Kennametal Inc. today reported fiscal 2004 fourth-quarter EPS of $0.81 compared with adjusted earnings of $0.45 in 2003. There were no special items reported in the fiscal 2004 fourth quarter results. Reported results in last year's fourth quarter were a loss of $0.14 per diluted share due to special items totaling $0.59 per share.

                            Earnings Per Share
                    Company Guidance:  $0.70 to $0.80
                 Analyst Estimate Range:  $0.76 to $0.81
                Diluted Earnings Per Share ("EPS"):  $0.81

  Total Year 2004

For fiscal 2004, reported EPS of $2.02 compared with earnings of $0.51 last year. Excluding special items in each period, EPS of $2.15 were 52 percent above the prior year's comparable EPS of $1.41.

"We were delighted to deliver excellent sales growth and operating leverage in 2004," said Kennametal Chairman, President and Chief Executive Officer, Markos I. Tambakeras. "Of particular note, Q4 included the highest quarterly sales, and the lowest primary working capital to sales ratio in the company's history. These results were driven by broad-based strong performances by all business units, and across most end markets."

Tambakeras further noted, "In addition to our strong earnings performance, we continue to generate good cash flow and strengthen our balance sheet. Free operating cash flow of $125 million contributed to an 870 basis point reduction in debt to capital, which ended the year at 33 percent."

  Highlights of the Fiscal 2004 Fourth Quarter
   -- Record sales of $542 million were up 17 percent, primarily on
      12 percent organic growth.
   -- Net income was $29.9 million versus a net loss of $4.9 million in Q4
      last year. Net income grew 88 percent compared to last year, excluding
      special items, reflecting the benefits of increased volume, mix, and a
      leaner cost structure.
   -- Net cash flow from operations was $68 million, versus $67 million for
      the prior year.  Free operating cash flow totaled $49 million for the
      quarter, $5 million lower than Q4 of 2003 due to increased capital
      expenditures.
   -- As of June 30, 2004, total debt was $440 million, down $85 million
      from June 2003.
   -- Debt to capital decreased to 33 percent versus 42 percent at the end
      of the prior year.

  Highlights of Fiscal 2004
   -- Sales of $2.0 billion were up 12 percent on a 5 percent improvement
      from organic sales, 2 percent incremental sales from acquisitions and
      a 5 percent benefit from foreign currency exchange rates.
   -- Reported net income totaled $73.6 million versus $18.1 million last
      year.  Excluding special items in both periods, net income improved
      57 percent to $78.3 million versus $49.9 million last year.

  Outlook

Global industrial economic indicators support expectations of additional growth through fiscal 2005 in North America and rest-of-world markets, and a return to modest growth in the first quarter for our European markets.

Tambakeras said, "We were very pleased with our performance in fiscal 2004, and the outlook for our end markets remains good. In 2005, we will leverage further the 6 processes of the Kennametal Value Business System (KVBS), our strong geographic and end-market balance and superior technology, to continue to outperform our markets. We will remain focused on growing market share and offsetting challenges such as high raw material costs by consistently finding new ways to add value for our customers and to continue to benefit from the skills and commitment of our employees."

Sales for the first quarter of fiscal 2005 are expected to grow 9 to 11 percent. Reported EPS is expected to be $0.50 to $0.60.

For the full year, sales are expected to grow 7 to 9 percent. Reported EPS are expected to be $2.65 to $2.85, up 25 to 35 percent.

Kennametal anticipates net cash flow provided by operating activities of approximately $180 to $220 million in fiscal 2005. Purchases of property, plant and equipment, net of proceeds from disposals of property, plant and equipment are expected to be approximately $70 to $80 million. Adjusting net cash flow provided by operating activities for the above items, Kennametal expects to generate between $110 and $140 million of free operating cash flow for fiscal 2005.

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 http://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, 2004, to shareowners of record as of the close of business August 10, 2004.

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 http://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 related to 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 13,500 employees worldwide, the company's annual sales approximate $2.0 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 http://www.kennametal.com/ .

FINANCIAL HIGHLIGHTS

Consolidated financial highlights for Kennametal Inc. for the quarter and twelve months ended June 30, 2004 and 2003 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,
                                   2004      2003       2004        2003

  Sales                          $541,858  $463,765  $1,971,441  $1,758,957

     Cost of goods sold (A)       356,084   314,974   1,318,074   1,190,053

  Gross profit                    185,774   148,791     653,367     568,904

     Operating expense (B)        134,441   121,757     512,621     464,861

     Restructuring and asset
      impairment charges ©          -      20,305       3,670      31,954

     Amortization of intangibles      664       854       2,234       4,164

  Operating income                 50,669     5,875     134,842      67,925

     Interest expense               6,405     9,108      25,884      36,166

     Other (income) expense, net (D)  294    (2,117)     (1,716)     (2,531)

  Income before provision for
   income taxes and minority
   interest                        43,970    (1,116)    110,674      34,290

  Provision for income taxes (E)   14,154     3,678      35,500      14,300

  Minority interest                   (36)       74       1,596       1,860

  Net income                      $29,852   $(4,868)    $73,578     $18,130

  Basic earnings per share          $0.83    $(0.14)      $2.06       $0.52

  Diluted earnings per share        $0.81    $(0.14)      $2.02       $0.51

  Dividends per share               $0.17     $0.17       $0.68       $0.68

  Basic weighted average shares
   outstanding                     36,051    35,396      35,704      35,202

  Diluted weighted average
   shares outstanding              36,952    35,682      36,473      35,479

  (A) For the twelve months ended June 30, 2004, these amounts include
      charges of $0.1 million for integration activities related to the
      Widia acquisition, $2.9 million related to restructuring programs, and
      $0.8 million for a pension curtailment.  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.

  (B) For the twelve months ended June 30, 2004, these amounts include
      charges of $1.8 million related to a note receivable from a
      divestiture of a business by Kennametal in 2002, $0.5 million related
      to a pension curtailment, and $1.4 million for integration activities
      related to the Widia acquisition.  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.

  © 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.

  (D) For the twelve months ended June 30, 2004, these amounts include
      income of $4.4 million related to a gain on the sale of Toshiba
      Tungaloy investment and a charge of $0.2 million on a note receivable
      from a divestiture of a business by Kennametal in 2002.

  (E) 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%.


                     FINANCIAL HIGHLIGHTS (Continued)

In addition to reported results under U.S. GAAP, 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. Management believes that each of these non-GAAP financial measures is useful to investors to more easily compare the Company's financial performance period to period.

  For the quarter ended June 30, 2004, there were no special items.


  RECONCILIATION TO GAAP - QUARTER ENDED JUNE 30, 2003 (Unaudited)

                                                                    Diluted
                                                                    Earnings
                                Gross   Operating Operating   Net     Per
                                Profit   Expenses  Income   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)    -
    J&L Restructuring               -         -        (64)     (45)    -
    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
  2003 Results Excluding
   Special Items               $150,802  $120,087  $29,861  $15,914   $0.45


                     FINANCIAL HIGHLIGHTS (Continued)

  RECONCILIATION TO GAAP - TWELVE MONTHS ENDED JUNE 30 (Unaudited)

                                                     Operating   Operating
                                        Gross Profit  Expenses     Income

  2004 Reported Results                   $653,367    $512,621    $134,842
     MSSG Restructuring                      2,850         -         5,023
     AMSG Restructuring                        -           -         1,497
     Widia Integration Costs - MSSG             63      (1,448)      1,511
     Widia Integration Costs - AMSG             48         -            48
     Pension Curtailment                       779        (520)      1,299
     Gain on Toshiba Investment                -           -           -
     Note Receivable                           -        (1,817)      1,817
  2004 Results Excluding Special Items    $657,107    $508,836    $146,037

  2003 Reported Results                   $568,904    $464,861     $67,925
     MSSG Restructuring                        -           -         9,060
     AMSG Restructuring                        -           -         4,406
     AMSG Electronics Impairment               -           -        16,110
     Corporate Restructuring                   -           -         1,137
     J&L Restructuring                         -           -         1,203
     FSS Restructuring                         -           -            38
     Widia Integration Costs - MSSG          1,344      (5,149)      6,493
     Widia Integration Costs - AMSG            865        (327)      1,192
  2003 Results Excluding Special Items    $571,113    $459,385    $107,564


  RECONCILIATION TO GAAP - TWELVE MONTHS ENDED JUNE 30 (Unaudited)

                                           Other                   Diluted
                                        (Income) /        Net      Earnings
                                        Expense, net     Income    Per Share

  2004 Reported Results                    $(1,716)     $73,578      $2.02
     MSSG Restructuring                        -          3,416       0.09
     AMSG Restructuring                        -          1,018       0.03
     Widia Integration Costs - MSSG            -          1,027       0.03
     Widia Integration Costs - AMSG            -             33        -
     Pension Curtailment                       -            883       0.02
     Gain on Toshiba Investment              4,397       (2,990)     (0.08)
     Note Receivable                          (183)       1,360       0.04
  2004 Results Excluding Special Items      $2,498      $78,325      $2.15

  2003 Reported Results                    $(2,531)     $18,130      $0.51
     MSSG Restructuring                        -          6,342       0.18
     AMSG Restructuring                        -          3,084       0.09
     AMSG Electronics Impairment               -         15,269       0.43
     Corporate Restructuring                   -            796       0.02
     J&L Restructuring                         -            843       0.02
     FSS Restructuring                         -             26        -
     Widia Integration Costs - MSSG            -          4,545       0.14
     Widia Integration Costs - AMSG            -            834       0.02
  2003 Results Excluding Special Items     $(2,531)     $49,869      $1.41


                     FINANCIAL HIGHLIGHTS (Continued)

  SEGMENT DATA (Unaudited):

                                   Quarter Ended      Twelve Months Ended
                                      June 30,              June 30,
                                   2004     2003 *      2004       2003 *
  Outside Sales:
  Metalworking Solutions and
   Services Group                $326,377  $289,996  $1,198,505  $1,086,831
  Advanced Materials Solutions
   Group                          119,227    96,699     419,073     353,262
  J&L Industrial Supply            59,741    48,158     218,295     196,170
  Full Service Supply              36,513    28,912     135,568     122,694
  Total Outside Sales            $541,858  $463,765  $1,971,441  $1,758,957

  Sales By Geographic Region:
  Within the United States       $283,453  $238,323  $1,020,629    $946,518
  International                   258,405   225,442     950,812     812,439
  Total Outside Sales            $541,858  $463,765  $1,971,441  $1,758,957

  Operating Income (Loss), as
   reported:
  Metalworking Solutions and
   Services Group                 $43,720   $23,616    $126,657     $88,213
  Advanced Materials Solutions
   Group                           16,793    (7,282)     53,168      19,762
  J&L Industrial Supply             6,137       931      19,547       6,140
  Full Service Supply                 882       264         818         (56)
  Corporate and Eliminations (1)  (16,863)  (11,654)    (65,348)    (46,134)
  Total Operating Income          $50,669    $5,875    $134,842     $67,925

  Operating Income (Loss),
   excluding special charges:
  Metalworking Solutions and
   Services Group                 $43,720   $29,261    $133,191    $103,766
  Advanced Materials Solutions
   Group                           16,793    11,222      54,713      41,470
  J&L Industrial Supply             6,137       867      19,547       7,343
  Full Service Supply                 882       264         818         (18)
  Corporate and Eliminations (1)  (16,863)  (11,753)    (62,232)    (44,997)
  Total Operating Income          $50,669   $29,861    $146,037    $107,564

  *  Prior year segment data has been restated for organizational changes.

  (1) Includes corporate functional shared services and intercompany
      eliminations.


                     FINANCIAL HIGHLIGHTS (Continued)

  OPERATING INCOME / (LOSS) RECONCILIATION (Unaudited):

  For the quarter ended June 30, 2004, there were no special items.

  QUARTER ENDED JUNE 30,
                                                           Corp &
                             MSSG     AMSG    J&L   FSS     Elim     Total
  2003 Reported Operating
   Income (Loss)            $23,616  $(7,282) $931  $264  $(11,654)  $5,875
    Restructuring             3,134    1,224   (64)  -         (99)   4,195
    Electronics impairment      -     16,110   -     -         -     16,110
    Widia Integration Costs   2,511    1,170   -     -         -      3,681
  2003 Operating Income
   (Loss) Excluding Special
   Items                    $29,261  $11,222  $867  $264  $(11,753) $29,861

  TWELVE MONTHS ENDED JUNE 30,
                                                          Corp &
                         MSSG     AMSG      J&L    FSS     Elim     Total
  2004 Reported
   Operating Income
   (Loss)              $126,657  $53,168  $19,547  $818  $(65,348) $134,842
    Restructuring         5,023    1,497      -     -         -       6,520
    Widia Integration
     Costs                1,511       48      -     -         -       1,559
    Pension Curtailment     -        -        -     -       1,299     1,299
    Note Receivable         -        -        -     -       1,817     1,817
  2004 Operating
   Income (Loss)
   Excluding Special
   Items               $133,191  $54,713  $19,547  $818  $(62,232) $146,037

  2003 Reported
   Operating Income
   (Loss)               $88,213  $19,762   $6,140  $(56) $(46,134)  $67,925
    Restructuring         9,060    4,406    1,203    38     1,137    15,844
    Electronics
     impairment             -     16,110      -     -         -      16,110
    Widia Integration
     Costs                6,493    1,192      -     -         -       7,685
  2003 Operating
   Income (Loss)
   Excluding Special
   Items               $103,766  $41,470   $7,343  $(18) $(44,997) $107,564


                     FINANCIAL HIGHLIGHTS (Continued)

  RECONCILIATION TO FREE OPERATING  CASH FLOW INFORMATION (Unaudited)

                                        Quarter Ended   Twelve Months Ended
                                           June 30,           June 30,
                                        2004     2003      2004      2003

  Net income                           $29,852  $(4,868)  $73,578   $18,130
  Electronics impairment                   -     16,110       -      16,110
  Other non-cash items                  (1,498)  11,264    13,959    19,346
  Depreciation and amortization         17,236   22,224    65,989    84,043
  Change in inventory                   (3,213)  23,527    10,255    38,171
  Change in accounts receivable           (986)  10,632    (4,199)   11,480
  Change in accounts payable            16,696   (3,262)   25,776      (826)
  Change in other assets and
   liabilities                          10,305   (8,269)   (7,500)   (4,910)
  Net cash flow provided by operating
   activities                           68,392   67,358   177,858   181,544

  Purchase of property, plant and
   equipment                           (20,902) (13,447)  (56,962)  (49,413)
  Proceeds from disposals of property,
   plant and equipment                   1,227      371     4,225     1,875
  Free operating cash flow             $48,717  $54,282  $125,121  $134,006


  CONDENSED BALANCE SHEETS (Unaudited)
                                                06/30/04          03/31/04
  ASSETS
  Cash and equivalents                           $25,940           $27,528
  Accounts receivable, net of allowance          247,245           248,879
  Inventories                                    388,077           387,202
  Deferred income taxes                           95,240            87,651
  Other current assets                            40,443            38,803
      Total current assets                       796,945           790,063
  Property, plant and equipment, net             484,475           481,793
  Goodwill and Intangible assets, net            542,014           554,614
  Other assets                                   115,229            59,641
      Total                                   $1,938,663        $1,886,111

  LIABILITIES
  Short-term debt, including notes
   payable                                      $126,807            $8,193
  Accounts payable                               148,216           132,246
  Accrued liabilities                            214,359           202,460
      Total current liabilities                  489,382           342,899
  Long-term debt                                 313,400           486,119
  Deferred income taxes                           64,571            38,045
  Other liabilities                              167,926           192,546
      Total liabilities                        1,035,279         1,059,609

  MINORITY INTEREST                               16,232            16,598

  SHAREOWNERS' EQUITY                            887,152           809,904

      Total                                   $1,938,663        $1,886,111


  CONDENSED BALANCE SHEETS (Unaudited)

                                           12/31/03    09/30/03    06/30/03
  ASSETS
  Cash and equivalents                      $15,086     $14,720     $15,093
  Accounts receivable, net of allowance     223,087     232,146     231,803
  Inventories                               386,250     387,877     389,613
  Deferred income taxes                      88,020      86,888      97,237
  Other current assets                       39,460      47,003      48,606
      Total current assets                  751,903     768,634     782,352
  Property, plant and equipment, net        487,530     489,242     489,828
  Goodwill and Intangible assets, net       500,890     484,662     473,173
  Other assets                               72,802      67,108      68,534
      Total                              $1,813,125  $1,809,646  $1,813,887

  LIABILITIES
  Short-term debt, including notes
   payable                                  $12,872     $11,375     $10,845
  Accounts payable                          112,563     107,653     118,509
  Accrued liabilities                       183,835     197,578     206,993
      Total current liabilities             309,270     316,606     336,347
  Long-term debt                            468,455     508,763     514,842
  Deferred income taxes                      36,087      41,368      43,543
  Other liabilities                         191,585     180,258     178,698
      Total liabilities                   1,005,397   1,046,995   1,073,430

  MINORITY INTEREST                          16,286      16,089      18,880

  SHAREOWNERS' EQUITY                       791,442     746,562     721,577

      Total                              $1,813,125  $1,809,646  $1,813,887


                     FINANCIAL HIGHLIGHTS (Continued)

  Debt to Capital Reconciliation (Unaudited)
                                                        June 30,
                                                  2004              2003

  Total Debt                                     440,207           525,687
  Total Shareowners' Equity                      887,152           721,577

  Debt to Equity, GAAP                             33.2%             42.1%

  Total Debt                                     440,207           525,687
  Minority Interest                               16,232            18,880
  Total Shareowners' Equity                      887,152           721,577

  Total Capital                                1,343,591         1,266,144

  Debt to Capital                                  32.8%             41.5%

SOURCE: Kennametal Inc.