================================================================================ 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

[KENNAMETAL LOGO] FROM: KENNAMETAL INC. P.O. Box 231 Latrobe, PA 15650 Investor Relations 724-539-6141 Contact: Beth A. Riley Media Relations 724-539-4662 Contact: Riz Chand DATE: April 30, 2003 FOR RELEASE: Immediate KENNAMETAL REPORTS THIRD QUARTER EARNINGS Delivers Another Strong Quarter of Cash Generation LATROBE, Pa., April 30, 2003 - Kennametal Inc. (NYSE: KMT) today reported fiscal 2003 third quarter earnings of $0.27 per diluted share compared with earnings of $0.42 per diluted share last year. Excluding special items in each period, diluted earnings per share were $0.38 for the quarter, against last year's earnings per share of $0.53. In accordance with SEC Regulation G, the attached financial charts include a reconciliation of all non-GAAP financial measures in this release to the most directly comparable GAAP measure. As expected, fiscal 2003 third quarter earnings included $0.08 dilution from the Widia acquisition, and $0.04 of reduced pension income. Earnings Per Share Excluding Special Items Company Guidance (03/27/03) $0.33 to $0.35 Analyst Estimate Range (04/25/03) $0.33 to $0.35 Earnings, Excluding Special Items $0.38 Through the first nine months, diluted earnings per share were $0.65, above last year's loss per share of $7.23. Excluding special items in each period, diluted earnings per share were $0.96 against last year's earnings per share of $1.28. The prior year included a non-cash SFAS 142 impairment charge associated with the adoption of SFAS No. 142 "Goodwill and Other Intangible Assets". Kennametal Chairman, President and Chief Executive Officer, Markos I. Tambakeras, said, "We continued our disciplined management of the business through a quarter challenged by a faltering global economy. I was particularly pleased that our relentless focus on working capital management contributed to another quarter of strong cash flow. Despite significant weakness in our key North American and European markets in what is historically our strongest quarter of the year, we again improved our gross margins as the Kennametal Lean - more -

- 2 - Enterprise, prior restructurings and ongoing pricing discipline continued to deliver additional benefits. In addition, I remain very pleased with the rapid pace and productive execution of the Widia integration. Our strong market position in all major markets is allowing Kennametal to weather a sustained period of stagnation in manufacturing. " - ------------------------------------------------------------------------------- Third Quarter Highlights - ------------------------------------------------------------------------------- - - Sales of $459.2 million were 17 percent above last year's $393.9 million. Sales growth was driven by a 12 percent positive benefit from net acquisitions and divestitures and a 4 percent benefit from foreign currency exchange. - - Gross profit margin, excluding special charges in both periods, was 33.1 percent, an increase of 40 basis points compared with the third quarter of fiscal 2002. Manufacturing efficiencies from the Kennametal Lean Enterprise and a benefit from foreign currency exchange offset the combination of lower Widia margins and $0.5 million in decreased pension income. Reported gross profit margin of 33.0 percent increased 60 basis points versus the prior year quarter. - - Operating expense for the quarter increased 26 percent, to $120.8 million, excluding special charges. Excluding $14.5 million in Widia operating expense, $7.4 million unfavorable foreign currency exchange and $1.7 million in decreased pension income; operating expense was just 2 percent above prior year. Reported operating expense of $122.6 million was 28 percent over the prior year. - - The current quarter included net special charges of $5.2 million, or $0.10 per diluted share, primarily associated with the previously announced Widia integration efforts. Prior-year results included special charges of $5.2 million, or $0.11 per diluted share, associated with previously announced restructurings. The charges were divided approximately evenly between the J&L/FSS business improvement plan and the Metalworking and Electronics plan. - - Interest expense of $9.0 million was 21 percent above the same quarter last year on a higher average debt for the quarter, associated with the Widia acquisition, and higher average borrowing rates. - - As expected, the effective tax rate, for the March 2003 quarter was 30.0 percent, compared with prior year of 32.0 percent. - - Excluding special items, net income was $13.3 million for the quarter; a 20 percent decrease compared to net income of $16.7 million last year including the impact of Widia dilution and reduced pension income. Reported net income was $9.7 million against net income of $13.1 million in the same quarter last year. - more -

- 3 - - - Decreased pension income reduced earnings per diluted share by $0.04 for the quarter versus the prior year. Pretax income for the quarter was reduced by $2.2 million (non-cash) compared to the same period in fiscal 2002 due to the effect of a decrease in the expected rate of return on Kennametal's pension fund assets, coupled with lower discount rates associated with pension and other postretirement benefit liabilities. - - Free operating cash flow remains strong and on plan at $26.7 million, versus $33.1 million in the same period last year. Primary working capital continues to be tightly controlled with its ratio to sales at 27.6 percent, versus 28.1 percent in the prior year. Primary working capital of $523.9 million was up 23 percent, or $99 million, from the same period last year entirely due to the impact of the Widia acquisition. - - Total debt was $580 million, up $169 million from June 2002, due to the closing of the Widia acquisition. OUTLOOK - ------- Global economic conditions remain weak at the beginning of the June quarter, and visibility continues to be very poor. Economic indicators in North America are mixed, with growth in durable goods orders overshadowed by weak March reports on industrial production, capacity utilization and the Institute of Supply Management (ISM - formally NAPM) index. The outlook in Europe is even more uncertain, with Germany in particular at risk for further declines based on the most recent macroeconomic indicators. Tambakeras said, "While weak markets are expected to constrain our top-line in the June quarter, we continue to execute on key initiatives positioning the company to leverage earnings growth when the global economies recover. As the new head of metalworking, Carlos Cardoso will advance programs to further differentiate the solutions that we provide our customers. The Widia integration will continue to enhance the breadth of our product offerings and our global reach, particularly into growing Asian markets. These will be supported by ongoing product innovation, efficiencies from the Kennametal Lean Enterprise, and sustained cash flow generation." Based on assumptions that the second quarter of calendar 2003 will be similar to the just completed March quarter, sales for the fourth quarter of fiscal 2003 are expected to grow 15 to 18 percent year-over-year. Reported diluted earnings per share are expected to be $0.17 to $0.37 per share. This includes an estimate for special charges associated with the Widia integration and restructuring programs of approximately $0.06 to $0.21 per share. Excluding these charges, diluted earnings per share are forecasted to range from $0.38 to $0.43 per share. The earnings forecast also includes $0.02 of dilution from Widia. - more -

- 4 - Kennametal anticipates net cash flow provided by operating activities of approximately $150 to $155 million for the year. Purchases of property, plant and equipment and proceeds from disposals of property, plant and equipment are expected to be approximately $50 to $55 million, net. Adjusting net cash flow provided by operating activities for the above items, Kennametal expects to generate at least $100 million of free operating cash flow for the year, per earlier guidance. As previously announced, a reduction in pension income is lowering diluted EPS for the fiscal year by $0.17 per share, or approximately $0.04 per share per quarter. Kennametal advises shareholders 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. DIVIDEND DECLARED - ------------------ Kennametal also announced its Board of Directors declared a quarterly cash dividend of $0.17 cents per share, payable May 23, 2003, to shareowners of record as of the close of business May 9, 2003. Third 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 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; future terrorist attacks; epidemics; 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

- 5 - 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 about 14,500 employees worldwide, the company's annual sales approximate $1.8 billion, with nearly half 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 www.kennametal.com. # # # # #

- 6 - FINANCIAL HIGHLIGHTS Consolidated financial highlights for Kennametal Inc. (NYSE: KMT) for the quarters and nine-month periods ended March 31, 2003 and 2002 are shown in the following tables (in thousands, except per share amounts). CONSOLIDATED STATEMENTS OF INCOME Quarter Ended Nine Months Ended March 31, March 31, -------------------------- --------------------------- 2003 2002 2003 2002 ---------- ----------- ----------- ----------- Net sales $ 459,243 $ 393,852 $ 1,295,192 $ 1,180,844 Cost of goods sold 307,582 266,205 875,079 806,893 ----------- ----------- ----------- ----------- Gross profit 151,661 127,647 420,113 373,951 Operating expense(1) 122,592 95,695 343,104 288,711 Restructuring and asset impairment charges 3,269 3,944 11,649 22,650 Amortization of intangibles 1,196 728 3,310 2,107 ----------- ----------- ----------- ----------- Operating income 24,604 27,280 62,050 60,483 Interest expense 8,979 7,421 27,058 25,076 Other expense (income), net(2) 713 (14) (414) (179) ----------- ----------- ----------- ----------- Income before provision for income taxes and minority interest 14,912 19,873 35,406 35,586 Provision for income taxes 4,474 6,359 10,622 11,387 Minority interest 739 370 1,786 1,071 ----------- ----------- ----------- ----------- Income before cumulative effect of change in accting. principle 9,699 13,144 22,998 23,128 Cumulative effect of change in accounting principle, net of tax(3) -- -- -- (250,406) ----------- ----------- ----------- ----------- Net income (loss) $ 9,699 $ 13,144 $ 22,998 $ (227,278) =========== =========== =========== =========== Diluted earnings (loss) per share $ 0.27 $ 0.42 $ 0.65 $ (7.23) =========== =========== =========== =========== Dividends per share $ 0.17 $ 0.17 $ 0.51 $ 0.51 =========== =========== =========== =========== Diluted weighted average shares outstanding 35,480 31,553 35,412 31,454 =========== =========== =========== =========== (1) For the quarter and nine months ended March 31, 2003, these amounts include charges of $1.8 million and $3.8 million, respectively, for integration activities related to the Widia acquisition. (2) For the quarters ended March 31, 2003 and 2002, these amounts include charges of $0.4 million and $0.5 million, respectively, for fees incurred in connection with the company's accounts receivable securitization program. For the nine months ended March 31, 2003 and 2002, these amounts include similar charges of $1.5 million and $2.0 million, respectively. (3) For the nine months ended March 31, 2002, this amount represents a non-cash charge for the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." -more-

- 7 - FINANCIAL HIGHLIGHTS (CONTINUED) In addition to reported results under U.S. GAAP for the fiscal periods, the following financial highlight tables also include, where appropriate, a reconciliation of results excluding special items, free operating cash flow and primary working capital (which are non-GAAP measures), to the most directly comparable GAAP measures. RECONCILIATION TO GAAP - QUARTER ENDED MARCH 31, Diluted Operating Operating Earnings Per Gross Profit Expense Income Net Income Share ------------ --------- --------- ---------- ------------ 2003 Reported Results $ 151,661 $ 122,592 $ 24,604 $ 9,699 $ 0.27 MSSG Restructuring -- -- 1,077 754 0.02 AMSG Restructuring -- -- 1,104 773 0.02 Corporate Restructuring -- -- 278 195 0.01 Widia Integration Costs - MSSG 144 (1,767) 1,911 1,337 0.04 Widia Integration Costs - AMSG -- (18) 18 13 -- --------- --------- --------- --------- -------- Total Core Business 144 (1,785) 4,388 3,072 0.09 --------- --------- --------- --------- -------- J&L Restructuring -- -- 801 561 0.02 FSS Restructuring -- -- 9 6 -- --------- --------- --------- --------- -------- Total Non-Core Business -- -- 810 567 0.02 --------- --------- --------- --------- -------- 2003 Results Excluding Special Items $ 151,805 $ 120,807 $ 29,802 $ 13,338 $ 0.38 ========= ========= ========= ========= ======== 2002 Reported Results $ 127,647 $ 95,695 $ 27,280 $ 13,144 $ 0.42 MSSG Restructuring 160 -- 1,904 1,295 0.04 AMSG Restructuring 554 -- 619 421 0.01 Corporate Restructuring -- -- 3 2 -- --------- --------- --------- --------- -------- Total Core Business 714 -- 2,526 1,718 0.05 --------- --------- --------- --------- -------- J&L Restructuring 507 -- 2,375 1,616 0.05 FSS Restructuring -- -- 264 179 0.01 --------- --------- --------- --------- -------- Total Non-Core Business 507 -- 2,639 1,795 0.06 --------- --------- --------- --------- -------- 2002 Results Excluding Special Items $ 128,868 $ 95,695 $ 32,445 $ 16,657 $ 0.53 ========= ========= ========= ========= ======== -more-

- 8 - FINANCIAL HIGHLIGHTS (CONTINUED) RECONCILIATION TO GAAP - NINE MONTHS ENDED MARCH 31, Diluted Operating Operating Net Income Earn./(Loss) Gross Profit Expense Income /(Loss) Per Share ------------ --------- --------- ---------- ------------ 2003 Reported Results $ 420,113 $ 343,104 $ 62,050 $ 22,998 $ 0.65 MSSG Restructuring -- -- 5,926 4,148 0.12 AMSG Restructuring -- -- 3,182 2,227 0.06 Corporate Restructuring -- -- 1,236 865 0.02 Widia Integration Costs - MSSG 198 (3,784) 3,982 2,787 0.08 Widia Integration Costs - AMSG -- (22) 22 16 -- --------- --------- --------- --------- -------- Total Core Business 198 (3,806) 14,348 10,043 0.28 --------- --------- --------- --------- -------- J&L Restructuring -- -- 1,267 888 0.03 FSS Restructuring -- -- 38 26 -- --------- --------- --------- --------- -------- Total Non-Core Business -- -- 1,305 914 0.03 --------- --------- --------- --------- -------- 2003 Results Excluding Special Items $ 420,311 $ 339,298 $ 77,703 $ 33,955 $ 0.96 ========= ========= ========= ========= ======== 2002 Reported Results $ 373,951 $ 288,711 $ 60,483 $(227,278) $ (7.23) MSSG Restructuring 160 -- 8,141 5,536 0.18 AMSG Restructuring 1,304 -- 6,573 4,470 0.14 Corporate Restructuring -- -- 160 109 -- MSSG ( Adoption of SFAS 142) -- -- -- 168,314 5.36 AMSG ( Adoption of SFAS 142) -- -- -- 82,092 2.61 --------- --------- --------- --------- -------- Total Core Business 1,464 -- 14,874 260,521 8.29 --------- --------- --------- --------- -------- J&L Restructuring 906 -- 9,846 6,694 0.21 FSS Restructuring -- -- 300 204 0.01 --------- --------- --------- --------- -------- Total Non-Core Business 906 -- 10,146 6,898 0.22 --------- --------- --------- --------- -------- 2002 Results Excluding Special Items $ 376,321 $ 288,711 $ 85,503 $ 40,141 $ 1.28 ========= ========= ========= ========= ======== -more-

-9- FINANCIAL HIGHLIGHTS (CONTINUED) SEGMENT DATA: Quarter Ended Nine Months Ended March 31, March 31, -------------------------- -------------------------- 2003 2002 2003 2002 ----------- ----------- ----------- ----------- Sales: Metalworking Solutions and Services Group $ 297,995 $ 224,971 $ 824,143 $ 666,006 Advanced Materials Solutions Group 79,039 72,879 231,038 227,498 J&L Industrial Supply 51,729 58,873 148,012 173,997 Full Service Supply 30,480 37,129 91,999 113,343 ----------- ----------- ----------- ----------- Total Sales $ 459,243 $ 393,852 $ 1,295,192 $ 1,180,844 =========== =========== =========== =========== Sales By Geographic Region: Within the United States $ 239,565 $ 253,905 $ 708,195 $ 762,140 International 219,678 139,947 586,997 418,704 ----------- ----------- ----------- ----------- Total Sales $ 459,243 $ 393,852 $ 1,295,192 $ 1,180,844 =========== =========== =========== =========== Operating Income (Loss), as reported: Metalworking Solutions and Services Group $ 24,156 $ 25,999 $ 66,488 $ 68,080 Advanced Materials Solutions Group 8,757 6,988 25,153 16,699 J&L Industrial Supply 1,323 1,208 5,209 (1,725) Full Service Supply 31 380 (320) 1,799 Corporate and Eliminations (9,663) (7,295) (34,480) (24,370) ----------- ----------- ----------- ----------- Total Operating Income $ 24,604 $ 27,280 $ 62,050 $ 60,483 =========== =========== =========== =========== Operating Income (Loss), excluding special charges: Metalworking Solutions and Services Group $ 27,144 $ 27,903 $ 76,396 $ 76,221 Advanced Materials Solutions Group 9,879 7,607 28,357 23,272 J&L Industrial Supply 2,124 3,584 6,476 8,122 Full Service Supply 40 644 (282) 2,099 Corporate and Eliminations (9,385) (7,293) (33,244) (24,211) ----------- ----------- ----------- ----------- Total Operating Income $ 29,802 $ 32,445 $ 77,703 $ 85,503 =========== =========== =========== =========== -more-

-10- OPERATING INCOME RECONCILIATION: QUARTER ENDED MARCH 31, CORPORATE & MSSG AMSG J&L FSS ELIMINATIONS -------- -------- -------- -------- ------------ 2003 Reported Operating Income $ 24,156 $ 8,757 $ 1,323 $ 31 $ (9,663) Restructuring 1,077 1,104 801 9 278 Widia Integration Costs 1,911 18 -- -- -- -------- -------- -------- -------- -------- 2003 Operating Income Excluding Special Charges $ 27,144 $ 9,879 $ 2,124 $ 40 $ (9,385) ======== ======== ======== ======== ======== 2002 Reported Operating Income $ 25,999 $ 6,988 $ 1,208 $ 380 $ (7,295) Restructuring 1,904 619 2,376 264 2 Widia Integration Costs -- -- -- -- -- -------- -------- -------- -------- -------- 2002 Operating Income Excluding Special Charges $ 27,903 $ 7,607 $ 3,584 $ 644 $ (7,293) ======== ======== ======== ======== ======== NINE MONTHS ENDED MARCH 31, CORPORATE & MSSG AMSG J&L FSS ELIMINATIONS -------- -------- -------- -------- ------------ 2003 Reported Operating Income $ 66,488 $ 25,153 $ 5,209 $ (320) $(34,480) Restructuring 5,926 3,182 1,267 38 1,236 Widia Integration Costs 3,982 22 -- -- -- -------- -------- -------- -------- -------- 2003 Operating Income Excluding Special Charges $ 76,396 $ 28,357 $ 6,476 $ (282) $(33,244) ======== ======== ======== ======== ======== 2002 Reported Operating Income $ 68,080 $ 16,699 $ (1,725) $ 1,799 $(24,370) Restructuring 8,141 6,573 9,847 300 159 Widia Integration Costs -- -- -- -- -- -------- -------- -------- -------- -------- 2002 Operating Income Excluding Special Charges $ 76,221 $ 23,272 $ 8,122 $ 2,099 $(24,211) ======== ======== ======== ======== ======== -more-

-11- FINANCIAL HIGHLIGHTS (CONTINUED) RECONCILIATION TO GAAP - CASH FLOW INFORMATION Quarter Ended Nine Months Ended March 31, March 31, ---------------------- ---------------------- 2003 2002 2003 2002 --------- --------- --------- --------- Net income $ 9,699 $ 13,144 $ 22,998 $(227,278) Adoption of SFAS 142 -- -- -- 250,406 Other non-cash items 2,994 (545) 9,330 17,676 Depreciation and amortization 21,839 17,935 61,819 55,237 Change in primary working capital (747) 5,780 17,928 43,996 Change in other assets and liabilities 6,238 4,729 3,359 (28,013) --------- --------- --------- --------- Net cash flow provided by operating activities 40,023 41,043 115,434 112,024 Purchases of property, plant and equipment (13,955) (10,235) (35,966) (30,349) Proceeds from disposals of property, plant and equipment 661 2,274 1,504 5,799 --------- --------- --------- --------- Free operating cash flow $ 26,729 $ 33,082 $ 80,972 $ 87,474 ========= ========= ========= ========= CONDENSED BALANCE SHEETS Quarter Ended -------------------------------------------------------------- 3/31/03 12/31/02 9/30/02 6/30/02 3/31/02 ---------- ---------- ---------- ---------- ---------- ASSETS Cash and equivalents $ 17,250 $ 18,155 $ 14,300 $ 10,385 $ 10,705 Accounts receivable, net of allowance 235,908 199,261 221,313 179,101 168,094 Inventories 408,996 403,530 403,590 345,076 351,129 Deferred income taxes 81,651 80,204 71,084 71,375 82,949 Other current assets 44,286 53,868 40,110 31,447 28,064 ---------- ---------- ---------- ---------- ---------- TOTAL CURRENT ASSETS 788,091 755,018 750,397 637,384 640,941 ---------- ---------- ---------- ---------- ---------- Property, plant and equipment, net 476,208 480,066 480,696 435,116 438,505 Goodwill and Intangible assets, net 491,987 478,060 467,140 367,992 370,324 Other assets 107,159 104,937 109,225 83,119 60,458 ---------- ---------- ---------- ---------- ---------- TOTAL $1,863,445 $1,818,081 $1,807,458 $1,523,611 $1,510,228 ========== ========== ========== ========== ========== LIABILITIES Short-term debt $ 15,068 $ 17,591 $ 16,992 $ 23,480 $ 383,639 Accounts payable 120,981 92,114 101,823 101,586 93,810 Accrued liabilities 208,816 171,726 171,045 137,034 152,867 ---------- ---------- ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 344,865 281,431 289,860 262,100 630,316 Long-term debt 565,067 599,425 599,615 387,887 164,257 Deferred income taxes 38,382 46,801 53,475 52,570 52,564 Other liabilities 140,550 135,101 125,816 96,421 88,720 ---------- ---------- ---------- ---------- ---------- TOTAL LIABILITIES 1,088,864 1,062,758 1,068,766 798,978 935,857 ---------- ---------- ---------- ---------- ---------- MINORITY INTEREST 18,070 17,594 17,685 10,671 8,907 ---------- ---------- ---------- ---------- ---------- SHAREOWNERS' EQUITY 756,511 737,729 721,007 713,962 565,464 ---------- ---------- ---------- ---------- ---------- TOTAL $1,863,445 $1,818,081 $1,807,458 $1,523,611 $1,510,228 ========== ========== ========== ========== ========== -more-

-12- SUPPLEMENTAL INFORMATION AND RECONCILIATIONS RECONCILIATION TO GAAP - PRIMARY WORKING CAPITAL Quarter Ended March 31, ----------------------- 2003 2002 -------- -------- Current assets 788,091 640,941 Current liabilities 344,865 630,316 -------- -------- Working capital in accordance with GAAP 443,226 10,625 Excluded items: Cash and cash equivalents (17,250) (10,705) Deferred income taxes (81,651) (82,949) other current assets (44,286) (28,064) -------- -------- (143,187) (121,718) Adjusted current assets 644,904 519,223 Short-term debt (15,068) (383,639) Accrued liabilities (208,816) (152,867) -------- -------- (223,884) (536,506) Adjusted current liabilities 120,981 93,810 Primary working capital 523,923 425,413 Primary working capital is defined as accounts receivable, net of allowance for doubtful accounts, plus inventories minus accounts payable. * * - end - * *