Kennametal Inc. today reported that EPS for third quarter of fiscal 2006 was $0.82, compared with prior year reported EPS of $0.80. Reported fiscal 2006 third-quarter adjusted EPS was $1.17, compared with prior year adjusted EPS of $0.92, an increase of 27 percent.

Fiscal 2006 third quarter performance reflects the impact of previously announced divestitures. These divestitures are consistent with the company's strategy of exiting non-core businesses. Therefore, third quarter results included charges associated with the sale of UK-based high speed steel business and transaction related costs from the divestiture of J&L Industrial Supply. The disposition of the UK-based high speed steel business was part of Kennametal's acceleration of its manufacturing rationalization and is expected to improve future overall EBIT margins by 10 to 20 basis points. The divestiture of J&L is in line with Kennametal's strategy to focus on its core manufacturing businesses. This transaction will complete the company's planned exit from owned distribution, and will allow Kennametal to build new and grow existing distributor relationships.

Additionally in the third quarter, a goodwill impairment charge was recognized for the small, high speed steel consumer retail product line because the company is pursuing strategic alternatives for this business.

President and Chief Executive Officer Carlos M. Cardoso said, "We are pleased with third quarter results, which represent the 9th consecutive quarter of year-over-year growth. Our team executed on clearly defined strategic initiatives to deliver another quarter of strong sales, EPS and return on invested capital. We will continue to focus on sustainable growth, portfolio enhancement, expanding margins and cash flow as evidenced by our actions this quarter. This quarter's performance is a result of being focused on our customers and implementing our strategy through the Kennametal Value Business System, or KVBS."

  Highlights of Fiscal 2006 Third Quarter

  -- Third quarter sales of $631 million were up 6 percent versus the same
     quarter last year, including 12 percent organic sales growth, partially
     offset by 3 percent unfavorable foreign currency exchange as well as a
     3 percent net impact of acquisitions and divestitures.

  -- Net income was $33 million compared to $31 million in the prior year,
     up 7 percent.

  -- The effective tax rate for the quarter was 37.4 percent.  Excluding
     special charges totaling $0.33 per share for which there were no tax
     benefits and other items, the effective tax rate was 31.1 percent.
     Such adjusted tax rate was lower than our expected tax rate of
     35.0 percent due to favorable earnings mix and other items, which
     contributed $0.07 per share to the current quarter.

  -- Reported EPS for third quarter was $0.82, compared with prior year
     reported EPS of $0.80.  Third quarter adjusted EPS of $1.17 was up
     27 percent compared to adjusted EPS of $0.92 for prior year quarter.



                Earnings Per Diluted Share Reconciliation

  Third Quarter FY 2006                Third Quarter FY 2005
  Reported EPS          $0.82          Reported EPS           $ 0.80

  UK-based high speed                  Full Service Supply
   steel business                       divestiture related
   divestiture           0.20           charges                 0.15

  Goodwill impairment    0.13

  J&L Industrial Supply
   transaction-related
   charges               0.03

  Impact of special                    Impact of special
   charges on overall                   charges on overall
   tax rate             (0.01)          tax rate               (0.03)

  Adjusted EPS          $1.17          Adjusted EPS           $ 0.92

  -- Net cash from operations was $42 million, including an outflow of
     $33 million for the funding of the UK pension plan, versus $66 million
     in the same quarter last year.  Excluding the pension funding,
     cash flow from operations of $75 million increased 12 percent from the
     prior year.

  -- Record adjusted return on invested capital was up 160 basis points to
     10.7 percent from 9.1 percent in the prior year.

  Business Segment Highlights of Fiscal 2006 Third Quarter

Metalworking Solutions & Services Group (MSSG) continued to deliver strong growth, despite difficult comparisons to a strong quarter last year. Growth in the Metalworking business continues to outpace the growth in its addressed markets, demonstrating the effects of price realization and further market penetration.

In the March quarter, MSSG sales were up 7 percent on volume and price, excluding acquisitions, divestitures and foreign exchange. North American cemented carbide and high-speed steel grew 9 percent and 6 percent, respectively. Europe sales were increased 8 percent. Rest of the world grew 6 percent. North American consumer products declined 6 percent.

MSSG operating income excluding special charges was up 10 percent, on 5 percent reported sales growth and the operating margin of 15.7 percent was up 70 basis points excluding special charges over the same period last year.

Advanced Materials Solutions Group (AMSG) delivered significant top line growth in the current quarter, also despite difficult comparisons to the prior year. The underlying markets in Mining, Construction and Energy remain strong for Kennametal. Electronics is the only market showing year-over-year decline. Despite this challenge, the overall AMSG segment continues to report considerable growth. Overall market conditions, price realization and market share penetration are primary factors to favorable results.

AMSG sales grew 24 percent on volume and price, excluding acquisitions, divestitures and foreign exchange. Mining and Construction was up 22 percent, Energy sales increased 56 percent and Engineered Products sales grew 18 percent. Electronics decreased 7 percent.

AMSG operating income grew 50 percent versus last year, on 35 percent reported sales growth with the operating margin increasing 180 basis points to 18.2 percent.

J&L sales grew 12 percent on volume and price, excluding impact of foreign exchange and operating income grew 19 percent. Operating margin of 12.7 percent was up 90 basis points versus prior year.

  Highlights of First Nine Months of Fiscal 2006

  -- Sales of $1.8 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.

  -- Net income was $92 million compared to $82 million in the prior year,
     up 13 percent.

  -- Reported EPS was $2.34, compared with prior year reported EPS of $2.15.
     For the first nine months of fiscal 2006, adjusted EPS was $2.69
     compared with prior year adjusted EPS of $2.26.

  Outlook

Global economic indicators forecast continued expansion through fiscal 2006 in North America and the rest-of-the-world markets, and flat to modest growth in European markets. Kennametal's organic sales growth for the fourth quarter of fiscal year 2006 is expected to be 7 to 10 percent, relative to very strong performance from the prior year quarter. Worldwide market conditions support the company's expectations of continued top line growth in the fourth quarter.

Consistent with year-to-date results and full year guidance for fiscal 2006, Kennametal expects to finish the year with organic revenue growth in the 9 to 10 percent range, 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, with moderating growth rates for certain sectors.

Cardoso said, "We have consistently achieved our goals, as shown by our performance in the third quarter, and we are cautiously optimistic that the outlook for our end markets for the remainder of the fiscal year remains favorable. Despite difficult comparables, the global manufacturing forecast is consistent with our belief that the industrial sector will continue to show strength. Our proven business model enables us to effectively deliver volume growth and price realization through disciplined processes and we expect to continue to outperform the market."

As discussed in prior statements, fourth quarter fiscal 2006 is expected to reflect a gain related to the divestiture of J&L Industrial Supply, as well as charges associated with the sale of the Kemmer Praezision Electronics business. The company anticipates ongoing pressure on raw material prices as mentioned during the past year. Consistent with historical seasonal patterns and reflecting confidence in the company's ability to maintain the strength of its year-to-date performance, forecasted EPS for the fourth quarter and full fiscal year 2006 are detailed as follows.

                         Fiscal Year 2006 Outlook

  Fourth Quarter FY 2006               Fiscal Year 2006
  EPS range          $3.83 - $4.12       EPS range (a)        $6.31 - $6.60

  Gain from                            Gain from
  J&L Industrial Supply                J&L Industrial Supply
   divestiture      (3.20) - (3.30)     divestiture          (3.20) - (3.30)

  Kemmer Praezision                    Kemmer Praezision
   divestiture        0.45 - 0.50       divestiture            0.45 - 0.50
  UK-based high speed                  UK-based high speed
   steel business                       steel business
   divestiture        0.00 - 0.04       divestiture            0.20 - 0.24

  Adjusted EPS range $1.17 - $1.27    Adjusted EPS range      $3.85 - $3.95

   (a) Reflects approximately $0.25 per share negative impact from the
       combination of expensing stock options due to SFAS 123® and the
       effects of the reduction in discount rate applied to the
       company's domestic pension plans.

Improvements in operating margins are expected to continue, and return on invested capital is solidly on track for the projected 10 to 12 percent range, for fiscal year 2006.

Kennametal anticipates net cash flow provided by operating activities of approximately $190 million to $210 million for fiscal 2006. Based on anticipated capital expenditures of $80 million, Kennametal expects to generate between $110 million to $130 million of free operating cash flow for fiscal 2006, including the $33 million funding of the UK pension plan in the third quarter.

The above guidance on sales growth, operating margins, ROIC and cash all assume the J&L transaction closes at the end of Kennametal's fiscal year.

Dividend Declared

Kennametal also announced that its Board of Directors declared a quarterly cash dividend of $0.19 per share. The dividend is payable May 23, 2006 to shareowners of record as of the close of business on May 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.

Third quarter 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 May 10, 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. 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 other 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 and regional economic conditions; risks associated with the availability and costs of raw materials; risks associated with integrating acquisitions and achieving the expected savings and synergies; risks relating to divesting J&L Industrial Supply and other businesses; energy costs; commodity prices; competition; demands on management resources; risks associated with international markets, such as currency exchange rates and social and political environments; future terrorist attacks; 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 $2.3 billion annually of Kennametal products and services - delivered by our 14,000 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

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 net income, diluted earnings per share, segment results and effective tax rate in each case excluding special charges, and adjusted return on invested capital (which is a non-GAAP financial measure), 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.

  Consolidated Statements of Income (Unaudited):

                                     Quarter Ended       Nine Months Ended
  (in thousands, except per share      March 31,             March 31,
   amounts)                         2006      2005        2006        2005

  Sales                           $631,114  $597,355  $1,785,590  $1,685,009
  Cost of goods sold(1)            413,812   386,094   1,168,681   1,118,939

     Gross profit                  217,302   211,261     616,909     566,070

  Operating expense(2)             148,498   146,422     441,442     416,884
  Loss on assets held for sale
   and goodwill impairment
   charge(3)                         5,722     6,253       5,722       6,253
  Amortization of intangibles        1,409       723       4,198       1,894

    Operating income                61,673    57,863     165,547     141,039

  Interest expense                   7,728     6,803      23,541      19,380
  Other (expense) income, net         (117)      (28)      1,855       2,786

     Income before provision for
      income taxes and minority
      interest                      53,828    51,032     143,861     124,445

  Provision for income taxes        20,143    18,933      49,733      39,540

  Minority interest                    782     1,449       2,041       3,354

  Net income                       $32,903   $30,650     $92,087     $81,551

  Basic earnings per share           $0.85     $0.83       $2.41       $2.22
  Diluted earnings per share         $0.82     $0.80       $2.34       $2.15
  Dividends per share                $0.19     $0.17       $0.57       $0.51
  Basic weighted average shares
   outstanding                      38,832    37,093      38,283      36,736
  Diluted weighted average shares
   outstanding                      39,978    38,253      39,396      37,935

  (1) For the quarter and nine months ended March 31, 2006, these amounts
      include $7.4 million related to asset write down as a result of the
      sale of the UK-based high speed steel business.
  (2) For the quarter and nine months ended March 31, 2006, these amounts
      include transaction-related costs of $1.9 million related to the
      divestiture of J&L Industrial Supply.
  (3) For the quarter and nine months ended March 31, 2006, these amounts
      include $5.0 million related to goodwill impairment charges and
      $0.7 million related to asset write-down as a result of the sale of
      the UK-based high speed steel business.  For the quarter and nine
      months ended March 31, 2005, these amounts include $4.7 million
      related to a FSS goodwill impairment charge and $1.5 million for FSS
      loss on assets held for sale.



                     FINANCIAL HIGHLIGHTS (Continued)

  RECONCILIATION TO GAAP - QUARTER ENDED MARCH 31, 2006 (Unaudited):

                                                                    Diluted
                                                                    Earnings
  (in thousands, except per share amounts)           Net Income    Per Share
  2006 Reported Results                                $32,903       $0.82
     UK-based high speed steel business divestiture      8,047        0.20
     Goodwill impairment charge                          5,030        0.13
     J&L Industrial Supply transaction-related charge    1,171        0.03
  Impact of special charges on overall tax rate           (544)      (0.01)
  2006 Results, excluding special charges              $46,607       $1.17


  RECONCILIATION TO GAAP - NINE MONTHS ENDED MARCH 31, 2006 (Unaudited):

                                                                    Diluted
                                                                    Earnings
  (in thousands, except per share amounts)           Net Income    Per Share
  2006 Reported Results                                $92,087       $2.34
     UK-based high speed steel business divestiture      8,047        0.20
     Goodwill impairment charge                          5,030        0.13
     J&L Industrial Supply transaction-related charge    1,171        0.03
  Impact of special charges on overall tax rate           (544)      (0.01)
  2006 Results, excluding special charges             $105,791       $2.69


  RECONCILIATION TO GAAP - QUARTER ENDED MARCH 31, 2005 (Unaudited):

                                                                    Diluted
                                                                    Earnings
  (in thousands, except per share amounts)           Net Income    Per Share
  2005 Reported Results                               $30,650        $0.80
     FSS goodwill impairment charge                     4,707         0.12
     Loss on assets held for sale                       1,076         0.03
  Impact of special charges on overall tax rate        (1,391)       (0.03)
  2005 Results, excluding special charges             $35,042        $0.92


  RECONCILIATION TO GAAP - NINE MONTHS ENDED MARCH 31, 2005 (Unaudited):

                                                                    Diluted
                                                                    Earnings
  (in thousands, except per share amounts)           Net Income    Per Share
  2005 Reported Results                               $81,551        $2.15
     FSS goodwill impairment charge                     4,707         0.12
     Loss on assets held for sale                       1,076         0.03
  Impact of special charges on overall tax rate        (1,430)       (0.04)
  2005 Results, excluding special charges             $85,904        $2.26



                     FINANCIAL HIGHLIGHTS (Continued)

                        SEGMENT DATA (Unaudited):

                                  Quarter Ended        Nine Months Ended
  (in thousands)                     March 31,              March 31,
                                  2006      2005        2006        2005
  Outside Sales:
  Metalworking Solutions and
   Services Group               $373,951  $357,197   $1,070,919  $1,009,297
  Advanced Materials Solutions
   Group                         182,777   135,460      509,946     375,673
  J&L Industrial Supply           74,386    67,054      204,725     189,809
  Full Service Supply                  -    37,644            -     110,230
  Total Outside Sales           $631,114  $597,355   $1,785,590  $1,685,009

  Sales By Geographic Region:
  Within the United States      $346,440  $323,484     $966,058    $926,791
  International                  284,674   273,871      819,532     758,218
  Total Sales by Geographic
   Region                       $631,114  $597,355   $1,785,590  $1,685,009
  Operating Income (Loss):
  Metalworking Solutions and
   Services Group                $45,605   $53,555     $135,324    $135,150
  Advanced Materials Solutions
   Group                          33,274    22,211       85,704      50,613
  J&L Industrial Supply            9,454     7,915       22,610      19,502
  Full Service Supply                  -    (5,036)           -      (4,370)
  Corporate and eliminations(1)  (26,660)  (20,782)     (78,091)    (59,856)
  Total Operating Income, as
   reported                      $61,673   $57,863     $165,547    $141,039

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



                     FINANCIAL HIGHLIGHTS (Continued)

  ADJUSTED SALES RECONCILIATION TO GAAP - (Unaudited)

  MSSG SEGMENT

                                                        Quarter Ended
                                                           March 31,
  (in thousands)                                      2006          2005

  Sales, as reported                                $373,951      $357,197
  Foreign currency exchange                           13,462            --
  Acquisition and divestiture                             --         3,891
  Adjusted sales                                    $387,413      $361,088


  AMSG SEGMENT

                                                        Quarter Ended
                                                           March 31,
  (in thousands)                                      2006          2005

  Sales, as reported                                $182,777      $135,460
  Foreign currency exchange                            3,693            --
  Acquisition and divestiture                        (13,917)        4,149
  Adjusted sales                                    $172,553      $139,609


  J&L SEGMENT

                                                        Quarter Ended
                                                           March 31,
  (in thousands)                                      2006          2005

  Sales, as reported                                 $74,386       $67,054
  Foreign currency exchange                              671             -
  Adjusted sales                                     $75,057       $67,054


  ADJUSTED OPERATING INCOME RECONCILIATION TO GAAP FOR THE QUARTER ENDED
  MARCH 31, 2006 - (Unaudited)

  MSSG SEGMENT

  2006 Reported Operating Income                     $45,605
     UK-based high speed steel business impact         8,047
     Goodwill impairment impact                        5,030
  2006 Adjusted Operating Income                     $58,682


  EFFECTIVE TAX RATE RECONCILIATION TO GAAP - (Unaudited)

  2006 Reported Quarter Effective Tax Rate              37.4%
     UK-based high speed steel business divestiture     -4.9%
     Goodwill impairment charge                         -0.7%
     Other items, net                                   -0.7%
  2006 Adjusted Quarter Effective Tax Rate              31.1%



                     FINANCIAL HIGHLIGHTS (Continued)

            CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited):

                                                     March 31,    June 30,
  (in thousands)                                       2006         2005

  ASSETS
  Cash and equivalents                                 $41,908     $43,220
  Trade receivables, net of allowance                  377,686     403,097
  Receivables securitized                             (106,106)   (109,786)
  Accounts receivable, net                             271,580     293,311
  Inventories                                          366,845     386,674
  Deferred income taxes                                 72,807      70,391
  Current assets held for sale                          88,185           -
  Other current assets                                  28,813      37,466
      Total current assets                             870,138     831,062
  Property, plant and equipment, net                   508,299     519,301
  Goodwill and intangible assets, net                  624,729     652,791
  Long term assets held for sale                        50,243           -
  Other assets                                         103,209      89,183
      Total                                         $2,156,618  $2,092,337

  LIABILITIES
  Short-term debt, including notes payable              $4,388     $50,889
  Accounts payable                                     111,826     154,839
  Current liabilities held for sale                     27,474           -
  Accrued liabilities                                  243,157     222,930
      Total current liabilities                        386,845     428,658
  Long-term debt                                       361,518     386,485
  Deferred income taxes                                 52,927      59,551
  Other liabilities                                    222,164     227,321
      Total liabilities                              1,023,454   1,102,015

  MINORITY INTEREST                                     18,054      17,460
  SHAREOWNERS' EQUITY                                1,115,110     972,862
      Total                                         $2,156,618  $2,092,337



                     FINANCIAL HIGHLIGHTS (Continued)

  RETURN ON INVESTED CAPITAL (Unaudited):

  For the Period Ended March 31, 2006 (in thousands, except percents)

   Invested
   Capital   3/31/2006 12/31/2005 9/30/2005  6/30/2005  3/31/2005    Average

  Debt       $365,906   $410,045   $415,250   $437,374   $485,168   $422,749
  Accounts
   receivable
   securi-
   tized      106,106    100,295    100,445    109,786    120,749    107,476
  Minority
   interest    18,054     16,918     18,117     17,460     19,664     18,043
  Shareowners'
   equity   1,115,110  1,045,974  1,009,394    972,862  1,021,186  1,032,905
  Total    $1,605,176 $1,573,232 $1,543,206 $1,537,482 $1,646,767 $1,581,173


                              Quarter Ended
   Interest
   Expense       3/31/2006  12/31/2005  9/30/2005  6/30/2005   Total

  Interest
   expense          $7,728     $7,984     $7,829    $7,897    $31,438
  Securitization
   fees              1,241      1,170      1,065       981      4,457
  Total interest
   expense          $8,969     $9,154     $8,894    $8,878    $35,895
  Income tax
   benefit                                                     12,599
  Total interest
   expense, net
   of tax                                                     $23,296


   Total
   Income        3/31/2006  12/31/2005  9/30/2005  6/30/2005   Total

  Net Income,
   as reported     $32,903    $31,087    $28,097   $37,740   $129,827

  UK-based high
   speed steel
   business          8,047         -          -         -       8,047
  Goodwill
   impairment
   charge            5,030         -          -          -      5,030
  J&L Industrial
   Supply
   transaction-related
   charges           1,171         -          -          -      1,171
  Impact of special
   charges on overall
   tax rate           (544)        -          -          -       (544)
  Minority interest
   expense             782       511        748       238       2,279
  Total Income,
   excluding special
   items           $47,389   $31,598    $28,845   $37,978    $145,810
  Total Income,
   excluding special
   items                                                     $145,810

  Total interest
   expense, net of
   tax                                                         23,296
                                                             $169,106
  Average invested
   capital                                                 $1,581,173
  Adjusted Return on
   Invested Capital                                              10.7%
  Return on invested capital calculated utilizing
   net income, as reported is as follows:
  Net Income, as
   reported                                                  $129,827
  Total Interest
   Expense, net of
   tax                                                         23,296
                                                             $153,123
  Average invested
   capital                                                 $1,581,173
  Return on Invested
   Capital                                                        9.7%


                     FINANCIAL HIGHLIGHTS (Continued)

   RETURN ON INVESTED CAPITAL (Unaudited):

   For the Period Ended March 31, 2005 (in thousands, except percents)

  Invested
   Capital  3/31/2005 12/31/2004  9/30/2004  6/30/2004   3/31/2004   Average

  Debt       $485,168   $405,156   $435,435   $440,207   $494,312   $452,056
  Accounts
   receivable
   securi-
   tized      120,749    115,253    115,309    117,480    108,916    115,541
  Minority
   interest    19,664     19,249     17,377     16,232     16,598     17,824
  Shareowners'
   equity   1,021,186  1,003,507    924,432    887,152    809,904    929,236
  Total    $1,646,767 $1,543,165 $1,492,553 $1,461,071 $1,429,730 $1,514,657


                              Quarter Ended

   Interest
   Expense         3/31/2005 12/31/2004  9/30/2004 6/30/2004    Total

  Interest expense    $6,803    $6,121     $6,456    $6,405    $25,785
  Securitization
   fees                  868       757        580       443      2,648
  Total interest
   expense            $7,671    $6,878     $7,036    $6,848    $28,433
  Income tax
   benefit                                                       9,099
  Total interest
   expense, net
   of tax                                                      $19,334


                              Quarter Ended

   Total
   Income          3/31/2005 12/31/2004  9/30/2004 6/30/2004    Total

  Net Income, as
   reported          $30,650   $28,181    $22,720   $29,852   $111,403

  Restructuring and
   asset impairment
   charges             4,707         -          -         -      4,707
  Loss on assets
   held for sale       1,076         -          -         -      1,076
  Impact of special
   charges on overall
   tax rate           (1,391)        -          -         -     (1,391)
  Minority interest
   expense             1,449       928        977        36      3,390
  Total Income,
   excluding special
   items             $36,491   $29,109    $23,697   $29,888   $119,185
  Total Income,
   excluding special
   items                                                      $119,185
  Total interest
   expense, net of
   tax                                                          19,334
                                                              $138,519
  Average invested
   capital                                                  $1,514,657

  Adjusted Return on
   Invested Capital                                                9.1%

  Return on invested capital calculated utilizing
   net income, as reported is as follows:
  Net Income,
   as reported                                                $111,403
  Total interest
   expense, net of
   tax                                                          19,334
                                                              $130,737
  Average invested
   capital                                                  $1,514,657

  Return on Invested
   Capital                                                         8.6%

SOURCE: Kennametal Inc.