<PAGE> 1
===============================================================================
FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from July 1, 1997 to December 31, 1997
Commission File Number: 1-5318
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
THE KENNAMETAL THRIFT PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Kennametal Inc.
1600 Technology Way
P.O. Box 231
Latrobe, Pennsylvania 15650
==============================================================================
<PAGE> 2
THE KENNAMETAL THRIFT PLAN
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Public Accountants............................... 2
Financial Statements:
Statements of Net Assets Available for Plan Benefits
December 31, 1997 and June 30, 1997............................... 3
Statement of Changes in Net Assets Available for Plan Benefits
Six months ended December 31, 1997................................ 4
Statement of Changes in Net Assets Available for Plan Benefits
Year ended June 30, 1997.......................................... 5
Statement of Changes in Net Assets Available for Plan Benefits
Year ended June 30, 1996.......................................... 6
Notes to Financial Statements..................................... 7
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997................................................. 12
Item 27d - Schedule of Reportable Transactions
Six months ended December 31, 1997................................ 14
Signatures............................................................. 15
Exhibit 23 - Consent of Independent Public Accountants................. 16
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Kennametal Inc.
and to the Kennametal Inc. ERISA Compliance Committee:
We have audited the accompanying statements of net assets available for plan
benefits of The Kennametal Thrift Plan (the Plan) as of December 31, 1997 and
June 30, 1997, and the related statements of changes in net assets available for
plan benefits for the six months ended December 31, 1997, and the years ended
June 30, 1997 and 1996. These financial statements and the schedules referred to
below are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1997 and June 30, 1997, and the changes in net assets available
for plan benefits for the six months ended December 31, 1997, and the years
ended June 30, 1997 and 1996, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
and fund information have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
/s/ ARTHUR ANDERSEN LLP
- -----------------------
Arthur Andersen LLP
Pittsburgh, Pennsylvania
May 28, 1999
2
<PAGE> 4
THE KENNAMETAL THRIFT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997 AND JUNE 30, 1997
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
---- ----
<S> <C> <C>
ASSETS
Receivables:
Participant Contributions $ 203,191 $ 410,565
Employer Contributions 71,690 146,508
------------ ------------
Total Receivables 274,881 557,073
------------ ------------
General Investments:
Putnam Mutual Funds 100,753,013 78,042,271
Common/Collective Trusts-Fixed Income Fund 62,641,682 78,332,505
Kennametal Inc. Common Stock 1,994,428 285,172
Participant Loans 2,489,562 981,817
------------ ------------
Total General Investments 167,878,685 157,641,765
------------ ------------
NET ASSETS AVAILABLE FOR PLAN BENEFITS $168,153,566 $158,198,838
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 5
THE KENNAMETAL THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Putnam Mutual Funds
---------------------------------------------------------------
Asset Asset
Primco Allocation Growth & New Allocation
Totals Fund Voyager Balanced Income Opportunities Growth
------ ---- ------- -------- ------ ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Assets at June 30, 1997 $158,198,838 $ 78,332,505 $ 57,532,476 $ 12,132,867 $2,547,112 $3,047,449 $ 744,475
Additions:
Participant Contributions 8,362,297 891,866 2,122,804 641,551 1,092,154 2,006,612 504,307
Employer Contributions 2,424,093 231,229 705,351 203,155 344,642 622,067 164,823
Earnings on Investments
(includes interest on loans) 8,584,842 2,109,053 3,717,980 972,553 1,036,397 222,321 189,643
Net Realized Gains (Losses) 1,747,936 -- 1,446,404 222,603 (17,282) 61,092 3,743
Net Unrealized Gains (Losses) 912,480 -- 2,218,132 (628,797) (671,467) 339,402 (135,900)
Loan Repayments -- 21,987 59,120 12,876 22,012 47,814 10,408
Other 67,166 65,438 181 387 -- 270 585
------------ ------------ ------------ ------------ ---------- ---------- ----------
Total Additions 22,098,814 3,319,573 10,269,972 1,424,328 1,806,456 3,299,578 737,609
------------ ------------ ------------ ------------ ---------- ---------- ----------
Deductions:
Benefit Payments (10,422,051) (5,011,661) (3,923,488) (720,923) (213,771) (284,915) (36,085)
Loan Issues -- (719,481) (578,003) (134,069) (79,319) (119,572) (23,126)
Loan Distributions (6,469) -- -- -- -- -- --
Employee Withdrawals (1,498,314) (865,541) (366,918) (50,446) (66,138) (82,816) (14,098)
Administrative Fees (111,497) (96,749) (7,495) (1,703) (1,129) (1,509) (383)
Forfeitures (105,755) (72,447) (19,169) (4,987) (1,342) (3,852) (1,089)
------------ ------------ ------------ ------------ ---------- ---------- ----------
Total Deductions (12,144,086) (6,765,879) (4,895,073) (912,128) (361,699) (492,664) (74,781)
------------ ------------ ------------ ------------ ---------- ---------- ----------
Net Transfers Between Funds -- (12,244,517) (710,104) (235,133) 4,612,502 3,578,030 1,141,483
------------ ------------ ------------ ------------ ---------- ---------- ----------
Net Assets at
December 31, 1997 $168,153,566 $ 62,641,682 $ 62,197,271 $ 12,409,934 $8,604,371 $9,432,393 $2,548,786
============ ============ ============ ============ ========== ========== ==========
<CAPTION>
Putnam Mutual Funds
---------------------------
Asset Kennametal
Allocation International Common Contributions Loan
Conservative Growth Stock Receivable Fund
------------ ------ ----- ---------- ----
<S> <C> <C> <C> <C> <C>
Net Assets at June 30, 1997 $ 739,612 $ 1,298,280 $ 285,172 $ 557,073 $ 981,817
Additions:
Participant Contributions 308,750 533,828 335,243 (74,818) --
Employer Contributions 95,308 150,773 114,119 (207,374) --
Earnings on Investments
(includes interest on loans) 132,472 192,385 12,038 -- --
Net Realized Gains (Losses) .. 5,059 (12,298) 38,615 -- --
Net Unrealized Gains (Losses) (100,648) (229,200) 120,958 -- --
Loan Repayments 5,892 14,932 7,113 -- (202,154)
Other 294 -- 11 -- --
----------- ----------- ----------- ----------- -----------
Total Additions 447,127 650,420 628,097 (282,192) (202,154)
----------- ----------- ----------- ----------- -----------
Deductions:
Benefit Payments (50,990) (161,340) (18,878) -- --
Loan Issues (17,931) (28,891) (18,476) -- 1,718,868
Loan Distributions -- -- -- -- (6,469)
Employee Withdrawals (13,554) (18,962) (17,341) -- (2,500)
Administrative Fees (258) (451) (1,820) -- --
Forfeitures (110) (1,146) (1,613) -- --
----------- ----------- ----------- ----------- -----------
Total Deductions (82,843) (210,790) (58,128) -- 1,709,899
----------- ----------- ----------- ----------- -----------
Net Transfers Between Funds 1,263,565 1,454,887 1,139,287 -- --
----------- ----------- ----------- ----------- -----------
Net Assets at
December 31, 1997 $ 2,367,461 $ 3,192,797 $ 1,994,428 $ 274,881 $ 2,489,562
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 6
THE KENNAMETAL THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
Putnam Mutual Funds
---------------------------------
Alliance Alliance Asset
Equity Balanced Primco Allocation Growth &
Totals Fund Fund Fund Voyager Balanced Income
------ ---- ---- ---- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Assets at June 30, 1996 $134,650,201 $ 47,290,863 $ 9,573,308 $77,786,030 $ -- $ -- $ --
Additions:
Participant Contributions 12,194,394 3,393,808 737,710 3,603,379 1,166,092 327,388 706,136
Employer Contributions 4,322,740 1,205,154 270,120 1,392,078 390,346 119,936 180,582
Earnings on Investments
(includes interest on loans) 1,788,518 -- -- 1,669,606 -- 108,826 5,908
Net Realized Gains 9,052,496 4,847,699 811,054 3,073,961 268,869 39,523 1,265
Net Unrealized Gains 6,129,984 -- -- -- 5,029,097 750,884 63,087
Other 10,999 -- -- 10,999 -- -- --
Transfers From RSP 3,673,020 -- -- 3,673,020 -- -- --
------------ ------------ ------------ ----------- ----------- ----------- ----------
Total Additions 37,172,151 9,446,661 1,818,884 13,423,043 6,854,404 1,346,557 956,978
------------ ------------ ------------ ----------- ----------- ----------- ----------
Deductions:
Benefit Payments (12,534,412) (3,082,379) (545,508) (8,521,140) (324,307) (51,811) (2,592)
Loan Issues -- -- -- (501,990) (390,306) (52,439) (7,792)
Employee Withdrawals (920,691) -- -- (705,624) (152,110) (27,827) (6,131)
Administrative Fees (165,308) (20,058) (4,103) (134,035) (5,869) (1,130) (27)
Forfeitures (3,103) -- -- (2,215) (713) (14) (56)
------------ ------------ ------------ ----------- ----------- ----------- ----------
Total Deductions (13,623,514) (3,102,437) (549,611) (9,865,004) (873,305) (133,221) (16,598)
------------ ------------ ------------ ----------- ----------- ----------- ----------
Net Transfers Between Funds -- (53,635,087) (10,842,581) (3,011,564) 51,551,377 10,919,531 1,606,732
------------ ------------- ------------- ----------- ----------- ----------- ----------
Net Assets at June 30, 1997 $158,198,838 $ -- $ -- $78,332,505 $57,532,476 $12,132,867 $2,547,112
============ ============ ============ =========== =========== =========== ==========
<CAPTION>
Putnam Mutual Funds
----------------------------------------------------------
Asset Asset Kennametal
New Allocation Allocation International Common Contributions Loan
Opportunities Growth Conservative Growth Stock Receivable Fund
------------- ------ ------------ ------ ----- ---------- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Assets at June 30, 1996 $ -- $ -- $ -- $ -- $ -- $ -- $ --
Additions:
Participant Contributions 1,004,640 297,042 154,829 224,424 168,381 410,565 --
Employer Contributions 340,145 89,385 55,484 74,481 58,521 146,508 --
Earnings on Investments
(includes interest on loans) -- -- 3,395 -- 552 -- 231
Net Realized Gains 6,079 926 1,169 1,116 835 -- --
Net Unrealized Gains 178,470 29,764 10,145 41,476 27,061 -- --
Other -- -- -- -- -- -- --
Transfers From RSP -- -- -- -- -- -- --
----------- ----------- ----------- ----------- -------- -------- --------
Total Additions 1,529,334 417,117 225,022 341,497 255,350 557,073 231
----------- ----------- ----------- ----------- -------- -------- --------
Deductions:
Benefit Payments (1,792) (1,715) (2,464) (456) (248) -- --
Loan Issues (14,740) (3,791) (2,438) (4,723) (3,367) -- 981,586
Employee Withdrawals (13,847) (7,170) (2,742) (1,540) (3,700) -- --
Administrative Fees (41) (10) (6) (16) (13) -- --
Forfeitures -- (69) (36) -- -- -- --
----------- ----------- ----------- ----------- -------- -------- --------
Total Deductions (30,420) (12,755) (7,686) (6,735) (7,328) -- 981,586
----------- ----------- ----------- ----------- -------- -------- --------
Net Transfers Between Funds 1,548,535 340,113 522,276 963,518 37,150 -- --
----------- ----------- ----------- ----------- -------- -------- --------
Net Assets at June 30, 1997 $ 3,047,449 $ 744,475 $ 739,612 $ 1,298,280 $285,172 $557,073 $981,817
=========== =========== =========== =========== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 7
THE KENNAMETAL THRIFT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Alliance Alliance
Equity Balanced Primco
Totals Fund Fund Fund
------ ---- ---- ----
<S> <C> <C> <C> <C>
Net Assets at June 30, 1995 $ 116,820,745 $ 30,746,840 $ 7,265,236 $ 78,808,669
Additions:
Participant Contributions 10,612,045 4,022,032 981,881 5,608,132
Employer Contributions 3,770,394 1,352,178 339,157 2,079,059
Earnings on Investments 4,678,502 -- -- 4,678,502
Net Realized Gains 8,551,079 7,511,068 1,040,011 --
Transfers From Other Plans 68,273 51,080 13,740 3,453
------------- ------------- ------------- -------------
Total Additions 27,680,293 12,936,358 2,374,789 12,369,146
------------- ------------- ------------- -------------
Deductions:
Benefit Payments (9,620,295) (2,082,222) (500,900) (7,037,173)
Administrative Fees (230,542) (30,570) (6,761) (193,211)
------------- ------------- ------------- -------------
Total Deductions (9,850,837) (2,112,792) (507,661) (7,230,384)
------------- ------------- ------------- -------------
Net Transfers Between Funds -- 5,720,457 440,944 (6,161,401)
------------- ------------- ------------- -------------
Net Assets at June 30, 1996 $ 134,650,201 $ 47,290,863 $ 9,573,308 $ 77,786,030
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 8
THE KENNAMETAL THRIFT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, JUNE 30, 1997 AND 1996
1. DESCRIPTION OF PLAN
The following general description of the Kennametal Thrift Plan (the Plan) is
provided for general information purposes only. Participants should refer to the
Plan document for complete information.
The Plan is a defined contribution employee benefit plan, established to
encourage investment and savings for certain salaried and hourly employees of
Kennametal Inc. and certain subsidiaries and to provide a method to supplement
their retirement income benefits. The Plan provides a vehicle for employee
savings with an added 401(k) tax-deferred feature. Kennametal Inc. is the Plan
sponsor.
CORPORATE ACTIONS - During the fiscal year ended June 30, 1995, Kennametal Inc.
acquired Adaptive Technologies Corporation (ATC). As a result of the
acquisition, ATC's 401(k) plan was merged into the Plan during the fiscal year
ended June 30, 1996. Effective March 1, 1997, the assets of the Kennametal Inc.
Retirement Savings Plan (RSP) were merged into the Plan.
Effective January 1, 1998, the Plan year end was changed from a fiscal year end
of June 30 to a December 31 year end.
ADMINISTRATION OF THE PLAN - Putnam Fiduciary Trust Company serves as the
Trustee of the Plan. Prior to March 1, 1997, Kennametal Inc. served as Trustee
of the Plan.
Putnam Investments functions as the recordkeeper for the Plan. Prior to March 1,
1997, Benefit Services Corporation, a firm providing defined contribution
administration services, served as recordkeeper for the Plan.
PRIMCO Capital Management, Inc. (PRIMCO) serves as the investment manager for
the fixed income fund of the Plan. The Equitable Life Assurance Society of the
United States served as the investment manager and custodian for the Alliance
Equity Fund and Alliance Balanced Fund (the Alliance Funds) through February 28,
1997. Effective March 1, 1997, the investments held in the Alliance Funds were
transferred to certain mutual funds of Putnam Investments. Accordingly, Putnam
Fiduciary Trust Company was appointed the investment manager and the custodian.
ELIGIBILITY - All eligible employees are entitled to become active participants
of the Plan on the first day of the month coinciding with or following the
completion of ten (10) days of service. Under present federal income tax law,
employer contributions and all earnings of the Plan do not constitute taxable
income to the participants until withdrawn from the Plan by the participants.
VESTING - Employee contributions are fully vested. Employer matching
contributions are fully vested after the third anniversary of the participant's
employment date. Forfeitures of employer contributions as a result of
withdrawals, terminations, etc., reduce the amount of future contributions
required by the employer.
7
<PAGE> 9
PARTICIPANT ACCOUNTS - A separate account is maintained for each participant in
the Plan, reflecting contributions, investments, investment gains and losses,
distributions, loans, withdrawals and transfers.
CONTRIBUTIONS - The Plan allows participants to elect a contribution rate
(either before-tax, after-tax, or a combination of both) of 2% - 12% of the
employee's base salary. Employer contributions equal 50% of the participant
contribution up to a maximum of 3% of the participant's salary. Employer
contributions are made concurrently with participant contributions. The
participants can elect to have their contributions invested in the different
investment funds available under the Plan.
DISTRIBUTIONS - Distributions to participants due to disability, retirement,
hardship or death are payable in either a lump sum, periodic payments for a
period not to exceed ten (10) years, or through the purchase of an annuity at
the participant's election.
PARTICIPANT LOANS - Effective June 2, 1997, a participant may borrow up to the
lesser of $50,000 or 50% of his or her vested account balance, with a minimum
loan amount of $1,000. Loans are repayable through payroll deductions over a
period not to exceed five years. If the proceeds are used to acquire a
participant's principal residence, the repayment period shall be no more than 15
years. The interest rate is determined by the Plan Administrator based on
existing market conditions and is fixed over the life of the loan. The interest
rate at December 31, 1997, was 9.5%. There were no delinquent loans as of
December 31, 1997 or June 30, 1997.
INVESTMENTS - Investment contracts placed by PRIMCO represented investment of
combined assets for both the RSP and the Plan until the merger of these plans as
of March 1, 1997.
Effective March 1, 1997, Kennametal Inc. common stock was added as an investment
option to the Plan.
A participant may direct contributions to any of the following investment
options:
PRIMCO Stable Value Fund - Investments of this fixed income fund consist of
traditional investment contracts issued by insurance companies, banks and other
financial institutions (or corporations), asset-backed investment contracts,
synthetic investment contracts and short-term investments.
Putnam Voyager Fund - This fund seeks aggressive capital appreciation by
investing in a combination of stocks of small companies expected to grow over
time as well as in stocks of larger, more established corporations.
Putnam Asset Allocation: Balanced Portfolio - For investors who want an
investment with moderate risk and the potential for moderate growth, this fund
seeks a balance between the relative stability of bonds and the fluctuation of
stocks, in efforts to reduce overall risk.
The Putnam Fund for Growth & Income - This fund seeks growth and income by
investing in attractively priced stocks of companies that offer long-term growth
potential while also providing income.
8
<PAGE> 10
Putnam New Opportunities Fund - This fund seeks long-term capital appreciation
by investing primarily in common stocks of companies within certain emerging
industry groups that Putnam Management believes offer above-average potential
for growth.
Putnam Asset Allocation: Growth Portfolio - For more aggressive investors who
will accept more risk in exchange for a higher growth potential, this fund seeks
diversification among different types of stocks, with some investments in bonds
and money market funds.
Putnam Asset Allocation: Conservative Portfolio - For investors who are willing
to assume a reduced potential for growth in exchange for less risk, this fund
seeks to reduce overall risk through substantial investments in investment-grade
bonds, with some investments in stocks to help stay ahead of inflation.
Putnam International Growth Fund - This fund seeks capital appreciation by
investing in a diversified portfolio of companies located outside the United
States.
Kennametal Common Stock Fund - This fund consists entirely of Kennametal Inc.
common stock, for investors who want to participate in the growth of Kennametal
Inc. as part owners of Kennametal Inc.
Effective March 1, 1997, the investments of the Alliance Funds were transferred
to two mutual funds, the Putnam Voyager Fund and the Putnam Asset Allocation:
Balanced Portfolio Fund. Investments of the Alliance Equity Fund consisted
solely of common stocks whereas the Alliance Balanced Fund's investments were a
combination of stocks, bonds, cash and convertible securities.
2. ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are maintained on the
accrual basis of accounting.
INVESTMENTS - Investment transactions are recorded on a trade date basis, and
revenues are recorded on an accrual basis of accounting. Investments in mutual
funds, Kennametal Inc. common stock and other short-term investments are stated
at fair value as measured by readily available market prices; benefit-responsive
investment contracts are valued at contract value. According to the provisions
of AICPA Statement of Position (SOP) 94-4, "Reporting of Investment Contracts
Held by Health and Welfare Benefit Plans and Defined-Contribution Pension
Plans," guaranteed investment contracts of defined contribution plans are
considered to be fully benefit-responsive. As a result, these contracts are
accounted for at contract value in the accompanying financial statements. PRIMCO
Capital Management, Inc. certified that all the investment contracts held in the
Fixed Income Fund are fully benefit-responsive. The difference between the
contract value and the fair value of all investment contracts was $777,974 and
$386,498 at December 31, 1997 and June 30, 1997, respectively. The crediting
interest rates on the contracts ranged from 5.05% to 7.55% at December 31, 1997,
from 4.88% to 8.15% at June 30, 1997, and from 4.88% to 7.87% at June 30, 1996.
INVESTMENT INCOME - Interest and dividend income are recorded in the period
earned. Gains and losses on securities sold or redeemed are determined on the
basis of specific identification.
9
<PAGE> 11
PLAN EXPENSES - Investment management, recordkeeping and other administrative
fees and expenses of the Plan are paid from assets and income of the Plan.
REALIZED/UNREALIZED GAINS AND LOSSES - Realized gains and losses on investments
sold or redeemed and unrealized gains and losses are determined using the
average cost method based on the beginning market value.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS - The preparation of
financial statements in conformity with generally accepted accounting principles
requires the plan administrator to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Actual
results may differ from these estimates.
RECLASSIFICATIONS - Certain prior year balances have been reclassified to
conform to the current year presentation.
3. INVESTMENTS EXCEEDING FIVE PERCENT OF NET ASSETS
The fair market values of individual investments that represent five percent or
more of the Plan's total plan assets as of December 31, 1997 and June 30, 1997,
were as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
---- ----
<S> <C> <C>
Common/Collective Trusts - Fixed Income Fund $ 62,641,682 $ 78,332,505
Putnam Mutual Funds -
Voyager 62,197,271 57,532,476
Asset Allocation - Balanced Portfolio 12,409,934 12,132,867
New Opportunities 9,432,393 --
Growth & Income 8,604,371 --
</TABLE>
4. COMMON TRUST ASSETS AND INCOME
The Plan's interest in the assets of the common trust is included in the
accompanying Statements of Net Assets Available for Plan Benefits. During the
plan year ended June 30, 1997, all of the assets of the RSP were merged into the
Plan. Accordingly, there were no assets held by the RSP as of December 31, 1997
or June 30, 1997.
Common trust income allocated to the participating plans for the six months
ended December 31, 1997, and the years ended June 30, 1997 and 1996, were as
follows:
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Years Ended June 30,
1997 1997 1996
---- ---- ----
<S> <C> <C> <C>
Thrift Plan $2,109,053 $4,866,795 $4,678,502
Retirement Savings Plan (as of March 1, 1997) -- 140,343 186,930
---------- ---------- ----------
Total Earnings on Investments $2,109,053 $5,007,138 $4,865,432
========== ========== ==========
</TABLE>
10
<PAGE> 12
5. QUALIFICATION OF PLAN
The Plan has been determined by the Internal Revenue Service to be qualified
under the Internal Revenue Code. The Internal Revenue Service issued a favorable
determination on April 23, 1996. Plans that are qualified under regulations of
the Internal Revenue Service are not subject to federal income taxes.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, Kennametal Inc. has the right
to terminate the Plan at any time, subject to the provisions of the Employee
Retirement Income Security Act of 1974. In the event of Plan termination, the
accounts of all participants will become fully vested and non-forfeitable.
7. CONTRIBUTIONS RECEIVABLE
As of December 31, 1997, the Plan recorded contributions receivable from the
employer and the participants in the amount of $274,881. This amount is recorded
as an asset in the accompanying statements in accordance with generally accepted
accounting principles. However, this amount is not recorded as an asset in the
Plan's Form 5500 as the Trustee prepares this Form using the cash-basis method
of accounting.
8. BENEFIT PAYABLE
As of June 30, 1996, the Plan was liable for participant benefits due but unpaid
in the amount of $2,102,139. This amount is recorded as a liability in the
Plan's Form 5500; however, this amount is not recorded as a liability in the
accompanying Statements of Net Assets Available for Plan Benefits in accordance
with generally accepted accounting principles. It is included in the total
benefit payments in the accompanying Statements of Changes in Net Assets
Available for Plan Benefits for the year end June 30, 1997. As of December 31,
1997 and June 30, 1997, the Plan was not liable for participant benefits due but
unpaid.
9. SUBSEQUENT EVENT
During fiscal 1997 and 1998, Kennametal Inc., through a majority-owned
subsidiary, acquired six companies, each sponsoring a defined contribution
employee benefit plan. On February 9, 1999, a resolution was unanimously
approved by the Kennametal Inc. ERISA Compliance Committee authorizing Putnam to
act as Trustee for the assets of these six plans when these plans are merged
into the Plan. These six plans will be merged into the Plan as soon as it is
practicable.
11
<PAGE> 13
THE KENNAMETAL THRIFT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Identity Current
of Issue Description of Investment Cost Value
- ----------------------------------------------------------------------------------------------------------------------
Security Backed Investments
---------------------------
<S> <C> <C> <C>
Bankers Bankers Trust (Del) Basic, Contract No.: 97-883THT
Trust Maturity: 12/30/00, Yield: 7.11% $ 8,625,942 $ 8,818,060
Transamerica Transamerica Life & Annuity, Contract No.: 76543
Life Maturity: 11/15/04, Yield: 6.44% 6,390,941 6,499,497
Allstate Life Allstate Life Ins. Co., Contract No.: GA-31007
Maturity: 3/1/98, Yield: 6.19% 2,260,669 2,272,919
John Hancock John Hancock Mutual Life, Contract No.: 7562
Maturity: 5/1/07, Yield: 7.40% 4,418,503 4,592,217
Mass Mutual Mass Mutual Life Ins. Co., Contract No.: 10480
Maturity: 7/5/02, Yield: 6.27% 3,888,798 3,909,116
Metropolitan Metropolitan Life Ins. Co., Contract No.: 13708
Life Maturity: 1/2/01, Yield: 6.75% 7,227,415 7,344,339
New York New York Life Ins. Co., Contract No.: 20032-18D
Life Maturity: 1/22/98, Yield: 5.46% 775,412 773,267
Peoples Peoples Security Life, Contract No.: 00028TR
Maturity: 3/30/07, Yield: 6.63% 7,442,330 7,551,350
CDC Caisse des Depots, Contract No.: 220-01
Maturity: 12/31/99, Yield: 6.19% 559,425 560,596
Caisse des Depots, Contract No.: 220-02
Maturity: 12/12/02, Yield: 6.02% 1,003,048 949,946
-------------- --------------
Total Security Backed Investments 42,592,483 43,271,307
-------------- --------------
General Account Investments
---------------------------
Canada Life Canada Life Assurance Co., Contract No.: 45798
Maturity: 1/4/99, Yield: 5.36% 4,205,968 4,197,489
Metropolitan Metropolitan Life Ins. Co., Contract No.: 13678
Life Maturity: 2/4/00, Yield: 5.55% 3,033,481 3,002,858
Metropolitan Metropolitan Life Ins. Co., Contract No.: 13852
Life Maturity: 10/1/99, Yield: 7.55% 2,530,762 2,592,424
</TABLE>
12
<PAGE> 14
THE KENNAMETAL THRIFT PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
Identity Current
of Issue Description of Investment Cost Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York New York Life Ins. Co., Contract No.: 30334
Life Maturity: 4/3/00, Yield: 6.45% $ 3,074,219 $ 3,094,362
Sun Life Sun Life Ass. Canada (US), Contract No.: S-0892-G
Maturity: 10/1/98, Yield: 5.05% 4,900,962 4,886,207
John Hancock John Hancock Mutual Life, Contract No.: 6406-1
Maturity: 8/1/02, Yield: 5.90% 48,809 47,898
-------------- --------------
Total General Account Investments 17,794,201 17,821,238
-------------- --------------
Cash & Equivalents
------------------
*Putnam Putnam Fiduciary Trust, Contract No.: 522619
Maturity: 1/1/98, Yield: 5.82% 2,327,111 2,327,111
-------------- --------------
Putnam Mutual Funds
-------------------
*Putnam Putnam Voyager Fund 54,950,042 62,197,271
*Putnam Putnam Asset Allocation - Balanced Portfolio 12,287,848 12,409,934
*Putnam The Putnam Fund for Growth & Income 9,212,751 8,604,371
*Putnam Putnam New Opportunities Fund 8,914,521 9,432,393
*Putnam Putnam Asset Allocation - Growth Portfolio 2,654,922 2,548,786
*Putnam Putnam Asset Allocation - Conservative Portfolio 2,457,964 2,367,461
*Putnam Putnam International Growth Fund 3,380,521 3,192,797
-------------- --------------
Total Putnam Mutual Funds 93,858,569 100,753,013
-------------- --------------
Kennametal Inc. Common Stock
----------------------------
*Putnam Kennametal Inc. Common Stock 1,846,401 1,994,428
-------------- --------------
Loans to Participants
---------------------
*Participants Loans to Participants, Maturities: From July 1998 to November
2012, Yield: 8.36% -- 2,489,562
-------------- --------------
Total Investments $ 158,418,765 $ 168,656,659
============== ==============
</TABLE>
* Party-in-interest.
13
<PAGE> 15
THE KENNAMETAL THRIFT PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (a)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Identity of Current Value
Party Purchase Selling Cost of Asset on Net
Involved Description of Investment Price Price of Asset Transaction Date Gain
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*Putnam The Putnam Fund for Growth and Income $ 8,628,051 $ -- $ 8,628,051 $ -- $ --
*Putnam Putnam Voyager Fund 13,067,601 12,067,341 13,067,601 10,620,937 1,446,404
*Putnam PRIMCO Stable Value Fund 8,193,736 23,886,878 8,193,736 23,886,874 4
</TABLE>
(a) Represents transactions or a series of transactions in excess of 5% of the
fair value of the Plan assets at the beginning of the year.
* Party-in-interest.
14
<PAGE> 16
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the plan administrator of the Kennametal Thrift Plan has duly caused this annual
report to be signed on its behalf by the undersigned, hereunto duly authorized,
in Unity Township, Westmoreland County, Commonwealth of Pennsylvania.
KENNAMETAL THRIFT PLAN
Date: June 24, 1999 By: /s/ AMY DOVERSPIKE
---------------------
Amy Doverspike
Plan Administrator
15
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports, included in this Form 11-K, into the Company's
previously filed Registration Statement on Form S-8, Registration No. 333-18423,
relating to the Kennametal Thrift Plan.
/s/ ARTHUR ANDERSEN LLP
-----------------------
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
June 23, 1999
16
