8 GROWTH Over the past three years we have increased our competitive strengths and laid the foundation for sustained profitable growth.  We are committed to growing faster than our markets and to that end are cultivating a passionate mindset and culture of growth. The Kennametal Lean Enterprise,  and continued development of our people, will help provide the resources, skills and vision to support our sustained growth efforts. Through innovation in core and adjacent markets We have consistently noted that we will grow both organically and through disciplined acquisition. Organically, innovation will continue to underpin the expansion of sales in our current core markets as well as leverage our expertise into adjacent markets. In fiscal 2003 innovation through new product development is expected to deliver our target of 40 percent of sales from new products. These efforts will be strongly complemented by the highly strategic acquisition of Widia, with leading metalworking brands in Europe and India.  In an industry where R&D, market reach and scale are increasingly important, obtaining Widia was pivotal to securing our position as a leader in the metalworking global marketplace. Widia fits precisely in our core metalworking business as a very similar, familiar business that we understand and know how to manage. Like Kennametal, this business has strong brands with a long history of success, a strong focus on new product development (37 percent of sales), and engineered products in addition to metalworking. Widia also strategically complements our current geographic strengths. Our geographic exposure  is now better balanced, with our metalworking sales now split 50/50 domestic/international, from 65/35. In addition to enhancing our European presence, it makes us the market leader in the fast growing, emerging market economy of India. Importantly, Widia India’s domestic platform will serve as a launch pad for global expansion, especially into non-Japan Asia, with India’s cost-effective manufacturing supporting global growth. In addition, we will benefit from India’s highly skilled, cost- effective professionals to support our increased engineering and product development efforts. We look forward to partnering with Widia customers, including Hero Honda in India (pictured), to deliver increased value. In addition to Widia, we are making minority investments in emerging new material companies to gain access to adjacent markets that could fuel accelerated growth in the future.