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, 1998
                                       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
Class A Common Stock, $.01 par value             New York Stock Exchange
Class B 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, 1999:  $593,569,000
-------------------------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Class A Common Stock $.01 par value, as of February 1, 1999:  25,580,571 shares
                                                              ----------
Class B Common Stock $.01 par value, as of February 1, 1999:  11,479,471 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 19, 1999, are incorporated by reference in Part III.
                                   Page 2
<PAGE>
PART I

ITEM 1.  BUSINESS

The Company is an international manufacturing and marketing company with sales
in over 130 countries and operations in three business segments:  Outdoor
Products, Sporting Equipment, and Industrial and Power Equipment.  The Company
was founded in 1946 as a general construction company.  In 1994, the
construction business was discontinued.  See "Business - Acquisitions and
Dispositions" on pages 6 and 7.

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 50 original equipment manufacturers ("OEMs").  In 1998, approximately 16%
of the sales by the Outdoor Products segment were to one customer.  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 Company has Oregon marketing personnel throughout the United States and in a
number of foreign countries.  Oregon manufactures cutting chain and related
products in Milwaukie, Oregon; 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.

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
line of ZTR lawn mowers for both homeowner and commercial applications.

The key element which 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 larger than the machine, a "zero radius
                                   Page 3
<PAGE>
turn".  This unique transmission enables the Dixon mower to out-maneuver
conventional ride-on products available in the market today and provides a cost
advantage over the more expensive hydrostatic drives used by competitors in the
market.  The latest product additions are in the hydrostatic portion of the
product line.  In late 1997, Dixon introduced the "Estate Line" featuring mowers
which 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 hydros and transaxle models geared for the residential user.  It
features models with cut widths of 42 inches, 50 inches and 60 inches.  Dixon
sells its products through distribution channels comprised of full-service
dealers, North American distributors and export distributors.

Frederick, located in Kansas City, Missouri, was acquired in January 1997.  See
"Business - Acquisitions and Dispositions" on pages 6 and 7.  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.

SPORTING EQUIPMENT

On November 4, 1997, the Company acquired the Federal Cartridge Company
("Federal").  See "Business - Acquisitions and Dispositions" on pages 6 and 7.
Federal manufactures and markets shotshell, centerfire and rimfire cartridges,
ammunition components, and clay targets.  These products are distributed
throughout the United States through a network of distributors and directly to
large retail chains, the U.S. government and federal, state, local and
international law enforcement agencies.  The Federal acquisition both
complemented and significantly expanded the Sporting Equipment segment's product
offerings.  Shotgun shells, a product not manufactured or sold by the Company
prior to this acquisition, represented approximately 22% of Sporting Equipment's
sales for 1998.  Federal is also a significant producer and marketer of
centerfire rifle ammunition, products as to which the Company's market share had
been much smaller.  Federal markets its products under the brand names of
"Premium," "Gold Medal," "American Eagle," "Classic," "BallistiClean" and
"Tactical."  The acquisition of Federal placed the Company among the leading
United States producers of ammunition products.

The Company's other Sporting Equipment segment operations manufacture small arms
ammunition, reloading equipment, primers, gun care products and accessories, and
distribute imported sports optical products.  Principal products include CCI and
Speer ammunition sold for use by hunters, sportsmen and law enforcement and
military personnel; RCBS reloading equipment for use by hunters and sportsmen
who prefer to reload their own ammunition; Redfield scope mounting systems;
Outers gun care and trap-shooting products; Ram-Line gun accessories; Weaver
scope mounting systems; and Simmons and Weaver optics.  The Company believes
that it is a market leader in the domestic gun care and ammunition reloading
markets with high levels of brand name recognition in each of these areas.  The
Company believes that the Sporting Equipment segment is also a world leader in
the production of industrial powerloads which are used in the construction
industry to drive fastening pins into metal or concrete.

The market for Sporting Equipment products is characterized by a high degree of
customer loyalty to brand names and historically has not been affected by
adverse economic conditions.  A continuing focus on new and better technologies
has enabled the Company to introduce a number of new and improved products in
recent years.  These products include Speer Gold Dot high performance pistol
ammunition which is used by law enforcement agencies around the world, as well
                                   Page 4
<PAGE>
as Clean-Fire and non-toxic ammunition used extensively for indoor training.
The Company's aluminum case technology continues to provide low cost Blazer
ammunition to consumers and for law enforcement training applications.  New for
1998 is a series of fully automatic electric traps specifically designed for
commercial trap, skeet and sporting clays applications.

Principal raw materials include brass, lead, aluminum and powder, which are
purchased from several suppliers.  The Company manufactures ammunition and
powerloads in Lewiston, Idaho; shotshell, ammunition and ammunition components
in Anoka, Minnesota; reloading equipment in Oroville, California; mounts,
shooting accessories and gun care equipment in Onalaska, Wisconsin; and clay
targets in Richmond, Indiana.  The Company imports substantially all its optical
products from foreign suppliers and does not rely on long-term agreements,
although it does have long-term relationships with some of its suppliers.
Optical products are distributed from a warehouse in Thomasville, Georgia.

In the market for small arms ammunition and primers, the Company competes with
several other manufacturers with well established brand names and market share
positions.  In the segment's other product lines, the Company competes with a
number of smaller competitors, none of whom has a dominant market share.

In 1998, approximately 20% of the Sporting Equipment segment's sales were to one
customer.

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
attachments under the Hydro-Ax brand name; and a line of delimbers, slashers and
firewood processors under the CTR brand name.

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 250 dealers in over 400 locations in the United States and
currently has an additional 20 offshore dealers, primarily in the timber
harvesting regions of South America and Southeast Asia.  Gear Products, Inc.
sells its products to over 350 original equipment manufacturers servicing the
utility, construction, forestry and marine industries.  Over 85% of this
segment's sales in 1998 were in the United States, primarily in the southeastern
and south central states.  In 1998, approximately 27% 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 Company's Industrial and Power Equipment
segment competes primarily on the basis of quality with a number of domestic and
foreign manufacturers.
                                   Page 5
<PAGE>
The Company attempts to capitalize on its technological and manufacturing
expertise as a means of increasing its participation in the market for
replacement parts for products which it manufactures, as well as of developing
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.

The Company's Industrial and Power Equipment segment has manufacturing
facilities in Owatonna, Minnesota; Prentice and Spencer, Wisconsin; Tulsa,
Oklahoma; and Zebulon and Union Grove, North Carolina.  A majority of the
components used in the Company's products are obtained from a number of domestic
manufacturers.

CAPACITY UTILIZATION

Based on an 80-hour work week, the Outdoor Products, Sporting Equipment, and
Industrial and Power Equipment segments utilized approximately 82%, 61% and 65%,
respectively, of their production capacity in the year ended December 31, 1998.

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,
                                        ------------------------   February 29,
                                         1998     1997     1996        1996
---------------------------------       ------   ------   ------   ------------
Outdoor Products                        $ 30.2   $ 42.0   $ 35.5      $ 33.7
Sporting Equipment                        15.1     19.7      9.5        15.5
Industrial and Power Equipment            16.0     56.2     29.2        63.6
---------------------------------       ------   ------   ------      ------
                                        $ 61.3   $117.9   $ 74.2      $112.8
---------------------------------       ======   ======   ======      ======

The total backlog as of December 31, 1998, is expected to be completed and
shipped within twelve months.

ACQUISITIONS AND DISPOSITIONS

In September 1998, the Company purchased certain operating assets of the
Redfield line for approximately $3 million.  The operating assets consisted of
inventory (primarily rifle scopes, mounting systems and related items),
machinery and equipment, trademarks, sales literature and patents.

On November 4, 1997, the Company acquired Federal Cartridge Company (formerly
Federal-Hoffman, Inc.), a manufacturer of shotshell, centerfire and rimfire
cartridges, ammunition components and clay targets.  The purchase price was
approximately $129 million, including a post-closing adjustment and acquisition
expenses.

In January 1997, the Company acquired the outstanding capital stock of the
Frederick Manufacturing Corporation and Orbex, Inc. for approximately $19
million and paid existing debt of the acquired companies in the amount of $5.8
million.  The principal products of the acquired companies are accessories for
lawn mowers and sporting goods.  Orbex, Inc. was subsequently merged into
Frederick Manufacturing Corporation.
                                   Page 6
<PAGE>
In December 1995, the Company acquired all the outstanding capital stock of
Simmons Outdoor Corporation, a sports optics distributor, for cash of
approximately $38 million.

In fiscal 1995, the Company acquired all the outstanding capital stock of CTR
Manufacturing, Inc., a manufacturer of automated forestry harvesting equipment,
and the operating assets of Ram-Line, Inc., a manufacturer of stocks, magazines,
lens caps and other products for the shooting sports markets.  The purchase
price paid for the two businesses was approximately $18.2 million, including
notes issued of $7.2 million.

In February 1994, the Company adopted a plan to discontinue its construction
business through the orderly completion and close-out of the Company's principal
domestic and foreign construction projects and the sale of Pozzo Construction
Co. ("Pozzo"), a subsidiary headquartered in Los Angeles, California.  During
the first quarter of fiscal 1996, Pozzo was sold with no material effect on the
Company's financial condition.  All construction projects are complete.

See Note 4 of Notes to Consolidated Financial Statements on page 28.

EMPLOYEES

At December 31, 1998, the Company employed approximately 5,300 individuals.
None of the Company's employees is unionized.  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 33 and 34.

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, where available.  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.

The Company expects to spend approximately $1.4 million, $1.0 million and $0.7
million during 1999, 2000 and 2001, respectively, on environmental compliance
costs.

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 15 and Note 9 of Notes to Consolidated Financial
Statements on pages 35 through 37.

SEASONALITY

Only the Company's Sporting Equipment segment experiences significant
seasonality with higher sales and operating income in the second half of the
year than the first half of the year.
                                   Page 7
<PAGE>
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; 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.  Sporting ammunition, reloading equipment products, gun care
equipment, industrial powerloads and shooting sports accessories are
manufactured at plants in Anoka, Minnesota; Lewiston, Idaho; Oroville,
California; Onalaska, Wisconsin; and Richmond, Indiana.  The Company maintains a
warehouse facility in Thomasville, Georgia for distribution of sports optics and
hunting accessories.  Log loaders, feller bunchers and accessories for automated
forestry equipment are manufactured at plants in Prentice and Spencer,
Wisconsin; Zebulon and Union Grove, North Carolina; and Owatonna, Minnesota.
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:

                                          Area in Square Feet
                                         ---------------------
                                           Owned       Leased
     -------------------------------     ---------    --------
     Outdoor Products                    1,015,000     209,000
     Sporting Equipment                  1,583,000     116,000
     Industrial and Power Equipment        798,000
     Corporate Office                      192,000      13,000
     -------------------------------     ---------     -------
          Total                          3,588,000     338,000
     -------------------------------     =========     =======


ITEM 3.  LEGAL PROCEEDINGS

For information regarding legal proceedings see Note 7 of Notes to Consolidated
Financial Statements on pages 33 and 34.


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

Not applicable.
                                   Page 8
<PAGE>
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 and cash dividends declared for the Company's Common Stock.  The
Company had approximately 10,100 shareholders as of February 1, 1999.


                                Class A Common Stock        Class B Common Stock
                            ------------------------    ------------------------
                             High    Low    Dividend     High    Low    Dividend
------------------------    ------  ------  --------    ------  ------  --------
Year Ended
December 31, 1998

First quarter               $29.75  $23.00     $.071    $29.88  $23.50     $.067
Second quarter               34.38   26.50      .071     32.25   26.44      .067
Third quarter                29.50   19.94      .071     28.50   22.06      .067
Fourth quarter               24.94   18.94      .071     24.63   19.50      .067

Year Ended
December 31, 1997

First quarter               $21.63  $18.81     $.063    $21.25  $18.75     $.059
Second quarter               22.75   19.00      .063     22.25   19.63      .059
Third quarter                25.25   20.75      .063     23.69   21.13      .059
Fourth quarter               26.88   23.00      .071     27.00   25.28      .067
------------------------    ------  ------     -----    ------  ------     -----


For information regarding restrictions on the net assets of foreign
subsidiaries, see Note 11 of Notes to Consolidated Financial Statements on pages
39 and 40.
                                   Page 9
<PAGE>
<TABLE>
ITEM 6.  SELECTED FINANCIAL DATA
<CAPTION>
                                                                                                     Twelve Months Ended
                                                       Twelve Months Ended             Ten Months       The Last Day
                                                          December 31,                   Ended          of February,
Dollar amounts in millions,                  --------------------------------------   December 31,   -------------------
except per share data                          1998      1997     1996(1)   1995(1)     1996(1)        1996       1995
----------------------------------------     --------  --------  --------  --------   ------------   --------   --------
                                                                    (Unaudited)
                                                                 ------------------
<S>                                           <C>       <C>       <C>       <C>          <C>          <C>        <C>
Operating Results:
Sales                                         $ 831.9   $ 716.9   $ 649.3   $ 621.4      $ 526.7      $ 644.3    $ 588.4
Operating income from segments                  132.4     117.9     113.1     104.9         91.2        112.8      101.9
Income from continuing operations
  before extraordinary loss                      63.3      59.1      53.8      49.4         44.0         53.6       40.7
Net income                                       61.3      59.1      55.2      49.4         45.4         53.6       40.7
Earnings per share:
  Basic:
    Income from continuing operations
      before extraordinary loss                  1.69      1.57      1.40      1.30         1.14         1.41       1.08
    Net income                                   1.64      1.57      1.44      1.30         1.18         1.41       1.08
  Diluted:
    Income from continuing operations
      before extraordinary loss                  1.65      1.53      1.38      1.27         1.13         1.38       1.05
    Net income                                   1.60      1.53      1.41      1.27         1.16         1.38       1.05
----------------------------------------     --------  --------  --------  --------     --------     --------   --------
End of Period Financial Position:
Total assets                                  $ 668.8   $ 637.8   $ 533.8   $ 522.4      $ 533.8      $ 546.5    $ 520.8
Working capital                                 232.2     171.1     166.2     122.2        166.2        136.2      123.3
Property, plant and equipment-gross             392.8     376.8     301.9     293.8        301.9        295.5      279.9
Property, plant and equipment-net               182.9     188.5     131.7     136.7        131.7        135.5      134.4
Long-term debt                                  161.6     138.8      84.6      95.9         84.6         95.9       98.3
Total debt                                      162.3     140.3      85.8     108.7         85.8        107.6      106.0
Net debt to total capitalization (2)            22.0%     28.8%      5.9%     24.8%         5.9%        23.6%      16.8%
Stockholders' equity                            354.6     316.1     290.8     244.6        290.8        255.0      207.7
Current ratio                                3.4 to 1  2.3 to 1  2.4 to 1  1.9 to 1     2.4 to 1     1.9 to 1   1.7 to 1
----------------------------------------     --------  --------  --------  --------     --------     --------   --------
Other Data:
Property, plant and equipment additions(3)    $  21.7   $  78.5   $  21.3   $  19.8      $  18.7      $  19.3    $  14.7
Depreciation and amortization                    30.9      25.0      23.3      22.3         19.2         22.2       22.9
Interest expense, net of interest income         11.8       7.0       7.5       6.8          5.6          7.4        8.5
Stock price:                  Class A high      34.38     26.88     19.44     17.58        19.44        17.58      16.38
                              Class A low       18.94     18.81     12.69     12.25        14.13        12.25       9.38
Stock price:                  Class B high      32.25     27.00     18.94     17.58        18.94        17.58      16.29
                              Class B low       19.50     18.75     14.75     12.58        14.75        12.58       9.67
Per common share dividends:   Class A            .285      .261      .228      .198         .228         .198       .173
                              Class B            .268      .244      .212      .181         .212         .181       .156
Shares used in earnings per share
  computations (in millions):
    Basic                                        37.4      37.6      38.4      37.9         38.4         38.0       37.8
    Diluted                                      38.4      38.5      39.1      38.9         39.2         38.9       38.8
Employees (approximate)                         5,300     5,700     4,400     4,400        4,400        4,400      4,600
----------------------------------------     --------  --------  --------  --------     --------     --------   --------
</TABLE>
(1)  In April 1996, the Company changed its fiscal year from one ending on the
last day of February to one ending on December 31.  See Note 1 of Notes to 
Consolidated Financial Statements.  Unaudited financial data for the twelve 
months ended December 31, 1996 and 1995 is also presented in the table above.
(2)  Net debt is defined as total debt less cash, cash equivalents and 
unexpended industrial development revenue bond proceeds.
(3)  Includes property, plant and equipment of acquired companies at date of 
purchase of $59.8 million in the twelve months ended December 31, 1997, and 
$0.6 million and $5.0 million in the twelve months ended the last day of 
February, 1996 and 1995.
                                   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.

OPERATING RESULTS

TWELVE MONTHS ENDED DECEMBER 31, 1998 (AUDITED) COMPARED TO TWELVE MONTHS ENDED
DECEMBER 31, 1997 (AUDITED)

Despite economic problems in some markets, the Company achieved record results
in 1998.  Sales in 1998 were $831.9 million compared to $716.9 million in 1997.
Income before extraordinary loss was $63.3 million ($1.65 per share) in 1998
compared to $59.1 million ($1.53 per share) in 1997.  Net income of $61.3
million ($1.60 per share) for 1998 reflects a net extraordinary loss of $2.0
million ($.05 per share) on the redemption of long-term debt.  The higher sales
and improved operating results in 1998 are primarily due to the full year
contribution to the Sporting Equipment segment by Federal Cartridge Company
("Federal") which was acquired during the fourth quarter of 1997.

Selling, general and administrative expenses were 17% of sales in 1998 compared
to 19% in 1997.  Total selling, general and administrative expenses increased by
$10.0 million in 1998 primarily due to Federal being included in operating
results for the entire year.  Higher interest expense in 1998 reflects higher
debt levels during the current year, principally due to the Federal acquisition.

Total backlog was $61.3 million at December 31, 1998, compared to $117.9 million
at December 31, 1997.  The current year backlog is lower at each of the
Company's operating segments with the largest decrease at the Industrial and
Power Equipment segment, principally reflecting reduced demand for timber
harvesting and industrial equipment.  The Company expects that 1999 will be a
challenging year as, for the near term, poor economic conditions in Southeast
Asia and the Far East will likely continue to affect the Outdoor Products
segment and low pulp prices and high mill inventories will impact the demand for
the Industrial and Power Equipment segment's timber harvesting equipment.  The
Industrial and Power Equipment segment has implemented production and cost
control measures to help mitigate the effect of the reduction in demand.  In
1999, the Sporting Equipment segment should continue to benefit from the
acquisition of Federal and related consolidation and cost reduction activities.

Sales and operating income for the Outdoor Products segment for 1998 were $315.4
million and $68.4 million, respectively, compared to $319.3 million and $67.1
million during 1997.  The operating results for this segment reflect a decrease
in sales and operating income of $10.0 million and $1.3 million, respectively,
at the Company's Oregon Cutting Systems Division ("Oregon") and higher sales and
operating income at Dixon Industries, Inc. ("Dixon").  Oregon's 1998 results
reflect an approximate $11.5 million sales decrease in Southeast Asia and the
Far East, primarily due to the economic problems in those areas, which has
contributed to an approximate 4% reduction in the sales volume of cutting chain
and chain saw guide bars, Oregon's principal products.  Oregon has foreign
manufacturing or distribution operations in Canada, Europe, Brazil, Japan and
Russia.  The Company estimates that foreign currency exchange rates in 1998, as
compared to 1997, provided a favorable impact on operating income of
approximately $1.5 million.  During 1998, operating income from Brazil was $3.1
million compared to $2.6 million during 1997.  Dixon's sales and operating
income improved in 1998 compared to the prior year due to higher volume and more
favorable weather conditions.
                                   Page 11
<PAGE>
Sales and operating income for the Sporting Equipment segment were $286.7
million and $36.1 million, respectively, in 1998 compared to $158.5 million and
$18.1 million in 1997.  The significant improvement in sales and operating
income reflect the sales and income added by Federal which was acquired during
the fourth quarter of 1997.  Total sales and operating income at other Sporting
Equipment operations were flat in 1998 as compared to the prior year.

Sales and operating income for the Industrial and Power Equipment segment were
down to $229.8 million and $27.9 million, respectively, in 1998 from $239.1
million and $32.7 million in 1997.  The results for 1998 reflect reduced demand
for timber harvesting equipment resulting principally from sharply lower pulp
prices since mid-year and higher mill inventories, higher competitive discounts
and higher warranty costs.  The operating results for this segment's Gear
Products, Inc. subsidiary ("Gear") improved slightly in 1998 compared to 1997.

TWELVE MONTHS ENDED DECEMBER 31, 1997 (AUDITED) COMPARED TO TWELVE MONTHS ENDED
DECEMBER 31, 1996 (UNAUDITED)

In April 1996, the Company changed its fiscal year from one ending on the last
day of February to one ending on December 31.  See Note 1 of Notes to
Consolidated Financial Statements.  This discussion and analysis includes a
discussion of 1997 compared to the twelve-month period ended December 31, 1996
("1996").

Sales in 1997 were $716.9 million compared to $649.3 million in 1996.  Income
from continuing operations improved to $59.1 million ($1.53 per share) in 1997
from $53.8 million ($1.38 per share) during the prior year.  Net income for 1996
included income of $1.4 million ($.03 per share) from discontinued operations.
The sales increase reflected higher sales in 1997 by each operating segment,
while the income increase resulted primarily from improved performance by the
Outdoor Products segment.

Selling, general and administrative expenses were 19% of sales in 1997 compared
to 20% in 1996.  Total selling, general and administrative expenses increased by
$4.6 million in 1997 principally due to the acquisitions of Federal and
Frederick Manufacturing Company and Orbex, Inc. ("Frederick-Orbex").  See Note 4
of Notes to Consolidated Financial Statements.  Other income was higher in 1997
as a result of gains on sales of securities.

Sales and operating income for the Outdoor Products segment for 1997 were $319.3
million and $67.1 million, respectively, compared to $292.7 million and $61.4
million during 1996.  The operating results for this segment reflect an increase
in sales and operating income of $25.7 million and $7.2 million, respectively,
at Oregon and flat sales and lower operating income at Dixon.  Oregon's results
reflect a 7% increase in the sales volume of cutting chain and a 15% increase in
the sales volume of chain saw guide bars, Oregon's two principal products,
partially offset by lower average selling prices, due to a higher percentage of
lower priced sales to original equipment manufacturers and unfavorable exchange
rates.  Additionally, the acquisition of Frederick-Orbex increased sales by 7.5%
in 1997.  Approximately 24% and 36% of Oregon's sales and operating costs and
expenses, respectively, were transacted in foreign currencies in 1997.  The
Company estimates that unfavorable exchange rates in 1997, as compared to 1996,
reduced operating income by approximately $2.0 million.  During 1997, operating
income from Brazil was $2.6 million compared to $0.3 million during 1996,
principally as a result of improved economic conditions.  Dixon's operating
results in 1997 compared to the prior year reflect the effects of reduced volume
and higher costs, partially offset by higher average selling prices.
                                   Page 12
<PAGE>
Sales for the Sporting Equipment segment were $158.5 million in 1997 compared to
$147.1 million in 1996.  Operating income was $18.1 million during 1997,
compared to $19.8 million during 1996.  Sales reflected a higher volume of
ammunition products sales and the contribution by Federal since acquisition in
November 1997, partially offset by a lower volume of sales of sports optics.
Operating income was lower in 1997 as lower sports optics sales offset the
effect of higher ammunition products sales.  Additionally, operating income for
the prior year included the positive effect of reduced environmental cost
estimates of $1.9 million resulting from the resolution of an environmental
matter.

Sales and operating income for the Industrial and Power Equipment segment were
$239.1 million and $32.7 million, respectively, in 1997 compared to $209.5
million and $31.9 million in 1996.  The higher sales during 1997 are principally
due to a higher volume of forestry equipment sold as a result of improved market
conditions and higher average selling prices.  Operating income increased by
$0.8 million during 1997 as higher forestry equipment product and warranty costs
offset much of the effect of the sales increase.  The operating results for Gear
continued to improve in 1997 as its sales and operating income increased by 8%
and 15%, respectively, primarily due to higher volume.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1998, the Company had senior notes ("the senior notes")
outstanding in the principal amount of $150.0 million which are due in 2005 and
no amounts outstanding under its $150 million revolving credit agreement.  At
December 31, 1998, the Company's long-term debt to equity ratio was 0.5 to 1
compared to a ratio of 0.4 to 1 at December 31, 1997.  See Note 3 of Notes to
Consolidated Financial Statements for a description of the terms and conditions
of the senior notes and the $150 million revolving credit agreement.

Working capital increased to $232.2 million at December 31, 1998, from $171.1
million at December 31, 1997, principally due to working capital provided by
operations.  Inventories decreased by $11.9 million, primarily due to production
and inventory control efforts.  Accounts payable decreased by $26.2 million
since the prior year end, reflecting reduced purchasing associated with the
production and inventory control efforts and the payment of an approximate $13.6
million post-closing adjustment for the purchase of Federal.  The Company's
operating cash flows for the year ended December 31, 1998 were $88.9 million
compared to $80.3 million in 1997.  Cash and cash equivalent balances were $45.1
million at December 31, 1998, compared to $4.8 million at December 31, 1997, as
the Company's cash flows from operations exceeded cash expenditures for
investing and financing activities.  Acquisition expenditures and the purchase
of treasury stock were lower in 1998.

Management believes that the Company will generate sufficient future taxable
income to realize all deferred income tax assets.

The Company believes that its operating cash flows and $150 million revolving
credit facility will provide both short-term and long-term liquidity.

The Company and its operations are subject to various environmental laws and
regulations.  See Note 7 of Notes to Consolidated Financial Statements for a
description of certain environmental matters.

Management believes that the impact of domestic inflation on the Company has not
been material in recent years as inflation rates have remained low.
                                   Page 13
<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.

Interest Rate Risk:
The Company manages its ratio of fixed to variable rate debt with the objective
of achieving a mix that management believes is appropriate.  Historically, the
Company has, on occasion, entered into interest rate swap agreements to exchange
fixed and variable interest rates based on agreed upon notional amounts and has
entered into interest rate lock contracts to hedge the interest rate of an
anticipated debt issue.  At December 31, 1998, no derivative financial
instruments were outstanding to hedge interest rate risk.  A hypothetical
immediate 10% increase in interest rates would decrease the fair value of the
Company's fixed rate long-term debt outstanding at December 31, 1998, by $5.3
million.  A hypothetical 10% increase in the interest rates on the Company's
variable rate long-term debt for a duration of one year would increase interest
expense by less than $0.1 million in 1999.

Foreign Currency Exchange Risk:
Approximately 36% of Oregon's sales and 42% of its operating costs and expenses
were transacted in foreign currencies in 1998.  As a result, fluctuations in
exchange rates impact the amount of Oregon's reported sales and operating
income.  Historically, the Company's principal exposures have been related to
local currency operating costs and expenses in Canada and local currency sales
in Europe (principally France and Germany).  During the past three years, the
Company has not used derivatives to manage any significant foreign currency
exchange risk and, at December 31, 1998, no foreign currency exchange
derivatives were outstanding.

Commodity Price Risk:
During 1998, the Company purchased approximately 10.9 million pounds of brass
for use in its Sporting Equipment operations.  The price risk of approximately
40% of these purchases was hedged through the use of copper and zinc futures
contracts.  In the near future, the Company expects to decrease its use of
futures contracts to manage this price risk.  An immediate hypothetical 10%
decrease in the futures prices of copper and zinc contracts outstanding at
December 31, 1998, would decrease their fair value by $0.3 million.  In
addition, a large quantity of other metals (principally lead) were purchased by
Sporting Equipment operations in 1998.  Derivatives were not used to manage this
price risk.

IMPACT OF YEAR 2000 ISSUE

The Company has been evaluating its internal date-sensitive systems and
equipment for Year 2000 compliance.  The assessment phase of the Year 2000
project is substantially complete and included both information technology
equipment and non-information technology equipment.  Based on its assessment,
the Company determined that it was necessary to modify or replace a portion of
its information systems and other equipment.  As of December 31, 1998, the
Company is approximately 76% complete in the modification or replacement and
testing of the critical software, hardware and equipment requiring remediation.
The Company expects to be completed by June 1999.

The Company believes that the above modifications and replacements should
mitigate the effect of the Year 2000 issue.  However, if such modifications and
replacements are not made, or fail to correct date-sensitive problems, the Year
                                   Page 14
<PAGE>
2000 issue could have a material impact on the Company's operations by
disrupting its ability to manufacture and ship products, process financial
transactions or engage in similar normal business activities.  The Company does
not believe that the effect of the Year 2000 issue on non-information technology
systems is likely to have a material adverse impact.  Finally, the Company has
reviewed its own products and believes that it has no significant Year 2000
issues for those products.

The total estimated cost of the Year 2000 project, including system upgrades, is
approximately $5.5 million and is being funded by operating cash flows.  As of
December 31, 1998, costs of $3.7 million had been incurred.  Of the total cost
of the project, approximately $2.9 million is attributable to new software and
equipment, which will be capitalized.  The remaining costs will be expensed as
incurred.

The Company has also communicated with key suppliers and customers to determine
their Year 2000 compliance and the extent to which the Company is vulnerable to
any third-party Year 2000 issues.  This program will be ongoing and the
Company's efforts with respect to specific problems identified will depend on
its assessment of the risk.  Most key suppliers and customers who have replied
to our inquiries indicated that they expect to be Year 2000 compliant on a
timely basis.  There can be no assurance that there will not be an adverse
effect on the Company if third parties do not make the necessary modifications
to their systems in a timely manner.  However, management believes that ongoing
communication with and assessment of these third parties will minimize these
risks.

Where needed, the Company will establish contingency plans based on actual
testing results and assessment of outside risks.

The costs of the Year 2000 issue and completion dates are based on management's
best estimates, which were derived utilizing numerous assumptions of future
events including the continued availability of certain resources, third-party
modification plans and other factors.  However, there can be no guarantee that
these estimates will be achieved and actual results could differ materially from
those plans.

The above statement in its entirety is designated a Year 2000 readiness
disclosure under the Year 2000 Information and Readiness Disclosure Act.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities."  SFAS No. 133 establishes accounting and
reporting standards for derivatives and hedging.  It requires that all
derivatives be recognized as either assets or liabilities at fair value and
establishes specific criteria for the use of hedge accounting.  The Company's
required adoption date is January 1, 2000.  SFAS No. 133 is not to be applied
retroactively to financial statements of prior periods.  The Company expects no
material adverse effect on consolidated results of operations, financial
position or cash flows upon adoption of SFAS No. 133, but does expect a small
reduction in stockholders' equity.


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 14.
                                   Page 15
<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, 1998 and 1997, and the results of their operations and their cash
flows for each of the two years in the period ended December 31, 1998 and the
ten-month period ended December 31, 1996, in conformity with generally accepted
accounting principles.  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 generally accepted
auditing standards 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, 1999
                                   Page 16
<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 internal audit department as part of its normal
responsibilities and by the independent auditors to the extent deemed necessary
in accordance with generally accepted auditing standards. 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 both by the
independent auditors and by the internal audit department. Management implements
those recommendations that it believes would improve the system of internal
controls and be cost justified.

Six 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, the internal auditors and the Company's independent
auditors each year to consider the results of internal and 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 and the General Auditor of the Company to ensure
free access by the independent auditors and internal 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.



JOHN M. PANETTIERE                          HAROLD E. LAYMAN
President and                               Executive Vice President
Chief Executive Officer                     Finance Operations and
                                            Chief Financial Officer
                                   Page 17
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Blount International, Inc. and Subsidiaries

                                          Twelve Months Ended        Ten Months
                                              December 31,             Ended
(Dollar amounts in millions,           --------------------------   December 31,
except per share data)                  1998      1997      1996        1996
-----------------------------------    ------    ------    ------   ------------
                                                        (Unaudited)
Sales                                  $831.9    $716.9    $649.3      $526.7
Cost of sales                           573.6     482.9     426.9       346.5
-----------------------------------    ------    ------    ------      ------
Gross profit                            258.3     234.0     222.4       180.2
Selling, general and administrative
expenses                                144.6     134.6     130.0       105.2
-----------------------------------    ------    ------    ------      ------
Income from operations                  113.7      99.4      92.4        75.0
Interest expense                        (14.3)     (9.5)     (9.9)       (7.9)
Interest income                           2.5       2.5       2.4         2.3
Other income, net                         0.3       1.3       0.5         0.2
-----------------------------------    ------    ------    ------      ------
Income before income taxes              102.2      93.7      85.4        69.6
Provision for income taxes               38.9      34.6      31.6        25.6
-----------------------------------    ------    ------    ------      ------
Income from continuing operations
before extraordinary loss                63.3      59.1      53.8        44.0
Discontinued operations -
  Income on disposal, net                                     1.4         1.4
Extraordinary loss on repurchase
of debt, net                             (2.0)
-----------------------------------    ------    ------    ------      ------
Net income                             $ 61.3    $ 59.1    $ 55.2      $ 45.4
-----------------------------------    ------    ------    ------      ------
Basic earnings per share:
  Continuing operations before
  extraordinary loss                   $ 1.69    $ 1.57    $ 1.40      $ 1.14
  Discontinued operations                                     .04         .04
  Extraordinary loss                     (.05)
-----------------------------------    ------    ------    ------      ------
  Net income                           $ 1.64    $ 1.57    $ 1.44      $ 1.18
-----------------------------------    ------    ------    ------      ------
Diluted earnings per share:
  Continuing operations before
  extraordinary loss                   $ 1.65    $ 1.53    $ 1.38      $ 1.13
  Discontinued operations                                     .03         .03
  Extraordinary loss                     (.05)
-----------------------------------    ------    ------    ------      ------
  Net income                           $ 1.60    $ 1.53    $ 1.41      $ 1.16
-----------------------------------    ------    ------    ------      ------
Cash dividends per share:
  Class A                              $ .285    $ .261    $ .228      $ .228
  Class B                                .268      .244      .212        .212
-----------------------------------    ------    ------    ------      ------

The accompanying notes are an integral part of the audited financial statements.
                                   Page 18
<PAGE>
CONSOLIDATED BALANCE SHEETS
Blount International, Inc. and Subsidiaries

                                                                  December 31,
(Dollar amounts in millions, except per share data)              1998     1997
--------------------------------------------------------        ------   ------
Assets
--------------------------------------------------------        ------   ------
Current assets:
  Cash and cash equivalents                                     $ 45.1   $  4.8
  Accounts receivable, net of allowance for
  doubtful accounts of $3.9 and $3.7                             132.3    135.7
  Inventories                                                    121.0    132.9
  Deferred income taxes                                           22.0     22.0
  Other current assets                                             6.7      5.8
--------------------------------------------------------        ------   ------
    Total current assets                                         327.1    301.2
Property, plant and equipment, net of accumulated
depreciation of $209.9 and $188.3                                182.9    188.5
Cost in excess of net assets of acquired businesses, net         114.7    116.4
Other assets                                                      44.1     31.7
--------------------------------------------------------        ------   ------
Total Assets                                                    $668.8   $637.8
--------------------------------------------------------        ------   ------
Liabilities and Stockholders' Equity
--------------------------------------------------------        ------   ------
Current liabilities:
  Notes payable and current maturities of long-term debt        $  0.7   $  1.5
  Accounts payable                                                30.4     56.6
  Accrued expenses                                                63.8     72.0
--------------------------------------------------------        ------   ------
    Total current liabilities                                     94.9    130.1
Long-term debt, exclusive of current maturities                  161.6    138.8
Deferred income taxes, exclusive of current portion               13.0     15.2
Other liabilities                                                 44.7     37.6
--------------------------------------------------------        ------   ------
    Total liabilities                                            314.2    321.7
--------------------------------------------------------        ------   ------
Commitments and Contingent Liabilities
--------------------------------------------------------        ------   ------
Stockholders' equity:
Common stock: par value $.01 per share (see
Note 5 for voting rights by class);
  Class A: 27,428,105 and 27,277,969 shares issued                 0.3      0.3
  Class B, convertible: 11,479,471 and
    11,620,552 shares issued                                       0.1      0.1
Capital in excess of par value of stock                           38.7     37.7
Retained earnings                                                348.9    300.3
Accumulated other comprehensive income                             7.6      7.0
Less Class A treasury stock at cost, 1,852,302 and
1,453,180 shares                                                 (41.0)   (29.3)
--------------------------------------------------------        ------   ------
    Total stockholders' equity                                   354.6    316.1
--------------------------------------------------------        ------   ------
Total Liabilities and Stockholders' Equity                      $668.8   $637.8
--------------------------------------------------------        ------   ------

The accompanying notes are an integral part of the audited financial statements.
                                   Page 19
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Blount International, Inc. and Subsidiaries
<CAPTION>
                                                    Twelve Months Ended       Ten Months
                                                        December 31,            Ended
                                                  ------------------------   December 31,
(Dollar amounts in millions)                       1998     1997     1996        1996
--------------------------------------------      ------   ------   ------   ------------
                                                                 (Unaudited)
<S>                                               <C>      <C>      <C>         <C>
Cash flows from operating activities:
Net income                                        $ 61.3   $ 59.1   $ 55.2      $ 45.4
Adjustments to reconcile net income to net cash
provided by operating activities:
  Extraordinary loss                                 2.0
  Depreciation, amortization and other
  noncash charges                                   30.9     25.0     23.6        19.6
  Deferred income taxes                             (2.3)    (1.7)     2.1        (2.1)
  Gain on disposals of property, plant
  and equipment                                              (0.6)    (0.2)       (0.9)
  Changes in assets and liabilities, net
  of effects of businesses acquired and sold:
    (Increase) decrease in accounts receivable       3.4     20.4     (0.6)       34.0
    (Increase) decrease in inventories              13.3    (10.4)    13.2        11.4
    (Increase) decrease in other assets                       0.8      1.9        (1.8)
    Increase (decrease) in accounts payable        (12.8)     0.8     (6.7)      (15.5)
    Decrease in accrued expenses                    (7.3)   (15.5)    (4.3)       (6.8)
    Increase (decrease) in other liabilities         0.4      2.4      3.3        (0.1)
--------------------------------------------      ------   ------   ------      ------
  Net cash provided by operating activities         88.9     80.3     87.5        83.2
--------------------------------------------      ------   ------   ------      ------
Cash flows from investing activities:
Proceeds from sales of property, plant
and equipment                                        1.3      0.9      1.9         1.8
Purchases of property, plant and equipment         (21.1)   (17.8)   (21.2)      (18.7)
Acquisitions of businesses                         (17.4)  (132.5)
--------------------------------------------      ------   ------   ------      ------
  Net cash used in investing activities            (37.2)  (149.4)   (19.3)      (16.9)
--------------------------------------------      ------   ------   ------      ------
Cash flows from financing activities:
Net reduction in short-term borrowings              (0.4)             (2.7)       (1.6)
Issuance of long-term debt                         149.4     62.0
Reduction of long-term debt                       (137.5)   (14.9)   (13.9)      (13.9)
Decrease in restricted funds                         0.5      1.0      3.7         2.7
Dividends paid                                     (10.5)    (9.4)    (8.5)       (8.5)
Purchase of treasury stock                         (18.1)   (27.5)    (4.3)       (4.3)
Other                                                5.2      4.0      3.7         3.4
--------------------------------------------      ------   ------   ------      ------
  Net cash provided by (used in) financing
  activities                                       (11.4)    15.2    (22.0)      (22.2)
--------------------------------------------      ------   ------   ------      ------
Net increase (decrease) in cash and cash
equivalents                                         40.3    (53.9)    46.2        44.1
--------------------------------------------      ------   ------   ------      ------
Cash and cash equivalents at beginning of period     4.8     58.7     12.5        14.6
--------------------------------------------      ------   ------   ------      ------
Cash and cash equivalents at end of period        $ 45.1   $  4.8   $ 58.7      $ 58.7
--------------------------------------------      ------   ------   ------      ------
</TABLE>
The accompanying notes are an integral part of the audited financial statements.
                                   Page 20
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Blount International, Inc. and Subsidiaries
<CAPTION>
                                                                                      Accumulated
                                                Common Stock     Capital                 Other
(Dollar amounts in millions,                  ----------------  In Excess  Retained  Comprehensive  Treasury
shares in thousands)                          Class A  Class B   of Par    Earnings      Income      Stock     Total
----------------------------------------      -------  -------  ---------  --------  -------------  --------  -------
<S>                                            <C>      <C>       <C>       <C>          <C>        <C>        <C>
Balance, February 29, 1996                     $ 0.1    $ 0.1     $31.3     $215.3       $ 8.2                 $255.0
Net income                                                                    45.4                               45.4
Other comprehensive income, net:
  Foreign currency translation adjustment                                                 (0.3)                  (0.3)
                                                                                                              -------
        Comprehensive income                                                                                     45.1
Dividends                                                                     (8.5)                              (8.5)
Conversion of Class B to Class A
  Common stock (35 shares)
Purchase of treasury stock
  (118 Class A shares)                                                                               $ (4.3)     (4.3)
Other (187 Class A shares) -
  principally stock options exercised                               3.5                                           3.5
----------------------------------------      -------  -------  ---------  --------  -------------  --------  -------
Balance, December 31, 1996                       0.1      0.1      34.8      252.2         7.9         (4.3)    290.8
Stock split (13,638 Class A
  shares, 728 shares to treasury,
  and 5,811 Class B shares)                      0.2               (0.2)
Net income                                                                    59.1                               59.1
Other comprehensive income, net:
  Foreign currency translation adjustment                                                 (0.9)                  (0.9)
                                                                                                              -------
        Comprehensive income                                                                                     58.2
Dividends                                                                     (9.6)                              (9.6)
Conversion of Class B to Class A
  Common stock (79 shares)
Purchase of treasury stock
  (673 Class A shares)                                                                                (27.5)    (27.5)
Other (229 Class A shares, 66 from
  treasury) - principally stock options
  exercised                                                         3.1       (1.4)                     2.5       4.2
----------------------------------------      -------  -------  ---------  --------  -------------  --------  -------
Balance, December 31, 1997                       0.3      0.1      37.7      300.3         7.0        (29.3)    316.1
Net income                                                                    61.3                               61.3
Other comprehensive income, net:
  Foreign currency translation adjustment                                                  0.5                    0.5
  Unrealized gains on securities, net of
    gains of $0.2 reclassified to net income                                               0.6                    0.6
  Minimum pension liability adjustment                                                    (0.5)                  (0.5)
                                                                                                              -------
        Comprehensive income                                                                                     61.9
Dividends                                                                    (10.5)                             (10.5)
Conversion of Class B to Class A
  Common stock (141 shares)
Purchase of treasury stock
  (705 Class A shares)                                                                                (18.0)    (18.0)
Other (315 Class A shares, 306 from
  treasury) - principally stock options
  exercised                                                         1.0       (2.2)                     6.3       5.1
----------------------------------------      -------  -------  ---------  --------  -------------  --------  -------
Balance, December 31, 1998                     $ 0.3    $ 0.1     $38.7     $348.9       $ 7.6      $ (41.0)   $354.6
----------------------------------------      -------  -------  ---------  --------  -------------  --------  -------
</TABLE>
The accompanying notes are an integral part of the audited financial statements.
                                   Page 21
<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.

Change in fiscal year:
In April 1996, the Company changed its fiscal year from one ending on the last
day of February to one ending on December 31.  Accordingly, the audited
financial statements include the results for the twelve-month periods ended
December 31, 1998 ("1998") and 1997 ("1997"), and the ten-month period ended
December 31, 1996 ("transition period").  In addition to the basic audited
financial statements and related notes, unaudited financial information for the
twelve-month period ended December 31, 1996 has been presented to enhance
comparability.

Reclassifications:
Certain amounts in 1997 and the transition period and notes to consolidated
financial statements have been reclassified to conform with the 1998
presentation.

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, 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 15 years; furniture, fixtures and office equipment - 2
years to 10 years; and transportation equipment - 1 year 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 costs and expenses was $25.9 million, $21.1
million and $16.4 million in 1998, 1997 and the transition period.
                                   Page 22
<PAGE>
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 reporting periods ended December 31, 1998.

Cost in excess of net assets of acquired businesses:
The excess cost is being amortized by the straight-line method over periods
ranging from 10 to 40 years.  Accumulated amortization was $28.9 million and
$25.0 million as of December 31, 1998 and 1997.  The excess cost is evaluated
for impairment based on the historic and estimated future profitability and cash
flows of the business units to which it relates.  Adjustments to carrying value
are made if required.

Insurance accruals:
It is the Company's policy to retain a portion of expected losses related to
workers' compensation and general, product and vehicle liability through
retentions or deductibles under its insurance programs.  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 1998, 1997 and the transition period.

Derivative financial instruments:
The Company accounts for copper and zinc futures contracts in accordance with
SFAS No. 80, "Accounting for Futures Contracts."  These contracts (approximately
4.0 million pounds and 8.4 million pounds at December 31, 1998 and 1997,
respectively) hedge a portion of the anticipated brass purchases the Company
expects to carry out in the normal course of business.  Any gain or loss on
futures contracts accounted for as a hedge which are closed before the date of
the anticipated transaction is deferred until completion of the transaction.
Deferred gains or losses are amortized over the transaction period.

An interest rate contract accounted for as an interest rate hedge of an expected
debt issue was extinguished upon the issuance of 7% senior notes in the
principal amount of $150 million (see Note 3) in June 1998.  The cost to
extinguish the interest rate contract is being amortized as an adjustment to
interest expense over the life of the senior notes.

Deferred gains and losses on derivative financial instruments are generally
classified as other assets or other liabilities in the consolidated balance
sheets.

Revenue recognition:
The Company's policy is to record sales as orders are shipped.
                                   Page 23
<PAGE>
Advertising:
Advertising costs are generally expensed as incurred.  Advertising costs were
$13.5 million, $14.6 million and $10.1 million for 1998, 1997 and the transition
period.

Research and development:
Expenditures for research and development are expensed as incurred. These costs
were $7.4 million, $8.0 million and $6.0 million for 1998, 1997 and the
transition period.

Accounting standards:
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income."  SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components in the financial statements.
Prior periods have been reclassified to reflect the adoption of this standard.
The adoption of SFAS No. 130 has no material impact on the Company's results of
operations, financial position or cash flows.  Comprehensive income equals net
income plus other comprehensive income.  Other comprehensive income refers to
revenue, expenses, gains and losses which are reflected in stockholders' equity
but excluded from net income.  For the Company, the components of other
comprehensive income are principally foreign currency translation adjustments,
unrealized gains or losses on investments and minimum pension liability
adjustments.

As of December 31, 1998, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information" and SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits."  These standards
have no material effect on the Company's results of operations, financial
position or cash flows.

SFAS No. 131 establishes new standards for reporting operating segments and
disclosing information about products and services and geographic areas.  The
Company's reportable segments are unchanged from the prior year.  See Note 9.

SFAS No. 132 revises disclosures about pension and other postretirement benefit
plans.  It does not change the measurement or recognition of those plans.  See
Note 6.
                                   Page 24
<PAGE>
NOTE 2:
INCOME TAXES

The provision for income taxes attributable to continuing operations before
extraordinary loss is as follows:

                                              Twelve Months Ended    Ten Months
                                                  December 31,         Ended
                                              -------------------   December 31,
(Dollar amounts in millions)                     1998     1997         1996
------------------------------------------      ------   ------     ------------
Current provision:
   Federal                                      $ 33.3   $ 28.6       $ 24.5
   State                                           4.3      3.8          0.8
   Foreign                                         4.2      3.9          2.4
Deferred provision (benefit):
   Federal                                        (2.4)    (1.5)        (3.6)
   State                                          (0.1)     0.1          0.4
   Foreign                                        (0.4)    (0.3)         1.1
------------------------------------------      ------   ------       ------
                                                $ 38.9   $ 34.6       $ 25.6
------------------------------------------      ------   ------       ------


A reconciliation of the provision for income taxes to the amount computed by
applying the statutory federal income tax rate to income from continuing
operations before extraordinary loss and income taxes is as follows:

                                              Twelve Months Ended    Ten Months
                                                  December 31,         Ended
                                              -------------------   December 31,
(Dollar amounts in millions)                     1998     1997         1996
------------------------------------------      ------   ------     ------------
Income before income taxes:
   Domestic                                     $ 91.5   $ 83.8       $ 61.1
   Foreign                                        10.7      9.9          8.5
------------------------------------------      ------   ------       ------
                                                $102.2   $ 93.7       $ 69.6
------------------------------------------      ------   ------       ------
                                                     %        %            %
Statutory tax rate                                35.0     35.0         35.0
Impact of earnings of foreign operations                   (0.7)         0.7
State income taxes, net of federal tax benefit     2.6      2.2          1.5
Permanent differences between book
bases and tax bases                                1.2      1.6          1.5
Other items, net                                  (0.7)    (1.2)        (1.9)
------------------------------------------      ------   ------       ------
Effective income tax rate                         38.1     36.9         36.8
------------------------------------------      ------   ------       ------


All years reflect the allocation of substantially all corporate office expenses
and interest expense to domestic operations.
                                   Page 25
<PAGE>
As of December 31, 1998 and 1997, deferred income tax assets were $35.7 million
and $35.6 million and deferred income tax liabilities were $26.7 million and
$28.8 million. Deferred income tax assets (liabilities) applicable to temporary
differences at December 31, 1998 and 1997 are as follows:

(Dollar amounts in millions)                                    1998      1997
--------------------------------------------------             ------    ------
Property, plant and equipment basis differences                $(17.8)   $(18.3)
Employee benefits                                                19.1      16.8
Other accrued expenses                                           15.0      16.1
Other - net                                                      (7.3)     (7.8)
--------------------------------------------------             ------    ------
                                                               $  9.0    $  6.8
--------------------------------------------------             ------    ------


Deferred income taxes of approximately $3.9 million have not been provided on
undistributed earnings of foreign subsidiaries in the amount of $45.9 million as
the earnings are considered to be permanently reinvested.

The Company has settled its issues with the Internal Revenue Service through the
1993 fiscal year with no material adverse effect.  The periods from fiscal 1994
through 1998 are still open for review.


NOTE 3:
DEBT AND FINANCING AGREEMENTS

Long-term debt at December 31, 1998 and 1997 consists of the following:

(Dollar amounts in millions)                                    1998      1997
--------------------------------------------------             ------    ------
Senior notes (net of discount)                                 $148.6
9% subordinated notes                                                    $ 68.8
Revolving credit agreement                                                 54.0
Industrial development revenue bonds payable,
maturing between 1999 and 2013, interest at varying
rates (principally 4.2% at December 31, 1998)                    13.1      15.7
Other long-term debt, interest at 8.8%                            0.4       0.5
Lease purchase obligations, interest at varying
rates, payable in installments to 2000                            0.2       0.9
--------------------------------------------------             ------    ------
                                                                162.3     139.9
Less current maturities                                          (0.7)     (1.1)
--------------------------------------------------             ------    ------
                                                               $161.6    $138.8
--------------------------------------------------             ------    ------
                                   Page 26
<PAGE>
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
-------------------------------    ------     ---------    --------    --------
1999                               $  0.5       $ 0.2       $ 0.0       $  0.7
2000                                  0.4                                  0.4
2001                                  0.4                                  0.4
2002                                  0.5                                  0.5
2003                                  0.0                                  0.0
2004 and beyond                     160.3                                160.3
-------------------------------    ------       -----       -----       ------
                                   $162.1       $ 0.2       $ 0.0       $162.3
-------------------------------    ------       -----       -----       ------


In June 1998, Blount, Inc., a wholly-owned subsidiary of Blount International,
Inc., issued senior notes ("the 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 July 1998, the Company redeemed all its 9% subordinated notes in the amount
of $68.8 million.  The extraordinary loss on redemption was $2.0 million, net of
income taxes of $1.2 million.

At December 31, 1998, no amount was outstanding under the Company's $150 million
revolving credit agreement with a group of five banks.  The $150 million
agreement expires April 2002 and 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 and commitment fees may vary based on the ratio
of cash flow to debt as defined in the agreement.  The agreement contains
covenants relating to liens, subsidiary debt, transactions with affiliates,
consolidations, mergers and sales of assets, and requires the Company to
maintain certain leverage and fixed charge coverage ratios.

Proceeds from industrial development revenue bonds issued in fiscal 1995 are
held in trust and released as qualified capital expenditures are made.  As of
December 31, 1998 and 1997, $3.5 million and $3.9 million were held in trust and
are included in "Other assets" in the Company's consolidated balance sheets.

As of December 31, 1997, the weighted average interest rate on outstanding
short-term borrowings (principally foreign) was 9.7%.  No short-term borrowings
were outstanding at December 31, 1998.
                                   Page 27
<PAGE>
NOTE 4:
ACQUISITIONS AND DISPOSALS

The following acquisitions have been accounted for 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 40 years.

In September 1998, the Company purchased certain operating assets of the
Redfield line for approximately $3 million.  The fair value of the assets
acquired approximated the purchase price.

On November 4, 1997, the Company acquired Federal Cartridge Company ("Federal"),
formerly Federal-Hoffman, Inc.  The purchase price was approximately $129
million including a post-closing adjustment and acquisition expenses.  Federal
manufactures shotshell, centerfire and rimfire cartridges, ammunition components
and clay targets.  The following summarized unaudited pro forma financial
information for the twelve months ended December 31, 1997 and 1996 assumes the
acquisition had occurred on January 1 of each year:

Pro forma information
(Dollar amounts in millions, except per share data)             1997      1996
---------------------------------------------------            ------    ------
Sales                                                          $842.2    $779.2
Income from continuing operations                                65.1      50.7
Earnings per share from continuing operations:
  Basic                                                          1.73      1.32
  Diluted                                                        1.69      1.30
---------------------------------------------------            ------    ------

The pro forma results do not necessarily represent the results which would have
occurred if the acquisition had taken place on the basis assumed nor are they
indicative of the results of future operations.

In January 1997, the Company acquired the outstanding capital stock of the
Frederick Manufacturing Corporation ("Frederick") and Orbex, Inc. ("Orbex") for
approximately $19 million and paid existing debt of the acquired companies in
the amount of $5.8 million.  Orbex was subsequently merged into Frederick.  The
principal products of the acquired companies are accessories for lawn mowers and
sporting goods.  The combined sales and pretax income of the acquired companies
for their most recent year prior to the acquisition was $19.8 million and $2.5
million, respectively.

In the transition period, income of $1.4 million, net of income taxes of $0.9
million, was recognized for disposal of the discontinued construction segment,
primarily due to favorable claim settlements and improved international job
profits.


NOTE 5:
CAPITAL STOCK, STOCK OPTIONS AND EARNINGS PER SHARE DATA

The Company has authorized 60 million shares of Class A Common Stock, 14 million
shares of Class B Common Stock and 4,456,855 shares of Preferred Stock. As of
December 31, 1998, no Preferred Stock was outstanding.  The Class A Common Stock
is entitled to elect 25% of the Company's Board of Directors, is entitled to
one-tenth of one vote per share on all other matters and will receive an
additional dividend of $.00415 in any quarter that a cash dividend is declared
on the Class B Common Stock. The Class B Common Stock is entitled to elect 75%
                                   Page 28
<PAGE>
of the Company's Board of Directors and is entitled to one vote per share on all
other matters.  Each share of Class B Common Stock is convertible at any time at
the option of the stockholder into one share of Class A Common Stock.

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

                                              Twelve Months Ended    Ten Months
                                                  December 31,         Ended
                                              -------------------   December 31,
                                                 1998     1997         1996
---------------------------------------         ------   ------     ------------
Shares for basic earnings per share
  computation - weighted average
  common shares outstanding                     37,372   37,632       38,418
Dilutive effect of stock options                 1,022      916          737
---------------------------------------         ------   ------       ------
Shares for diluted earnings per
  share computation                             38,394   38,548       39,155
---------------------------------------         ------   ------       ------

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

The Company has 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 may be granted up to 6,750,000 shares.  Each plan provides 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 are exercisable for a period of up to ten years under each plan
and vest in installments over periods determined by the Compensation and
Management Development Committee of the Board of Directors. As of December 31,
1998 and 1997, there were options for 815,020 shares and 99,422 shares available
for grant under the plans.

A summary of the status of the Company's fixed stock option plans as of December
31, 1998, 1997 and 1996, and changes during the periods ending on those dates is
presented below:
<TABLE>
<CAPTION>
                                           Twelve Months
                                         Ended December 31,                        Ten Months
                         ------------------------------------------------      Ended December 31,
                                  1998                      1997                     1996
                         ----------------------    ----------------------    ----------------------
                                      Weighted-                 Weighted-                 Weighted-
                                       Average                   Average                   Average
                           Shares     Exercise       Shares     Exercise       Shares     Exercise
                         (in 000's)     Price      (in 000's)     Price      (in 000's)     Price
--------------------     ----------   ---------    ----------   ---------    ----------   ---------
<S>                      <C>          <C>          <C>          <C>          <C>          <C>
Outstanding at
beginning of period           3,466      $14.79         2,918      $11.88         2,162      $ 9.05
   Granted                      598       25.15         1,035       19.98         1,171       15.48
   Exercised                   (306)      13.69          (444)       7.87          (365)       6.78
   Forfeited                   (114)      21.45           (43)      13.75           (50)      10.78
--------------------     ----------   ---------    ----------   ---------    ----------   ---------
Outstanding at
end of period                 3,644      $16.38         3,466      $14.79         2,918      $11.88
--------------------     ----------   ---------    ----------   ---------    ----------   ---------
Options exercisable
at end of period              1,948                     1,385                       849
--------------------     ----------                ----------                ----------
</TABLE>
                                   Page 29
<PAGE>
The following table summarizes information about fixed stock options outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
                                          Options Outstanding                 Options Exercisable
                               ------------------------------------------    ----------------------
                                                Weighted-       Weighted-                 Weighted-
                                                 Average         Average                   Average
                                 Shares         Remaining       Exercise       Shares     Exercise
Range of Exercise Prices       (in 000's)    Contractual Life     Price      (in 000's)     Price
------------------------       ----------    ----------------   ---------    ----------   ---------
<S>                            <C>           <C>        <S>     <C>          <C>          <C>
   $2.54 to $4.56                  175              4.0 years      $ 3.43         95         $ 4.02
   $9.35 to $12.78                 633              5.1 years        9.50        585           9.51
   $14.33 to $20.72              2,249              7.4 years       17.02      1,257          16.31
   $23.64 to $31.28                587              9.1 years       25.19         11          25.44
------------------------       ----------    ----------------   ---------    ----------   ---------
Total                            3,644              7.1 years      $16.38      1,948         $13.72
------------------------       ----------    ----------------   ---------    ----------   ---------
</TABLE>
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 and earnings per share
would have been the pro forma amounts indicated below:

                                              Twelve Months Ended    Ten Months
                                                  December 31,         Ended
(Dollar amounts in millions,                  -------------------   December 31,
except per share data)                           1998     1997         1996
------------------------------------            ------   ------     ------------
Net income:
   As reported                                  $ 61.3   $ 59.1       $ 45.4
   Pro forma                                      58.1     56.7         44.5
Earnings per share:
   As reported:
     Basic                                        1.64     1.57         1.18
     Diluted                                      1.60     1.53         1.16
   Pro forma:
     Basic                                        1.55     1.51         1.16
     Diluted                                      1.51     1.48         1.14
------------------------------------            ------   ------       ------

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    Ten Months
                                                  December 31,         Ended
                                              -------------------   December 31,
                                                 1998     1997         1996
------------------------------------            ------   ------     ------------
Estimated lives of plan options                6 years  6 years       6 years
Risk-free interest rates                          5.5%     6.2%          6.2%
Expected volatility                              23.0%    23.0%         24.0%
Dividend yield                                    1.5%     1.5%          1.5%
------------------------------------           -------  -------        -------

The weighted average estimated fair value of options granted during 1998, 1997
and the transition period was $7.34, $6.15 and $4.87, respectively.
                                   Page 30
<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, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
                                                                            Other
                                                       Pension         Postretirement
                                                       Benefits            Benefits
FUNDED PLANS                                       ----------------    ----------------
(Dollar amounts in millions)                        1998      1997      1998      1997
----------------------------------------           ------    ------    ------    ------
<S>                                               <C>       <C>        <C>       <C>
Change in Benefit Obligation:
Benefit obligation at beginning of period         $(107.9)  $ (76.4)   $ (2.1)   $ (2.2)
Service cost                                         (6.2)     (4.6)
Interest cost                                        (8.4)     (6.2)     (0.2)     (0.2)
Plan participants' contributions                                         (0.2)     (0.2)
Actuarial losses                                     (6.8)     (2.7)     (0.4)     (0.1)
Benefits and plan expenses paid                       2.9       2.6       0.5       0.6
Acquisition                                                   (20.6)
----------------------------------------          -------   -------    ------    ------
Benefit obligation at end of period                (126.4)   (107.9)     (2.4)     (2.1)
----------------------------------------          -------   -------    ------    ------

Change in Plan Assets:
Fair value of plan assets at beginning of period    114.1      82.0       2.1       2.1
Actual return on plan assets                         10.5      14.1       0.1       0.4
Company contributions
Plan participants' contributions                                          0.2       0.2
Benefits and plan expenses paid                      (2.9)     (2.6)     (0.5)     (0.6)
Acquisition                                                    20.6
----------------------------------------          -------   -------    ------    ------
Fair value of plan assets at end of period          121.7     114.1       1.9       2.1
----------------------------------------          -------   -------    ------    ------
Funded status                                        (4.7)      6.2      (0.5)      0.0
Unrecognized actuarial losses                         7.3       1.4       0.5
Unrecognized transition asset                        (0.6)     (0.8)
Unrecognized prior service cost                      (0.2)     (0.2)
----------------------------------------          -------   -------    ------    ------
Net amount recognized                             $   1.8   $   6.6    $  0.0    $  0.0
----------------------------------------          -------   -------    ------    ------

Net amount recognized:
Prepaid benefits                                  $   3.3   $   6.8
Accrued benefits                                     (1.5)     (0.2)
----------------------------------------          -------   -------    ------    ------
                                                  $   1.8   $   6.6    $  0.0    $  0.0
----------------------------------------          -------   -------    ------    ------
</TABLE>
                                   Page 31
<PAGE>
<TABLE>
<CAPTION>
                                                                            Other
                                                       Pension         Postretirement
                                                       Benefits            Benefits
OTHER PLANS                                        ----------------    ----------------
(Dollar amounts in millions)                        1998      1997      1998      1997
----------------------------------------           ------    ------    ------    ------
<S>                                                <C>       <C>       <C>       <C>
Change in Benefit Obligation:
Benefit obligation at beginning of period          $ (6.3)   $ (5.4)   $(16.8)   $(13.5)
Service cost                                         (0.5)     (0.3)     (0.4)     (0.3)
Interest cost                                        (0.6)     (0.5)     (1.2)     (1.0)
Plan participants' contributions                                         (0.4)     (0.2)
Actuarial gains (losses)                             (0.4)     (0.4)      0.3       0.6
Benefits and plan expenses paid                       0.3       0.3       1.1       0.7
Acquisition                                                                        (3.1)
Plan amendments                                      (6.3)
----------------------------------------           ------    ------    ------    ------
Benefit obligation at end of period                 (13.8)     (6.3)    (17.4)    (16.8)
Unrecognized actuarial (gains) losses                 1.2       1.0      (0.9)     (0.5)
Unrecognized transition obligation                    0.1       0.2
Unrecognized prior service cost                       6.2       0.3       0.1
----------------------------------------           ------    ------    ------    ------
Net amount recognized                              $ (6.3)   $ (4.8)   $(18.2)   $(17.3)
----------------------------------------           ------    ------    ------    ------

Net amount recognized:
Accrued benefits                                   $(13.4)   $ (4.8)   $(18.2)   $(17.3)
Intangible asset                                      6.3
Accumulated other comprehensive income                0.8
----------------------------------------           ------    ------    ------    ------
                                                   $ (6.3)   $ (4.8)   $(18.2)   $(17.3)
----------------------------------------           ------    ------    ------    ------
</TABLE>

The Company acquired Federal in November 1997, including the pension and
postretirement benefit plans for its active employees.

The accumulated pension benefit obligation of supplemental non-qualified defined
benefit pension plans was $13.4 million and $4.9 million at December 31, 1998
and 1997, respectively.  A Rabbi Trust, whose assets are not included in the
table above has been established to fund part of these non-qualified benefits.
                                   Page 32
<PAGE>
The components of net periodic benefit cost and the weighted average assumptions
used in accounting for pension and other postretirement benefits follow:
<TABLE>
<CAPTION>
                                                   Pension Benefits                Other Postretirement Benefits
                                           ---------------------------------     ---------------------------------
                                           Twelve Months Ended   Ten Months      Twelve Months Ended   Ten Months
                                               December 31,        Ended             December 31,        Ended
                                           -------------------  December 31,     -------------------  December 31,
(Dollar amounts in millions)                 1998       1997       1996            1998       1997       1996
----------------------------------         --------   --------  ------------     --------   --------  ------------
<S>                                         <C>        <C>         <C>            <C>        <C>         <C>
Components of net periodic benefit cost:
Service cost                                $  6.7     $  4.9      $  3.7         $  0.4     $  0.3      $  0.3
Interest cost                                  9.0        6.7         5.5            1.4        1.2         0.9
Expected return on plan assets                (9.7)      (7.3)       (6.0)          (0.2)      (0.2)       (0.1)
Amortization of actuarial (gains) losses       0.1        0.1         0.1           (0.1)       0.1
Amortization of transition asset              (0.1)      (0.1)       (0.1)
Amortization of prior service cost             0.4        0.8         1.1
                                            ------     ------      ------         ------     ------      ------
                                            $  6.4     $  5.1      $  4.3         $  1.5     $  1.4      $  1.1
                                            ------     ------      ------         ------     ------      ------
Weighted average assumptions:
Discount rate                                 7.0%       7.4%        7.6%           7.0%       7.5%        7.5%
Expected return on plan assets                8.9%       8.7%        8.7%           9.0%       8.8%        8.8%
Rate of compensation increase                 3.8%       4.0%        4.2%
----------------------------------          ------     ------      ------         ------     ------      ------
</TABLE>

A 7% annual rate of increase in the cost of health care benefits was assumed for
1998; the rate was assumed to decrease 1% per year until 4% is reached, remain
at that level for ten years, and then decrease to the ultimate trend rate of 3%.
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           $ 0.1         $ 0.1
Effect on other postretirement benefit obligations         0.9           0.8
------------------------------------------------      -----------   -----------


The Company sponsors a defined contribution 401(k) plan and matches a portion of
employee contributions.  The expense was $4.9 million, $3.6 million and $2.4
million in 1998, 1997 and the transition period.


NOTE 7:
COMMITMENTS AND CONTINGENT LIABILITIES

The Company leases office space and equipment under operating leases expiring in
1 to 7 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, 1998, are as follows (in millions): 1999--
$3.4; 2000--$2.1; 2001--$1.6; 2002--$0.9; 2003--$0.7; and 2004 and beyond--$0.6.
Rentals charged to costs and expenses under cancelable and noncancelable lease
arrangements were $4.6 million, $4.9 million and $5.0 million for 1998, 1997 and
the transition period, respectively.
                                   Page 33
<PAGE>
In 1989, the United States Environmental Protection Agency ("EPA") designated a
predecessor of the Company as one of four potentially responsible parties
("PRPs") with respect to the Onalaska Municipal Landfill in Onalaska, Wisconsin
("the Site").  The waste complained of was placed in the landfill prior to 1981
by a corporation, some of whose assets were later purchased by a predecessor of
the Company.  It is the view of management that because the Company's
predecessor corporation purchased assets rather than stock, the Company is not
liable and is not properly a PRP.  Although management believes the EPA is wrong
on the successor liability issue, with other PRPs, the Company made a good faith
offer to the EPA to pay a portion of the Site clean-up costs.  The offer was
rejected and the EPA and State of Wisconsin ("the State") proceeded with the
clean-up at a cost of approximately $12 million.  The EPA and the State brought
suit in 1996 against the Town of Onalaska ("the Town") and a second PRP,
Metallics, Inc., to recover response costs.  On December 18, 1996, the United
States District Court for the Western District of Wisconsin approved and entered
Consent Decrees pursuant to which the Town and Metallics, Inc. settled the suit
and will pay a total of over $1.8 million to the EPA and the State.  The Company
continues to maintain that it is not a liable party.  The EPA has not taken
action against the Company, nor has the EPA accepted the Company's position.
The Company does not know the financial status of the other named and unnamed
PRPs who may have liability with respect to the Site.  Management does not
expect the situation to have a material adverse effect on consolidated financial
condition or operating results.

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 cause the Company to be
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.  The results of the RI/FS investigation are expected in the
near future.  The Company is unable to determine, at this time, the level of
clean-up 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.

The Company is a defendant in a number of product liability lawsuits, some of
which seek significant or unspecified damages, involving serious personal
injuries for which there are retentions or deductible amounts under the
Company's insurance policies. 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.
                                   Page 34
<PAGE>
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, 1998, approximately 78% 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 estimated fair values of certain financial instruments at December 31, 1998
and 1997 are as follows:

                                             1998                  1997
                                     --------------------  --------------------
                                     Carrying     Fair     Carrying     Fair
(Dollar amounts in millions)          Amount      Value     Amount      Value
----------------------------------   ---------  ---------  ---------  ---------
Cash and short-term investments        $  45.1    $  45.1    $   4.8    $   4.8
Futures contracts (see Note 1)             0.0       (0.1)       0.0       (0.9)
Other assets (restricted trust
  funds and notes receivable)             17.3       17.1       14.7       16.1
Notes payable and long-term debt
  (see Note 3)                          (162.3)    (163.7)    (140.3)    (143.2)
Interest rate lock contract
  (see Note 1)                                                   0.0       (1.4)
----------------------------------     -------    -------    -------    -------


The carrying amount of cash and short-term investments approximates fair value
because of the short maturity of those instruments.  The fair value of
derivative financial instruments (futures contracts and interest rate lock
contract) is estimated by obtaining market quotes.  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 three reportable segments:  Outdoor Products, Sporting
Equipment, 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.  Sporting Equipment produces
or markets small arms ammunition, sports optical products, reloading equipment
and other shooting sports accessories. 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 35
<PAGE>
Information on Segments:

                                          Twelve Months Ended        Ten Months
                                              December 31,             Ended
                                       --------------------------   December 31,
(Dollar amounts in millions)            1998      1997      1996       1996
---------------------------------      ------    ------    ------   ------------
                                                        (Unaudited)
Sales:
   Outdoor products                    $315.4    $319.3    $292.7     $239.3
   Sporting equipment                   286.7     158.5     147.1      121.7
   Industrial and power equipment       229.8     239.1     209.5      165.7
---------------------------------      ------    ------    ------     ------
                                       $831.9    $716.9    $649.3     $526.7
---------------------------------      ------    ------    ------     ------
Operating income:
   Outdoor products                    $ 68.4    $ 67.1    $ 61.4     $ 50.7
   Sporting equipment                    36.1      18.1      19.8       16.5
   Industrial and power equipment        27.9      32.7      31.9       24.0
---------------------------------      ------    ------    ------     ------
   Operating income from segments       132.4     117.9     113.1       91.2
Corporate office expenses               (18.7)    (18.5)    (20.7)     (16.2)
---------------------------------      ------    ------    ------     ------
Income from operations                  113.7      99.4      92.4       75.0
Interest expense                        (14.3)     (9.5)     (9.9)      (7.9)
Interest income                           2.5       2.5       2.4        2.3
Other income, net                         0.3       1.3       0.5        0.2
---------------------------------      ------    ------    ------     ------
Income before income taxes             $102.2    $ 93.7    $ 85.4     $ 69.6
---------------------------------      ------    ------    ------     ------


Identifiable assets:
   Outdoor products                    $209.1    $221.9    $196.2     $196.2
   Sporting equipment                   226.8     236.6     107.7      107.7
   Industrial and power equipment       107.1     102.7     102.6      102.6
   Corporate office                     125.8      76.6     127.3      127.3
---------------------------------      ------    ------    ------     ------
                                       $668.8    $637.8    $533.8     $533.8
---------------------------------      ------    ------    ------     ------
Depreciation and amortization:
   Outdoor products                    $ 13.6    $ 13.4    $ 12.8     $ 10.6
   Sporting equipment                    10.7       5.7       4.8        4.0
   Industrial and power equipment         4.2       4.1       3.9        3.2
   Corporate office                       2.4       1.8       1.8        1.4
---------------------------------      ------    ------    ------     ------
                                       $ 30.9    $ 25.0    $ 23.3     $ 19.2
---------------------------------      ------    ------    ------     ------
Capital expenditures:
   Outdoor products                    $  7.9    $ 13.5    $ 11.4     $ 10.2
   Sporting equipment                     6.9      60.5       3.3        2.5
   Industrial and power equipment         6.7       4.2       6.0        5.6
   Corporate office                       0.2       0.3       0.6        0.4
---------------------------------      ------    ------    ------     ------
                                       $ 21.7    $ 78.5    $ 21.3     $ 18.7
---------------------------------      ------    ------    ------     ------
                                   Page 36
<PAGE>
Information on Sales By Significant Product Groups:

                                           Twelve Months Ended       Ten Months
                                               December 31,            Ended
                                        --------------------------  December 31,
(Dollar amounts in millions)             1998      1997      1996      1996
---------------------------------       ------    ------    ------  ------------
                                                         (Unaudited)

Chain saw components                    $199.7    $211.1    $201.1    $167.0
Ammunition and related products          212.0      87.9      64.9      52.9
Timber harvesting and loading equipment  199.8     210.5     183.3     143.5
Lawn mowers and related products          75.7      66.2      45.6      34.9
Sports optical products                   41.3      36.6      43.2      34.2
All others, less than 5% each            103.4     104.6     111.2      94.2
---------------------------------       ------    ------    ------    ------
                                        $831.9    $716.9    $649.3    $526.7
---------------------------------       ======    ======    ======    ======


Information on Geographic Areas:
                                          Twelve Months Ended        Ten Months
                                              December 31,             Ended
                                       --------------------------   December 31,
(Dollar amounts in millions)            1998      1997      1996       1996
---------------------------------      ------    ------    ------   ------------
                                                        (Unaudited)
Sales:
  United States                        $623.4    $495.1    $446.6     $360.0
  Canada                                 32.4      36.5      30.8       25.0
  Germany                                24.0      24.5      25.0       19.9
  All others, less than 3% each         152.1     160.8     146.9      121.8
---------------------------------      ------    ------    ------     ------
                                       $831.9    $716.9    $649.3     $526.7
---------------------------------      ------    ------    ------     ------

Long-Lived Assets:
  United States                        $156.1    $159.6    $103.3     $103.3
  Canada                                 20.1      22.3      21.4       21.4
  Brazil                                  3.7       3.6       3.8        3.8
  All others, less than 3% each           3.0       3.0       3.2        3.2
---------------------------------      ------    ------    ------     ------
                                       $182.9    $188.5    $131.7     $131.7
---------------------------------      ------    ------    ------     ------

The geographic sales information is by country of destination.  Long-lived
assets exclude the cost in excess of net assets of acquired businesses.  No
customer accounted for more than 10% of consolidated sales in 1998, 1997 or the
transition period.  In 1998, approximately 16% of sales by Outdoor Products were
to one customer, 20% of Sporting Equipment sales were to one customer, and 27%
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 37
<PAGE>
NOTE 10:
SUMMARIZED FINANCIAL INFORMATION

Blount, Inc. is a wholly-owned subsidiary of Blount International, Inc. and is
the issuer of the 7% senior notes described in Note 3.  Summarized financial
information for Blount, Inc. is as follows:


                                                              December 31,
(Dollar amounts in millions)                              1998           1997
------------------------------------------------       ----------     ----------
Current assets                                          $ 351.3        $ 301.2
Noncurrent assets                                         341.8          336.6
------------------------------------------------        -------        -------
  Total assets                                          $ 693.1        $ 637.8
------------------------------------------------        =======        =======

Current liabilities                                     $  92.4        $ 128.3
Noncurrent liabilities                                    219.2          191.6
Stockholder's equity                                      381.5          317.9
------------------------------------------------        -------        -------
  Total liabilities and stockholder's equity            $ 693.1        $ 637.8
------------------------------------------------        =======        =======


                                              Twelve Months Ended    Ten Months
                                                  December 31,         Ended
                                              -------------------   December 31,
                                                 1998     1997         1996
------------------------------------            ------   ------     ------------
Sales                                           $831.9   $716.9       $526.7
Gross profit                                     258.3    234.0        180.2
Income from continuing operations
  before extraordinary loss                       64.3     60.0         44.8
Net income                                        62.3     60.0         46.2
------------------------------------            ------   ------       ------
                                   Page 38
<PAGE>
NOTE 11:
OTHER INFORMATION

At December 31, 1998 and 1997, the following balance sheet captions are
comprised of the items specified below:

(Dollar amounts in millions)                              1998           1997
-----------------------------------------------        ---------      ---------
Accounts receivable:
   Trade accounts                                       $ 132.9        $ 131.5
   Other                                                    3.3            7.9
   Allowance for doubtful accounts                         (3.9)          (3.7)
-----------------------------------------------         -------        -------
                                                        $ 132.3        $ 135.7
-----------------------------------------------         -------        -------
Inventories:
   Finished goods                                       $  73.6        $  79.0
   Work in process                                         19.3           20.9
   Raw materials and supplies                              28.1           33.0
-----------------------------------------------         -------        -------
                                                        $ 121.0        $ 132.9
-----------------------------------------------         -------        -------
Property, plant and equipment:
   Land                                                 $  12.6        $  13.1
   Buildings and improvements                             107.1          106.1
   Machinery and equipment                                219.8          204.8
   Furniture, fixtures and office equipment                26.0           25.6
   Transportation equipment                                16.7           16.6
   Construction in progress                                10.6           10.6
   Accumulated depreciation                              (209.9)        (188.3)
-----------------------------------------------         --------       -------
                                                        $ 182.9        $ 188.5
-----------------------------------------------         --------       -------
Accrued expenses:
   Salaries, wages and related withholdings             $  23.6        $  25.8
   Employee benefits                                        8.6            7.5
   Casualty insurance costs                                 9.5            9.5
   Income taxes payable                                     0.5            1.3
   Other                                                   21.6           27.9
-----------------------------------------------         --------       -------
                                                        $  63.8        $  72.0
-----------------------------------------------         --------       -------
Other liabilities:
   Employee benefits                                    $  41.3        $  31.9
   Casualty insurance costs                                 1.5            1.7
   Other                                                    1.9            4.0
-----------------------------------------------         --------       -------
                                                        $  44.7        $  37.6
-----------------------------------------------         --------       -------


At December 31, 1998, the Company's manufacturing operation in Canada had net
assets of $19.6 million which were subject to withdrawal restrictions resulting
from a financing agreement expiring in 1999. The majority of this amount was
invested in property, plant and equipment.
                                   Page 39
<PAGE>
Supplemental cash flow information is as follows:

                                              Twelve Months Ended    Ten Months
                                                  December 31,         Ended
                                              -------------------   December 31,
(Dollar amounts in millions)                     1998     1997         1996
------------------------------------            ------   ------     ------------
Interest paid                                   $ 20.9   $ 10.4       $  9.1
Income taxes paid                                 39.3     38.4         16.9
Noncash investing and financing activities:
Capital lease obligations
  incurred (terminated)                                     0.8         (6.4)
Fair value of assets acquired                             175.3
Cash paid                                                (132.5)
Liabilities assumed and incurred                           42.8
------------------------------------            ------   ------       ------
                                   Page 40
<PAGE>
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, 1998 and 1997.

<TABLE>
<CAPTION>
(Dollar amounts        1st Quarter     2nd Quarter      3rd Quarter         4th Quarter
in millions, except       Ended           Ended             Ended              Ended
per share data)       March 31, 1998  June 30, 1998  September 30, 1998  December 31, 1998    Total
-----------------     --------------  -------------  ------------------  -----------------  -------
<S>                       <C>            <C>               <C>                 <C>           <C>
1998

Sales                     $199.7         $205.1            $226.6              $200.5        $831.9
Gross profit                60.5           63.1              70.7                64.0         258.3
Income before
  extraordinary loss        13.7           13.8              19.2                16.6          63.3
Net income                  13.7           13.8              17.2                16.6          61.3
Earnings per share:
  Basic:
    Income before
      extraordinary loss     .37            .36               .51                 .45          1.69
    Net income               .37            .36               .46                 .45          1.64
  Diluted:
    Income before
      extraordinary loss     .36            .35               .50                 .44          1.65
    Net income               .36            .35               .45                 .44          1.60
</TABLE>
The third quarter includes a net extraordinary loss of $2.0 million ($.05 per
share) on the redemption of long-term debt.


<TABLE>
<CAPTION>
(Dollar amounts        1st Quarter     2nd Quarter      3rd Quarter         4th Quarter
in millions, except       Ended           Ended            Ended               Ended
per share data)       March 31, 1997  June 30, 1997  September 30, 1997  December 31, 1997    Total
-----------------     --------------  -------------  ------------------  -----------------  -------
<S>                       <C>            <C>               <C>                 <C>           <C>
1997

Sales                     $170.1         $160.5            $182.1              $204.2        $716.9
Gross profit                56.3           51.8              58.9                67.0         234.0
Net income                  13.6           11.4              15.8                18.3          59.1
Earnings per share:
  Basic                      .36            .30               .42                 .49          1.57
  Diluted                    .35            .30               .41                 .47          1.53
</TABLE>
The fourth quarter includes the results of Federal, acquired on November 4, 1997
(see Note 4 of Notes to Consolidated Financial Statements).  Federal's sales
were $14.5 million in the fourth quarter since acquisition.


ITEM 9.  DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.
                                   Page 41
<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 19, 1999, 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 19, 1999, 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
19, 1999, Annual Meeting of Stockholders of Blount International, Inc., which
section is incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See the "Indebtedness of Management" and "Certain Transactions and Other
Matters" sections of the proxy statement for the April 19, 1999, Annual Meeting
of Stockholders of Blount International, Inc., which sections are incorporated
herein by reference.
                                   Page 42
<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                                   16

     Consolidated Statements of Income for the years
     ended December 31, 1998 and 1997 and the ten-month
     period ended December 31, 1996                                      18

     Consolidated Balance Sheets as of
     December 31, 1998 and 1997                                          19

     Consolidated Statements of Cash Flows for the years
     ended December 31, 1998 and 1997 and the ten-month
     period ended December 31, 1996                                      20

     Consolidated Statements of Changes in Stockholders' Equity
     for the years ended December 31, 1998 and 1997 and the
     ten-month period ended December 31, 1996                            21

     Notes to Consolidated Financial Statements                       22 - 40

     Supplementary Data                                                  41

     (2)  Financial Statement Schedules

     Schedule II - Valuation and qualifying accounts
     for the years ended December 31, 1998 and 1997
     and the ten-month period ended December 31, 1996                    48

     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

     None.

(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 43
<PAGE>
      * 3(a)      Restated Certificate of Incorporation of Blount International,
Inc. 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).

      * 3(b)      By-Laws of Blount International, Inc. 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(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)      $150,000,000 Credit Agreement dated as of April 1, 1997 among
Blount, Inc., Blount International, Inc. and certain banks filed as Exhibit 4(d)
to the Annual Report of Blount International, Inc. on Form 10-K for the fiscal
year ended December 31, 1997 (Commission File No. 001-11549).

      *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)      Insurance Agreement between Blount, Inc. and Winton M. Blount
which was filed as an exhibit to the Annual Report of Blount, Inc. on Form 10-K
for the fiscal year ended February 28, 1983.

      *10(c)      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(d)      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(e)      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(f)      Insurance Agreement between Blount, Inc. and D. Joseph McInnes
which was filed as Exhibit 10(y) to the Annual Report of Blount, Inc. on Form
10-K for the fiscal year ended February 28, 1991 (Commission File No. 1-7002).

      *10(g)      Supplemental Executive Retirement Plan between Blount, Inc.
and Winton M. Blount which was filed as Exhibit 10(z) to the Annual Report of
Blount, Inc. on Form 10-K for the fiscal year ended February 28, 1991
(Commission File No. 1-7002).
                                   Page 44
<PAGE>
      *10(h)      1992 Blount Incentive Stock Option Plan of Blount, Inc. 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(i)      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(j)      1994 Blount Executive Stock Option Plan of Blount, Inc. 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(k)      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(l)      1995 Blount Long-Term Executive Stock Option Plan of Blount,
Inc. 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(m)      Employment Agreement between Blount, Inc. and John M.
Panettiere which was filed as Exhibit 10(p) to the Annual Report of Blount, Inc.
on Form 10-K for the fiscal year ended February 28, 1995 (Commission File No.
1-7002).

      *10(n)      Employment Agreement between Blount, Inc. and Harold E. Layman
which was filed as Exhibit 10(q) to the Annual Report of Blount, Inc. on Form
10-K for the fiscal year ended February 28, 1995 (Commission File No. 1-7002).

      *10(o)      Employment Agreement between Blount, Inc. and D. Joseph
McInnes which was filed as Exhibit 10(r) to the Annual Report of Blount, Inc. on
Form 10-K for the fiscal year ended February 28, 1995 (Commission File No. 1-
7002).

      *10(p)      Employment Agreement between Blount, Inc. and James S.
Osterman which was filed as Exhibit 10(s) to the Annual Report of Blount, Inc.
on Form 10-K for the fiscal year ended February 28, 1995 (Commission File No. 1-
7002).

      *10(q)      Employment Agreement between Blount, Inc. and Donald B. Zorn
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, 1995 (Commission File No. 1-7002).

      *10(r)      Supplemental Executive Retirement Plan between Blount, Inc.
and Donald B. Zorn which was filed as Exhibit 10(v) to the Annual Report of
Blount, Inc. on Form 10-K for the fiscal year ended February 28, 1995
(Commission File No. 1-7002).

      *10(s)      Employment Agreement between Blount, Inc. and Richard H.
Irving III which was filed as Exhibit 10(t) to the Transition Report of Blount
International, Inc. on Form 10-K for the transition period from March 1, 1996 to
December 31, 1996 (Commission File No. 001-11549).
                                   Page 45
<PAGE>
      *10(t)      Blount, Inc. Non-Employee Directors' Stock Compensation Plan
which was filed as Exhibit 10(u) 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(u)      Amendments to and Assumptions of Employment Agreements with
the following individuals which were filed as Exhibit 10(w) 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):

                       John M. Panettiere
                       Harold E. Layman
                       D. Joseph McInnes
                       James S. Osterman
                       Donald B. Zorn

      *10(v)      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(w)      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(x)      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.

     **10(y)      Employment Agreement between Blount, Inc. and Gerald W.
Bersett.

     **10(z)      Supplemental Executive Retirement Plan between Blount, Inc.
and Gerald W. Bersett.

     **10(aa)     Amendment to the Employment Agreement between Blount
International, Inc. and Richard H. Irving.

     **10(bb)     Amendment to the Employment Agreement between Blount
International, Inc. and Harold E. Layman.

     **10(cc)     The Blount Deferred Compensation Plan.

21.  A list of the significant subsidiaries of Blount International, Inc.
included herein on page 49.

23.  Consent of Independent Accountants included herein on page 50.

27.  Financial Data Schedule included herein on page 51.

*    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 46
<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/ Harold E. Layman
Harold E. Layman
Executive Vice President Finance Operations
and Chief Financial Officer

Dated:  February 22, 1999

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:  February 22, 1999


/s/ Winton M. Blount                    /s/ C. Todd Conover
Winton M. Blount                        C. Todd Conover
Chairman of the Board                   Director
and Director

/s/ John M. Panettiere                  /s/ H. Corbin Day
John M. Panettiere                      H. Corbin Day
President and Chief Executive           Director
Officer and Director

/s/ Haley Barbour                       /s/ Mary D. Nelson
Haley Barbour                           Mary D. Nelson
Director                                Director

/s/ Samuel R. Blount                    /s/ Arthur P. Ronan
Samuel R. Blount                        Arthur P. Ronan
Director                                Director

/s/ W. Houston Blount                   /s/ Andrew A. Sorensen
W. Houston Blount                       Andrew A. Sorensen
Director                                Director

/s/ R. Eugene Cartledge                 /s/ Rodney W. Blankenship
R. Eugene Cartledge                     Rodney W. Blankenship
Director                                Vice President and Controller
                                        (Chief Accounting Officer)
                                   Page 47
<PAGE>
<TABLE>
BLOUNT INTERNATIONAL, INC. AND SUBSIDIARIES
SCHEDULE II
CONSOLIDATED SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS

<CAPTION>
(Dollar amounts in millions)
----------------------------

       Column A             Column B             Column C               Column D        Column E
       --------           ------------    -------------------------    -----------     ----------
                                                 Additions
                                          -------------------------
                           Balance at     Charged to     Charged to                    Balance at
                          Beginning of     Cost and        Other                         End of
      Description            Period        Expenses       Accounts      Deductions       Period
      -----------         ------------    ----------     ----------    ------------    ----------
<S>                         <C>             <C>          <C>     <S>    <C>     <S>      <C>

Ten months ended
December 31, 1996
-----------------
Allowance for doubtful
accounts receivable         $   3.9         $   0.6                     $   1.5 (1)      $   3.0
                            =======         =======                     =======          =======

Year ended
December 31, 1997
-------------------
Allowance for doubtful
accounts receivable         $   3.0         $   1.0      $   0.9 (2)    $   1.2 (1)      $   3.7
                            =======         =======      =======        =======          =======

Year ended
December 31, 1998
-------------------
Allowance for doubtful
accounts receivable         $   3.7         $   0.9                     $   0.7 (1)      $   3.9
                            =======         =======                     =======          =======
</TABLE>


(1)  Principally amounts written-off less recoveries of amounts previously 
     written-off.

(2)  Principally allowances established for companies acquired by purchase.
                                   Page 48
<PAGE>
EXHIBIT 21


SUBSIDIARIES OF THE REGISTRANT


At December 31, 1998, consolidated, directly or indirectly, wholly-owned
subsidiaries of Blount International, Inc. were as follows:

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

Blount, Inc.                                   Delaware

   BI Holdings Corp.                           Delaware

      Blount Holdings, Ltd.                    Canada

         Blount Canada, Ltd.                   Canada

   Federal Cartridge Company                   Minnesota

   Dixon Industries, Inc.                      Kansas

   Gear Products, Inc.                         Oklahoma

   Simmons Outdoor Corporation                 Delaware

   CTR Manufacturing, Inc.                     North Carolina

   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, 1998.
                                   Page 49
<PAGE>
EXHIBIT 23

CONSENT OF INDEPENDENT ACCOUNTANTS


We consent to the incorporation by reference in the registration statements of
Blount International, Inc. on Form S-3 (File No. 33-46543), Form S-8 (File No.
33-51580), Form S-8 (File No. 33-56801), Form S-8 (File No. 333-14261) and Form
S-8 (File No. 333-56701) of our report dated January 28, 1999, on our audits of
the consolidated financial statements and financial statement schedules of
Blount International, Inc. and subsidiaries as of December 31, 1998 and 1997,
and for the ten months ended December 31, 1996, which report is included in this
Annual Report on Form 10-K.


PricewaterhouseCoopers LLP


Atlanta, Georgia
January 28, 1999
                                   Page 50
<PAGE>