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Kennametal Sells South Deerfield Industrial

Kennametal Inc., Latrobe, PA, has signed a definitive agreement to sell its consumer products business, South Deerfield Industrial, Inc., to Cal SDI. The disposition of this business is in line with the continued execution of Kennametal’s strategy to concentrate on its core business. The sale, which is expected to close by August 31, 2006, remains subject to negotiated conditions of closing.

The sale also includes the Industrial Sawblade Division of Kennametal’s Industrial Products Group.

Kennametal expects to receive $34 million in proceeds and will recognize an estimated pre-tax loss of $12 million to $13 million in the quarter ended June 30, 2006, in connection with the transaction. In addition, Kennametal also anticipates it will recognize a tax benefit of approximately $15 million in the same quarter.

Cal SDI, a private investment entity formed by an entrepreneur with interests in similar businesses, will acquire the operations of South Deerfield Industrial, Inc., and the employees will become Cal SDI employees when the transaction closes. South Deerfield Industrial manufactures and markets high quality national branded and private label power tool accessories for the consumer and industrial markets. Its focus on consumer products is not consistent with Kennametal’s core industrial customer base.

“As we announced earlier this year, Kennametal has been pursuing strategic alternatives for this operation as a part of our stated strategy to concentrate on our core business,” commented Ron Keating, Kennametal vice president and president of Kennametal’s Metalworking Solutions Services Group.

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