================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 30, 2003 KENNAMETAL INC. (Exact name of registrant as specified in its charter) Commission file number 1-5318 PENNSYLVANIA 25-0900168 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) WORLD HEADQUARTERS 1600 TECHNOLOGY WAY P.O. BOX 231 LATROBE, PENNSYLVANIA 15650-0231 (Address of registrant's principal executive offices) Registrant's telephone number, including area code: (724) 539-5000 ================================================================================ ITEM 9. INFORMATION PROVIDED UNDER ITEM 12 - DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION In accordance with Securities and Exchange Commission Release No. 33-8216, the following information, is furnished pursuant to Item 12, "Results of Operations and Financial Condition". On April 30, 2003, Kennametal Inc. ("Kennametal") issued a press release announcing financial results for its third quarter ended March 31, 2003. The press release contains non-GAAP financial measures, including gross profit, operating expense, operating income, net income (loss) and diluted EPS in each case excluding special items. The special items include: restructuring charges, Widia integration costs and goodwill impairment. Kennametal management excludes these items in measuring and compensation internal performance to better understand underlying operations. We believe investors should have available the same information that management uses to measure and compensate performance. Kennametal management believes that presentation of these non-GAAP financial measures provides useful information into the results of operations of the company for the current, past and future periods. Kennametal also presents free operating cash flow and primary working capital in the press release. Free operating cash flow is a non-GAAP presentation and is defined as cash provided by continuing operations (in accordance with GAAP) less capital expenditures and proceeds from asset disposals. Free operating cash flow is considered to be an important indicator of Kennametal's ability to generate liquidity because it better represents cash generated from operations that can be used for strategic initiatives, dividends or debt repayment. Primary working capital is a non-GAAP presentation and is defined as accounts receivable, net of allowance for doubtful accounts, plus inventories minus accounts payable. The most directly comparable GAAP number is working capital which is defined as current assets less current liabilities. We believe primary working capital better represents Kennametal's performance in managing certain assets and liabilities controllable at the business unit level and is used as such for internal performance measurement. Additionally, during our quarterly teleconference we may use various non-GAAP financial measures to describe the underlying operating results. Accordingly, we have compiled below certain reconciliations as required by Regulation G. EBIT ---- EBIT is an acronym for Earnings Before Interest and Taxes and is not a calculation in accordance with accounting principles generally accepted in the United States (GAAP). However, we believe that EBIT is widely used as a measure of operating performance and we believe EBIT to be an important indicator of the Company's operational strength and performance. Nevertheless, the measure should not be considered in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining liquidity that is calculated in accordance with GAAP. - 2 Kennametal Inc. EBIT Reconciliation Quarter Ended March 31, As a percentage of sales ----------------------------- ---------------------------- 2003 2002 2003 2002 ------- ------- ------ ------ Operating income, as reported $24,604 $27,280 5.5% 6.9% Adjusted other (expense) income(1) (1,084) 124 ------- ------- EBIT 23,520 27,404 5.1% 7.0% Special charges 5,198 5,165 ------- ------- EBIT, excluding special charges $28,718 $32,569 6.3% 8.3% (1) Other expense (income), as reported ($713) $14 Interest income (777) (348) Securitization fees 406 458 ------- ------ Adjusted other (expense) income ($1,084) $124 Quarter Ended March 31, ------------------------------------------ MSSG SEGMENT 2003 2002 ------------ ---- ---- Sales, as reported $ 297,995 $ 224,971 LESS: ----- Widia sales 54,407 -- Foreign currency exchange 12,425 -- ------------- ------------- Adjusted Sales $ 231,163 $ 224,971 Quarter Ended March 31, As a- As a ----------------------------------------- Percentage of Percentage of MSSG EBIT 2003 2002 2003 Sales 2002 Sales --------- ---- ---- ---------- ---------- MSSG operating income, as reported $ 24,156 $ 25,999 8.1% 11.6% Other (expense) income (206) 640 ------------- ------------- EBIT 23,950 26,639 Adjustments: MSSG Restructuring 1,077 1,904 Widia Integration 1,911 -- ------------- ------------- EBIT, excluding special charges $ 26,938 $ 28,543 9.0% 12.7% -3 Quarter Ended March 31, ------------------------------------------ AMSG SEGMENT 2003 2002 ------------ ---- ---- Sales, as reported $ 79,039 $ 72,879 LESS: ----- Foreign currency exchange 3,399 -- ------------- ------------- Adjusted Sales $ 75,640 $ 72,879 Quarter Ended March 31, As a As a ----------------------------------------- Percentage of Percentage of AMSG EBIT 2003 2002 2003 Sales 2002 Sales --------- ---- ---- ---------- ---------- AMSG operating income, as reported $ 8,757 $ 6,988 11.1% 9.6% Other (expense) (96) (135) ------------- ------------- EBIT 8,661 6,853 Adjustments: AMSG restructuring 1,104 619 Widia Integration 18 -- ------------- ------------- EBIT, excluding special charges $ 9,783 $ 7,472 12.4% 10.3% Quarter Ended March 31, ------------------------------------------ J&L SEGMENT 2003 2002 ----------- ---- ---- Sales, as reported $ 51,729 $ 58,873 LESS: ----- Strong Tool Co. sales -- 7,802 Foreign exchange 670 -- ------------- ------------- Adjusted Sales $ 51,059 $ 51,071 Quarter Ended March 31, As a As a ----------------------------------------- Percentage of Percentage of J&L EBIT 2003 2002 2003 Sales 2002 Sales -------- ---- ---- ---------- ---------- J&L operating income, as reported $ 1,323 $ 1,208 2.6% 2.1% Other (expense) (6) (7) ------------ ------------- EBIT 1,317 1,201 Adjustments: J&L restructuring 801 2,375 ------------- ------------- EBIT, excluding special charges $ 2,118 $ 3,576 4.1% 6.1% -4 Quarter Ended March 31, ------------------------------------------ FSS SEGMENT 2003 2002 ----------- ---- ---- Sales, as reported $ 30,480 $ 37,129 Adjustments -- -- ------------- ------------- Adjusted Sales $ 30,480 $ 37,129 Quarter Ended March 31, As a As a ----------------------------------------- Percentage of Percentage of FSS EBIT 2003 2002 2003 Sales 2002 Sales -------- ---- ---- ---------- ---------- FSS operating income, as reported $ 31 $ 380 .1% 1.0% Other (expense) -- (6) ------------- ------------- EBIT 31 374 Adjustments: FSS restructuring 9 264 ------------- ------------- EBIT, excluding special charges $ 40 $ 638 .1% 1.7% Forecasted Results Twelve Month Quarter Ended Period Ended ---------------------------------------------- RECONCILIATION OF EPS June 30, 2003 June 30, 2003 --------------------- ------------- ------------- Forecasted earnings on a GAAP basis $0.17 - $0.37 $0.82 - $1.02 Excluding Forecasted Restructuring and Integration costs $0.21 - $0.06 $0.53 - $0.38 ------------- ----------- Forecasted EPS excluding restructuring and integration $0.38 - $0.43 $1.35 - $1.40 Excluding Forecasted Widia dilution $0.02 - $0.02 $0.15 - $0.15 ------------- ------------- Forecasted EPS, excluding restructuring and integration and Widia dilution $0.40 - $0.45 $1.50 - $1.55 Excluding pension income decline $0.04 - $0.04 $0.17 - $0.17 ------------- ------------- Forecasted EPS, excluding restructuring and integration, Widia dilution and pension income decline $0.44 - $0.49 $1.67 - $1.72 Exhibit Index Exhibit Description ------- ----------- 99.1 Press Release dated April 30, 2003. Furnished herewith. -5 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. KENNAMETAL INC. Date: April 30, 2003 By: /s/ TIMOTHY A. HIBBARD ----------------------------------- Timothy A. Hibbard Corporate Controller and Chief Accounting Officer -6