Kennametal Inc. today reported fourth quarter EPS of $4.11, including special items of $2.86 per share. Fourth quarter adjusted EPS were $1.25 compared with prior year EPS of $0.98, an increase of 28 percent.
Fiscal 2006 reported EPS were $6.48, including special items of $2.53, compared with prior year reported EPS of $3.13, including special charges of $0.12 per share, an increase of 107 percent. Fiscal 2006 adjusted EPS were $3.95 compared to prior year adjusted EPS of $3.25, an increase of 22 percent.
Fiscal 2006 fourth quarter performance reflects continuing operational excellence as well as the impact of previously announced divestitures. These transactions are consistent with the company's strategy of exiting non-core businesses. Therefore, fourth quarter results included charges associated with the sale of UK-based high speed steel business (Presto), the sale of Kemmer Praezision electronics business (Electronics) and the previously announced sale of South Deerfield Industrial's consumer retail product line (CPG). These dispositions are expected to improve future overall EBIT margins.
In addition, fourth quarter results included a gain, net of transaction related costs, from the divestiture of J&L Industrial Supply (J&L). The divestiture of J&L is in line with Kennametal's strategy to focus on its core manufacturing businesses. This transaction completes the company's planned exit from owned distribution and Kennametal will continue building new distributor relationships while growing existing ones.
As previously disclosed, the company evaluated options for cash repatriation and the corresponding tax impact under the American Jobs Creation Act of 2004 (AJCA). The Act provides for a special one-time tax deduction on foreign earnings that are repatriated to the United States. The company repatriated $89 million, which resulted in an $11 million tax cost which was recorded during fourth quarter of fiscal 2006.
President and Chief Executive Officer Carlos M. Cardoso said, "We are very pleased with the results for fourth quarter and fiscal year 2006, which reflect all that we have accomplished. Through the Kennametal Value Business System (KVBS), our team is successfully executing on our strategy. The fourth quarter performance represents the 10th consecutive quarter of year over year growth. Kennametal's strong sales, EPS and return on invested capital validate our market leadership position as well the continuing global opportunity for our company. We are excited to be essentially done with the divestiture of non-core businesses. We now have created a stronger foundation, which positions our company for long-term growth and profitability. By continually enhancing our portfolio to ensure the appropriate mix of businesses, Kennametal is focused on serving customers' needs through innovative technology and solutions."
Reconciliation of all non-GAAP financial measures are set forth in the attached tables.
Highlights of Fiscal 2006 Fourth Quarter
-- Fourth quarter sales of $612 million increased 3 percent versus the
same quarter last year, including 8 percent organic sales growth,
offset by 5 percent from a prior year divestiture. Sales in the
quarter included two months of J&L activity prior to its divestiture.
-- Income from continuing operations was $176 million for the fourth
quarter. Income from continuing operations, excluding special items,
was $48 million for the fourth quarter versus prior year of $36
million, an increase of 33 percent. This year over year improvement
was driven by strong performance across all business units coupled
with ongoing cost containment.
-- Fourth quarter reported EPS were $4.11, including special items of
$2.86 per share. Fourth quarter adjusted EPS were $1.25 compared with
prior year EPS of $0.98, an increase of 28 percent. A reconciliation
follows:
Earnings Per Diluted Share Reconciliation
Fourth Quarter FY 2006 Fourth Quarter FY 2005
Reported EPS $4.11 Reported EPS $0.98
Gain on sale of J&L No special items.
and transaction-
related charges (3.24)
Loss on sale
Electronics 0.39
Tax impact of cash
repatriation under
AJCA 0.28
CPG goodwill
impairment and
transaction-related
charges, net of tax
benefit (0.06)
Loss on sale of
Presto 0.04
Favorable resolution
of tax contingencies (0.27)
Adjusted EPS $1.25 $0.98
-- Special items related to ongoing portfolio shaping included the
divestitures of J&L, Electronics and Presto. The company also
recorded pre-tax charges related to its previously announced
divestiture of CPG including industrial saw blades, which is expected
to close in the first quarter of fiscal 2007.
-- Cash repatriation of $89 million under the AJCA. The tax impact of
this repatriation was a charge of $11 million, or $0.28 per diluted
share.
-- Record adjusted return on invested capital was up 180 basis points to
11.4 percent from 9.6 percent in the prior year.
-- Repayments of the company's Accounts Receivable Securitization
Program totaled $107 million.
-- Repurchased 1.3 million shares totaling $79 million.
-- Funded $40 million related to one of the company's U.S. pension
plans.
Highlights of Fiscal 2006
-- Sales of $2.3 billion were up 6 percent versus prior year, including 9
percent organic growth, partially offset by a 2 percent net impact of
acquisitions and divestitures and 1 percent of unfavorable foreign
currency exchange. Sales for the year included 11 months of J&L
activity prior to its divestiture.
-- Income from continuing operations was $272 million compared to prior
year of $114 million. Income from continuing operations, excluding
special items, was $154 million versus prior year of $118 million, an
increase of 30 percent.
-- Fiscal 2006 reported EPS were $6.48, including special items of $2.53,
compared with prior year reported EPS of $3.13, including special
charges of $0.12 per share, an increase of 107 percent. Fiscal 2006
adjusted EPS were $3.95 compared to prior year adjusted EPS of $3.25,
an increase of 22 percent. A reconciliation follows:
Earnings Per Diluted Share Reconciliation
Year ended June 30, 2006 Year ended June 30, 2005
Reported EPS $6.48 Reported EPS $3.13
Gain on sale of J&L Loss on sale of Full
and transaction- Service Supply and
related charges (3.24) transaction-related
charges 0.12
Loss on sale of
Electronics 0.39
Tax impact of cash
repatriation under
AJCA 0.28
CPG goodwill
impairment and
transaction-related
charges, net of tax
benefit 0.07
Loss on sale of
Presto 0.24
Favorable resolution
of tax contingencies (0.27)
Adjusted EPS $3.95 Adjusted EPS $3.25
-- Adjusted free operating cash flow for fiscal 2006 and 2005 was $125
million in each period. Current year adjustments include $110 million
of repayments related to the company's Accounts Receivable
Securitization Program and $73 million of pension funding. Capital
expenditures for fiscal 2006 totaled $80 million.
-- Repurchased 1.6 million shares totaling $93 million.
Business Segment Highlights of Fiscal 2006 Fourth Quarter
Metalworking Solutions & Services Group (MSSG) growth continues to outpace the growth in its major markets, demonstrating the effects of further market penetration through the company's channel saturation and branding strategy, as well as price realization. North American sales growth was leveraged with the divestiture of J&L that spurred opportunities with new distributors. General engineering, distribution and energy market segments each exhibited strong year over year growth. The divestiture of Presto and the previously announced divestiture of CPG support the company's long-term strategy of continued focus on its core businesses.
In the June quarter, MSSG adjusted sales were up 6 percent on volume and price. North American cemented carbide and high-speed steel grew 10 percent and 8 percent, respectively. Europe sales were increased 4 percent. Rest of the world grew 3 percent.
MSSG operating income was up 18 percent on reported sales growth of 6 percent and the operating margin of 16 percent was up 200 basis points over the same period last year due to ongoing cost containment and price realization.
Advanced Materials Solutions Group (AMSG) delivered significant top line growth in the current quarter. The underlying markets in mining and energy remain strong for Kennametal. The overall AMSG segment continues to report considerable growth. Overall market conditions, price realization and market share penetration are primary factors contributing to favorable results.
In the June quarter, AMSG adjusted sales grew 14 percent on volume and price. Energy product sales were up 37 percent, Conforma Clad sales increased 24 percent, engineered products grew 12 percent and mining and construction product sales increased 9 percent.
AMSG operating income grew 11 percent versus last year, on 18 percent reported sales growth. Operating margin of 18 percent was down 100 basis points over the same period last year due primarily to the impact of raw material price increases period over period, particularly tungsten.
Outlook
Worldwide market conditions support the company's expectations of continued top line growth in fiscal year 2007. Global economic indicators show that North America is expected to remain strong, modest growth is expected in Europe, and emerging markets are forecasted to be robust. While there remain some uncertainties and risks related to the macro-economic environment, fundamental drivers for global demand appear to be stable.
Cardoso said, "We are optimistic about the outlook for our end markets. The global manufacturing forecast is in line with our belief that the industrial sector will continue to show strength. We will continue to balance and diversify our end markets and world geographic mix. We again expect to outperform the market by effectively delivering volume growth, gaining market share and realizing price through innovative customer solutions that provide value and performance."
Kennametal expects organic revenue growth in the 7 to 10 percent range for fiscal year 2007, continuing the trend of consistently outpacing worldwide industrial production rates by two to three times. The company anticipates the majority of its end markets to continue operating at high levels throughout the year, with moderating growth rates for some sectors.
The expectation of ongoing expansion around the globe supports Kennametal's projection of 6 to 9 percent organic sales growth in the first quarter of fiscal 2007, relative to very strong performance from the prior year quarter.
Reported EPS are expected to be in the $4.20 to $4.40 range for fiscal year 2007, despite some dilution from recent divestitures of non-core businesses, reflecting confidence in the company's ability to maintain its strong performance. This forecasted range also includes costs related to the company's ongoing SG&A initiatives that will result in increased profitability for the long term. The fiscal year 2007 guidance midpoint represents a 9 percent year over year growth. On a comparable basis, fiscal year 2007 guidance midpoint represents approximately 25 percent growth, a substantial increase over prior year. Approximately 65 percent of the forecasted EPS will be realized in the second half of fiscal year 2007, consistent with historical seasonal patterns. First quarter 2007 EPS are expected to be $0.60 to $0.70.
Improvements in operating margins are expected to continue and return on invested capital is solidly on track for the projected 11 to 12 percent range for fiscal year 2007.
Kennametal anticipates net cash flow provided by operating activities of approximately $275 million to $285 million for fiscal 2007. Based on anticipated capital expenditures of $90 million, Kennametal expects to generate between $185 million to $195 million of free operating cash flow for fiscal 2007. However, approximately $100 million to $110 million will be used for tax payments, due to recent divestitures and cash repatriation related to the AJCA.
Dividend Declared
Kennametal also announced that its Board of Directors declared a quarterly cash dividend of $0.19 per share. The dividend is payable August 23, 2006 to shareowners of record as of the close of business on August 8, 2006.
Kennametal advises shareowners 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.
Fourth quarter and full year results will be discussed in a live Internet broadcast at 10:00 a.m. Eastern time today. This event will be broadcast live on the company's website, www.kennametal.com. Once on the homepage, click "Corporate," and then "Investor Relations." Also, the replay of this event will be available on the company's website through August 9, 2006.
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. Forward-looking statements are statements that do not relate strictly to historical or current facts. You can identify forward- looking statements by the fact they use words such as "should," "anticipate," "estimate," "approximate," "expect," "may," "will," "project," "intend," "plan," "believe" and other words of similar meaning and expression in connection with any discussion of future operating or financial performance. These statements are likely to relate to, among other things, our strategy, 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. It is not possible to predict or identify all factors; however, they may include the following: global and regional economic conditions; energy costs; risks associated with the availability and costs of raw materials; commodity prices; risks associated with integrating recent acquisitions, as well as any future acquisitions, and achieving the expected savings and synergies; risks relating to business divestitures; competition; demands on management resources; risks associated with international markets, such as currency exchange rates and social and political environments or instability; future terrorist attacks or acts of war; labor relations; 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. is a leading global supplier of tooling, engineered components and advanced materials consumed in production processes. The company improves customers' competitiveness by providing superior economic returns through the delivery of application knowledge and advanced technology to master the toughest of materials application demands. Companies producing everything from airframes to coal, from medical implants to oil wells and from turbochargers to motorcycle parts recognize Kennametal for extraordinary contributions to their value chains. Customers buy over $2 billion annually of Kennametal products and services - delivered by our approximately 13,000 talented employees in over 60 countries - with almost 50 percent of these revenues coming from outside the United States. Visit us at www.kennametal.com [KMT-E]
FINANCIAL HIGHLIGHTS
Consolidated Statements of Income (Unaudited):
(in thousands, except per Quarter Ended Year Ended
share amounts) June 30, June 30,
2006 2005(1) 2006(1) 2005(1)
Sales $612,167 $593,599 $2,329,628 $2,202,832
Cost of goods sold 388,133 373,492 1,497,462 1,431,716
Gross profit 224,034 220,107 832,166 771,116
Operating expense 146,316 153,171 579,907 559,293
Goodwill impairment
charge - - - 4,707
(Gain) loss on assets
held for sale (230,578) - (229,886) 1,546
Amortization of
intangibles 1,428 1,566 5,626 3,460
Operating income 306,868 65,370 476,519 202,110
Interest expense 7,478 7,897 31,019 27,277
Other income, net (307) (851) (2,219) (3,645)
Income from continuing
operations before income
taxes and minority interest 299,697 58,324 447,719 178,478
Provision for income
taxes 123,536 21,842 172,902 60,967
Minority interest 525 238 2,566 3,592
Income from continuing
operations 175,636 36,244 272,251 113,919
(Loss) income from
discontinued operations,
net of income taxes (11,440) 1,496 (15,968) 5,372
Net income $164,196 $37,740 $256,283 $119,291
Basic earnings per share
- continuing operations $4.52 $0.97 $7.08 $3.09
Basic (loss) earnings per
share - discontinued
operations (0.30) 0.04 (0.41) 0.14
Basic earnings per share $4.22 $1.01 $6.67 $3.23
Diluted earnings per
share - continuing
operations $4.40 $0.94 $6.88 $2.99
Diluted (loss) earnings
per share - discontinued
operations (0.29) 0.04 (0.40) 0.14
Diluted earnings per
share $4.11 $0.98 $6.48 $3.13
Dividends per share $0.19 $0.17 $0.76 $0.68
Basic weighted average
shares outstanding 38,888 37,510 38,432 36,924
Diluted weighted average
shares outstanding 39,923 38,477 39,551 38,056
(1) Amounts have been reclassified to reflect discontinued operations
related to the divestiture of Electronics and CPG including industrial
saw blades.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited):
June 30, June 30,
(in thousands) 2006 2005
ASSETS
Cash and equivalents $233,976 $43,220
Trade receivables, net of allowance 386,714 403,097
Receivables securitized - (109,786)
Accounts receivable, net 386,714 293,311
Inventories 334,949 386,674
Deferred income taxes 55,328 70,391
Current assets held for sale 24,280 -
Other current assets 51,610 37,466
Total current assets 1,086,857 831,062
Property, plant and equipment, net 530,379 519,301
Goodwill and intangible assets, net 618,423 652,791
Long term assets held for sale 11,285 -
Other assets 136,562 89,183
Total $2,383,506 $2,092,337
LIABILITIES
Short-term debt, including notes payable $2,214 $50,889
Accounts payable 124,907 154,839
Current liabilities held for sale 3,065 -
Accrued liabilities 331,405 222,930
Total current liabilities 461,591 428,658
Long-term debt 409,508 386,485
Deferred income taxes 73,338 59,551
Other liabilities 129,078 227,321
Total liabilities 1,073,515 1,102,015
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES 14,626 17,460
SHAREOWNERS' EQUITY 1,295,365 972,862
Total $2,383,506 $2,092,337
SEGMENT DATA (Unaudited):
Quarter Ended Year Ended
(in thousands) June 30, June 30,
2006 2005(1) 2006(1) 2005(1)
Outside Sales:
Metalworking Solutions and
Services Group $373,839 $352,591 $1,401,777 $1,313,525
Advanced Materials Solutions
Group 191,758 162,312 676,556 510,572
J&L Industrial Supply 46,570 66,031 251,295 255,840
Full Service Supply - 12,665 - 122,895
Total Outside Sales $612,167 $593,599 $2,329,628 $2,202,832
Sales By Geographic Region:
United States $322,903 $315,167 $1,239,449 $1,185,146
International 289,264 278,432 1,090,179 1,017,686
Total Sales by Geographic
Region $612,167 $593,599 $2,329,628 $2,202,832
Operating Income (Loss):
Metalworking Solutions and
Services Group $59,390 $50,487 $197,525 $178,313
Advanced Materials Solutions
Group 34,061 30,630 121,058 84,268
J&L Industrial Supply 238,284 7,592 260,894 27,094
Full Service Supply - 265 - (4,105)
Corporate and eliminations(2) (24,867) (23,604) (102,958) (83,460)
Total Operating Income, as
reported $306,868 $65,370 $476,519 $202,110
(1) Amounts have been reclassified to reflect discontinued operations
related to the divestiture of Electronics (AMSG) and CPG including
industrial saw blades (MSSG).
(2) Includes corporate functional shared services and intercompany
eliminations.
In addition to reported results under generally accepted accounting principles in the United States of America (GAAP), the following financial highlight tables also include, where appropriate, a reconciliation of gross profit, operating expense, operating income, income from continuing operations, net income and diluted earnings per share, in each case excluding special items, adjusted free operating cash flow, adjusted segment sales, and adjusted return on invested capital (which are non-GAAP financial measures), to the most directly comparable GAAP measures. Management believes that the investor should have available the same information that management uses to assess operating performance, determine compensation, and assess the capital structure of the Company. These non-GAAP measures should not be considered in isolation or as a substitute for the most comparable GAAP measures. Non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies.
RECONCILIATION TO GAAP - QUARTER ENDED JUNE 30, 2006 (Unaudited)
(in thousands, except per share amounts)
Income
from
Gross Operating Operating Continuing Net Diluted
Profit Expense Income Operations Income EPS
2006 Reported
Results $224,034 $146,316 $306,868 $175,636 $164,196 $4.11
Gain on
sale of J&L (1,935) - (233,949) (132,009) (132,009) (3.31)
J&L trans-
action
related
charges - (4,510) 4,510 2,796 2,796 0.07
Loss on
sale of
Electronics - - - - 15,366 0.39
Tax impact
of cash
repatriation
under AJCA - - - 11,176 11,176 0.28
CPG goodwill
impairment
and
transaction-
related
charges - - - - (2,192) (0.06)
Loss on
sale of
Presto (26) - 1,410 1,410 1,410 0.04
Favorable
resolution of
tax
contingencies - - - (10,873) (10,873) (0.27)
2006 Results,
excluding
special items $222,073 $141,806 $78,839 $48,136 $49,870 $1.25
For the quarter ended June 30, 2005, there were no special items.
RECONCILIATION TO GAAP - YEAR ENDED JUNE 30, 2006 (Unaudited)
(in thousands, except per share amounts)
Income
from
Gross Operating Operating Continuing Net Diluted
Profit Expense Income Operations Income EPS
2006 Reported
Results $832,166 $579,907 $476,519 $272,251 $256,283 $6.48
Gain on
sale of J&L (1,935) - (233,949) (132,001) (132,001) (3.34)
J&L
trans-
action-
related
charges - (6,381) 6,381 3,956 3,956 0.10
Loss on
sale of
Electronics - - - - 15,366 0.39
Tax impact
of cash
repatriation
under AJCA - - - 11,176 11,176 0.28
CPG goodwill
impairment
and trans-
action-related
charges - - - - 2,838 0.07
Loss on sale of
Presto 7,329 - 9,457 9,457 9,457 0.24
Favorable
resolution
of tax
contingencies - - - (10,873) (10,873) (0.27)
2006 Results,
excluding special
items $837,560 $573,526 $258,408 $153,966 $156,202 $3.95
RECONCILIATION TO GAAP - YEAR ENDED JUNE 30, 2005 (Unaudited)
Income from
Operating Continuing Net Diluted
Income Operations Income EPS
2005 Reported $202,110 $113,919 $119,291 $3.13
FSS goodwill
impairment charge 4,707 3,277 3,277 0.09
FSS loss on sale 1,546 1,076 1,076 0.03
2005 Results, excluding
special items $208,363 $118,272 $123,644 $3.25
RECONCILIATION OF ADJUSTED FREE OPERATING CASH FLOW INFORMATION (Unaudited):
Year Ended
June 30,
2006 2005
Net cash flow provided
by operating activities $19,053 $202,327
Purchase of property,
plant and equipment (79,593) (88,552)
Proceeds from disposals
of property, plant and
equipment 2,961 3,912
Free operating cash flow $(57,579) $117,687
Adjustments:
Repayments of accounts
receivable securitization
program 109,786 7,694
Pension funding 72,956 -
Adjusted free operating
cash flow $125,163 $125,381
MSSG SEGMENT
Quarter Ended Year Ended
June 30, June 30,
(in thousands) 2006 2005 2006 2005
Sales, as reported $373,839 $352,591 $1,401,777 $1,313,525
Foreign currency exchange 440 - 12,859 -
Divestiture-related and
inter-segment reclasses - (290) - 17,332
Adjusted sales $374,279 $352,301 $1,414,636 $1,330,857
AMSG SEGMENT
Quarter Ended Year Ended
June 30, June 30,
(in thousands) 2006 2005 2006 2005
Sales, as reported $191,758 $162,312 $676,556 $510,572
Foreign currency exchange 553 - 7,261 -
Acquisition-related and
inter-segment reclasses (1,910) 4,963 (54,003) 12,711
Adjusted sales $190,401 $167,275 629,814 $523,283
RETURN ON INVESTED CAPITAL (Unaudited):
For the Year Ended June 30, 2006 (in thousands, except percents)
Invested
Capital 6/30/2006 3/31/2006 12/31/2005 9/30/2005 6/30/2005 Average
Debt $411,722 $365,906 $410,045 $415,250 $437,374 $408,060
Accounts
receivable
securitized 0 106,106 100,295 100,445 109,786 83,326
Minority
interest 14,626 18,054 16,918 18,117 17,460 17,035
Shareowners'
equity 1,295,365 1,115,110 1,045,974 1,009,394 972,862 1,087,741
Total $1,721,713 $1,605,176 $1,573,232 $1,543,206 $1,537,482 $1,596,162
Quarter Ended
Interest
Expense 6/30/2006 3/31/2006 12/31/2005 9/30/2005 Total
Interest
expense $7,478 $7,728 $7,984 $7,829 $31,019
Securitiza-
tion
fees 1,288 1,241 1,170 1,065 4,764
Total
interest
expense $8,766 $8,969 $9,154 $8,894 $35,783
Income
tax
benefit 13,311
Total
interest
expense,
net of
tax $22,472
Total
Income 6/30/2006 3/31/2006 12/31/2005 9/30/2005 Total
Net Income,
as
reported $164,196 $32,903 $31,087 $28,097 $256,283
Gain on
sale of
J&L (132,001) - - - (132,001)
J&L
trans-
action-
related
charges 2,796 1,160 - - 3,956
Loss on
sale of
Electron-
ics 15,366 - - - 15,366
Tax
impact of
cash
repatriat-
ion under
AJCA 11,176 - - - 11,176
CPG
goodwill
impairment
and trans-
action-
related
charges (2,192) 5,030 - - 2,838
Loss on
sale of
Presto 1,410 8,047 - - 9,457
Favorable
resolution
of tax
contingen-
cies (10,873) - - - (10,873)
Minority
interest
expense 525 782 511 748 2,566
Total
Income,
excluding
special
items $50,403 $47,922 $31,598 $28,845 $158,768
Total
Income,
excluding
special
items $158,768
Total
interest
expense,
net of
tax 22,472
$181,240
Average
invested
capital $1,596,162
Adjusted
Return on
Invested
Capital 11.4%
Return on invested capital calculated utilizing net
income, as reported is as follows:
Net Income,
as reported $256,283
Total
Interest
Expense, net of tax
22,472
$278,755
Average
invested
capital $1,596,162
Return on
Invested
Capital 17.5%
RETURN ON INVESTED CAPITAL (Unaudited):
For the Year Ended June 30, 2005 (in thousands, except percents)
Invested Capital 6/30/2005 3/31/2005 12/31/2004
Debt $437,374 $485,168 $405,156
Accounts
receivable
securitized 109,786 120,749 115,253
Minority interest 17,460 19,664 19,249
Shareowners' equity 972,862 1,021,186 1,003,507
Total $1,537,482 $1,646,767 $1,543,165
RETURN ON INVESTED CAPITAL (Unaudited):
For the Year Ended June 30, 2005 (in thousands, except percents)
Invested Capital 9/30/2004 6/30/2004 Average
Debt $435,435 $440,207 $440,668
Accounts
receivable
securitized 115,309 117,480 115,715
Minority interest 17,377 16,232 17,996
Shareowners' equity 924,432 887,152 961,828
Total $1,492,553 $1,461,071 $1,536,207
Quarter Ended
Interest
Expense 6/30/2005 3/31/2005 12/31/2004 9/30/2004 Total
Interest
expense $7,897 $6,803 $6,121 $6,456 $27,277
Securitiza-
tion fees 981 868 757 580 3,186
Total
interest
expense $8,878 $7,671 $6,878 $7,036 $30,463
Income tax
benefit 10,175
Total
Interest
Expense,
net of
tax $20,288
Quarter Ended
Total
Income 6/30/2005 3/31/2005 12/31/2004 9/30/2004 Total
Net Income,
as reported $37,740 $30,650 $28,181 $22,720 $119,291
Restructuring
and asset
impairment
charges - 3,306 - - 3,306
Loss on
assets
held for
sale - 1,086 - - 1,086
Minority
interest
expense 238 1,449 928 977 3,592
Total Income,
excluding
special
items $37,978 $36,491 $29,109 $23,697 $127,275
Total Income,
excluding
special items $127,275
Total
Interest
Expense,
net of
tax 20,288
$147,563
Average
invested
capital $1,536,207
Adjusted Return
on Invested
Capital 9.6%
Return on Invested Capital calculated utilizing Net
Income, as reported is as follows:
Net Income,
as reported $119,291
Total Interest
Expense,
net of tax 20,288
$139,579
Average
invested
capital $1,536,207
Return on
Invested
Capital 9.1%
SOURCE: Kennametal Inc.
CONTACT: Investor Relations, Quynh McGuire, +1-724-539-6559, or Media
Relations, Joy Chandler, +1-724-539-4618, both of Kennametal Inc.
Web site: http://www.kennametal.com/