We generated net cash flows from operating activities of$9.6 million during the three months endedSeptember 30, 2020 compared to$27.5 million during the prior year quarter. Capital expenditures were$39.3 million and$72.5 million during the three months endedSeptember 30, 2020 and 2019, respectively, with the decrease primarily related to lower capital spending on our simplification/modernization initiative.
RESULTS OF CONTINUING OPERATIONS
SALES
Sales for the three months endedSeptember 30, 2020 were$400.3 million , a decrease of$117.8 million , or 23 percent, from$518.1 million in the prior year quarter. The decrease in sales was driven by 21 percent organic sales decline, a 1 percent unfavorable currency exchange impact and a 1 percent decline from divestiture. Three Months Ended September 30, 2020 (in percentages) As Reported Constant Currency End market sales decline: Aerospace (45)% (45)% Energy (26) (26) Transportation (22) (21) General engineering (21) (19) Earthworks (12) (11) Regional sales decline: Americas (31)% (28)% Europe, the Middle East and Africa (EMEA) (20) (21) Asia Pacific (7) (6) GROSS PROFIT Gross profit for the three months endedSeptember 30, 2020 was$105.1 million , a decrease of$33.9 million from$139.0 million in the prior year quarter. The decrease was primarily due to organic sales decline and unfavorable labor and fixed cost absorption due to lower volumes, partially offset by lower raw material costs and incremental simplification/modernization benefits. Gross profit margin for the three months endedSeptember 30, 2020 was 26.2 percent, as compared to 26.8 percent in the prior year quarter. OPERATING EXPENSE Operating expense for the three months endedSeptember 30, 2020 was$93.3 million compared to$114.2 million for the three months endedSeptember 30, 2019 . The decrease was primarily due to cost-control measures and incremental simplification/modernization benefits. We invested further in technology and innovation during the current quarter to continue delivering high quality products to our customers. Research and development expenses included in operating expense totaled$8.8 million and$10.4 million for the three months endedSeptember 30, 2020 and 2019, respectively. RESTRUCTURING AND RELATED CHARGES AND ASSET IMPAIRMENT CHARGES FY20 Restructuring Actions In the June quarter of fiscal 2019, we implemented, and in fiscal 2020 substantially completed, the FY20 Restructuring Actions associated with our simplification/modernization initiative to reduce structural costs, improve operational efficiency and position us for long-term profitable growth. Total restructuring and related charges since inception of$54.8 million were recorded for this program throughSeptember 30, 2020 , consisting of:$46.5 million in Metal Cutting and$8.3 million in Infrastructure. Inception to date, we have achieved annualized savings of approximately$35 million related to the FY20 Restructuring Actions. 20
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FY21 Restructuring Actions In the September quarter of fiscal 2020, we announced the initiation of restructuring actions inGermany associated with our simplification/modernization initiative, which are expected to reduce structural costs. We agreed with local employee representatives to downsize ourEssen, Germany operations instead of the previously proposed closure. Subsequently, we also announced the acceleration of our structural cost reduction plans including the closing of theJohnson City, Tennessee facility. Estimated annualized benefits of the FY21 Restructuring Actions are$65 million to$75 million and the expected pre-tax charges are$90 million to$100 million . Total restructuring and related charges since inception of$70.4 million were recorded for this program throughSeptember 30, 2020 , consisting of:$65.0 million in Metal Cutting and$5.5 million in Infrastructure. The majority of the remaining charges related to the FY21 Restructuring Actions are expected to be in the Metal Cutting segment. Inception to date, we have achieved annualized savings of approximately$40 million related to the FY21 Restructuring Actions. Restructuring and Related Charges Recorded We recorded restructuring and related charges of$28.6 million , of which$26.0 million was in Metal Cutting and$2.6 million was in Infrastructure, and$8.0 million for the three months endedSeptember 30, 2020 and 2019, respectively. Of these amounts, restructuring charges totaled$25.6 million and$4.7 million for the three months endedSeptember 30, 2020 and 2019, respectively. Restructuring-related charges of$3.0 million and$3.3 million were recorded in cost of goods sold for the three months endedSeptember 30, 2020 and 2019, respectively. INTEREST EXPENSE Interest expense for the three months endedSeptember 30, 2020 increased to$10.6 million compared to$7.9 million , for the three months endedSeptember 30, 2019 . The increase was primarily due to the increase in borrowings under the Credit Agreement in the current quarter. OTHER INCOME, NET Other income for the three months endedSeptember 30, 2020 increased to$4.0 million from$2.7 million during the three months endedSeptember 30, 2019 . PROVISION FOR INCOME TAXES The effective income tax rates for the three months endedSeptember 30, 2020 and 2019 were 12.1 (benefit on a loss) and 33.7 (provision on income), respectively. The year-over-year change is primarily due to the effects of relatively lower pre-tax income in the current quarter. BUSINESS SEGMENT REVIEW EffectiveJuly 1, 2020 , as a result of a change in commercial strategy, organizational structure, and the way performance is assessed and resources are allocated, the Industrial and Widia businesses were combined to form one Metal Cutting business. The Infrastructure business remained unchanged. Therefore, we currently operate in two reportable segments consisting of Metal Cutting and Infrastructure. Our reportable operating segments have been determined in accordance with our internal management structure, which is organized based on operating activities, the manner in which we organize segments for allocating resources, making operating decisions and assessing performance and the availability of separate financial results. We do not allocate certain corporate expenses related to executive retirement plans, our Board of Directors, strategic initiatives, and certain other costs and report them in Corporate. 21
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Our sales and operating (loss) income by segment are as follows:
Three Months Ended September 30, (in thousands) 2020 2019 Sales: Metal Cutting$ 247,876 $ 324,085 Infrastructure 152,429 194,003 Total sales$ 400,305 $ 518,088 Operating (loss) income: Metal Cutting$ (23,626) $ 19,306 Infrastructure 7,268 (2,690) Corporate (820) (240) Total operating (loss) income (17,178) 16,376 Interest expense 10,578 7,881 Other income, net (4,019) (2,681) (Loss) income from continuing operations before income taxes$ (23,737) $ 11,176 METAL CUTTING Three Months Ended September 30, (in thousands, except operating margin) 2020 2019 Sales$ 247,876 $ 324,085 Operating (loss) income (23,626) 19,306 Operating margin (9.5) % 6.0 % (in percentages) Three Months Ended September 30, 2020 Organic sales decline (23)% Foreign currency exchange impact(1) (1) Sales decline (24)% Three Months Ended September 30, 2020 (in percentages) As Reported Constant Currency End market sales decline: Aerospace (45)% (45)% Transportation (22) (21) General engineering (20) (20) Energy (17) (17) Regional sales decline: Americas (30)% (29)% EMEA (23) (24) Asia Pacific (11) (9) 22
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For the three months endedSeptember 30, 2020 , Metal Cutting sales decreased 24 percent from the prior year quarter due to the global manufacturing slowdown and deteriorating conditions across all end markets and regions. Aerospace end market sales declined in all regions due to a significant reduction in airplane manufacturing. Transportation end market sales declined in all regions due to continued weakness in auto build rates caused by a slowdown in auto sales. Sales in our general engineering end market declined in all regions as a result of continued lower manufacturing activity, related to the COVID-19 pandemic. Energy sales decreased primarily due to a decline in oil and gas drilling in theAmericas , partially offset by continued strength in power generation inChina . On a regional basis, the sales decrease in theAmericas was driven by declines in all four end markets, while the sales decrease in EMEA was primarily driven by declines in the general engineering and transportation end markets, in addition to a decline in the aerospace end market. The sales decrease inAsia Pacific was primarily driven by declines in the transportation and general engineering end markets, in addition to a decline in the aerospace end market, offset by an increase in sales in the energy end market. For the three months endedSeptember 30, 2020 , Metal Cutting operating loss was$23.6 million compared to operating income of 19.3 million in the prior year quarter. The year-over-year change was driven primarily by organic sales decline, unfavorable labor and fixed cost absorption due to lower volumes and greater restructuring and related charges of$19.7 million , partially offset by incremental simplification/modernization benefits, lower raw material costs and cost-control measures. INFRASTRUCTURE Three Months Ended September 30, (in thousands) 2020 2019 Sales$ 152,429 $ 194,003
Operating income (loss) 7,268 (2,690) Operating margin 4.8 % (1.4) % (in percentages) Three Months Ended September 30, 2020 Organic sales decline (18)% Business days impact(2) 1 Divestiture impact(3) (4) Sales decline (21)% Three Months Ended September 30, 2020
(in percentages) As Reported Constant Currency End market sales decline: Energy (32)% (31)% General engineering (22) (14) Earthworks (12) (11) Regional sales (decline) growth: Americas (31)% (27)% EMEA (10) (9) Asia Pacific - 1 23
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For the three months endedSeptember 30, 2020 , Infrastructure sales decreased by 21 percent from the prior year quarter. TheU.S. oil and gas market drove year-over-year decline in the energy market withU.S. land rig counts down approximately 70 percent compared to the prior year quarter. The sales decline in general engineering was primarily driven by the economic decline and the effect of COVID-19 in all regions, and in the earthworks end market, sales were down year-over-year due to softness in mining in theAmericas , partially offset by growth in EMEA andAsia Pacific construction. On a regional basis, the sales decrease in theAmericas was primarily driven by declines in the energy end market, and to a lesser extent, declines in the general engineering and earthworks end markets. In EMEA, the sales decrease was driven primarily by a decline in the general engineering end market, partially offset by growth in the earthworks end market and process industries within the energy end market. The increase in sales inAsia Pacific , excluding the unfavorable impact of currency exchange, was driven primarily by growth in the energy end market, partially offset by a decline in the general engineering end market. For the three months endedSeptember 30, 2020 , Infrastructure operating income was$7.3 million compared to operating loss of$2.7 million in the prior year quarter. The year-over-year change was driven primarily by lower raw material costs, simplification/modernization benefits and cost-control measures, partially offset by organic sales decline and unfavorable labor and fixed cost absorption due to lower volumes. CORPORATE Three Months Ended September 30, (in thousands) 2020 2019 Corporate expense $ (820)$ (240)
For the three months ended
LIQUIDITY AND CAPITAL RESOURCES Cash flow from operations is the primary source of funding for our capital expenditures. For the three months endedSeptember 30, 2020 , cash flow provided by operating activities was$9.6 million , primarily due to effects of the net loss offset by working capital adjustments. During the three months endedSeptember 30, 2020 , we entered into the First Amendment (the Amendment) to the Fifth Amended and Restated Credit Agreement dated as ofJune 21, 2018 , (as amended by the Amendment, the Credit Agreement). The Credit Agreement is a five-year, multi-currency, revolving credit facility and is used to augment cash from operations and as an additional source of funds. The Credit Agreement provides for revolving credit loans of up to$700.0 million for working capital, capital expenditures and general corporate purposes. The Credit Agreement allows for borrowings inU.S. dollars, euros, Canadian dollars, pounds sterling and Japanese yen. Interest payable under the Credit Agreement is based upon the type of borrowing under the facility and may be (1) LIBOR plus an applicable margin, (2) the greater of the prime rate or the Federal Funds effective rate plus an applicable margin, or (3) fixed as negotiated by us. The Credit Agreement matures inJune 2023 . The Credit Agreement requires us to comply with various restrictive and affirmative covenants, including two financial covenants: (1) a maximum leverage ratio where debt, net of domestic cash in excess of$25 million and, as added by the Amendment, sixty percent of the unrestricted cash held outside ofthe United States , must be less than or equal to 3.5 times trailing twelve months EBITDA (temporarily increased by the Amendment to 4.25 times trailing twelve months EBITDA during the period fromSeptember 30, 2020 through and includingDecember 31, 2021 ), adjusted for certain non-cash expenses and which may be further adjusted, at our discretion, to include up to$120 million (increased from$80 million pursuant to the Amendment) of cash restructuring charges throughDecember 31, 2021 ; and (2) a minimum consolidated interest coverage ratio of EBITDA to interest of 3.5 times (as the aforementioned terms are defined in the Credit Agreement). Borrowings under the Credit Agreement are guaranteed by our significant domestic subsidiaries. As ofSeptember 30, 2020 , we were in compliance with all covenants of the Credit Agreement and we had$38.5 million of borrowings outstanding and$661.5 million of additional availability. There were$500.0 million of borrowings outstanding as ofJune 30, 2020 . 24
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The Company continues to assess the expected conditions in its primary end markets, including the effects of COVID-19 on the Company's business, financial condition, operating results and cash flows. Because the extent and duration of the COVID-19 pandemic are uncertain, the effects of the pandemic could materially affect our availability to borrow under the Credit Agreement and our compliance with the maximum leverage ratio covenant of the Credit Agreement. To offset some of the uncertainty related to COVID-19, we obtained an Amendment to the Credit Agreement during the first quarter of fiscal 2021, as described above. Additionally, we continue to evaluate when and to what extent we may access the capital markets, including our plan to refinance the$300 million 3.875% Senior Unsecured Notes dueFebruary 2022 during the current fiscal year. In the event that a refinancing does not occur before theFebruary 2022 maturity date, management believes that the Company will have the ability to repay theFebruary 2022 Notes with projected cash on hand and availability under the Credit Agreement. However, the Company can provide no assurance of this due in part, but not limited to, the uncertainty surrounding the COVID-19 pandemic. If over the course of the next year, market conditions do not improve or further deteriorate, the Company may need to take one or a combination of the following additional actions to ensure the Company has adequate access to liquidity and remains in compliance with the maximum leverage ratio covenant of the Credit Agreement both of which are within the Company's control: implement additional short-term cost-control actions and undertake new restructuring programs. We have concluded that we will remain in compliance with the covenants of the Credit Agreement and, as a result, will have adequate access to liquidity to satisfy our obligations within one year after the date the financial statements are issued. For the three months endedSeptember 30, 2020 , average daily borrowings outstanding under the Credit Agreement were approximately$430.9 million . We had$38.5 million and$500.0 million of borrowings outstanding under the Credit Agreement as ofSeptember 30, 2020 andJune 30, 2020 , respectively. We consider the majority of the unremitted earnings of our non-U.S. subsidiaries to be permanently reinvested. With regard to these unremitted earnings, we have not, nor do we anticipate the need to, repatriate funds to theU.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. With regard to the small portion of unremitted earnings that are not indefinitely reinvested, we maintain a deferred tax liability for foreign withholding andU.S. state income taxes. In 2012, we received an assessment from the Italian tax authority that denied certain tax deductions primarily related to our 2008 tax return. Attempts at negotiating a reasonable settlement with the tax authority were unsuccessful; and as a result, we decided to litigate the matter. While the outcome of the litigation is still pending, the authority has served notice requiring payment in the amount of €36 million. Accordingly, we requested and were granted a stay and are not currently required to make a payment in connection with this assessment. We continue to believe that the assessment is baseless and accordingly, no income tax liability has been recorded in connection with this assessment in any period. However, if the Italian tax authority were to be successful in litigation, settlement of the amount alleged by the Italian tax authority would result in an increase to income tax expense by as much as €36 million, or$42 million , including penalties and interest of €21 million, or$25 million . A trial date has not yet been set by the Italian court. AtSeptember 30, 2020 , cash and cash equivalents were$98.3 million , Total Kennametal Shareholders' equity was$1,225.4 million and total debt was$639.7 million . Our current senior credit ratings are at investment grade levels. We believe that our current financial position, liquidity and credit ratings provide us access to the capital markets. We believe that we have sufficient resources available to meet cash requirements for the next 12 months. We continue to closely monitor our liquidity position and the condition of the capital markets, as well as the counterparty risk of our credit providers. There have been no material changes in our contractual obligations and commitments sinceJune 30, 2020 . We are also closely monitoring the rapidly evolving effects of the COVID-19 pandemic on our business operations, financial results and financial position and on the industries in which we operate. Cash Flow Provided by Operating Activities During the three months endedSeptember 30, 2020 , cash flow provided by operating activities was$9.6 million , compared to$27.5 million for the prior year period. Cash flow provided by operating activities for the current year period consisted of net income and non-cash items amounting to an inflow of$18.7 million and changes in certain assets and liabilities netting to an outflow of$9.1 million . Contributing to the changes in certain assets and liabilities were a decrease in accrued income taxes of$11.6 million , a decrease in accounts payable and accrued liabilities of$8.2 million , a decrease in accrued pension and postretirement benefits of$6.9 million and an increase in accounts receivable of$6.7 million . Partially offsetting these cash outflows was a decrease in inventories of$23.3 million . 25
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During the three months endedSeptember 30, 2019 , cash flow provided by operating activities consisted of net income and non-cash items amounting to an inflow of$48.9 million and changes in certain assets and liabilities netting to an outflow of$21.3 million . Contributing to the changes in certain assets and liabilities were a decrease in accounts payable and accrued liabilities of$47.1 million , a decrease in accrued income taxes of$6.7 million and a decrease in accrued pension and postretirement benefits of$6.3 million . Partially offsetting these cash outflows were a decrease in accounts receivable of$41.6 million and a decrease in inventories of$2.7 million , Cash Flow Used for Investing Activities Cash flow used for investing activities was$39.0 million for the three months endedSeptember 30, 2020 , compared to$71.9 million for the prior year period. During the current year period, cash flow used for investing activities primarily included capital expenditures, net of$39.0 million , which consisted primarily of expenses related to our simplification/modernization initiatives and equipment upgrades. For the three months endedSeptember 30, 2019 , cash flow used for investing activities included capital expenditures, net of$72.1 million , which consisted primarily of expenses related to our simplification/modernization initiatives and equipment upgrades. Cash Flow Used for Financing Activities Cash flow used for financing activities was$483.4 million for the three months endedSeptember 30, 2020 compared to$20.0 million in the prior year period. During the current year period, cash flow used for financing activities included$461.5 million of a net decrease in the revolving and other lines of credit and$16.6 million of cash dividends paid to Kennametal Shareholders. For the three months endedSeptember 30, 2019 , cash flow used for financing activities included$16.6 million of cash dividends paid toKennametal Shareholders and$5.8 million of the effect of employee benefit and stock plans and dividend reinvestment, partially offset by a net increase in notes payable of$3.3 million . FINANCIAL CONDITION Working capital was$520.1 million atSeptember 30, 2020 , a decrease of$22.6 million from$542.7 million atJune 30, 2020 . The decrease in working capital was primarily driven by a decrease in cash and cash equivalents of$508.4 million , partially offset by a decrease in revolving and other lines of credit and notes payable of$453.9 million and a decrease in accounts payable of$28.6 million . Currency exchange rate effects increased working capital by a total of approximately$16 million , the impact of which is included in the aforementioned changes. Property, plant and equipment, net increased$15.9 million from$1,038.3 million atJune 30, 2020 to$1,054.2 million atSeptember 30, 2020 , primarily due to capital additions of approximately$30.5 million and a positive currency exchange impact of approximately$15 million , partially offset by depreciation expense of$27.6 million and disposals of$1.6 million . AtSeptember 30, 2020 , other assets were$569.1 million , an increase of$10.6 million from$558.5 million atJune 30, 2020 . The primary drivers for the increase was an increase in other assets of$7.5 million primarily due to an increase in pension plan assets and an increase in goodwill of$4.8 million due to favorable currency exchange effects of approximately$5 million , partially offset by a decrease in other intangible assets of$2.5 million due to amortization expense of$3.3 million , partially offset by favorable currency exchange effects of approximately$1 million . Kennametal Shareholders' equity was$1,225.4 million atSeptember 30, 2020 , a decrease of$4.5 million from$1,229.9 million atJune 30, 2020 . The decrease was primarily due to net loss attributable toKennametal of$21.7 million and cash dividends paid to Kennametal Shareholders of$16.6 million , partially offset by favorable currency exchange effects of$30.7 million and capital stock issued under employee benefit and stock plans of$2.2 million . DISCUSSION OF CRITICAL ACCOUNTING POLICIES There have been no changes to our critical accounting policies sinceJune 30, 2020 . NEW ACCOUNTING STANDARDS
See Note 2 to our condensed consolidated financial statements set forth in Part I, Item 1 of this Quarterly Report on Form 10-Q for a description of new accounting standards.
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RECONCILIATION OF FINANCIAL MEASURES NOT DEFINED BYU.S. GAAP In accordance withSEC rules, below are the definitions of the non-GAAP financial measures we use in this report and the reconciliation of these measures to the most closely related GAAP financial measures. We believe that these measures provide useful perspective on underlying business trends and results and provide a supplemental measure of year-over-year results. The non-GAAP financial measures described below are used by management in making operating decisions, allocating financial resources and for business strategy purposes. We believe these measures may be useful to investors as they provide supplemental information about business performance and provide investors a view of our business results through the eyes of management. These non-GAAP financial measures are not intended to be considered by the user in place of the related GAAP financial measure, but rather as supplemental information to our business results. These non-GAAP financial measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted. Organic sales decline Organic sales decline is a non-GAAP financial measure of sales decline (which is the most directly comparable GAAP measure) excluding the effects of acquisitions, divestitures, business days and foreign currency exchange from year-over-year comparisons. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth decline on a consistent basis. Also, we report organic sales decline at the consolidated and segment levels. Constant currency end market sales decline Constant currency end market sales decline is a non-GAAP financial measure of sales decline (which is the most directly comparable GAAP measure) by end market excluding the effects of acquisitions, divestitures and foreign currency exchange from year-over-year comparisons. We note that, unlike organic sales decline, constant currency end market sales decline does not exclude the effect of business days. We believe this measure provides investors with a supplemental understanding of underlying end market trends by providing end market sales growth decline on a consistent basis. Also, we report constant currency end market sales decline at the consolidated and segment levels. Constant currency regional sales (decline) growth Constant currency regional sales (decline) growth is a non-GAAP financial measure of sales (decline) growth (which is the most directly comparable GAAP measure) by region excluding the effects of acquisitions, divestitures and foreign currency exchange from year-over-year comparisons. We note that, unlike organic sales growth, constant currency regional sales (decline) growth does not exclude the effect of business days. We believe this measure provides investors with a supplemental understanding of underlying regional trends by providing regional sales (decline) growth on a consistent basis. Also, we report constant currency regional sales (decline) growth at the consolidated and segment levels. Reconciliations of organic sales decline to sales decline are as follows: Three Months Ended September 30, 2020 Metal Cutting Infrastructure Total Organic sales decline (23)% (18)% (21)% Foreign currency exchange effect(1) (1) - (1) Business days effect(2) - 1 - Divestiture effect(3) - (4) (1) Sales decline (24)% (21)% (23)% Reconciliations of constant currency end market sales decline to end market sales decline(4) are as follows: Metal Cutting Three Months Ended September 30, 2020 General engineering Transportation Aerospace Energy Constant currency end market sales decline (20)% (21)% (45)% (17)% Foreign currency exchange effect(1) - (1) - - End market sales decline(4) (20)% (22)% (45)% (17)% Infrastructure Three Months Ended September 30, 2020 Energy Earthworks General engineering Constant currency end market sales decline (31)% (11)% (14)% Foreign currency exchange effect(1) - (1) 2 Divestiture effect(3) (1) - (10) End market sales decline(4) (32)% (12)% (22)% Total
Three Months Ended
Earthworks Constant currency end market sales decline (19)% (21)% (45)% (26)% (11)% Foreign currency exchange effect(1) 1 (1) - 1 (1) Divestiture effect(3) (3) - - (1) - End market sales decline(4) (21)% (22)% (45)% (26)% (12)%
Reconciliations of constant currency regional sales (decline) growth to reported regional sales decline (growth)(5) are as follows:
Three Months Ended September 30, 2020 Americas EMEA Asia Pacific Metal Cutting Constant currency regional sales decline (29)% (24)% (9)% Foreign currency exchange effect(1) (1) 1 (2) Regional sales decline(5) (30)% (23)% (11)% Infrastructure Constant currency regional sales (decline) growth (27)% (9)% 1% Foreign currency exchange effect(1) 2 (1) (1) Divestiture effect(3) (6) - - Regional sales (decline) growth(5) (31)% (10)% -%
Total
Constant currency regional sales decline (28)% (21)% (6)% Foreign currency exchange effect(1) - 1 (1) Divestiture effect(3) (3) - - Regional sales decline(5) (31)% (20)% (7)% (1) Foreign currency exchange effect is calculated by dividing the difference between current period sales and current period sales at prior period foreign exchange rates by prior period sales. (2) Business days effect is calculated by dividing the year-over-year change in weighted average working days (based on mix of sales by country) by prior period weighted average working days. (3) Divestiture effect is calculated by dividing prior period sales attributable to divested businesses by prior period sales. (4) Aggregate sales for all end markets sum to the sales amount presented onKennametal's financial statements. (5) Aggregate sales for all regions sum to the sales amount presented onKennametal's financial statements. 27
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