Kennametal Inc. today reported fiscal 2002 third quarter earnings of $0.53 per diluted share, a decrease of 42 percent, compared with earnings of $0.91* per diluted share last year, excluding special items in each period. On the same basis through the first nine months, diluted earnings per share were $1.28, 38 percent below last year's earnings of $2.06*.

                Earnings Per Share Excluding Special Items
        Company Guidance (1/30/02)              $0.50 to $0.55
        Analyst Estimate Range (04/30/02)       $0.50 to $0.55
        Earnings, Excluding Special Items            $0.53

On a reported basis, diluted earnings per share were $0.42 for the quarter against last year's earnings per share of $0.84*. For the first nine months, reported diluted earnings per share were $0.74 against last year's earnings per share of $1.89*.

   * Fiscal 2001 performance quoted in this release excludes goodwill
     amortization as defined by SFAS 142, "Goodwill and Other Intangible
     Assets" to allow equivalent comparisons.  A table reconciling the
     fiscal 2001 impact of goodwill amortization is included later in this
     release.

"We were encouraged to see 3.6 percent sequential improvement versus the December quarter, and continued our disciplined management of the business through the softest March quarter in many years," Kennametal Chairman, President and Chief Executive Officer, Markos I. Tambakeras, said. "We leveraged continued aggressive cost management through the Kennametal Lean Enterprise, as North American industrial markets remained severely depressed and our European and energy related markets softened as expected. I was particularly pleased that our relentless focus on working capital management contributed to another quarter of strong cash flow, including an $18 million decrease in inventory. In addition, the previously announced restructuring effort in our J&L, IPG and Electronics businesses progressed as planned and positioned the company for even stronger performance as the economy rebounds."

  Third Quarter Highlights
   -- Sales of $393.9 million declined 16 percent, versus $468.2 million
      last year.  Excluding the unfavorable impact of foreign currency
      (2 percent), and fewer workdays (3 percent), sales were 11 percent
      below the prior year.  Each month in the March 2002 quarter improved
      sequentially on a daily sales basis, despite broad year-over-year
      weakness.  Sales for the March 2002 quarter improved 3.6% sequentially
      versus the December quarter.

   -- Gross profit margin, excluding special charges in both periods, of
      32.7 percent declined 250 basis points compared with the third quarter
      of fiscal 2001.  Lean initiatives continue to provide manufacturing
      efficiencies that offset much of the combined negative pressure of
      underutilized capacity due to volume declines and an unfavorable
      customer and product mix.  Foreign currency translation also reduced
      the margin.

   -- Operating expense for the quarter was reduced 10 percent, to
      $95.7 million, excluding special charges in 2001.  The reduction was
      9 percent excluding the impact of foreign exchange.  Ongoing
      cost-cutting and lean initiatives, combined with several short-term
      savings actions, reduced expenses nearly in line with sales declines.
      Moreover, the reduction was achieved even as spending on growth
      programs and R&D was sustained.

   -- The current quarter included special charges of $5.2 million, or
      $0.11 per diluted share, associated with previously announced
      restructurings.  The charges were divided approximately evenly between
      the J&L/FSS business improvement plan and the Metalworking and
      Electronics plan.  These plans are expected to be completed by fiscal
      year end.  Prior-year results included special charges of
      $3.2 million, or $0.07 per share, associated with the J&L and FSS
      business improvement plans and the resize program.

   -- Interest expense of $7.4 million is 41 percent below the same quarter
      last year due to ongoing debt reduction and lower average borrowing
      rates.

   -- The effective tax rate for the March 2002 quarter was 32.0 percent,
      compared with prior year of 33.9 percent.

   -- Excluding special items, net income was $16.7 million, a 40 percent
      decrease compared with net income of $28.0 million last year.
      Reported net income was $13.1 million against net income of
      $25.9 million in the same quarter last year.

   -- Free operating cash flow was $31.4 million, versus $31.9 million in
      the same period last year.  Primary working capital remained tightly
      controlled with the primary working capital as a percent of sales
      ratio increasing slightly to 28.1 percent.  Primary working capital of
      $425.4 million was down 14 percent from the same period last year.

   -- Total debt was $547.9 million, down $107.0 million from March 2001 and
      down $59.2 million from the beginning of the fiscal year.  Three years
      of focused debt reduction has lowered total debt by more than 40%.

  Outlook

"Sequential improvement though the March quarter supports the broad perception that the markets have found a bottom and are slowly beginning to rebound," Tambakeras said, "Key indicators including industrial production and the Institute of Supply Management (ISM -- formerly NAPM) index also continue to strengthen. Consequently, we are reaffirming our outlook for the final quarter of the fiscal year with the expectation that the gradual economic improvement will continue. While the near term will continue to be challenging, we remain confident that future economic growth will allow us to take maximum advantage of the many improvements we have made as a company. These improvements have included revitalized investment in technology, which has increased sales from new products to 34%. New products have been leveraged with sales and marketing initiatives to deliver market share gains and enhanced customer satisfaction. At the same time we have significantly improved operating efficiency."

Assuming economic conditions continue to slowly strengthen, sales for the fourth quarter of fiscal 2002 are expected to sequentially improve 2 to 5 percent, and to decline 5 to 10 percent year-over-year, with diluted earnings per share between $0.62 and $0.72, excluding special charges. Cash flow for the year is still expected to exceed $100 million.

Change of Independent Auditor

On April 30, 2002, upon the joint recommendation of management and the Audit Committee, the Board of Directors of Kennametal Inc. (the company) ratified the dismissal of Arthur Andersen LLP (Arthur Andersen) as the company's independent auditors following the completion by Arthur Andersen of its report on the financial statements of the company for the quarter ended March 31, 2002, and the selection of PricewaterhouseCoopers LLP as independent auditors for fiscal year ending June 30, 2002. The appointment of PricewaterhouseCoopers LLP was made after careful consideration by the Board of Directors, the Audit Committee and management of the company, and included an extensive evaluation process.

The decision to change auditors was not the result of any disagreement between the company and Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. During its long tenure as the company's outside auditors, Arthur Andersen has provided many years of quality service and has demonstrated a high level of professionalism.

Strong Tool Company Disposition

Kennametal also announced that it has sold its wholly owned subsidiary, Strong Tool Company, headquartered in Cleveland, Ohio. This April 2002 action represents a net book loss of approximately $2.4 million and is in line with Kennametal's strategy to refocus J&L on its catalog business.

Dividend Declared

Kennametal also announced its Board of Directors declared a quarterly cash dividend of $0.17 cents per share, payable May 24, 2002, to shareowners of record as of the close of business May 10, 2002.

Third 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" as defined by Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may differ materially from those expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the extent that global economic conditions deteriorate or do not continue to improve in the second quarter of calendar 2002, 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, risks associated with the implementation of restructuring plans and environmental remediation, as well as other risks and uncertainties including those detailed from time to time in the filings of the company with the Securities and Exchange Commission. The company undertakes no obligation to publicly release any revisions to forward-looking statements to reflect events or circumstances occurring after the date hereof.

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 approximately 12,000 employees worldwide, the company's fiscal 2001 annual sales were $1.8 billion, with a third 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 quarters and nine-month periods ended March 31, 2002 and 2001 are shown in the following tables (in thousands, except per share amounts). All fiscal year 2002 data is subject to year-end (June 30) adjustment and audit by independent public accountants.

  Consolidated Statements of Income

                       Quarter Ended          Nine Months Ended
                         March 31,                March 31,
                     2002         2001        2002          2001

  Net sales        $393,852     $468,191   $1,180,844    $1,365,391

     Cost of
      goods sold    266,205      303,684      806,893       896,852
     Gross profit   127,647      164,507      373,951       468,539
     Operating
      expense(1)     95,695      106,786      288,711       323,238
     Restructuring and
      asset impairment
      charges         3,944        2,286       22,650         4,633
     Amortization of
      intangibles       728        6,063        2,107        18,533

  Operating income   27,280       49,372       60,483       122,135
    Interest
     expense(2)       7,421       12,496       25,076        39,091
    Other expense
     (income), net(3)   (14)       1,873         (179)        6,766

  Income before
   provision for income
   taxes and minority
   interest          19,873       35,003       35,586        76,278

  Provision for
   income taxes       6,359       13,824       11,387        30,128

  Minority interest     370          785        1,071         2,291

  Income before
   cumulative effect
   of change in
   accting.
   principle         13,144       20,394       23,128        43,859

  Cumulative effect
   of change in
   accounting principle,
   net of tax            --           --           --         (599)

  Net income        $13,144      $20,394      $23,128       $43,260

  Diluted earnings
   per share          $0.42        $0.66        $0.74         $1.41

  Dividends per share $0.17        $0.17        $0.51         $0.51

  Diluted weighted
   average shares
   outstanding       31,553       30,692       31,454        30,656

  (1)  For the quarter and nine-months ended March 31, 2001, this
       includes a charge of $0.1 million and $2.1 million, respectively,
       primarily related to the tender offer to acquire the outstanding
       shares of JLK.
  (2)  For the quarter and nine-months ended March 31, 2001, this
       includes a charge of $0.3 million related to the recognition of a
       portion of deferred financing fees as a result of the reduction
       in the availability under the company's U.S. credit facility.
  (3)  For the quarters ended March 31, 2002 and 2001, these amounts
       include charges of $0.5 million and $1.5 million, respectively,
       for fees incurred in connection with the company's accounts
       receivable securitization program.  For the nine-months ended
       March 31, 2002 and 2001, these amounts include similar charges of
       $2.0 million and $4.7 million, respectively.

                     FINANCIAL HIGHLIGHTS (Continued)
 Pro forma Fiscal 2001 Operating Results Excluding Goodwill Amortization:

                                                   Period Ended
                                                  March 31, 2001
                                            Quarter          Nine Months

  Operating income                          $54,732           $138,272
  Interest expense                           12,496             39,091
  Other expense, net                          1,873              6,766
  Income before provision for income
   taxes and minority interest               40,363             92,415
  Provision for income taxes                 13,683             31,322
  Minority interest                             800              2,527
  Income before cumulative effect of
   change in accounting principle            25,880             58,566
  Cumulative effect of change in
   accounting principle, net of tax              --               (599)

  Pro forma net income                      $25,880            $57,967

  Pro forma diluted earnings per share        $0.84              $1.89

The following tables provide a comparison of the company's reported results, and the results excluding special items, for fiscal 2002 and fiscal 2001.

  Quarter Ended March 31,
                                                                     Diluted
                                                                    Earnings
                                           Gross   Operating   Net    Per
                                           Profit   Income   Income  Share

  2002 Reported Results                  $127,647  $27,280  $13,144  $0.42
       MSSG Restructuring                     160    1,904    1,295   0.04
       AMSG Restructuring                     554      619      421   0.01
       Corporate Restructuring                 --        3        2     --
            Total Core Business               714    2,526    1,718   0.05
       J&L Restructuring                      507    2,375    1,616   0.05
       FSS Restructuring                       --      264      179   0.01
            Total Non-Core Business           507    2,639    1,795   0.06
  2002 Results Excluding Special Items   $128,868  $32,445  $16,657  $0.53

  2001 Reported Results                  $164,507  $49,372  $20,394  $0.66
       MSSG Restructuring                      --    1,011      612   0.02
       AMSG Restructuring                      --     (264)    (160)    --
       Corporate Special Charge                --       --      208   0.01
            Total Core Business                --      747      660   0.03
       J&L Restructuring                      419    1,913    1,157   0.04
       FSS Restructuring                       --      170      103     --
            Total Non-Core Business           419    2,083    1,260   0.04
  2001 Results Excluding
   Special Items                         $164,926  $52,202  $22,314  $0.73

                     FINANCIAL HIGHLIGHTS (Continued)

   Nine Months Ended March 31,

                                                                    Diluted
                                                                    Earnings
                                          Gross   Operating    Net    Per
                                          Profit    Income   Income   Share

  2002 Reported Results                  $373,951   $60,483  $23,128  $0.74
       MSSG Restructuring                     160     8,141    5,536   0.18
       AMSG Restructuring                   1,304     6,573    4,470   0.14
       Corporate Restructuring                 --       160      109     --
            Total Core Business             1,464    14,874   10,115   0.32
       J&L Restructuring                      906     9,846    6,694   0.21
       FSS Restructuring                       --       300      204   0.01
            Total Non-Core Business           906    10,146    6,898   0.22
  2002 Results Excluding Special Items   $376,321   $85,503  $40,141  $1.28

  2001 Reported Results                  $468,539  $122,135  $43,260  $1.41
       MSSG Restructuring                      --     1,016      615   0.02
       AMSG Restructuring                      --      (238)    (146)    --
       Corporate Restructuring & Other         --       (20)     197   0.01
            Total Core Business                --       758      666   0.03
       J&L Restructuring & Other              419     6,092    3,344   0.11
       FSS Restructuring                       --      320      184     --
            Total Non-Core Business           419     6,412    3,528   0.11
       Adoption of SFAS 133                    --        --      599   0.02
  2001 Results Excluding Special Items   $468,958  $129,305  $48,053  $1.57

                     FINANCIAL HIGHLIGHTS (Continued)

  SEGMENT DATA:

                                     Quarter Ended       Nine Months Ended
                                         March 31,             March 31,
                                    2002    2001(1)      2002      2001(1)
  Sales:(2)
  Metalworking Solutions and
   Services Group                $224,971  $260,098    $666,006    $754,759
  Advanced Materials Solutions
   Group                           72,879    91,858     227,498     263,746
  J&L Industrial Supply            58,873    74,504     173,997     224,708
  Full Service Supply              37,129    41,731     113,343     122,178
  Total Sales                    $393,852  $468,191  $1,180,844  $1,365,391

  Sales By Geographic Region:(2)
  Within the United States       $253,905  $302,620    $762,140    $903,383
  International                   139,947   165,571     418,704     462,008
  Total Sales                    $393,852  $468,191  $1,180,844  $1,365,391

  Operating Income (Loss), as
   reported:(2)
  Metalworking Solutions and
   Services Group                 $25,999   $38,318     $68,080     $98,930
  Advanced Materials Solutions
   Group                            6,988    12,188      16,699      32,118
  J&L Industrial Supply             1,208     2,896      (1,725)      4,533
  Full Service Supply                 380     2,125       1,799       5,944
  Corporate and Eliminations       (7,295)   (6,155)    (24,370)    (19,390)
  Total Operating Income          $27,280   $49,372     $60,483    $122,135

  Operating Income (Loss),
   excluding special charges:(2)
  Metalworking Solutions and
   Services Group                 $27,903   $39,329     $76,221     $99,946
  Advanced Materials Solutions
   Group                            7,607    11,924      23,272      31,880
  J&L Industrial Supply             3,584     4,809       8,122      10,625
  Full Service Supply                 644     2,295       2,099       6,264
  Corporate and Eliminations       (7,293)   (6,155)    (24,211)    (19,410)
  Total Operating Income          $32,445   $52,202     $85,503    $129,305

  Operating Income (Loss),
   excluding special charges
       and goodwill
        amortization: (2)(3)
  Metalworking Solutions and
   Services Group                           $41,678                $106,984
  Advanced Materials Solutions
   Group                                     14,154                  38,571
  J&L Industrial Supply                       5,575                  12,795
  Full Service Supply                         2,310                   6,309
  Corporate and Eliminations                 (6,155)                (19,217)
  Total Operating Income                    $57,562                $145,442

  (1)  Kennametal reports global business units consisting of
       Metalworking Solutions and Services Group, Advanced Materials
       Solutions Group, J&L Industrial Supply, Full Service Supply and
       corporate functional shared services.  Certain amounts in prior
       year sales and operating income (loss) have been restated to
       conform to this reporting structure.

  (2)  Amounts reflect reclassification of shipping fees charged
       customers to sales, and freight and handling costs to costs of
       goods sold, as required by Emerging Issues Task Force 00-10,
       "Accounting for Shipping and Handling Fees and Costs."

  (3)  As reported amounts for fiscal 2002 are reflective of the non-
       amortization provision of SFAS 142, "Goodwill and Other
       Intangible Assets."

                     FINANCIAL HIGHLIGHTS (Continued)

                          CASH FLOW INFORMATION

                              Quarter Ended           Nine Months Ended
                                March 31,                 March 31,
                           2002         2001(1)      2002         2001(1)

  Net income             $13,144       $20,394      $23,128      $43,260
  Non-cash items          (1,078)        4,774       11,241        6,766
  Depreciation and
   amortization           17,934        24,375       55,237       73,440
  Change in primary
   working capital         5,780       (13,166)      43,996       16,259
  Change in other
   working capital         3,574         9,931      (29,169)      (6,241)
  Cash flow from
   operations             39,354        46,308      104,433      133,484
  Capital
   expenditures          (10,235)      (17,141)     (30,349)     (40,121)
  Proceeds from
   asset disposals         2,274         2,714        5,799        3,558
  Free operating
   cash flow             $31,393       $31,881      $79,883      $96,921

   (1) Certain amounts have been reclassified to be consistent with the
       current year presentation.

                     FINANCIAL HIGHLIGHTS (Continued)

   CONDENSED BALANCE SHEETS
                                        Quarter Ended
                   3/31/02    12/31/01     9/30/01     6/30/01     3/31/01
  ASSETS
  Cash and
   equivalents     $10,705     $10,414     $10,722     $12,940     $19,987
  Accounts
   receivables,
   net of
   allowance       168,094     162,916     196,003     206,175     214,332
  Inventories      351,129     367,724     382,701     373,221     387,520
  Deferred income
   taxes            66,177      67,215      64,673      57,452      52,610
  Other current
   assets           28,064      24,728      25,036      31,408      31,899
     Total current
      assets       624,169     632,997     679,135     681,196     706,348
  Property, plant
   and equipment,
   net             438,505     448,263     467,268     472,874     474,015
  Goodwill, net    615,955     616,113     616,527     615,263     628,104
  Intangible assets,
   net               7,164       7,945       8,716       9,497       9,529
  Other assets      60,458      60,797      50,943      46,612      39,177
     Total      $1,746,251  $1,766,115  $1,822,589  $1,825,442  $1,857,173

  LIABILITIES
  Short-term
   debt           $383,639    $406,677    $418,448     $24,530      $8,786
  Accounts
   payable          93,810     101,817     103,993     118,073     108,371
  Accrued
   liabilities     136,095     131,656     137,055     151,882     174,378
     Total current
      liabilities  613,544     640,150     659,496     294,485     291,535
  Long-term debt   164,257     173,514     209,613     582,585     646,144
  Deferred income
   taxes            54,953      54,204      50,945      53,844      37,531
  Other
   liabilities      88,720      89,880      90,716      87,898      84,312
     Total
      liabilities  921,474     957,748   1,010,770   1,018,812   1,059,522

  MINORITY INTEREST  8,907       9,271      10,187       9,861      10,708

  SHAREOWNERS'
   EQUITY          815,870     799,096     801,632     796,769     786,943

     Total      $1,746,251  $1,766,115  $1,822,589  $1,825,442  $1,857,173

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SOURCE: Kennametal Inc.