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KENNAMETAL ANNOUNCES EARNINGS FOR DECEMBER QUARTER

 KENNAMETAL ANNOUNCES EARNINGS FOR DECEMBER QUARTER
 LATROBE, Pa., Jan. 17 /PRNewswire/ -- Kennametal Inc. (NYSE: KMT) reported today that net income for the second quarter ended Dec. 31, 1991, was $1.1 million, or $0.10 per share, as compared with $6.3 million, or $0.60 per share, in the same quarter last year.
 Sales for the quarter were $141 million, down 8 percent from $152 million last year.
 For the six months ended Dec. 31, 1991, net income was $4.8 million, or $0.45 per share, as compared with $13.2 million, or $1.26 per share, in the same period last year. Sales were $291 million, down 5 percent from $304 million last year.
 Robert L. McGeehan, president and chief executive officer, said that earnings for the December 1991 quarter fell because of lower sales of metalworking products throughout the world and lower production levels in the company's manufacturing operations.
 Recessions in the United States and other areas of the world continued to affect demand for the company's metalcutting tools and toolholding products. Sales of metalworking products fell below the prior year level in each of the last four quarters.
 On the positive side, sales of mining and construction tools continued to grow. Sales increased slightly from last year as a result of brisk demand for highway construction tools in the United States and Europe. Sales of coal tools also increased over last year. Sales of metallurgical products decreased 19 percent from last year because of lower demand for intermediate powders used in carbide cutting tools.
 In reviewing the financial results, McGeehan noted that the gross margin was approximately 38 percent, down from 42 percent last year. The gross margin was adversely affected by a less favorable sales mix, higher raw material costs, and lower production levels in the company's metalworking operations. Operating expenses decreased slightly from last year as a result of ongoing cost containment efforts and lower employment levels. In December 1991, the company reduced its work force by an additional 150 employees. Costs necessary to implement this action were not material.
 In November 1991, the company divested Precision Hard Materials, S.A. (PHM), a Belgian subsidiary, resulting in a pretax loss of approximately $0.9 million with offsetting tax benefits of approximately $1.2 million, or an increase in earnings of $0.03 per share. PHM, a manufacturer of specialty products, had sales to unaffiliated customers of approximately $3 million for the year ended June 30, 1991.
 In looking to next quarter, McGeehan stated that while sales of metalworking products are expected to improve, sales will again fall below last year's level. Sales of mining and construction tools should continue to grow. He added that Kennametal's financial condition remains strong and the company continues to focus on research and development activities, improving operating efficiencies, and satisfying the customer.
 KENNAMETAL INC.
 FINANCIAL HIGHLIGHTS
 Consolidated financial highlights for Kennametal Inc. (NYSE: KMT) for the quarter ended Dec. 31, 1991, are shown in the following tables (in thousands, except per share amounts). All fiscal year 1992 data are subject to year-end (June 30) adjustment and audit by independent public accountants.
 Quarter Six Months
 Ended December 31, Ended December 31,
 1991 1990 1991 1990
 Net sales $140,570 $152,146 $290,503 $304,284
 Cost of goods sold 87,429 88,359 178,023 176,756
 Research & development
 expense 3,683 4,054 6,993 7,388
 Marketing expense 33,741 33,382 68,546 66,591
 General & adminis-
 trative expense 11,314 11,838 23,006 23,409
 Interest expense 2,696 3,126 5,158 6,184
 Amortization of
 intangibles 828 1,031 1,822 2,083
 Other income (expense) (762)(A) 460 (539)(A) 863
 Provisions (credits) for
 income taxes (1,000)(A) 4,500 1,600(A) 9,500
 Net income $ 1,117 $ 6,316 $ 4,816 $13,236
 Average shares
 outstanding 10,706 10,524 10,692 10,518
 Earnings per share $ 0.10 $ 0.60 $ 0.45 $ 1.26
 Dividends per share $ 0.29 $ 0.29 $ 0.58 $ 0.58
 (A) Includes pretax loss of $900 relating to the divestiture of Precision Hard Materials, S.A. with related income tax benefits of $1,200.
 Quarter Six Months
 Ended December 31, Ended December 31,
 1991 1990 1991 1990
 Sales by Product Class:
 Metalworking $114,874 $127,044 $234,532 $252,318
 Mining & construction 20,307 20,085 44,354 42,328
 Metallurgical 4,057 5,017 8,868 9,638
 Other 1,332 - 2,749 -
 Sales by Geographic Area:
 Within the U.S. $103,172 $108,691 $214,758 $216,950
 Export & foreign 37,398 43,455 75,745 87,334
 December 31, June 30,
 1991 1991
 Assets:
 Cash & equivalents $ 9,880 $ 11,288
 Accounts receivable, net of
 allowances 84,868 96,760
 Inventories 124,342 119,767
 Total current assets 219,090 227,815
 Net property, plant & equipment 199,834 193,830
 Other assets 54,070 54,549
 Total assets $472,994 $476,194
 Liabilities & Shareholders' Equity:
 Short-term debt $ 36,861 $ 57,597
 Accounts payable 44,716 47,021
 Other current liabilities 27,850 34,766
 Total current liabilities 109,427 139,384
 Term debt, less current portion 97,029 73,113
 Deferred income taxes & other 18,353 20,162
 Shareholders' equity 248,185 243,535
 Total liabilities &
 shareholders' equity $472,994 $476,194
 -0- 1/17/92
 /CONTACT: Ron Szymanski of Kennametal, 412-539-4617/
 (KMT) CO: Kennametal Inc. ST: Pennsylvania IN: MNG SU: ERN


DM -- PG018 -- 1153 01/17/92 17:06 EST
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