Kennametal Inc. today reported a fiscal 2003 fourth quarter loss of $0.14 per diluted share compared with earnings of $0.48 per diluted share last year. Excluding special items in each period, diluted earnings per share were $0.45 for the quarter, at the high end of guidance, against last year's earnings per share of $0.67. Sales of $463.8 million were 15 percent above prior year, driven by the Widia acquisition. Free operating cash flow was $55 million versus $43 million in fiscal 2002.

                Earnings Per Share Excluding Special Items
             Company Guidance (07/09/03)         $0.43 to $0.45
             Analyst Estimate Range (07/29/03)   $0.38 to $0.44
             Earnings, Excluding Special Items        $0.45

For the total fiscal year, diluted earnings per share were $0.51, compared against last year's loss per share of $6.70. Excluding special items in each period, diluted earnings per share were $1.41 against last year's earnings per share of $1.95. The prior year included a non-cash impairment charge associated with the adoption of SFAS No. 142 "Goodwill and Other Intangible Assets". Sales of $1,759 million grew 11 percent, and free operating cash flow was $136 million.

Kennametal Chairman, President and Chief Executive Officer, Markos I. Tambakeras, said, "We are pleased to deliver a credible performance in fiscal 2003, in the context of a manufacturing recession that persisted in North America, for the third year, and deepened in Europe. Our continuing disciplined management of the business strengthened the foundation that will enhance our operating leverage as global manufacturing economies improve."

Tambakeras continued, "We substantially improved our competitiveness across all fronts. The delivery of another strong year of free operating cash flow, in excess of $130 million despite $25 million spent on the Widia integration, was particularly gratifying. Product innovation was unabated, and we confirmed our technological leadership by attaining our target of 40 percent of sales from new products. At the same time, we delivered against very aggressive objectives for the Widia acquisition. In the face of a sustained manufacturing recession, I remain particularly impressed by the resilience and resourcefulness of our employees. "

Tambakeras further noted that Institutional Shareholder Services (ISS) recently reviewed and rated Kennametal's corporate governance profile and, according to ISS, Kennametal outperformed 96% of the companies in the S&P 400 and 98% of the companies in the Capital Goods group.

  Highlights
  Fourth Quarter - FY03
   -- Sales of $463.8 million were 15 percent above last year's
      $402.9 million.  Sales growth was driven by a 13 percent positive
      benefit from acquisitions.

   -- Reported net loss was $4.9 million against net income of $15.4 million
      in the same quarter last year. Excluding special items, net income was
      $15.9 million for the quarter; a 26 percent decrease compared to net
      income of $21.4 million last year including the impact of Widia
      dilution and reduced pension income.

   -- The current quarter included net special charges of $20.8 million, or
      $0.59 per diluted share, primarily associated with the previously
      announced Widia integration efforts and Electronics' impairment
      charge.  Prior-year results included net special charges of
      $6.1 million, or $0.19 per diluted share, associated with the
      completion of previously announced restructurings and the divestiture
      of Strong Tool.

   -- Decreased pension income reduced earnings per diluted share by
      $0.05 for the quarter versus the prior year.  Pretax income for the
      quarter was reduced by $2.6 million (non-cash) compared to the same
      period in fiscal 2002 due to the effect of a decrease in the expected
      rate of return on Kennametal's pension fund assets, coupled with lower
      discount rates related to pension liabilities.

   -- At year-end, Kennametal's pension plan had an unfunded obligation of
      $3.7 million that resulted in a $35.2 million charge, net of tax, to
      equity under SFAS No. 87 "Employers Accounting for Pensions".  The
      pension plan is adequately funded from an ERISA perspective, and the
      company currently does not anticipate any cash funding requirements
      during fiscal 2004.

   -- Free operating cash flow remained strong at $55.0 million, versus
      $43.5 million in the same period last year.

   -- Total debt was $526 million, up $114 million from June 2002, but down
      $91 million from the closing of the Widia acquisition in the September
      quarter.

  Fiscal 2003 versus 2002

   -- Sales for the 12 months ending June 30, 2003 of $1,759 million grew
      11 percent.  Net acquisitions and divestitures contributed growth of
      11 percent.

   -- Reported net income was $18.1 million against a net loss of
      $211.9 million in the prior year.  Excluding special items, net income
      was $49.9 million, a decrease of 19 percent compared to $61.6 million
      last year.

   -- Special charges of $31.7 million, or $0.90 per share, were included in
      the year's results related primarily to the Widia integration and the
      previously announced Electronics' impairment charge.  Prior-year
      results included special charges of $273.5 million, or $8.65 per
      share, related primarily to the SFAS No. 142 impairment charge of
      $250.4 million.  A chart detailing special charges for both years is
      attached.

   -- Free operating cash flow remained strong at $136 million, versus
      $131 million for the prior year.

  Outlook

Global economic signals remain mixed at the beginning of the current quarter. The sustainability of the modest sales improvement in June is unclear, as near-term visibility remains limited. However, the macroeconomic outlook beyond the next three to six months is cautiously more positive, and continues to suggest that a North American recovery will precede any improvement in Europe.

Tambakeras said, "In fiscal 2004, we expect to accelerate the realization of benefits from our efforts. As projected, the Widia acquisition is anticipated to become accretive to earnings in the first quarter. Our competitive repositioning of the company will gain traction even with a modest market improvement."

Sales for the first quarter of fiscal 2004 are expected to grow 9 to 11 percent year-over-year. Reported diluted earnings per share are expected to be $0.20 to $0.27 per share. This includes an estimate for special charges associated with the completion of the Widia integration of approximately $0.08 to $0.10 per share, consistent with previously announced integration assumption. Excluding these charges, diluted earnings per share are forecasted to range from $0.30 to $0.35 per share.

For the full year, sales are expected to grow 4 to 6 percent year-over-year. Reported diluted earnings per share are expected to be $1.70 to $2.10 per share. This includes an estimate for special charges associated with the completion of the Widia integration approximately $0.10 to $0.20 per share. Excluding these charges, diluted earnings per share are forecasted to range from $1.90 to $2.20 per share. The earnings forecast includes $0.15 to $0.20 of accretion from Widia, better than the $0.10 to $0.15 per share originally estimated. An incremental increase in pension expense is lowering diluted EPS for the fiscal year by approximately $0.30 per share. In addition, combining information obtained from the valuation of acquired Widia assets with further review and analysis, management has determined that the current useful lives of Kennametal's assets should be extended to more appropriately match the life of those assets. The resulting depreciation expense reduction is expected to be approximately $0.30 per share.

Kennametal expects to generate between $100 and $125 million of free operating cash flow in fiscal 2004.

Kennametal advises shareholders to note monthly order trends, for which the company makes a disclosure ten business days after the conclusion of each month. This information is available on the Investor Relations section of Kennametal's corporate web site at www.kennametal.com.

Dividend Declared

Kennametal also announced its Board of Directors declared a quarterly cash dividend of $0.17 cents per share, payable August 25, 2003, to shareowners of record as of the close of business August 8, 2003.

Fourth quarter results will be discussed in a live Internet broadcast at 10:00 a.m. today. Access the live or archived conference by visiting the Investor Relations section of Kennametal's corporate web site at www.kennametal.com.

This release contains "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can identify these forward-looking statements by the fact they use words such as "should," "anticipate," "estimate," "approximate," "expect," "may," "will," "project," "intend," "plan," "believe," and others words of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements are likely to relate to, among other things, our goals, plans and projections regarding our financial position, results of operations, market position and product development, which are based on current expectations that involve inherent risks and uncertainties, including factors that could delay, divert or change any of them in the next several years. Although it is not possible to predict or identify all factors, they may include the following: global economic conditions; future terrorist attacks; epidemics; risks associated with integrating and divesting businesses and achieving the expected savings and synergies; demands on management resources; risks associated with international markets such as currency exchange rates, and social and political environments; competition; labor relations; commodity prices; demand for and market acceptance of new and existing products; and risks associated with the implementation of restructuring plans and environmental remediation matters. We can give no assurance that any goal or plan set forth in forward- looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.

Kennametal Inc. aspires to be the premier tooling solutions supplier in the world with operational excellence throughout the value chain and best-in- class manufacturing and technology. Kennametal strives to deliver superior shareowner value through top-tier financial performance. The company provides customers a broad range of technologically advanced tools, tooling systems and engineering services aimed at improving customers' manufacturing competitiveness. With about 14,000 employees worldwide, the company's annual sales approximate $1.8 billion, with nearly half coming from sales outside the United States. Kennametal is a five-time winner of the GM "Supplier of the Year" award and is represented in more than 60 countries. Kennametal operations in Europe are headquartered in Furth, Germany. Kennametal Asia Pacific operations are headquartered in Singapore. For more information, visit the company's web site at www.kennametal.com.

FINANCIAL HIGHLIGHTS

Consolidated financial highlights for Kennametal Inc. for the quarters and twelve-month periods ended June 30, 2003 and 2002 are shown in the following tables (in thousands, except per share amounts).

  Consolidated Statements of Income (Unaudited)

                                   Quarter Ended      Twelve Months Ended
                                      June 30,              June 30,
                                   2003      2002       2003        2002

  Net sales                      $463,765  $402,898  $1,758,957  $1,583,742

      Cost of goods sold(1)       314,974   266,025   1,190,053   1,072,918

  Gross profit                    148,791   136,873     568,904     510,824

      Operating expense(2)        121,757   100,685     464,861     389,396

      Restructuring and asset
       impairment charges(3)       20,305     4,657      31,954      27,307

      Amortization of
       intangibles                    854       697       4,164       2,804

  Operating income                  5,875    30,834      67,925      91,317

      Interest expense(4)           9,108     7,551      36,166      32,627

      Other (income), net(5)       (2,117)     (182)     (2,531)       (361)

  (Loss) Income before provision
   for income taxes
   and minority interest           (1,116)   23,465      34,290      59,051

  Provision for income taxes(6)     3,678     7,513      14,300      18,900

  Minority interest                    74       582       1,860       1,653

  (Loss) Income before
   cumulative effect of change
   in accounting principle         (4,868)   15,370      18,130      38,498

  Cumulative effect of change
   in accounting
   principle, net of tax(7)           -         -           -      (250,406)

  Net (loss) income               $(4,868)  $15,370     $18,130   $(211,908)

  Diluted (loss) earnings per
   share                           $(0.14)    $0.48       $0.51      $(6.70)

  Dividends per share               $0.17     $0.17       $0.68       $0.68

  Basic weighted average
   shares outstanding              35,396    31,673      35,202      31,169

  Diluted weighted average
   shares outstanding              35,682    32,159      35,479      31,627


  (1) For the quarter and twelve months ended June 30, 2003, these amounts
      include charges of $2.0 million and $2.2 million, respectively, for
      integration activities related to the Widia acquisition.

  (2) For the quarter and twelve months ended June 30, 2003, these amounts
      include charges of $1.7 million and $5.5 million, respectively, for
      integration activities related to the Widia acquisition.

  (3) For the quarter and twelve months ended June 30, 2003, these amounts
      include a non-cash charge of $16.1 million for impairment of long-
      lived assets within the Electronics business.

  (4) For the quarter and twelve months ended June 30, 2003, these amounts
      include $0.5 million for recognition of a portion of deferred
      financing fees due to the company reducing its borrowing capacity
      under its U.S. credit facility.  For the quarter and twelve months
      ended June 30, 2002, these amounts include $0.3 million related to
      recognition of the remaining unamortized balance of deferred financing
      fees from the company's U.S. credit facilities that were replaced with
      a new 3-year facility.

  (5) For the quarters ended June 30, 2003 and 2002, these amounts include
      charges of $0.4 million and $0.5 million, respectively, for fees
      incurred in connection with the company's accounts receivable
      securitization program.  For the twelve months ended June 30, 2003 and
      2002, these amounts include similar charges of $1.9 million and $2.5
      million, respectively.  For the quarter and twelve months ended June
      30, 2002, these amounts include a charge of $3.5 million related to
      the divestiture of Strong Tool Company.

  (6) For the quarter and twelve months ended June 30, 2003, the effective
      tax rate was (329.6%) and 41.7%, respectively.  These amounts reflect
      that a portion of the Electronics impairment could not be tax
      effected, otherwise, the tax rate for the quarter and twelve month
      period would have been 30%.

  (7) For the twelve months ended June 30, 2002, this amount represents a
      non-cash charge for the adoption of Statement of Financial Accounting
      Standards No. 142, "Goodwill and Other Intangible Assets."


                     FINANCIAL HIGHLIGHTS (Continued)

In addition to reported results under U.S. GAAP for the fiscal periods, the following financial highlight tables also include, where appropriate, a reconciliation of results excluding special items and free operating cash flow (which are non-GAAP measures), to the most directly comparable GAAP measures.

  RECONCILIATION TO GAAP _ QUARTER ENDED JUNE 30 (Unaudited)

                                                                    Diluted
                                                                    (Loss)/
                                                  Operating   Net   Earnings
                                Gross   Operating  Income/  (Loss)/    Per
                                Profit   Expense   (Loss)   Income    Share

  2003 Reported Results        $148,791  $121,757   $5,875  $(4,868) $(0.14)
    MSSG Restructuring              -         -      3,134    2,194    0.06
    AMSG Restructuring              -         -      1,224      857    0.02
    AMSG Electronics
     impairment                     -         -     16,110   15,269    0.43
    Corporate Restructuring         -         -        (99)     (69)    -
    Widia Integration Costs -
     MSSG                         1,146    (1,365)   2,511    1,758    0.06
    Widia Integration Costs -
     AMSG                           865      (305)   1,170      818    0.02
    J&L Restructuring               -         -        (64)     (45)    -
  2003 Results Excluding
   Special Items               $150,802  $120,087  $29,861  $15,914   $0.45


  2002 Reported Results        $136,873  $100,685  $30,834  $15,370   $0.48
    MSSG Restructuring              384       -      2,104    1,423    0.04
    AMSG Restructuring              350       (11)   1,424      960    0.03
    Corporate Restructuring         -         -        915      621    0.02
    Widia Integration Costs -
     Corporate                      -        (144)     144       98     -
    Deferred Financing Fees         -         -        -        184    0.01
    J&L Restructuring              (377)      -        247      168    0.01
    FSS Restructuring               -         -        335      226    0.01
    J&L Strong Tool
     Divestiture                    -         -        -      2,390    0.07
  2002 Results Excluding
   Special Items               $137,230  $100,530  $36,003  $21,440   $0.67


                     FINANCIAL HIGHLIGHTS (Continued)

  TWELVE MONTHS ENDED JUNE 30 (Unaudited)

                                                                    Diluted
                                                                   Earnings/
                                                             Net     (Loss)
                             Gross   Operating  Operating   Income/    Per
                             Profit   Expense    Income     (Loss)    Share

  2003 Reported Results     $568,904  $464,861   $67,925    $18,130   $0.51
    MSSG Restructuring           -         -       9,060      6,342    0.18
    AMSG Restructuring           -         -       4,406      3,084    0.09
    AMSG Electronics
     impairment                  -         -      16,110     15,269    0.43
    Corporate Restructuring      -         -       1,137        796    0.02
    Widia Integration Costs
     - MSSG                    1,344    (5,149)    6,493      4,545    0.14
    Widia Integration Costs
     - AMSG                      865      (327)    1,192        834    0.02
    J&L Restructuring            -         -       1,203        843    0.02
    FSS Restructuring            -         -          38         26     -
  2003 Results Excluding
   Special Items            $571,113  $459,385  $107,564    $49,869   $1.41



  2002 Reported Results     $510,824  $389,396   $91,317  $(211,908) $(6.70)
    MSSG Restructuring           544       -      10,245      6,958    0.22
    AMSG Restructuring         1,654       (11)    7,997      5,430    0.17
    Corporate Restructuring      -         -       1,075        730    0.02
    MSSG (Adoption of SFAS
     142)                        -         -         -      168,314    5.32
    AMSG (Adoption of SFAS
     142)                        -         -         -       82,092    2.60
    Widia Integration Costs
     - Corporate                 -        (144)      144         98     -
    Deferred Financing Fees      -         -         -          184    0.01
    J&L Restructuring            529       -      10,093      6,863    0.22
    FSS Restructuring            -         -         635        430    0.01
    J&L Strong Tool
     Divestiture                 -         -         -        2,390    0.08
  2002 Results Excluding
   Special Items            $513,551  $389,241  $121,506    $61,581   $1.95


                     FINANCIAL HIGHLIGHTS (Continued)

  SEGMENT DATA (Unaudited):

                                   Quarter Ended      Twelve Months Ended
                                      June 30,              June 30,
                                   2003      2002       2003        2002
  Sales:
  Metalworking Solutions and
   Services Group                $299,032  $231,151  $1,123,175    $897,157
  Advanced Materials Solutions
   Group                           88,185    80,170     319,223     307,668
  J&L Industrial Supply            48,158    52,013     196,170     226,010
  Full Service Supply              28,390    39,564     120,389     152,907
  Total Sales                    $463,765  $402,898  $1,758,957  $1,583,742

  Sales By Geographic Region:
  Within the United States       $238,323  $257,709    $946,518  $1,019,849
  International                   225,442   145,189     812,439     563,893
  Total Sales                    $463,765  $402,898  $1,758,957  $1,583,742

  Operating Income (Loss), as
   reported:
  Metalworking Solutions and
   Services Group                 $24,139   $29,243     $90,627     $97,323
  Advanced Materials Solutions
   Group                           (7,805)   10,082      17,348      26,781
  J&L Industrial Supply               931     1,044       6,140        (681)
  Full Service Supply                 264       215         (56)      2,014
  Corporate and Eliminations      (11,654)   (9,750)    (46,134)    (34,120)
  Total Operating Income           $5,875   $30,834     $67,925     $91,317

  Operating Income (Loss),
   excluding special charges:
  Metalworking Solutions and
   Services Group                 $29,784   $31,347    $106,180    $107,568
  Advanced Materials Solutions
   Group                           10,699    11,506      39,056      34,778
  J&L Industrial Supply               867     1,290       7,343       9,412
  Full Service Supply                 264       550         (18)      2,649
  Corporate and Eliminations      (11,753)   (8,690)    (44,997)    (32,901)
  Total Operating Income          $29,861   $36,003    $107,564    $121,506


                     FINANCIAL HIGHLIGHTS (Continued)

  OPERATING INCOME RECONCILIATION (Unaudited):

  QUARTER ENDED JUNE 30,

                    MSSG      AMSG      J&L       FSS  Corp & Elim. Total

  2003 Reported
   Operating
   Income
   (Loss)         $24,139   $(7,805)    $931     $264  $(11,654)   $5,875
    Restructuring   3,134     1,224      (64)      -        (99)    4,195
    Widia
     Integration
     Costs          2,511     1,170        -       -         -      3,681
    Electronics
     Impairment         -    16,110        -       -        -      16,110
  2003 Operating
   Income (Loss)
   Excluding
   Special
   Charges        $29,784   $10,699     $867     $264  $(11,753)  $29,861


  2002 Reported
   Operating
   Income
   (Loss)         $29,243   $10,082   $1,044     $215   $(9,750)  $30,834
    Restructuring   2,104     1,424      246      335       916     5,025
    Widia
     Integration
     Costs              -         -        -        -       144       144
  2002 Operating
   Income (Loss)
   Excluding
   Special
   Charges        $31,347   $11,506    $1,290    $550   $(8,690)  $36,003


  TWELVE MONTHS ENDED JUNE 30,

                    MSSG      AMSG      J&L       FSS  Corp & Elim. Total

  2003 Reported
   Operating
   Income
   (Loss)         $90,627   $17,348    $6,140    $(56) $(46,134)   $67,925
    Restructuring   9,060     4,406     1,203      38     1,137     15,844
    Widia
     Integration
     Costs          6,493     1,192        -        -         -      7,685
    Electronics
     Impairment         -    16,110        -        -         -     16,110
  2003 Operating
   Income (Loss)
   Excluding Special
   Charges       $106,180   $39,056    $7,343    $(18) $(44,997)  $107,564


  2002 Reported
   Operating
   Income (Loss)  $97,323   $26,781     $(681) $2,014  $(34,120)   $91,317
    Restructuring  10,245     7,997    10,093     635     1,075     30,045
    Widia
     Integration
     Costs              -         -         -       -       144        144
  2002 Operating
   Income (Loss)
   Excluding
   Special
   Charges       $107,568   $34,778    $9,412  $2,649  $(32,901)  $121,506



                     FINANCIAL HIGHLIGHTS (Continued)

  RECONCILIATION TO GAAP CASH FLOW INFORMATION (Unaudited)

                                       Quarter Ended    Twelve Months Ended
                                          June 30,           June 30,
                                       2003     2002      2003      2002

  Net income                          $(4,868) $15,370   $18,130  $(211,908)
  Adoption of SFAS 142                    -        -         -      250,406
  Electronics impairment               16,110      -      16,110        -
  Other non-cash items                 11,796    8,468    21,126     26,144
  Depreciation and amortization        22,224   18,392    84,043     73,629
  Change in primary working capital    30,897   16,366    48,825     60,362
  Change in other assets and
   liabilities                         (8,125)  (6,535)   (4,766)   (34,548)
  Net cash flow provided by operating
   activities                          68,034   52,061   183,468    164,085

  Purchase of property, plant and
   equipment                          (13,447) (13,691)  (49,413)   (44,040)
  Proceeds from disposals of
   property, plant and equipment          371    5,106     1,875     10,905
  Free operating cash flow            $54,958  $43,476  $135,930   $130,950


  CONDENSED BALANCE SHEETS (Unaudited)

                                                     Quarter Ended
                                           06/30/03    03/31/03    12/31/02
  ASSETS
  Cash and equivalents                      $15,093     $17,250     $18,155
  Accounts receivable, net of allowance     235,648     235,908     199,261
  Inventories                               392,255     408,996     403,530
  Deferred income taxes                      79,564      81,651      80,204
  Other current assets                       42,119      44,286      53,868
      Total current assets                  764,679     788,091     755,018
  Property, plant and equipment, net        493,373     476,208     480,066
  Goodwill and Intangible assets, net       473,932     491,987     478,060
  Other assets                               47,108     107,159     104,937
      Total                              $1,779,092  $1,863,445  $1,818,081

  LIABILITIES
  Short-term debt                           $10,845     $15,068     $17,591
  Accounts payable                          119,853     120,981      92,114
  Accrued liabilities                       205,649     208,816     171,726
      Total current liabilities             336,347     344,865     281,431
  Long-term debt                            514,842     565,067     599,425
  Deferred income taxes                       8,660      38,382      46,801
  Other liabilities                         178,453     140,550     135,101
      Total liabilities                   1,038,302   1,088,864   1,062,758

  MINORITY INTEREST                          18,880      18,070      17,594

  SHAREOWNERS' EQUITY                       721,910     756,511     737,729

      Total                              $1,779,092  $1,863,445  $1,818,081


  CONDENSED BALANCE SHEETS

                                                       Quarter Ended
                                                09/30/02          06/30/02
  ASSETS
  Cash and equivalents                           $14,300           $10,385
  Accounts receivable, net of allowance          221,313           179,101
  Inventories                                    403,590           345,076
  Deferred income taxes                           71,084            71,375
  Other current assets                            40,110            31,447
      Total current assets                       750,397           637,384
  Property, plant and equipment, net             480,696           435,116
  Goodwill and Intangible assets, net            467,140           367,992
  Other assets                                   109,225            83,119
      Total                                   $1,807,458        $1,523,611

  LIABILITIES
  Short-term debt                                $16,992           $23,480
  Accounts payable                               101,823           101,586
  Accrued liabilities                            171,045           137,034
      Total current liabilities                  289,860           262,100
  Long-term debt                                 599,615           387,887
  Deferred income taxes                           53,475            52,570
  Other liabilities                              125,816            96,421
      Total liabilities                        1,068,766           798,978

  MINORITY INTEREST                               17,685            10,671

  SHAREOWNERS' EQUITY                            721,007           713,962

      Total                                   $1,807,458        $1,523,611


   RECONCILIATION OF FORECASTED GAAP CASH FLOW INFORMATION (Unaudited)

                                                   Twelve Months Ended
                                                      June 30, 2004
   Forecasted net cash flow provided by
    operating activities                           $170,000 - $195,000

   Forecasted purchases and disposals
    of property, plant and equipment                   (70,000)

   Forecasted free operating cash flow             $100,000 - $125,000

SOURCE: Kennametal Inc.