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COVID-19: How Kennametal is responding

Kennametal Inc. today reported fiscal 2002 fourth quarter earnings of $0.67 per diluted share, a decrease of 12 percent, compared with earnings of $0.76* per diluted share last year, excluding special items in each period.

                Earnings Per Share Excluding Special Items
        Company Guidance (05/01/02)                  $0.62 to $0.72
        Analyst Estimate Range (07/22/02)            $0.67 to $0.72
        Earnings, Excluding Special Items                 $0.67

On a reported basis, diluted earnings per share were $0.48 for the quarter, 4 percent above last year's earnings per share of $0.46*.

   * 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.

Kennametal Chairman, President and Chief Executive Officer, Markos I. Tambakeras, said, "The external environment made fiscal 2002 a very challenging year, with global economies deteriorating as Europe followed the United States economy in decline. Despite the external adversity, we remained focused on executing our strategy and continuing to unlock the potential of the Kennametal franchise. Notable accomplishments for fiscal 2002 included: another year of free operating cash flow in excess of $100 million (approx. two times net income), despite the market declines; major new product introductions which resulted in sales from new products of 35%, the highest level in more than 10 years; and formalizing the Kennametal Lean Enterprise, which delivered in excess of $10 million in cost savings. Our core metalworking business gained market share, and we completed the J&L restructuring. Finally, the focused efforts of recent years to prime the company for growth allowed us to announce the highly strategic Widia acquisition, which we expect to close in the near future."

Tambakeras continued, "The success of our efforts over the past 3 years to reposition the company has provided Kennametal with the management team, operational structure and balance sheet to not only be able to acquire Widia, but to also conclude a very successful extensive refinancing of the company in June 2002. The combination of strong business prospects and an impressive credit story drove three financing transactions which positioned Kennametal for growth with a solid capital foundation characterized by high-quality investors and attractive terms."

  Highlights
  Fourth Quarter

   -- Sales of $402.9 million declined 9 percent, versus $442.5 million last
      year.  The net unfavorable impact of acquisitions and divestitures
      essentially offset the benefit of additional workdays, and the foreign
      exchange impact was negligible.  Average daily sales for the June 2002
      quarter improved 1% sequentially versus the March quarter, compared to
      a typical sequential decline in the low single-digits.

   -- Gross profit margin, excluding special charges in both periods, of
      34.1 percent increased 10 basis points compared with the fourth
      quarter of fiscal 2001.  Lean initiatives continue to provide
      manufacturing efficiencies that offset the combined negative pressure
      of underutilized capacity due to volume declines and an unfavorable
      customer and product mix.

   -- Operating expense for the quarter was reduced 2 percent, to
      $100.5 million, excluding special charges.

   -- The current quarter included special charges of $9.0 million, or
      $0.19 per diluted share, associated with the completion of previously
      announced restructurings and the divestiture of Strong Tool.
      Prior-year results included special charges of $13.9 million, or
      $0.28 per share, related to the divestiture of ATS, the J&L business
      improvement plan and work force reductions.

   -- Interest expense of $7.3 million was 36 percent below the same quarter
      last year due to ongoing debt reduction and lower average borrowing
      rates.

   -- The effective tax rate for the June 2002 quarter was 32.1 percent,
      compared with prior year of 33.9 percent, as anticipated.

   -- Excluding special items, net income was $21.4 million, a 9 percent
      decrease compared with net income of $23.5 million last year.
      Reported net income was $15.4 million against net income of
      $14.3 million in the same quarter last year.

   -- Free operating cash flow was $42.6 million, versus $34.9 million in
      the same period last year.  Primary working capital continues to be
      tightly controlled with its ratio to sales at 27.9 percent, up
      slightly from last year driven by the sales decline.  Primary working
      capital of $422.6 million was down 8 percent, or $39 million, from the
      same period last year.

   -- Total debt was $411.4 million, down $195.7 million from June 2001,
      including approximately $120 million from the issuance of equity.
      Three years of focused debt reduction has lowered total debt by more
      than 50%, or $450 million.

  Fiscal 2002 versus 2001

   -- Organic sales for the 12 months ending June 30, 2002 declined
      11 percent.  Actual sales of $1,583.7 million were down 12 percent.
      Negative pressures included foreign exchange and net acquisitions and
      divestitures.

   -- Excluding special items, net income was $61.6 million, a decrease of
      29 percent compared to $86.7 million last year.

   -- Through twelve months, diluted earnings per share were $1.95, or
      31 percent below last year's earnings of $2.82.  Reported diluted
      earnings per share were a loss of $6.70 (primarily due to a $7.92 per
      share impact from a non-cash SFAS 142 impairment charge, see below),
      against last year's earnings per share of $2.35.

   -- Special charges of $286.8 million, or $8.65 per share, were included
      in the year's results related primarily to the SFAS No. 142 impairment
      charge of $250.4 million.  Prior-year results included special charges
      of $22.5 million, or $0.44 per share.  A chart detailing special
      charges for both years is attached.

  SFAS No. 142 Non-Cash Goodwill Impairment Charge

As previously identified, the company recorded a non-cash goodwill impairment charge of $250.4 million, net of $2.4 million tax, associated with the adoption of SFAS No. 142 "Goodwill and Other Intangible Assets." The charge was within the previously disclosed range of $230 million to $260 million and is specific to certain businesses acquired in 1997 as part of Greenfield Industries. If the previous accounting rules had remained in effect, no charge would have occurred. The company reiterated its January 17, 2002 observation that the non-cash charge will have no effect on Kennametal's operating performance or cash flow, and management remains committed to maintaining a strong balance sheet.

As noted previously, the charge will be reflected in the income statement, effective July 1, 2001, as the cumulative effect of the adoption of this new accounting standard.

Outlook

Looking forward, Tambakeras said, "Based on current economic assumptions, we are confident that Kennametal is positioned for growth in fiscal 2003, and will be able to deliver accelerated benefits as a repositioned company. Key indicators including industrial production and the Institute of Supply Management (ISM -- formally NAPM) index have been steadily improving. However, the recovery continues to be slower than previously anticipated, and the strength and timing of sustained economic improvement remains unclear. We are beginning the year on the heels of two quarters of very modest sequential sales improvement. Consequently, we expect the sluggish recovery to continue, with a return to year-over-year growth in the December quarter at the earliest. While the global economies slowly strengthen, we will continue to invest in growth initiatives, Kennametal Lean Enterprise and further development of our people as we build on the foundation of the past three years with a mission to improve the competitiveness of our customers' operations around the world. Our focus on both the income statement and the balance sheet will continue."

   Fiscal 2003 Full Year Outlook
   $ in millions, except EPS; Excludes special charges

                                   Pre-Widia             Including Widia
  Sales Growth                    Plus 5% to 7%          Plus 19% to 23%
  EBITDA                          $210 to $240             $230 to $260
  Diluted EPS                    $2.25 to $2.55           $2.10 to $2.40
  EPS Growth                     Plus 15% to 30%          Plus 10% to 25%
  Free Operating Cash Flow        $100 to $150             $100 to $150


   EBITDA = Income before income taxes and minority interest plus interest
   expense, depreciation and amortization

Assuming economic conditions continue to slowly strengthen, sales for the first quarter of fiscal 2003 are expected to be down low- to mid-single digits, with diluted earnings per share between $0.34 and $0.39, excluding approximately $0.06 dilution from Widia.

Dividend Declared

Kennametal also announced its Board of Directors declared a quarterly cash dividend of $0.17 cents per share, payable August 23, 2002, to shareowners of record as of the close of business August 9, 2002.

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; risks associated with integrating and divesting businesses and achieving the expected savings and synergies; demands on management resources; risks associated with international markets such as currency exchange rates, and social and political environments; competition; labor relations; commodity prices; demand for and market acceptance of new and existing products; and risks associated with the implementation of restructuring plans and environmental remediation matters. We can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.

Kennametal Inc. aspires to be the premier tooling solutions supplier in the world with operational excellence throughout the value chain and best-in-class manufacturing and technology. Kennametal strives to deliver superior shareowner value through top-tier financial performance. The company provides customers a broad range of technologically advanced tools, tooling systems and engineering services aimed at improving customers' manufacturing competitiveness. With approximately 12,000 employees worldwide, the company's fiscal 2002 annual sales were approximately $1.6 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 quarter and year ended June 30, 2002 and 2001 are shown in the following tables (in thousands, except per share amounts).

  Consolidated Statements of Income

                                   Quarter Ended      Twelve Months Ended
                                      June 30,              June 30,
                                   2002      2001       2002        2001

  Net sales                      $402,898  $442,505  $1,583,742  $1,807,896

          Cost of goods sold(1)   266,025   295,324   1,072,918   1,192,176

  Gross profit                    136,873   147,181     510,824     615,720

          Operating expense(2)    100,685   102,403     389,396     425,641

          Restructuring and
           asset impairment
           charges                  4,657     4,912      27,307       9,545

          Amortization of
           intangibles                697     5,601       2,804      24,134

  Operating income                 30,834    34,265      91,317     156,400

          Interest expense(3)       7,551    11,290      32,627      50,381

          Other expense
           (income), net(4)          (182)    4,924        (361)     11,690

  Income before provision for
   income taxes and minority
   interest                        23,465    18,051      59,051      94,329

  Provision for income taxes        7,513     7,172      18,900      37,300

  Minority interest                   582       851       1,653       3,142

  Income before cumulative
   effect of change in acting.
   principle                       15,370    10,028      38,498      53,887

  Cumulative effect of change in
   accounting principle, net of
   tax(5)                               -         -    (250,406)       (599)

  Net income/(loss)               $15,370   $10,028   $(211,908)    $53,288

  Diluted earnings/(loss) per
   share                            $0.48     $0.32      $(6.70)      $1.73

  Dividends per share               $0.17     $0.17       $0.68       $0.68

  Diluted weighted average
   shares outstanding              32,159    31,027      31,627      30,749


  (1)  For the quarter and year ended June 30, 2001, these amounts
       include charges of $3.2 million and $3.7 million, respectively,
       related to the JLK business improvement plan.

  (2)  For the year ended June 30, 2001, this amount includes $2.1
       million primarily related to the tender offer to acquire the
       outstanding shares of JLK.

  (3)  For the quarter and year ended June 30, 2002 these amounts include
       $0.3 million related to recognition of the remaining unamortized
       balance of deferred financing fees from the company's U.S. credit
       facilities that were replaced with a new 3 year facility.  For the
       year ended June 30, 2001, this amount 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.

  (4)  For the quarters ended June 30, 2002 and 2001, these amounts
       include charges of $0.5 million and $1.1 million, respectively,
       for fees incurred in connection with the company's accounts
       receivable securitization program.  For the years ended June 30,
       2002 and 2001, these amounts include similar charges of $2.5
       million and $5.7 million, respectively.  For the quarter and year
       ended June 30, 2002, these amounts include a charge of $3.5
       million related to the divestiture of Strong Tool Company.  For
       the quarter and year ended June 30, 2001, these amounts include a
       charge of $5.8 million related to the divestiture of Abrasive &
       Tool Specialties.

  (5)  For the year ended June 30, 2002, this amount represents a non-
       cash charge for the adoption of Statement of Financial Accounting
       Standards No. 142, "Goodwill and Other Intangible Assets."  For
       the year ended June 30, 2001, this amount represents a non-cash
       charge for the adoption of Statement of Financial Accounting
       Standards No. 133, "Accounting for Derivative Instruments and
       Hedging Activities."

                   FINANCIAL HIGHLIGHTS (Continued)

  Pro forma Fiscal 2001 Operating Results Excluding Goodwill Amortization:

                                                       Period Ended
                                                       June 30, 2001
                                                 Quarter             Year
  Operating income                               $39,150           $177,422

  Interest expense                                11,290             50,381

  Other expense, net                               4,924             11,690

  Income before provision for income
   taxes and minority interest                    22,936            115,351

  Provision for income taxes                       7,778             39,100

  Minority interest                                  862              3,389

  Income before cumulative effect of
   change in accounting principle                 14,296             72,862

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

  Pro forma net income                           $14,296            $72,263

  Pro forma diluted earnings per share             $0.46              $2.35

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 JUNE 30,

                                                                     Diluted
                                                                    Earnings
                                           Gross   Operating   Net     Per
                                           Profit   Income   Income   Share
  2002 Reported Results                   $136,873  $30,834  $15,370  $0.48
       MSSG Restructuring                      384    2,104    1,423   0.04
       AMSG Restructuring                      350    1,424      960   0.03
       Corporate Restructuring                   -      915      621   0.02
       Widia Integration Costs                   -      144       98    -
       Deferred Financing Fees                   -        -      184   0.01
            Total Core Business                734    4,587    3,286   0.10
       J&L Restructuring                      (377)     247      168   0.01
       FSS Restructuring                         -      335      226   0.01
       Strong Tool Divestiture                   -        -    2,390   0.07
            Total Non-Core Business           (377)     582    2,784   0.09
  2002 Results Excluding Special Items    $137,230  $36,003  $21,440  $0.67

  2001 Reported Results                   $147,181  $34,265  $10,028  $0.32
       MSSG Restructuring                        -    2,255    1,373   0.05
       AMSG Restructuring                        -    1,165      710   0.02
       Corporate Special Charge                  -      454      278   0.01
            Total Core Business                  -    3,874    2,361   0.08
       J&L Restructuring                     3,234    4,035    2,460   0.08
       FSS Restructuring                         -      252      163   0.01
       ATS Divestiture                           -        -    3,522   0.11
            Total Non-Core Business          3,234    4,287    6,145   0.20
  2001 Results Excluding Special Items    $150,415  $42,426  $18,534  $0.60

                     FINANCIAL HIGHLIGHTS (Continued)

  YEAR Ended JUNE 30,


                                                           Net    Diluted
                                    Gross    Operating   Income/ Earn/(Loss)
                                    Profit    Income     (Loss)  Per Share
  2002 Reported Results            $510,824   $91,317  $(211,908) $(6.70)
       MSSG Restructuring               544    10,245      6,958    0.22
       MSSG (Adoption of SFAS 142)        -         -    168,314    5.32
       AMSG Restructuring             1,654     7,997      5,430    0.17
       AMSG (Adoption of SFAS 142)        -         -     82,092    2.60
       Corporate Restructuring            -     1,075        730    0.02
       Widia Integration costs            -       144         98     -
       Deferred Financing Fees            -         -        184    0.01
            Total Core Business       2,198    19,461    263,806    8.34
       J&L Restructuring                529    10,093      6,863    0.22
       FSS Restructuring                  -       635        430    0.01
       Strong Tool Divestiture            -         -      2,390    0.08
            Total Non-Core Business     529    10,728      9,683    0.31
  2002 Results Excluding Special
   Items                           $513,551  $121,506    $61,581   $1.95

  2001 Reported Results            $615,720  $156,400    $53,288   $1.73
       MSSG Restructuring                 -     3,271      1,988    0.06
       AMSG Restructuring                 -       927        564    0.02
       Corporate Restructuring &
        Other                             -       434        475    0.02
            Total Core Business           -     4,632      3,027    0.10
       J&L Restructuring & Other      3,653    10,127      5,804    0.19
       FSS Restructuring                  -       572        347    0.01
       ATS Divestiture                    -         -      3,522    0.12
            Total Non-Core Business   3,653    10,699      9,673    0.32
       Adoption of SFAS 133               -         -        599    0.02
  2001 Results Excluding Special
   Items                           $619,373  $171,731    $66,587   $2.17

                     FINANCIAL HIGHLIGHTS (Continued)

  SEGMENT DATA:

                                   Quarter Ended           Year Ended
                                      June 30,              June 30,
                                   2002    2001(1)      2002      2001(1)
  Sales:(2)
  Metalworking Solutions and
   Services Group                $231,151  $245,054    $897,157    $999,813
  Advanced Materials Solutions
   Group                           80,170    89,187     307,668     352,933
  J&L Industrial Supply            52,013    64,556     226,010     289,264
  Full Service Supply              39,564    43,708     152,907     165,886
  Total Sales                    $402,898  $442,505  $1,583,742  $1,807,896

  Sales By Geographic Region:(2)
  Within the United States       $257,709  $285,631  $1,019,849  $1,189,014
  International                   145,189   156,874     563,893     618,882
  Total Sales                    $402,898  $442,505  $1,583,742  $1,807,896

  Operating Income (Loss), as
   reported:(2)
  Metalworking Solutions and
   Services Group                 $29,243   $31,628     $97,323    $130,558
  Advanced Materials Solutions
   Group                           10,082    11,152      26,781      43,270
  J&L Industrial Supply             1,044      (844)       (681)      3,689
  Full Service Supply                 215     1,597       2,014       7,541
  Corporate and Eliminations       (9,750)   (9,268)    (34,120)    (28,658)
  Total Operating Income          $30,834   $34,265     $91,317    $156,400

  Operating Income (Loss),
   excluding special charges:(2)
  Metalworking Solutions and
   Services Group                 $31,347   $33,883    $107,568    $133,829
  Advanced Materials Solutions
   Group                           11,506    12,317      34,778      44,197
  J&L Industrial Supply             1,290     3,191       9,412      13,816
  Full Service Supply                 550     1,849       2,649       8,113
  Corporate and Eliminations       (8,690)   (8,814)    (32,901)    (28,224)
  Total Operating Income          $36,003   $42,426    $121,506    $171,731

  Operating Income (Loss),
   excluding special charges
       and goodwill
        amortization: (2)(3)
  Metalworking Solutions and
   Services Group                           $36,227                $143,211
  Advanced Materials Solutions
   Group                                     14,214                  52,785
  J&L Industrial Supply                       3,820                  16,808
  Full Service Supply                         1,864                   8,173
  Corporate and Eliminations                 (8,814)                (28,224)
  Total Operating Income                    $47,311                $192,753

  (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        Year Ended
                                          June 30,           June 30,
                                       2002    2001(1)    2002     2001(1)

  Net income (Loss)                   $15,370  $10,028  $(211,908)  $53,288
  Adoption of SFAS 142                      -        -    250,406         -
  Other Non-cash items                 (9,134)  16,301      2,107    23,067
  Depreciation and amortization        18,392   23,857     73,629    97,297
  Change in primary working capital    16,850   19,986     60,846    36,245
  Change in other working capital      10,375  (16,100)   (18,794)  (22,341)
  Cash flow from operations            51,853   54,072    156,286   187,556
  Capital expenditures                (13,691) (19,808)   (44,040)  (59,929)
  Proceeds from asset disposals         4,462      669     10,261     4,227
  Free operating cash flow            $42,624  $34,933   $122,507  $131,854


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


  CONDENSED BALANCED SHEETS

                                   Quarter Ended
                  6/30/02    3/31/02     12/31/01    9/30/01     6/30/01
  ASSETS
  Cash and
   equivalents   $10,385     $10,705     $10,414     $10,722      $12,940
  Accounts
   receivables,
   net of
   allowance     179,101     168,094     162,916     196,003      206,175
  Inventories    345,076     351,129     367,724     382,701      373,221
  Deferred
   income taxes   88,678      66,177      67,215      64,673       57,452
  Other current
   assets         31,447      28,064      24,728      25,036       31,408
    Total
     current
     assets      654,687     624,169     632,997     679,135      681,196
  Property, plant
   and equipment,
   net           435,116     438,505     448,263     467,268      472,874
  Goodwill,
   net           359,055     363,160     363,318     363,732      615,263
  Intangible
   assets, net     8,937       7,164       7,945       8,716        9,497
  Other assets    83,119      60,458      60,797      50,943       46,612
    Total     $1,540,914  $1,493,456  $1,513,320  $1,569,794   $1,825,442

  LIABILITIES
  Short-term
   debt          $23,480    $383,639    $406,677    $418,448      $24,530
  Accounts
   payable       101,586      93,810     101,817     103,993      118,073
  Accrued
   liabilities   154,337     136,095     131,656     137,055      151,882
    Total current
     liabilities 279,403     613,544     640,150     659,496      294,485
  Long-term
   debt          387,887     164,257     173,514     209,613      582,585
  Deferred income
   taxes          52,570      52,564      51,815      48,556       53,844
  Other
   liabilities    96,421      88,720      89,880      90,716       87,898
    Total
     liabilities 816,281     919,085     955,359   1,008,381    1,018,812

  MINORITY
   INTEREST       10,671       8,907       9,271      10,187        9,861

  SHAREOWNERS'
   EQUITY        713,962     565,464     548,690     551,226      796,769

    Total     $1,540,914  $1,493,456  $1,513,320  $1,569,794   $1,825,442

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SOURCE: Kennametal Inc.

CONTACT: Investors - Beth A. Riley, +1-724-539-6141, or Media - Steve
Halvonik, +1-724-539-4618, both of Kennametal Inc.