Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to Kennametal’s Third Quarter Fiscal Year 2009 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn the call over to Quynh McGuire, Director of Investor Relations. Please go ahead.

Thank you, Regina. Welcome everyone. Thank you for joining us to review Kennametal’s third quarter of fiscal 2009 results. We issued our quarterly earnings press release earlier today. You may access this announcement via our website at www.kennametal.com. Consistent with our practice in prior quarterly conference calls, we’ve invited various members of the media to listen to this call. It’s also being broadcast live on our website, and a recording of this call will be available on our site for replay through May 24, 2009. I’m Quynh McGuire, Director of Investor Relations for Kennametal. Joining me for our call today are Chairman, President, and Chief Executive Officer, Carlos Cardoso; Vice President and Chief Financial Officer, Frank Simpkins; and Vice President of Finance and Corporate Controller, Wayne Moser. Carlos and Frank will provide details on the quarter’s financial performance. After their remarks, we’ll be happy to answer your questions. At this time, I’d like to direct your attention to our forward-looking disclosure statement. The discussion we’ll have today contains comments that may constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of assumptions, risks, and uncertainties that could cause the company’s actual results, performance, or achievements, to differ materially from those expressed in or implied by such forward-looking statements. Additional information regarding these risk factors and uncertainties is detailed in Kennametal’s filings with the Securities and Exchange Commission. In addition, Kennametal provided the SEC with a Form 8-K, a copy of which is currently available on our website. This enables us to discuss non-GAAP financial measures during this call, in accordance with SEC Regulation G. This 8-K presents GAAP financial measures that we believe are most directly comparable to those non-GAAP financial measures and it provides a reconciliation of those measures as well. I will now turn the call over Carlos.

Thank you, Quynh. Good morning everyone. Thank you for joining us today. The third quarter of fiscal 2009 was exceptionally challenging for Kennametal, as well as most companies in the industrial sector. The downturn in the global markets, particularly in Europe was more rapid and significantly steeper than anticipated. In fact, the current downturn has been broader, faster, and more pronounced than any we have witnessed in Kennametal’s history. Credit markets continued to be difficult and the recession deepened. Capital spending and industrial production both slowed. Customers and distributors continued de-stocking and are using their inventories on hand. On a geographic basis, North America, Europe, Asia and India all experienced lower sales volumes. The March manufacturing report from the Institute of Supply Management, or ISM underscored the environment in the North American marketplace. The report stated that economic activity in manufacturing sector failed to grow for the 14th consecutive month and the overall economy contracted for the 6th consecutive month. In Europe, industrial activity essentially fell off the cliff in the March quarter. Germany and other major European economies are in deep recession. Production in our served end markets in Asia and India was also down considerably year-over-year. While certain sectors in Asia are starting to show some slightly positive signs. We do not yet see any concrete indicators of stabilization on a global basis. Therefore, we do not know whether economic conditions have reached bottom, or when the recovery will begin. As we announced last week, the highly unfavorable economic environment had a considerable negative impact on our business for the quarter, resulting in sales decline of 32% on an organic basis and an operating loss of $6 million before charges related to [restruction] and impairment. In response, we reacted quickly with additional measures during the March quarter, as…

Thank you, Carlos. I’ll provide further comments on our performance for the March quarter and then I’ll move on to the outlook for the remainder of fiscal 2009. Some of my comments will exclude special items, so please refer to the reconciliation schedules we provided in our earnings release and related 8-K. As Carlos mentioned, the impact of the global economic downturn on our markets and business has been more rapid and steep than anticipated. Those of you who closely follow our monthly-published order rates have certainly observed that trend. It's striking to think just six short months ago, we reported record organic sales for our September quarter. Even as late as October, our organic sales were flat with the prior year. We saw a modest decline in November, and then in December was considerably weaker with organic sales down 24% from the prior year. Organic sales in January and February were down about the same as December. Then in March, our organic sales fell by 43% from the prior year. The speed, descent and impact of this downturn are unprecedented in our company's 70-year history. This is a tremendous challenge of which we will and continue to aggressively respond. Against this background, we considered ourselves fortunate that we started our restructuring programs about one year ago. We are now realizing benefits from those actions and the savings will continue to accelerate. Over the past 12 months, we added to those programs and continued to implement additional cost reduction actions including further measures this past quarter. As one measure of the degree of favorable impact of our cost reduction actions, our year-over-year decremental EBIT margin for the March quarter was 34% on an organic sales decline of 32%. This is an improvement in decremental EBIT margin of 700 basis points…

Thank you, Frank. Again it’s difficult to gauge whether this downturn has reached bottom, when an economic recovery will begin and what the pace of that recovery will be. The North American economy continues to face challenges, including rising unemployment, tight credit markets and lagging consumer confidence. The slowdown in Europe has been so pronounced that we believe it will take longer for that region to recover. Asia may be the first major economic region to rebound. For signs of such a recovery, we will look to certain sectors as leading indicators such as general engineering, automotive, and oil and gas exploration. An increase in industrial production, GDP, consumer conference and employment figures will be positive signals of an improvement in the economic activity. In the meantime, we'll continue to manage through the challenging times. We remain committed to the Kennametal Value Business System, or KVBS, the management operating system that continues to guide all of the decisions we make relative to strategic planning, product development, sales growth, portfolio management and lean enterprise processes. KVBS provides the roadmap for a team as we implement a necessary restructuring programs to streamline our business and reduce our costs. At Kennametal, we are constantly building a better business. This focus is helping to position the company for growth, once we begin to see the eventual upturn in the customer demand for our products. We are a market leader in tooling and solutions, engineered components and advanced materials. As such, we are a consumables business and supply tools and components that are used in everyday production. We are also out balanced across geographic and end markets. We are financially sound. Those solid fundamentals give us confidence that we will be able to manage through this global economic downturn, while providing customers with quality service and maintaining our competitive strength in the marketplace. Thank you for your time and your interest in Kennametal. We will now take your questions.

(Operator Instructions). Your first question comes from the line of Eli Lustgarten with Longbow Securities. Eli Lustgarten – Longbow Securities: Good morning.

Hello, Eli.

Hi, Eli. Eli Lustgarten – Longbow Securities: I guess, the only good news today is the cash flow was pretty decent. Can we talk a little bit about your demand outlook for fourth quarter? I mean if you look at your third quarter, you had a decline in metalworking that was almost twice to decline in advanced materials. When you’re talking about a 40% organic decline and probably, north of 45% on with currency, is that equally split between the two or is that still more heavily, we’re going to see over 50% metalworking and somewhat less in advanced material. So give me some guidance of how you’re thinking about that?

Well. The metalworking is going to decline less this quarter. And we are going to see less than last quarter in relative numbers. And we anticipate to see a bigger decline than before on the AMSG side of it. We see the rig counts being down for the gas and the natural gas and we see the backing of the supplies. There is plenty of supply out there for gas. So, that has been holding pretty well for us throughout the year-to-date basis. Eli Lustgarten – Longbow Securities: That’s sort of saying that you’re looking at metalworking, the advanced material decline almost doubling at this point?

Well. I mean, again we still anticipate a significant decline in metalworking. Because I mean, all the indicators currently, the industrial production continues to be down and so forth. I mean every company that has announced so far in industrial space has announced a lower worst scenario for the next quarter than they had before. So we're in the same boat.

Yeah. Eli, I'll just to directionally point you there. From advanced material, I wouldn’t say it’s double the number that you talked about. I would say it’s much, it deteriorated from the second quarter below kind of guidance we had in the press release and I’d say North America sequentially is down a little bit more, not substantial and that’s really due to the drop off in Europe, which we have to watch closely and it’s tough to gauge what’s going on in April right now, because of the Easter holiday. I would say it’s a little bit softer in the metalworking side, because of Europe, number one and then to some of the factors that Carlos mentioned, I expect AMSG to be below where metalworking was, but softer sequentially. Eli Lustgarten – Longbow Securities: Okay, so we are, now the big thing if you look at your incremental margin why it got to 34%, it was really made up of two different worlds you hadn’t. I guess, back to the envelope, it looks metalworking was down like 47% and advanced materials down 22%. So, I mean I assume the goal is to reduce the metalworking incremental, decremental margin. How bad does an advanced materials sort of match it and we get to similar numbers, because it seems like there will be a very tough quarter to match incremental, decremental margin?

Yeah. I would expect the decremental margin to improve slightly. And I expect AMSG to be in that vicinity and with further benefits for metalworking through a combination of additional restructuring benefits kicking in. And some of the short-time programs we have in the international non-U.S. locations. Eli Lustgarten – Longbow Securities: Yeah. And one of the wild cards we had, generated a $15 million tax credit on a $6 million operating loss. I assume you're going to have tax credit in this quarter, or so is the magnitude the same, because it’s very difficult to predict mathematically given where this quarter turned out?

You're exactly right. First of all, we will have a tax benefit in the fourth quarter, nowhere near the magnitude, because in the third quarter as you know you have the cumulative view. Basically you’re trueing up your forecast, and we did earn income in the first half, and you’re catching up in the second half, but I would put the tax benefit in the range excluding special items anywhere from 12% to 15% in the fourth quarter, but as you know… Eli Lustgarten – Longbow Securities: The operating loss, you mean?

Yeah, and that could move significantly one where the other when you have such a low base as you know. Eli Lustgarten – Longbow Securities: Yeah. And in corporate expense, drop $10 million bucks or so, can we hold the current levels or near the current levels in corporate expense?

It will be tough. I would expect it to be up slightly, but nothing substantial. Eli Lustgarten – Longbow Securities:

The two factors on the cash flow, which will be, I will call them temporary, because we will pay more cash out the door related to some of the restructuring programs. Whereas we book some of the charges so they're kind of one-time type cash payments out the door and then given the operating performance being somewhat lower in the third quarter. We won’t have anywhere near the performance we had in the March quarter. Eli Lustgarten – Longbow Securities: The cash flow sort of is half the goal or something like that of Q3, something to that effect?

Eli, this is Quynh. Afraid, we are not going to be able be comment on that, but I think there is drivers that Frank had outlined gives you a sense of where we’re heading. Eli Lustgarten – Longbow Securities: Okay. Then one final question, the fiscal year is coming down. Our biggest problem is guessing 2010 and is everything being put in place to sort of make sure that even if volume doesn’t change dramatically next year that will be considerably more profitable next year that we shouldn’t see much better earning leverage than we're seeing this year, from wherever we wined up this year?

Yeah. I mean obviously at this point, I mean we have a hard visibility for the fourth quarter, nevertheless that 2010. I mean we are assuming, we have to assume as a management team that 2010 worst-case scenario is going to be just like 2009, or even slightly worse. So we are looking at all of those possibilities, so to put the company in a better position. So, we are assuming the worst case at this point. Eli Lustgarten – Longbow Securities: All right. Thank you.

Your next question comes from the line of Jack Hain with Barrington Research. Jack Hain – Barrington Research Associates, Inc.: Good morning.

Good morning.

Good morning. How are you? Jack Hain – Barrington Research Associates, Inc.: It seems like the culprit in this quarter and going forward it’s really being Europe. So I going to sort of focus my questions there, and maybe this is more granular than you usually get, but could you just provide some qualitative remarks about how operating margins in Europe are trending relative to North America and rest of the world, I mean is it really day and night, or is it more shades of gray in terms of the impact of the cost under absorption in Europe?

Profitability, it’s very similar on the metalworking side. They’re both very profitable type businesses and Europe for the most part was hanging in there up pretty well until really this last quarter. So when you have, the last shoe falling or as Carlos said falling off the cliff that put additional pressure on the quarter. But from an overall profitability standpoint, very much similar and that's what we've experienced this last drop off here in the March quarter. Jack Hain – Barrington Research Associates, Inc.: Okay. And also Carlos in your prepared remarks, you said that there are some sectors in Europe that are starting to show some positive signs of recovery? I was wondering if you wouldn’t mind being a bit more specific in terms of where you are starting to see some strength reappearing?

Actually, my comment was relative to Asia, what we are seeing in Asia, we see there is stimulus package really starting to take hold. We see, we starting to see a lot of activity for example, in railroads. We have gotten quite a few orders in that area and the automotive is picking up. Again, their stimulus is giving people that are buying smaller, more gas efficient cars, they are coming to production. Those two areas are the first areas that we see a comeback, but my comments were relative to Asia. And we do see Asia coming out of the chute first, at this point, China in particular. Jack Hain – Barrington Research Associates, Inc.: Okay, and last question. I have to believe that some of the sales drop has to be, due to inventory de-stocking. Just wondering how much more de-stocking do you feel that there is to go and, would a trough margin impact look like?

I mean, the de-stocking is really hard for us to see how much more, because I mean, we don’t, we never believe that there was that much stock, first of all the distributors don’t carry that much stock for us. The de-stocking is about the enduser and we have very little visibility to that, but as companies like industrial companies cut their inventories, they cut their production, obviously they don’t buy the tooling. So, it's really hard for us to know at this point.

Yeah, the only thing I would add to that is, and as you know it's tough to figure out de-stocking, because you've got two issues there. As everybody is watching everything they can and then we’ve actually improved our fill rates. So, our customer service metric throughout the door, customers don’t have to carry as much inventory the basic inline on efficient manufactures since goes back to our Kennametal Value Business System by focusing on lean, we're able to get our products much faster to our customers. And then from a trough margin, I don’t know how to answer that question, but I would tell you we're shooting for the decremental margin of 30% or less and that’s kind of the goal that we have internally. Jack Hain – Barrington Research Associates, Inc.: All right. Thank you very much.

Thank you.

Your next question comes from the line of Henry Kirn with UBS. Henry Kirn – UBS: Question about pricing discipline in the market. Have you seen any competitors trying to undercut you and gain some share in the downturn?

Actually the pricing discipline has been very good. We have really with the major players I mean there is thousands of people, thousands of companies in this marketplace, but the major competitors have maintained the discipline as far as we can tell at this point. And we have, we went with the price increase as late this January and we have been able to get price at this point. So, the environment relative to price has been pretty favorable. There is a lot of pressure, there is a lot of pushback, but so far we are doing fine. Henry Kirn – UBS: Right. And without giving guidance, could you give some of the factors as to how we should think about margins in MSSG and AMSG over the next few quarters at least relative to each other?

Generally, Henry we do not provide any margin information on the individual segments. It’s always on a consolidated Kennametal basis. Henry Kirn – UBS: Okay. That’s fair. Abnormal times, so I was hoping to get something. As far as raw material costs, could you talk a little about what you are seeing there and how they are trending?

Yeah, I would say, from an overall materials, when I look at it on a year-to-date basis in both periods, I would say they are actually up the same amount. However, the trend that we are experiencing this year as they are still up slightly in this last quarter, but they’ve come down substantially from the first quarter to the second to the third. So that, we are doing good on the price recovery, but the raw materials are still a little bit high year-over-year, and we expect that to neutralize itself potentially in the fourth quarter as we had originally anticipated with the culprits being steel predominantly and that’s coming down and on a year-over-year basis, it still year-to-date cobalt, but that has subsided in the third quarter, and we are just seeing some tungsten or APT some slight increases there. Henry Kirn – UBS: Hey, thanks a lot. That’s helpful.

Thank you.

Your next question comes from the line of Mark Koznarek with Cleveland Research. Mark Koznarek – Cleveland Research Company: Hi, good morning.

Hey, Mark.

Good morning, Mark. Mark Koznarek – Cleveland Research Company: On the price related comment, I think last well, initially in the year, you were shooting for 2% price realization. I think last quarter, you said you’ve got that, was the price contribution similar to this quarter?

Actually, Mark it was 3%. Mark Koznarek – Cleveland Research Company: 3%, well. Okay.

Yeah, we continue to do very well. I mean it shows that our brand has value. It shows that the value proposition, although, one other things we have actually seen customers placing higher number of orders, but they are just buying less. So the order number, the dollar of those orders is less. So, it shows that the customers are watching their spends, but they are going for product like our value-added products and Kennametal, because they need the cost reductions that we can offer. Mark Koznarek – Cleveland Research Company: Well, that’s pretty impressive.

Mark, that’s consistent with metalworking; they had a last round, most of the competition followed there in October. And then, our major competitor in Europe also increased prices in January, and I think a lot of the competition followed as well. Mark Koznarek – Cleveland Research Company: Okay. Given that your guidance for revenue has a sequential decline in the fourth quarter. I don’t imagine you are seeing any degree of stabilization so far in April. Would that be correct?

I mean, it’s hard to tell in April, especially because of the holiday. The holiday fell in April. So, we really have not had as many working days that we can really feel, have a good feeling one way or the other at this point. Mark Koznarek – Cleveland Research Company: , :

Yes. I believe it is, I think, we have one, we’ve sold a number of businesses to the magnitude of $500 million in sales plus, that were more commodity business. If you recall, we had just bought Widia a couple of years before the recovery. During the downturn, we were in the midst of the integration of that business. And through the 2001, 2002 timeframe, we were really in the midst of that, which today we don’t have I mean everything that we have has been integrated. So, there is a number of factors that I believe will put us in a better situation coming out of us. I think, we have done more in the cost structure. We have closed more facilities. So I think, there is a number of things and everything that I mentioned is not includes that we have done that makes us feel that we can do a much better job coming out of this downturn. Mark Koznarek – Cleveland Research Company: Okay.

Whenever that is. Mark Koznarek – Cleveland Research Company: Yeah. All right. We will keep our fingers crossed. Thank you.

Thank you.

Your next question comes from the line of Steve Barger with KeyBanc Capital Markets. Steve Barger – KeyBanc Capital Markets: Good morning.

Hey, Steve.

How you are doing Steve? Steve Barger – KeyBanc Capital Markets: Good. I hear what you are saying about planning for the worst case in FY ’10. But presumably you’re also thinking about how to run the business if volumes come back a quarters out. How should we think about incremental margins? Should you get back to a single-digit growth rate against some of these easy comps relative to your new cost structure? What's kind of possible there, do you think?

Well, again, I don’t want to get into fiscal '10, but they should be much better than the last cycle that we had where we have always shot for 35% in the past, say average 30, 35, but when we're coming out of this, Steve, I would expect those to have a number above that given the restructuring that we've taken out, some of the divestitures we’ve had over the years. Steve Barger – KeyBanc Capital Markets: Right, yeah if you just…

I'll emphasize the fact that we are, I mean, I answered a question about preparing, being ready to the business to be worse case scenario. You are absolutely right, we are also preparing to be ready when the business, when the economy turns. I mean that’s a challenge that we have is that we have a broadband that we have to look at. Steve Barger – KeyBanc Capital Markets: Right, right. If you just do the math on the $125 million in pre-tax savings, that’s more than $1 in earnings, I know some of that falls into FY ‘09, but if you have flat to up sales in FY ‘10, would you expect to see an EPS recovery similar to that of what you saw in '04 over '03, where EPS, I think pretty much doubled?

I don’t remember that, I mean I don’t have that data in front of us right now, but...

But directionally, I think that's where you would think. I mean, if next year it's going to be tough being at June 30 year-end, it’s going to be kind of a tale of two halves. Steve Barger – KeyBanc Capital Markets: Right.

We are going into decent comps in the first half and then the second half it really goes up, calendar '10, we think it’s going to be really good. And it’s just getting through it, then on run rate, I think directionally your comments are valid. Steve Barger – KeyBanc Capital Markets: Okay, that's yeah, that’s helpful. One last question, I'll get back in line. On a dollar basis, SG&A was down $20 million sequentially on that mid 30% decline. How should we think about SG&A on a dollar basis for the fourth quarter, given the revenue guidance that you've talked about?

I can't see it varying much. Steve Barger – KeyBanc Capital Markets: So, inline with what you put up in 3Q?

Yeah, again if anything it should be, maybe down a little bit. Steve Barger – KeyBanc Capital Markets: Okay.

That's fine. Steve Barger – KeyBanc Capital Markets: That's great. Thanks a lot.

Thank you.

Your next question comes from line of Andy Casey with Wachovia Securities. Andrew Casey – Wachovia Securities: Good morning everybody.

How are you doing, Andy? Andrew Casey – Wachovia Securities: I'm doing okay. It sounds like you guys are too.

Yes. Andrew Casey – Wachovia Securities: With your comment about customers buying less, but paying more, does that imply a mix shift up to gain tooling productivity, despite the general economic uncertainty?

Yeah, I mean my comment was that the transactions, we have more transactions, more orders placed, but the value of those orders are lower in general and yes, the customers are, I mean yeah, when you say the customers, it's a broad brush here, but the good companies are actually looking at our new product and our best products. So they can reduce cost in their factory floors. So, we are definitely seeing that, which would be very, very positive. The positive to us coming out, because we will have been better establish with those customers, we have been with them during the tough times. So, when they are looking to increase production, we will be right there with them. Andrew Casey – Wachovia Securities: Okay thanks. And then on the Q4 MSSG revenue guidance implied, if I look directly at North America given some fairly large steel consumers are saying they're taking unusual shutdown periods in Q3. How much of the Q4 might be related to de-stocking in advance of actions like that?

It’s really hard for us to really.

Andrew Casey – Wachovia Securities: And just based on your history Frank would it be, would that impact occur in your fourth fiscal quarter, or would it be first fiscal quarter of next year?

Yeah, I think it is straddle. It would probably more in the July period given the fourth of July. So when, it depends when if they start earlier and how long they extend it, but we will see that both domestically with the Detroit 3 and then you have the European situation with August. So, we typically see a stronger impact in the first quarter, but it could straddle both this period. Andrew Casey – Wachovia Securities: Okay. One last one, another market question. You commented on the natural gas rigs, have you seen any inflection in your exposure to the coal mining area?

Well, actually, as you know our coal mining is, we have a good market share in the Appalachian and that area has actually kind of held up fairly good so far. And so the Appalachian core production is down 5% year-over-year for the period ending this quarter. So but, the 52-week trend is still positive. So we have been doing okay, that’s been good for us at this point, been a bright spot. Andrew Casey – Wachovia Securities: Okay. Thank you very much.

Your next question comes from the line of Holden Lewis with BB&T. Holden Lewis – BB&T Capital Markets: Great. Thank you, good morning.

Good morning.

Hey, Holden how are you. Holden Lewis – BB&T Capital Markets: Well, thank you. First can you just, I may have missed this, but the corporate expense I think that going into this quarter you were expecting something again sort of $15 to $20 million range, and then you sort of came up with the $8.5 million number and it looks like that’s come in lower. Can you give us a little more detail of how that number has come in as low it is, what it might stay at and at what point does it return to that $20 million level. What do we need to see or just sort of new sort of paradigm for you?

It’s a combination of additional cost reductions relative to the plans that we accelerated and then some of the compensation programs, we actually did worse than we had anticipated. So, we didn’t need as much for the compensation program. So, it’s a combination of those two.

And the compensation part, obviously is the only part that will comeback up. Holden Lewis – BB&T Capital Markets: Going forward, right.

Going forward, so the structural costs. Whatever we reduce our SG&A and corporate by we're going to keep those. Holden Lewis – BB&T Capital Markets: Okay. And then do you have a sense of how and I guess the next question was I think you are looking at about $35 million in restructuring benefits for the second half. Can you talk about where you were in the quarter and for the half; and maybe talk about how much of that benefit is coming at the corporate side versus within the segment?

Yeah, year-to-date little over $20 million we expect that to ramp up in the fourth quarter. Almost 20% more in the fourth quarter, but the big drivers of the benefits we're seeing will be in MSSG we will have the largest given some other facilities that we’ve closed and some of the headcount reductions then AMSG and the corporate’s still the laggard, compared to the other two because of the just the sheer numbers of people involved. Holden Lewis – BB&T Capital Markets: Okay. You had about $20 million in savings year-to-date and you expect that to be…

We expect anywhere from, at the end of the year anywhere from put a broad range out here $40 to $50 million. Holden Lewis – BB&T Capital Markets: With realized benefit?

Correct, for the full year and all the incremental as we talked about falling into FY ’10. Holden Lewis – BB&T Capital Markets: Okay. And the incremental being the 125. Okay, so you are actually a little bit ahead of pace in terms of squeezing those into this year.

The other wild card in corporate is kind of the FX activity. So, we have gains on some of the derivative contracts, I think reflected in corporate not the business units. So that could skew a quarter one-way or the other. Holden Lewis – BB&T Capital Markets: Okay. Thinking strategically, I mean you have long said that your goal was obviously to reduce the number of SKUs and reduced the number of plants in long-term do so reasonably, substantially. When you look at the environment being as poor as it is, earnings obviously kind of being a basket case here, is there any interest in maybe taking these difficult conditions and accelerating the plant closings and the sort of shutting off some of the SKUs, I know you have six announced, but any interest in may be working towards your long-term goals on the plant side at an accelerated pace?

That’s we are doing right now, is accelerating all of those actions and again is a balance between although things are down the sales are down. So balance between cash, between capacity from how many plants we have something like six plants in the hopper right now. So they were closing. Holden Lewis – BB&T Capital Markets: Right. And I understand you're accelerating sort of the closing of those six plants, but I was just curious, you have more plants that you would like to in the long-term plan, does that 6 become 12 in the very near term, as you just sort of focus internally or other resources just not available to sheer number of plants that you might shut?

Yeah, I mean, we continue to look at how to accelerate that further, I mean, we continue to look at the potential of the divesting some product lines that would help with the sites and so forth. So all of that is sort of a day-to-day environment here. Holden Lewis – BB&T Capital Markets: Okay.

We are getting more aggressive. We like to get more aggressive. Holden Lewis – BB&T Capital Markets: Great, thank you.

And in the interest of time, your last question will come from the line of Dana Walker with Kalmar Investments. Dana Walker – Kalmar Investments: I hope that doesn't mean I have five seconds, and no more.

You can have all the time you want Dana. Dana Walker – Kalmar Investments: In the interest of time, Carlos thank you. I may have missed a couple of responses. So if I cover something that's been covered, just tell me to go back and read the transcript. But, when you have as many restructuring programs as you have going on presently, how complicated is it to do them right?

I mean, as you know, the restructuring programs are always challenging. Everything has bad news and good news; the bad news is the sales are down. The good news is the sales are down and gives us a lot more confidence in getting these things done right. And the proof is that year-to-date with all these activities, we are actually ahead of our plan. So that demonstrates that we have been able to do them or we can do them right. Dana Walker – Kalmar Investments: Since your CapEx spiked last year after having been at a lower level for many years, is that helping or hurting your ability to take your footprint into a smaller ink blot?

Well, I mean is actually helping because as we go through this new processes with the new equipment. We need the last equipment typically is more efficient and we typically have put that capital investment. In facilities that we see those facilities being the long-term facilities that we will have. In other words, we basically did maintenance in the plants that we felt that they are not going to be here a long-term and invested in the plants that we think that we're going to be here for the long-term. So, the CapEx has really not hurt us at all. Dana Walker – Kalmar Investments: I presume that’s a way of saying that you did not put a lot of money into the six locations that you are shutting down?

Yes, exactly. Dana Walker – Kalmar Investments: Did you comment earlier maybe I missed this, on your revenue comparisons in tooling versus consumables?

No, I mean 80% of our business is consumable. So I mean the, we don’t look at the growth in consumables versus non-consumables. We look at growth by market segments and by products. Dana Walker – Kalmar Investments: There was no interesting metric to look at though that might say that your tooling revenue is down more sharply than your consumable revenue?

Well, I mean, we don’t, the consumables are tooling. I'm not sure that I understand. You are talking about tool holders, maybe. Dana Walker – Kalmar Investments: Yes, something that would be more of a capital item.

The capital item for us is definitely lower.

Dana, that would be the Extrude Hone business, as well as some of the machine building in MSSG in India. But even the tool holders are part of that 80% consumables.

Yes, so in general, anything that we have that which is a smaller percentage of our business that is in any fashion close to a machine tool is down more than the consumables. Dana Walker – Kalmar Investments: As busy as you are focusing on your right-sizing to what degree is there a flow of either products or small businesses that would be available on more advantageous terms now than a year or two years ago that you would be reviewing?

Well, I mean we are always reviewing opportunities and we are staying in talks with people. However, there is a number of elements, I think people saw their business at a very high value. I think are still in shock at how low the value has gotten. So, we are trying to see that they can recover some other value on the way up. Although, I think most of them have accepted the fact that some of their business never be at the ultimate value they were at one time. But, I don’t feel that people are at that level yet, they are willing to give up any upturn opportunity, but right now our focus has been around liquidity and cash. I mean that’s going to be, until we see the bottom, I mean we must stay very focus on that. Dana Walker – Kalmar Investments: Two last quickies, when you made a strategic judgment to better favor distribution over company controlled selling; in some markets you probably didn’t conceive that this type of a weak environment would be part of your future. How does that decision hold up in this environment? What degree are your distribution partners maintaining the resources, so that you don’t lose share?

They are I mean I think that decision was still proven to be a good decision. I mean, we always believed that there was going to be downturn in the economy. We just didn’t believe that was going to be this dramatic. So that was always part of the equation, but as far as I can tell at this point, our distribution has performed at equal levels as our direct sales and vice versa. Dana Walker – Kalmar Investments: Final question is this and it relates to aerospace, you were of the mind that the new manufacturing techniques that would be evident in the Dreamliner or in the comparable products at Airbus would allow your types of products and services to gain relevance? What if any decisions have been taken in the meanwhile that bear that out?

From Kennametal's perspective? Dana Walker – Kalmar Investments: Yes.

I mean, we continue to be bullish about that opportunity, I mean even in the sales comps that we have. Our sales to Boeing and the aerospace continue to be positive. In other words, year-over-year growth. So, it’s still the right decision. Dana Walker – Kalmar Investments: Very well, thank you. Good luck.

Thank you.

This Q&A period is complete and it concludes our discussion. Please contact me Quynh McGuire at 724-539-6559 for any follow-up questions. And thank you for joining us. Operator?

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