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KENNAMETAL 'F-2' COMMERCIAL PAPER AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --

 KENNAMETAL 'F-2' COMMERCIAL PAPER AFFIRMED BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Feb. 5 /PRNewswire/ -- Kennametal, Inc.'s "F-2" commercial paper is affirmed by Fitch. The affirmation is based on Kennametal's leading market position and strong operating record, highlighted by a history of steady operating cash flows relative to debt and comparatively strong fixed charge coverage. The rating also reflects the cyclical nature of the company's business.
 Kennametal has been implementing a strategic plan to augment its presence in its cyclical metalworking markets. This strategy includes acquisitions to broaden its product offerings and distribution channels and strengthen product quality and service capabilities.
 Throughout the mid-1980s, Kennametal's total debt to capital ratio averaged approximately 20 percent. In fiscal 1986, this ratio rose to approximately 35 percent due to a debt-financed share repurchase program. The debt ratio has remained at this level largely due to debt- financed acquisitions. Kennametal's other financial protection measures have also weakened somewhat due to the assimilation of acquisitions as well as the current recession. Over this interval, however, cash flow has remained strong, averaging 46 percent of total debt over the last five years.
 Kennametal's debt leverage will likely remain at current levels as the company plans to reinvest cash flows for growth. It is possible, however, that in fiscal 1993 or 1994, total debt to capital could rise if management elects to take a one-time charge for the "transition obligation" arising from the adoption of Financial Accounting Standard 106, which governs accounting for postretirement benefits other than pensions. This non-cash charge, however, should not have any ratings impact.
 -0- 2/5/92
 /CONTACT: Donald H. Powell of Fitch, 212-908-0570/
 (KMT) CO: Kennametal, Inc. ST: Pennsylvania IN: MNG SU: RTG


SH -- NY059 -- 7265 02/05/92 14:05 EST
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Publication:PR Newswire
Date:Feb 5, 1992
Words:292
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