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FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
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:
KENNAMETAL INC. 2000 EMPLOYEE STOCK
PURCHASE 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
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KENNAMETAL INC. 2000 EMPLOYEE STOCK PURCHASE PLAN
INDEX TO FINANCIAL STATEMENTS
PAGE
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Report of Independent Public Accountants.................................. 2
Financial Statements:
Statement of Net Assets Available for Plan Benefits
December 31, 2001.................................................... 3
Statement of Changes in Net Assets Available for Plan Benefits
Period from inception (March 1, 2001) to December 31, 2001........... 4
Notes to Financial Statements........................................ 5
Signatures................................................................ 8
Exhibit 23 - Consent of Independent Public Accountants.................... 9
Exhibit 99 - Arthur Andersen Quality Control Representation .............. 10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Kennametal Inc. and to the Kennametal Inc.
Committee on Organization and Compensation:
We have audited the accompanying statements of net assets available for plan
benefits of the Kennametal Inc. 2000 Employee Stock Purchase Plan (the Plan) as
of December 31, 2001, and the related statement of changes in net assets
available for plan benefits for the period from inception (March 1, 2001) to
December 31, 2001. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. 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 audit provides 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, 2001, and the changes in net assets available for plan benefits
for the period from inception (March 1, 2001) to December 31, 2001, in
conformity with accounting principles generally accepted in the United States.
/s/ ARTHUR ANDERSEN LLP
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Arthur Andersen LLP
Pittsburgh, Pennsylvania
March 29, 2002
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KENNAMETAL INC. 2000 EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 2001
ASSETS
Participant deposits due from Kennametal Inc. $ 163,643
LIABILITIES
Stock purchase payable 163,643
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NET ASSETS AVAILABLE FOR PLAN BENEFITS $ --
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The accompanying notes are an integral part of these statements.
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KENNAMETAL INC. 2000 EMPLOYEE STOCK PURCHASE PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
PERIOD FROM INCEPTION (MARCH 1, 2001) TO DECEMBER 31, 2001
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Participant contributions $ 578,866
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Contributions used for stock purchases (578,866)
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NET CHANGE --
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of period --
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End of year $ --
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The accompanying notes are an integral part of these statements.
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KENNAMETAL INC. 2000 EMPLOYEE STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
1. DESCRIPTION OF PLAN
The following general description of the Kennametal Inc. 2000 Employee Stock
Purchase Plan, as amended (the Plan), is provided for general information
purposes only. Participants should refer to the Plan document for complete
information.
The Plan is an employee stock purchase plan, established on March 1, 2001, to
enable eligible employees of Kennametal Inc. (the company) and certain
subsidiaries to purchase Kennametal Inc. capital stock at a discount from the
fair market value. The purchase price is equal to 85 percent of the lower of
the fair market value of the stock as of the first business day and the last
business day of a purchase period. If either of these days is on a weekend or
U.S. holiday, this day is the previous business day the New York Stock Exchange
(NYSE) was open. Fair market value is determined as the average of the high
price and the low price on each of the applicable dates, as quoted on the NYSE.
Each calendar year is divided into four purchase periods, each three months in
duration, the first of which is January 1 through March 31, followed by April 1
through June 30, July 1 through September 30, and October 1 through December 31.
The first purchase period was March 1, 2001 through March 31, 2001, with
three-month purchase periods thereafter. Subsequent purchase periods
automatically commence unless otherwise specified by the Plan Administrator.
The Plan has a ten-year lifetime and provides for the issuance of no more than
1,500,000 shares of the company's capital stock. The Plan, however, will
terminate when all shares available for issuance have been sold. The shares may
be unissued shares or reacquired shares, including shares purchased on the open
market.
The Plan is intended to qualify as an "employee stock purchase plan" under
Section 423 of the U.S. Internal Revenue Code of 1986, as amended (the Code).
The Plan is not intended to be a qualified pension, profit-sharing or stock
bonus plan under Code Section 401(a), nor is it subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
ADMINISTRATION OF THE PLAN - The Plan is administered by the Kennametal Board of
Directors Committee on Organization and Compensation. It has delegated these
responsibilities to a Plan Administrator. Mellon Investor Services functions as
the recordkeeper and custodian for the Plan.
ELIGIBILITY - Currently, employees in the United States and Canada are eligible
to participate in the Plan if:
- their customary employment is more than 20 hours per week and they are
employed more than five months per year, including individuals
designated as "full-time employees" and "regular part-time employees"
under the company's current human resources policy, and
- they own less then 5 percent of the total combined voting power of all
outstanding shares of all classes of securities of the company.
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Participation begins on the first day of the first payroll period subsequent to
the employee's enrollment date.
PARTICIPANT ACCOUNTS - A separate account is maintained by the recordkeeper for
each participant in the Plan, reflecting share purchases and sales, purchase or
sale prices, dividends reinvested and investment gains and losses.
CONTRIBUTIONS - The Plan allows participants to elect an after-tax contribution
rate of 1% to 15% of the employee's pay, which includes gross earnings,
including overtime pay, shift premiums, incentive compensation, incentive
payments, bonuses, and other cash compensation. Contributions are made through
payroll deductions and are held by the company until shares are purchased.
Employees may not purchase more than $25,000 worth of stock through the Plan in
any one year; any contributions in excess of this amount are refunded to the
employee. No interest is paid on contributions made during a purchase period.
The company does not make contributions to the Plan.
Employee contributions are used to purchase shares of company stock on the
purchase date, or the last business day of each purchase period (each March 31,
June 30, September 30, and December 31). If the purchase date is on a weekend or
is a U.S. holiday, the purchase date will be the previous business day of the
purchase period in which the NYSE was open. Purchases are made in whole and
fractional shares. Purchases are made automatically, unless a participant
withdrawal is executed prior to the purchase date.
A participant may withdraw or discontinue their contributions to the Plan prior
to the purchase date. When a withdrawal occurs, all contributions made during
the purchase period are returned to the participant. Any shares previously
purchased remain in the participant's account despite discontinuing
contributions or withdrawing from the Plan.
SALE OF STOCK - Shares purchased under the Plan are currently subject to a
restriction period of two years from the beginning of the purchase period during
which they were purchased. Shares may not be sold, pledged or otherwise
transferred during this two-year restriction period.
DIVIDENDS - Dividends paid on stock held in participant accounts are
automatically reinvested in additional shares of stock. Shares purchased with
dividends are priced at 100 percent of the fair market value of the stock as of
the date dividends are paid. There is no time requirement for holding shares
purchased with dividends.
2. ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Plan are maintained on the
accrual basis of accounting.
PLAN EXPENSE - Administrative fees and expense of the Plan are paid by the
company.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS - The preparation of
financial statements in conformity with accounting principles generally accepted
in the United States requires the Plan Administrator and company to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from these
estimates.
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3. PARTICIPANT DEPOSITS DUE FROM KENNAMETAL INC.
At December 31, 2001, the Plan was obligated to purchase approximately 6,233
shares of company capital stock on behalf of the participants. The liability is
reflected in the accompanying Statement of Net Assets Available for Plan
Benefits as participant deposits due from Kennametal Inc. The capital stock was
purchased and distributed directly to the participants' accounts in January
2002.
4. TAX STATUS
It is the intention of the company to have the Plan qualify under Section 423 of
the Code. The provisions of the Plan have been construed to extend and limit
participation in a manner consistent with the requirements of that section of
the Code. Participating employees may be subject to federal, state, provincial
or local income tax on income derived from the Plan.
5. PLAN MODIFICATIONS
The Kennametal Board of Directors may amend or suspend the Plan at any time.
However, no amendment can adversely affect participant rights under the Plan in
the current purchase period.
Although it has not expressed any intent to do so, the Kennametal Board of
Directors may terminate the Plan at any time. If it does, the Plan will
terminate in its entirety, and no further purchase rights will be granted or
exercised and no further payroll contributions will be collected.
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SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the plan administrator of the Kennametal Inc. 2000 Employee Stock Purchase 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 INC. 2000 EMPLOYEE
STOCK PURCHASE PLAN
Date: March 29, 2002 By: /s/ M. Rizwan Chand
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M. Rizwan Chand
Kennametal Inc.
Vice President,
Chief Human Resources Officer
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