sales                                                   268.1      84.7        115.3         (139.1)    329.0
                                                             --------    ------       ------      ---------    ------
Gross profit                                                     65.7      39.4         51.8            0.3     157.2
Selling, general and administrative expenses     $  1.1          45.7      18.7         38.3                    103.8
Merger expenses                                    69.6           6.5                                            76.1
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) from operations                     (70.7)         13.5      20.7         13.5            0.3     (22.7)
Interest expense                                                (44.7)     (2.5)                        2.4     (44.8)
Interest income                                     1.3           4.0       0.5          0.3           (2.4)      3.7
Other income (expense), net                                       3.3      (1.6)        (0.9)                     0.8
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) before income taxes                 (69.4)        (23.9)     17.1         12.9            0.3     (63.0)
Provision (benefit) for income taxes              (20.2)         (8.7)      6.5          6.2                    (16.2)
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) from continuing operations          (49.2)        (15.2)     10.6          6.7            0.3     (46.8)
Discontinued operations:
  Net income (loss) from operations                               9.7      15.3                                  25.0
                                                 ------      --------    ------       ------      ---------    ------
Income (loss) before earnings (losses)
  of affiliated companies                         (49.2)         (5.5)     25.9          6.7            0.3     (21.8)
Equity in earnings (losses) of
  affiliated companies, net                        27.4          32.9      (0.1)                      (60.2)
                                                 ------      --------    ------       ------      ---------    ------
Net income                                       $(21.8)     $   27.4    $ 25.8       $  6.7      $   (59.9)   $(21.8)
                                                 ======      ========    ======       ======      =========    ======
</table>
                                                   Page 46
<page>
December 31, 2001
<table>
                                                 Blount                               Non-
                                             International,  Blount,   Guarantor    Guarantor
                                                  Inc.        Inc.    Subsidiaries Subsidiaries Eliminations Consolidated
                                             --------------  -------  ------------ ------------ ------------ ------------
BALANCE SHEET
-------------

                                              <c>         <c>         <c>          <c>         <c>          <c>
ASSETS
Current assets:
  Cash and cash equivalents                                  $   43.9    $ (1.1)      $  4.8                   $    47.6
  Accounts receivable, net                                       26.3      14.7         16.3                        57.3
  Intercompany receivables                                      282.2      28.6          6.0      $  (316.8)
  Inventories                                                    29.1      22.7         16.3                        68.1
  Deferred income taxes                                          22.9                                               22.9
  Other current assets                                            6.5       0.4          1.3                         8.2
                                                             --------    ------       ------      ---------    ---------
    Total current assets                                        410.9      65.3         44.7         (316.8)       204.1
Investments in affiliated companies              $(17.5)        186.9                    0.2         (169.6)
Property, plant and equipment, net                               42.0      27.4         26.8                        96.2
Cost in excess of net assets of acquired
  businesses, net                                                30.2      40.2          6.5                        76.9
Intercompany notes receivable                                                            5.0           (5.0)
Other assets                                                     64.0       0.5          3.1                        67.6
                                                 ------      --------    ------       ------      ---------    ---------
    Total Assets                                 $(17.5)     $  734.0    $133.4       $ 86.3      $  (491.4)   $   444.8
                                                 ======      ========    ======       ======      =========    =========


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Notes payable and current maturities
    of long-term debt                                        $    3.4                 $  5.1                   $     8.5
  Accounts payable                               $  0.1          10.3    $  4.9          4.4                        19.7
  Intercompany payables                           316.8                                           $  (316.8)
  Accrued expenses                                               78.5       5.9          8.8                        93.2
                                                 ------      --------    ------       ------      ---------    ---------
    Total current liabilities                     316.9          92.2      10.8         18.3         (316.8)       121.4
Long-term debt, exclusive of current maturities    15.5         617.0                                              632.5
Intercompany notes payable                                        5.0                                  (5.0)
Deferred income taxes, exclusive of
  current portion                                                 0.9                    1.9                         2.8
Other liabilities                                                36.4       0.9          0.7                        38.0
                                                 ------      --------    ------       ------      ---------    ---------
    Total liabilities                             332.4         751.5      11.7         20.9         (321.8)       794.7
Stockholders' equity (deficit)                   (349.9)        (17.5)    121.7         65.4         (169.6)      (349.9)
                                                 ------      --------    ------       ------      ---------    ---------
    Total Liabilities and
      Stockholders' Equity (Deficit)             $(17.5)     $  734.0    $133.4       $ 86.3      $  (491.4)   $   444.8
                                                 ======      ========    ======       ======      =========    =========
</table>
                                                     Page 47
<page>
December 31, 2000
<table>
                                                 Blount                               Non-
                                             International,  Blount,   Guarantor    Guarantor
                                                  Inc.        Inc.    Subsidiaries Subsidiaries Eliminations Consolidated
                                             --------------  -------  ------------ ------------ ------------ ------------
BALANCE SHEET
-------------

                                              <c>         <c>         <c>          <c>         <c>          <c>
ASSETS
Current assets:
  Cash and cash equivalents                                  $    1.9    $ (0.8)      $  3.7                   $     4.8
  Accounts receivable, net                                       56.0      77.0         16.0                       149.0
  Intercompany receivables                                      282.8      57.8         10.4      $  (351.0)
  Inventories                                                    66.1      70.6         14.0                       150.7
  Deferred income taxes                                          23.8                                               23.8
  Other current assets                                            5.7       0.5          0.9                         7.1
                                                             --------    ------       ------      ---------    ---------
    Total current assets                                        436.3     205.1         45.0         (351.0)       335.4
Investments in affiliated companies              $ 38.9         385.7                    0.3         (424.9)
Property, plant and equipment, net                               70.4      80.6         26.4                       177.4
Cost in excess of net assets of acquired
  businesses, net                                                37.8      83.7          6.8                       128.3
Intercompany notes receivable                                                            5.1           (5.1)
Other assets                                                     58.0       1.3          3.5                        62.8
                                                 ------      --------    ------       ------      ---------    ---------
    Total Assets                                 $ 38.9      $  988.2    $370.7       $ 87.1      $  (781.0)   $   703.9
                                                 ======      ========    ======       ======      =========    =========


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Notes payable and current maturities
    of long-term debt                                        $    3.4                 $  5.1                   $     8.5
  Accounts payable                               $  0.1          18.0    $ 19.6          6.3                        44.0
  Intercompany payables                           351.0                                           $  (351.0)
  Accrued expenses                                               58.6      23.5          9.0                        91.1
                                                 ------      --------    ------       ------      ---------    ---------
    Total current liabilities                     351.1          80.0      43.1         20.4         (351.0)       143.6
Long-term debt, exclusive of current maturities                 824.4                    0.1                       824.5
Intercompany notes payable                                        5.1                                  (5.1)
Deferred income taxes, exclusive of
  current portion                                                 2.7                    2.0                         4.7
Other liabilities                                                37.1       5.4          0.8                        43.3
                                                 ------      --------    ------       ------      ---------    ---------
    Total liabilities                             351.1         949.3      48.5         23.3         (356.1)     1,016.1
Stockholders' equity (deficit)                   (312.2)         38.9     322.2         63.8         (424.9)      (312.2)
                                                 ------      --------    ------       ------      ---------    ---------
    Total Liabilities and
      Stockholders' Equity (Deficit)             $ 38.9      $  988.2    $370.7       $ 87.1      $  (781.0)   $   703.9
                                                 ======      ========    ======       ======      =========    =========
</table>
                                                    Page 48
<page>
For The Twelve Months
Ended December 31, 2001
<table>
                                                 Blount                               Non-
                                             International,  Blount,   Guarantor    Guarantor
                                                  Inc.        Inc.    Subsidiaries Subsidiaries Eliminations Consolidated
                                             --------------  -------  ------------ ------------ ------------ ------------
STATEMENT OF CASH FLOWS
-----------------------

                                              <c>         <c>         <c>          <c>         <c>          <c>
Net cash provided by (used in) continuing
  operations                                     $    34.2   $   27.7    $  2.4       $  9.2      $   (55.5)   $    18.0
Net cash provided by discontinued operations                     20.6       9.2                                     29.8
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash provided by (used in) operating
  activities                                          34.2       48.3      11.6          9.2          (55.5)        47.8
                                                 ---------   --------    ------       ------      ---------    ---------
Cash flows from investing activities:
Proceeds from sales of property, plant
  and equipment                                                   2.6                    0.1                         2.7
Proceeds from sale of discontinued
  operations                                                     54.0     148.6                                    202.6
Purchases of property, plant and equipment                       (4.7)     (2.2)        (4.6)                      (11.5)
Acquisitions of businesses                                       (1.3)                                              (1.3)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash provided by (used in) continuing
  operations                                                     50.6     146.4         (4.5)                      192.5
Net cash used in discontinued operations                         (2.3)     (1.1)                                    (3.4)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash provided by (used in) investing
  activities                                                     48.3     145.3         (4.5)                      189.1
                                                 ---------   --------    ------       ------      ---------    ---------
Cash flows from financing activities:
Issuance of long-term debt                            13.0                                                          13.0
Reduction of long-term debt                                    (211.1)                  (0.1)                     (211.2)
Dividends paid                                                  (52.1)                  (3.4)          55.5
Capital contributions                                  7.0       20.0                                 (20.0)         7.0
Advances from (to) affiliated companies              (54.2)     191.4    (157.2)                       20.0
Other                                                            (2.9)                                              (2.9)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash provided by (used in) financing
  activities                                     $   (34.2)     (54.7)   (157.2)        (3.5)     $    55.5       (194.1)
                                                 ---------   --------    ------       ------      ---------    ---------
Net increase (decrease) in cash and cash
  equivalents                                                    41.9      (0.3)         1.2                        42.8
Cash and cash equivalents at beginning of period                  1.9      (0.8)         3.7                         4.8
                                                 ---------   --------    ------       ------      ---------    ---------
Cash and cash equivalents at end of period                   $   43.8    $ (1.1)      $  4.9                   $    47.6
                                                 =========   ========    ======       ======      =========    =========
</table>
                                                       Page 49
<page>
For The Twelve Months
Ended December 31, 2000
<table>
                                                 Blount                               Non-
                                             International,  Blount,   Guarantor    Guarantor
                                                  Inc.        Inc.    Subsidiaries Subsidiaries Eliminations Consolidated
                                             --------------  -------  ------------ ------------ ------------ ------------
STATEMENT OF CASH FLOWS
-----------------------

                                              <c>         <c>         <c>          <c>         <c>          <c>
Net cash provided by (used in) continuing
  operations                                     $   355.6   $    2.7    $ 21.0       $  7.9      $  (380.2)   $     7.0
Net cash provided by (used in) discontinued
  operations                                                     25.6      (2.8)                                    22.8
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash provided by (used in) operating
  activities                                         355.6       28.3      18.2          7.9         (380.2)        29.8
                                                 ---------   --------    ------       ------      ---------    ---------
Cash flows from investing activities:
Proceeds from sales of property, plant
  and equipment                                                  15.5       1.5          0.1                        17.1
Purchases of property, plant and equipment                       (8.2)     (6.5)        (5.9)                      (20.6)
Acquisitions of businesses                                      (32.6)                                             (32.6)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash used in continuing operations                          (25.3)     (5.0)        (5.8)                      (36.1)
Net cash used in discontinued operations                        (11.4)     (4.2)                                   (15.6)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash used in investing activities                           (36.7)     (9.2)        (5.8)                      (51.7)
                                                 ---------   --------    ------       ------      ---------    ---------
Cash flows from financing activities:
Net increase (reduction) in short-term
  borrowings                                                                             2.0                         2.0
Issuance of long-term debt                                       18.1                                               18.1
Reduction of long-term debt                                      (3.4)                  (0.1)                       (3.5)
Dividends paid                                                 (375.0)                  (5.2)         380.2
Advances from (to) affiliated companies             (355.6)     365.7     (10.1)
Other                                                            (0.4)                                              (0.4)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash provided by (used in) financing
  activities                                     $  (355.6)       5.0     (10.1)        (3.3)     $   380.2         16.2
                                                 ---------   --------    ------       ------      ---------    ---------
Net decrease in cash and cash equivalents                        (3.4)     (1.1)        (1.2)                       (5.7)
Cash and cash equivalents at beginning of period                  5.3       0.3          4.9                        10.5
                                                 ---------   --------    ------       ------      ---------    ---------
Cash and cash equivalents at end of period                   $    1.9    $ (0.8)      $  3.7                   $     4.8
                                                 =========   ========    ======       ======      =========    =========
</table>
                                                       Page 50
<page>
For The Twelve Months
Ended December 31, 1999
<table>
                                                 Blount                               Non-
                                             International,  Blount,   Guarantor    Guarantor
                                                  Inc.        Inc.    Subsidiaries Subsidiaries Eliminations Consolidated
                                             --------------  -------  ------------ ------------ ------------ ------------
STATEMENT OF CASH FLOWS
-----------------------

                                              <c>         <c>         <c>          <c>         <c>          <c>
Net cash provided by (used in) continuing
  operations                                     $   (24.3)  $   41.1    $ (5.0)      $  2.9      $   (29.2)   $   (14.5)
Net cash provided by discontinued operations                     11.8      21.7                                     33.5
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash provided by (used in) operations            (24.3)      52.9      16.7          2.9          (29.2)        19.0
                                                 ---------   --------    ------       ------      ---------    ---------
Cash flows from investing activities:
Proceeds from sales of property, plant
  and equipment                                                   0.7       0.1                                      0.8
Purchases of property, plant and equipment                       (3.8)     (2.4)        (3.5)                       (9.7)
Acquisitions of businesses                                                 (0.7)                                    (0.7)
Other                                                            (3.3)                                              (3.3)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash used in continuing operations                           (6.4)     (3.0)        (3.5)                      (12.9)
Net cash used in discontinued operations                         (3.1)     (5.3)                                    (8.4)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash used in investing activities                            (9.5)     (8.3)        (3.5)                      (21.3)
                                                 ---------   --------    ------       ------      ---------    ---------
Cash flows from financing activities:
Net increase (reduction) in short-term
  borrowings                                                                             3.0                         3.0
Issuance of long-term debt                                      696.9                                              696.9
Reduction of long-term debt                                     (72.1)     (2.3)        (0.2)                      (74.6)
Decrease in restricted funds                                      3.5                                                3.5
Dividends paid                                        (7.8)     (25.0)                  (4.2)          29.2         (7.8)
Redemption of common stock                        (1,068.8)                                                     (1,068.8)
Capital contribution                                 417.5                                                         417.5
Advances from (to) affiliated companies              682.4     (678.1)     (4.3)
Other                                                  1.0       (3.0)                                              (2.0)
                                                 ---------   --------    ------       ------      ---------    ---------
Net cash provided by (used in) financing
  activities                                     $    24.3      (77.8)     (6.6)        (1.4)     $    29.2        (32.3)
                                                 ---------   --------    ------       ------      ---------    ---------
Net increase (decrease) in cash and cash
  equivalents                                                   (34.4)      1.8         (2.0)                      (34.6)
Cash and cash equivalents at beginning of period                 39.7      (1.5)         6.9                        45.1
                                                 ---------   --------    ------       ------      ---------    ---------
Cash and cash equivalents at end of period                   $    5.3    $  0.3       $  4.9                   $    10.5
                                                 =========   ========    ======       ======      =========    =========
</table>
                                                      Page 50
<page>
NOTE 11:
OTHER INFORMATION

At December 31, 2001 and 2000, the following balance sheet captions are
comprised of the items specified below:

(Dollar amounts in millions)                              2001           2000
-----------------------------------------------        ---------      ---------
Accounts receivable:
   Trade accounts                                       $  58.3        $ 148.1
   Other                                                    2.5            4.7
   Allowance for doubtful accounts                         (3.5)          (3.8)
-----------------------------------------------         -------        -------
                                                        $  57.3        $ 149.0
-----------------------------------------------         -------        -------
Inventories:
   Finished goods                                       $  32.1        $  81.1
   Work in process                                          9.8           27.3
   Raw materials and supplies                              26.2           42.3
-----------------------------------------------         -------        -------
                                                        $  68.1        $ 150.7
-----------------------------------------------         -------        -------
Property, plant and equipment:
   Land                                                 $   5.6        $  13.2
   Buildings and improvements                              75.7          115.0
   Machinery and equipment                                169.4          255.8
   Furniture, fixtures and office equipment                20.7           26.8
   Transportation equipment                                 4.8            8.5
   Construction in progress                                 5.2            8.8
   Accumulated depreciation                              (185.2)        (250.7)
-----------------------------------------------         -------        -------
                                                        $  96.2        $ 177.4
-----------------------------------------------         -------        -------
Other Assets:
   Deferred financing costs                             $  23.9        $  31.0
   Rabbi trusts (see Note 6)                               11.1           21.5
   Other                                                   32.6           10.3
-----------------------------------------------         -------        -------
                                                        $  67.6        $  62.8
-----------------------------------------------         -------        -------
Accrued expenses:
   Salaries, wages and related withholdings             $  21.8        $  24.2
   Employee benefits                                        6.7           13.8
   Casualty insurance costs                                 5.6            6.9
   Accrued interest                                        22.5           24.9
   Other                                                   36.6           21.3
-----------------------------------------------         -------        -------
                                                        $  93.2        $  91.1
-----------------------------------------------         -------        -------
Other liabilities:
   Employee benefits                                    $  33.5        $  41.3
   Casualty insurance costs                                 2.1            1.2
   Other                                                    2.4            0.8
-----------------------------------------------         -------        -------
                                                        $  38.0        $  43.3
-----------------------------------------------         -------        -------
                                 Page 52
<page>
Supplemental cash flow information is as follows:

                                                        Twelve Months Ended
                                                            December 31,
                                                     --------------------------
(Dollar amounts in millions)                          2001      2000      1999
------------------------------------------------     ------    ------    ------
Interest paid                                        $ 92.5    $ 90.8    $ 52.5
Income taxes paid                                      (1.3)      6.5      14.0
Noncash investing and financing activities:
Capital lease obligations incurred                                          0.2
Fair value of assets acquired                                    46.1
Cash paid                                                       (40.4)
Liabilities assumed and incurred                                  5.7
------------------------------------------------     ------    ------   -------


SUPPLEMENTARY DATA
QUARTERLY RESULTS OF OPERATIONS
(unaudited)

The following tables set forth a summary of the unaudited quarterly results of
operations for the twelve-month periods ended December 31, 2001 and 2000.
<table>
(Dollar amounts        1st Quarter     2nd Quarter      3rd Quarter         4th Quarter
in millions, except       Ended           Ended            Ended               Ended
per share data)       March 31, 2001  June 30, 2001  September 30, 2001  December 31, 2001    Total
-----------------     --------------  -------------  ------------------  -----------------  -------

                         <c>          <c>               <c>                 <c>           <c>
2001
Sales                       $119.1       $117.1            $113.6              $119.0        $468.7
Gross profit                  40.2         37.9              38.3                40.0         156.4
Net loss                     (13.8)        (4.8)             (6.2)              (18.9)        (43.6)
Earnings (loss) per share:
  Basic                       (.45)        (.15)             (.20)               (.61)        (1.42)
  Diluted                     (.45)        (.15)             (.20)               (.61)        (1.42)
</table>
The first quarter includes after-tax restructuring expense of $10.3 million
($.33 per share).  The fourth quarter includes the loss on the sale of the
Sporting Equipment Group of $8.5 million ($.28 per share) and a $5.5 million
extraordinary loss ($.18 per share) associated with the early payment of debt.
<table>
(Dollar amounts        1st Quarter     2nd Quarter      3rd Quarter         4th Quarter
in millions, except       Ended           Ended             Ended              Ended
per share data)       March 31, 2000  June 30, 2000  September 30, 2000  December 31, 2000    Total
-----------------     --------------  -------------  ------------------  -----------------  -------

                         <c>          <c>               <c>                 <c>           <c>
2000
Sales                       $135.9       $129.6            $128.7              $119.7        $513.9
Gross profit                  46.0         44.3              45.1                38.7         174.1
Net income (loss)              1.4          7.0               3.3                (0.8)         10.8
Earnings (loss) per share:
  Basic                        .05          .23               .11                (.03)          .35
  Diluted                      .05          .23               .11                (.03)          .35
</table>
The second quarter of 2000 includes the after-tax gain of $2.9 million ($.09 per
share) from the sale of the Company aircraft.


ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.
                                      Page 53
<page>

PART III


ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE
REGISTRANT

See the "Election of Directors," "Executive Officers," and "Filing Disclosure"
sections of the proxy statement for the April 16, 2002 Annual Meeting of
Stockholders of Blount International, Inc., which sections are incorporated
herein by reference.


ITEM 11.  EXECUTIVE COMPENSATION

See the "Executive Compensation," "Compensation of Directors," "Compensation
Committee Interlocks and Insider Participation," and "Employment Contracts,
Termination of Employment and Change in Control Arrangements" sections of the
proxy statement for the April 16, 2002 Annual Meeting of Stockholders of Blount
International, Inc., which sections are incorporated herein by reference.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

See the "Principal Stockholders" section of the proxy statement for the April
16, 2002 Annual Meeting of Stockholders of Blount International, Inc., which
section is incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See the "Certain Transactions and Other Matters" section of the proxy statement
for the April 16, 2002 Annual Meeting of Stockholders of Blount International,
Inc., which section is incorporated herein by reference.
                                     Page 54
<page>
PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

                                                                        Page
                                                                     Reference
                                                                     ---------
(a)  Certain documents filed as part of Form 10-K

     (1)  Financial Statements and Supplementary Data

     Report of Independent Accountants                                   20

     Consolidated Statements of Income (Loss) for the years
     ended December 31, 2001, 2000 and 1999                              22

     Consolidated Balance Sheets as of
     December 31, 2001 and 2000                                          23

     Consolidated Statements of Cash Flows for the years
     ended December 31, 2001, 2000 and 1999                              24

     Consolidated Statements of Changes in Stockholders' Equity
     (Deficit) for the years ended December 31, 2001, 2000 and 1999      25

     Notes to Consolidated Financial Statements                       26 - 53

     Supplementary Data                                                  53

     (2)  Financial Statement Schedules

     Schedule II - Valuation and qualifying accounts
     for the years ended December 31, 2001, 2000 and 1999                61

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

(b)  Reports on Form 8-K in the Fourth Quarter

     Press Release - Filed October 26, 2001
     Press Release - Filed November 13, 2001
     Disposition of Assets - Filed December 21, 2001

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

      * 2(a)      Plan and Agreement of Merger among Blount International, Inc.,
HBC Transaction Subsidiary, Inc. and Blount, Inc., dated August 17, 1995 filed
as part of Registration Statement on Form S-4 (Reg. No. 33-63141) of Blount
International, Inc., including amendments and exhibits, which became effective
on October 4, 1995 (Commission File No. 33-63141).

      * 2(b)      Stock Purchase Agreement, dated November 4, 1997, by and among
Blount, Inc., Hoffman Enclosures, Inc., Pentair, Inc. and Federal-Hoffman, Inc.
which was filed as Exhibit No. 2 to the Form 8-K filed by Blount International,
Inc. on November 19, 1997 (Commission File No. 001-11549).
                                      Page 55
<page>
      * 2(c)      Agreement and Plan of Merger and Recapitalization, dated as of
April 18, 1999, between Blount International, Inc. and Red Dog Acquisition,
Corp. (included as Appendix A to the Proxy Statement-Prospectus which forms a
part of the Registration Statement) previously filed on July 15, 1999, by Blount
International, Inc.(Reg. No. 333-82973).

      * 3(c)      Post-Merger 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 (Reg.
No. 333-82973) previously filed on July 15, 1999, by Blount International, Inc.

      * 3(d)      Post-Merger Bylaws of Blount International, Inc. (included as
Exhibit B 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 (Reg. No. 333-82973).

      * 4(a)      Registration Rights and Stock Transfer Restriction agreement
filed as part of Registration Statement on Form S-4 (Reg. No. 33-63141) of
Blount International, Inc., including amendments and exhibits, which became
effective on October 4, 1995 (Commission File No. 33-63141).

      * 4(b)      Registration Statement on Form S-3 (Reg. Nos. 333-42481 and
333-42481-01), with respect to the 7% $150 million Senior Notes due 2005 of
Blount, Inc. which are guaranteed by Blount International, Inc., including
amendments and exhibits, which became effective on June 17, 1998.

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

      * 4(d)      $500,000,000 Credit Agreement dated as of August 19, 1999
among Blount International, Inc., Blount, Inc., as Borrower, and the Several
Lenders from time to time Parties Hereto which was filed as Exhibit 4 to the
report on Form 10-Q for the third quarter ended September 30, 1999.

      * 4(e)      Indenture between Blount, Inc., as Issuer, Blount
International, Inc., BI Holdings Corp., Benjamin F. Shaw Company, BI, L.L.C.,
Blount Development Corp., Omark Properties, Inc., 4520 Corp., Inc., Gear
Products, Inc., Dixon Industries, Inc., Frederick Manufacturing Corporation,
Federal Cartridge Company, Simmons Outdoor Corporation, Mocenplaza Development
Corp., and CTR Manufacturing, Inc., as Guarantors, and United States Trust
Company of New York, dated as of August 19, 1999, (including exhibits) which was
filed as Exhibit 4.1 to the report on Form 10-Q for the third quarter ended
September 30, 1999.

      * 4(f)      Registration Right Agreement by and among Blount, Inc., Blount
International, Inc., BI Holdings Corp., Benjamin F. Shaw Company, BI, L.L.C.,
Blount Development Corp., Omark Properties, Inc., Gear Products, Inc., Dixon
Industries, Inc., Frederick Manufacturing Corporation, Federal Cartridge
Company, Simmons Outdoor Corporation, Mocenplaza Development Corp., CTR
Manufacturing, Inc., and Lehman Brothers, Inc., dated as of August 19, 1999,
which was filed as Exhibit 4.2 to the report on Form 10-Q for the third quarter
ended September 30, 1999.

      * 4(g)      Registration Statement on Form S-4 (Reg. No. 333-92481) with
respect to the 13% $325 million Senior Subordinated Notes of Blount, Inc.
guaranteed by Blount International, Inc., including amendments and exhibits,
which became effective on January 19, 2000.
                                      Page 56
<page>
      * 4(h)      Amendment to $500,000,000 Credit Agreement dated as of January
31, 2001 as filed on Form 8-K on February 8, 2001.

      * 4(i)      Purchase Agreement between Blount International, Inc. and an
affiliate of Lehman Brothers Merchant Banking Partners II, L.P. for sale of
$20,000,000 of a convertible preferred equivalent security, together with
warrants for common stock, as filed on Form 8-K on March 13, 2001.

     ** 4(j)      Amendment to $500,000,000 Credit Agreement dated as of
December 3, 2001.

      * 9(a)      Stockholder Agreement, dated as of April 18, 1999, between Red
Dog Acquisition, Corp., a Delaware corporation and a wholly-owned subsidiary of
Lehman Brothers Merchant Banking Partners II L.P., a Delaware limited
partnership, and The Blount Holding Company, L.P., a Delaware limited
partnership which was filed as Exhibit 9 to the Form 8-K/A filed April 20, 1999.

      *10(a)      Form of Indemnification Agreement between Blount
International, Inc. and The Blount Holding Company, L.P. filed as part of
Registration Statement on Form S-4 (Reg. No. 33-63141) of Blount International,
Inc., including amendments and exhibits, which became effective on October 4,
1995 (Commission File No. 33-63141).

      *10(b)      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(c)      Written description of the Management Incentive Plan of
Blount, Inc. which was included within the Proxy Statement of Blount, Inc. for
the Annual Meeting of Stockholders held June 27, 1994 (Commission File No. 1-
7002).

      *10(d)      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(e)      Supplemental Executive Retirement Plan between Blount, Inc.
and John M. Panettiere which was filed as Exhibit 10(t) to the Annual Report of
Blount, Inc. on Form 10-K for the fiscal year ended February 28, 1993
(Commission File No. 1-7002).

      *10(f)      Executive Management Target Incentive Plan of Blount, Inc.
which was filed as Exhibit B to the Proxy Statement of Blount, Inc. for the
Annual Meeting of Stockholders held June 27, 1994 (Commission File No. 1-7002).

      *10(g)      Blount, Inc. Executive Benefit Plans Trust Agreement and
Amendment to and Assumption of Blount, Inc. Executive Benefit Plans Trust which
were 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(h)      Blount, Inc. Benefits Protection Trust Agreement and Amendment
To and Assumption of Blount, Inc. Benefits Protection Trust which were 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(i)      1998 Blount Long-Term Executive Stock Option Plan of Blount
International, Inc. filed as part of Registration Statement on Form S-8 (Reg.
No. 333-56701), including exhibits, which became effective on June 12, 1998.
                                     Page 57
<page>
      *10(j)      Supplemental Executive Retirement Plan between Blount, Inc.
and Gerald W. Bersett which was filed as Exhibit 10(z) 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(k)      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(l)      Employment Agreement, dated as of April 18, 1999, between
Blount International, Inc. and John M. Panettiere filed as part of Registration
Statement on Form S-4 (Reg. No.333-92481) of Blount International, Inc.,
including amendments and exhibits, which became effective January 19, 2000.

      *10(m)      Employment Agreement, dated as of April 18, 1999, between
Blount International, Inc. and Gerald W. Bersett filed as part of Registration
Statement on Form S-4 (Reg. No.333-92481) of Blount International, Inc.,
including amendments and exhibits, which became effective January 19, 2000.

      *10(n)      Employment Agreement, dated as of April 18, 1999, between
Blount International, Inc. and James S. Osterman filed as part of Registration
Statement on Form S-4 (Reg. No.333-92481) of Blount International, Inc.,
including amendments and exhibits, which became effective January 19, 2000.

      *10(o)      Employment Agreement, dated as of April 18, 1999, between
Blount International, Inc. and Richard H. Irving filed as part of Registration
Statement on Form S-4 (Reg. No.333-92481) of Blount International, Inc.,
including amendments and exhibits, which became effective January 19, 2000.

      *10(p)      Employment Agreement, dated as of April 18, 1999, between
Blount International, Inc. and Harold E. Layman filed as part of Registration
Statement on Form S-4 (Reg. No.333-92481) of Blount International, Inc.,
including amendments and exhibits, which became effective January 19, 2000.

      *10(q)      Employee Stockholder Agreement dated as of August 19, 1999,
among Blount International, Inc., Lehman Brothers Merchant Banking Partners II
L.P. and Certain Employee Stockholders.

      *10(r)      Amendment to Harold E. Layman Employment Agreement dated
February 3, 2000, as filed as Exhibit 10(t) to the Report on Form 10-Q for the
second quarter ended June 30, 2000.

     **10(s)      Employment Agreement, effective as of August 15, 2000, between
Blount International, Inc. and Dennis E. Eagan.

      *10(t)      Amendment to Employment Agreement between Blount
International, Inc. and James S. Osterman dated February 2, 2001 filed as
Exhibit 10(u) to the report on Form 10-Q for the quarter ended March 31, 2001.
                                      Page 58
<page>
     **10(u)      Supplemental Executive Retirement Plan between Blount, Inc.
and Richard H. Irving, III.

21.  A list of the significant subsidiaries of Blount International, Inc.
included herein on page 62.

23.  Consent of Independent Accountants included herein on page 63.




*    Incorporated by reference.

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

         Blount International, Inc.
         P. O. Box 949
         Montgomery, AL 36101-0949
                                 Page 59
<page>
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/ Rodney W. Blankenship
Rodney W. Blankenship
Senior Vice President
and Chief Financial Officer

Dated:  March 11, 2002

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 11, 2002


/s/ Eliot M. Fried                              /s/ William A. Shutzer
Eliot M. Fried                                  William A. Shutzer
Chairman of the Board and Director              Director

/s/ Harold E. Layman                            /s/ E. Daniel James
Harold E. Layman                                E. Daniel James
President and Chief Executive Officer           Director
and Director

/s/ Calvin E. Jenness
Calvin E. Jenness
Vice President - Controller/Treasurer
(Chief Accounting Officer)
                                      Page 60
<page>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
SCHEDULE II
CONSOLIDATED SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS


(Dollar amounts in millions)
----------------------------
<table>
       Column A             Column B        Column C      Column D (1)      Column E
     ------------         ------------    ------------    ------------    ------------
                                           Additions
                                          ------------
                           Balance at      Charged to                      Balance at
                          Beginning of      Cost and                         End of
      Description            Period         Expenses       Deductions        Period
    ---------------       ------------     ----------     ------------     ----------

                         <c>             <c>             <c>              <c>
Year ended
December 31, 2001
-------------------
Allowance for doubtful
accounts receivable         $   3.8         $   1.3         $   1.6          $   3.5
                            =======         =======         =======          =======

Year ended
December 31, 2000
-------------------
Allowance for doubtful
accounts receivable         $   4.2         $   0.8         $   1.2          $   3.8
                            =======         =======         =======          =======

Year ended
December 31, 1999
-----------------
Allowance for doubtful
accounts receivable         $   3.9         $   1.5         $   1.2          $   4.2
                            =======         =======         =======          =======



(1)  Principally amounts written-off less recoveries of amounts previously written-off.
</table>
                                        Page 61
<page>
EXHIBIT 21


SUBSIDIARIES OF THE REGISTRANT


At December 31, 2001, consolidated, directly or indirectly, wholly-owned
subsidiaries of Blount International, Inc. were as follows:

NAME OF                                        PLACE OF
SUBSIDIARY                                     INCORPORATION
----------                                     -------------

Blount, Inc.                                   Delaware

   Blount Holdings, Ltd.                       Canada

      Blount Canada, Ltd.                      Canada

   Dixon Industries, Inc.                      Kansas

   Gear Products, Inc.                         Oklahoma

   Frederick Manufacturing Corporation         Delaware

The names of particular 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, 2001.
                                    Page 62
<page>
EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS


We consent to the incorporation by reference in the registration statement of
Blount International, Inc. on Form S-4 (File No. 333-92481) of our report dated
January 28, 2002, on our audits of the consolidated financial statements and
financial statement schedules of Blount International, Inc. and subsidiaries as
of December 31, 2001 and 2000, and for the three years ended December 31, 2001,
which report is included in this Annual Report on Form 10-K.



PricewaterhouseCoopers LLP

Atlanta, Georgia
January 28, 2002