1 ================================================================================ FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1998 Commission File Number 1-5318 KENNAMETAL INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-0900168 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) WORLD HEADQUARTERS 1600 TECHNOLOGY WAY P. O. BOX 231 LATROBE, PENNSYLVANIA 15650-0231 (Address of principal executive offices) Registrant's telephone number, including area code: 724-539-5000 Securities registered pursuant to Section 12(b) of the Act: <TABLE> <CAPTION> Title of each class Name of each exchange on which registered - ------------------- ----------------------------------------- <S> <C> Capital Stock, par value $1.25 per share New York Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange </TABLE> Securities registered pursuant to Section 12(g) of the Act: None. 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, and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of August 31, 1998, the aggregate market value of the registrant's Capital Stock held by non-affiliates of the registrant, estimated solely for the purposes of this Form 10-K, was approximately $622,900,000. For purposes of the foregoing calculation only, all directors and executive officers of the registrant and each person who may be deemed to own beneficially more than 5% of the registrant's Capital Stock have been deemed affiliates. As of August 31, 1998, there were 29,872,372 shares of Capital Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the 1998 Annual Report to Shareholders are incorporated by reference into Parts I, II and IV. Portions of the Proxy Statement for the 1998 Annual Meeting of Shareholders are incorporated by reference into Parts III and IV. ================================================================================
2 TABLE OF CONTENTS <TABLE> <CAPTION> Item No. Page - -------- ---- <S> <C> <C> PART I 1. Business...................................................................................... 1 2. Properties.................................................................................... 8 3. Legal Proceedings............................................................................. 9 4. Submission of Matters to a Vote of Security Holders........................................... 9 Officers of the Registrant.................................................................... 10 PART II 5. Market for the Registrant's Capital Stock and Related Stockholder Matters....................................................................................... 13 6. Selected Financial Data....................................................................... 13 7. Management's Discussion and Analysis of Financial Condition and Results of Operations......................................................................... 13 7A. Qualitative and Quantitative Disclosures About Market Risk.................................... 13 8. Financial Statements and Supplementary Data................................................... 13 9. Changes in and Disagreements on Accounting and Financial Disclosure........................... 13 PART III 10. Directors and Executive Officers of the Registrant............................................ 14 11. Executive Compensation........................................................................ 14 12. Security Ownership of Certain Beneficial Owners and Management................................ 14 13. Certain Relationships and Related Transactions................................................ 14 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K............................... 15 </TABLE>
3 PART I ITEM 1. BUSINESS Overview - -------- Kennametal Inc. was incorporated in Pennsylvania in 1943. Kennametal Inc. and subsidiaries ("Kennametal" or the "company") manufacture, purchase and distribute a broad range of tools, tooling systems, supplies and services for the metalworking, mining and highway construction industries. Kennametal specializes in developing and manufacturing metalcutting tools and wear-resistant parts using a specialized type of powder metallurgy. Kennametal's metalcutting tools are made of cemented carbides, ceramics, cermets, high-speed steel and other hard materials. The company manufactures a complete line of toolholders, toolholding systems and rotary cutting tools by machining and fabricating steel bars and other metal alloys. The company also distributes a broad range of industrial supplies used in the metalworking industry. Kennametal's mining and construction cutting tools are tipped with cemented carbide and are used for underground coal mining and highway construction, repair and maintenance. During fiscal 1998, the company expanded its metalworking focus by acquiring Greenfield Industries, Inc. ("Greenfield"), a leading worldwide manufacturer of consumable cutting tools and related products used in a variety of industrial, electronics, energy and construction, engineered and consumer markets. Greenfield manufactures a complete line of high-speed steel and tungsten carbide products, including industrial drill bits, taps and dies and fixed limit gages, energy and construction products used in oil and gas drilling, mining and highway resurfacing, carbide drills, endmills and routers used to make printed circuit boards for the electronics industry, and "made-to-order" tungsten carbide parts for demanding wear applications such as plastics processing, tool and die manufacturing and petroleum flow control. The company also manufactures cutting tools, drill bits, saw blades and other tools for builders, contractors, mechanics and "do-it-yourselfers." The matters discussed in this Form 10-K contain "forward-looking statements" as defined by 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, Europe and, to a lesser extent, Asia Pacific, and the effect of third party or company failures to achieve timely remediation of year 2000 issues, change from the company's expectations. The company undertakes no obligation to publicly release any revisions to forward-looking statements to reflect events or circumstances occurring after the date hereof. Business Segment and Markets - ---------------------------- The company operates predominantly as a tooling supplier specializing in powder metallurgy, which represents a single business segment. The company expended its metalworking focus with the acquisition of Greenfield in November 1997. While many of the company's products are similar in composition, sales are classified into three markets: metalworking, industrial supply, and mining and construction. The company's sales by market are presented on page 29 of the 1998 Annual Report to Shareholders, and such information is incorporated herein by reference. Additional information about the company's operations by geographic area is presented on page 49 of the 1998 Annual Report to Shareholders, and such information is incorporated herein by reference. Metalworking Markets - -------------------- Kennametal markets, manufactures and distributes a full line of products and services for the metalworking industry. The company provides metalcutting tools to manufacturing companies in a wide range of industries throughout the world. Metalcutting operations include turning, boring, threading, grooving, milling and drilling. -1-
4 A Kennametal tooling system consists of a steel toolholder and an indexable cutting tool such as an insert or a drill made from cemented carbides, ceramics, cermets, high-speed steel and other hard materials. During a metalworking operation, the toolholder is positioned in a machine tool that provides the turning power. While the workpiece or toolholder is rapidly rotating, the cutting tool insert or drill contacts the workpiece and cuts or shapes the workpiece. The cutting tool insert or drill is consumed during use and must be replaced periodically. The company markets metalcutting tools to manufacturing companies in a wide range of industries throughout the world and believes it is the largest North American and the second largest global provider of consumable metalcutting tools and supplies. The company also manufactures cutting tools, drill bits, saw blades and other tools for the consumer market which are marketed under private label and other proprietary brands. The company is also a leading manufacturer of carbide products used in engineered product applications. The company also makes industrial wear-resistant parts for use in abrasive environments and specialty applications such as plastics processing, tool and die manufacturing and petroleum flow control. Industrial Supply Market - ------------------------ Through its subsidiary, JLK Direct Distribution Inc. ("JLK"), Kennametal distributes a broad range of metalworking consumables and related products to customers in the United States, offering a full line of cutting tools, carbide and other tool inserts, abrasives, drills, machine tool accessories, hand tools and other industrial supplies. JLK also conducts its direct-marketing program for small and medium-sized customers in the United Kingdom and Germany. The majority of industrial supplies distributed by JLK are purchased from other manufacturers, although the industrial supply product offering does include Kennametal-manufactured items. To meet the varying supply needs of small-, medium- and large-sized customers, JLK offers: (i) a direct-marketing program, whereby JLK supplies predominately small and medium-sized customers through mail-order catalog, showroom sales, and a direct field sales force, and (ii) integrated industrial supply programs or Full Service Supply programs, by which large industrial manufacturers engage JLK to carry out all aspects of complex metalworking supply processes, including needs assessment, cost analysis, procurement planning, supplier selection, "just-in-time" restocking of supplies and ongoing technical support. Mining and Construction Market - ------------------------------ Mining and highway construction cutting tools are fabricated from steel parts and tipped with cemented carbide. Mining tools, used primarily in the coal industry, include longwall shearer and continuous miner drums, blocks, bits, pinning rods, augers and a wide range of mining tool accessories. The company also supplies compacts for mining, quarrying, water well drilling and oil and gas exploration. The company believes that it is the largest independent supplier of oil field compacts in the world. Compacts are the cutting edges of oil well drilling bits, which are commonly referred to as "rock bits". Highway construction cutting tools include carbide-tipped bits for ditching, trenching and road planing, grader blades for site preparation and routine roadbed control, and snowplow blades and shoes for winter road plowing. The company also makes proprietary metallurgical powders for use as a basic material in many of its metalworking, mining and highway construction products. In addition, the company produces a variety of metallurgical powders and related materials for specialized markets. These products include intermediate carbide powders, hardfacing materials and matrix powders that are sold to manufacturers of cemented carbide products, oil and gas drilling equipment and diamond drill bits. -2-
5 International Operations - ------------------------ The company's principal international operations are conducted in Western Europe, Canada, South Africa and Mexico. In addition, the company has joint ventures in China, India, Poland and Russia, manufacturing and sales subsidiaries in Israel and in the Asia Pacific region and sales agents and distributors in Eastern Europe and other areas of the world. The company's international operations are subject to the usual risks of doing business in those countries, including currency fluctuations and changes in social, political and economic environments. In management's opinion, the company's business is not materially dependent upon any one international location involving significant risk. The company's international sales are presented on page 29 of the 1998 Annual Report to Shareholders, and such information is incorporated herein by reference. Information pertaining to the effects of foreign currency fluctuations is contained under the caption "Foreign Currency Translation" in the notes to the consolidated financial statements on page 40 of the 1998 Annual Report to Shareholders, and such information is incorporated herein by reference. Marketing and Distribution - -------------------------- The company's products are sold primarily through the following distinct sales channels: a direct sales force, JLK's Full Service Supply programs, retail showrooms and mail-order catalogs, and a network of independent distributors and sales agents in the United States and certain international markets. The company's manufactured products are sold to end users through a direct sales force and a network of independent distributors. Service engineers and technicians directly assist customers with product design, selection and application. In addition, Kennametal-manufactured products, together with a broad range of purchased products, are sold through JLK's Full Service Supply programs, retail showrooms and mail-order catalogs. The company's products are marketed under various trademarks and tradenames, such as Kennametal*, Hertel*, the letter K combined with other identifying letters and/or numbers*, Block Style K*, Kendex*, Kenloc*, Top Notch*, Erickson*, Kyon*, KM*, Drill-Fix*, Fix-Perfect*, and Disston*. The company also sells products to customers who resell such products under the customers' names or private labels. Raw Materials and Supplies - -------------------------- Major metallurgical raw materials consist of ore concentrates, compounds and secondary materials containing tungsten, tantalum, titanium, niobium and cobalt. Although these raw materials are in relatively adequate supply, major sources are located abroad and prices at times have been volatile. For these reasons, the company exercises great care in the selection, purchase and inventory availability of these materials. The company also purchases substantial quantities of steel bars, and forgings for making toolholders, high-speed steel and other tool parts, rotary cutting tools and accessories. Products purchased for resale are obtained from thousands of suppliers located in the United States and abroad. Research and Development - ------------------------ The company is involved in research and development of new products and processes. Research and development expenses totaled $20.4 million, $24.1 million and $20.6 million in 1998, 1997 and 1996, respectively. Additionally, certain costs associated with improving * Trademark owned by Kennametal Inc. or Kennametal Hertel AG -3-
6 manufacturing processes are included in cost of goods sold. The company holds a number of patents and licenses which, in the aggregate, are not material to the operation of the business. The company has brought a number of new products to market during the past few years. These include metalcutting inserts and drills that incorporate innovative tool geometries or compositions for improved chip control and productivity as well as new mining and highway construction tools and toolholders. Some of these new compositions include KC715M*, a general purpose steel milling grade insert, KT315* a steel turning cermet grade, KC7310* insert for turning inconel, titanium and cast iron, KC705M* for milling inconel, titanium and cast iron, KC709M* for milling ductile iron, KC721M* for milling stainless steel and aerospace materials, KC7115* for stainless steel drilling, KC7040* for carbon steel drilling, MN insert geometry for steel machining, KSEM*, BF*, SEFAS*, and TX* product lines for drilling deeper faster or combining drilling and chamfering operations, milling cutters for aeroframe machining, and an improved K3560* for mining with significantly improved thermal fatigue resistance. Seasonality - ----------- Seasonal variations do not have a major effect on the company's business. However, to varying degrees, traditional summer vacation shutdowns of metalworking customers' plants and holiday shutdowns often affect the company's sales levels during the first and second quarters of its fiscal year. Backlog - ------- The company's backlog of orders generally is not significant to its operations. Approximately 90 percent of all orders are filled from stock, and the balance generally is filled within short lead times. Competition - ----------- Kennametal is one of the world's leading producers of cemented carbide tools and high-speed steel tools, and maintains a strong competitive position, especially in North America and Europe. There is active competition in the sale of all products made by the company, with approximately 30 companies engaged in the cemented carbide business in the United States and many more outside the United States. Several competitors are divisions of larger corporations. In addition, several hundred fabricators and toolmakers, many of whom operate out of relatively small shops, produce tools similar to those made by the company and buy the cemented carbide components for such tools from cemented carbide producers, including the company. Major competition exists from both U.S.-based and international-based concerns. In addition, the company competes with thousands of industrial supply distributors. The principal elements of competition in the company's business are service, product innovation, quality, availability and price. The company believes that its competitive strength rests on its customer service capabilities, including its multiple distribution channels, its global presence, its state-of-the-art manufacturing capabilities, its ability to develop new and improved tools responsive to the needs of its customers, and the consistent high quality of its products. These factors frequently permit the company to sell such products based on the value added for the customer rather than strictly on competitive prices. Regulation - ---------- Compliance with government laws and regulations pertaining to the discharge of materials or pollutants into the environment or otherwise relating to the protection of the environment did * Trademark owned by Kennametal Inc. or Kennametal Hertel AG -4-
7 not have a material effect on the company's capital expenditures, earnings or competitive position for the year covered by this report, nor is such compliance expected to have a material effect in the future. 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 one Superfund site 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 as well as an EH&S Policy Committee to ensure 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 No. 5, "Accounting for Contingencies." Stock Issuances - --------------- On March 20, 1998, the company sold 3.45 million shares of common stock resulting in net proceeds of $171.4 million. The proceeds were used to reduce a portion of the company's long term debt incurred in connection with the acquisition of Greenfield. On July 2, 1997, an initial public offering of approximately 4.9 million shares of common stock of JLK was consummated at a price of $20.00 per share. JLK operates the industrial supply operations consisting of the company's wholly owned J&L America, Inc. ("J&L") subsidiary and its Full Service Supply programs. The net proceeds from the offering were $90.4 million and represented approximately 20 percent of JLK's common stock. The net proceeds were used by JLK to repay $20.0 million of indebtedness related to a dividend to the company and $20.0 million related to intercompany obligations to the company incurred in 1997. The company used these proceeds to repay short term debt. JLK used the remaining net proceeds of $50.4 million from the offering during 1998 to make additional acquisitions. The company today owns approximately 83 percent of the outstanding common stock of JLK and intends to retain a majority of both the economic and voting interests of JLK. Acquisitions - ------------ In November 1997, the company completed the acquisition of Greenfield for $1.0 billion. The company acquired all of Greenfield's outstanding common stock for $38.00 per share, including the assumption of outstanding debt and convertible securities of $320.0 million. Greenfield is a manufacturer of consumable cutting tools and related products used in a variety of industrial, electronics, energy and construction, engineered and consumer markets. The acquisition of Greenfield increased the company's market share in the high-speed rotary steel product markets. Additionally, the company also has made several other acquisitions in fiscal 1998 to expand its product offering and distribution channels. All acquisitions were accounted for using the purchase method of accounting. The company will continue to evaluate new opportunities that allow for the expansion of existing product lines into new market areas, either directly or indirectly through joint ventures, where appropriate. -5-
8 Employees - --------- The company employed approximately 14,400 persons at June 30, 1998, of which 10,200 were located in the United States and 4,200 in other parts of the world, principally Europe and Asia Pacific. Approximately 2,200 employees were represented by labor unions, of which 700 were hourly-rated employees located at six plants in the United States. The remaining 1,500 employees represented by labor unions were employed at eighteen plants located outside of the United States. The company considers its labor relations to be generally good. Corporate Directory - ------------------- The following is a summary of the company's consolidated subsidiaries and affiliated companies as of June 30, 1998: CONSOLIDATED SUBSIDIARIES (% OWNERSHIP) Kennametal Australia Pty. Ltd., Australia Kennametal Foreign Sales Corporation, Barbados Kennametal Ltd., Canada Presto Cutting Tools Canada Limited, Canada Kennametal (China) Limited, China Kennametal (Shanghai) Ltd., China Shanxi-Kennametal Mining Cutting Systems Manufacturing Company Limited, China (70%) Xuzhou-Kennametal Mining Cutting Systems Manufacturing Company Limited, China (70%) Kennametal Hertel AG, Germany (96%) Kennametal Hardpoint H.K. Ltd., Hong Kong (90%) Kennametal Hertel Japan Ltd., Japan Kennametal Hertel (Malaysia) Sdn. Bhd., Malaysia Kennametal de Mexico, S.A. de C.V., Mexico Kennametal/Becker-Warkop Ltd., Poland (84%) Kennametal Hertel (Singapore) Pte. Ltd., Singapore Kennametal South Africa (Proprietary) Limited, South Africa Kennametal Hardpoint (Taiwan) Inc., Taiwan (90%) Kennametal Hertel Co., Ltd., Thailand (75%) Adaptive Technologies Corp., United States Circle Machine Company, United States Greenfield Industries, Inc., United States JLK Direct Distribution Inc., United States (83%) CONSOLIDATED SUBSIDIARIES OF KENNAMETAL HERTEL AG Kennametal Hertel Belgium S.A., Belgium Kennametal Hertel Limited, England Kennametal Hertel France S.A., France Materiels de Precision et de Production S.A., France Kennametal Hertel G.m.b.H., Germany Rubig G.m.b.H., Germany Kennametal Hertel Nederland B.V., Netherlands Nederlandse Hardmetaal Fabrieken B.V., Netherlands Kennametal Hertel Korea G.m.b.H. Korea Branch, South Korea (branch) CONSOLIDATED SUBSIDIARIES OF JLK DIRECT DISTRIBUTION INC. J&L America, Inc., United States -6-
9 CONSOLIDATED SUBSIDIARIES OF J&L AMERICA, INC. J&L Industrial Supply UK, England (branch) J&L Werkzeuge Und Industriebedarf G.m.b.H., Germany Abrasive Tool Specialties Company, United States ATS Industrial Supply Company, United States Dalworth Tool & Supply Inc., United States GRS Industrial Supply Co., United States Production Tools Sales, Inc., United States Strong Tool Co., United States CONSOLIDATED SUBSIDIARIES OF GREENFIELD INDUSTRIES INC. Greenfield Industries Foreign Sales Corporation, Barbados Greenfield Industries, Inc., Canada Cirbo Limited, England Presto Engineers Cutting Tools Ltd., England Hanita Metal Works G.m.b.H., Germany Kemmer Hartmetallwerkzeuge G.m.b.H., Germany Kemmer Prazision G.m.b.H., Germany Hanita Metal Works, Ltd., Israel Kemmer-Cirbo S.r.L., Italy Cleveland Twist Drill de Mexico, S.A. de C.V., Mexico Greenfield Tools de Mexico, S.A. de C.V., Mexico Herramientas Cleveland, S.A. de C.V., Mexico Cleveland Europe Limited, Scotland Kemmer AG, Switzerland Basset Rotary Tool Company, United States Carbidie Corporation, United States The Cleveland Twist Drill Company, United States Hanita Cutting Tools, Inc., United States Rogers Tool Works, Inc., United States Remgrit Abrasive Tools, Inc., United States Rule Cutting Tools, Inc., United States Rule Paint and Chemical, Inc., United States AFFILIATED COMPANIES (% OWNERSHIP) Kennametal Hertel G. Beisteiner G.m.b.H., Austria (26%) Birla Kennametal Ltd., India (44%) Drillco Hertel Ltd., India (50%) Kennametal Ca.Me.S., S.p.A., Italy (61%) Kennametal Hertel S.p.A., Italy (52%) Kemmer Japan, Japan (29%) Wilke Carbide B.V., Netherlands (50%) PIGMA-Kennametal Joint Venture, Russia (49%) Carbidie Asia Pacific Pte. Ltd., Singapore (50%) Kenci, S.A., Spain (20%) -7-
10 ITEM 2. PROPERTIES Presented below is a summary of principal manufacturing facilities used by the company and its majority-owned subsidiaries. <TABLE> <CAPTION> Location Owned/Leased Principal Products -------- ------------ ------------------ <S> <C> <C> United States: Bentonville, Arkansas Owned Carbide Round Tools Pine Bluff, Arkansas Owned High Speed Steel Drills Rogers, Arkansas Owned Carbide Products Monrovia, California Leased Boring Bars Placentia, California Leased Wear Parts Evans, Georgia Owned High Speed Steel Drills Chicago, Illinois Leased Circuit Board Drills Elk Grove Village, Illinois Leased Fixed Limited Gages Rockford, Illinois Owned Indexable Tooling Monticello, Indiana Owned Carbide Round Tools Framingham, Massachusetts Leased Fixed Limited Gages Greenfield, Massachusetts Owned High Speed Taps South Deerfield, Massachusetts Leased Consumer Products Traverse City, Michigan Owned Ceramic Wear Parts Troy, Michigan Leased Metalworking Toolholders Malden, Missouri Leased Carbide Round Tools Fallon, Nevada Owned Metallurgical Powders Asheboro, North Carolina Owned High Speed End Mills Henderson, North Carolina Owned Metallurgical Powders Roanoke Rapids, North Carolina Owned Metalworking Inserts Orwell, Ohio Owned Metalworking Inserts Solon, Ohio Owned Metalworking Toolholders Solon, Ohio Owned High Speed Special Drills Bedford, Pennsylvania Owned Mining and Construction Tools and Wear Parts Irwin, Pennsylvania Owned Carbide Wear Parts Latrobe, Pennsylvania Owned Metallurgical Powders and Wear Parts Hendersonville, Tennessee Leased Fixed Limited Gages Johnson City, Tennessee Owned Metalworking Inserts Whitehouse, Tennessee Leased Fixed Limited Gages Clemson, South Carolina Owned High Speed Steel Drills Lyndonville, Vermont Leased High Speed Taps Chilhowee, Virginia Owned Mining and Construction Tools and Wear Parts New Market, Virginia Owned Metalworking Toolholders Janesville, Wisconsin Leased Circuit Board Drills </TABLE> -8-
11 <TABLE> <CAPTION> Location Owned/Leased Principal Products -------- ------------ ------------------ <S> <C> <C> International: Victoria, Canada Owned Wear Parts Shanghai, China Owned Metalworking Inserts Shanxi, China Owned Mining Tools Xuzhou, China Owned Mining Tools Blaydon, England Leased Mining Tools Bodmin, England Owned Circuit Board Drills and Routers Crewe, England Leased Circuit Board Drill Repoint Center Kingswinford, England Leased Metalworking Toolholders Sheffield, England Leased High Speed Steel Drills, Taps and End Mills Bordeaux, France Leased Metalworking Cutting Tools Ebermannstadt, Germany Owned Metalworking Inserts Mistelgau, Germany Owned Metallurgical Powders, Metalworking Inserts and Wear Parts Nabburg, Germany Owned Metalworking Toolholders Schwabisch Gmund, Germany Leased Circuit Board Drills Vohenstrauss, Germany Owned Metalworking Carbide Drills Pachuca, Mexico Owned High Speed Steel Drills Arnhem, Netherlands Owned Wear Products </TABLE> The company also has a network of warehouses and customer service centers located throughout North America, Western Europe, Asia and Australia, a significant portion of which are leased. The majority of the company's research and development efforts are conducted in a corporate technology center located adjacent to world headquarters in Latrobe, Pennsylvania and in Furth, Germany. All significant properties are used in the company's dominant business of powder metallurgy, tools, tooling systems and supplies. The company's production capacity is adequate for its present needs. The company believes that its properties have been adequately maintained, are generally in good condition and are suitable for the company's business as presently conducted. ITEM 3. LEGAL PROCEEDINGS (a) There are no material pending legal proceedings, other than litigation incidental to the ordinary course of business, to which the company or any of its subsidiaries is a party or of which any of their property is the subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the fourth quarter of fiscal year 1998, there were no matters submitted to a vote of security holders through the solicitation of proxies or otherwise. -9-
12 OFFICERS OF THE REGISTRANT <TABLE> <CAPTION> Name, Age, and Position Experience During Past Five Years (2) - ----------------------- ------------------------------------- <S> <C> Robert L. McGeehan, 61 (1) President and Director since 1989. Chief President Executive Officer since October 1, 1991. Chief Executive Officer Director William R. Newlin, 57 (1) Chairman of the Board since October 28, 1996. Chairman of the Board Director since 1982. Bart A. Aitken, 39 Elected Vice President of Kennametal in 1998. Vice President and Director, Vice President of Greenfield's Engineered Engineered Products Group, Products Group since 1995, Director of Greenfield Industries Manufacturing of Greenfield's Circuit Board Vice President, Kennametal Inc. Drill Group since 1992. David B. Arnold, 59 (1) Vice President since 1979. Chief Technical Vice President Officer since 1988. Chief Technical Officer James R. Breisinger, 48 (1) Vice President since 1990. Named Chief Vice President, Financial Officer in September 1998. Chief Financial Officer Chief Operating Officer, Greenfield Industries and Corporate Controller from March through September 1998. Renamed Controller in 1994. Managing Director of Europe from 1991 to 1994. Controller from 1983 to 1991. David T. Cofer, 53 (1) Vice President since 1986. Secretary and Vice President General Counsel since 1982. Secretary and General Counsel Derwin R. Gilbreath, 50 Vice President since January 1997. Chief Operating Officer, Elected Chief Operating Officer, Greenfield Greenfield Industries Industries in September 1998. Director of Vice President Global Manufacturing since 1995. Director of Director of Global Manufacturing North America Metalworking Manufacturing Kennametal Inc. from 1994 to 1995. Richard C. Hendricks, 59 (1) Vice President since 1982. Director of Vice President Corporate Business Development since 1992. Director of Corporate Business Development Timothy D. Hudson, 52 Vice President since 1994. Director Vice President of Human Resources since 1992. Corporate Director of Human Resources Manager of Human Resources from 1978 to 1992. </TABLE> -10-
13 <TABLE> <CAPTION> Name, Age, and Position Experience During Past Five Years (2) - ----------------------- ------------------------------------- <S> <C> Brian E. Kelly, 35 Elected Assistant Treasurer and named Assistant Treasurer Director of Taxes in September 1998. Director of Taxes Manager of Corporate Tax from 1996 to 1998. Formerly, Tax Consultant with Westinghouse Electric Corp. from 1995 to 1996. Formerly, Senior Tax Analyst with E.I. Du Pont De Nemours & Co. from 1987 to 1994. H. Patrick Mahanes, Jr., 55 (1) Vice President since 1987. Named Chief Vice President Operating Officer in 1995. Director of Chief Operating Officer Operations from 1991 to 1995. Richard V. Minns, 60 Vice President since 1990. Director of Vice President Sales for the Metalworking Systems Division Director of Metalworking Sales, since 1985. North America James E. Morrison, 47 Vice President since 1994. Treasurer Vice President since 1987. Treasurer Wayne D. Moser, 45 Elected Vice President in 1998. Director of Vice President Mining and Construction Division since 1997. Director of Mining and Construction Chief Financial Officer of Kennametal Hertel AG from 1993 to 1997. Kevin G. Nowe, 46 Joined the company as Assistant General Assistant Secretary Counsel in 1992 and was elected Assistant Assistant General Counsel Secretary in 1993. Richard J. Orwig, 57 (1) Named President and Chief Executive Officer President and Chief Executive Officer, of JLK Direct Distribution Inc. in September JLK Direct Distribution Inc. 1998. Elected a Vice President of Kennametal Inc. in 1987 and was Chief Financial and Administrative Officer of Kennametal Inc. from 1994 to 1998. Director of Administration of Kennametal Inc. from 1991 to 1994. Ajita G. Rajendra, 46 Elected Vice President of Kennametal in 1998. Vice President and Director, Vice President of Greenfield's Electronic Industrial Products Group, Products Group since 1996. Previously in Greenfield Industries various positions with Corning, Inc. Vice President, Kennametal Inc. P. Mark Schiller, 50 Vice President since 1992. Director of Vice President Kennametal Distribution Services since Director of Kennametal Distribution 1990. Services Lawrence L. Shrum, 57 Vice President since January 1997. Named Vice President Director of Global Management Information Director of Global Management Systems in 1994. Manager of User Systems Information Systems Support from 1992 to 1994. </TABLE> -11-
14 <TABLE> <CAPTION> Name, Age, and Position Experience During Past Five Years (2) - ----------------------- ------------------------------------- <S> <C> A. David Tilstone, 44 (1) Vice President since July 1997. Named Vice President Director of Global Marketing in April 1997. Director of Global Marketing Director of Asia Pacific Operations from 1995 to 1997. Manager of Business Development from 1994 to 1995. </TABLE> Notes: - ------ (1) Executive officer of the Registrant. (2) Each officer has been elected by the Board of Directors to serve until removed or until a successor is elected and qualified, and has served continuously as an officer since first elected. -12-
15 PART II The information required under Items 5 through 8 is included in the 1998 Annual Report to Shareholders and such information is incorporated herein by reference as indicated by the following table. <TABLE> <CAPTION> Incorporated by Reference to Captions and Pages of the 1998 Annual Report ----------------------------------- <S> <C> <C> ITEM 5. Market for the Registrant's Quarterly Financial Information Capital Stock and Related (Unaudited) on page 50. Stockholder Matters Stock Issuances on page 42. ITEM 6. Selected Financial Data Ten-Year Financial Highlights (information with respect to the years 1994 to 1998) on pages 52 and 53. ITEM 7. Management's Discussion and Management's Discussion & Analysis Analysis of Financial Condition on pages 29 to 34. and Results of Operations ITEM 7A. Quantitative and Qualitative Financial Instruments on page 47. Disclosure About Market Risk ITEM 8. Financial Statements and Item 14(a)1 herein and Quarterly Supplementary Data Financial Information (Unaudited) on page 50. ITEM 9. Changes in and Disagreements Not applicable. on Accounting and Financial Disclosure </TABLE> -13-
16 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Incorporated herein by reference is the information set forth in Part I under the caption "Officers of the Registrant" and the information set forth under the caption "Election of Directors" in the company's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after June 30, 1998 ("1998 Proxy Statement"). ITEM 11. EXECUTIVE COMPENSATION Incorporated herein by reference is the information set forth under the caption "Compensation of Executive Officers" and certain information regarding directors' fees under the caption "Board of Directors and Board Committees" in the 1998 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated herein by reference is the information set forth under the caption "Ownership of Capital Stock by Directors, Nominees and Executive Officers" with respect to the directors' and officers' shareholdings and under the caption "Principal Holders of Voting Securities" with respect to other beneficial owners in the 1998 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated herein by reference is certain information set forth in the notes to the table under the caption "Election of Directors" and the information set forth in the section entitled "Certain Relationships and Related Transactions" in the 1998 Proxy Statement. -14-
17 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) Documents filed as part of this Form 10-K report. 1. Financial Statements The consolidated balance sheets as of June 30, 1998 and 1997, the consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended June 30, 1998, and the notes to consolidated financial statements, together with the report thereon of Arthur Andersen LLP dated July 21, 1998, presented in the company's 1998 Annual Report to Shareholders, are incorporated herein by reference. 2. Financial Statement Schedule The financial statement schedule shown below should be read in conjunction with the consolidated financial statements contained in the 1998 Annual Report to Shareholders. Other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. Separate financial statements of the company are omitted because the company is primarily an operating company, and all significant subsidiaries included in the consolidated financial statements are wholly owned, with the exception of Kennametal Hertel AG, in which the company has a 96 percent interest, and JLK Direct Distribution Inc., in which the company has an 83 percent interest. Financial Statement Schedule: Page ----------------------------- ---- Report of Independent Public Accountants 21 Schedule II - Valuation and Qualifying Accounts for the Three Years Ended June 30, 1998 22 3. Exhibits <TABLE> <S> <C> <C> (2) Plan of Acquisition, Reorganization, ------------------------------------ Arrangement, Liquidation, or Succession --------------------------------------- (2.1) Agreement and Plan of merger by Exhibit (c)(1) of the company's and among Kennametal Inc., Schedule 14D-1 (SEC file no. Kennametal Acquisition Corp. reference no. 1-5318; docket entry (formerly, Palmer Acquisition date - October 17, 1997) is Corp.) and Greenfield Industries, incorporated herein by reference. Inc. dated as of October 10, 1997 (3) Articles of Incorporation and Bylaws ------------------------------------ (3.1) Amended and Restated Articles Exhibit 3.1 of the company's of Incorporation as Amended September 30, 1994 Form 10-Q is incorporated herein by reference. </TABLE> -15-
18 <TABLE> <S> <C> <C> (3.2) Bylaws Exhibit 3.1 of the company's March 31, 1991 Form 10-Q (SEC file no. reference 1-5318; docket entry date - May 14, 1991) is incorporated herein by reference. (4) Instruments Defining the Rights of ---------------------------------- Security Holders, Including Indentures -------------------------------------- (4.1) Rights Agreement dated Exhibit 4 of the company's October 25, 1990 Form 8-K dated October 23, 1990 (SEC file no. reference 1-5318; docket entry date - November 1, 1990) is incorporated herein by reference. (10) Material Contracts ------------------ (10.1)* Management Performance The discussion regarding the Bonus Plan Management Performance Bonus Plan under the caption "Report of the Board of Directors Committee on Executive Compensation" contained in the company's 1996 Proxy Statement is incorporated herein by reference. (10.2)* Stock Option Plan of 1982, Exhibit 10.3 of the company's as amended December 31, 1985 Form 10-Q (SEC file no. reference 1-5318; docket entry date - February 14, 1986) is incorporated herein by reference. (10.3)* Stock Option and Exhibit 10.1 of the company's Incentive Plan of 1988 December 31, 1988 Form 10-Q (SEC file no. reference 1-5318; docket entry date - February 9, 1989) is incorporated herein by reference. (10.4)* Officer employment Exhibit 10.3 of the company's 1988 agreements, as amended Form 10-K (SEC file no. reference and restated 1-5318; docket entry date - September 23, 1988) is incorporated herein by reference. (10.5)* Deferred Fee Plan for Exhibit 10.4 of the company's 1988 Outside Directors Form 10-K (SEC file no. reference 1-5318; docket entry date September 23, 1988) is incorporated herein by reference. </TABLE> - --------------------------------------------------------- * Denotes management contract or compensatory plan or arrangement. -16-
19 <TABLE> <S> <C> (10.6)* Executive Deferred Exhibit 10.5 of the company's 1988 Compensation Trust Form 10-K (SEC file no. reference Agreement 1-5318; docket entry date - September 23, 1988) is incorporated herein by reference. (10.7)* Stock Option and Exhibit 10.1 of the company's Incentive Plan of 1992 September 30, 1992 Form 10-Q (SEC file no. reference 1-5318; docket entry date - November 10, 1992) is incorporated herein by reference. (10.8)* Directors Stock Incentive Exhibit 10.2 of the company's Plan September 30, 1992 Form 10-Q (SEC file no. reference 1-5318; docket entry date - November 10, 1992) is incorporated herein by reference. (10.9)* Performance Bonus Stock Exhibit A of the company's 1995 Plan of 1995 annual meeting proxy statement. (10.10)* Stock Option and Incentive Exhibit 10.14 of the company's Plan of 1996 September 30, 1996 Form 10-Q is incorporated herein by reference. (10.11)* Stock Option and Exhibit 10.8 of the company's Incentive Plan of 1992, December 31, 1996 Form 10-Q is as amended incorporated herein by reference. (10.12)* Form of Employment Exhibit 10.1 of the company's Agreement with certain March 31, 1997 Form 10-Q is officers incorporated herein by reference. (10.13)* Supplemental Executive Exhibit 10.2 of the company's Retirement Plan March 31, 1997 Form 10-Q is incorporated herein by reference. (10.14)* Form of Employment Exhibit 10.1 of the company's Agreement December 31, 1997 Form 10-Q is incorporated herein by reference. (10.15) Credit Agreement with Mellon Exhibit 10.2 of the company's Bank, N.A. and various creditors December 31, 1997 Form 10-Q dated as of November 17, 1997 is incorporated herein by reference. (10.16) Guaranty and Suretyship Exhibit 10.3 of the company's Agreement with Mellon Bank, December 31, 1997 Form 10-Q N.A. dated November 17, 1997 is incorporated herein by reference. (10.17)* Greenfield Industries, Inc. Exhibit 10.71 of the Greenfield Executive Deferred Compensation Industries, Inc. December 31, 1995 Plan Form 10-K is incorporated herein by reference. </TABLE> - --------------------------------------------------------- * Denotes management contract or compensatory plan or arrangement. -17-
20 <TABLE> <S> <C> <C> (10.18) Amendment to Credit Agreement Filed herewith. with Mellon Bank, N.A. and various creditors dated as of November 26, 1997 (10.19) Amendment to Credit Agreement Filed herewith. with Mellon Bank, N.A. and various creditors dated as of December 19, 1997 (10.20) Amendment to Credit Agreement Filed herewith. with Mellon Bank, N.A. and various creditors dated as of March 19, 1998 (13) Annual Report to Shareholders Portions of the 1998 Annual ----------------------------- Report are filed herewith. (21) Subsidiaries of the Registrant Filed herewith. ------------------------------ (23) Consent of Independent Public Filed herewith. ----------------------------- Accountants ----------- (27) Financial Data Schedule Filed herewith. ----------------------- </TABLE> (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended June 30, 1998. -18-
21 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KENNAMETAL INC. By /s/ JAMES R. BREISINGER -------------------------------- James R. Breisinger Vice President, Chief Financial Officer and Corporate Controller Date: September 24, 1998 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. <TABLE> <CAPTION> SIGNATURE TITLE DATE --------- ----- ---- <S> <C> <C> /s/ WILLIAM R. NEWLIN - ----------------------------- William R. Newlin Chairman of the Board September 24, 1998 /s/ ROBERT L. MCGEEHAN - ----------------------------- Robert L. McGeehan President, Chief Executive September 24, 1998 Officer and Director /s/ JAMES R. BREISINGER - ----------------------------- James R. Breisinger Vice President, Chief September 24, 1998 Financial Officer and Corporate Controller </TABLE> -19-
22 <TABLE> <CAPTION> SIGNATURE TITLE DATE --------- ----- ---- <S> <C> <C> /s/ RICHARD C. ALBERDING - --------------------------------- Richard C. Alberding Director September 24, 1998 /s/ PETER B. BARTLETT - --------------------------------- Peter B. Bartlett Director September 24, 1998 /s/ A. PETER HELD - --------------------------------- A. Peter Held Director September 24, 1998 /s/ WARREN H. HOLLINSHEAD - --------------------------------- Warren H. Hollinshead Director September 24, 1998 /s/ TIMOTHY S. LUCAS - --------------------------------- Timothy S. Lucas Director September 24, 1998 /s/ ALOYSIUS T. MCLAUGHLIN, JR. - --------------------------------- Aloysius T. McLaughlin, Jr. Director September 24, 1998 /s/ LARRY YOST - --------------------------------- Larry Yost Director September 24, 1998 </TABLE> -20-
23 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Shareholders of Kennametal Inc. We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements included in Kennametal Inc.'s annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated July 21, 1998. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index in Item 14(a) 2 of this Form 10-K is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not a part of the basic financial statements. The schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP ------------------------ Arthur Andersen LLP Pittsburgh, Pennsylvania July 21, 1998 -21-
24 <TABLE> <CAPTION> KENNAMETAL INC. SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS FOR THE THREE YEARS ENDED JUNE 30, 1998 - ----------------------------------------------------------------------------------------------------------------------------------- (Dollars in thousands) Additions ----------------------------------------------- Balance at Charged to Deductions Balance at Beginning of Costs and Other from End of Description Year Expenses Recoveries Adjustments(a) Reserves (b) Year - ----------- --------------- --------- ---------- ----------- ------------ --------- <S> <C> <C> <C> <C> <C> <C> 1998 Allowance for doubtful accounts $ 7,325 $2,453 $336 $5,061 $3,201 $11,974 ======= ====== ==== ====== ====== ======= 1997 Allowance for doubtful accounts $ 9,296 $1,979 $136 $ (546) $3,540 $ 7,325 ======= ====== ==== ======= ====== ======= 1996 Allowance for doubtful accounts $12,106 $1,810 $213 $ (871) $3,962 $ 9,296 ======= ====== ==== ======= ====== ======= </TABLE> (a) Represents foreign currency translation adjustment and reserves acquired through business combinations. (b) Represents uncollected accounts charged against the allowance. -22-
25 EXHIBIT INDEX <TABLE> <CAPTION> Exhibit No. Reference - ------- ------------------------------------------------------- <S> <C> <C> 2.1 Agreement and Plan of merger by Exhibit (c)(1) of the company's Schedule 14D-1 and among Kennametal Inc., (SEC file no. reference no. 1-5318; docket entry Kennametal Acquisition Corp. (formerly, date - October 17, 1997) is incorporated herein by Palmer Acquisition Corp.) and reference. Greenfield Industries, Inc. dated as of October 10, 1997 3.1 Amended and Restated Articles Exhibit 3.1 of the company's September 30, 1994 of Incorporation as Amended Form 10-Q is incorporated herein by reference. 3.2 Bylaws Exhibit 3.1 of the company's March 31, 1991 Form 10-Q (SEC file no. reference 1-5318; docket entry date - May 14, 1991) is incorporated herein by reference. 4.1 Rights Agreement dated Exhibit 4 of the company's Form 8-K dated October 25, 1990 October 23, 1990 (SEC file no. reference 1-5318; docket entry date - November 1, 1990) is incorporated herein by reference. 10.1 Management Performance The discussion regarding the Management Bonus Plan Performance Bonus Plan under the caption "Report of the Board of Directors Committee on Executive Compensation" contained in the company's 1996 Proxy Statement is incorporated herein by reference. 10.2 Stock Option Plan of 1982, as Exhibit 10.3 of the company's December 31, 1985 amended Form 10-Q (SEC file no. reference 1-5318; docket entry date - February 14, 1986) is incorporated herein by reference. 10.3 Stock Option and Incentive Plan Exhibit 10.1 of the company's December 31, 1988 of 1988 Form 10-Q (SEC file no. reference 1-5318; docket entry date - February 9, 1989) is incorporated herein by reference. 10.4 Officer employment agreements, Exhibit 10.3 of the company's 1988 Form 10-K as amended and restated (SEC file no. reference 1-5318; docket entry date - September 23, 1988) is incorporated herein by reference. </TABLE>
26 <TABLE> <CAPTION> Exhibit No. Reference - ------- ------------------------------------------------------- <S> <C> <C> 10.5 Deferred Fee Plan for Outside Exhibit 10.4 of the company's 1988 Form 10-K Directors (SEC file no. reference 1-5318; docket entry date - September 23, 1988) is incorporated herein by reference. 10.6 Executive Deferred Compensation Exhibit 10.5 of the company's 1988 Form 10-K Trust Agreement (SEC file no. reference 1-5318; docket entry date - September 23, 1988) is incorporated herein by reference. 10.7 Stock Option and Incentive Plan Exhibit 10.1 of the company's September 30, 1992 of 1992 Form 10-Q (SEC file no. reference 1-5318; docket entry date - November 10, 1992) is incorporated herein by reference. 10.8 Directors Stock Incentive Plan Exhibit 10.2 of the company's September 30, 1992 Form 10-Q (SEC file no. reference 1-5318; docket entry date - November 10, 1992) is incorporated herein by reference. 10.9 Performance Bonus Stock Exhibit A of the company's 1995 annual meeting Plan of 1995 proxy statement. 10.10 Stock Option and Incentive Exhibit 10.14 of the company's September 30, 1996 Plan of 1996 Form 10-Q is incorporated herein by reference. 10.11 Stock Option and Incentive Plan Exhibit 10.8 of the company's December 31, 1996 of 1992, as amended Form 10-Q is incorporated herein by reference. 10.12 Form of Employment Agreement Exhibit 10.1 of the company's March 31, 1997 with certain executive officers Form 10-Q is incorporated herein by reference. 10.13 Supplemental Executive Exhibit 10.2 of the company's March 31, 1997 Retirement Plan Form 10-Q is incorporated herein by reference. 10.14 Form of Employment Agreement Exhibit 10.1 of the company's December 31, 1997 Form 10-Q is incorporated herein by reference. 10.15 Credit Agreement with Mellon Exhibit 10.2 of the company's December 31, 1997 Bank, N.A. and various creditors Form 10-Q is incorporated herein by reference. dated as of November 17, 1997 10.16 Guaranty and Suretyship Agreement Exhibit 10.3 of the company's December 31, 1997 with Mellon Bank, N.A. Form 10-Q is incorporated herein by reference. dated as of November 17, 1997 </TABLE>
27 <TABLE> <CAPTION> Exhibit No. Reference - ------- ------------------------------------------------------- <S> <C> <C> 10.17 Greenfield Industries, Inc. Executive Exhibit 10.71 of the Greenfield Industries, Inc. Deferred Compensation Plan December 31, 1995 Form 10-K is incorporated herein by reference 10.18 Amendment to Credit Agreement Filed herewith. with Mellon Bank, N.A. and various creditors dated as of November 26, 1997 10.19 Amendment to Credit Agreement Filed herewith. with Mellon Bank, N.A. and various creditors dated as of December 19, 1997 10.20 Amendment to Credit Agreement Filed herewith. with Mellon Bank, N.A. and various creditors dated as of March 19, 1998 13 Annual Report to Shareholders Portions of the 1998 Annual Report are filed herewith. 21 Subsidiaries of the Registrant Filed herewith. 23 Consent of Independent Public Filed herewith. Accountants 27 Financial Data Schedule Filed herewith. </TABLE>