================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 29, 2003
KENNAMETAL INC.
(Exact name of registrant as specified in its charter)
Commission file number 1-5318
PENNSYLVANIA 25-0900168
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
WORLD HEADQUARTERS
1600 TECHNOLOGY WAY
P.O. BOX 231
LATROBE, PENNSYLVANIA 15650-0231
(Address of registrant's principal executive offices)
Registrant's telephone number, including area code: (724) 539-5000
================================================================================
ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On October 29, 2003, Kennametal Inc. ("Kennametal" or "the Company") issued a
press release announcing financial results for its first quarter ended September
30, 2003.
The press release contains non-GAAP financial measures, including gross profit,
operating expense, operating income, net income (loss) and diluted EPS in each
case excluding special items. The special items include: restructuring charges
and Widia integration costs. Kennametal management excludes these items in
measuring and compensating internal performance to more easily compare the
Company's financial performance period to period. We believe investors should
have available the same information that management uses to measure and
compensate performance. Kennametal management believes that presentation of
these non-GAAP financial measures provides useful information into the results
of operations of the company for the current, past and future periods.
Free operating cash flow is a non-GAAP presentation and is defined as cash
provided by continuing operations (in accordance with GAAP) less capital
expenditures and proceeds from asset disposals. Free operating cash flow is
considered to be an important indicator of Kennametal's ability to generate
liquidity because it better represents cash generated from operations that can
be used for strategic initiatives, dividends or debt repayment.
Debt-to-Capital
- ---------------
Debt to equity in accordance with GAAP is defined as total debt divided by
Stockholder's Equity and total debt. Debt to equity is defined by Kennametal as
total current and long term debt divided by total Shareowner's equity plus
minority interest plus total debt. Kennametal adjusted its debt to equity
percentage for the additional minimum pension charge and electronics impairment
that is recorded in equity. Management believes that the adjustment provides
additional insight into the underlying capital structuring and performance of
the Company.
Additionally, during our quarterly teleconference we may use various other
non-GAAP financial measures to describe the underlying operating results.
Accordingly, we have compiled below certain reconciliations as required by
Regulation G.
Primary Working Capital
- -----------------------
Primary working capital is a non-GAAP presentation and is defined as accounts
receivable, net plus inventories, net minus accounts payable. The most directly
comparable GAAP measure is working capital, which is defined as current assets
less current liabilities. We believe primary working capital better represents
Kennametal's performance in managing certain assets and liabilities controllable
at the business unit level and is used as such for internal performance
measurement.
EBIT
- ----
EBIT is an acronym for Earnings Before Interest and Taxes and is not a
calculation in accordance with GAAP. The most directly comparable GAAP measure
is net income except with respect to reporting segments in which the most
comparable GAAP measure is operating income. However, we believe that EBIT is
widely used as a measure of operating performance and we believe EBIT to be an
important indicator of the Company's operational strength and performance.
Nevertheless, the measure should not be considered in isolation or as a
substitute for operating income, cash flows from operating activities or any
other measure for determining liquidity that is calculated in accordance with
GAAP.
Adjusted Sales
- --------------
Kennametal adjusted sales as reported under GAAP for specific items including
acquisitions and foreign currency translation. Management believes that
adjusting the sales as reported under GAAP provides additional insight into the
underlying operations. Management uses this information in reviewing operating
performance and in the determination of compensation.
Adjusted Gross Profit
- ---------------------
Kennametal adjusted gross profit as recorded under GAAP for specific items
including Widia integration and restructuring charges. Management believes that
the adjusted gross profit information is an important indicator of the
Company's underlying operating performance.
Operating Expense Reconciliation
- --------------------------------
Kennametal adjusted operating expense as reported under GAAP for Widia
Integration, Restructuring charges, Widia operating expense, foreign exchange
and decreased pension income. Management believes that the adjusted operating
expense provides additional insight into the underlying operations. Management
uses this information in reviewing operating performance and in the
determination of compensation.
SUPPLEMENTAL INFORMATION AND RECONCILIATIONS
RECONCILIATION TO GAAP WORKING CAPITAL (UNAUDITED)
September 30,
-----------------------------
2003 2002
--------- ---------
Current assets $ 796,365 $ 750,397
Current liabilities 314,789 289,860
--------- ---------
Working capital in accordance with GAAP 481,576 460,537
Excluded items:
Cash and cash equivalents (14,720) (14,300)
Deferred income taxes (114,619) (71,084)
Other current assets (47,003) (40,110)
--------- ---------
Total excluded current assets $(176,342) $(125,494)
Adjusted current assets 620,023 624,903
Short-term debt, including notes payable (11,375) (16,992)
Accrued liabilities (195,761) (171,045)
--------- ---------
Total excluded current liabilities $(207,136) $(188,037)
Adjusted current liabilities 107,653 101,823
Primary working capital $ 512,370 $ 523,080
-more-
SUPPLEMENTAL INFORMATION AND RECONCILIATIONS
KENNAMETAL INC. EBIT RECONCILIATION (UNAUDITED)
September 30,
----------------------------
2003 2002
-------- --------
Net income, as reported $ 8,764 $ 10,829
As % of sales 2.0% 2.7%
Add back:
Interest 6,600 8,485
Taxes 4,452 5,255
-------- --------
EBIT 19,816 24,569
Additional adjustments:
Minority interest 695 338
Restructuring, including
items in COGS 3,393 (181)
Widia integration 1,559 711
Interest income (436) (640)
Securitization fees 397 537
-------- --------
Adjusted EBIT $ 25,424 $ 25,334
======== ========
As of % of sales 5.7% 6.3%
-more-
SUPPLEMENTAL INFORMATION AND RECONCILIATIONS
MSSG SEGMENT (UNAUDITED):
Quarter Ended
September 30,
--------------------------
2003 2002
-------- --------
Sales, as reported $271,129 $240,422
Widia sales(1) (26,018) -
Foreign currency exchange (11,098) -
-------- --------
Adjusted sales $234,013 $240,422
======== ========
MSSG EBIT (UNAUDITED):
Quarter Ended
September 30,
-------------------------
2003 2002
------- -------
MSSG operating income, as reported $23,502 $23,473
As % of sales 8.7% 9.8%
Other income 264 189
------- -------
EBIT 23,766 23,662
Adjustments:
MSSG restructuring, including items in COGS 3,393 -
Widia integration 1,511 711
------- -------
EBIT, excluding special charges $28,670 $24,373
======= =======
As % of sales 10.6% 10.1%
(1) Widia was acquired on August 30, 2002. Sales related to Widia for July and
August have been removed from the 2003 results in order to reflect
comparable Widia activity for both years.
-more-
SUPPLEMENTAL INFORMATION AND RECONCILIATIONS
AMSG SEGMENT (UNAUDITED):
Quarter Ended
September 30,
---------------------------
2003 2002
-------- --------
Sales, as reported $ 93,631 $ 83,409
Widia acquisition(1) (5,476) -
Foreign currency exchange (2,775) -
-------- --------
Adjusted sales $ 85,380 $ 83,409
======== ========
AMSG EBIT (UNAUDITED):
Quarter Ended
September 30,
---------------------------
2003 2002
-------- --------
AMSG operating income (expense), as reported $ 11,822 $ 11,385
As % of sales 12.6% 13.6%
Other income (expense) 113 58
-------- --------
EBIT 11,935 11,443
Adjustments:
AMSG restructuring - (181)
Widia integration 48 -
-------- --------
EBIT, excluding special charges $ 11,983 $ 11,262
======== ========
As % of sales 12.8% 13.5%
(1) Widia was acquired on August 30, 2002. Sales related to Widia for July and
August have been removed from the 2003 results in order to reflect
comparable Widia activity for both years.
-more-
SUPPLEMENTAL INFORMATION AND RECONCILIATIONS
J&L SEGMENT (UNAUDITED):
Quarter Ended
September 30,
---------------------------
2003 2002
-------- --------
Sales, as reported $ 48,139 $ 48,606
Foreign currency exchange (221) -
-------- --------
Adjusted sales $ 47,918 $ 48,606
======== ========
J&L EBIT (UNAUDITED):
Quarter Ended
September 30,
---------------------------
2003 2002
-------- --------
J&L operating income, as reported $ 2,685 $ 2,301
As % of sales 5.6% 4.7%
Other (expense) - (11)
-------- --------
EBIT 2,685 2,290
Adjustments:
J&L restructuring - -
-------- --------
EBIT, excluding special charges $ 2,685 $ 2,290
======== ========
As % of sales 5.6% 4.7%
-more-
SUPPLEMENTAL INFORMATION AND RECONCILIATIONS
FSS SEGMENT (Unaudited):
Quarter Ended
September 30,
---------------------------
2003 2002
-------- --------
Sales, as reported $ 31,676 $ 31,781
Foreign currency exchange (79) -
-------- --------
Adjusted sales $ 31,597 $ 31,781
======== ========
FSS EBIT (Unaudited):
Quarter Ended
September 30,
---------------------------
2003 2002
-------- --------
FSS operating income, as reported $ (281) $ (19)
As % of sales -0.9% -0.1%
Other (expense) income 2 100
-------- --------
EBIT (279) 81
Adjustments:
FSS restructuring - -
-------- --------
EBIT, excluding special charges $ (279) $ 81
======== ========
As % of sales -0.9% 0.3%
-more-
SUPPLEMENTAL INFORMATION AND RECONCILIATIONS
RECONCILIATION TO GAAP - GROSS PROFIT (UNAUDITED)
QUARTER ENDED QUARTER ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -------------------------
AS A % AS A %
2003 OF SALES 2002 OF SALES
---- -------- ---- --------
Gross profit $144,107 32.4% $130,969 32.4%
Widia integration and restructuring charges 2,954 0.7% - 0.0%
-------- ---- -------- ----
Gross profit, excluding special items $147,061 33.1% $130,969 32.4%
======== ==== ======== ====
OPERATING EXPENSE RECONCILIATION (UNAUDITED):
Quarter ended Quarter ended
Sept. 30, 2003 Sept. 30, 2002
-------------- --------------
Operating expense, as reported $ 121,239 $ 104,835
Integration costs (1,448) (711)
--------- ---------
Operating expense, excluding special items 119,791 104,124
Less:
Widia operating expense 8,441 -
Unfavorable foreign exchange 4,979 -
--------- ---------
Operating expense, excluding special items,
Widia expense and foreign exchange
$ 106,371 $ 104,124
========= =========
-end-
Exhibit Index
Exhibit Description
- ------- -----------
99.1 Press Release dated October 29, 2003. Furnished herewith.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KENNAMETAL INC.
Date: October 29, 2003 By: /s/ TIMOTHY A. HIBBARD
---------------------------------
Timothy A. Hibbard
Corporate Controller and
Chief Accounting Officer
Exhibit 99.1
FROM: KENNAMETAL INC.
P.O. Box 231
Latrobe, PA 15650
Investor Relations
724-539-6141
Contact: Beth A. Riley
Media Relations
724-539-4662
Contact: Riz Chand
DATE: October 29, 2003
FOR RELEASE: Immediate
KENNAMETAL REPORTS FIRST QUARTER EARNINGS
-----------------------------------------
- Sales up 10%
- Reported earnings per diluted share of
$0.24, per guidance
- Cash flow in-line with expectations
LATROBE, Pa., October 29, 2003 - Kennametal Inc. (NYSE: KMT) today reported a
fiscal 2004 first quarter earnings of $0.24 per diluted share compared with
earnings of $0.31 per diluted share last year. Excluding special items in each
period, diluted earnings per share were $0.34 for the quarter, at the high end
of guidance, against last year's earnings per share of $0.32. Sales of $445
million were 10 percent above prior year, driven by the Widia acquisition.
Earnings Per Share Excluding Special Items
Company Guidance (07/30/03) $0.30 to $0.35
Analyst Estimate Range (10/23/03) $0.32 to $0.35
Earnings, Excluding Special Items $0.34
Kennametal Chairman, President and Chief Executive Officer, Markos I.
Tambakeras, said, "We were pleased to deliver earnings near the top of our
guidance, with our global markets developing largely as we expected. Our results
reflect a nascent recovery in our key North American markets, and continued
strong growth in the developing regions of Asia-Pacific and South America. Our
confidence in the sustainability of the North American recovery was encouraged
by the return to growth of our Light and General Engineering end market.
Historically, this market segment has been a good proxy for the health of the
broad industrial markets. Persistent weakness in our European markets was
somewhat worse than we expected. During the quarter, we were focused on the
final phases of the Widia integration and on accelerating investments in our
global sales and marketing activities."
- more -
-2-
- -------------------------------------------------------------------------------
HIGHLIGHTS
- -------------------------------------------------------------------------------
FIRST QUARTER - FY04
- --------------------
- - Sales of $444.6 million were 10 percent above last year's $404.2 million.
Sales results include an 8 percent addition from the Widia acquisition, a 4
percent benefit from foreign currency exchange, and a 2 percent decline in
organic sales volume.
- - Reported net income was $8.8 million against net income of $10.8 million in
the same quarter last year. Excluding special items, net income was $12.1
million for the quarter, an 8 percent increase compared to net income of
$11.2 million last year reflecting the benefits of Widia synergies, cost
reductions and foreign currency exchange.
- - The current quarter included net special charges of $3.4 million, or $0.10
per diluted share, primarily associated with the previously announced Widia
integration efforts. Prior-year quarter included net special charges of
$0.4 million, or $0.01 per diluted share, also largely related to the Widia
integration.
- - As expected, net cash flow from operations was $12.2 million, versus $38.3
million for the prior year. Free operating cash flow was $2.1 million,
versus $28.4 million in the same period last year due to higher tax and
restructuring payments this quarter.
- - Total debt was $520 million, down $6 million from June 2003, and $96
million below September 2002.
- - Debt to capital decreased to 40.5 percent, from 45.5 percent at the end of
September in the prior year.
OUTLOOK
- -------
Performance in certain key North American markets toward the end of the
September quarter corroborated positive macroeconomic indicators, and increased
the probability of a sustained recovery in North American industrial markets.
The strength of the North American recovery has yet to be established. While a
North American recovery was expected to precede improvement in Europe, the
weakness in Europe is greater than previously anticipated.
Tambakeras said, "On balance, we remain confident in our ability to deliver
against our original earnings guidance for the year. While Europe is weaker than
anticipated, North America is encouraging, and our earnings outlook was based on
modest growth assumptions for the second half of our fiscal year. We will
continue to manage costs and spending, as appropriate, for evolving
market performance."
Sales for the second quarter of fiscal 2004 are expected to grow 4 to 5 percent
year-over-year, including the impact of currency. Organic volume is anticipated
to be flat to down 2 percent year-over-year, compared to a 2 percent decline in
the first quarter. Reported diluted earnings per share are expected to
- more -
-3-
be $0.19 to $0.26 per share. This includes an estimate for special charges
associated with the completion of the Widia integration of approximately $0.06
to $0.08 per share, consistent with previously announced integration
assumptions. Excluding these charges, diluted earnings per share are forecasted
to range from $0.27 to $0.32 per share.
Guidance for the full year remains essentially unchanged. Sales are expected to
grow 6 to 8 percent year-over-year. Reported diluted earnings per share are
expected to be $1.72 to $2.04 per share. This includes an estimate for special
charges associated with the completion of the Widia integration of approximately
$0.16 to $0.18 per share. Excluding these charges, diluted earnings per share
are forecasted to range from $1.90 to $2.20 per share. The earnings forecast
includes $0.12 to $0.15 of accretion from Widia, slightly lower than prior
guidance on reduced expectations for the performance of European markets.
Kennametal anticipates net cash flow provided by operating activities of
approximately $165 to $185 million in fiscal 2004. Purchases of property, plant
and equipment and proceeds from disposals of property, plant and equipment are
expected to be $60 to $70 million, net. Adjusting net cash flow
provided by operating activities for the above items, Kennametal expects to
generate between $100 and $125 million of free operating cash flow.
Kennametal advises shareholders to note monthly order trends, for which the
company makes a disclosure ten business days after the conclusion of each month.
This information is available on the Investor Relations section of Kennametal's
corporate web site at www.kennametal.com.
DIVIDEND DECLARED
- -----------------
Kennametal also announced its Board of Directors declared a quarterly cash
dividend of $0.17 cents per share, payable November 25, 2003, to shareowners of
record as of the close of business November 10, 2003.
First quarter results will be discussed in a live Internet broadcast at 10:00
a.m. today. Access the live or archived conference by visiting the Investor
Relations section of Kennametal's corporate web site at www.kennametal.com.
This release contains "forward-looking" statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. You can identify these forward-looking statements by the fact they use
words such as "should," "anticipate," "estimate," "approximate," "expect,"
"may," "will," "project," "intend," "plan," "believe," and others words of
similar meaning and expression in connection with any discussion of future
operating or financial performance. One can also identify forward-looking
statements by the fact that they do not relate strictly to historical or current
facts. These statements are likely to relate to, among other things, our goals,
plans and projections regarding our financial position,
- more -
-4-
results of operations, market position and product development, which are based
on current expectations that involve inherent risks and uncertainties, including
factors that could delay, divert or change any of them in the next several
years. Although it is not possible to predict or identify all factors, they may
include the following: global economic conditions; future terrorist attacks;
epidemics; risks associated with integrating and divesting businesses and
achieving the expected savings and synergies; demands on management resources;
risks associated with international markets such as currency exchange rates, and
social and political environments; competition; labor relations; commodity
prices; demand for and market acceptance of new and existing products; and risks
associated with the implementation of restructuring plans and environmental
remediation matters. We can give no assurance that any goal or plan set forth in
forward-looking statements can be achieved and readers are cautioned not to
place undue reliance on such statements, which speak only as of the date made.
We undertake no obligation to release publicly any revisions to forward-looking
statements as a result of future events or developments.
Kennametal Inc. aspires to be the premier tooling solutions supplier in the
world with operational excellence throughout the value chain and best-in-class
manufacturing and technology. Kennametal strives to deliver superior shareowner
value through top-tier financial performance. The company provides customers a
broad range of technologically advanced tools, tooling systems and engineering
services aimed at improving customers' manufacturing competitiveness. With about
14,000 employees worldwide, the company's annual sales approximate $1.8 billion,
with nearly half coming from sales outside the United States. Kennametal is a
five-time winner of the GM "Supplier of the Year" award and is represented in
more than 60 countries. Kennametal operations in Europe are headquartered in
Furth, Germany. Kennametal Asia Pacific operations are headquartered in
Singapore. For more information, visit the company's web site at
www.kennametal.com.
- more -
FINANCIAL HIGHLIGHTS
Consolidated financial highlights for Kennametal Inc. (NYSE: KMT) for the
quarter ended September 30, 2003 and 2002 are shown in the following tables (in
thousands, except per share amounts).
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
QUARTER ENDED
SEPTEMBER 30,
--------------------------
2003 2002
--------- ---------
Sales $ 444,575 $ 404,218
Cost of goods sold(1) 300,468 273,249
--------- ---------
Gross profit 144,107 130,969
Operating expense(2) 121,239 104,835
Restructuring and asset impairment charges 550 (181)
Amortization of intangibles 470 814
--------- ---------
Operating income 21,848 25,501
Interest expense 6,600 8,485
Other expense, net 1,337 594
--------- ---------
Income before provision for income taxes
and minority interest 13,911 16,422
Provision for income taxes 4,452 5,255
Minority interest 695 338
--------- ---------
Net income $ 8,764 $ 10,829
========= =========
Basic earnings per share $ 0.25 $ 0.31
========= =========
Diluted earnings per share $ 0.24 $ 0.31
========= =========
Dividends per share $ 0.17 $ 0.17
========= =========
Basic weighted average share outstanding 35,336 35,045
========= =========
Diluted weighted average shares outstanding 35,989 35,344
========= =========
(1) For the quarter ended September 30, 2003, these amounts include charges of
$0.1 million for integration activities related to the Widia acquisition
and $2.8 million related to restructuring programs.
(2) For the quarters ended September 30, 2003 and 2002, these amounts include
charges of $1.4 million and $0.7 million, respectively, for integration
activities related to the Widia acquisition.
-more-
FINANCIAL HIGHLIGHTS (CONTINUED)
In addition to reported results under U.S. GAAP for the fiscal periods, the
following financial highlight tables also include, where appropriate, a
reconciliation of results excluding special items, free operating cash flow and
debt to capital (which are non-GAAP measures), to the most directly comparable
GAAP measures. Management believes that each of these non-GAAP financial
measures is useful to investors to more easily compare the Company's financial
performance period to period.
RECONCILIATION TO GAAP - QUARTER ENDED SEPTEMBER 30 (UNAUDITED)
Diluted
Operating Operating Net Earnings
Gross Profit Expense Income Income Per Share
--------------- -------------- --------------- -------------- --------------
2003 Reported Results $ 144,107 $ 121,239 $ 21,848 $ 8,764 $ 0.24
MSSG Restructuring 2,843 - 3,393 2,307 0.07
Widia Integration Costs - MSSG 63 (1,448) 1,511 1,027 0.03
Widia Integration Costs - AMSG 48 - 48 33 -
--------------- -------------- --------------- -------------- --------------
2003 Results Excluding Special Items $ 147,061 $ 119,791 $ 26,800 $ 12,131 $ 0.34
=============== ============== =============== ============== ==============
2002 Reported Results $ 130,969 $ 104,835 $ 25,501 $ 10,829 $ 0.31
AMSG Restructuring - - (181) (123) -
Widia Integration Costs - MSSG - (711) 711 483 0.01
--------------- -------------- --------------- -------------- --------------
2002 Results Excluding Special Items $ 130,969 $ 104,124 $ 26,031 $ 11,189 $ 0.32
=============== ============== =============== ============== ==============
-more-
FINANCIAL HIGHLIGHTS (CONTINUED)
SEGMENT DATA (UNAUDITED):
Quarter Ended
September 30,
----------------------------
2003 2002*
--------- ---------
Sales:
Metalworking Solutions and Services Group $ 271,129 $ 240,422
Advanced Materials Solutions Group 93,631 83,409
J&L Industrial Supply 48,139 48,606
Full Service Supply 31,676 31,781
--------- ---------
Total Sales $ 444,575 $ 404,218
========= =========
Sales By Geographic Region:
Within the United States $ 232,614 $ 239,124
International 211,961 165,094
--------- ---------
Total Sales $ 444,575 $ 404,218
========= =========
Operating Income (Loss), as reported:
Metalworking Solutions and Services Group $ 23,502 $ 23,473
Advanced Materials Solutions Group 11,822 11,385
J&L Industrial Supply 2,685 2,301
Full Service Supply (281) (19)
Corporate and Eliminations (15,880) (11,639)
--------- ---------
Total Operating Income $ 21,848 $ 25,501
========= =========
Operating Income (Loss), excluding special charges:
Metalworking Solutions and Services Group $ 28,406 $ 24,184
Advanced Materials Solutions Group 11,870 11,204
J&L Industrial Supply 2,685 2,301
Full Service Supply (281) (19)
Corporate and Eliminations (15,880) (11,639)
--------- ---------
Total Operating Income $ 26,800 $ 26,031
========= =========
*Prior year segment data has been restated for organizational changes
-more-
FINANCIAL HIGHLIGHTS (CONTINUED)
OPERATING INCOME (LOSS) RECONCILIATION (UNAUDITED):
QUARTER ENDED SEPTEMBER 30,
MSSG AMSG J&L FSS Corp & Elim. Total
-------- -------- --------- --------- ------------ -------
2003 Reported Operating Income (Loss) $ 23,502 $ 11,822 $ 2,685 $ (281) $(15,880) $ 21,848
Restructuring 3,393 - - - - 3,393
Widia Integration Costs 1,511 48 - - - 1,559
-----------------------------------------------------------------------
2003 Operating Income (Loss) Excluding Special Charges $ 28,406 $ 11,870 $ 2,685 $ (281) $(15,880) $ 26,800
=======================================================================
2002 Reported Operating Income (Loss) $ 23,473 $ 11,385 $ 2,301 $ (19) $(11,639) $ 25,501
Restructuring - (181) - - - (181)
Widia Integration Costs 711 - - - - 711
-----------------------------------------------------------------------
2002 Operating Income (Loss) Excluding Special Charges $ 24,184 $ 11,204 $ 2,301 $ (19) $(11,639) $ 26,031
=======================================================================
-more-
FINANCIAL HIGHLIGHTS (CONTINUED)
RECONCILIATION TO OPERATING CASH FLOW INFORMATION (UNAUDITED)
Quarter Ended
September 30,
-------------------------
2003 2002
-------- --------
Net income $ 8,764 $ 10,829
Other non-cash items 6,473 2,005
Depreciation and amortization 15,351 19,066
Change in inventory 3,728 10,121
Change in accounts receivable 5,054 5,938
Change in accounts payable (12,512) (14,099)
Change in other assets and liabilities (14,673) 4,454
-------- --------
Net cash flow provided by operating activities 12,185 38,314
Purchase of property, plant and equipment (10,594) (10,475)
Proceeds from disposals of property, plant and equipment 534 605
-------- --------
Free operating cash flow $ 2,125 $ 28,444
======== ========
CONDENSED BALANCE SHEETS (UNAUDITED)
Quarter Ended
---------------------------------------------------------------------
09/30/03 06/30/03 03/31/03 12/31/02 09/30/02
---------- ---------- ---------- ---------- ----------
ASSETS
Cash and equivalents $ 14,720 $ 15,093 $ 17,250 $ 18,155 $ 14,300
Accounts receivable, net of allowance 232,146 235,648 235,908 199,261 221,313
Inventories 387,877 392,255 408,996 403,530 403,590
Deferred income taxes 114,619 79,564 81,651 80,204 71,084
Other current assets 47,003 42,119 44,286 53,868 40,110
---------- ---------- ---------- ---------- ----------
TOTAL CURRENT ASSETS 796,365 764,679 788,091 755,018 750,397
---------- ---------- ---------- ---------- ----------
Property, plant and equipment, net 489,242 493,373 476,208 480,066 480,696
Goodwill and Intangible assets, net 483,165 473,932 491,987 478,060 467,140
Other assets 39,736 47,108 107,159 104,937 109,225
---------- ---------- ---------- ---------- ----------
TOTAL $1,808,508 $1,779,092 $1,863,445 $1,818,081 $1,807,458
========== ========== ========== ========== ==========
LIABILITIES
Short-term debt, including notes payable $ 11,375 $ 10,845 $ 15,068 $ 17,591 $ 16,992
Accounts payable 107,653 119,853 120,981 92,114 101,823
Accrued liabilities 195,761 205,649 208,816 171,726 171,045
---------- ---------- ---------- ---------- ----------
TOTAL CURRENT LIABILITIES 314,789 336,347 344,865 281,431 289,860
---------- ---------- ---------- ---------- ----------
Long-term debt 508,763 514,842 565,067 599,425 599,615
Deferred income taxes 42,047 8,748 38,382 46,801 53,475
Other liabilities 180,258 178,698 140,550 135,101 125,816
---------- ---------- ---------- ---------- ----------
TOTAL LIABILITIES 1,045,857 1,038,635 1,088,864 1,062,758 1,068,766
---------- ---------- ---------- ---------- ----------
MINORITY INTEREST 16,089 18,880 18,070 17,594 17,685
---------- ---------- ---------- ---------- ----------
SHAREOWNERS' EQUITY 746,562 721,577 756,511 737,729 721,007
---------- ---------- ---------- ---------- ----------
TOTAL $1,808,508 $1,779,092 $1,863,445 $1,818,081 $1,807,458
========== ========== ========== ========== ==========
-more-
DEBT TO EQUITY RECONCILIATION (UNAUDITED)
Forecasted Quarter Ended September 30, Quarter Ended
June 30, 2004 2003 2002 June 30, 2003
------------- -------------- -------------- -------------
Total Debt $ 431,920 $ 520,138 $ 616,607 $ 525,687
Total Shareowners' Equity 799,500 746,562 721,007 721,577
---------- ---------- ---------- ----------
Debt to Equity, GAAP 35.1% 41.1% 46.1% 42.1%
Total Debt $ 431,900 $ 520,138 $ 616,607 $ 525,687
Minority Interest 18,800 16,089 17,685 18,880
Total Shareowners' Equity 799,500 746,562 721,007 721,577
---------- ---------- ---------- ----------
Total Capital $1,250,200 $1,282,789 $1,355,299 $1,266,144
Debt to Capital 34.5% 40.5% 45.5% 41.5%
RECONCILIATION OF FORECASTED GAAP CASH FLOW INFORMATION (UNAUDITED)
TWELVE MONTHS ENDED
JUNE 30, 2004
-------------
Forecasted net cash flow provided by operating activities $165,000 - 185,000
Forecasted purchases and disposals of property, plant and equipment (60,000) - (70,000)
--------------------------
Forecasted free operating cash flow $100,000 - 125,000
==========================
-end-
