SEC Filing | Kennametal Inc.

1 =============================================================================== FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 Commission file number 1-5318 KENNAMETAL INC. (Exact name of registrant as specified in its charter) 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 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Title Of Each Class Outstanding at October 30, 2000 - ---------------------------------------- -------------------------------- Capital Stock, par value $1.25 per share 30,277,530 ===============================================================================

2 KENNAMETAL INC. FORM 10-Q FOR QUARTER ENDED SEPTEMBER 30, 2000 TABLE OF CONTENTS Item No. Page - ------- ---- PART I. FINANCIAL INFORMATION 1. Financial Statements: Condensed Consolidated Statements of Income (Unaudited) Three months ended September 30, 2000 and 1999..................................................... 1 Condensed Consolidated Balance Sheets (Unaudited) September 30, 2000 and June 30, 2000............................................................... 2 Condensed Consolidated Statements of Cash Flows (Unaudited) Three months ended September 30, 2000 and 1999..................................................... 3 Notes to Condensed Consolidated Financial Statements (Unaudited)................................... 4 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................................... 9 3. Quantitative and Qualitative Disclosures about Market Risk......................................... 14 PART II. OTHER INFORMATION 4. Submission of Matters to a Vote of Security Holders................................................ 15 6. Exhibits and Reports on Form 8-K................................................................... 15

3 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- KENNAMETAL INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - ------------------------------------------------------------------------------- (in thousands, except per share data) Three Months Ended September 30, ------------------------------- 2000 1999 ---- ---- OPERATIONS Net sales $ 450,705 $ 442,943 Cost of goods sold 282,052 279,614 ----------- ----------- Gross profit 168,653 163,329 Operating expense 128,424 122,487 Restructuring and asset impairment charge 1,535 -- Amortization of intangibles 6,323 7,003 ----------- ----------- Operating income 32,371 33,839 Interest expense 13,195 14,527 Other expense (income), net 1,457 (258) ----------- ----------- Income before provision for income taxes and minority interest 17,719 19,570 Provision for income taxes 7,176 8,709 Minority interest 602 948 ----------- ----------- Income before cumulative effect of change in accounting principle 9,941 9,913 Cumulative effect of change in accounting principle, net of tax of $399 (599) -- ----------- ----------- Net income $ 9,342 $ 9,913 =========== =========== PER SHARE DATA Basic earnings per share before cumulative effect of change in accounting principle $ 0.32 $ 0.33 Cumulative effect of change in accounting principle per share (0.02) -- ----------- ---------- Basic earnings per share $ 0.30 $ 0.33 =========== =========== Diluted earnings per share before cumulative effect of change in accounting principle $ 0.32 $ 0.33 Cumulative effect of change in accounting principle per share (0.02) -- ----------- ----------- Diluted earnings per share $ 0.30 $ 0.33 =========== =========== Dividends per share $ 0.17 $ 0.17 =========== =========== Basic weighted average shares outstanding 30,703 30,099 =========== =========== Diluted weighted average shares outstanding 30,742 30,165 =========== =========== See accompanying notes to condensed consolidated financial statements. 1

4 KENNAMETAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - ------------------------------------------------------------------------------- (in thousands) September 30, June 30, 2000 2000 ---- ---- ASSETS Current assets: Cash and equivalents $ 31,560 $ 22,323 Marketable equity securities available-for-sale 24,290 27,614 Accounts receivable, less allowance for doubtful accounts of $8,740 and $12,214 218,863 231,917 Inventories 392,741 410,885 Deferred income taxes 43,760 42,911 Other current assets 17,707 13,065 ------------- ------------- Total current assets 728,921 748,715 ------------- ------------- Property, plant and equipment: Land and buildings 232,774 230,448 Machinery and equipment 720,748 720,556 Less accumulated depreciation (467,391) (452,220) ------------- ------------- Net property, plant and equipment 486,131 498,784 ------------- ------------- Other assets: Investments in affiliated companies 3,351 2,571 Intangible assets, less accumulated amortization of $93,336 and $88,458 653,018 661,172 Other 29,458 29,879 ------------- ------------- Total other assets 685,827 693,622 ------------- ------------- Total assets $ 1,900,879 $ 1,941,121 ============= ============= LIABILITIES Current liabilities: Current maturities of long-term debt and capital leases $ 3,188 $ 3,855 Notes payable to banks 56,248 57,701 Accounts payable 111,873 118,908 Accrued vacation pay 27,842 28,217 Accrued income taxes 25,950 30,226 Accrued payroll 22,777 20,605 Other current liabilities 89,787 91,800 ------------- ------------- Total current liabilities 337,665 351,312 ------------- ------------- Long-term debt and capital leases, less current maturities 613,157 637,686 Deferred income taxes 31,907 31,727 Other liabilities 85,059 85,036 ------------- ------------- Total liabilities 1,067,788 1,105,761 ------------- ------------- Minority interest in consolidated subsidiaries 52,892 55,106 ------------- ------------- SHAREOWNERS' EQUITY Preferred stock, no par value; 5,000 shares authorized; none issued -- -- Capital stock, $1.25 par value; 70,000 shares authorized; 33,319 and 33,200 shares issued 41,648 41,500 Additional paid-in capital 340,135 335,314 Retained earnings 512,853 508,733 Treasury shares, at cost; 2,501 and 2,677 shares held (53,046) (55,236) Unearned compensation (3,661) (2,814) Accumulated other comprehensive loss (57,730) (47,243) ------------- ------------- Total shareowners' equity 780,199 780,254 ------------- ------------- Total liabilities and shareowners' equity $ 1,900,879 $ 1,941,121 ============= ============= See accompanying notes to condensed consolidated financial statements. 2

5 KENNAMETAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - ------------------------------------------------------------------------------- (in thousands) Three Months Ended September 30, ---------------------------------- 2000 1999 ---- ---- OPERATING ACTIVITIES Net income $ 9,342 $ 9,913 Adjustments for noncash items: Depreciation 18,243 19,061 Amortization 6,323 7,003 Restructuring and asset impairment charge 235 -- Cumulative effect of change in accounting principle, net of tax 599 -- Other 2,155 80 Changes in certain assets and liabilities: Accounts receivable 7,444 (1,041) Proceeds from accounts receivable securitization 1,500 -- Inventories 10,801 4,871 Accounts payable and accrued liabilities (4,765) 16,154 Other (3,543) 5,762 ------------ ------------ Net cash flow from operating activities 48,334 61,803 ------------ ------------ INVESTING ACTIVITIES Purchases of property, plant and equipment (11,471) (10,779) Disposals of property, plant and equipment 84 5,049 Purchase of subsidiary stock (1,947) -- Other (165) (124) ------------ ------------ Net cash flow used for investing activities (13,499) (5,854) ------------ ------------ FINANCING ACTIVITIES Net decrease in notes payable (1,333) (5,346) Net decrease in revolver and other lines of credit (23,900) (13,000) Term debt borrowings 350 -- Term debt repayments (718) (30,535) Dividend reinvestment and employee benefit and stock plans 5,736 1,386 Cash dividends paid to shareowners (5,222) (5,117) ------------ ------------ Net cash flow used for financing activities (25,087) (52,612) ------------ ------------ Effect of exchange rate changes on cash and equivalents (511) 3 ------------ ------------ CASH AND EQUIVALENTS Net increase in cash and equivalents 9,237 3,340 Cash and equivalents, beginning of year 22,323 17,408 ------------ ------------ Cash and equivalents, end of period $ 31,560 $ 20,748 ============ ============ SUPPLEMENTAL DISCLOSURES Interest paid $ 13,087 $ 15,858 Income taxes paid 7,770 2,914 See accompanying notes to condensed consolidated financial statements. 3

6 KENNAMETAL INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ------------------------------------------------------------------------------- 1. The condensed consolidated financial statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the company's 2000 Annual Report. The condensed consolidated balance sheet as of June 30, 2000 has been derived from the audited balance sheet included in the company's 2000 Annual Report. These interim statements are unaudited; however, management believes that all adjustments necessary for a fair presentation have been made and all adjustments are normal, recurring adjustments. The results for the three months ended September 30, 2000 and 1999 are not necessarily indicative of the results to be expected for a full fiscal year. Unless otherwise specified, any reference to a "year" is to a fiscal year ended June 30. Certain amounts in the prior years' consolidated financial statements have been reclassified to conform with the current year presentation. 2. On July 20, 2000, the company proposed to the Board of Directors of JLK Direct Distribution Inc., an 83-percent owned subsidiary of the company, to acquire the outstanding shares of JLK it does not already own. On September 11, 2000, the company and JLK announced that they entered into a definitive merger agreement for the company to acquire these minority shares. Pursuant to the agreement, JLK agreed to commence a cash tender offer for all of its shares of Class A Common Stock at a price of $8.75 per share. The tender offer commenced on October 3, 2000 and will expire on November 15, 2000. Following JLK's purchase of shares in the tender offer, the company will acquire the remainder of the minority shares at the same price in a merger. The aggregate value to acquire the minority interest of approximately 4.3 million shares would be approximately $37 million. The transaction has been unanimously approved by the JLK Board of Directors, including its special committee comprised of independent directors of the JLK Board. The transaction is not conditioned on financing, but is subject to conditions set forth in the merger agreement. In July 2000, the company, JLK and the JLK directors (including one former director) were named as defendants in several putative class action lawsuits. The lawsuits seek an injunction, rescission, damages, costs and attorney fees in connection with the company's proposal to acquire the outstanding stock of JLK not owned by the company. On November 3, 2000, the parties to the lawsuits entered into a Memorandum of Understanding (MOU) with respect to a proposed settlement of the lawsuits. The proposed settlement would provide for complete releases of the defendants, as well as among other persons their affiliates and representatives, and would extinguish and enjoin all claims that have been, could have been or could be asserted by or on behalf of any member of the class against the defendants which in any manner relate to the allegations, facts, or other matters raised in the lawsuits or which otherwise relate in any manner to the agreement, the offer and the merger. The MOU also provides, among other matters, for the payment by JLK of up to approximately $0.3 million in attorneys' fees and expenses to plaintiffs' counsel. No payment is to be made for liability or damages. The final settlement of the lawsuits, including the amount of attorneys' fees and expenses to be paid, is subject to the execution of a definitive stipulation of settlement, to consummation of the merger, and to court approval. 3. Inventories are stated at lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method for a significant portion of U.S. inventories and the first-in, first-out (FIFO) or average cost methods for other inventories. The company used the LIFO method of valuing its inventories for approximately 47 percent of total inventories at September 30, 2000. Because inventory valuations under the LIFO method are based on an annual determination of quantities and costs as of June 30 of each year, the interim LIFO valuations are based on management's projections of expected year-end inventory levels and costs. Therefore, the interim financial results are subject to any final year-end LIFO inventory adjustments. 4

7 KENNAMETAL INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- Inventories as of the balance sheet dates consisted of the following (in thousands): September 30, June 30, 2000 2000 ---- ---- Finished goods $ 290,678 $ 306,334 Work in process and powder blends 95,499 96,101 Raw materials and supplies 34,849 35,707 ------------ ------------ Inventory at current cost 421,026 438,142 Less LIFO valuation (28,285) (27,257) ------------ ------------ Total inventories $ 392,741 $ 410,885 ============ ============ 4. The company has been involved in various environmental cleanup and remediation activities at several of its manufacturing facilities. In addition, the company is currently named as a potentially responsible party (PRP) at several Superfund sites in the United States. In 2000, the company recorded a remediation reserve of $3.0 million with respect to its involvement in these matters, which was recorded as a component of operating expense. This represents management's best estimate of its undiscounted future obligation based on its evaluations and discussions with outside counsel and independent consultants, and the current facts and circumstances related to these matters. The company recorded this liability because certain events occurred, including sufficient progress made by the government and the PRPs in the identification of other PRPs and review of potential remediation solutions, that clarified the level of involvement in these matters by the company and its relationship to other PRPs. This led the company to conclude that it was probable that a liability had been incurred. In addition to the amount currently reserved, the company may be subject to loss contingencies related to these matters estimated to be up to an additional $3.3 million. The company believes that such undiscounted unreserved losses are reasonably possible but are not currently considered to be probable of occurrence. The reserved and unreserved liabilities could change substantially in the near term due to factors such as the nature and extent of contamination, changes in remedial requirements, technological changes, discovery of new information, the financial strength of other PRPs and the identification of new PRPs. The company maintains a Corporate Environmental, Health and Safety (EH&S) Department, as well as an EH&S Policy Committee, to ensure compliance with environmental regulations and to monitor and oversee remediation activities. In addition, the company has established an EH&S administrator at its domestic manufacturing facilities. The company's financial management team periodically meets with members of the Corporate EH&S Department and the Corporate Legal Department to review and evaluate the status of environmental projects and contingencies. On a quarterly basis, management establishes or adjusts financial provisions and reserves for environmental contingencies in accordance with Statement of Financial Accounting Standard (SFAS) No. 5, "Accounting for Contingencies." 5. For purposes of determining the number of dilutive shares outstanding, weighted average shares outstanding for basic earnings per share calculations were increased due to the dilutive effect of unexercised stock options by 39,253 and 66,272 for the three months ended September 30, 2000 and 1999, respectively. 5

8 KENNAMETAL INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- 6. Comprehensive income (loss) for the three months ended September 30, 2000 and 1999 is as follows (in thousands): Three Months Ended September 30, ----------------------------------- 2000 1999 ---- ---- Net income $ 9,342 $ 9,913 Cumulative effect of change in accounting principle, net of tax 1,571 -- Unrealized loss on derivatives designated and and qualified as cash flow hedges, net of tax (302) -- Reclassification of unrealized gains or losses on matured derivatives, net of tax (58) -- Unrealized loss on marketable equity securities available-for-sale, net of tax (1,618) (1,998) Minimum pension liability adjustment, net of tax 47 (26) Foreign currency translation adjustments (10,127) 4,062 ------------- ------------ Comprehensive income (loss) $ (1,145) $ 11,951 ============ ============ The components of accumulated other comprehensive loss consist of the following (in thousands): September 30, June 30, 2000 2000 ---- ---- Unrealized gain on marketable equity securities available-for-sale, net of tax $ 7,045 $ 8,663 Unrealized gains on derivatives designated and qualified as cash flow hedges, net of tax 1,211 -- Minimum pension liability adjustment, net of tax (803) (850) Foreign currency translation adjustments (65,183) (55,056) ----------- ----------- Total accumulated other comprehensive loss $ (57,730) $ (47,243) =========== =========== 7. On July 1, 2000, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," was adopted resulting in the recording of current assets of $1.6 million, long-term assets of $1.4 million, current liabilities of $1.3 million, long-term liabilities of $0.7 million, a decrease in accumulated other comprehensive loss of $1.6 million, net of tax, and a loss from the cumulative effect from the change in accounting principle of $0.6 million, net of tax. Forward contracts, purchased options and range forward contracts, designated as cash flow hedges, hedge anticipated cash flows from cross-border intercompany sales of product and services through the remainder of 2001. Gains and losses realized on these contracts at maturity are recorded in accumulated other comprehensive loss, net of tax, and are recognized as a component of other expense (income), net when the underlying sales of product or services are recognized into earnings. The company recognized expense of $0.1 million, as a component of other expense (income), net, during the September 2000 quarter related to hedge ineffectiveness. Floating-to-fixed interest rate swap agreements, designated as cash flow hedges, hedge the company's floating rate debt and mature at various times through June 2003. The fair value of these contracts is recorded in the balance sheet, with the offset to accumulated other comprehensive loss, net of tax. Forward contracts hedging significant cross-border intercompany loans are considered other derivatives and therefore, not eligible for hedge accounting. These contracts are recorded at fair value in the balance sheet, with the offset to other expense (income), net. Based upon foreign exchange and interest rates at September 30, 2000, the company expects to recognize net current assets of $2.9 million into earnings in the next 12 months related to all derivative instruments. 6

9 KENNAMETAL INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- 8. In the September 2000 quarter, the company's management began to implement a business improvement plan in the JLK/Industrial Supply segment. As a result, the company recorded a restructuring and asset impairment charge of $1.6 million associated with the closure of five underperforming satellite locations and severance for certain individuals. This includes a $0.2 million noncash writedown of the book value of certain property, plant and equipment, net of salvage value, that management determined would no longer be utilized in ongoing operations. The costs accrued for these plans were based on management estimates using the latest information available at the time that the accrual was established. The costs charged against the accrual in the September 2000 quarter were not significant. The company continues to review its business strategies and pursue other cost-reduction activities, some of which could result in future charges. In 2000, the company announced plans to close, consolidate or downsize several plants, warehouses and offices, and associated work force reductions as part of its overall plan to increase asset utilization and financial performance, and to reposition the company to become the premier tooling solutions supplier. The costs charged against the restructuring accrual for the 2000 programs as of September 30, 2000 were as follows (in thousands): June 30, Cash September 30, 2000 Expenditures Adjustments 2000 ---- ------------ ----------- ---- Employee severance $ 2,533 $ (858) $ (52) $ 1,623 Facility rationalizations 3,518 (210) -- 3,308 ----------- ---------- ---------- ----------- Total $ 6,051 $ (1,068) $ (52) $ 4,931 =========== ========== ========== =========== In the September 2000 quarter, the company incurred period costs of $0.1 million related to these initiatives which were included in cost of goods sold as incurred. The adjustment to the accrual for employee severance is due to a reduction in actual amounts paid to certain individuals compared to what was initially anticipated. This adjustment was recorded as a component of restructuring and asset impairment charge. In 1999, management implemented restructuring plans including several programs to reduce costs, improve operations and enhance customer satisfaction. Accruals for these 1999 programs were $1.4 million at September 30, 2000. Costs charged against the accrual for the voluntary early retirement plan in the September 2000 quarter were $0.1 million. There were no costs charged against the accrual for the plant closure. 9. In September 2000, management reorganized the financial reporting of its operations to focus on global business units consisting of Metalworking Services & Solutions Group (MSSG), Advanced Materials Solutions Group (AMSG) and JLK/Industrial Supply, and corporate functional shared services. The results for all periods presented have been restated to conform to the new reporting structure. The company's external sales, intersegment sales and operating income by segment for the three months ended September 30, 2000 and 1999 are as follows (in thousands): Three Months Ended September 30, --------------------------------- 2000 1999 ---- ---- External sales: MSSG $ 246,816 $ 242,164 AMSG 86,779 84,800 JLK/Industrial Supply 117,110 115,979 ----------- ----------- Total external sales $ 450,705 $ 442,943 =========== =========== Intersegment sales: MSSG $ 23,966 $ 41,903 AMSG 7,174 6,604 JLK/Industrial Supply 3,341 2,336 ----------- ----------- Total intersegment sales $ 34,481 $ 50,843 =========== =========== 7

10 KENNAMETAL INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) - ------------------------------------------------------------------------------- Three Months Ended September 30, ---------------------------------- 2000 1999 ---- ---- Total sales: MSSG $ 270,782 $ 284,067 AMSG 93,953 91,404 JLK/Industrial Supply 120,451 118,315 ----------- ----------- Total sales $ 485,186 $ 493,786 =========== =========== Operating income: MSSG $ 27,922 $ 29,257 AMSG 11,187 10,623 JLK/Industrial Supply 552 6,979 Corporate and eliminations (7,290) (13,020) ----------- ----------- Total operating income $ 32,371 $ 33,839 =========== =========== JLK/Industrial Supply operating income for the three months ended September 30, 2000 was reduced by $1.6 million related to restructuring and asset impairment charges, and $1.7 million of costs primarily related to the tender offer to acquire the outstanding shares of JLK. MSSG operating income for the three months ended September 30, 1999 includes a gain of $4.7 million on the sale of inventory to the JLK/Industrial Supply segment. The elimination of this gain from consolidated results is included in Corporate and eliminations. The company's assets by business area at September 30, 2000 and June 30, 2000 are as follows (in thousands): September 30, 2000 June 30, 2000 ------------------ --------------- Assets: MSSG $ 957,610 $ 978,188 AMSG 465,635 475,741 JLK/Industrial Supply 283,632 287,682 Corporate 194,002 199,510 --------------- --------------- Total assets $ 1,900,879 $ 1,941,121 =============== =============== 10. In September 2000, SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities - a replacement of FASB Statement No. 125" was issued. SFAS No. 140 revises criteria for accounting for asset securitizations, other financial-asset transfers, and collateral and introduces new disclosures, but otherwise carries forward most of SFAS No. 125's provisions without amendment. SFAS No. 140 has an immediate impact through new disclosure requirements and amendments of the collateral provisions of SFAS No. 125. These changes must be applied for fiscal years ending after December 15, 2000. The company is currently evaluating the effects of SFAS No. 140 and is preparing a plan for implementation. 8

11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ------------------------------------------------------------------------------- RESULTS OF OPERATIONS OVERVIEW Sales for the September 2000 quarter were $450.7 million, an increase of two percent from $442.9 million in the year-ago quarter. Sales increased six percent excluding unfavorable foreign currency effects of two percent and fewer workdays in the September 2000 quarter. Sales performance generally was favorable across the company's businesses, with particular strength from international markets. Soft end markets in the North American construction business negatively affected this growth by one percent. Net income for the quarter ended September 30, 2000 was $9.3 million, or $0.30 per share, compared to net income of $9.9 million, or $0.33 per share, in the same quarter last year. Excluding special charges in the September 2000 quarter, net income was $11.5 million, or $0.38 per share. The earnings improvement is attributable to higher sales levels and margins, lower interest costs and a decline in the company's effective tax rate, partially offset by higher operating expense. Special charges in the September 2000 quarter of $3.2 million or $0.06 per share, related to the JLK business improvement plan and costs associated with the tender offer to acquire the outstanding shares of JLK, coupled with a charge of $0.6 million, net of tax, or $0.02 per share, related to the adoption of Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities." BUSINESS SEGMENT REVIEW In September 2000, management reorganized the financial reporting of its operations to focus on global business units consisting of Metalworking Services & Solutions Group (MSSG), Advanced Materials Solutions Group (AMSG) and JLK/Industrial Supply, and corporate functional shared services. The results for all periods presented have been restated to conform to the new reporting structure. METALWORKING SERVICES & SOLUTIONS GROUP Three Months Ended September 30, -------------------------------- 2000 1999 ---- ---- External sales $ 246,816 $ 242,164 Intersegment sales 23,966 41,903 Operating income 27,922 29,257 MSSG sales increased five percent compared to the September 1999 quarter, excluding unfavorable foreign exchange effects of three percent due to the stronger U.S. dollar. Most major markets experienced year-over-year growth, with particular strength in North America and Europe. In North America, sales were up four percent, while Europe was up eight percent, in local currency, due primarily to strength in the machine tool builders and energy markets. The automotive end market began to slow both in North America and Europe, with particular weakness in the heavy-duty truck market. Sales in Asia continued to grow, up seven percent compared to a year ago. Operating income was $27.9 million compared to $29.3 million last year. The September 1999 results include a gain of $4.7 million on the sale of $12.7 million of inventory to the JLK/Industrial Supply segment. This purchase by JLK was necessary in order for JLK to have access to Kennametal's branded inventory subsequent to the new business system implementation. Excluding this gain and incremental period costs of $1.3 million, operating income increased eight percent or $2.1 million, as a result of lean techniques that improved manufacturing performance. The company incurred period costs of $0.1 million related to the Kingswinford plant downsizing in the September 2000 quarter, compared to $1.4 million related to the Solon plant closing in the September 1999 quarter, both of which were included in cost of goods sold as incurred. Operating expense was flat compared to the September 1999 quarter. 9

12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) - ------------------------------------------------------------------------------- ADVANCED MATERIALS SOLUTIONS GROUP Three Months Ended September 30, -------------------------------- 2000 1999 ---- ---- External sales $ 86,779 $ 84,800 Intersegment sales 7,174 6,604 Operating income 11,187 10,623 AMSG sales increased five percent, from the September 1999 quarter, excluding unfavorable foreign exchange effects of three percent. Continued strength in electronics, driven by strong demand for computer circuit boards and cellular phones, and higher demand for products used for oil and gas exploration, contributed 10 percent to the growth in sales, on a local currency basis. This was partially offset by soft demand for construction tools in North America as highway funds are being spent on infrastructure programs and new roads. Operating income increased $0.6 million from a year ago due to higher sales levels, partially offset by weakness in the high-margin construction tool business. Operating expense was flat compared to last year. JLK/INDUSTRIAL SUPPLY Three Months Ended September 30, ---------------------------------- 2000 1999 ---- ---- External sales $ 117,110 $ 115,979 Intersegment sales 3,341 2,336 Operating income 552 6,979 JLK sales increased one percent compared to last year as higher sales through Full Service Supply (FSS) programs contributed three percent to sales growth, partially offset by a decline in sales through acquired distributors of two percent. The increase in FSS sales is due to the continued penetration in existing accounts coupled with curtailed growth in the September 1999 quarter as a result of the implementation of its new business system. Sales at the acquired distributors declined due to reduced demand in the end markets served. The company provided FSS programs to 182 customers covering 260 different facilities at September 30, 2000, compared to 163 customers covering 262 different facilities at September 30, 1999. Operating income was $0.6 million and included a restructuring and asset impairment charge of $1.6 million and special charges of $1.7 million primarily related to the tender offer to acquire the outstanding shares of JLK. Excluding these charges, operating income was $3.9 million and was primarily affected by lower margins in all businesses due to a shift in end markets served, coupled with higher operating expense due to higher shipping costs incurred to provide enhanced customer service. As part of a business improvement plan, JLK recorded a restructuring and asset impairment charge associated with the closure of five underperforming satellite locations and severance for certain individuals. GROSS PROFIT MARGIN The consolidated gross profit margin for the September 2000 quarter was 37.4 percent, a 50 basis point improvement compared with 36.9 percent in the prior year. This increase is the result of implementing lean manufacturing techniques that has resulted in ongoing reductions in manufacturing variances and a $1.3 million reduction in period costs incurred associated with restructuring programs. OPERATING EXPENSE Consolidated operating expense for the September 2000 quarter was $128.4 million, including $1.7 million of costs primarily related to the tender offer to acquire the outstanding shares of JLK. Excluding these costs, operating expense increased three percent due to investments in strategic initiatives, including increased research 10

13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) - ------------------------------------------------------------------------------- and development, productivity programs and the company's e-commerce initiative. Excluding these costs, operating expense increased one percent. RESTRUCTURING AND ASSET IMPAIRMENT CHARGE In the September 2000 quarter, the company's management began to implement a business improvement plan in the JLK/Industrial Supply segment. As a result, the company recorded a restructuring and asset impairment charge of $1.6 million associated with the closure of five underperforming satellite locations and severance for certain individuals. This includes a $0.2 million non-cash writedown of the book value of certain property, plant and equipment, net of salvage value, that management determined would no longer by utilized in ongoing operations. The costs accrued for these plans were based on management estimates using the latest information available at the time that the accrual was established. The costs charged against the accrual in the September 2000 quarter were not significant. Annualized benefits of $0.9 million are expected to be realized beginning in the March 2001 quarter. The company continues to review its business strategies and pursue other cost-reduction activities, some of which could result in future charges. In 2000, the company announced plans to close, consolidate or downsize several plants, warehouses and offices, and associated work force reductions as part of its overall plan to increase asset utilization and financial performance, and to reposition the company to become the premier tooling solutions supplier. The costs charged against the restructuring accrual for the 2000 programs as of September 30, 2000 were as follows (in thousands): June 30, Cash September 30, 2000 Expenditures Adjustments 2000 ---- ------------ ----------- ---- Employee severance $ 2,533 $ (858) $ (52) $ 1,623 Facility rationalizations 3,518 (210) -- 3,308 ------------- ----------- ---------- ---------- Total $ 6,051 $ (1,068) $ (52) $ 4,931 ============= =========== ========== ========== In the September 2000 quarter, the company incurred period costs of $0.1 million related to these initiatives which were included in cost of goods sold as incurred. The adjustment to the accrual for employee severance is due to a reduction in actual amounts paid to certain individuals compared to what was initially anticipated. This adjustment was recorded as a component of restructuring and asset impairment charge. In 1999, management implemented restructuring plans including several programs to reduce costs, improve operations and enhance customer satisfaction. Accruals for these 1999 programs were $1.4 million at September 30, 2000. Costs charged against the accrual for the voluntary early retirement plan in the September 2000 quarter were $0.1 million. There were no costs charged against the accrual for the plant closure. INTEREST EXPENSE Interest expense for the September 2000 quarter declined to $13.2 million due to reduced debt levels, partially offset by higher borrowing rates. Average U.S. borrowing rates of 7.4 percent were up 100 basis points from a year ago due to Federal Reserve rate increases. OTHER EXPENSE (INCOME), NET Other expense for the September 2000 quarter included fees of $1.6 million incurred in connection with the accounts receivable securitization program. Other income for the September 1999 quarter included a net one-time gain of $1.4 million from the sale of miscellaneous underutilized assets. This was partially offset by $1.1 million in fees incurred in connection with the accounts receivable securitization program. 11

14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) - ------------------------------------------------------------------------------- INCOME TAXES The effective tax rate for the September 2000 quarter was 40.5 percent compared to an effective tax rate of 44.5 percent in the prior year. The decline in the effective tax rate is attributable to successful tax planning initiatives in Europe, which more than offset the repeal of the Foreign Sales Corporation tax laws in the United States. CHANGE IN ACCOUNTING PRINCIPLE On July 1, 2000, SFAS No. 133 was adopted, resulting in the recording of a loss from the cumulative effect from the change in accounting principle of $0.6 million, net of tax, or $0.02 per share. The loss primarily relates to the write-down of previously paid option premiums. LIQUIDITY AND CAPITAL RESOURCES The company's cash flow from operations is the primary source of financing for capital expenditures and internal growth. During the quarter ended September 30, 2000, the company generated $48.3 million in cash flow from operations, a decline of $13.5 million compared to a year ago. The decline resulted primarily from lower working capital improvements of $15.8 million, partially offset by increased proceeds from the securitization of accounts receivable of $1.5 million and a $1.4 million increase in non-cash items. Net cash used for investing activities was $13.5 million, an increase of $7.6 million compared to the prior year. The increase is due to a $5.0 million reduction in proceeds from the disposal of underutilized assets, that occurred in the September 1999 quarter, coupled with the purchase of minority interests in two consolidated subsidiaries for $1.9 million in the September 2000 quarter. Net cash used for financing activities was $25.1 million, a decline of $27.5 million compared to the prior year. This decline is due to lower debt reductions of $23.3 million due to lower cash flow from operations coupled with higher proceeds of $4.4 million from company contributions of capital stock to U.S. defined contribution pension plans. The company generated free operating cash flow (FOCF) of $42.9 million and $50.4 million for the quarters ended September 30, 2000 and 1999, respectively. The decline in FOCF is due to lower working capital improvements in the September 2000 quarter. In October 2000, the company continued its program to repurchase, from time to time, up to a total of 1.6 million shares of its outstanding capital stock for investment or other general corporate purposes. This repurchase program was announced on January 31, 1997. During October 2000, the company purchased 600,000 shares of its capital stock at a total cost of $16.5 million, bringing the total purchased under the authority of this program to approximately 1.4 million shares. The repurchases were financed principally by cash from operations and short-term borrowings. Additionally, the Board of Directors authorized the company to repurchase, from time to time, up to a total of 2.0 million additional shares of its outstanding capital stock. No repurchases have been made under this new program. Repurchases may be made from time to time in the open market, in negotiated or other permissible transactions. FINANCIAL CONDITION Total assets were $1,900.9 million at September 30, 2000, a two percent decline from June 30, 2000. Net working capital was $391.3 million, down two percent from $397.4 million at June 30, 2000. The ratio of current assets to current liabilities at September 30, 2000 was 2.2 compared to 2.1 at June 30, 2000. Primary working capital as a percentage of sales (PWC%) at September 30, 2000 was 28.5 percent, compared to 29.4 percent at June 30, 2000 and 32.0 percent at September 30, 1999. The improvements in net working capital, the current ratio and PWC% are primarily due to company sponsored programs to reduce primary working capital. The total 12

15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) - ------------------------------------------------------------------------------- debt-to-total capital ratio declined to 44.7 percent at September 30, 2000 from 45.6 percent at June 30, 2000 and 50.2 percent at September 30, 1999 due to the FOCF generated by the company. ACQUISITION OF JLK MINORITY INTEREST On July 2000, the company proposed to the Board of Directors of JLK Direct Distribution Inc., an 83-percent owned subsidiary to acquire the outstanding shares of JLK it does not already own. On September 11, 2000, the company and JLK announced that they entered into a definitive merger agreement for the company to acquire these minority shares. Pursuant to the agreement, JLK agreed to commence a cash tender offer for all of its shares of Common A Common Stock at a price of $8.75 per share. The tender offer commenced on October 3, 2000 and will expire on November 15, 2000. Following JLK's purchase of shares in the tender offer, the company will acquire the remainder of the minority shares at the same price in a merger. The aggregate value to acquire the minority interest of approximately 4.3 million shares would be approximately $37 million. The transaction has been unanimously approved by the JLK Board of Directors, including its special committee comprised of independent directors of the JLK Board. The transaction is not conditioned on financing, but is subject to conditions set forth in the merger agreement. In July 2000, the company, JLK and the JLK directors (including one former director) were named as defendants in several putative class action lawsuits. The lawsuits seek an injunction, rescission, damages, costs and attorney fees in connection with the company's proposal to acquire the outstanding stock of JLK not owned by the company. On November 3, 2000, the parties to the lawsuits entered into a Memorandum of Understanding (MOU) with respect to a proposed settlement of the lawsuits. The proposed settlement would provide for complete releases of the defendants as well as among other persons their affiliates and representatives, and would extinguish and enjoin all claims that have been, could have been or could be asserted by or on behalf of any member of the class against the defendants which in any manner relate to the allegations, facts, or other matters raised in the lawsuits or which otherwise relate in any manner to the agreement, the offer and the merger. The MOU also provides, among other matters, for the payment by JLK of up to approximately $0.3 million in attorneys' fees and expenses to plaintiffs' counsel. No payment is to be made for liability or damages. The final settlement of the lawsuits, including the amount of attorneys' fees and expenses to be paid, is subject to the execution of a definitive stipulation of settlement, to consummation of the merger, and to court approval. STRATEGIC ALTERNATIVES The company is considering strategic alternatives for two subsidiaries. Strong Tool Company and Abrasive & Tools Specialties Company, including the possible divestiture of these businesses or a portion thereof. In 2000, these businesses represented approximately $90 million in sales. The company is currently not a party to any written or oral agreement regarding the divestiture of these businesses. NEW ACCOUNTING STANDARD In September 2000, SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities -- a replacement of FASB Statement No. 125" was issued. SFAS No. 140 revises criteria for accounting for asset securitizations, other financial-asset transfers, and collateral and introduces new disclosures, but otherwise carries forward most of SFAS No. 125's provisions without amendment. SFAS No. 140 has an immediate impact through new disclosure requirements and amendments of the collateral provisions of SFAS No. 125. These changes must be applied for fiscal years ending after December 15, 2000. The company is currently evaluating the effects of SFAS No. 140 and is preparing a plan for implementation. FORWARD-LOOKING STATEMENTS This Form 10-Q contains "forward-looking statements" as defined by Section 21E of the Securities Exchange Act of 1934. Actual results may differ materially from those expressed or implied in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, the extent that the economic conditions in the United States and Europe, and to a lesser extent, Asia Pacific are not sustained, risks associated with integrating businesses, demands on management resources, risks associated with international markets such as currency exchange rates, competition, and risks associated with the implementation of restructuring actions and environmental remediation activities. The company undertakes no obligation to publicly release any revisions to forward-looking statements to reflect events or circumstances occurring after the date hereof. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK - ------------------------------------------------------------------------------- There were no material changes in the company's exposure to market risk from June 30, 2000. 13

16 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------------------------- At the Annual Meeting of Shareowners on October 24, 2000, the shareowners of the company voted on the election of four directors, the approval of the Kennametal Inc. 2000 Employee Stock Purchase Plan and the election of independent public accountants. The following is the number of shares voted in favor of and against each matter and the number of shares having authority to vote on each matter but withheld. 1. With respect to the votes cast for the election of three directors whose terms expire in 2003: For Withheld Broker Non-Vote ------------------------------------------------------------ Richard C. Alberding 22,940,427 3,388,891 -- William R. Newlin 22,790,941 3,538,377 -- Timothy S. Lucas 22,960,528 3,368,790 -- With respect to the votes cast for the election of one director whose term expires in 2002: For Withheld ---------------------------------- Kathleen J. Hempel 25,966,644 362,674 The following other directors' terms of office continued after the meeting: Peter B. Bartlett, A. Peter Held, Aloysius T. McLaughlin, Jr., Markos I. Tambakeras and Larry Yost. 2. With respect to the votes cast for the approval of the Kennametal Inc. 2000 Employee Stock Purchase Plan: For Against Abstained ------------------------------------------------------ Kennametal Inc. 2000 Employee Stock Purchase Plan 21,080,090 5,155,098 94,130 3. With respect to the election of the firm of Arthur Andersen LLP, independent public accountants, to audit the financial statements of the company and its subsidiary companies for the fiscal year ending June 30, 2001: For Against Abstained ------------------------------------------------------ Arthur Andersen LLP 26,200,817 71,029 57,472 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------------------------------------------------------------------------------- (a) Exhibits (4) Instruments Defining the Rights of Security Holders, Including Indentures 4.1 Rights Agreement, effective as of November 2, 2000, is incorporated herein by reference to Exhibit 1 of the company's October 10, 2000 Form 8-A. (27) Financial Data Schedules 27.1 For the three months ended September 30, 2000, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.2 For the year ended June 30, 2000, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.3 For the nine months ended March 31, 2000, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.4 For the six months ended December 31, 1999, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.5 For the three months ended September 30, 1999, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.6 For the year ended June 30, 1999, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.7 For the nine months ended March 31, 1999, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.8 For the six months ended December 31, 1998, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.9 For the three months ended September 30, 1998, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 27.10 For the year ended June 30, 1998, as restated, submitted to the Securities and Exchange Commission in electronic format. Filed herewith. 14

17 (b) Reports on Form 8-K A report on Form 8-K was filed on July 21, 2000 regarding the announcement of a proposal by Kennametal Inc. to acquire the outstanding shares of JLK Direct Distribution Inc., an 83 percent- owned subsidiary of Kennametal Inc., that it does not already own for $6.70 per share in cash. A report on Form 8-K was filed on July 25, 2000 regarding the announcements that the Board of Directors adopted a new shareowner rights plan to replace its existing plan which has been in effect since 1990, that Robert L. McGeehan resigned as a member of the Board of Directors effective July 24, 2000, and that Kennametal and all the directors of JLK Direct Distribution Inc., an 83 percent-owned subsidiary of Kennametal Inc., were named in civil action No. GD00-12565, filed in the Court of Common Pleas in Allegheny County, Pennsylvania. A report on Form 8-K was filed on September 11, 2000 regarding the announcement that Kennametal Inc. and JLK Direct Distribution Inc., an 83 percent-owned subsidiary of Kennametal Inc., have entered into a definitive merger agreement for Kennametal to acquire the outstanding shares of JLK that Kennametal does not already own. A report on Form 8-K was filed on September 12, 2000 regarding the announcement that JLK Direct Distribution Inc., an 83 percent-owned subsidiary of Kennametal Inc., expects to recognize special charges of $15 - $20 million associated with its business improvement plan. 15

18 SIGNATURES 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 thereunto duly authorized. KENNAMETAL INC. Date: November 14, 2000 By: /s/ FRANK P. SIMPKINS ----------------------------- Frank P. Simpkins Corporate Controller and Chief Accounting Officer 16

5 This schedule contains summary financial information extracted from the September 30, 2000 Condensed Consolidated Financial Statements (unaudited), and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS JUN-30-2001 JUL-01-2000 SEP-30-2000 31,560 24,290 227,603 8,740 392,741 728,921 953,522 467,391 1,900,879 337,665 0 0 0 41,648 738,551 1,900,879 450,705 450,705 282,052 282,052 11,331 315 13,195 17,719 7,176 9,941 0 0 599 9,342 0.30 0.30

5 This schedule contains summary restated financial information extracted from the June 30, 2000 Consolidated Financial Statements and is qualified in its entirety by reference to such financial statements. 1,000 YEAR JUN-30-2000 JUL-01-1999 JUN-30-2000 22,323 27,614 244,131 12,214 410,885 748,715 951,004 452,220 1,941,121 351,312 0 0 0 41,500 738,754 1,941,121 1,853,663 1,853,663 706,376 706,376 45,698 4,177 55,079 100,411 43,700 51,977 0 267 0 51,710 1.71 1.70

5 This schedule contains summary restated financial information extracted from the March 31, 2000 Condensed Consolidated Financial Statements (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS JUN-30-2000 JUL-01-1999 MAR-31-2000 21,552 9,173 258,324 13,322 417,333 748,927 948,945 444,521 1,948,719 367,226 0 0 0 41,354 715,722 1,948,719 1,379,890 1,379,890 859,242 859,242 34,813 1,970 41,948 64,739 28,485 32,521 0 267 0 32,254 1.07 1.06

5 This schedule contains summary restated financial information extracted from the December 31, 1999 Condensed Consolidated Financial Statements (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS JUN-30-2000 JUL-01-1999 DEC-31-1999 17,258 10,113 238,648 14,626 417,473 727,702 968,823 450,085 1,943,921 279,643 0 0 0 41,242 710,926 1,943,921 896,871 896,871 564,675 564,675 22,936 1,543 28,280 36,894 16,418 18,424 0 267 0 18,157 0.60 0.60

5 This schedule contains summary restated financial information extracted from the September 30, 1999 Condensed Consolidated Financial Statements (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS JUN-30-2000 JUL-01-1999 SEP-30-1999 20,748 11,772 249,266 15,399 431,324 751,194 997,652 466,468 1,989,338 367,627 0 0 0 41,128 712,599 1,989,338 442,943 442,943 279,614 279,614 11,350 970 14,527 19,570 8,709 9,913 0 0 0 9,913 0.33 0.33

5 This schedule contains summary restated financial information extracted from the June 30, 1999 Consolidated Financial Statements and is qualified in its entirety by reference to such financial statements. 1,000 YEAR JUN-30-1999 JUL-01-1998 JUN-30-1999 17,408 13,436 246,556 15,269 434,462 748,646 992,292 452,492 2,000,480 375,064 0 0 0 41,128 704,003 2,000,480 1,902,916 1,902,916 1,198,651 1,198,651 44,585 8,230 68,594 78,410 32,900 39,116 0 0 0 39,116 1.31 1.31

5 This schedule contains summary restated financial information extracted from the March 31, 1999 Condensed Consolidated Financial Statements (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS JUN-30-1999 JUL-01-1998 MAR-31-1999 15,896 11,567 356,995 15,041 454,278 857,947 995,828 446,855 2,130,842 411,438 0 0 0 41,025 700,291 2,130,842 1,444,291 1,444,291 910,816 910,816 34,135 6,936 53,248 49,438 21,000 23,610 0 0 0 23,610 0.79 0.79

5 This schedule contains summary restated financial information extracted from the December 31, 1998 Condensed Consolidated Financial Statements (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 29,311 0 347,170 13,935 465,154 857,762 993,966 436,293 2,144,323 400,453 0 0 0 41,025 707,854 2,144,323 965,240 965,240 605,162 605,162 23,476 2,129 35,256 42,504 18,100 21,430 0 0 0 21,430 0.72 0.72

5 This schedule contains summary restated financial information extracted from the September 30, 1998 Condensed Consolidated Financial Statements (unaudited) and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS JUN-30-1999 JUL-01-1998 SEP-30-1998 21,044 0 355,693 13,565 458,836 852,208 958,085 417,893 2,135,623 400,113 0 0 0 41,025 695,592 2,135,623 480,922 480,922 301,906 301,906 11,976 500 17,621 15,655 6,700 7,394 0 0 0 7,394 0.25 0.25

5 This schedule contains summary restated financial information extracted from the June 30, 1998 Consolidated Financial Statements and is qualified in its entirety by reference to such financial statements. 1,000 YEAR JUN-30-1998 JUL-01-1997 JUN-30-1998 18,366 0 344,651 11,974 436,472 818,831 912,569 386,642 2,098,406 377,069 0 0 0 41,025 694,435 2,098,406 1,678,388 1,678,388 994,481 994,481 36,045 2,453 59,536 130,576 53,900 71,197 0 0 0 71,197 2.61 2.58