Form 11K - KRISP- Dec 31, 2012


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR
PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
 
ý
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012
 
¨
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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 RETIREMENT
INCOME SAVINGS 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











 
 
 
 
 




KENNAMETAL RETIREMENT INCOME SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
 
 
 
 
Page
 
 
 
 
Financial Statements:
 
 
 
 
 
 
 
 
 
Supplemental Schedule:
 
 
 
 
 
 
 
Exhibit 23 – Consent of Independent Registered Public Accounting Firm
 
Note: Other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under ERISA have been omitted because they are not applicable.



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrator of
the Kennametal Retirement Income Savings Plan:
We have audited the accompanying statements of net assets available for benefits of the Kennametal Retirement Income Savings Plan (Plan) as of December 31, 2012 and 2011, and the related statement of changes in net assets available for benefits for the year ended December 31, 2012. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements of the Plan, referred to above, present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2012 and 2011, and the changes in its net assets available for benefits for the year ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) as of December 31, 2012 is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan's management. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
 
Pittsburgh, Pennsylvania
June 21, 2013


3


KENNAMETAL RETIREMENT INCOME SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2012 AND 2011
 
 
 
2012

 
2011

ASSETS
 
 
 
 
Receivables:
 
 
 
 
Notes receivable from participants
 
$
337,028

 
$
274,980

Employer contributions
 
24,599

 
27,455

Participant contributions
 
13,553

 
11,919

Total receivables
 
375,180

 
314,354

Investments at fair value (Note 3):
 
 
 
 
Master trust
 
5,198,709

 
5,163,175

Mutual funds
 
4,374,276

 
6,548,908

Common / collective trusts
 
2,933,072

 
—

Kennametal Inc. capital stock
 
2,261,911

 
2,269,992

Total investments at fair value
 
14,767,968

 
13,982,075

Total assets
 
15,143,148

 
14,296,429

Adjustment from fair value to contract value for fully benefit- responsive investment contracts
 
(271,016
)
 
(258,476
)
NET ASSETS AVAILABLE FOR BENEFITS
 
$
14,872,132

 
$
14,037,953

The accompanying notes are an integral part of these financial statements.


4


KENNAMETAL RETIREMENT INCOME SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2012
 
 
2012

ADDITIONS TO NET ASSETS ATTRIBUTED TO:
 
Net appreciation in fair value of investments
$
1,060,923

Dividends and interest
277,365

Participant contributions
142,525

Employer contributions
112,433

Interest - notes receivable from participants
18,876

Total additions
1,612,122

DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
 
Benefits paid to participants
761,604

Administrative fees
16,339

Total deductions
777,943

NET INCREASE
834,179

NET ASSETS AVAILABLE FOR BENEFITS:
 
Beginning of year
14,037,953

End of year
$
14,872,132

The accompanying notes are an integral part of these financial statements.


5


KENNAMETAL RETIREMENT INCOME SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2012 AND 2011
NOTE 1 - DESCRIPTION OF PLAN
The following general description of the Kennametal Retirement Income Savings 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 a defined contribution plan, established to encourage investment and savings for eligible union employees of Kennametal Inc. (Kennametal or the Company), and to provide a method to supplement their retirement income. The Plan provides these employees the opportunity to defer a portion of their annual compensation for federal income tax purposes in accordance with Section 401(k) of the Internal Revenue Code, as amended (IRC). The Plan also provides for Company contributions. The Plan is subject to certain provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The Company is the Plan sponsor.
ADMINISTRATION OF THE PLAN – The management of the Company has the authority and responsibility for the general administration of the Plan. Fidelity Management Trust Company functions as the trustee, and Fidelity Investments Institutional Operations Company functions as the recordkeeper.
ELIGIBILITY – Employees are participants in the Plan on the first day of the first payroll period subsequent to completing six (6) months of service. Under present federal income tax law, employer contributions and all earnings of the Plan do not constitute taxable income to the participants until withdrawn from the Plan by the participants.
VESTING – All participant and employer contributions vest immediately.
PARTICIPANT ACCOUNTS – A separate account is maintained for each participant in the Plan. Each participant's account is credited with the participant's contributions and Company matching contributions, as well as allocations of the Company's profit sharing contribution and Plan earnings. Participant accounts are charged with administrative expenses that are paid by the Plan. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account.
CONTRIBUTIONS – The Company is required to contribute quarterly, a base amount of 2% of each eligible employee’s wages, which include base salary, overtime, shift differential pay and incentive compensation. Participants may elect to contribute to the Plan from 1% to 20% of their pre-tax wages through payroll deductions. Employees who are age 50 or older and who exceed the annual dollar limit under the law or the Plan are eligible to make catch-up contributions. Unless otherwise amended, the Plan provides for employer matching contribution of 50% of employee contributions up to 4%. As such, the maximum employer matching contribution is 2%. Under the Plan, the Company has the discretion to make its employer matching contributions in Kennametal capital stock.
The participants can elect to have their contributions (pre-tax, catch-up and rollover amounts) invested in the different investment funds available under the Plan. Currently, the Plan offers 21 mutual funds, Kennametal capital stock, a Master Trust, as well as a self-directed brokerage account. Employer mandatory and matching contributions are made quarterly. During 2012, these contributions were invested in the same investment elections that the employee elected for their pre-tax or after-tax contributions.


6


DISTRIBUTIONS – Distributions to participants due to disability, retirement or death are payable in either a lump sum or in periodic payments for a period not to exceed ten (10) years. If a participant’s vested interest in his or her account exceeds $1,000, a participant may elect to defer distribution to a future date as more fully described in the plan document.
In addition, while still employed, participants may withdraw pre-tax employee and Company contributions if over age 59.5, at any time. Pre-tax employee and Company contributions can be withdrawn by participants under age 59.5 only for specific hardship reasons.
NOTES RECEIVABLE FROM PARTICIPANTS – Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 less the excess of the highest outstanding note balance during the previous one-year period over the outstanding balance as of the date of the note or 50% of their account balance as defined by the Plan or the IRC. Principal and interest are paid ratably through payroll deductions. The maximum term permissible for a general-purpose note is 5 years and 30 years for a residential note. The interest rate is determined by the plan administrator based on existing market conditions and is fixed over the life of the note. Interest rates on notes receivable from participants ranged from 4.25% to 9.50% at both December 31, 2012 and 2011. Notes receivable from participants outstanding at December 31, 2012 have maturity dates ranging from 2013 to 2036.
INVESTMENTS – Participants direct their contributions and Company cash contributions by electing that such contributions be placed in a single investment or allocated to any combination of investments or the self-directed brokerage account available under the Plan. Earnings derived from the assets of any investment are reinvested in the investment to which they relate. Participants may elect at any time to transfer all or a portion of the value of their accounts among the investment options.
For Company contributions made in Kennametal capital stock, participants have the ability to exchange the Kennametal capital stock for a single investment or for any combination of investments offered by the Plan.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING – The financial statements of the Plan are prepared under the accrual basis of accounting.
As described in the accounting guidance on “Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans,” investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. As required by this standard, the statements of net assets available for benefits present the fair value of the investment contract as well as the adjustment of the fully benefit-responsive investment contract from fair value to contract value. The statements of net assets available for benefits are prepared on a contract value basis.

RECENT ACCOUNTING PRONOUNCEMENTS – As of January 1, 2012, the Plan adopted changes to fair value measurement and disclosures. The objective of this guidance is a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between accounting principles generally accepted in the United States of America (U.S. GAAP) and international financial reporting standards. Many of the amendments in this guidance represent clarifications to existing guidance or changes in the measurement guidance for determining fair value. The adoption of this guidance did not have an impact on the Plan's financial statements.

7


USE OF ESTIMATES – The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results may differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION – Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Plan's Investment Committee determines the Plan's valuation policies utilizing information provided by the investment advisers, investment consultants and the custodian. See Note 3 for discussion of fair value measurements.
Investment transactions are recorded on a trade date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the exdividend date. Net appreciation includes the Plan's gains and losses on investments bought and sold as well as held during the year.
INVESCO Institutional, Inc. reported that all the investment contracts held in the Master Trust under the Stable Value Fund (see Note 5) are fully benefit-responsive. Fully benefit-responsive investment contracts are reported at fair value with a corresponding adjustment to contract value for purposes of reporting net assets available for investments. Shares of mutual funds and common stock are valued at the net asset value of shares held by the Plan at year-end. Investments in Kennametal capital stock are valued at their quoted market price at year-end.
NOTES RECEIVABLE FROM PARTICIPANTS – Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded in the period earned. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2012 or 2011. If a participant ceases to make loan repayments and the plan administrator deems the participant loan to be in default, the participant loan balance is reduced and a benefit payment is recorded.
PAYMENT OF BENEFITS – Benefit payments are recorded when paid to participants / beneficiaries.

NET APPRECIATION – Net appreciation in fair value of investments is composed of unrealized gains and losses, which represent the change in market value, compared to the cost of investments in each year, and realized gains and losses on security transactions, which represent the difference between proceeds received and average cost. Net appreciation in fair value of investments for the year ended
December 31, 2012 was as follows: 
 
2012

 
Mutual Funds
$
828,451

Kennametal Inc. Capital Stock
232,472

Total
$
1,060,923


PLAN EXPENSES – Certain expenses of maintaining the Plan are paid directly by the Company and are excluded from these financial statements. Fees related to the administration of notes receivable from participants are charged directly to the participant's account and are included in administrative expenses. Investment related expenses are included in net appreciation of fair value of investments.
As of January 1, 2012, record keeping fees are charged equally to each participant and are classified as administrative fees on the statement of changes in net assets.


8


NOTE 3 - FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy consists of three levels to prioritize the inputs used in valuations, as defined below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3: Inputs that are unobservable.
The following sections describe the valuation methodologies used by the Plan to measure investments at fair value, including an indication of the level in the fair value hierarchy in which each major category of investments is generally classified. Where appropriate, the description includes details of the valuation models and any significant assumptions. There have been no changes in the methodologies used and no transfers between fair value levels at December 31, 2012 and 2011.
Mutual Funds Investments in mutual funds are valued at quoted net asset values at year end.
Master Trust The plan has an undivided interest in the underlying assets of the Master Trust. Assets of the Master Trust are held in a stable value fund by INVESCO. The Master Trust primarily invests in wrapper contracts, or synthetic guaranteed investment contracts. See Note 5 for additional disclosures related to the Master Trust. The fair value of the underlying assets of the Master Trust were determined using a present value model and the principal inputs are discount rate, fee periods, fee invoice schedule, contract value, replacement cost and actual cost.

Capital Stock Investments in capital stock are valued at their quoted market price at year-end.

Common / collective trusts Investments in common / collective trusts are valued using the Net Asset Value (NAV) of units of a bank collective trust. The NAV, as provided by the trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV. Participant transactions (purchases and sales) may occur daily. Were the Plan to initiate a full redemption of the collective trust, the investment adviser reserves the right to temporarily delay withdrawal from the trust in order to ensure that securities liquidations will be carried out in an orderly business manner. These investments do not have any unfunded commitments as of December 31, 2012 and have a nominal redemption period.





9


As of December 31, 2012, the fair values of the Plan’s investments measured on a recurring basis are categorized as follows:
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Plan's interest in Kennametal Inc. Master Trust:
 
 
 
 
 
 
 

Synthetic guaranteed investment contracts
 
$
—

 
$
5,033,861

 
$
—

 
$
5,033,861

Money market fund
 
—

 
164,848

 
—

 
164,848

Mutual funds:
 
 
 
 
 
 
 
 
Growth funds
 
1,583,781

 
—

 
—

 
1,583,781

Value funds
 
1,212,956

 
—

 
—

 
1,212,956

Index funds
 
1,260,700

 
—

 
—

 
1,260,700

Fixed income funds
 
316,839

 
—

 
—

 
316,839

Common / collective trusts:
 
 
 
 
 
 
 
 
  Balanced funds *
 
—

 
2,933,072

 
—

 
2,933,072

Kennametal Inc. capital stock
 
2,261,911

 
—

 
—

 
2,261,911

Total investments
 
$
6,636,187

 
$
8,131,781

 
$
—

 
$
14,767,968


* Common / collective trusts consist of various JP Morgan investments. The investment strategies of these investments are detailed below
Common / collective trusts investment strategies
 
 
 
 
 
 
 
 
 

JP Morgan
JP Morgan
JP Morgan
JP Morgan
JP Morgan

SmartRetirement
SmartRetirement
SmartRetirement
SmartRetirement
SmartRetirement
Investment Holdings
2015 Fund
2020 Fund
2025 Fund
2030 Fund
2035 Fund
Domestic equity funds
23.4
%
26.5
%
29.7
%
33.4
%
34.5
%
International funds
20.5
%
24.4
%
27.6
%
30.6
%
33.0
%
Taxable fixed income
42.5
%
39.4
%
32.4
%
27.2
%
21.1
%
Specialty funds
10.1
%
6.9
%
7.2
%
5.1
%
7.3
%
Money market fund
1.8
%
1.7
%
1.9
%
2.0
%
2.4
%
U.S. Treasuries
0.8
%
0.9
%
1.2
%
1.7
%
1.7
%
Exchange-traded notes
0.9
%
0.2
%
—
%
—
%
—
%

100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Fair value as of December 31, 2012
$2,052,781
$288,919
$140,647
$238,634
$30,725
 
 
JP Morgan
JP Morgan
JP Morgan
JP Morgan
 
 
SmartRetirement
SmartRetirement
SmartRetirement
SmartRetirement
Investment Holdings
 
2040 Fund
2045 Fund
2050 Fund
Income Fund
Domestic equity funds
 
36.3
%
36.7
%
35.1
%
18.0
%
International funds
 
34.1
%
33.8
%
34.0
%
17.7
%
Taxable fixed income
 
19.2
%
18.8
%
18.8
%
41.5
%
Specialty funds
 
6.3
%
6.6
%
7.7
%
12.8
%
Money market fund
 
2.3
%
2.3
%
2.6
%
7.9
%
U.S. Treasuries
 
1.8
%
1.8
%
1.8
%
0.8
%
Exchange-traded notes
 
—
%
—
%
—
%
1.3
%


100.0
%
100.0
%
100.0
%
100.0
%
Fair value as of December 31, 2012
 
$26,662
$2,646
$0
$152,058

10


As of December 31, 2011, the fair values of the Plan’s investments measured on a recurring basis are categorized as follows:
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds:
 
 
 
 
 
 
 
 
Balanced funds
 
$
2,649,817

 
$
—

 
$
—

 
$
2,649,817

Growth funds
 
1,460,111

 
—

 
—

 
1,460,111

Value funds
 
1,121,529

 
—

 
—

 
1,121,529

Index funds
 
1,053,415

 
—

 
—

 
1,053,415

Fixed income funds
 
264,036

 
—

 
—

 
264,036

Plan's interest in Kennametal Inc. Master Trust:
 
 
 
 
 
 
 

Synthetic guaranteed investment contracts
 
—

 
4,813,989

 
—

 
4,813,989

Money market fund
 
—

 
349,186

 
—

 
349,186

Kennametal Inc. capital stock
 
2,269,992

 
—

 
—

 
2,269,992

Total investments
 
$
8,818,900

 
$
5,163,175

 
$
—

 
$
13,982,075


NOTE 4 - INVESTMENTS EXCEEDING FIVE PERCENT OF NET ASSETS
The fair values of individual investments that represent five percent or more of the Plan’s total net assets as of December 31 were as follows:
 
 
 
2012

 
2011

Stable Value Fund
 
$
5,198,709

 
$
5,163,175

Kennametal Inc. Capital Stock
 
2,261,911

 
2,269,992

JP Morgan SmartRetirement 2015 Fund
 
2,052,781

 
N/A
Vanguard Institutional Index Fund
 
1,250,149

 
1,045,680

Prudential Jennison Mid-Cap Growth Fund
 
1,135,655

 
N/A
Vanguard Equity Income Fund Admiral Shares
 
879,693

 
N/A
Fidelity Freedom 2015 Fund
 
N/A
 
1,888,670

MSIF MidCap Growth Portfolio
 
N/A
 
1,068,271

H&W LargeCap Value Fund
 
N/A
 
784,748

Investments shown as "N/A" were not offered as an option under the Plan as of December 31, 2012 or 2011, respectively.
NOTE 5 - MASTER TRUST
A portion of the Plan’s investments are held in a Master Trust, which was established for the investment of assets of the Plan and two other Company-sponsored defined contribution plans. Each plan has an undivided interest in the underlying assets of the Master Trust. The assets of the Master Trust are held in a stable value fund by INVESCO. Investment income relating to the Master Trust is allocated to the individual plans based upon average monthly balances invested by each plan. The underlying assets of the Master Trust include benefit-responsive investment contracts (the contracts).
The Master Trust’s key objectives are to provide preservation of principal, maintain a stable interest rate, and provide daily liquidity at contract value for participant withdrawals and transfers in accordance with the provisions of the Plan.

11


To accomplish the objectives described above, the Master Trust primarily invests in wrapper contracts, or synthetic guaranteed investment contracts (GICs). In wrapper contracts, the investments are owned and held by the Master Trust for Plan participants. The Trust purchases a wrapper contract from an insurance company or bank. The wrapper contract amortizes the realized and unrealized gains and losses on the underlying fixed-income investments, typically over the duration of the investments, through adjustments to the future interest-crediting rate, the rate earned by participants in the Master Trust for the underlying investments. The issuer of the wrapper contract provides assurance that the adjustment to the interest-crediting rate will not result in a future interest-crediting rate that is less than zero. An interest-crediting rate less than zero would result in a loss of principal or accrued interest.
The key factors that influence future interest-crediting rates for a wrapper contract include the level of market interest rates, the amount and timing of participant activity within the wrapper contract, the investment returns and the duration of the underlying investments. Most wrapper contracts use a formula based on the characteristics of the underlying fixed-income portfolio to determine a crediting rate. Over time, the crediting rate formula amortizes the Master Trust’s realized and unrealized market value gains and losses over the duration of the investments. The wrapper contracts’ interest-crediting rates are typically reset on a monthly or quarterly basis.
The average yield earned by the Plan based on actual earnings was 0.88% and 1.36% for the years ended December 31, 2012 and 2011, respectively. The average yield earned by the Plan based on the interest rate credited to participants was 2.34% and 2.87% for the years ended December 31, 2012 and 2011, respectively.
In certain circumstances, the amount withdrawn from the wrapper contract would be payable at fair value rather than at contract value. These events include termination of the Plan, a material adverse change to the provisions of the Plan, if the employer elects to withdraw from a contract in order to switch to a different investment provider, or if the terms of a successor plan do not meet the wrapper contract issuer’s underwriting criteria for issuance of a clone wrapper contract. Management believes that the events described above could result in the payment of benefits at fair value rather than contract value and are not probable of occurring in the foreseeable future.

12


Investments held by the Master Trust at December 31, 2012 were as follows:
 
Security
 
Issuer
Rating
 
Investments at
Fair Value
 
Adjustments to
Contract Value
 
Investments at
Contract Value
Wrapped Portfolios
 
 
 
 
 
 
 
 
Common Collective Trusts:
 
 
 
 
 
 
 
 
Pacific Life IGT INVESCO Multi-Mgr A or Better Interm. G/C Fund
 
A+/A1
 
23,102,264

 
(1,726,976
)
 
21,375,288

ING IGT INVESCO Multi-Mgr A or Better Interm. G/C Fund
 
A-/A3
 
23,096,358

 
(1,725,671
)
 
21,370,687

NATIXIS IGT INVESCO
Short Term Bond Fund
 
A/A2
 
$
22,221,178

 
$
(816,299
)
 
$
21,404,879

Prudential Insurance IGT INVESCO Short Term Bond Fund
 
AA-/A2
 
18,712,540

 
(693,737
)
 
18,018,803

Monumental IGT INVESCO Short Term Bond Fund
 
AA-/A1
 
17,161,278

 
(841,421
)
 
16,319,857

Monumental IGT Goldman Sachs Core A
 
AA-/A1
 
4,854,356

 
(238,010
)
 
4,616,346

Monumental IGT BlackRock A or Better Core Fixed Income Fund
 
AA-/A1
 
4,846,210

 
(237,611
)
 
4,608,599

Prudential Insurance IGT INVESCO A or Better Core Fixed Income Fund
 
AA-/A2
 
3,999,155

 
(148,262
)
 
3,850,893

Prudential Insurance IGT PIMCO A or Better Core Fixed Income Fund
 
AA-/A2
 
3,996,205

 
(148,153
)
 
3,848,052

Monumental IGT INVESCO A or Better Core Fixed Income Fund
 
AA-/A1
 
855,779

 
(41,959
)
 
813,820

Monumental IGT PIMCO A or Better Core Fixed Income Fund
 
AA-/A1
 
855,148

 
(41,928
)
 
813,220

Monumental Wrapper Contracts
 
AA-/A1
 
34,167

 
(1,675
)
 
32,492

Short Term Investments
 
 
 
 
 
 
 
 
Fidelity Money Market
 
N/A
 
4,052,029

 
—

 
4,052,029

Total
 
 
 
$
127,786,667

 
$
(6,661,702
)
 
$
121,124,965

At December 31, 2012, the Plan’s interest in the Master Trust was approximately 4 percent. Total investment income for the Master Trust was $3,068,566 for the year ended December 31, 2012. The investment income for the Master Trust is recorded in dividends and interest in the statement of changes in net assets available for benefits.

13


Investments held by the Master Trust at December 31, 2011 were as follows:
 
Security
 
Issuer
Rating
 
Investments at
Fair Value
 
Adjustments to
Contract Value
 
Investments at
Contract Value
Wrapped Portfolios
 
 
 
 
 
 
 
 
Common Collective Trusts:
 
 
 
 
 
 
 
 
Monumental IGT INVESCO
  Short Term Bond Fund
 
AA-/A1
 
$
24,732,887

 
$
(1,241,581
)
 
$
23,491,306

Pacific Life IGT INVESCO Multi-
  Mgr A or Better Interm. G/C Fund
 
A+/A1
 
22,292,377

 
(1,537,951
)
 
20,754,426

ING IGT INVESCO Multi-Mgr A
  or Better Interm. G/C Fund
 
A-/A3
 
22,258,267

 
(1,534,163
)
 
20,724,104

NATIXIS IGT INVESCO Short
  Term Bond Fund
 
A+/Aa3
 
21,739,113

 
(873,540
)
 
20,865,573

State Street IGT INVESCO Short Term Bond Fund
 
AA-/Aa2
 
15,377,692

 
(630,283
)
 
14,747,409

JP Morgan Chase IGT INVESCO
  Short Term Bond Fund
 
A+/Aa1
 
10,746,001

 
(472,884
)
 
10,273,117

JP Morgan Chase Wrapper Contracts
 
A+/Aa1
 
45,252

 
(1,991
)
 
43,261

Monumental Wrapper Contracts
 
AA-/A1
 
17,390

 
(873
)
 
16,517

Short Term Investments
 
 
 
 
 
 
 
 
Fidelity Money Market
 
N/A
 
8,501,832

 
—

 
8,501,832

Total
 
 
 
$
125,710,811

 
$
(6,293,266
)
 
$
119,417,545

At December 31, 2011, the Plan’s interest in the Master Trust was approximately 4 percent.
NOTE 6 - TAX STATUS
The Internal Revenue Service has determined and informed the Plan sponsor by a letter dated March 10, 2003, that the Plan and related trust are designed in accordance with the applicable sections of the IRC. Although the Plan has been amended since receiving the determination letter, the Plan administrator and the Plan’s tax counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC and therefore believe that the Plan is qualified and the related trust is tax-exempt.
U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely would not be sustained upon examination by taxing jurisdictions. The Plan is subject to routine audits by taxing jurisdictions; however there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2009.
NOTE 7 - PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions and to terminate the Plan at any time, subject to the provisions of ERISA and according to the terms of the collective bargaining agreement. In the event of Plan termination, participants would become 100 percent vested in their employer contributions.


14


NOTE 8 - RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits.
NOTE 9 - RELATED PARTY TRANSACTIONS
Certain investments of the Plan are managed by Fidelity Investments. The trustee of the Plan is Fidelity Management Trust Company and, therefore, these transactions qualify as party-in-interest transactions.
One of the investment fund options available to participants is capital stock of Kennametal Inc., the Plan sponsor. The Plan held 56,519 and 62,126 shares of Kennametal capital stock, or $2,261,911 and $2,269,992 at December 31, 2012 and 2011, respectively. As a result, transactions related to this investment fund qualify as party-in-interest transactions.


15


KENNAMETAL RETIREMENT INCOME SAVINGS PLAN
PLAN NUMBER: 015
EIN: 25-0900168
SCHEDULE H, LINE 4i
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2012
(a)
(b) Issuer
(c) Description
(d) Cost
(e) Fair Value
 
 
 
Mutual Funds
 
 
 
Vanguard
Vanguard Institutional Index Fund
N/A
$
1,250,149

 
Prudential
Prudential Jennison Mid-Cap Growth Fund
N/A
1,135,655

 
Vanguard
Vanguard Equity Income Fund Admiral Shares
N/A
879,693

 
Amercian Beacon
American Beacon Small Cap Value Institutional Fund
N/A
234,094


American Funds
American Funds EuroPacific Growth Fund
N/A
209,414

 
JP Morgan
JP Morgan Core Bond Fund
N/A
161,137

 
Vanguard
Vanguard Total Bond Market Index Signal
N/A
155,702


T. Rowe Price
T. Rowe Price Institutional Large Cap Growth Fund
N/A
137,986

 
Vanguard
Vanguard Selected Value Fund
N/A
99,169

 
Eagle
Eagle Small Cap Growth Fund
N/A
83,768


Vanguard
Vanguard Total International Stock
N/A
16,958

 
Vanguard
Vanguard Mid Capitalization Index Signal
N/A
10,551

 
 
Total Mutual Funds
 
4,374,276

 
 
 
 
 
 
 
Common / Collective Trusts
 
 
 
JP Morgan
JP Morgan SmartRetirement 2015 Fund
N/A
2,052,781

 
JP Morgan
JP Morgan SmartRetirement 2020 Fund
N/A
288,919

 
JP Morgan
JP Morgan SmartRetirement 2030 Fund
N/A
238,634

 
JP Morgan
JP Morgan SmartRetirement Income Fund
N/A
152,058

 
JP Morgan
JP Morgan SmartRetirement 2025 Fund
N/A
140,647

 
JP Morgan
JP Morgan SmartRetirement 2035 Fund
N/A
30,725

 
JP Morgan
JP Morgan SmartRetirement 2040 Fund
N/A
26,662

 
JP Morgan
JP Morgan SmartRetirement 2045 Fund
N/A
2,646

 
 
Total Common / Collective Trusts
 
2,933,072

 
 
 
 
 
 
 
Master Trust
 
 
 
INVESCO
Stable Value Fund
N/A
5,198,709

 
 
 
 
 
 
 
Kennametal Inc. Capital Stock
 
 
*
Kennametal
Kennametal Inc. Capital Stock
N/A
2,261,911

 
 
Total Investments
 
14,767,968

 
 
 
 
 
*
Notes receivable from participants
Maturities from 2013 to 2036, interest rates from 4.25% to 9.50%
N/A
337,028

 
 
Total
 
$
15,104,996

*
Party-in-interest, for which a statutory exemption exists.

16


SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934, the plan administrator of the Kennametal Retirement Income Savings Plan has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
KENNAMETAL RETIREMENT INCOME SAVINGS PLAN
 
 
 
 
Date: June 21, 2013
 
 
 
By:
 
/s/ John Bielinski
 
 
 
 
 
 
John Bielinski
 
 
 
 
 
 
Plan Administrator

17