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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Kennametal Inc | NYSE:KMT | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.38 | 1.57% | 24.54 | 24.625 | 24.15 | 24.55 | 872,676 | 22:58:40 |
|
Pennsylvania
|
|
25-0900168
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
600 Grant Street
Suite 5100
Pittsburgh, Pennsylvania
|
|
15219-2706
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer [X]
|
|
Accelerated filer [ ]
|
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
|
|
Smaller reporting company [ ]
|
Title of Each Class
|
|
Outstanding at January 31, 2017
|
Capital Stock, par value $1.25 per share
|
|
80,193,977
|
|
Item No.
|
Page No.
|
|
|
|
|
|
|
|
1.
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
2.
|
||
|
|
|
3.
|
||
|
|
|
4.
|
||
|
|
|
|
|
|
2.
|
||
|
|
|
6.
|
||
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands, except per share amounts)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Sales
|
$
|
487,573
|
|
|
$
|
524,021
|
|
|
$
|
964,713
|
|
|
$
|
1,079,376
|
|
Cost of goods sold
|
339,950
|
|
|
383,215
|
|
|
673,560
|
|
|
787,345
|
|
||||
Gross profit
|
147,623
|
|
|
140,806
|
|
|
291,153
|
|
|
292,031
|
|
||||
Operating expense
|
111,004
|
|
|
123,580
|
|
|
230,869
|
|
|
252,824
|
|
||||
Restructuring and asset impairment charges (Notes 8 and 18)
|
8,456
|
|
|
112,237
|
|
|
37,061
|
|
|
121,357
|
|
||||
Loss on divestiture (Note 5)
|
—
|
|
|
133,307
|
|
|
—
|
|
|
133,307
|
|
||||
Amortization of intangibles
|
4,150
|
|
|
5,638
|
|
|
8,421
|
|
|
11,886
|
|
||||
Operating income (loss)
|
24,013
|
|
|
(233,956
|
)
|
|
14,802
|
|
|
(227,343
|
)
|
||||
Interest expense
|
7,151
|
|
|
6,803
|
|
|
14,144
|
|
|
13,782
|
|
||||
Other expense (income), net
|
726
|
|
|
(732
|
)
|
|
844
|
|
|
353
|
|
||||
Income (loss) before income taxes
|
16,136
|
|
|
(240,027
|
)
|
|
(186
|
)
|
|
(241,478
|
)
|
||||
Provision (benefit) for income taxes
|
8,221
|
|
|
(71,216
|
)
|
|
13,100
|
|
|
(66,964
|
)
|
||||
Net income (loss)
|
7,915
|
|
|
(168,811
|
)
|
|
(13,286
|
)
|
|
(174,514
|
)
|
||||
Less: Net income attributable to noncontrolling interests
|
653
|
|
|
416
|
|
|
1,108
|
|
|
939
|
|
||||
Net income (loss) attributable to Kennametal
|
$
|
7,262
|
|
|
$
|
(169,227
|
)
|
|
$
|
(14,394
|
)
|
|
$
|
(175,453
|
)
|
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS
|
|
|
|
|
|||||||||||
Basic earnings (loss) per share
|
$
|
0.09
|
|
|
$
|
(2.12
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(2.20
|
)
|
Diluted earnings (loss) per share
|
$
|
0.09
|
|
|
$
|
(2.12
|
)
|
|
$
|
(0.18
|
)
|
|
$
|
(2.20
|
)
|
Dividends per share
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.40
|
|
|
$
|
0.40
|
|
Basic weighted average shares outstanding
|
80,206
|
|
|
79,840
|
|
|
80,131
|
|
|
79,784
|
|
||||
Diluted weighted average shares outstanding
|
81,026
|
|
|
79,840
|
|
|
80,131
|
|
|
79,784
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
2016
|
|
2015
|
||||||||
Net income (loss)
|
$
|
7,915
|
|
|
$
|
(168,811
|
)
|
$
|
(13,286
|
)
|
|
$
|
(174,514
|
)
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
||||||||
Unrealized gain on derivatives designated and qualified as cash flow hedges
|
1,606
|
|
|
277
|
|
1,480
|
|
|
802
|
|
||||
Reclassification of unrealized loss (gain) on expired derivatives designated and qualified as cash flow hedges
|
382
|
|
|
(418
|
)
|
769
|
|
|
(2,184
|
)
|
||||
Unrecognized net pension and other postretirement benefit gain
|
3,471
|
|
|
1,450
|
|
4,101
|
|
|
2,449
|
|
||||
Reclassification of net pension and other postretirement benefit loss
|
1,796
|
|
|
1,203
|
|
3,630
|
|
|
2,422
|
|
||||
Foreign currency translation adjustments
|
(41,428
|
)
|
|
(23,639
|
)
|
(40,264
|
)
|
|
(42,488
|
)
|
||||
Reclassification of foreign currency translation adjustment loss realized upon sale
|
—
|
|
|
17,028
|
|
—
|
|
|
17,028
|
|
||||
Total other comprehensive loss, net of tax
|
(34,173
|
)
|
|
(4,099
|
)
|
(30,284
|
)
|
|
(21,971
|
)
|
||||
Total comprehensive loss
|
(26,258
|
)
|
|
(172,910
|
)
|
(43,570
|
)
|
|
(196,485
|
)
|
||||
Less: comprehensive (loss) income attributable to noncontrolling interests
|
(401
|
)
|
|
(111
|
)
|
469
|
|
|
(128
|
)
|
||||
Comprehensive loss attributable to Kennametal Shareholders
|
$
|
(25,857
|
)
|
|
$
|
(172,799
|
)
|
$
|
(44,039
|
)
|
|
$
|
(196,357
|
)
|
|
|
|
|
|
(in thousands, except per share data)
|
December 31,
2016 |
|
June 30,
2016 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
102,001
|
|
|
$
|
161,579
|
|
Accounts receivable, less allowance for doubtful accounts of $12,247 and $12,724, respectively
|
339,479
|
|
|
370,916
|
|
||
Inventories (Note 11)
|
449,890
|
|
|
458,830
|
|
||
Deferred income taxes (Note 3)
|
—
|
|
|
26,713
|
|
||
Other current assets
|
80,375
|
|
|
57,303
|
|
||
Total current assets
|
971,745
|
|
|
1,075,341
|
|
||
Property, plant and equipment:
|
|
|
|
||||
Land and buildings
|
348,848
|
|
|
353,789
|
|
||
Machinery and equipment
|
1,518,731
|
|
|
1,511,462
|
|
||
Less accumulated depreciation
|
(1,142,446
|
)
|
|
(1,134,611
|
)
|
||
Property, plant and equipment, net
|
725,133
|
|
|
730,640
|
|
||
Other assets:
|
|
|
|
||||
Investments in affiliated companies
|
2
|
|
|
2
|
|
||
Goodwill (Note 18)
|
291,952
|
|
|
298,487
|
|
||
Other intangible assets, less accumulated amortization of $119,522 and $114,093, respectively (Note 18)
|
197,267
|
|
|
207,208
|
|
||
Deferred income taxes (Note 3)
|
34,368
|
|
|
14,459
|
|
||
Other
|
34,314
|
|
|
36,646
|
|
||
Total other assets
|
557,903
|
|
|
556,802
|
|
||
Total assets
|
$
|
2,254,781
|
|
|
$
|
2,362,783
|
|
LIABILITIES
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt and capital leases
|
$
|
254
|
|
|
$
|
732
|
|
Notes payable to banks
|
2,009
|
|
|
1,163
|
|
||
Accounts payable
|
168,880
|
|
|
182,039
|
|
||
Accrued income taxes
|
18,742
|
|
|
16,602
|
|
||
Accrued expenses
|
59,744
|
|
|
74,470
|
|
||
Other current liabilities
|
140,522
|
|
|
152,269
|
|
||
Total current liabilities
|
390,151
|
|
|
427,275
|
|
||
Long-term debt and capital leases, less current maturities (Notes 3 and 12)
|
694,329
|
|
|
693,548
|
|
||
Deferred income taxes (Note 3)
|
13,901
|
|
|
17,126
|
|
||
Accrued pension and postretirement benefits
|
191,717
|
|
|
201,473
|
|
||
Accrued income taxes
|
2,756
|
|
|
3,100
|
|
||
Other liabilities
|
27,246
|
|
|
24,460
|
|
||
Total liabilities
|
1,320,100
|
|
|
1,366,982
|
|
||
EQUITY (Note 16)
|
|
|
|
||||
Kennametal Shareholders’ Equity:
|
|
|
|
||||
Preferred stock, no par value; 5,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Capital stock, $1.25 par value; 120,000 shares authorized; 80,065 and 79,694
shares issued, respectively
|
100,082
|
|
|
99,618
|
|
||
Additional paid-in capital
|
450,645
|
|
|
436,617
|
|
||
Retained earnings
|
734,233
|
|
|
780,597
|
|
||
Accumulated other comprehensive loss
|
(382,154
|
)
|
|
(352,509
|
)
|
||
Total Kennametal Shareholders’ Equity
|
902,806
|
|
|
964,323
|
|
||
Noncontrolling interests
|
31,875
|
|
|
31,478
|
|
||
Total equity
|
934,681
|
|
|
995,801
|
|
||
Total liabilities and equity
|
$
|
2,254,781
|
|
|
$
|
2,362,783
|
|
|
|
|
|
|
|
Six Months Ended December 31,
|
||||||
(in thousands)
|
2016
|
|
2015
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net loss
|
$
|
(13,286
|
)
|
|
$
|
(174,514
|
)
|
Adjustments for non-cash items:
|
|
|
|
||||
Depreciation
|
45,994
|
|
|
50,429
|
|
||
Amortization
|
8,421
|
|
|
11,886
|
|
||
Stock-based compensation expense
|
13,275
|
|
|
10,811
|
|
||
Restructuring and asset impairment charges (Note 8 and 18)
|
781
|
|
|
111,327
|
|
||
Deferred income tax provision
|
1,274
|
|
|
(78,742
|
)
|
||
Loss on divestiture (Note 5)
|
—
|
|
|
133,307
|
|
||
Other
|
(2,773
|
)
|
|
(345
|
)
|
||
Changes in certain assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
20,423
|
|
|
69,832
|
|
||
Inventories
|
(1,938
|
)
|
|
46,565
|
|
||
Accounts payable and accrued liabilities
|
(7,618
|
)
|
|
(44,142
|
)
|
||
Accrued income taxes
|
1,632
|
|
|
(12,390
|
)
|
||
Accrued pension and postretirement benefits
|
(11,298
|
)
|
|
(18,176
|
)
|
||
Other
|
(8,309
|
)
|
|
(1,304
|
)
|
||
Net cash flow provided by operating activities
|
46,578
|
|
|
104,544
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Purchases of property, plant and equipment
|
(70,573
|
)
|
|
(61,175
|
)
|
||
Disposals of property, plant and equipment
|
3,509
|
|
|
4,402
|
|
||
Proceeds from divestiture (Note 5)
|
—
|
|
|
61,100
|
|
||
Other
|
100
|
|
|
814
|
|
||
Net cash flow (used for) provided by investing activities
|
(66,964
|
)
|
|
5,141
|
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Net increase (decrease) in notes payable
|
1,005
|
|
|
(6,990
|
)
|
||
Term debt borrowings
|
—
|
|
|
26,173
|
|
||
Term debt repayments
|
(427
|
)
|
|
(63,726
|
)
|
||
Purchase of capital stock
|
(125
|
)
|
|
(167
|
)
|
||
Dividend reinvestment and the effect of employee benefit and stock plans
|
3,462
|
|
|
1,473
|
|
||
Cash dividends paid to Shareholders
|
(31,970
|
)
|
|
(31,845
|
)
|
||
Other
|
(6,626
|
)
|
|
(290
|
)
|
||
Net cash flow used for financing activities
|
(34,681
|
)
|
|
(75,372
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(4,511
|
)
|
|
(829
|
)
|
||
CASH AND CASH EQUIVALENTS
|
|
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
(59,578
|
)
|
|
33,484
|
|
||
Cash and cash equivalents, beginning of period
|
161,579
|
|
|
105,494
|
|
||
Cash and cash equivalents, end of period
|
$
|
102,001
|
|
|
$
|
138,978
|
|
4.
|
SUPPLEMENTAL CASH FLOW DISCLOSURES
|
|
Six Months Ended December 31,
|
||||||
(in thousands)
|
2016
|
|
2015
|
||||
Cash paid during the period for:
|
|
|
|
||||
Interest
|
$
|
13,480
|
|
|
$
|
13,076
|
|
Income taxes
|
10,191
|
|
|
25,735
|
|
||
Supplemental disclosure of non-cash information:
|
|
|
|
||||
Changes in accounts payable related to purchases of property, plant and equipment
|
15,404
|
|
|
16,400
|
|
5.
|
DIVESTITURE
|
(in thousands)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives
(1)
|
$
|
—
|
|
|
$
|
2,543
|
|
|
$
|
—
|
|
|
$
|
2,543
|
|
Total assets at fair value
|
$
|
—
|
|
|
$
|
2,543
|
|
|
$
|
—
|
|
|
$
|
2,543
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
(1)
|
$
|
—
|
|
|
$
|
1,287
|
|
|
$
|
—
|
|
|
$
|
1,287
|
|
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
1,287
|
|
|
$
|
—
|
|
|
$
|
1,287
|
|
(in thousands)
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Derivatives
(1)
|
$
|
—
|
|
|
$
|
334
|
|
|
$
|
—
|
|
|
$
|
334
|
|
Total assets at fair value
|
$
|
—
|
|
|
$
|
334
|
|
|
$
|
—
|
|
|
$
|
334
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivatives
(1)
|
$
|
—
|
|
|
$
|
763
|
|
|
$
|
—
|
|
|
$
|
763
|
|
Contingent consideration
|
—
|
|
|
—
|
|
|
6,600
|
|
|
6,600
|
|
||||
Total liabilities at fair value
|
$
|
—
|
|
|
$
|
763
|
|
|
$
|
6,600
|
|
|
$
|
7,363
|
|
7.
|
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
|
(in thousands)
|
December 31,
2016 |
|
June 30,
2016 |
||||
Derivatives designated as hedging instruments
|
|
|
|
||||
Other current assets - range forward contracts
|
$
|
1,590
|
|
|
$
|
323
|
|
Total derivatives designated as hedging instruments
|
1,590
|
|
|
323
|
|
||
Derivatives not designated as hedging instruments
|
|
|
|
||||
Other current assets - currency forward contracts
|
953
|
|
|
11
|
|
||
Other current liabilities - currency forward contracts
|
(1,287
|
)
|
|
(763
|
)
|
||
Total derivatives not designated as hedging instruments
|
(334
|
)
|
|
(752
|
)
|
||
Total derivatives
|
$
|
1,256
|
|
|
$
|
(429
|
)
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Other expense (income), net - currency forward contracts
|
$
|
(59
|
)
|
|
$
|
25
|
|
|
$
|
(377
|
)
|
|
$
|
8
|
|
8.
|
RESTRUCTURING AND RELATED CHARGES
|
(in thousands)
|
June 30, 2016
|
|
Expense
|
|
Asset Write-Down
|
|
Translation
|
|
Cash Expenditures
|
|
December 31, 2016
|
||||||||||||
Industrial
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Severance
|
$
|
8,180
|
|
|
$
|
21,270
|
|
|
$
|
—
|
|
|
$
|
(412
|
)
|
|
$
|
(18,324
|
)
|
|
$
|
10,714
|
|
Facilities
|
—
|
|
|
100
|
|
|
(100
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
809
|
|
|
(72
|
)
|
|
—
|
|
|
(10
|
)
|
|
(477
|
)
|
|
250
|
|
||||||
Total Industrial
|
$
|
8,989
|
|
|
$
|
21,298
|
|
|
$
|
(100
|
)
|
|
$
|
(422
|
)
|
|
$
|
(18,801
|
)
|
|
$
|
10,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Widia
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Severance
|
$
|
909
|
|
|
$
|
4,504
|
|
|
$
|
—
|
|
|
$
|
(87
|
)
|
|
$
|
(3,880
|
)
|
|
$
|
1,446
|
|
Facilities
|
—
|
|
|
9
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other
|
90
|
|
|
(15
|
)
|
|
—
|
|
|
(3
|
)
|
|
(72
|
)
|
|
—
|
|
||||||
Total Widia
|
999
|
|
|
4,498
|
|
|
(9
|
)
|
|
(90
|
)
|
|
(3,952
|
)
|
|
1,446
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Infrastructure
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Severance
|
$
|
5,301
|
|
|
$
|
10,620
|
|
|
$
|
—
|
|
|
$
|
(205
|
)
|
|
$
|
(9,148
|
)
|
|
$
|
6,568
|
|
Facilities
|
33
|
|
|
967
|
|
|
(967
|
)
|
|
—
|
|
|
—
|
|
|
33
|
|
||||||
Other
|
381
|
|
|
(36
|
)
|
|
—
|
|
|
(7
|
)
|
|
(245
|
)
|
|
93
|
|
||||||
Total Infrastructure
|
$
|
5,715
|
|
|
$
|
11,551
|
|
|
$
|
(967
|
)
|
|
$
|
(212
|
)
|
|
$
|
(9,393
|
)
|
|
$
|
6,694
|
|
Total
|
$
|
15,703
|
|
|
$
|
37,347
|
|
|
$
|
(1,076
|
)
|
|
$
|
(724
|
)
|
|
$
|
(32,146
|
)
|
|
$
|
19,104
|
|
9.
|
STOCK-BASED COMPENSATION
|
Risk-free interest rate
|
|
1.4
|
%
|
Expected life (years)
(2)
|
|
4.5
|
|
Expected volatility
(3)
|
|
31.0
|
%
|
Expected dividend yield
|
|
2.0
|
%
|
|
Options
|
|
Weighted
Average
Exercise Price
|
|
Weighted Average Remaining Life (years)
|
|
Aggregate
Intrinsic value
(in thousands)
|
|||||
Options outstanding, June 30, 2016
|
2,547,809
|
|
|
$
|
33.72
|
|
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(111,683
|
)
|
|
27.34
|
|
|
|
|
|
|||
Lapsed or forfeited
|
(169,129
|
)
|
|
30.51
|
|
|
|
|
|
|||
Options outstanding, December 31, 2016
|
2,266,997
|
|
|
$
|
34.27
|
|
|
4.3
|
|
$
|
4,445
|
|
Options vested and expected to vest, December 31, 2016
|
2,243,491
|
|
|
$
|
34.32
|
|
|
4.3
|
|
$
|
4,369
|
|
Options exercisable, December 31, 2016
|
1,747,101
|
|
|
$
|
35.96
|
|
|
3.0
|
|
$
|
2,153
|
|
|
Performance Vesting Stock Units
|
|
Performance Vesting Weighted Average Fair Value
|
|
Time Vesting
Stock Units
|
|
Time Vesting Weighted Average Fair Value
|
||||||
Unvested performance vesting and time vesting restricted stock units, June 30, 2016
|
115,467
|
|
|
$
|
36.96
|
|
|
1,014,744
|
|
|
$
|
31.97
|
|
Granted
|
235,241
|
|
|
26.35
|
|
|
586,662
|
|
|
25.01
|
|
||
Vested
|
(16,084
|
)
|
|
45.24
|
|
|
(300,888
|
)
|
|
36.11
|
|
||
Performance metric not achieved
|
(35,980
|
)
|
|
26.35
|
|
|
—
|
|
|
—
|
|
||
Forfeited
|
(17,354
|
)
|
|
35.31
|
|
|
(49,727
|
)
|
|
27.20
|
|
||
Unvested performance vesting and time vesting restricted stock units, December 31, 2016
|
281,290
|
|
|
$
|
27.69
|
|
|
1,250,791
|
|
|
$
|
27.89
|
|
10.
|
BENEFIT PLANS
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Service cost
|
$
|
727
|
|
|
$
|
1,156
|
|
|
$
|
1,460
|
|
|
$
|
2,319
|
|
Interest cost
|
7,770
|
|
|
9,438
|
|
|
15,579
|
|
|
18,923
|
|
||||
Expected return on plan assets
|
(14,672
|
)
|
|
(14,657
|
)
|
|
(29,429
|
)
|
|
(29,364
|
)
|
||||
Amortization of transition obligation
|
22
|
|
|
21
|
|
|
45
|
|
|
42
|
|
||||
Amortization of prior service credit
|
(113
|
)
|
|
(104
|
)
|
|
(226
|
)
|
|
(209
|
)
|
||||
Recognition of actuarial losses
|
2,088
|
|
|
1,815
|
|
|
4,200
|
|
|
3,648
|
|
||||
Special termination benefit charge
|
—
|
|
|
54
|
|
|
—
|
|
|
107
|
|
||||
Net periodic pension income
|
$
|
(4,178
|
)
|
|
$
|
(2,277
|
)
|
|
$
|
(8,371
|
)
|
|
$
|
(4,534
|
)
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest cost
|
$
|
168
|
|
|
$
|
210
|
|
|
$
|
337
|
|
|
$
|
420
|
|
Amortization of prior service credit
|
(6
|
)
|
|
(5
|
)
|
|
(11
|
)
|
|
(11
|
)
|
||||
Recognition of actuarial loss
|
89
|
|
|
81
|
|
|
177
|
|
|
162
|
|
||||
Net periodic other postretirement benefit cost
|
$
|
251
|
|
|
$
|
286
|
|
|
$
|
503
|
|
|
$
|
571
|
|
11.
|
INVENTORIES
|
(in thousands)
|
December 31, 2016
|
|
June 30, 2016
|
||||
Finished goods
|
$
|
280,427
|
|
|
$
|
284,054
|
|
Work in process and powder blends
|
150,881
|
|
|
166,274
|
|
||
Raw materials
|
76,003
|
|
|
68,472
|
|
||
Inventories at current cost
|
507,311
|
|
|
518,800
|
|
||
Less: LIFO valuation
|
(57,421
|
)
|
|
(59,970
|
)
|
||
Total inventories
|
$
|
449,890
|
|
|
$
|
458,830
|
|
12.
|
LONG-TERM DEBT
|
14.
|
INCOME TAXES
|
15.
|
EARNINGS PER SHARE
|
|
Kennametal Shareholders’ Equity
|
|
|
|
|
||||||||||||||||||
(in thousands)
|
Capital
stock |
|
Additional
paid-in capital |
|
Retained
earnings |
|
Accumulated
other comprehensive loss |
|
Non-
controlling interests |
|
Total equity
|
||||||||||||
Balance as of June 30, 2016
|
$
|
99,618
|
|
|
$
|
436,617
|
|
|
$
|
780,597
|
|
|
$
|
(352,509
|
)
|
|
$
|
31,478
|
|
|
$
|
995,801
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
(14,394
|
)
|
|
—
|
|
|
1,108
|
|
|
(13,286
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,645
|
)
|
|
(639
|
)
|
|
(30,284
|
)
|
||||||
Dividend reinvestment
|
5
|
|
|
122
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
127
|
|
||||||
Capital stock issued under employee benefit and stock plans
(4)
|
464
|
|
|
14,028
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14,492
|
|
||||||
Purchase of capital stock
|
(5
|
)
|
|
(122
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(127
|
)
|
||||||
Cash dividends paid
|
—
|
|
|
—
|
|
|
(31,970
|
)
|
|
—
|
|
|
(72
|
)
|
|
(32,042
|
)
|
||||||
Balance as of December 31, 2016
|
$
|
100,082
|
|
|
$
|
450,645
|
|
|
$
|
734,233
|
|
|
$
|
(382,154
|
)
|
|
$
|
31,875
|
|
|
$
|
934,681
|
|
|
Kennametal Shareholders’ Equity
|
|
|
|
|
||||||||||||||||||
(in thousands)
|
Capital
stock
|
|
Additional
paid-in
capital
|
|
Retained
earnings
|
|
Accumulated
other comprehensive loss |
|
Non-
controlling
interests
|
|
Total equity
|
||||||||||||
Balance as of June 30, 2015
|
$
|
99,219
|
|
|
$
|
419,829
|
|
|
$
|
1,070,282
|
|
|
$
|
(243,523
|
)
|
|
$
|
29,628
|
|
|
$
|
1,375,435
|
|
Net (loss) income
|
—
|
|
|
—
|
|
|
(175,453
|
)
|
|
—
|
|
|
939
|
|
|
(174,514
|
)
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,904
|
)
|
|
(1,067
|
)
|
|
(21,971
|
)
|
||||||
Dividend reinvestment
|
8
|
|
|
159
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
167
|
|
||||||
Capital stock issued under employee benefit and stock plans
(4)
|
369
|
|
|
6,874
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,243
|
|
||||||
Purchase of capital stock
|
(8
|
)
|
|
(159
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(167
|
)
|
||||||
Cash dividends paid
|
—
|
|
|
—
|
|
|
(31,845
|
)
|
|
—
|
|
|
(71
|
)
|
|
(31,916
|
)
|
||||||
Balance as of December 31, 2015
|
$
|
99,588
|
|
|
$
|
426,703
|
|
|
$
|
862,984
|
|
|
$
|
(264,427
|
)
|
|
$
|
29,429
|
|
|
$
|
1,154,277
|
|
17.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
Attributable to Kennametal:
|
Postretirement benefit plans
|
Currency translation adjustment
|
Derivatives
|
Total
|
||||||||
Balance, June 30, 2016
|
$
|
(212,163
|
)
|
$
|
(131,212
|
)
|
$
|
(9,134
|
)
|
$
|
(352,509
|
)
|
Other comprehensive income (loss) before reclassifications
|
4,101
|
|
(39,625
|
)
|
1,480
|
|
(34,044
|
)
|
||||
Amounts reclassified from AOCL
|
3,630
|
|
—
|
|
769
|
|
4,399
|
|
||||
Net current period other comprehensive
income (loss)
|
7,731
|
|
(39,625
|
)
|
2,249
|
|
(29,645
|
)
|
||||
AOCL, December 31, 2016
|
$
|
(204,432
|
)
|
$
|
(170,837
|
)
|
$
|
(6,885
|
)
|
$
|
(382,154
|
)
|
|
|
|
|
|
||||||||
Attributable to noncontrolling interests:
|
|
|
|
|
||||||||
Balance, June 30, 2016
|
$
|
—
|
|
$
|
(3,446
|
)
|
$
|
—
|
|
$
|
(3,446
|
)
|
Other comprehensive income before
reclassifications
|
—
|
|
(639
|
)
|
—
|
|
(639
|
)
|
||||
Net current period other comprehensive loss
|
—
|
|
(639
|
)
|
—
|
|
(639
|
)
|
||||
AOCL, December 31, 2016
|
$
|
—
|
|
$
|
(4,085
|
)
|
$
|
—
|
|
$
|
(4,085
|
)
|
Attributable to Kennametal:
|
Postretirement benefit plans
|
Currency translation adjustment
|
Derivatives
|
Total
|
||||||||
Balance, June 30, 2015
|
$
|
(138,793
|
)
|
$
|
(97,309
|
)
|
$
|
(7,421
|
)
|
$
|
(243,523
|
)
|
Other comprehensive income (loss) before reclassifications
|
2,449
|
|
(41,421
|
)
|
802
|
|
(38,170
|
)
|
||||
Amounts reclassified from AOCL
|
2,422
|
|
17,028
|
|
(2,184
|
)
|
17,266
|
|
||||
Net current period other comprehensive
income (loss)
|
4,871
|
|
(24,393
|
)
|
(1,382
|
)
|
(20,904
|
)
|
||||
AOCL, December 31, 2015
|
$
|
(133,922
|
)
|
$
|
(121,702
|
)
|
$
|
(8,803
|
)
|
$
|
(264,427
|
)
|
|
|
|
|
|
||||||||
Attributable to noncontrolling interests:
|
|
|
|
|
||||||||
Balance, June 30, 2015
|
$
|
—
|
|
$
|
(2,258
|
)
|
$
|
—
|
|
$
|
(2,258
|
)
|
Other comprehensive loss before
reclassifications
|
—
|
|
(1,067
|
)
|
—
|
|
(1,067
|
)
|
||||
Net current period other comprehensive
loss
|
—
|
|
(1,067
|
)
|
—
|
|
(1,067
|
)
|
||||
AOCL, December 31, 2015
|
$
|
—
|
|
$
|
(3,325
|
)
|
$
|
—
|
|
$
|
(3,325
|
)
|
|
Three Months Ended December 31,
|
Six Months Ended December 31,
|
|
|
||||||||||||
Details about AOCL components
|
2016
|
|
2015
|
2016
|
|
2015
|
|
Affected line item in the Income Statement
|
||||||||
Gains and losses on cash flow hedges:
|
|
|
|
|
|
|
|
|
||||||||
Forward starting interest rate swaps
|
$
|
545
|
|
|
$
|
525
|
|
$
|
1,090
|
|
|
$
|
1,049
|
|
|
Interest expense
|
Currency exchange contracts
|
(163
|
)
|
|
(1,199
|
)
|
(321
|
)
|
|
(4,572
|
)
|
|
Other expense (income), net
|
||||
Total before tax
|
382
|
|
|
(674
|
)
|
769
|
|
|
(3,523
|
)
|
|
|
||||
Tax impact
|
—
|
|
|
256
|
|
—
|
|
|
1,339
|
|
|
Provision (benefit) for income taxes
|
||||
Net of tax
|
$
|
382
|
|
|
$
|
(418
|
)
|
$
|
769
|
|
|
$
|
(2,184
|
)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Postretirement benefit plans:
|
|
|
|
|
|
|
|
|
||||||||
Amortization of transition obligations
|
$
|
22
|
|
|
$
|
21
|
|
$
|
45
|
|
|
$
|
42
|
|
|
See note 10 for further details
|
Amortization of prior service credit
|
(119
|
)
|
|
(109
|
)
|
(237
|
)
|
|
(220
|
)
|
|
See note 10 for further details
|
||||
Recognition of actuarial losses
|
2,177
|
|
|
1,896
|
|
4,377
|
|
|
3,810
|
|
|
See note 10 for further details
|
||||
Total before tax
|
2,080
|
|
|
1,808
|
|
4,185
|
|
|
3,632
|
|
|
|
||||
Tax impact
|
(284
|
)
|
|
(605
|
)
|
(555
|
)
|
|
(1,210
|
)
|
|
Provision (benefit) for income taxes
|
||||
Net of tax
|
$
|
1,796
|
|
|
$
|
1,203
|
|
$
|
3,630
|
|
|
$
|
2,422
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments:
|
|
|
|
|
|
|
|
|
||||||||
Released due to divestiture
|
$
|
—
|
|
|
$
|
17,028
|
|
$
|
—
|
|
|
$
|
17,028
|
|
|
Loss on divestiture
|
Total before taxes
|
—
|
|
|
17,028
|
|
—
|
|
|
17,028
|
|
|
|
||||
Tax impact
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
Provision (benefit) for income taxes
|
||||
Net of tax
|
$
|
—
|
|
|
$
|
17,028
|
|
$
|
—
|
|
|
$
|
17,028
|
|
|
|
|
|
2016
|
|
|
|
|
2015
|
|
||||||||||||
(in thousands)
|
Pre-tax
|
Tax impact
|
Net of tax
|
|
|
Pre-tax
|
Tax impact
|
Net of tax
|
||||||||||||
Unrealized gain on derivatives designated and qualified as cash flow hedges
|
$
|
1,606
|
|
$
|
—
|
|
$
|
1,606
|
|
|
|
$
|
447
|
|
$
|
(170
|
)
|
$
|
277
|
|
Reclassification of unrealized loss (gain) on expired derivatives designated and qualified as cash flow hedges
|
382
|
|
—
|
|
382
|
|
|
|
(674
|
)
|
256
|
|
(418
|
)
|
||||||
Unrecognized net pension and other postretirement benefit gain
|
4,639
|
|
(1,168
|
)
|
3,471
|
|
|
|
1,949
|
|
(499
|
)
|
1,450
|
|
||||||
Reclassification of net pension and other postretirement benefit loss
|
2,080
|
|
(284
|
)
|
1,796
|
|
|
|
1,808
|
|
(605
|
)
|
1,203
|
|
||||||
Foreign currency translation adjustments
|
(41,428
|
)
|
—
|
|
(41,428
|
)
|
|
|
(24,643
|
)
|
1,004
|
|
(23,639
|
)
|
||||||
Reclassification of foreign currency translation adjustment loss realized upon sale
|
—
|
|
—
|
|
—
|
|
|
|
17,028
|
|
—
|
|
17,028
|
|
||||||
Other comprehensive loss
|
$
|
(32,721
|
)
|
$
|
(1,452
|
)
|
$
|
(34,173
|
)
|
|
|
$
|
(4,085
|
)
|
$
|
(14
|
)
|
$
|
(4,099
|
)
|
|
|
2016
|
|
|
|
|
2015
|
|
||||||||||||
(in thousands)
|
Pre-tax
|
Tax impact
|
Net of tax
|
|
|
Pre-tax
|
Tax impact
|
Net of tax
|
||||||||||||
Unrealized (loss) gain on derivatives designated and qualified as cash flow hedges
|
$
|
1,480
|
|
$
|
—
|
|
$
|
1,480
|
|
|
|
$
|
1,294
|
|
$
|
(492
|
)
|
$
|
802
|
|
Reclassification of unrealized loss (gain) on expired derivatives designated and qualified as cash flow hedges
|
769
|
|
—
|
|
769
|
|
|
|
(3,523
|
)
|
1,339
|
|
(2,184
|
)
|
||||||
Unrecognized net pension and other postretirement benefit gain
|
5,401
|
|
(1,300
|
)
|
4,101
|
|
|
|
3,216
|
|
(767
|
)
|
2,449
|
|
||||||
Reclassification of net pension and other postretirement benefit loss
|
4,185
|
|
(555
|
)
|
3,630
|
|
|
|
3,632
|
|
(1,210
|
)
|
2,422
|
|
||||||
Foreign currency translation adjustments
|
(40,264
|
)
|
—
|
|
(40,264
|
)
|
|
|
(43,548
|
)
|
1,060
|
|
(42,488
|
)
|
||||||
Reclassification of foreign currency translation adjustment loss realized upon sale
|
—
|
|
—
|
|
—
|
|
|
|
17,028
|
|
—
|
|
17,028
|
|
||||||
Other comprehensive loss
|
$
|
(28,429
|
)
|
$
|
(1,855
|
)
|
$
|
(30,284
|
)
|
|
|
$
|
(21,901
|
)
|
$
|
(70
|
)
|
$
|
(21,971
|
)
|
18.
|
GOODWILL AND OTHER INTANGIBLE ASSETS
|
(in thousands)
|
Industrial
|
|
Widia
|
|
Infrastructure
|
|
Total
|
||||||||
Gross goodwill
|
$
|
408,705
|
|
|
$
|
40,624
|
|
|
$
|
633,211
|
|
|
$
|
1,082,540
|
|
Accumulated impairment losses
|
(137,204
|
)
|
|
(13,638
|
)
|
|
(633,211
|
)
|
|
(784,053
|
)
|
||||
Balance as of June 30, 2016
|
$
|
271,501
|
|
|
$
|
26,986
|
|
|
$
|
—
|
|
|
$
|
298,487
|
|
|
|
|
|
|
|
|
|
||||||||
Activity for the six months ended December 31, 2016:
|
|
|
|
|
|
|
|
||||||||
Change in gross goodwill due to translation
|
(6,549
|
)
|
|
14
|
|
|
—
|
|
|
(6,535
|
)
|
||||
Gross goodwill
|
402,156
|
|
|
40,638
|
|
|
633,211
|
|
|
1,076,005
|
|
||||
Accumulated impairment losses
|
(137,204
|
)
|
|
(13,638
|
)
|
|
(633,211
|
)
|
|
(784,053
|
)
|
||||
Balance as of December 31, 2016
|
$
|
264,952
|
|
|
$
|
27,000
|
|
|
$
|
—
|
|
|
$
|
291,952
|
|
|
Estimated
Useful Life
(in years)
|
|
December 31, 2016
|
June 30, 2016
|
||||||||||||||
(in thousands)
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|||||||||
Contract-based
|
3 to 15
|
|
$
|
7,058
|
|
|
$
|
(6,996
|
)
|
|
|
$
|
7,152
|
|
|
$
|
(6,886
|
)
|
Technology-based and other
|
4 to 20
|
|
45,914
|
|
|
(27,152
|
)
|
|
|
47,323
|
|
|
(27,011
|
)
|
||||
Customer-related
|
10 to 21
|
|
203,731
|
|
|
(67,922
|
)
|
|
|
205,471
|
|
|
(66,938
|
)
|
||||
Unpatented technology
|
10 to 30
|
|
31,659
|
|
|
(9,363
|
)
|
|
|
31,837
|
|
|
(4,614
|
)
|
||||
Trademarks
|
5 to 20
|
|
12,230
|
|
|
(8,089
|
)
|
|
|
12,668
|
|
|
(8,644
|
)
|
||||
Trademarks
|
Indefinite
|
|
16,197
|
|
|
—
|
|
|
|
16,850
|
|
|
—
|
|
||||
Total
|
|
|
$
|
316,789
|
|
|
$
|
(119,522
|
)
|
|
|
$
|
321,301
|
|
|
$
|
(114,093
|
)
|
19.
|
SEGMENT DATA
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Sales:
|
|
|
|
|
|
|
|
||||||||
Industrial
(5)
|
$
|
267,492
|
|
|
$
|
268,578
|
|
|
$
|
536,536
|
|
|
$
|
538,770
|
|
Widia
(5)
|
42,874
|
|
|
42,305
|
|
|
83,888
|
|
|
85,447
|
|
||||
Infrastructure
|
177,207
|
|
|
213,138
|
|
|
344,289
|
|
|
455,159
|
|
||||
Total sales
|
$
|
487,573
|
|
|
$
|
524,021
|
|
|
$
|
964,713
|
|
|
$
|
1,079,376
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
||||||||
Industrial
(5)
|
$
|
18,067
|
|
|
$
|
12,025
|
|
|
$
|
23,603
|
|
|
$
|
33,483
|
|
Widia
(5)
|
(2,666
|
)
|
|
(4,665
|
)
|
|
(8,403
|
)
|
|
(6,374
|
)
|
||||
Infrastructure
|
10,274
|
|
|
(237,738
|
)
|
|
2,687
|
|
|
(246,166
|
)
|
||||
Corporate
|
(1,662
|
)
|
|
(3,578
|
)
|
|
(3,085
|
)
|
|
(8,286
|
)
|
||||
Total operating income (loss)
|
24,013
|
|
|
(233,956
|
)
|
|
14,802
|
|
|
(227,343
|
)
|
||||
Interest expense
|
7,151
|
|
|
6,803
|
|
|
14,144
|
|
|
13,782
|
|
||||
Other expense (income), net
|
726
|
|
|
(732
|
)
|
|
844
|
|
|
353
|
|
||||
Income (loss) from continuing operations before income taxes
|
$
|
16,136
|
|
|
$
|
(240,027
|
)
|
|
$
|
(186
|
)
|
|
$
|
(241,478
|
)
|
(in thousands)
|
December 31, 2016
|
|
June 30, 2016
|
||||
Industrial
(5)
|
$
|
1,054,688
|
|
|
$
|
1,019,887
|
|
Widia
(5)
|
193,343
|
|
|
195,339
|
|
||
Infrastructure
|
755,836
|
|
|
849,447
|
|
||
Corporate
|
250,914
|
|
|
298,110
|
|
||
Total assets
|
$
|
2,254,781
|
|
|
$
|
2,362,783
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Sales
|
$
|
267,492
|
|
|
$
|
268,578
|
|
|
$
|
536,536
|
|
|
$
|
538,770
|
|
Operating income
|
18,067
|
|
|
12,025
|
|
|
23,603
|
|
|
33,483
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Sales
|
$
|
42,874
|
|
|
$
|
42,305
|
|
|
$
|
83,888
|
|
|
$
|
85,447
|
|
Operating loss
|
(2,666
|
)
|
|
(4,665
|
)
|
|
(8,403
|
)
|
|
(6,374
|
)
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Sales
|
$
|
177,207
|
|
|
$
|
213,138
|
|
|
$
|
344,289
|
|
|
$
|
455,159
|
|
Operating income (loss)
|
10,274
|
|
|
(237,738
|
)
|
|
2,687
|
|
|
(246,166
|
)
|
|
|
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
||||||||||||
(in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2016
|
||||||||
Corporate unallocated expense
|
$
|
(1,662
|
)
|
|
$
|
(3,578
|
)
|
|
$
|
(3,085
|
)
|
|
$
|
(8,286
|
)
|
|
|
|
|
|
|
|
|
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4. CONTROLS AND PROCEDURES
|
ITEM 1. LEGAL PROCEEDINGS
|
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
Total Number of
Shares Purchased
(1)
|
|
|
Average Price
Paid per Share
|
|
|
Total Number of
Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
|
Maximum Number
of Shares that May
Yet Be Purchased
Under the Plans or
Programs
(2)
|
|
|
October 1 through October 31, 2016
|
655
|
|
|
$
|
28.59
|
|
|
—
|
|
|
10,100,100
|
|
November 1 through November 30, 2016
|
4,418
|
|
|
30.58
|
|
|
—
|
|
|
10,100,100
|
|
|
December 1 through December 31, 2016
|
2,530
|
|
|
32.99
|
|
|
—
|
|
|
10,100,100
|
|
|
Total
|
7,603
|
|
|
$
|
31.21
|
|
|
—
|
|
|
|
(1)
|
During the current period, 1,824 shares were purchased on the open market on behalf of Kennametal to fund the Company’s dividend reinvestment program. Also, during the current period employees delivered 5,779 shares of restricted stock to Kennametal, upon vesting, to satisfy tax withholding requirements.
|
(2)
|
On July 25, 2013, the Company publicly announced an amended repurchase program for up to 17 million shares of its outstanding capital stock outside of the Company's dividend reinvestment program.
|
ITEM 6. EXHIBITS
|
|
KENNAMETAL INC.
|
|||
|
||||
Date:
|
February 8, 2017
|
By:
|
|
/s/ Martha Fusco
|
|
Martha Fusco
Vice President Finance and Corporate Controller
|
1 Year Kennametal Chart |
1 Month Kennametal Chart |
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