FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1995
Commission file number 1-5318
KENNAMETAL INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0900168
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
ROUTE 981 AT WESTMORELAND COUNTY AIRPORT
P.O. BOX 231
LATROBE, PENNSYLVANIA 15650
(Address of registrant's principal executive offices)
Registrant's telephone number, including area code: (412) 539-5000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
TITLE OF EACH CLASS OUTSTANDING AT JANUARY 31, 1996
- ---------------------------------------- -------------------------------
Capital Stock, par value $1.25 per share 26,634,279
<PAGE>
KENNAMETAL INC.
FORM 10-Q
FOR QUARTER ENDED DECEMBER 31, 1995
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item No.
- --------
1. Financial Statements:
Condensed Consolidated Balance Sheets (Unaudited)
December 31, 1995 and June 30, 1995
Condensed Consolidated Statements of Income (Unaudited)
Three months and six months ended December 31, 1995 and 1994
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six months ended December 31, 1995 and 1994
Notes to Condensed Consolidated Financial Statements (Unaudited)
2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
1. Legal Proceedings
4. Submission of Matters to a Vote of Security Holders
5. Other Information
6. Exhibits and Reports on Form 8-K
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KENNAMETAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- -------------------------------------------------
(in thousands)
December 31, June 30,
1995 1995
ASSETS ---------- ----------
Current Assets:
Cash and equivalents $ 17,303 $ 10,827
Accounts receivable, less allowance for
doubtful accounts of $13,016 and $12,106 162,857 175,405
Inventories 212,345 200,680
Deferred income taxes 22,262 22,362
-------- --------
Total current assets 414,767 409,274
-------- --------
Property, Plant and Equipment:
Land and buildings 151,271 151,905
Machinery and equipment 384,068 365,275
Less accumulated depreciation (271,620) (256,838)
-------- --------
Net property, plant and equipment 263,719 260,342
-------- --------
Other Assets:
Investments in affiliated companies 7,813 6,873
Intangible assets, less accumulated
amortization of $19,894 and $19,009 32,040 32,253
Deferred income taxes 45,668 56,629
Other 19,803 16,238
-------- --------
Total other assets 105,324 111,993
-------- --------
Total assets $783,810 $781,609
======== ========
LIABILITIES
Current Liabilities:
Current maturities of term debt and capital leases $ 16,137 $ 17,475
Notes payable to banks 69,615 53,555
Accounts payable 52,082 60,211
Accrued vacation pay 17,810 18,424
Other 56,959 75,537
-------- --------
Total current liabilities 212,603 225,202
-------- --------
Term Debt and Capital Leases, Less Current Maturities 76,296 78,700
Deferred Income Taxes 21,301 20,998
Other Liabilities 51,055 51,615
-------- --------
Total liabilities 361,255 376,515
-------- --------
Minority Interest in Consolidated Subsidiaries 14,318 13,209
-------- --------
SHAREHOLDERS' EQUITY
Shareholders' Equity:
Preferred stock, 5,000 shares authorized; none issued - -
Capital stock, $1.25 par value; 70,000 and 30,000
shares authorized; 29,370 shares issued 36,712 36,712
Additional paid-in capital 86,517 85,768
Retained earnings 317,372 297,838
Treasury shares, at cost; 2,735 and 2,793 shares held (36,312) (36,737)
Cumulative translation adjustments 3,948 8,304
-------- --------
Total shareholders' equity 408,237 391,885
-------- --------
Total liabilities and shareholders' equity $783,810 $781,609
======== ========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
<TABLE>
KENNAMETAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- -------------------------------------------------------
(in thousands, except per share data)
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
-------------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
OPERATIONS:
Net sales $259,174 $230,335 $514,077 $449,173
Cost of goods sold 151,370 135,714 299,831 263,765
-------- -------- -------- --------
Gross profit 107,804 94,621 214,246 185,408
Research and development expenses 4,977 4,363 9,941 8,782
Selling, marketing and distribution expenses 60,632 52,336 120,007 103,104
General and administrative expenses 15,982 13,565 31,674 26,442
Amortization of intangibles 398 755 782 1,528
-------- -------- -------- --------
Operating Income 25,815 23,602 51,842 45,552
Interest expense 3,173 2,992 6,112 6,466
Other income (expense) 934 (137) 685 (45)
-------- -------- -------- --------
Income before taxes 23,576 20,473 46,415 39,041
Provision for income taxes 9,700 8,600 18,900 16,500
-------- -------- -------- --------
Net income $ 13,876 $ 11,873 $ 27,515 $ 22,541
======== ======== ======== ========
PER SHARE DATA:
Earnings per share $0.52 $0.45 $1.03 $0.85
======== ======== ======== ========
Dividends per share $0.15 $0.15 $0.30 $0.30
======== ======== ======== ========
Weighted average shares outstanding 26,629 26,487 26,612 26,433
======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
KENNAMETAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -----------------------------------------------------------
(in thousands)
Six Months Ended
December 31,
--------------------------
1995 1994
---------- ----------
OPERATING ACTIVITIES:
Net income $27,515 $22,541
Adjustments for noncash items:
Depreciation and amortization 19,940 19,683
Other 8,045 1,803
Changes in certain assets and liabilities:
Accounts receivable 10,109 (2,243)
Inventories (13,658) (13,131)
Accounts payable and accrued liabilities (16,152) (24,783)
Other (7,796) 2,816
------- -------
Net cash flow from operating activities 28,003 6,686
------- -------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (27,440) (16,877)
Disposals of property, plant and equipment 2,607 681
Other (3,134) 100
------- -------
Net cash flow used for investing activities (27,967) (16,096)
------- -------
FINANCING ACTIVITIES:
Increase in short-term debt 16,306 8,259
Increase in term debt 2,191 3,190
Reduction in term debt (5,047) (4,071)
Dividend reinvestment and employee stock plans 1,174 2,969
Cash dividends paid to shareholders (7,981) (7,924)
------- -------
Net cash flow from financing activities 6,643 2,423
------- -------
Effect of exchange rate changes on cash (203) 323
------- -------
CASH AND EQUIVALENTS:
Net increase (decrease) in cash and equivalents 6,476 (6,664)
Cash and equivalents, beginning 10,827 17,190
------- -------
Cash and equivalents, ending $17,303 $10,526
======= =======
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 6,236 $ 6,516
Income taxes paid 20,209 14,665
See accompanying notes to condensed consolidated financial statements.
<PAGE>
KENNAMETAL INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- ----------------------------------------------------------------
1. The condensed consolidated financial statements should be read in
conjunction with the Notes to Consolidated Financial Statements included in
the Company's 1995 Annual Report. The condensed consolidated balance sheet as
of June 30, 1995 has been derived from the audited balance sheet included in
the Company's 1995 Annual Report. These interim statements are unaudited;
however, management believes that all adjustments necessary for a fair
presentation have been made and all adjustments are normal, recurring
adjustments. The results for the six months ended December 31, 1995 are not
necessarily indicative of the results to be expected for the full fiscal year.
2. Inventories are stated at lower of cost or market. Cost is determined
using the last-in, first-out (LIFO) method for a significant portion of
domestic inventories and the first-in, first-out (FIFO) method or average cost
for other inventories. The Company used the LIFO method of valuing its
inventories for approximately 55 percent of total inventories at December 31,
1995. Because inventory valuations under the LIFO method are based on an
annual determination of quantities and costs as of June 30 of each year, the
interim LIFO valuations are based on management's projections of expected
year-end inventory levels and costs. Therefore, the interim financial results
are subject to any final year-end LIFO inventory adjustments.
3. The major classes of inventory as of the balance sheet dates were as
follows (in thousands):
December 31, June 30,
1995 1995
---------- ----------
Finished goods $161,019 $147,231
Work in process and powder blends 66,527 65,231
Raw materials and supplies 24,377 24,629
-------- --------
Inventory at current cost 251,923 237,091
Less LIFO valuation (39,578) (36,411)
-------- --------
Total inventories $212,345 $200,680
======== ========
4. The Company has been involved in various environmental cleanup and
remediation activities at several of its manufacturing facilities. In
addition, the Company has been named as a potentially responsible party at
four Superfund sites in the United States. However, it is management's
opinion, based on its evaluations and discussions with outside counsel and
independent consultants, that the ultimate resolution of these environmental
matters will not have a material adverse effect on the results of operations,
financial position or cash flows of the Company.
The Company maintains a Corporate Environmental, Health and Safety (EH&S)
Department to facilitate compliance with environmental regulations and to
monitor and oversee remediation activities. In addition, the Company has
established an EH&S administrator at each of its domestic manufacturing
facilities. The Company's financial management team periodically meets with
members of the Corporate EH&S Department and the Corporate Legal Department to
review and evaluate the status of environmental projects and contingencies.
On a quarterly and annual basis, management establishes or adjusts financial
provisions and reserves for environmental contingencies in accordance with
Statement of Financial Accounting Standards (SFAS) No. 5, "Accounting for
Contingencies."
5. Prior to its acquisition by the Company, a non-U.S. subsidiary recorded
sales of approximately $60 million in calendar 1993 under contracts with a
certain customer to provide various equipment, know-how and training for a
manufacturing facility. Upon the acquisition by the Company, the subsidiary
decided to complete performance under the contracts with this customer but to
not enter into any such contracts in the future.
Pursuant to a United States embargo effective June 6, 1995, the subsidiary
suspended performance under the contracts pending issuance by the U.S.
government of definitive embargo regulations. Other than finalizing the
transfer of know-how and training to commence production, performance was
substantially completed prior to the suspension. The estimated costs to
complete performance are not material and were accrued in the consolidated
financial statements. The customer disputed the suspension and advised that
it might file suit to require completion of performance as well as for
compensation for alleged damages. However, the subsidiary reinstituted
performance following the issuance of definitive embargo regulations in
September of 1995.
Management believes that the ultimate resolution of this matter will not have
a material adverse impact on the financial position of the Company.
6. On January 29, 1996, the Company's Board of Directors approved a plan to
build a manufacturing facility in Shanghai, China at a cost of approximately
$20 million. The Company will own 100 percent of the plant, which will
manufacture tools made of cemented carbides and other hard materials for
metalcutting applications. Construction is expected to begin during fiscal
1996, with manufacturing planned to begin in January 1998. The Board of
Directors also approved a capital expenditure to begin a pilot project to
manufacture solid carbide drills in Pennsylvania.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
There were no material changes in financial position, liquidity or capital
resources between June 30, 1995 and December 31, 1995. The ratio of current
assets to current liabilities was 2.0 as of December 31, 1995 and 1.8 as of
June 30, 1995. The debt to capital ratio (i.e., total debt divided by the sum
of total debt and shareholders' equity) was 28 percent as of December 31,
1995, unchanged from June 30, 1995.
Capital expenditures are estimated to be $60-70 million in fiscal year 1996.
Expenditures are being made to modernize facilities, upgrade machinery and
equipment, and acquire new information technology. Capital expenditures are
being financed with cash from operations and borrowings under existing
revolving credit agreements with banks.
RESULTS OF OPERATIONS
SALES AND EARNINGS
During the quarter ended December 31, 1995, consolidated sales were $259
million, up 13 percent from $230 million in the same quarter last year. Net
income was $13.9 million, or $0.52 per share, as compared with net income of
$11.9 million, or $0.45 per share in the same quarter last year.
During the six month period ended December 31, 1995, consolidated sales were
$514 million, up 14 percent from $449 million last year. Net income was $27.5
million, or $1.03 per share, compared to $22.5 million, or $0.85 per share
last year.
For the quarter and six months ended December 31, 1995, earnings increased
primarily because of higher sales volume in North America and Europe, and the
continued expansion of catalog sales. Earnings were also impacted by higher
manufacturing costs and operating expenses related to implementation of new
information technology.
The following table presents the Company's sales by product class and
geographic area (in thousands):
<TABLE>
<CAPTION>
Three Months Ended December 31, Six Months Ended December 31,
------------------------------- -----------------------------
1995 1994 % Change 1995 1994 % Change
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
By Product Class:
Metalworking $225,092 $197,637 13.9% $442,039 $381,218 16.0%
Mining and construction 26,189 25,407 3.1 56,429 53,774 4.9
Metallurgical 7,893 7,291 8.3 15,609 14,181 10.1
-------- -------- ----- -------- -------- -----
Net sales $259,174 $230,335 12.5% $514,077 $449,173 14.4%
======== ======== ===== ======== ======== =====
By Geographic Area:
Within the United States $157,420 $141,330 11.4% $312,360 $281,899 10.8%
International 101,754 89,005 14.3 201,717 167,274 20.6
-------- -------- ----- -------- -------- -----
Net sales $259,174 $230,335 12.5% $514,077 $449,173 14.4%
======== ======== ===== ======== ======== =====
</TABLE>
METALWORKING PRODUCTS
During the December 1995 quarter, worldwide sales of metalworking products
increased 14 percent from last year.
In the United States, direct sales of metalcutting inserts and toolholding
devices increased 4 percent. Total sales of industrial supply products
increased 28 percent as a result of increased sales through mail order
catalogs and full service supply programs.
International sales of metalworking products increased 17 percent from the
previous year primarily because of higher sales volume in Europe, the impact
of favorable foreign currency translation effects, and newly-consolidated
subsidiaries in Japan and China. Excluding the currency translation effect,
international metalworking sales increased an estimated 12 percent.
For the six month period, worldwide sales of metalworking products increased
16 percent from the prior year because of increased sales of metalworking
products in the United States and Europe, modest price increases, newly-
consolidated subsidiaries in Japan and China, and favorable foreign currency
translation effects. Excluding foreign currency translation effects,
international sales of metalworking products increased 15 percent from last
year.
MINING AND CONSTRUCTION PRODUCTS
During the December 1995 quarter, sales of mining and construction tools
increased 3 percent from the previous year primarily because of additional
domestic demand for mining and construction tools. International sales of
highway construction and mining tools increased slightly because of increased
demand in the United Kingdom and as a result of the start-up of a joint
venture in China.
For the six month period, sales of mining and construction tools increased
5 percent from the prior year primarily because of increased domestic demand
for highway construction and mining tools and the start-up of a joint venture
in China.
METALLURGICAL PRODUCTS
During the December 1995 quarter, sales of metallurgical products increased
8 percent from the previous year primarily because of increased international
demand for carbide powders.
For the six month period, sales of metallurgical products rose 10 percent
primarily because of increased international demand for carbide powders.
GROSS PROFIT
As a percentage of sales, gross profit for the December 1995 quarter was 41.6
percent as compared with 41.1 percent in the prior year. The gross profit
benefited from higher sales volumes, modest price increases and favorable
currency effects of international sales of products manufactured in the United
States. These benefits were offset by higher raw material costs, costs
associated with the implementation of focused factories, and reduced
manufacturing efficiencies due to lower production volumes.
For the six month period, the gross profit was 41.7 percent, up from 41.3
percent last year. The gross profit was favorable affected by higher sales
volumes, modest price increases, and favorable foreign currency effects.
However, these benefits were partially offset by higher raw material costs,
costs associated with the implementation of focused factories, and reduced
manufacturing efficiencies due to lower production volumes.
OPERATING EXPENSES
For the quarter ended December 31, 1995, operating expenses as a percentage of
sales were 31.5 percent compared to 30.5 percent last year. Operating
expenses increased 16 percent primarily because of costs related to
implementation of new client server information systems, costs necessary to
support the higher sales levels, increased spending on research and
development, marketing, and catalog branch openings.
For the six month period, operating expenses as a percentage of sales were
31.4 percent compared to 30.8 percent last year. Operating expenses increased
primarily because of costs related to implementation of new client server
information systems, costs necessary to support the higher sales levels,
increased research and development, marketing and catalog branch openings.
INCOME TAXES
The effective tax rate for the December 1995 quarter was 41.1 percent compared
to an effective tax rate of 42.0 percent in the prior year.
For the six month period, the effective tax rate was 40.7 percent compared to
42.3 percent in the prior year. The decrease in the effective tax rate for
the six month period is the result of lower estimated non-U.S. taxes and
additional benefits derived from the utilization of the foreign sales
corporation.
OUTLOOK
In looking to the third quarter ending March 31, 1996, management expects
consolidated sales to increase from the $268 million achieved in the same
quarter last year. Sales of metalworking products in the United States should
continue to benefit from full service supply programs and catalog sales as a
result of additional branch openings. International sales are expected to
increase due to additional demand and as the Asia-Pacific economy continues to
expand. Sales of mining and construction tools should continue to increase
from international demand for highway construction and mining tools and
emerging opportunities in China and Russia.
The foregoing are "forward-looking statements" as defined in Section 21E of
the Securities Exchange Act of 1934. Actual results can differ from those in
the forward-looking statements to the extent that the economic conditions in
the United States and Europe are not sustained.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information set forth in Note 4 to the condensed consolidated
financial statements, contained in Part I, Item 1 of this Form 10-Q, is
incorporated by reference herein and supplements the information previously
reported in Part I, Item 3 of the Company's Form 10-K for the year
ended June 30, 1995, which is also incorporated by reference herein.
It is management's opinion, based on its evaluation and discussions with
outside counsel, that the Company has viable defenses to these cases and that,
in any event, the ultimate resolutions of these matters will not have a
materially adverse effect on the results of operations, financial position or
cash flows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information set forth in Part II, Item 4 of the Company's September 30,
1995 Form 10-Q is incorporated by reference herein.
ITEM 5. OTHER INFORMATION
On January 29, 1996, the Company issued a press release announcing that it
received approval to make capital investments in China and Pennsylvania.
The Company's Board of Directors approved a plan to build a manufacturing
facility in Shanghai, China at a cost of approximately $20 million. The
Company will own 100 percent of the plant, which will manufacture tools made
of cemented carbides and other hard materials for metalcutting applications.
Construction is expected to begin during fiscal 1996, with manufacturing
planned to begin in January 1998.
The Board of Directors also approved a capital expenditure to begin a pilot
project to manufacture solid carbide drills in Pennsylvania.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
REFERENCE
(a) Exhibits ---------
(27) Financial Data Schedule for six months ended
December 31, 1995 Filed herewith
(99) Additional Exhibits
Press Release Dated January 29, 1996 Filed herewith
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended December 31, 1995.
SIGNATURES
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 thereunto duly authorized.
KENNAMETAL INC.
Date: February 12, 1996 By: /s/ RICHARD J. ORWIG
-------------------------
Richard J. Orwig
Vice President
Chief Financial and Administrative Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the December 31, 1995 Condensed Consolidated Financial Statements
(unaudited) and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,303
<SECURITIES> 0
<RECEIVABLES> 175,873
<ALLOWANCES> 13,016
<INVENTORY> 212,345
<CURRENT-ASSETS> 414,767
<PP&E> 535,339
<DEPRECIATION> 271,620
<TOTAL-ASSETS> 783,810
<CURRENT-LIABILITIES> 212,603
<BONDS> 0
<COMMON> 36,712
0
0
<OTHER-SE> 371,525
<TOTAL-LIABILITY-AND-EQUITY> 783,810
<SALES> 514,077
<TOTAL-REVENUES> 514,077
<CGS> 299,831
<TOTAL-COSTS> 299,831
<OTHER-EXPENSES> 10,723
<LOSS-PROVISION> 871
<INTEREST-EXPENSE> 6,112
<INCOME-PRETAX> 46,415
<INCOME-TAX> 18,900
<INCOME-CONTINUING> 27,515
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,515
<EPS-PRIMARY> 1.03
<EPS-DILUTED> 1.03
</TABLE>
KENNAMETAL INC.
Corporate Public Relations
Latrobe, PA 15650
412-539-4618
CONTACT: Charles T. Glazer
FOR IMMEDIATE RELEASE
KENNAMETAL DECLARES
QUARTERLY DIVIDEND
Board Also Approves Capital Investments in China and Pennsylvania
Latrobe, Pa. -- January 29, 1996 -- The Board of Directors of Kennametal Inc.
(NYSE: KMT) today declared a quarterly cash dividend of 15 cents per share
payable February 23, 1996 to shareholders of record as of February 9, 1996.
This action continues the dividend at the rate paid in the preceding five
quarters.
The Board also approved a plan to build a manufacturing facility in
Shanghai, China at a cost of approximately $20 million. Kennametal will own
100 percent of the plant, which will manufacture tools made of cemented
carbides and other hard materials for metalcutting applications.
"There are tremendous growth opportunities for Kennametal in China and
throughout the Asia/Pacific region," said Robert L. McGeehan, president and
chief executive officer. "Although we already have several sales offices in
China and two successful joint ventures in mining tools, by building this
plant in Shanghai, we will increase our presence significantly in one of the
world's fastest-growing markets."
Kennametal is in negotiations with building contractors and will begin
construction of the facility in the spring. The project will proceed in three
phases, with the first phase being a 40,000 square-foot facility to house
manufacturing, sales, engineering, administration, training and warehousing.
Phase One is scheduled to be completed and manufacturing is scheduled to begin
by January 1998.
"Our market research strongly supports this move," said H. Patrick
Mahanes, vice president and chief operating officer. "The opportunities for
making and selling our products in China should contribute long term to our
sustained, worldwide growth."
Mahanes added that talks have gone well with Chinese authorities and
that Kennametal's plans have been well received in Shanghai.
Kennametal's Board also approved a capital expenditure to begin a pilot
project at its Chestnut Ridge plant, located just outside Latrobe,
Pennsylvania. This project to manufacture solid carbide drills will utilize
Kennametal technology combined with technology it gained in its acquisition of
Hertel, a former competitor headquartered in Fuerth, Germany.
"This is another example of the strength of our acquisition of Hertel,"
said McGeehan. "This project unites two great, leading-edge technologies."
Mahanes added, "This investment will allow us to participate in the
growing carbide drill market worldwide. Because this is a pilot project, we
cannot discuss at this time what the impact will be on our production numbers
or if any new jobs will result. We will announce further plans in the future
after we evaluate the project's start-up."
The Chestnut Ridge project is scheduled to begin immediately.
# # # # #
