1 ================================================================================ SCHEDULE 14A SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material under Section 240.14a-12 KENNAMETAL INC. (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT) Payment of Filing Fee (Check the appropriate box): [X] No fee required [ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11 (1) Title of each class of securities to which transaction applies: _______ (2) Aggregate number of securities to which transaction applies: __________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule O-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ____________ (4) Proposed maximum aggregate value of transaction: ______________________ (5) Total fee paid: _______________________________________________________ [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule O-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: _______________________________________________ (2) Form, Schedule or Registration Statement No.: _________________________ (3) Filing Party: _________________________________________________________ (4) Date Filed: ___________________________________________________________ ================================================================================
2 KENNAMETAL INC. LATROBE, PENNSYLVANIA 15650 NOTICE OF ANNUAL MEETING OF SHAREOWNERS TO BE HELD OCTOBER 30, 2001 To the Shareowners of Kennametal Inc.: The Annual Meeting of Shareowners of Kennametal Inc. will be held at the Technology Center, located at 1600 Technology Way (on Route 981 South), approximately 1/4 mile south of its intersection with U.S. Route 30 near Latrobe, Unity Township, Pennsylvania, on Tuesday, October 30, 2001, at 2:00 p.m. (Eastern Standard Time), to consider and act upon the following matters: 1. The election of three directors for terms to expire in 2004; and 2. The election of auditors for the fiscal year ending June 30, 2002. Shareowners also will be asked to consider such other business as may properly come before the meeting. The Board of Directors has fixed Tuesday, September 11, 2001, as the record date. Only shareowners of record at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting. IF YOU ARE UNABLE TO ATTEND THE MEETING, IT IS REQUESTED THAT YOU COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE. BY ORDER OF THE BOARD OF DIRECTORS DAVID T. COFER Secretary September 13, 2001
3 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREOWNERS OCTOBER 30, 2001 This Proxy Statement is being furnished to the shareowners of Kennametal Inc. (the "Corporation") in connection with the solicitation by the Board of Directors of the Corporation of proxies to be voted at the Annual Meeting of Shareowners, which is scheduled to be held October 30, 2001. Only holders of record of capital stock, par value $1.25 per share, of the Corporation ("Capital Stock") at the close of business on September 11, 2001, will be entitled to vote at the meeting. On that date there were 31,187,942 shares of Capital Stock outstanding and entitled to one vote per share. Any shareowner who executes and returns the proxy may revoke it at will at any time prior to the voting of the proxy, but revocation of the proxy will not be effective until written notice thereof has been received by the Secretary of the Corporation. The proxy may also be revoked by voting in person at the meeting or by delivering a later-dated, signed proxy. The shares represented by all properly executed proxies received by the Secretary in the accompanying form of proxy prior to the meeting and not so revoked will be voted. Where a choice is specified on the form of proxy, the shares will be voted in accordance with the choice made therein. If no such choice is made, the shares will be voted in accordance with the recommendation of the Board of Directors. The form of proxy also confers discretionary authority on the named proxies to vote the shares represented by the proxy on any matter that is properly presented for action at the Annual Meeting of Shareowners. Under Pennsylvania law and the Corporation's Articles of Incorporation and By-Laws, abstentions and broker non-votes will have no effect on matters to be voted on at the Annual Meeting since directors are to be elected by plurality vote and auditors are to be elected by the affirmative vote of at least a majority of the votes cast by shareowners present, in person or by proxy, at the meeting. A majority of the named proxies who shall be present and shall act at the meeting (or if only one shall be present and act, then that one) may exercise all powers granted to them by the proxies solicited hereunder. The address of the principal executive offices of the Corporation is 1600 Technology Way, Latrobe, Pennsylvania 15650, and the date this Proxy Statement was mailed to shareowners was on or about September 19, 2001. ELECTION OF DIRECTORS Three directors are to be elected to hold office as Directors of the Third Class for terms of three years and until their successors are elected and qualified. The owners of Capital Stock have cumulative voting rights in the election of directors. In voting for directors, a shareowner has the right to multiply the total number of shares which the shareowner is entitled to vote by the number of directors to be elected in each class, and to cast the whole number of votes so determined for one nominee in the class or to distribute them among the nominees if more than one nominee is named in such class. Proxies who vote at the meeting on behalf of a shareowner will have the discretion to and may exercise such cumulative voting rights. The three individuals who receive the largest number of votes cast will be elected as Directors of the Third Class. The persons named in the enclosed form of proxy were selected by the Board of Directors and have advised the Board of Directors that, unless authority is withheld, they intend to vote the shares represented by them at the meeting for the election of the following nominees named to serve as directors. The nominees for election for terms of three years in the Third Class of Directors are: A. Peter Held, Aloysius T. McLaughlin, Jr. and Larry D. Yost who have served as directors since 1995, 1986 and 1987, respectively. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THESE NOMINEES.
4 If at the time of the meeting any of the foregoing nominees is not available to serve as a director, an event which the Corporation has no reason to anticipate, the Corporation has been informed that the persons named in the enclosed form of proxy intend to vote the shares represented by them at the meeting for such other person or persons, if any, as may be nominated by the Board of Directors. The following table provides certain information concerning each nominee for election as a director and each director whose term of office will continue after the meeting.
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6 Audit Committee: The Audit Committee met four times during the past fiscal year. The Committee acts under a written charter and it is responsible for monitoring (1) the integrity of the financial statements of the Corporation, (2) the compliance by the Corporation with legal and regulatory requirements and (3) the independence and performance of the Corporation's General Auditor and independent public accountants. For further information, see "Report of the Board of Directors Audit Committee". The following directors currently comprise the Committee: Larry D. Yost (Chairman), A. Peter Held, Aloysius T. McLaughlin, Jr. and Kathleen J. Hempel. Committee on Organization and Compensation: The Committee on Organization and Compensation met ten times during the past fiscal year. The Committee's duties include the setting of compensation rates of the Corporation's officers, the determination of additional compensation, if any, to be awarded to such officers and the administration of the Corporation's stock-based incentive plans. The report of the Committee on Organization and Compensation appears elsewhere in this Proxy Statement. The following directors currently comprise the Committee: Richard C. Alberding (Chairman), Peter B. Bartlett, A. Peter Held and Aloysius T. McLaughlin, Jr. Directors who are not employees of the Corporation each receive compensation from the Corporation for services as a director at an annual rate of $30,000. Members of the Audit Committee and members of the Committee on Organization and Compensation who are not employees of the Corporation each receive additional annual compensation of $4,000. Non-employee directors who are members of the Executive Committee receive a fee of $1,100 per Executive Committee meeting. The non-employee members of the Board of Directors were awarded the following stock options during fiscal 2001 for serving on the Board: Messrs. Alberding, Bartlett, Held, Lucas, McLaughlin and Yost, 4,500 shares each at $26.065; Mrs. Hempel 9,000 shares at $26.065; and Mr. Newlin 25,000 shares at $28.125 and 4,500 shares at $26.065. The exercise price for each award was the closing price of the Corporation's Capital Stock on the New York Stock Exchange -- Composite Transactions reporting system on the date of the grant. Under the Deferred Fee Plan for Outside Directors (the "Deferred Fee Plan"), directors are permitted annually to request that the payment of any compensation that may be payable to them for services as a director or committee member be deferred for payment, with interest, at a later time. The deferred payments would be actually funded by a transfer of cash into a deferred compensation trust (a so-called "Rabbi Trust"), administered by an independent trustee, upon the occurrence of a threatened or actual change in control of the Corporation (as defined in the deferred compensation trust agreement). Under the Corporation's Directors Stock Incentive Plan, any director who is not an employee may elect to receive shares of the Corporation's Capital Stock in lieu of all or a portion of any consideration payable for services as a director that is not deferred pursuant to the Deferred Fee Plan. In addition, any director who is not an employee may elect to receive credits, representing shares of the Corporation's Capital Stock ("Stock Credits"), with respect to all or a portion of any consideration deferred pursuant to the Directors Stock Incentive Plan. Directors who are not employees of the Corporation also receive $50,000 of life insurance coverage which is paid for by the Corporation. Directors who are employees of the Corporation do not receive any compensation for services as a director or as a member of any committee of the Board of Directors. 4
7 OWNERSHIP OF CAPITAL STOCK BY DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS The following table sets forth the beneficial ownership of the Corporation's Capital Stock as of June 30, 2001, by each director, each nominee for director, each Named Executive Officer (as hereinafter defined) and all directors and executive officers as a group.
8 COMPENSATION OF EXECUTIVE OFFICERS The following table sets forth the compensation paid by the Corporation during its last three fiscal years to its Chief Executive Officer, and to each of the other four most highly compensated executive officers (the "Named Executive Officers"), each of whose aggregate direct remuneration exceeded $100,000 during the fiscal year ended June 30, 2001. SUMMARY COMPENSATION TABLE
9 this plan. The Corporation contributes shares of Capital Stock to each participant's account in an amount equal to one-half of that portion of the employee's contribution that does not exceed 6% of the employee's compensation. Contributed sums are invested in proportions as directed by the employee in a stable value fund, various equity funds (including the Corporation's Capital Stock) and balanced funds (consisting of both equity and fixed-income securities), each managed by investment management companies, and can be withdrawn by the employee only upon the occurrence of certain events. Certain terms of the plan are designed to make available to participants the provisions of section 401(k) of the Internal Revenue Code, as amended (the "Code"), which permit elective employee contributions on a pre-tax basis. (7) Mr. Tambakeras became President and Chief Executive Officer on July 1, 1999. His employment commenced May 21, 1999. Mr. Tambakeras was granted a restricted stock award for 83,000 shares on May 4, 1999 under the Kennametal Inc. 1999 Stock Plan. The award vested over 24 months in three equal amounts at 8 months, 16 months and 24 months. Dividends were paid on the shares subject to the award. (8) Mr. Mahanes was granted a restricted stock award for 30,000 shares on April 26, 1999 under the Kennametal Inc. 1999 Stock Plan. The award vests over three years in equal amounts. Dividends are paid on the shares subject to the award. (9) Mr. Grasberger became employed by the Corporation on August 28, 2000. EMPLOYMENT AND SEVERANCE AGREEMENTS The Corporation has agreements with Messrs. Breisinger, Mahanes, Grasberger and Gilbreath whereby, subject to review by the Board of Directors and a provision for termination without cause by either party upon written notice, each will be employed by the Corporation. The agreements generally provide that the officers will devote their entire time and attention to the business of the Corporation, will refrain during employment and for three years thereafter from competing with the Corporation (unless employment is terminated by the Corporation without cause or following a change-in-control) and will not disclose confidential or trade secret information belonging to the Corporation. These agreements also require the officers to assign to the Corporation all inventions conceived or made during their employment by the Corporation. The agreements provide for severance payments upon termination of employment occurring either before or after a change-in-control of the Corporation. In the event of termination of his employment by the Corporation prior to a change-in-control, each officer would receive as severance pay an amount equal to three months' base salary at the time of such termination. In the event of termination by the officer prior to a change-in-control, or without good reason following a change-in-control, no severance payments will be made. In general, in the event of termination of employment after a change-in-control by the officer for good reason or by the employer other than for cause or disability, each officer would receive as severance pay 2.8 times the sum of (i) his respective annual base salary at the date of termination or, at the officer's election, his salary as of the beginning of the month preceding the month in which the change-in-control occurs, and (ii) the average of any bonuses which he was entitled to or paid during the three most recent fiscal years ending prior to the date of termination or, at the officer's election, the average of any bonuses which the officer was entitled to or paid for the three fiscal years preceding the fiscal year in which the change-in-control occurred. In addition, for a three-year period the officer would receive the same medical and group insurance benefits that he received at the date of termination. The officer would also receive three years of additional credit for purposes of computing benefits under the Corporation's supplemental retirement plan. In addition to the provisions described above, Mr. Grasberger's agreement provides that if the Corporation terminates his employment within twenty-four (24) months of his employment date, for reasons other than good cause as defined in the agreement, he will continue to receive his base salary and medical benefits for twelve (12) months after termination as severance. 7
10 The Corporation also entered into an agreement with Markos I. Tambakeras dated as of May 4, 1999, as amended on March 3, 2000, pursuant to which Mr. Tambakeras serves as President and Chief Executive Officer of the Corporation, effective July 1, 1999. Mr. Tambakeras receives a minimum annual base salary of $550,000 and is eligible to receive future bonuses of not less than $300,000 under the Corporation's bonus plans then in effect. The agreement is for a three-year term. Pursuant to the agreement, Mr. Tambakeras received a $300,000 sign-on bonus (which, at Mr. Tambakeras' request, was paid in shares of Capital Stock pursuant to the terms of the Performance Bonus Plan of 1995), an option to purchase 150,000 shares of Capital Stock at $26.00 per share vesting over a three-year period, a restricted stock grant covering 83,000 shares of Capital Stock vesting over twenty-four (24) months and certain supplemental retirement benefits. The agreement with Mr. Tambakeras provides that if, during the term of the agreement and prior to a change-in-control, Mr. Tambakeras is terminated without cause, or if he terminates the agreement due to the Corporation's breach, he will be entitled to a lump sum payment equal to the greater of the base salary and bonuses that he would have earned during the term or two times his highest base salary plus targeted bonus for the year of termination. In addition, the options and restricted stock awards discussed above would vest. If his employment is terminated after the term by the Corporation prior to a change-in-control and other than for cause, Mr. Tambakeras would receive a lump-sum payment equal to two years' annual base salary at the rate then in effect plus targeted bonus for the year of termination. In the event that, at or after a change-in-control and prior to the third anniversary of the date of the change-in-control, Mr. Tambakeras' employment is terminated by him for good reason or by the Corporation other than for cause, or if Mr. Tambakeras terminates his employment during the thirty (30) day period commencing twelve (12) months after the change-in-control, then Mr. Tambakeras would receive a lump sum payment equal to three times his base salary and targeted bonus for the year of termination. Severance payments upon change-in-control would be grossed-up for the excise tax during the three-year term. After the term, payments due on change-in-control would be reduced to avoid implicating the excise tax. STOCK OPTIONS The Kennametal Inc. Stock Option and Incentive Plan of 1992 (the "1992 Plan") provides for the granting of nonstatutory and incentive stock options and share awards covering the lesser of 1,650,000 shares (gross) and 1,109,473 shares (net) of the Corporation's Capital Stock. The Kennametal Inc. Stock Option and Incentive Plan of 1996 (the "1996 Plan") provides for the granting of nonstatutory and incentive stock options and share awards covering 1,500,000 shares of the Corporation's Capital Stock. The Kennametal Inc. 1999 Stock Plan provides for the granting of nonstatutory stock options and share awards covering 600,000 shares of the Corporation's Capital Stock. The Kennametal Inc. Stock Option and Incentive Plan of 1999 (the "1999 Plan") provides for granting nonstatutory and incentive stock options and share awards covering 2,500,000 shares of the Corporation's Capital Stock. Although options are still outstanding under the Kennametal Inc. Stock Option and Incentive Plan of 1988 (the "1988 Plan"), no further grants of options may be made under that plan. Under each of the plans, the price at which shares covered by an option may be purchased must not be less than the fair market value of such shares at the time the option is granted or, in the case of the non-qualified stock options granted under the 1992 Plan and the 1996 Plan, at not less than 75% of the fair market value. The purchase price must be paid in full at the time of exercise either in cash or, in the discretion of the Committee administering the plan, by delivering shares of the Corporation's Capital Stock or a combination of shares and cash having an aggregate fair market value equal to the purchase price. 8
11 The following table sets forth information concerning options granted to the Named Executive Officers during the fiscal year ended June 30, 2001: OPTION GRANTS IN LAST FISCAL YEAR
12 RETIREMENT BENEFITS The following table indicates, for purposes of illustration, the approximate annual retirement benefits that would be payable at the present time (assuming retirement at age 65) on a straight life annuity basis pursuant to the Kennametal Inc. Retirement Income Plan and the Supplemental Executive Retirement Plan under various assumptions as to salary, bonus and years of service to employees in higher salary classifications. The amounts shown in the table below have been adjusted for Social Security and are not subject to any deductions for Social Security or other offset amount. PENSION PLAN TABLE
13 REPORT OF THE BOARD OF DIRECTORS COMMITTEE ON ORGANIZATION AND COMPENSATION EXECUTIVE COMPENSATION PHILOSOPHY Executive and managerial compensation programs at the Corporation are designed and implemented with certain guiding principles in mind: - To link the interests of executives and managers to the interests of the shareowners and other potential investors. - To provide incentives for working toward increasing the market value of the Corporation's stock and to increase shareowner value through achieving financial and business objectives. - To provide incentives for strategic vision and decision-making that will promote the longer-term health and viability of the Corporation. - To provide incentives for innovation, quality management, responsiveness to customer needs, value-added products and services, and an action-oriented approach to opportunities in the marketplace. - To attract and retain individuals with the leadership and technical skills required to carry the Corporation forward into the future, given the belief that the Corporation's human resources can provide a competitive advantage in the marketplace. GENERAL COMPENSATION PLAN DESIGN Executive and management compensation plans consist of (1) a long-term element, (2) annual performance rewards, (3) basic compensation, and (4) stock ownership goals. - The primary vehicles for providing long-term incentives are the Corporation's stock option plans and a limited participation restricted stock grant plan, with vesting of restricted stock dependent on an annual schedule and performance metrics. The belief is that key executives and certain managers should hold stock options in such quantities as to provide an incentive to make decisions and take actions that will enhance the performance of the Corporation and increase its value. The interests of shareowners and executives are tied together by the market value of the stock. - Annual performance rewards include a management performance bonus plan and annual base salary merit increases. -- The Prime Bonus Plan for executives and managers is designed to closely tie bonus awards to corporate performance, unit performance, and individual contribution, relative to the Corporation's business plans and strategies. The Prime Bonus Plan is also intended to maintain management compensation at a competitive level, as indicated by published compensation surveys. -- The annual Base Salary Merit Increase Review for executives and managers provides rewards for more qualitative achievements in innovation, quality, service to the customer and leadership. Consideration is given to competitive salary increases that are being awarded by other industrial firms, as indicated by published salary surveys. - Basic compensation for executives, including the Chief Executive Officer, is intended to be competitive in the employment market and is designed to attract, retain and motivate high-quality individuals. Basic compensation includes base salary, flexible and fixed-benefit plans, minor executive perquisites and the Supplemental Executive Retirement Plan. - In 1995, executive stock ownership goals were established by the Chief Executive Officer, ratified by the Board of Directors Committee on Executive Compensation (the predecessor of the Committee on 11
14 Organization and Compensation) and presented to the Board of Directors. In 2001, executive stock ownership goals were strengthened and stock ownership goals were extended to certain other managers. COMPENSATION OF THE CHIEF EXECUTIVE OFFICER - Markos I. Tambakeras became President and Chief Executive Officer on July 1, 1999. - Under the plan design of the Prime Bonus Plan for fiscal 2001, a bonus pool was calculated by management and approved by the Board of Directors. Based on specific personal achievements, the Committee recommended a bonus award of $350,000 for Mr. Tambakeras. On July 31, 2001, Mr. Tambakeras' bonus award was approved by the Board of Directors. COMPENSATION OF EXECUTIVE OFFICERS - Stock options were awarded to certain executive officers on July 31, 2001 for the purpose of providing an incentive for managing the continuing performance and value of the Corporation. The awards, as recommended by Mr. Tambakeras, were approved by the Board of Directors Committee on Organization and Compensation on July 31, 2001. - Individual executive officer bonus awards were determined by corporate, unit and individual performance, as recommended by Mr. Tambakeras, and were approved by the Board of Directors Committee on Organization and Compensation on July 31, 2001. Committee on Organization and Compensation: Richard C. Alberding, Chairman Peter B. Bartlett A. Peter Held Aloysius T. McLaughlin, Jr. 12
15 REPORT OF THE BOARD OF DIRECTORS AUDIT COMMITTEE The Audit Committee is composed of four directors, each of whom meets the independence and experience requirements of the New York Stock Exchange. During the last fiscal year, the Audit Committee reviewed with management, the internal auditors and the independent public accountants, the overall scope and specific plans for their respective audits. The Audit Committee discussed with Arthur Andersen LLP matters required to be discussed under accounting standards generally accepted in the United States, including, among other things, matters related to the conduct of the audit of the Corporation's consolidated financial statements and the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, concerning communication with audit committees. The Audit Committee also reviewed and discussed the audited financial statements with management. Arthur Andersen LLP provided the Audit Committee with the written disclosures and the letter required by Independence Standards Board Standard No. 1, concerning independence discussions with audit committees. The Audit Committee discussed with Arthur Andersen LLP their independence from the Corporation. In so doing, the Audit Committee considered whether the provision of financial information systems design and implementation services and other non-audit services to the Corporation were compatible with the auditors' independence. The Audit Committee also reviewed the amount of fees paid to Arthur Andersen LLP for both audit and non-audit services. Based on this review and these meetings, discussions and reports, the Audit Committee approved, on behalf of the Board of Directors, the Corporation's audited consolidated financial statements for the fiscal year ended June 30, 2001, to be included in the Corporation's Annual Report on Form 10-K. The Audit Committee has also recommended the selection of the Corporation's independent auditors and, based on the recommendation of the Audit Committee, the Board of Directors has recommended Arthur Andersen LLP as the Corporation's independent auditors for the fiscal year ending June 30, 2002. Audit Committee: Larry D. Yost, Chairman A. Peter Held Aloysius T. McLaughlin, Jr. Kathleen J. Hempel 13
16 COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN The following graph compares cumulative total shareowner return on the Corporation's Capital Stock with the cumulative total shareowner return on the common equity of the companies in the Standard & Poor's Mid-Cap 400 Market Index (the "S&P Mid-Cap"), a peer group of companies determined by the Corporation ("Old Peer Group") and a New Peer Group of companies determined by the Corporation ("New Peer Group") for the period from July 1, 1996 to June 30, 2001. The New Peer Group consists of the following companies: Danaher Corp.; Eaton Corp.; Hardinge Inc.; Ingersoll-Rand Company; Kaydon Corp.; Lincoln Electric Holdings Inc.; Milacron Inc.; Parker-Hannifin Corp.; Sandvik AB; and Timken Co. The Old Peer Group consisted of these same companies excluding Sandvik AB but including MascoTech, Inc. MascoTech, Inc. ceased to be a publicly traded entity during fiscal 2001 and, therefore, has been removed from both the Old and New Peer Groups for all periods presented. The Corporation has created the New Peer Group for benchmarking its sales and earnings growth, return on invested capital, profitability and asset management. GRAPH COMPARISON OF CUMULATIVE TOTAL RETURNS* Comparison of 5 Year Cumulative Return Assumes Initial Investment of $100 Year Ending June 30, 2001
17 PRINCIPAL HOLDERS OF VOTING SECURITIES The following table sets forth each person or entity who may be deemed to have beneficial ownership of more than 5% of the outstanding Capital Stock of the Corporation based upon information publicly available as of August 31, 2001.
18 FORM 10-K ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION COPIES OF THE ANNUAL REPORT (FORM 10-K) OF THE CORPORATION FOR THE FISCAL YEAR ENDED JUNE 30, 2001 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE AVAILABLE TO SHAREOWNERS BY SEPTEMBER 28, 2001. A SHAREOWNER MAY OBTAIN ONE WITHOUT CHARGE BY WRITING TO: CHIEF FINANCIAL OFFICER, KENNAMETAL INC., 1600 TECHNOLOGY WAY, P.O. BOX 231, LATROBE, PENNSYLVANIA 15650. OTHER MATTERS The Corporation knows of no other matters to be presented for action at the Annual Meeting. However, the enclosed form of proxy confers discretionary authority with respect to the transaction of any other business that may properly come before the meeting. If any other matters should properly come before the meeting, it is intended that votes will be cast pursuant to the proxy in respect thereto in accordance with their best judgment. The Corporation will pay the expense in connection with the printing, assembling and mailing of the notice of meeting, this Proxy Statement and the accompanying form of proxy to the owners of Capital Stock of the Corporation. In addition to the use of the mails, proxies may be solicited by directors, officers or employees of the Corporation personally or by telephone or telex or facsimile or other means of communication. The Corporation may request the persons holding stock in their names, or in the names of their nominees, to send proxy material to and obtain proxies from their principals and will reimburse such persons for their expense in so doing. In addition, the Corporation has retained the services of Georgeson Shareholder Communications Inc., a professional soliciting organization, to assist in soliciting proxies from brokerage houses, custodians, nominees, other fiduciaries and other shareowners of the Corporation. The fees and expenses of that firm in connection with such solicitation are not expected to exceed $25,000. SHAREOWNER PROPOSALS AND NOMINATING PROCEDURES Shareowners who intend to submit a proposal for inclusion in the Corporation's 2002 Proxy Statement for consideration at the Annual Meeting of the Shareowners of the Corporation to be held in October 2002, must submit such proposal to the attention of the Secretary of the Corporation at the address of its executive offices no later than May 24, 2002. Any such proposal must comply with Rule 14a-8 of Regulation 14A of the proxy rules of the Securities and Exchange Commission and must contain certain information specified in the By-Laws of the Corporation. The By-Laws of the Corporation require that all shareowner proposals to be submitted at the Annual Meeting but not included in the Corporation's Proxy Statement be submitted to the Secretary of the Corporation at the address of its executive offices no earlier than May 1, 2002 and prior to July 1, 2002, together with certain information specified in the By-Laws. The By-Laws of the Corporation also require that nominations for directors to be elected at the 2002 Annual Meeting, other than those made by the Board of Directors, be submitted to the Secretary of the Corporation no earlier than May 1, 2002 and prior to July 1, 2002. The By-Laws require that notice of such nominations contain certain information regarding the nominee and certain information regarding the nominating shareowner. Any shareowner may obtain a copy of the applicable By-Law from the Secretary of the Corporation upon written request. 16
19 PROXY PROXY KENNAMETAL INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION The undersigned hereby appoints Markos I. Tambakeras, Peter B. Bartlett and Richard C. Alberding, and each of them with power of substitution in each, as proxies to represent the undersigned at the annual meeting of the shareowners of Kennametal Inc. to be held at the Technology Center, located on Route 981 South (recently designated "Technology Way"), approximately 1/4 mile south of its intersection with U.S. Route 30 near Latrobe, Unity Township, Pennsylvania, on Tuesday, October 30, 2001 at 2:00 p.m., and at any adjournments thereof, to vote the same number of shares and as fully as the undersigned would be entitled to vote if then personally present (including the power to vote cumulatively in the election of directors as explained in the Proxy Statement) in the manner directed by the undersigned as follows: THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES LISTED IN ITEM I AND FOR THE ELECTION OF AUDITORS. (over) -------------------------------------------------------------------------------- FOLD AND DETACH HERE
20 PLEASE MARK [X] YOUR VOTES AS INDICATED IN THIS EXAMPLE I. ELECTION OF DIRECTORS FOR TERMS TO EXPIRE IN 2004 Nominees: 01 A. Peter Held, 02 Aloysius T. McLaughlin, Jr. and 03 Larry D. Yost (Instruction: To withhold authority to vote for any INDIVIDUAL NOMINEE, write nominee's name on the line provided below): ----------------------------------------------------------- VOTE FOR all WITHHOLD nominees listed AUTHORITY (except as marked to vote FOR ALL to the contrary). NOMINEES listed [ ] [ ] II. ELECTION OF AUDITORS FOR AGAINST ABSTAIN [ ] [ ] [ ] This Proxy when properly executed will be voted in the manner directed herein. If no direction is made, this Proxy will be voted FOR the election of the nominees in Item I above and FOR the election of auditors. The proxies are authorized in accordance with their judgment, to vote upon such other matters as may properly come before the meeting and any adjournments thereof. ----------------------------- ----------------------------- --------------- SIGNATURE(S) SIGNATURE(S) DATE ,2001 SIGN EXACTLY AS ADDRESSED, BUT IF EXECUTED FOR A CORPORATION, MINOR, ETC. SIGN THAT NAME AND SIGNATURE AND CAPACITY OF AUTHORIZED SIGNOR. -------------------------------------------------------------------------------- FOLD AND DETACH HERE KENNAMETAL INC. September 13, 2001 Dear Kennametal Inc. Shareowner The 2001 Annual Meeting of the Shareowners of Kennametal, Inc. will be held at 2:00 p.m. on Tuesday, October 30, 2001 at the Technology Center, located on Route 981 South (recently designated "Technology Way"), approximately 1/4 mile south of its intersection with U.S. Route 30 near Latrobe, Unity Township, Pennsylvania. I cordially invite you to attend. Whether or not you plan to attend the meeting, please detach the proxy above, complete it, and return it in the enclosed envelope. Your vote is important to us. Sincerely, William R. Newlin Chairman of the Board Kennametal Inc.