Kennametal Inc. today reported fiscal 2007 fourth quarter EPS of $1.57. This represents a decrease of 62 percent from the prior year quarter reported EPS of $4.11, and a 26 percent increase compared with prior year adjusted EPS of $1.25. Prior year quarter EPS special items totaled $2.86 per share and related primarily to the gain on the sale of J&L Industrial Supply (J&L) of $3.31 per share.

Fiscal 2007 reported EPS decreased 31 percent to $4.44, compared with prior year reported EPS of $6.48. Fiscal 2007 adjusted EPS were $4.56, compared with prior year adjusted EPS of $3.95, an increase of 15 percent.

Carlos M. Cardoso, Kennametal's President and Chief Executive Officer said, "Once again, we demonstrated our ability to deliver solid sales growth and strong performance in EBIT margin, EPS and ROIC. During fiscal year 2007, we completed five acquisitions: Sintec, Camco, Federal Signal's cutting tool business, International Specialty Alloys and Kenci. We have strategically redeployed our cash to acquire businesses that both complement our existing portfolio and offer additional opportunities for sales growth and margin expansion."

Cardoso added, "We attribute our successes to the strength of our operations, as well as to our proven strategy of balancing our business mix, geographic presence and end markets. As always, we continue to implement our strategy under the disciplines of the Kennametal Value Business System, our management operating system that serves as the foundation of our company. As we move forward, we will further capitalize on our strengths and opportunities to drive our operating and financial performance to even higher levels."

Reconciliation of all non-GAAP financial measures is set forth in the attached tables.

  Highlights of Fiscal 2007 Fourth Quarter
  -- Sales for the quarter were $657 million, compared with $612 million in
     the same quarter last year.  Sales grew 6 percent on an organic basis
     and also benefited 3 percent from favorable foreign currency effects.
     This growth was partially offset by the net impact of acquisitions and
     divestitures of 2 percent, primarily the divestiture of J&L, which was
     completed on May 31, 2006.  J&L contributed sales of $47 million in the
     June quarter last year.
  -- Income from continuing operations was $62 million, compared with $176
     million in the prior year quarter, a decrease of 65 percent due
     primarily to the prior year gain on the sale of J&L.  Excluding special
     items from the previous year, income from continuing operations grew 29
     percent over the prior year quarter.  The current year quarter results
     benefited from organic sales growth, a reduction in operating expenses
     and lower securitization fees.  Amortization expense increased
     primarily as a result of recent acquisitions.
  -- The effective tax rate for the June quarter was 27 percent, compared
     with 41 percent in the prior year quarter.  The current year rate
     benefited from increased earnings from the company's pan-European
     business strategy, while certain special items unfavorably impacted the
     prior year rate.
  -- Reported EPS decreased 62 percent to $1.57, compared with prior year
     quarter reported EPS of $4.11.  Reported EPS increased 26 percent,
     compared with prior year quarter adjusted EPS of $1.25.  A
     reconciliation follows:


                Earnings Per Diluted Share Reconciliation

  Fourth Quarter FY 2007            Fourth Quarter FY 2006
  Reported EPS           $1.57    Reported EPS               $4.11
  No special items                Gain on sale of J&L
                                   and transaction
                                   -related charges          (3.24)
                                  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               (0.06)
                                  Loss on sale of
                                   Presto                     0.04
                                  Favorable resolution
                                   of tax contingencies      (0.27)
                         $1.57    Adjusted EPS               $1.25


  -- Cash flow from operating activities grew to $199 million in fiscal
     2007, compared with $19 million in the prior year.  Free operating cash
     flow (FOCF) was an inflow of $110 million for fiscal 2007, compared
     with an outflow of $58 million in the prior year. Included in the
     current year FOCF were first quarter income tax payments of $86
     million, primarily related to the gain on the sale of J&L and cash
     repatriated in 2006 under the American Jobs Creation Act.  FOCF in the
     prior year included $110 million of repayments related to the company's
     accounts receivable securitization program and $73 million of pension
     funding.  Adjusted FOCF, excluding the effects of these items,
     increased 58 percent to $197 million, compared with $125 million in
     fiscal 2006.
  -- Adjusted return on invested capital (ROIC) was 11.3 percent, compared
     with 11.4 percent in the prior year.
  -- Kennametal acquired Purity Metal Holdings, Inc. and its wholly owned
     subsidiary, International Specialty Alloys, Inc. (ISA). ISA
     manufactures high-purity specialty metal products for the aerospace,
     defense and specialty alloy industries, and enhances the company's
     advanced materials segment.
  -- Kennametal also acquired the remaining ownership interest in its
     Spanish affiliate, Kenci, S.A., which is the company's sales and
     service company operating in Spain and Portugal.  This acquisition adds
     to Kennametal's metalworking segment.

  Highlights of Fiscal 2007
  -- Sales were $2.4 billion, compared with $2.3 billion in the prior year
     period.  Sales grew 6 percent on an organic basis and 3 percent due to
     favorable foreign currency effects.  This growth was partially offset
     by the net impact of acquisitions and divestitures of 7 percent,
     primarily the J&L divestiture.  J&L contributed sales of $251 million
     in the prior year.
  -- Income from continuing operations was $177 million, compared with $272
     million in the prior year, a decrease of 35 percent due primarily to
     the prior year gain on the sale of J&L.  Excluding special items in
     both periods, income from continuing operations increased 16 percent
     compared with the prior year.  The current year results benefited from
     organic sales growth and a reduction in operating expenses.
     Amortization expense increased due primarily to recent acquisitions.
     Additionally, the current year results benefited from lower interest
     expense and lower securitization fees.
  -- The effective tax rate was 28 percent, compared with the prior year
     rate of 39 percent.  The current year rate benefited from increased
     earnings from the company's pan-European business strategy, as well as
     the extension of the research, development and experimental tax credit.
     In addition, certain special items unfavorably impacted the prior year
     rate.
  -- Reported EPS of $4.44 decreased 31 percent compared with prior year
     reported EPS of $6.48.  Adjusted EPS of $4.56 increased 15 percent
     compared with prior year adjusted EPS of $3.95.  A reconciliation
     follows:


                Earnings Per Diluted Share Reconciliation

  Year ended June 30, 2007                   Year ended June 30, 2006
  Reported EPS                      $4.44    Reported EPS             $6.48
  Electronics impairment                     Gain on sale of J&L
   and divestiture-related                    and transaction-related
   charges                           0.08     charges                 (3.24)
  Loss on divestiture of CPG
   and transaction-related                   Loss on sale of
   charges                           0.01     Electronics              0.39
  Adjustment on J&L divestiture              Tax impact of cash
   and transaction-related                    repatriation under
   charges                           0.03     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                      $4.56    Adjusted EPS             $3.95


  -- Kennametal expanded its advanced materials segment with the
     acquisitions of the Sintec Group, which manufactures ceramic engineered
     components used in the aerospace, general engineering, metallizing and
     medical markets; the Camco Group, which manufactures specialized saw
     tips and supplies for the forestry and woodworking industry; and Purity
     Metal Holdings, Inc. and its wholly-owned subsidiary, ISA.
  -- Kennametal also added to its metalworking segment with the acquisitions
     of Federal Signal Corporation's cutting tool business, which produces,
     markets and services super hard polycrystalline diamond and cubic boron
     nitride cutting tools, tool holding systems and certain specialized
     turning tools; and the remaining ownership interest in the company's
     Spanish affiliate, Kenci, S.A.

  Business Segment Highlights for the Fiscal 2007 Fourth Quarter

Metalworking Solutions & Services Group (MSSG) continued to deliver top- line growth in the June quarter, led by year-over-year expansion in the distribution, aerospace and machine tool markets, and the effects of acquisitions. The European market continued to be favorable. Asia Pacific and India delivered strong growth, while the North American market declined slightly.

In the June quarter, MSSG sales were higher by 15 percent as a result of 5 percent organic growth, 6 percent net impact of acquisitions and divestiture and 4 percent favorable foreign currency effects. Europe sales increased 9 percent. Asia Pacific and India sales grew by 31 percent and 8 percent, respectively. North America sales decreased by 2 percent.

MSSG operating income increased by 17 percent, and the operating margin increased over the same quarter last year. The current quarter results benefited from top-line growth and ongoing cost containment. The prior year quarter results included a loss on the sale of Presto of $1 million.

Advanced Materials Solutions Group (AMSG) also continued to deliver top- line growth in the June quarter, driven by favorable international market conditions and the effects of acquisitions. Strong growth in the energy and mining markets continued to contribute to AMSG's results.

AMSG sales grew 18 percent as a result of 8 percent organic growth, 9 percent impact of acquisitions and 1 percent favorable foreign currency effects. Energy product sales were up 17 percent, mining and construction product sales were higher by 4 percent, and engineered product sales increased 1 percent.

AMSG operating income was up 11 percent driven by top-line growth while the operating margin was lower than the prior year due primarily to higher raw material costs in the current quarter.

Outlook

Worldwide market conditions support Kennametal's expectations of continued top-line growth during fiscal 2008. Based on global economic indicators, the company believes that the moderation in the North American market will continue to persist in the near term. The company also believes that the European market will continue to be favorable, and that business conditions will continue to be robust in developing economies. While there remain some uncertainties and risks related to the macro-economic environment, fundamental drivers for global demand appear to be stable.

The company anticipates that many of its end markets will continue to operate at favorable levels for the fiscal year, with moderating growth rates for some regions and market sectors.

Kennametal expects sales growth in the range of 8 to 10 percent for fiscal 2008, continuing the trend of consistently outpacing worldwide industrial production rates by two to three times.

The company expects fiscal 2008 EPS to be in the range of $5.30 to $5.50, excluding the effect of a non-cash tax charge that will be recorded in the September quarter of fiscal 2008. This charge is estimated to be in the range of $5 million to $6 million, or $0.12 to $0.15 per share, to reflect the impact of a German tax reform bill enacted on July 6, 2007. The fiscal 2008 guidance midpoint represents 18 percent growth, compared with fiscal 2007 adjusted EPS. Consistent with historical seasonal patterns, the company expects approximately 65 percent of the forecasted EPS to be realized in the second half.

In the first quarter of fiscal 2008, Kennametal expects sales growth to be in the range of 9 to 10 percent, and EPS to be in the range of $0.95 to $1.00, excluding the effect of the non-cash tax charge related to the recently enacted German tax reform bill.

Kennametal anticipates cash flow from operating activities of approximately $275 million to $285 million for fiscal 2008. Based on anticipated capital expenditures of $140 million, the company expects to generate between $135 million to $145 million of FOCF for fiscal 2008.

Dividend Declared

Kennametal announced today that its Board of Directors declared a regular quarterly cash dividend of $0.21 per share. The dividend is payable August 22, 2007 to shareowners of record as of the close of business on August 7, 2007.

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 http://www.kennametal.com/.

Fourth quarter and full year results for fiscal 2007 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, http://www.kennametal.com/. Once on the homepage, click "Corporate," and then "Investor Relations." The replay of this event will also be available on the company's website through August 22, 2007.

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, all of which are based on current expectations that involve inherent risks and uncertainties, including factors that could delay, divert or change any of them in future periods. 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, cost-reduction initiatives 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 provide additional information about many of the specific risks our Company faces in the "Risk Factors" Section of our Annual Report on Form 10-K, as well as in our other securities filings. 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 approximately $2.4 billion annually of Kennametal products and services - delivered by our 13,500 talented employees in over 60 countries - with approximately 50 percent of these revenues coming from outside the United States. Visit us at http://www.kennametal.com/ [KMT-E]

                           FINANCIAL HIGHLIGHTS
              Consolidated Statements of Income (Unaudited):

  (in thousands, except   Three Months Ended           Year Ended
   per share amounts)          June 30,                  June 30,
                          2007         2006         2007         2006

  Sales                 $657,477     $612,167   $2,385,493   $2,329,628
  Cost of goods sold(a)  421,934      388,133    1,543,931    1,497,462

   Gross profit          235,543      224,034      841,562      832,166

  Operating expense      142,328      146,316      554,634      579,907
  Asset impairment
   charge                      -            -        5,970            -
  (Gain) loss on
   divestitures                -     (230,578)       1,686     (229,886)
  Amortization of
   intangibles             4,149        1,428        9,852        5,626

   Operating income       89,066      306,868      269,420      476,519

  Interest expense         7,513        7,478       29,141       31,019
  Other income, net       (3,783)        (307)      (9,217)      (2,219)

  Income from continuing
   operations before
   income taxes and
   minority interest      85,336      299,697      249,496      447,719

  Provision for income
   taxes                  23,014      123,536       70,469      172,902

  Minority interest
   expense                   229          525        2,185        2,566

  Income from continuing
   operations             62,093      175,636      176,842      272,251

  Loss from discontinued
   operations(b)               -      (11,440)      (2,599)     (15,968)

  Net income             $62,093     $164,196     $174,243     $256,283

  Basic earnings (loss)
   per share:
   Continuing operations   $1.61        $4.52        $4.61        $7.08
   Discontinued
    operations(b)              -        (0.30)       (0.07)       (0.41)
                           $1.61        $4.22        $4.54        $6.67

  Diluted earnings (loss)
   per share:
   Continuing operations   $1.57        $4.40        $4.50        $6.88
   Discontinued
    operations(b)              -        (0.29)       (0.06)       (0.40)
                           $1.57        $4.11        $4.44        $6.48

  Dividends per share      $0.21        $0.19        $0.82        $0.76
  Basic weighted average
   shares outstanding     38,618       38,888       38,394       38,432
  Diluted weighted
   average shares
   outstanding            39,489       39,923       39,273       39,551

  (a) For the three months ended June 30, 2006, cost of goods sold includes
      a benefit of $1,961 from the divestitures of J&L and Presto.   For the
      year ended June 30, 2006, cost of goods sold includes a charge of
      $7,329 related to the divestiture of Presto.
  (b) Loss from discontinued operations reflects divested results of
      Electronics - AMSG and CPG - MSSG.



                     FINANCIAL HIGHLIGHTS (Continued)

            CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited):


  (in thousands)                                   June 30,      June 30,
                                                     2007          2006

  ASSETS
  Cash and cash equivalents                        $50,433       $233,976
  Accounts receivable, net                         466,690        386,714
  Inventories                                      403,613        334,949
  Current assets of discontinued operations
   held for sale                                         -         24,280
  Other current assets                              95,766        106,938
    Total current assets                         1,016,502      1,086,857
  Property, plant and equipment, net               614,019        530,379
  Goodwill and intangible assets, net              834,290        618,423
  Assets of discontinued operations held for sale        -         11,285
  Other assets                                     139,111        188,328
    Total                                       $2,603,922     $2,435,272

  LIABILITIES
  Current maturities of long-term debt and
   capital leases, including notes payable          $5,430         $2,214
  Accounts payable                                 189,301        124,907
  Current liabilities of discontinued
   operations held for sale                              -          3,065
  Other current liabilities                        290,201        332,013
    Total current liabilities                      484,932        462,199

  Long-term debt and capital leases                361,399        409,508
  Other liabilities                                255,500        253,574
    Total liabilities                            1,101,831      1,125,281

  MINORITY INTEREST IN CONSOLIDATED
   SUBSIDIARIES                                     17,624         14,626
  SHAREOWNERS' EQUITY                            1,484,467      1,295,365
    Total                                       $2,603,922     $2,435,272



                        SEGMENT DATA (Unaudited):

  (in thousands)          Three Months Ended            Year Ended
                               June 30,                  June 30,
                          2007         2006         2007         2006
  Outside Sales:
  Metalworking Solutions
   and Services Group   $430,630     $373,839   $1,577,234   $1,401,777
  Advanced Materials
   Solutions Group       226,847      191,758      808,259      676,556
  J&L Industrial Supply        -       46,570            -      251,295
    Total outside sales $657,477     $612,167   $2,385,493   $2,329,628

  Sales By Geographic Region:
  United States         $306,848     $322,903   $1,134,752   $1,239,449
  International          350,629      289,264    1,250,741    1,090,179
    Total sales by
    geographic region   $657,477     $612,167   $2,385,493   $2,329,628

  Operating Income (Loss):
  Metalworking Solutions
   and Services Group   $ 69,729      $59,390    $ 221,387     $197,525
  Advanced Materials
   Solutions Group        37,974       34,061      131,323      121,058
  J&L Industrial Supply        -      238,284            -      260,894
  Corporate and
   eliminations(c)       (18,637)     (24,867)     (83,290)    (102,958)
  Total operating income $89,066     $306,868     $269,420     $476,519

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



                     FINANCIAL HIGHLIGHTS (Continued)

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 (which are GAAP financial measures), in each case excluding special items, as well as adjusted free operating cash flow 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. Investors are cautioned that non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies.

  There were no special items for the three months ended June 30, 2007.


  RECONCILIATION TO GAAP - THREE MONTHS ENDED JUNE 30, 2006 (Unaudited)

 (in thousands, except                            Income from
 per share amounts)  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 transaction
   -related charges        -    (4,510)   4,510      2,796      2,796  0.07
  Loss on divestiture
   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,
   excl. special
   items            $222,073  $141,806  $78,839    $48,136    $49,870 $1.25


  RECONCILIATION TO GAAP - YEAR ENDED JUNE 30, 2007 (Unaudited)

                                                    Income from
  (in thousands, except  Gross  Operating Operating Continuing  Net  Diluted
   per share amounts)   Profit  Expense    Income   Operations Income  EPS
  2007 Reported
   Results            $841,562  $554,634  $269,420  $176,842 $174,243 $4.44
  Electronics
   impairment and
   divestiture-related
   charges                   -         -         -         -    3,213  0.08
  Loss on sale of CPG
   and transaction
   -related charges          -         -         -         -      368  0.01
  Adjustment on J&L
   divestiture and
   transaction-related
   charges                   -      (333)    2,019     1,252    1,252  0.03
  2007 Results,
   excl. special
   items              $841,562  $554,301  $271,439  $178,094 $179,076 $4.56



                     FINANCIAL HIGHLIGHTS (Continued)

  RECONCILIATION TO GAAP - YEAR ENDED JUNE 30, 2006 (Unaudited)

                                                    Income from
  (in thousands, except  Gross  Operating Operating Continuing  Net  Diluted
   per share amounts)   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 transaction
   -related charges          -    (6,381)    6,381     3,956    3,956  0.10
  Loss on divestiture
   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          -         -         -         -    2,838  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, excl.
   special items      $837,560  $573,526  $258,408  $153,966 $156,202 $3.95


  RECONCILIATION OF ADJUSTED FREE OPERATING CASH FLOW (Unaudited):
                                                         Year Ended
                                                          June 30,
  (in thousands)                                     2007          2006

  Net cash flow provided by operating activities  $199,006        $19,053
  Purchases of property, plant and equipment       (92,001)       (79,593)
  Proceeds from disposals of property, plant
   and equipment                                     3,455          2,961
  Free operating cash flow                         110,460        (57,579)
  Adjustments:
  Repayments of accounts receivable
   securitization program                                -        109,786
  Pension funding                                        -         72,956
  Income taxes paid (refunded) during first
   quarter                                          86,236           (572)
  Adjusted free operating cash flow               $196,696       $124,591



                     FINANCIAL HIGHLIGHTS (Continued)

  RETURN ON INVESTED CAPITAL (Unaudited):

  June 30, 2007 (in thousands, except percents)

  Invested
   Capital  6/30/2007  3/31/2007  12/31/2006  9/30/2006  6/30/2006  Average
  Debt      $366,829   $371,521    $376,472   $409,592   $411,722   $387,227
  Minority
   interest   17,624     16,896      15,807     15,177     14,626     16,026
  Shareowners'
   equity  1,484,467  1,431,235   1,369,748  1,319,599  1,295,365  1,380,083
  Total   $1,868,920 $1,819,652  $1,762,027 $1,744,368 $1,721,713 $1,783,336

                      Three Months Ended
  Interest
   Expense
            6/30/2007  3/31/2007  12/31/2006  9/30/2006    Total
  Interest
   expense   $7,513     $6,915      $7,286     $7,427     $29,141
  Securitization
   fees           5          5           6         22          38
  Total
   interest
   expense   $7,518     $6,920      $7,292     $7,449     $29,179
  Income tax
   benefit                                                  8,258
  Total interest
   expense, net
   of tax                                                 $20,921

  Total
   Income   6/30/2007  3/31/2007  12/31/2006  9/30/2006    Total
  Net Income,
   as
   reported  $62,093    $51,738     $30,051    $30,361   $174,243
  Adjustment
   on J&L
   divestiture
   and
   transaction-
   related
   charges         -          -           -      1,252     1,252
  Electronics
   impairment
   and
   transaction
   -related
   charges         -          -       3,213          -     3,213
  Loss on sale
   of CPG and
   transaction
   -related
   charges         -          -           -        368       368
  Minority
   interest
   expense       229        757         642        557     2,185
  Total Income,
   excluding
   special
   items     $62,322    $52,495     $33,906    $32,538  $181,261
  Total interest
   expense,
   net of
   tax                                                    20,921
                                                        $202,182
  Average
   invested
   capital                                            $1,783,336
  Adjusted
   Return on
   Invested
   Capital                                                  11.3%

  Return on invested capital calculated utilizing net income, as reported
   is as follows:
  Net income, as reported                               $174,243
  Total interest expense, net of tax                      20,921
                                                        $195,164
  Average invested capital                            $1,783,336
  Return on Invested Capital                                10.9%



                     FINANCIAL HIGHLIGHTS (Continued)

  RETURN ON INVESTED CAPITAL (Unaudited):

  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     -    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


  Interest Expense                     Three Months Ended
                  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
  Securitization
   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 transaction-
   related
   charges           2,796       1,160            -           -       3,956
  Loss on
   divestiture
   of Electronics   15,366           -            -           -      15,366
  Tax impact of
   cash repatriation
   under AJCA       11,176           -            -           -      11,176
  CPG goodwill
   impairment and
   transaction-related
   charges          (2,192)      5,030            -           -       2,838
  Loss on sale of
   Presto            1,410       8,047            -           -       9,457
  Favorable
   resolution of
   tax
   contingencies   (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 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%

First Call Analyst:
FCMN Contact: barbara.haser@kennametal.com

SOURCE: Kennametal Inc.