Allegheny Technologies Announces First Quarter Results.Business Editors PITTSBURGH--(BUSINESS WIRE)--April 21, 2004 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. ): -- Sales increased 20% compared to the first quarter 2003 -- First quarter loss of $50.4 million, or $0.63 per share, includes a LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack inventory valuation reserve increase of $48.1 million related to significantly higher raw materials costs -- Cost reductions, before the effects of inflation, totaled $26.6 million in the first quarter 2004 Allegheny Technologies Incorporated (NYSE:ATI) reported a net loss of $50.4 million, or $0.63 per share, on sales of $577.8 million for the first quarter ended March 31, 2004. Results included a LIFO (last-in, first-out last-in, first-out n. A method of inventory accounting in which the most recently acquired items are assumed to have been the first sold. In a period of rising prices, this method yields a lower ending inventory, a higher cost of goods sold, a lower ) inventory valuation reserve increase of $48.1 million, primarily due to the effects of rapidly rising raw materials costs, which increased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 30% in the first quarter 2004 compared to the fourth quarter 2003. Retirement benefit expense, primarily non-cash, was $36.0 million, or $0.45 per share, in the quarter. First quarter 2004 results do not include an income tax benefit as a result of a deferred tax valuation allowance recorded in the fourth quarter 2003. In the first quarter 2003, ATI reported a net loss before the cumulative effect of a change in accounting principle of $25.8 million, or $0.32 per share, on sales of $480.5 million. First quarter 2003 results included a LIFO inventory valuation reserve increase of $3.0 million and retirement benefit expense, primarily non-cash, of $34.8 million, or $0.28 per share. First quarter 2003 results included an income tax benefit of $14.2 million, or $0.18 per share. "We saw the first signs of real strength in market demand for many of our products during the first quarter 2004. Strong demand is continuing in the second quarter, and we are currently booking orders into the third quarter," said Pat Hassey, ATI's President and Chief Executive Officer. "Compared to the first quarter 2003, Flat-Rolled Products segment sales increased 28%, High Performance Metals segment sales increased 11% and Engineered Products segment sales increased 12%. "In our Flat-Rolled Products segment, demand from a variety of markets improved, particularly for our high-value products such as strip, Precision Rolled Strip(R), nickel alloys Noun 1. nickel alloy - an alloy whose main constituent is nickel nickel-base alloy alloy, metal - a mixture containing two or more metallic elements or metallic and nonmetallic elements usually fused together or dissolving into each other when molten; "brass , 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. steel 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. During the first quarter, flat-rolled products base-selling prices began to recover from historical lows. The 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 cold-rolled sheet base-selling price, which excludes the impact of raw material surcharges, increased by over 10% from the historical low price in December December: see month. 2003. Price increases along with 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. revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. have been effective in helping to offset rapidly rising raw materials costs on a cash basis. "In our High Performance Metals segment, demand for our nickel-based superalloys and premium 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 improved. We saw more stable inventory in the supply chain, improving demand for spare parts Spare parts, also referred to as Service Parts is a term used to indicate extra parts available and in proximity to the mechanical item, such as a automobile, boat, engine, for which they might be used. Spare parts are also called “spares. from the commercial aerospace market, and continued strong demand from the military aerospace market. Our exotic exotic not native, not indigenous. 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. business continued to perform well. Demand remained strong from the government market, super-conducting applications for the high energy physics market and corrosion markets, such as chemical processing, particularly in Asia. "Our newly expanded state-of-the-art long products rolling mill rolling mill: see steel. began production in April on budget and on schedule. This advanced rolling mill, located in Richburg, South Carolina Richburg is a town in Chester County, South Carolina, United States. The population was 332 at the 2000 census. Geography Richburg is located at (34.717374, -81.019635)GR1. , provides enhanced technological capabilities enabling ATI to grow our high performance metals business. "Sales in our Engineered Products segment increased as a result of improved demand from several key markets, as well as a pickup Pickup A gain in yield made by selling one bond and buying another. Also referred to as "yield pickup." Notes: When the present yield is relatively low compared to the longer-term yields, pickups will be done by investors trying to increase the yield and duration of their in overall manufacturing demand. "The ATI Business System is driving lean manufacturing Lean manufacturing is the production of goods using less of everything compared to mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. , quality improvement and cost reductions throughout the Company. For example, even though raw materials costs rose rapidly during the first quarter, managed working capital as a percent of 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. sales decreased to approximately 26% at the end of the quarter compared to nearly 31% at the end of 2003. We also achieved nearly $27 million of cost reductions, before the effects of inflation, in the first quarter 2004. We are on track to achieve our $104 million cost reduction goal for 2004. "We are continuing discussions with the United Steelworkers United Steelworkers (USW) historic labour union representing workers in steel, aluminum, and other metallurgical industries for much of the 20th century. In the U.S. of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. ways to "fix" our stainless steel business and better secure a strong future for 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. Ludlum and its employees. "We continue to make progress toward completing the previously announced acquisition of substantially all of the assets of J&L Specialty Steel, which remains subject to certain closing conditions. This acquisition is expected to complement and enhance our competitive position in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. flat-rolled stainless steel market. It maintains historical domestic capacity and keeps significant J&L equipment in production. "As the second quarter 2004 begins, we see improving market conditions across most of our businesses. In addition, we are beginning to see less volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the for some of the key raw materials that we use. If these trends continue, we expect to see gradual The Gradual (Latin: graduale, sometimes called the Grail) is a chant in the extraordinary form of the Roman Catholic Mass, sung after the reading or singing of the Epistle and before the Alleluia, or, during penitential seasons, before the Tract. improvement in earnings per share through the remainder of 2004."
Three Months Ended
March 31
In Millions
-------------------------
2004 2003
----------- ------------
Sales $577.8 $480.5
Loss before income taxes (50.4) (40.0)
Net loss before the cumulative
effect of change in accounting
principle (50.4) (25.8)
Cumulative effect of change
in accounting principle - (1.3)
----------- ------------
Net loss $(50.4) $(27.1)
Per Diluted Share
-------------------------
Net loss before the cumulative
effect of change in accounting
principle $(0.63) $(0.32)
Cumulative effect of change
in accounting principle - (0.02)
----------- ------------
Net loss $(0.63) $(0.34)
First Quarter 2004 Financial Highlights -- Sales were $577.8 million, up 20% compared to the first quarter 2003. Sales were up 28% in the Flat-Rolled Products segment, 11% in the High Performance Metals segment, and 12% in the Engineered Products segment. During the quarter, we increased base-selling prices for most of our products and implemented additional surcharges for certain raw materials for many of our products. -- Loss before taxes was $50.4 million, compared to last year's pretax loss pretax loss A loss reported before tax benefits are considered. of $40.0 million. Results for 2004 included a LIFO inventory valuation reserve increase of $48.1 million, due to an approximately 30% increase in costs in the first quarter 2004 compared to the fourth quarter 2003 for the major raw materials that we use. For the same 2003 period, the increase to the LIFO inventory valuation reserve was $3.0 million. -- Retirement benefit expense in the first quarter 2004 was $36.0 million compared to $34.8 million in the first quarter 2003. Approximately 82% of the 2004 retirement benefit expense is non-cash. -- Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was a negative $0.2 million in the first quarter 2004 due primarily to a $63.1 million increase in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying during the quarter, as well as higher gross inventory levels, which were partially offset by increased accounts payable. The higher accounts receivable resulted from increased sales, including the effects of raw material surcharges. Capital expenditures were $12.1 million. Cash on-hand ended the quarter at $67.3 million, $12.3 million lower than year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2003. We had no borrowings outstanding under our secured credit facility during the first quarter 2004. -- Cost reductions, before the effects of inflation, totaled $26.6 million company-wide. Our 2004 cost reduction goal is $104 million. Flat-Rolled Products Segment Market Conditions -- Demand improved from capital goods Capital Goods Any goods used by an organization to produce other goods. Notes: Examples of capital goods include office buildings, equipment, and machinery. See also: Capital Expenditure, Disinvestment Capital goods markets while demand from automotive and other consumer durables Consumer durables Consumer products that are expected to last three years or more, such as an automobile or a home appliance. consumer durables See durable goods. markets remained good. Raw material surcharges, which continued to escalate es·ca·late v. es·ca·lat·ed, es·ca·lat·ing, es·ca·lates v.tr. To increase, enlarge, or intensify: escalated the hostilities in the Persian Gulf. v.intr. during the quarter due to rising raw material prices, combined with higher base selling prices, resulted in higher average transaction prices compared to the first quarter 2003. First quarter 2004 compared to first quarter 2003 -- Sales increased 28% to $329.6 million primarily due to improved demand from capital goods markets, and the impact of higher raw material surcharges and base-selling price increases. Total 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. shipped increased 5%. Shipments of commodity products increased 4% and shipments of high-value products increased 7%. Average transaction prices, which include surcharges, were 22% higher. Average base-selling prices, which exclude surcharges, increased by approximately 3%. -- The segment had an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $11.0 million compared to an operating loss of $1.3 million last year. Higher raw material costs, which resulted in a LIFO inventory valuation reserve increase of $37.6 million in the first quarter 2004, offset the benefits of additional surcharges, higher base-selling prices and cost reduction initiatives. The 2003 first quarter included a LIFO inventory valuation reserve increase of $3.9 million. -- Energy costs increased $2.4 million, net of $0.4 million in gains from natural gas derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. . -- Results benefited from $13 million in cost reductions, before the effects of inflation. High Performance Metals Segment Market Conditions -- Demand for nickel-based superalloys and titanium alloys improved as the commercial aerospace supply chain was stable. Demand improved for spare parts from the commercial aerospace market and remained strong from the military aerospace market. Our exotic alloys business continued to benefit from sustained high demand from government and high energy physics markets and corrosion markets, particularly in Asia. First quarter 2004 compared to first quarter 2003 -- Sales increased 11% to $178.7 million. Shipments were up 3% for nickel-based and specialty steel alloys, 9% for titanium alloys and 27% for exotic alloys. -- 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. declined to $7.9 million compared to an operating profit of $8.3 million as the impact of higher raw material costs offset increased sales and the benefits of cost reduction initiatives. The rise in raw material costs resulted in a LIFO inventory valuation reserve increase of $8.6 million in 2004, compared to $1.0 million in 2003. -- Results benefited from $10 million of cost reductions, before the effects of inflation. Engineered Products Segment Market Conditions -- Demand for tungsten tungsten (tŭng`stən) [Swed.,=heavy stone], metallic chemical element; symbol W; at. no. 74; at. wt. 183.85; m.p. about 3,410°C;; b.p. 5,660°C;; sp. gr. 19.3 at 20°C;; valence +2, +3, +4, +5, or +6. products remained strong from the oil and gas market and demand improved for tungsten carbide tungsten carbide n. An extremely hard, fine gray powder whose composition is WC, used in tools, dies, wear-resistant machine parts, and abrasives. products and cutting tools due to a pickup in overall manufacturing activity. Demand improved considerably for forged forge 1 n. 1. A furnace or hearth where metals are heated or wrought; a smithy. 2. A workshop where pig iron is transformed into wrought iron. v. products from the Class 8 truck market and for cast products from the improving manufacturing sector and transportation and wind energy markets. First quarter 2004 compared to first quarter 2003 -- Sales improved 12% to $69.5 million. -- Operating profit improved to $3.8 million compared to $1.8 million last year due to higher sales volumes, improved pricing, and the benefits from cost reductions, which offset higher raw material costs. The rise in raw material costs resulted in an increase to the LIFO inventory valuation reserve of $1.9 million in 2004 compared to a decrease of $1.9 million in 2003. -- Results benefited from $2 million of cost reductions, before the effects of inflation. Retirement Benefit Expense -- Retirement benefit expense was $36.0 million in the first quarter 2004, compared to $34.8 million in the first quarter 2003. Approximately $29.7 million of the first quarter 2004 retirement benefit expense was non-cash. -- The 2004 retirement benefit expense does not include the expected favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact on our postretirement medical expense from the enactment of the Federal Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. prescription drug prescription drug Prescription medication Pharmacology An FDA-approved drug which must, by federal law or regulation, be dispensed only pursuant to a prescription–eg, finished dose form and active ingredients subject to the provisos of the Federal Food, Drug, benefit program in December 2003, pending final authoritative accounting guidance regarding how the benefit is to be recognized in the financial statements. -- For the first quarter 2004, retirement benefit expense increased cost of sales by $27.6 million, and selling and administrative expenses by $8.4 million. For the first quarter 2003, retirement benefit expense increased cost of sales by $24.4 million, and selling and administrative expenses by $10.4 million. -- ATI is not required to make cash contributions to its defined benefit pension plan for 2004 and, based upon current actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin studies, does not expect to be required to make cash contributions to its defined benefit pension plan during the next several years. Other Expenses -- Corporate expenses for the first quarter 2004 were $5.6 million compared to $4.8 million in the year-ago period. This increase is due primarily to non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) associated with the Company's stock-based long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. incentive compensation program, which offset savings associated with reductions in staffing and other efforts to control costs at the corporate office. -- Excluding the effects of retirement benefit expense and non-cash stock-based compensation expense, selling and administrative expenses as a percentage of sales declined to 7.3% in the 2004 first quarter from 8.6% in the same period of 2003. -- No income tax benefit was recognized in the 2004 first quarter since we cannot tax benefit current operating losses due to cumulative losses incurred during 2001 through 2003. We recorded a valuation allowance in the 2003 fourth quarter for a major portion of our deferred tax assets in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 109 "Accounting for Income Taxes". Future tax provisions or benefits will be recognized when taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. exceeds the 2003 tax loss, or when tax losses, if any, are recoverable as cash refunds. Cash Flow, Working Capital and Debt -- Cash on hand was $67.3 million at March 31, 2004, a decrease of $12.3 million from 2003 year-end. -- First quarter 2004 cash flow from operations was a negative $0.2 million due primarily to a $75.4 million increase in managed working capital in the quarter, partially offset by the receipt of a $6.9 million federal income tax refund Tax refund Money back from the government when too much tax has been paid or withheld from a salary. pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to our 2003 tax return. -- The increase in managed working capital was due to a $63.1 million increase in accounts receivable, which reflects the higher level of sales in the first quarter 2004, compared to the fourth quarter 2003, and a $59.1 million increase in inventory mostly as a result of higher raw material costs, which was partially offset by a $46.8 million increase in accounts payable. The majority of the increase in raw material costs should be recovered through surcharges. -- At March 31, 2004, managed working capital was 26.4% of annualized sales compared to 30.7% of annualized sales at 2003 year-end. We define managed working capital as accounts receivable and gross inventories less accounts payable. -- Cash used in investing activities was $10.9 million in the first quarter 2004 and consisted primarily of $12.1 million of capital expenditures, net of $1.2 million of proceeds from the disposal of miscellaneous assets. -- Cash used in financing activities was $1.2 million in the first quarter 2004, and included a net decrease in debt of $3.1 million, primarily due to a $9.5 million repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of an industrial revenue bond partially offset by a $6.5 million net increase in borrowings at our STAL imp. 1. Stole. China joint venture, and by $1.9 million of proceeds received from the exercise of stock options. -- There were no borrowings outstanding during the first quarter 2004 under ATI's $325 million secured borrowing facility, although a portion of the letters of credit capacity was utilized. New Accounting Pronouncement Adopted in 2003 The adoption of Statement of Financial Accounting Standards No. 143 "Accounting for Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. " ("SFAS 143") resulted in an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge of $1.3 million, or $0.02 per share in the 2003 first quarter. This charge is reported as a cumulative effect of change in accounting principle. Allegheny Technologies will conduct a conference call with investors and analysts on April 21, 2004, at 1 p.m. ET to discuss the financial results. The conference call will be broadcast live on www.alleghenytechnologies.com. To access the broadcast, click on "First Quarter Conference Call". In addition, the conference call will be available through the CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network website, located at www.ccbn.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. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Certain statements in this news release relate to future events and expectations and, as such, constitute forward-looking statements. Forward-looking statements include those containing such words as "anticipates," "believes," "estimates," "expects," "would," "should," "will," "will likely result," "forecast," "outlook," "projects," and similar expressions. Such forward-looking statements are based on management's current expectations and include known and unknown risks, uncertainties and other factors, many of which we are unable to predict or control, that may cause our 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. Various of these factors are described from time to time in our filings with the Securities and Exchange Commission, including our Annual 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 31, 2003, and our Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. . We assume no duty to update our forward-looking statements. Allegheny Technologies Incorporated (NYSE:ATI) is one of the largest and most diversified diversified (di·verˑ·s specialty materials producers in the world, with revenues of approximately $1.9 billion in 2003. The Company has approximately 8,800 employees world-wide and its talented people use innovative technologies to offer growing global markets a wide range of specialty materials. High-value products include nickel-based and cobalt-based alloys and superalloys, titanium and titanium alloys, specialty steels, super stainless steel, exotic alloys, which include 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. , 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. and niobium niobium (nīō`bēəm), metallic chemical element; symbol Nb; at. no. 41; at. wt. 92.9064; m.p. about 2,468°C;; b.p. 4,742°C;; sp. gr. 8.57 at 20°C;; valence +2, +3, +4, or +5. , tungsten materials, and highly engineered strip and Precision Rolled Strip(R) products. In addition, we produce commodity specialty materials such as stainless steel sheet and plate, silicon and tool steels, and forgings and castings. The Allegheny Technologies website can be found at www.alleghenytechnologies.com.
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Statements of Operations
(Unaudited - Dollars in millions, except per share amounts)
Three Months
Ended
March 31
------- -------
2004 2003
------- -------
Sales $577.8 $480.5
Costs and expenses:
Cost of sales 567.4 465.9
Selling and administrative expenses 53.7 47.7
------- -------
Loss before interest, other
income and income taxes (43.3) (33.1)
Interest expense, net (8.2) (7.4)
Other income, net 1.1 0.5
------- -------
Loss before income tax provision (benefit)
and cumulative effect of change in
accounting principle (50.4) (40.0)
Income tax provision (benefit) - (14.2)
------- -------
Net loss before cumulative effect of
change in accounting principle (50.4) (25.8)
Cumulative effect of change in accounting
principle - (1.3)
------- -------
Net loss $(50.4) $(27.1)
======= =======
Basic and diluted net loss per common
share before cumulative effect
of change in accounting principle $(0.63) $(0.32)
Cumulative effect of change in accounting
principle - (0.02)
------- -------
Basic and diluted net loss
per common share $(0.63) $(0.34)
======= =======
Weighted average common shares
outstanding -- basic and diluted
(millions) 80.4 80.7
Actual common shares outstanding--
end of period (millions) 81.2 81.0
Allegheny Technologies Incorporated and Subsidiaries
Sales and Operating Profit (Loss) by Business Segment
(Unaudited - Dollars in millions)
Q1 2004 Q1 2003
------- -------
Sales:
Flat-Rolled Products $329.6 $257.3
High Performance Metals 178.7 161.0
Engineered Products 69.5 62.2
------- -------
Total External Sales $577.8 $480.5
======= =======
Operating Profit (Loss):
Flat-Rolled Products $(11.0) $(1.3)
% of Sales -3.3% -0.5%
High Performance Metals 7.8 8.3
% of Sales 4.4% 5.2%
Engineered Products 3.8 1.8
% of Sales 5.5% 2.9%
------- -------
Operating Profit (Loss) 0.6 8.8
% of Sales 0.1% 1.8%
Corporate expenses (5.6) (4.8)
Interest expense, net (8.2) (7.4)
------- -------
Subtotal (13.2) (3.4)
Other costs, net of gains
on asset sales (1.2) (1.8)
Retirement benefit expense (a) (36.0)(a) (34.8)
------- -------
Loss before
income taxes $(50.4) $(40.0)
======= =======
(a) Includes non-cash expenses of $29.7 million and $28.2 million for
the 2004 and 2003 first quarter, respectively.
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Balance Sheets
(Current period unaudited--Dollars in millions)
March 31, December 31,
2004 2003
--------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $67.3 $79.6
Accounts receivable, net of allowances for
doubtful accounts of $11.0 and $10.2 at
March 31, 2004 and December 31, 2003,
respectively 311.0 248.8
Inventories, net 366.9 359.7
Income tax refunds receivable 0.3 7.2
Prepaid expenses and
other current assets 37.3 48.0
--------- ---------
Total current assets 782.8 743.3
Property, plant and equipment, net 711.2 711.1
Cost in excess of net assets acquired 206.3 198.4
Deferred pension asset 144.0 144.0
Deferred income taxes 34.3 34.3
Other assets 62.7 53.8
--------- ---------
Total Assets $1,941.3 $1,884.9
========= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $219.4 $172.3
Accrued liabilities 207.5 194.6
Short term debt and current
portion of long-term debt 21.8 27.8
--------- ---------
Total current liabilities 448.7 394.7
Long-term debt 512.4 504.3
Accrued postretirement benefits 518.0 507.2
Pension liabilities 238.6 220.6
Other long-term liabilities 87.3 83.4
--------- ---------
Total liabilities 1,805.0 1,710.2
--------- ---------
Total stockholders' equity 136.3 174.7
--------- ---------
Total Liabilities and Stockholders' Equity $1,941.3 $1,884.9
========= =========
Allegheny Technologies Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited--Dollars in millions)
Three Months
Ended
March 31
---------------
2004 2003
------- -------
Operating Activities:
Net loss $(50.4) $(27.1)
Cumulative effect of change in accounting
principle - 1.3
Depreciation and amortization 18.8 18.0
Change in pension assets/liabilities 17.5 22.4
Deferred income taxes - (13.3)
Income tax refunds received 6.9 48.3
Change in managed working capital (75.4) (21.6)
Accrued liabilities and other 82.4 17.2
------- -------
Cash provided by (used in) operating activities (0.2) 45.2
------- -------
Investing Activities:
Purchases of property, plant and equipment (12.1) (11.8)
Asset disposals and other 1.2 5.9
------- -------
Cash used in investing activities (10.9) (5.9)
------- -------
Financing Activities:
Net increase (decrease) in debt (3.1) 2.9
Interest rate swap termination - 14.6
Dividends paid - (4.8)
Other 1.9 -
------- -------
Cash provided by (used in) financing activities (1.2) 12.7
------- -------
Increase (decrease) in cash and cash equivalents (12.3) 52.0
Cash and cash equivalents at beginning of period 79.6 59.4
------- -------
Cash and cash equivalents at end of period $67.3 $111.4
======= =======
Allegheny Technologies Incorporated and Subsidiaries
Selected Financial Data
(Unaudited)
Q1 2004 Q1 2003
-------- --------
Volume:
Flat-Rolled Products (finished tons) 124,987 118,964
-------- --------
Commodity 87,016 83,492
High value 37,971 35,472
High Performance Metals
(000's lbs.)
Nickel-based and
specialty steel alloys 8,944 8,692
Titanium mill products 5,023 4,615
Exotic alloys 1,185 932
Average Prices:
Flat-Rolled Products (per finished ton) $2,636 $2,159
Commodity $2,006 $1,564
High value $4,081 $3,557
High Performance Metals (per lb.)
Nickel-based and specialty
steel alloys $7.73 $6.73
Titanium mill products $11.41 $12.85
Exotic alloys $36.32 $37.75
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Managed Working Capital
(Unaudited - Dollars in millions)
March 31, 2004
Change in
March 31, December 31, Managed
2004 2003 Working Capital
---------- ---------- ---------------
Accounts receivable $311.0 $248.8
Inventory 366.9 359.7
Accounts payable (219.4) (172.3)
---------- ----------
Subtotal 458.5 436.2
Allowance for doubtful accounts 11.0 10.2
LIFO reserve 159.8 111.7
Corporate and other 21.6 17.4
---------- ---------- ---------------
Managed working capital $650.9 $575.5 $75.4
========== ========== ===============
Annualized prior 2 months
sales $2,463.0 $1,874.0
========== ==========
Managed working capital as a
% of annualized sales 26.4% 30.7%
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