Allegheny Technologies' Third Quarter Net Income Doubles Compared to Year-Ago Period.Business Editors PITTSBURGH--(BUSINESS WIRE)--Oct. 17, 2000 Allegheny Technologies Allegheny Technologies, Inc. NYSE: ATI is a specialty metals company headquartered in Pittsburgh, Pennsylvania, USA. It is the 17th largest employer in Allegheny County and one of the last "steel" companies with its headquarters in "The Steel City" and major manufacturing Incorporated (NYSE NYSE See: New York Stock Exchange :ATI (ATI Technologies Inc., Markham Ontario, http://ati.amd.com) A leading manufacturer of graphics chips and display adapters. Founded in 1985 by K. Y. Ho, Benny Lau and Lee Lau, ATI chips and boards are widely used by OEMs. ) Third quarter 2000 highlights from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the compared to third quarter 1999: - Safety improvement exceeded 30% - Revenues increased 9% - Net income increased 101% - Earnings per share increased 148% - Flat-Rolled Products segment operating profit increased 166% - High Performance Metals segment operating profit increased 47% - Industrial Products segment operating profit increased 161% Other third quarter 2000 key points: - Price increases announced for nickel-based and titanium titanium (tītā`nēəm, tĭ–) [from Titan], metallic chemical element; symbol Ti; at. no. 22; at. wt. 47.88; m.p. 1,675°C;; b.p. 3,260°C;; sp. gr. 4.54 at 20°C;; valence +2, +3, or +4. products, super stainless, specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. and silicon electrical steels - Prices declined for certain stainless steel stainless steel: see steel. stainless steel Any of a family of alloy steels usually containing 10–30% chromium. The presence of chromium, together with low carbon content, gives remarkable resistance to corrosion and heat. commodity products - Share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program authorization The right or permission to use a system resource; the process of granting access. See access control. expanded by 5 million shares to 25 million total authorization - $24 million in cost reductions achieved Allegheny Technologies Incorporated (NYSE:ATI) reported net income from continuing operations of $42.1 million, or $0.52 per share, on sales of $612.0 million for the third quarter ended September September: see month. 30, 2000. During the same period in 1999, net income from continuing operations was $20.9 million, or $0.21 per share, on sales of $562.5 million.
Three Months Ended Nine Months Ended
Continuing Operations September 30 September 30
--------------------- ------------------ -----------------
Millions of Dollars
2000 1999 2000 1999
---- ---- ---- ----
Sales $ 612.0 $ 562.5 $1,875.7 $1,720.7
Net income before
special items and
extraordinary gains
42.1 20.9 122.1 97.9
Special items, after tax -- -- 5.0 --
Extraordinary gains,
after tax -- 129.6 -- 129.6
-------- -------- ------- -------
Net income $ 42.1 $ 150.5 $ 127.1 $ 227.5
Dollars per Diluted Share
Before special items
and extraordinary gains $0.52 $0.21 $1.46 $1.01
Special items -- -- 0.06 --
Extraordinary gains -- 1.36 -- 1.34
-------- -------- ------- -------
Net income $ 0.52 $ 1.57 $ 1.52 $ 2.35
For the nine months ended September 30, 2000, net income from continuing operations before extraordinary gains was $127.1 million, or $1.52 per share, on sales of $1,875.7 million compared to 1999 nine months net income from continuing operations before extraordinary gains of $97.9 million, or $1.01 per share, on sales of $1,720.7 million. Earnings for the first nine months of 2000 benefited from net special items of $5.0 million, or $0.06 per share. Net income in the 1999 periods included $129.6 million of extraordinary gains on the sales of certain businesses. "The third quarter 2000 performance reflects the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of revised raw materials surcharges and continued emphasis on cost reductions," said Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs A. Corcoran Background Corcoran. Spelling variations include: MacCorcoran, O'Corcoran,Corcorran and others. The Irish surname Corcoran is derived from the Gaelic word Corcair, now used to denote purple but formerly meaning ruddy, or 'of reddish complexion'. , chairman, president and chief executive officer. "Additionally, we saw the positive effect of our diversified diversified (di·verˑ·s markets and product mix with the High Performance Metal segment performing especially well. We also improved safety performance by more than 30 percent. "In the Flat-Rolled Products segment, demand remains solid for our non-commodity stainless steel products, particularly for our high-value, high-growth Precision Rolled Strip(R) products. The segment performed well in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite difficult conditions for some commodity stainless steel products. In our High Performance Metals segment, orders for aerospace products improved as the market rebounded and inventories corrected. The oil and gas markets continue to improve and the power generation and biomedical bi·o·med·i·cal adj. 1. Of or relating to biomedicine. 2. Of, relating to, or involving biological, medical, and physical sciences. markets remain very strong. "Capitalizing on strength in certain markets, Allegheny Technologies announced several price increases during the third quarter. In the Flat-Rolled Products segment, we announced price increases for super stainless steel, nickel-based products, commercially pure titanium products and silicon electrical steel Electrical steel, also called lamination steel, silicon electrical steel, silicon steel or transformer steel, is specialty steel tailored to produce certain magnetic properties, such as a small hysteresis area (small energy dissipation per cycle, or low . In the High Performance Metals segment, price increases were announced for nickel-based, titanium, and specialty steel products. While the price increases should have some impact on performance this year, we expect greater benefit in 2001. "Looking ahead, we expect to continue to benefit from our diversified markets and product mix and our continued emphasis on cost reduction. However, we are concerned that the economy may be slowing. We expect the difficult conditions for commodity stainless steel to continue, and we are concerned about higher energy costs. In spite of these issues, at this point, we believe the analysts' consensus estimate for 2000 of $1.94 per share, before special items and extraordinary gains, is achievable." Operational Excellence "In safety, our OSHA OSHA n. Occupational Safety and Health Administration, a branch of the US Department of Labor responsible for establishing and enforcing safety and health standards in the workplace. Total Recordable Incident Rate improved by 34 percent and our Lost Workday Case Rate improved by 39 percent as compared to 1999. This performance exceeds our 25 percent safety improvement target for 2000. In addition, $24 million in cost reductions were realized during the third quarter, increasing year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. cost reductions to $70 million. We're we're Contraction of we are. we're we are on track to achieve our $90 million cost reduction program in 2000." Flat-Rolled Products Third quarter 2000 operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. grew 166 percent to $31.6 million from $11.9 million in the same year-ago period in spite of higher raw materials costs in the third quarter 2000 compared to the same period last year. Sales grew 9 percent to $354.8 million compared to the prior year period. Third quarter revenue and operating profit benefited from revised raw material surcharge An overcharge or additional cost. A surcharge is an added liability imposed on something that is already due, such as a tax on tax. It also refers to the penalty a court can impose on a fiduciary for breaching a duty. base levels, an improved product mix and cost reductions. Comparing the 2000 third quarter with the same year-ago period, the average price per ton increased 23 percent to $2,392 from $1,940 in the 1999 third quarter, reflecting higher surcharge revenues and an improved product mix. Total strip, Precision Rolled Strip, super stainless steel, nickel-alloy, and titanium product shipments grew by 10 percent in the 2000 third quarter, substantially replacing lower margin semi-finished products. In the 1999 third quarter, 15,300 tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. of semi-finished products were shipped. Total finished shipments in the third quarter 2000 were 3 percent lower at 148,200 tons compared to 152,800 tons in the year-ago period. During the third quarter 2000, price increases ranging from 4 to 7 percent were announced for flat-rolled super stainless steel, nickel-based products, and commercially pure titanium products as well as silicon electrical steel. These price increases are expected to primarily benefit 2001 performance. High Performance Metals Third quarter 2000 operating profit increased 47 percent to $24.2 million from $16.5 million in the same year-ago period. Sales of $187.4 million improved nearly 11 percent compared to the prior year period. Shipments continued to be strong for the growing markets for electrical power generation turbines and biomedical products. In the third quarter 2000, orders improved from the aerospace and the oil and gas markets. Both markets were weak during the 1999 third quarter. In addition, shipments were strong for very high-value products such as niobium-titanium Niobium-titanium (NbTi) is an alloy of niobium and titanium, used industrially as a type II superconductor wire for superconducting magnets. It can not withstand as high magnetic field intensity as the more expensive niobium-tin, but for most applications it is alloys This is a list of alloys for which an article exists in Wikipedia (or is proposed but not yet written). They are grouped by base metal, in order of increasing atomic number. Within these headings they are in no particular order. , nickel-titanium shape memory alloys Shape memory alloys A group of metallic materials that can return to some previously defined shape or size when subjected to the appropriate thermal procedure. , nickel-titanium super-elastic alloys and hafnium hafnium (hăf`nēəm), metallic chemical element; symbol Hf; at. no. 72; at. wt. 178.49; m.p. about 2,227°C;; b.p. 4,602°C;; sp. gr. 13.31 at 20°C;; valence +4. alloys. During the third quarter, price increases ranging from 8 to 10 percent were announced for nickel-based, titanium, and specialty steel products. Due to normal long lead times for these products, particularly in aerospace alloys, these price increases are expected to primarily benefit 2001 performance. Industrial Products Third quarter 2000 operating profit grew 161 percent to $4.7 million from $1.8 million in the same 1999 period. Operating profit in the third quarter 1999 included $2.1 million in costs related to a workforce reduction at Metalworking Products. Segment sales grew by 4 percent to $69.8 million compared to the prior year. Sales and operating profit at Metalworking Products improved compared to the 1999 same period due to better industrial demand and cost savings, including workforce reductions. Other Comments Corporate expenses for the third quarter 2000 decreased to $6.6 million from $10.8 million in the year ago period due to continued cost controls, including 21 percent fewer corporate employees. Net interest expense increased to $11.0 million for the third quarter 2000 from $2.3 million in the prior year primarily due to share repurchases. Excess pension income increased to $27.3 million in the third quarter 2000 compared to $16.2 million in the same 1999 period due to higher pension assets as a result of strong investment performance during 1999. Excess pension income increased by $4.6 million in the 2000 third quarter compared to the 2000 second quarter reflecting reduced post-retirement benefit liabilities. During the third quarter of 2000, the company repurchased 1.1 million shares of its stock at a cost of $21.6 million. From the inception INCEPTION. The commencement; the beginning. In making a will, for example, the writing is its inception. 3 Co. 31 b; Plowd. 343. Vide Consummation; Progression. of the share repurchase program in October October: see month. 1998 through October 16, 2000, the company has repurchased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 19.7 million shares at a cost of $517.1 million, reducing shares outstanding by 20 percent. In September 2000, the company's Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a 5 million share increase in the stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program, bringing the total authorization to 25 million shares. Based on September 30, 2000 annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. performance, return on capital employed Return on capital employed (ROCE) Indicator of profitability of the firm's capital investments. Determined by dividing Earnings Before Interest and Taxes by (capital employed plus short-term loans minus intangible assets). before special items was 11.0 percent and return on stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. before special items was 14.4 percent. For the twelve-month period ending September 30, 2000, return on capital employed before special items was 9.2 percent, and return on stockholders' equity before special items was 11.5 percent. For the nine months ended September 30, 2000, cash flow from operating activities before the effect of businesses sold in 1999 was $57.0 million compared to $119.9 million for the comparable period in 1999. This decrease is primarily due to higher working capital and increased net pension income as of September 30, 2000, which more than offset the increase in net income from continuing operations before extraordinary gains. Net debt as a percent of total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. increased to 34.6 percent at September 30, 2000 from 15.5 percent one year ago, primarily due to share repurchases. Comparative data by business segments for the third quarter and nine months ended September 30, 2000 is contained in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. statements. Net income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for the third quarter and nine months ended September 30, 2000, reflected on the Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Income, represents income from operations that were spun off or sold in 1999. Allegheny Technologies will conduct a conference call with investors and analysts on October 17, 2000 at 10 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT to discuss the earnings news release. The conference call will be broadcast live on www.alleghenytechnologies.com. To access the broadcast, click on "Third Quarter Conference Call". In addition, the conference call will be available through Investor Broadcast Networks' Vcall website, located at www.vcall.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. including those related to anticipated business, economic and market conditions, operational actions taken to respond to market conditions, increased sales and earnings, financial performance and growth, prices, price increases and the effect of price increases on performance, product demand, raw material costs, cost reductions, working capital, cash flow and potential repurchases of company stock. Such forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which the company is unable to predict or control, that may cause the company's actual results or performance to materially differ from any future results or performance expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by such statements. Additional information concerning factors that could cause actual results to differ materially from those projected in the forward-looking statements is contained in the company's filings with the Securities and Exchange Commission, including its Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 1999 and its Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June June: see month. 30, 2000. Allegheny Technologies Incorporated (NYSE:ATI) is one of the largest and most diversified producers of specialty materials in the world. Our talented people use innovative technologies to offer growing global markets a wide range of specialty materials including stainless steel, nickel-based and cobalt-based alloys and superalloys, titanium and titanium alloys Titanium alloys are metallic materials which contain a mixture of titanium and other chemical elements. Such alloys have very high tensile strength and toughness (even at extreme temperatures), light weight, extraordinary corrosion resistance, and ability to withstand extreme , specialty steel alloys, zirconium zirconium (zərkō`nēəm), metallic chemical element; symbol Zr; at. no. 40; at. wt. 91.22; m.p. about 1,852°C;; b.p. 4,377°C;; sp. gr. 6.5 at 20°C;; valence +2, +3, or +4. and related alloys, and tungsten-based specialty materials. Our goal is to be the low cost, high quality supplier to global markets. Allegheny Allegheny (ăl`əgā'nē, ăl`əgä'nē), river, 325 mi (523 km) long, rising in N central Pa., and flowing NW into N.Y., then SW through Pa. Technologies' website can be found at http://www.alleghenytechnologies.com.
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Statements of Income
(Unaudited - In millions except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
Sales $612.0 $562.5 $1,875.7 $1,720.7
Costs and expenses:
Cost of sales 490.5 471.3 1,516.0 1,392.6
Selling and administrative
expenses 45.0 56.7 149.0 159.1
Interest expense, net 11.0 2.3 25.3 19.7
------ ------ ------ ------
Earnings before other
income 65.5 32.2 185.4 149.3
Other income, net 0.8 0.4 14.7 3.6
------ ------ ------ ------
Income from continuing
operations before taxes
and extraordinary gains 66.3 32.6 200.1 152.9
Provision for income
taxes 24.2 11.7 73.0 55.0
------ ------ ------ ------
Income from continuing
operations before
extraordinary gains 42.1 20.9 127.1 97.9
Income from discontinued
operations, net of tax - 17.1 - 58.0
Extraordinary gains on
sales of operations, net
of tax - 129.6 - 129.6
------ ------ ------ ------
Net income $42.1 $167.6 $127.1 $285.5
------ ------ ------ ------
------ ------ ------ ------
Basic net income per common share:
Income from continuing
operations before
extraordinary gains $0.52 $0.22 $1.52 $1.02
Income from discontinued
operations - 0.18 - 0.60
Extraordinary gains - 1.36 - 1.35
------ ------ ------ ------
Basic net income per
common share $0.52 $1.76 $1.52 $2.97
------ ------ ------ ------
------ ------ ------ ------
Weighted average
common shares
outstanding - basic 81.2 95.3 83.8 96.3
Diluted net income per common share:
Income from continuing
operations before
extraordinary gains $0.52 $0.21 $1.52 $1.01
Income from discontinued
operations - 0.18 - 0.60
Extraordinary gains - 1.36 - 1.34
------ ------ ------ ------
Diluted net income per
common share $0.52 $1.75 $1.52 $2.95
------ ------ ------ ------
------ ------ ------ ------
Weighted average
common shares
outstanding - diluted 81.3 95.7 83.9 96.8
Actual common shares
outstanding - end of
quarter 80.7 94.5 80.7 94.5
Allegheny Technologies Incorporated and Subsidiaries
Sales and Operating Profit by Business Segment
(Unaudited - In millions of dollars)
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
Sales:
Flat-Rolled Products $ 354.8 $ 326.4 $ 1,112.1 $ 957.3
High Performance Metals 187.4 169.1 550.8 549.4
Industrial Products 69.8 67.0 212.8 214.0
------- ------- ------- -------
Total Sales $ 612.0 $ 562.5 $ 1,875.7 $ 1,720.7
------- ------- ------- -------
Operating Profit:
Flat-Rolled Products $ 31.6 $ 11.9 $ 100.6 $ 73.8
Operating Profit as a
% of Sales 8.9% 3.6% 9.0% 7.7%
High Performance Metals 24.2 16.5 55.9 65.7
Operating Profit as a
% of Sales 12.9% 9.8% 10.1% 12.0%
Industrial Products 4.7 1.8 18.7 10.2
Operating Profit as a
% of Sales 6.7% 2.7% 8.8% 4.8%
------- ------- ------- -------
Operating Profit $ 60.5 $ 30.2 $ 175.2 $ 149.7
Operating Profit as a
% of Sales 9.9% 5.4% 9.3% 8.7%
Corporate expenses (6.6) (10.8) (22.5) (27.8)
Interest expense, net (11.0) (2.3) (25.3) (19.7)
Gains on asset sales
and other (3.9) (0.7) 0.1 5.2
Excess pension income 27.3 16.2 72.6 45.5
------- ------- ------- -------
Income from continuing
operations before
income taxes and
extraordinary gains $ 66.3 $ 32.6 $ 200.1 $ 152.9
------- ------- ------- -------
------- ------- ------- -------
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Balance Sheets
(Current period unaudited - in millions of dollars)
September 30, 2000 December 31, 1999
------------------ -----------------
Assets
Current Assets:
Cash $ 43.6 $ 50.7
Receivables 345.0 341.2
Inventories 608.5 558.3
Deferred income taxes and other 78.6 83.3
-------- --------
Total current assets 1,075.7 1,033.5
Property and equipment 898.9 912.4
Prepaid pension cost 600.5 503.7
Other assets 286.8 301.0
-------- --------
Total Assets $2,861.9 $2,750.6
-------- --------
-------- --------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 165.4 $ 172.9
Accrued liabilities 190.6 214.4
ST debt and current portion
of LT debt 6.1 152.7
-------- --------
Total current liabilities 362.1 540.0
Long-term debt 599.9 200.3
Accrued postretirement benefits 530.2 544.8
Deferred income taxes and other 306.4 265.3
-------- --------
1,798.6 1,550.4
-------- --------
Total stockholders' equity 1,063.3 1,200.2
-------- --------
Total Liabilities and
Stockholders' Equity $2,861.9 $2,750.6
-------- --------
-------- --------
Consolidated Statements of Cash Flows
(Unaudited -in millions of dollars)
Nine Months Ended
September 30, 2000 September 30, 1999
------------------ ------------------
Cash provided by operating
activities before effect
of businesses sold in
1999 (including depreciation
and amortization of $75.6 and
$71.5, respectively) $ 57.0 $ 119.9
Cash effect from businesses
sold in 1999 (6.3) 57.0
--------- ---------
Net cash provided by operating
activities 50.7 176.9
Cash used in investing
activities (57.3) (53.6)
Cash used in financing
activities (0.5) (432.2)
Cash provided by disposed
operations - 283.7
--------- ---------
Decrease in cash and cash
equivalents (7.1) (25.2)
Cash and cash equivalents at
beginning of period 50.7 74.2
--------- ---------
Cash and cash equivalents at
end of period $ 43.6 $ 49.0
--------- ---------
--------- ---------
Allegheny Technologies Incorporated and Subsidiaries
Selected Financial Data
(Unaudited)
Three Months Ended
September 30, 2000 September 30, 1999 Change
------------------ ------------------ ------
Volume:
Flat-Rolled
Products (tons) 148,325 168,181 (12%)
High Performance
Metals - nickel-based
and specialty steel
alloys (000's lbs.) 11,147 10,709 4%
High Performance
Metals - titanium
mill products
(000's lbs.) 6,110 5,352 14%
High Performance
Metals - zirconium
and related alloys
(000's lbs.) 1,014 793 28%
Average Prices:
Flat-Rolled
Products (per ton) $ 2,392 $1,940 23%
High Performance
Metals - nickel-based
and specialty
steel alloys (per lb.) $ 5.92 $ 5.84 1%
High Performance
Metals - titanium
mill products
(per lb.) $ 10.78 $11.76 (8%)
High Performance
Metals - zirconium
and related alloys
(per lb.) $ 37.07 $35.34 5%
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