Allegheny Technologies Announces Fourth Quarter Results.Business Editors PITTSBURGH--(BUSINESS WIRE)--Jan. 21, 2003 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. ) reported a net loss of $(39.7) million, or $(0.49) per share, including special charges of $(29.0) million, or $(0.36) per share, on sales of $454.2 million for the fourth quarter ended December December: see month. 31, 2002. The special items included previously announced charges for asset impairments and workforce reductions, charges for settlement of a labor issue, and the write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. of the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the Company's minority interest in an investment held for sale. During the same period in 2001, the Company reported a net loss of $(45.8) million, or $(0.57) per share, on sales of $493.1 million, including special charges of $(47.8) million, or $(0.59) per share. Excluding special charges, the net loss was $(10.7) million, or $(0.13) per share, for the fourth quarter ended December 31, 2002, compared to net income of $2.0 million, or $0.02 per share, for the 2001 fourth quarter. Results for the twelve months ended December 31, 2002, were a net loss of $(65.8) million, or $(0.82) per share, on sales of $1,907.8 million and included after tax special charges of $(33.5) million, or $(0.42) per share, for asset impairments, workforce reductions, settlement of a labor issue, and the write-down of the carrying value of the Company's minority interest in an investment held for sale. The results for the comparable 2001 period were a net loss of $(25.2) million, or $(0.31) per share, on sales of $2,128.0 million and included after tax charges of $(51.2) million, or $(0.63) per share. Excluding special charges, the net loss was $(32.3) million, or $(0.40) per share, for the twelve months ended December 31, 2002, compared to net income of $26.0 million, or $0.32 per share, for the comparable 2001 period. Results for 2001 included goodwill amortization of $(4.0) million, or $(0.05) per share. 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. 142, commencing in 2002, goodwill is no longer subject to amortization.
Three Months Ended Twelve Months Ended
December 31 December 31
In Millions
-----------------------------------------
2002 2001 2002 2001
------------ -------- --------- ---------
Sales $454.2 $493.1 $1,907.8 $2,128.0
Net loss $(39.7) $(45.8) $(65.8) $(25.2)
Special items, after tax $(29.0) $(47.8) $(33.5) $(51.2)
Net income (loss) excluding
special items $(10.7) $ 2.0 $ (32.3) $ 26.0
Per Diluted Share
-----------------------------------------
Net loss $(0.49) $(0.57) $(0.82) $(0.31)
Special items, after tax $(0.36) $(0.59) $(0.42) $(0.63)
Net income (loss) excluding
special items $ (0.13) $ 0.02 $ (0.40) $ 0.32
Comments "Business conditions in most of our markets were weak throughout the year resulting in net losses for the fourth quarter and the full year 2002," said Jim Murdy, 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' president and chief executive officer. "Fourth quarter shipments in our Flat-Rolled Products segment were at the lowest quarterly level in a decade. In the High Performance Metals segment, improved performance in our exotic 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 was not enough to offset continued weak demand from commercial aerospace and power generation for our nickel-based and titanium-based products. The Industrial Products segment was modestly profitable. "We anticipated that 2002 would present challenging conditions in most of our markets. As a result, our top priorities were to enhance our leading market positions, while reducing costs, generating cash and reducing debt. We had a lot of success in these areas. "We had a number of gains with customers that should improve our position in key markets beginning in 2003. These successes demonstrate that our reputation for quality, service, delivery reliability and technical leadership are unsurpassed in the markets we serve. We continue to make important strategic investments in our business because we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the 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. prospects for our Company. "In our Flat-Rolled Products segment, we improved our 2003 position with major distributors of commodity 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. products in large part due to our superior reputation for quality and delivery reliability. We were awarded a new long-term agreement (LTA LTA Land Transport Authority LTA Land Trust Alliance LTA Lawn Tennis Association LTA Lost Time Accident LTA Lighter-Than-Air LTA Lieutenant (Singapore military) LTA Lipoteichoic Acid LTA Lymphotoxin-Alpha ) with a manufacturer of electrical transformers representing potentially 30,000 new tons annually of 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 shipments. In addition, our STAL imp. 1. Stole. Precision Rolled Strip(R) products operation in Shanghai Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. , China won several new contracts in that rapidly growing market. In the High Performance Metals segment, we finalized See finalization. a significant LTA and achieved gains at other customers for our premium nickel-based alloys, superalloys 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 products. "In 2002, 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 $204 million and we generated $111 million of free cash flow, after investing activities and dividend payments. Managed working capital was reduced by $146 million, more than double our full year reduction goal of $65 million. At the end of 2002, managed working capital was 33% 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 compared to 37% at the end of 2001. Our 2002 cost reductions reached $135 million, exceeding our goal of $100 million. "Business conditions remain very difficult and uncertain as 2003 begins. We are staying focused on improving 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. in all business segments by enhancing our leading market positions, reducing costs and conserving con·serve v. con·served, con·serv·ing, con·serves v.tr. 1. a. To protect from loss or harm; preserve: cash. Our 2003 cost reduction goal is $90 million and we intend to further improve upon the gains we made reducing managed working capital in 2002. We believe Allegheny Technologies is well-positioned across our broad range of products to emerge strongly when the economy recovers." Segment Results Comparative data by business segments for the fourth quarter ended December 31, 2002 is contained in the accompanying statements. Flat-Rolled Products Fourth quarter 2002 compared to fourth quarter 2001 Sales declined 2% to $243.0 million due to continued weakness in several end markets, especially 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 . Total shipments of 114,803 tons were the lowest quarterly level for a full operating quarter since the 1991 fourth quarter. Operating results improved $3.3 million compared to 2001 primarily due to cost reductions, but still resulted in a loss of $(12.1) million for the quarter. Total shipments decreased 4%, while average prices increased 2% primarily due to higher raw material surcharges. Results for 2002 include the effects of a settlement of the profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of dispute for prior years 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. (USWA USWA United Steelworkers of America USWA United States Wrestling Association USWA United States Windsurfing Association USWA United States Wristwrestling Association ), which resulted in a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta special charge of $(3.9) million. Fourth quarter 2002 compared to third quarter 2002 Sales decreased 9% primarily due to several customers reducing inventories at 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. as a result of continuing weakness in the domestic manufacturing economy. Operating results declined to a loss of $(12.1) million in the fourth quarter compared to operating profit of $3.9 million in the third quarter primarily due to lower sales and operating levels, and the USWA settlement discussed above. Total tons shipped decreased 6% and average prices declined 3%. High Performance Metals Fourth quarter 2002 compared to fourth quarter 2001 Sales declined 17% to $156.1 million due primarily to reduced demand from the commercial aerospace and power generation markets partially offset by improved demand for premium exotic alloys from the mining, high energy physics and government markets. Operating profit was $9.0 million compared to $25.6 million in the year-ago period. Shipments of nickel-based, specialty steel and titanium-based products decreased significantly. Average prices of nickel-based and specialty steel products decreased 5%, while average prices of titanium-based products increased 5% due to product mix. Shipments of exotic alloys decreased 11% while average prices were higher, both due to product mix. Fourth quarter 2002 compared to third quarter 2002 Sales improved 7%; however, operating profit declined 3%. Improved results at our exotic alloys business were offset by continued weakness in the aerospace and power generation markets. Shipments of nickel-based, specialty steel, and titanium-based products increased, while average prices of nickel-based and specialty steel products decreased 9% and prices of titanium-based products were essentially flat. Shipments of exotic alloys decreased and average prices were higher, both due to product mix. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of confirmed orders was approximately $300 million at December 31, 2002, which was 20% higher than at September September: see month. 30, 2002, and 15% lower than at December 31, 2001. Industrial Products Due to the generally weak manufacturing sector of the economy, fourth quarter 2002 sales decreased to $55.1 million, a 3% reduction from the same period last year. However, operating profit improved to $0.9 million compared to a loss of $(1.6) million in the year-ago period, primarily due to cost reductions. Compared to the third quarter 2002, sales decreased 3% and operating profit was $0.7 million lower. Special Items - After Tax Fourth quarter 2002 results included net 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. special charges of $(29.0) million, or $(0.36) per share, primarily related to cost reduction actions. These actions included an asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge of $(21.8) million related to the indefinite INDEFINITE. That which is undefined; uncertain. INDEFINITE, NUMBER. A number which may be increased or diminished at pleasure. 2. When a corporation is composed of an indefinite number of persons, any number of them consisting of a majority of those idling of the Company's Massillon Massillon (măs`ĭlŏn), city (1990 pop. 31,007), Stark co., NE Ohio, on the Tuscarawas River; inc. 1853. A wheat-shipping center on the Ohio & Erie Canal after 1828, it became an industrial city producing steel, steel products, and , OH stainless steel coil plate facility, and a $(1.9) million charge resulting from the Company's plans to implement further workforce reductions of approximately 90 employees in the High Performance Metals and Industrial Products segments, mostly in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .
These items are presented as restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). costs on the statement of
operations See Income statement. . Also during the fourth quarter, the company settled a
dispute with USWA regarding profit sharing for certain employees of the
Flat-Rolled Products segment for prior years, which resulted in a charge
of $(2.5) million. Additionally, the Company wrote down the carrying
value of its minority interest in New Piper Aircraft Piper Aircraft, Inc., is a manufacturer of general aviation aircraft, located in Vero Beach, Florida. HistoryOriginally founded as the Taylor Brothers Aircraft Manufacturing Company in September of 1927 by Clarence Gilbert Taylor and Gordon A. , an investment held for sale, which resulted in a charge of $(2.8) million. On a pre-tax basis, all but approximately $7 million of these charges are non-cash and are expected to provide future annual cost savings of approximately $6 million. The fourth quarter 2001 special items included a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. $(47.8) million, or $(0.59) per share, after-tax charge, primarily non-cash, resulting from asset impairment and cost reduction actions, including the permanent idling of the Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; , PA stainless steel melt shop and workforce reductions. Retirement Benefits - Pension, Medical and Life Insurance A severe decline in the equity markets in both 2000 and 2001 and higher benefit liabilities from long-term labor contracts negotiated in 2001 resulted in a pre-tax retirement benefit expense of $5.1 million in the fourth quarter 2002 compared to pre-tax retirement benefit income of $10.1 million in the fourth quarter 2001. These factors resulted in a $15.2 million pre-tax, or $0.12 per share after-tax, reduction in fourth quarter 2002 earnings as compared to the fourth quarter 2001, and a $74.9 million pre-tax, or $0.63 per share after-tax, reduction in earnings for full year 2002 compared to 2001. The swing to retirement benefit expense in 2002 from income in 2001 had a negative effect on both cost of sales and selling and administrative expenses in the fourth quarter and the full year 2002 compared to the same periods last year. As a result of a substantially lower level of pension plan investments, combined with the changes in assumptions discussed below and higher projected retiree healthcare costs, the Company expects pre-tax retirement benefit expenses to increase significantly in 2003, based upon current actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin assumptions, to approximately $140 million, compared to $22 million in 2002. Approximately 79%, or $110 million, of the estimated 2003 retirement benefit expense will be non-cash. As previously announced, the Company's accumulated benefit obligation Accumulated Benefit Obligation (ABO) An approximate measure of the liability of a pension plan in the event of a termination at the date the calculation is performed. Related: Projected benefit obligation. (ABO ABO See: Accumulated Benefit Obligation ) exceeded the value of the pension assets at the November November: see month. 30, 2002, measurement date. This resulted in a $406 million charge to 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. . This charge would be reversed in subsequent years if the value of the pension plan investments returns to a level that exceeds the ABO as of a future measurement date. This charge does not impact the Company's compliance with debt covenants in the bank credit agreement. Based upon current actuarial studies, the Company does not expect to be required to make contributions to the defined benefit pension plan during the next several years. As previously announced, the Company has completed its annual review of discount rate and long-term expected rate of return expected rate of return The rate of return expected on an asset or a portfolio. The expected rate of return on a single asset is equal to the sum of each possible rate of return multiplied by the respective probability of earning on each return. on investment assumptions for 2003. The discount rate for both pension and retiree healthcare liabilities will be 6.75%, based on the Moody's Moody's Corporation (NYSE: MCO) is the holding company for Moody's Investors Service which performs financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale. average AA corporate bond yield at the Company's measurement date. The Company had previously assumed a discount rate of 7.0%. The long-term expected rate of return on pension assets will be 8.75%, compared to the previously assumed rate of return of 9.0%. The long-term expected rate of return on investments in the VEBA VEBA Voluntary Employees' Beneficiary Association trusts, which provide partial funding for the Company's retiree medical benefits obligations, will be 9%. The Company had previously assumed a long-term expected rate of return of approximately 15.0% for the VEBA trusts when a larger percentage of investments were in private equities. Other Earnings Comments Corporate expenses for the fourth quarter 2002 decreased 17% to $4.8 million compared to the year-ago period primarily due to cost reductions and lower incentive compensation accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. . Fourth quarter 2002 interest expense increased to $8.2 million from $6.6 million in the year-ago period primarily due to higher interest costs associated with the 8.375% 10-year Notes issued in December 2001, which were partially offset by the pay-off of all outstanding commercial paper. Financial Highlights Cash flow from operating activities totaled $204.2 million, primarily due to managed working capital reductions of $145.6 million and income tax refunds Tax refund Money back from the government when too much tax has been paid or withheld from a salary. of $45.6 million. Cash flow from operations was $122.8 million in 2001. Cash used in investing activities was $39.8 million compared to $85.0 million a year ago, primarily due to reduced capital expenditures, which totaled $48.7 million in 2002 compared to $104.2 million in 2001. Cash used in financing activities was $138.7 million and consisted of $85.5 million in debt reduction and $53.2 million of dividend payments. Cash used in financing activities in 2001 was $30.3 million and included $64.2 million of dividend payments and a $36.7 million increase in debt. Total debt outstanding declined to $519.1 million at December 31, 2002, from $582.2 million at end of 2001, primarily due to the pay-off of all outstanding commercial paper. The decline in debt outstanding was partially offset by the recognition of the fair market value of the interest rate swap Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. contracts. At December 31, 2002, the accounting treatment required to adjust these swap contracts to fair market value resulted in the recognition of a $18.7 million asset on the balance sheet, included in other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. , with an offsetting increase in long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . 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 50.5% at December 31, 2002, compared to 36.7% at end of 2001 primarily as a result of the decline in stockholders' equity due to the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of the pension asset and the recognition of a minimum pension liability. There were no borrowings outstanding at the end of the 2002 fourth quarter under the Company's $250 million domestic bank credit facility. Allegheny Technologies will conduct a conference call with investors and analysts on January January: see month. 21, 2003 at 1 p.m. ET to discuss the earnings results. The conference call will be broadcast live on www.alleghenytechnologies.com. To access the broadcast, click on "Fourth 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 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, 2001, 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 2002. The Company has approximately 10,000 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 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. 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 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. 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
(Quarterly period unaudited - Dollars in millions, except per share
amounts)
Three Months Twelve Months
Ended Ended
December 31 December 31
--------------- -------------------
2002 2001 2002 2001
------- ------- --------- ---------
Sales $454.2 $493.1 $1,907.8 $2,128.0
Costs and expenses:
Cost of sales 428.0 431.3 1,744.5 1,862.3
Selling and administrative
expenses 41.4 52.6 188.3 198.8
Restructuring costs 37.3 74.2 42.8 74.2
------- ------- --------- ---------
Loss before interest, other income
(expense) and income taxes (52.5) (65.0) (67.8) (7.3)
Interest expense, net 8.2 6.6 34.3 29.3
Other income (expense), net (1.0) (0.3) (1.7) 0.2
------- ------- --------- ---------
Loss before income tax benefit (61.7) (71.9) (103.8) (36.4)
Income tax benefit (22.0) (26.1) (38.0) (11.2)
------- ------- --------- ---------
Net loss $(39.7) $(45.8) $(65.8) $(25.2)
======= ======= ========= =========
Basic and diluted net loss
per common share $(0.49) $(0.57) $(0.82) $(0.31)
======= ======= ========= =========
Weighted average common shares
outstanding -- basic and diluted
(millions) 80.6 80.3 80.6 80.3
Actual common shares outstanding--
end of period (millions) 80.6 80.3 80.6 80.3
Allegheny Technologies Incorporated and Subsidiaries
Sales and Operating Profit (Loss) by Business Segment
(Quarterly periods unaudited - Dollars in millions)
Q4 Q3 Q2 Q1 Q4
2002 2001 2002 2002 2002 2002 2001
--------------------- -----------------------------------
Sales:
Flat-Rolled
$1,048.2 $1,088.4 Products $243.0 $266.4 $276.7 $262.1 $248.0
High
Performance
630.0 771.8 Metals 156.1 146.1 154.9 172.9 188.3
Industrial
229.6 267.8 Products 55.1 56.8 59.6 58.1 56.8
--------------------- -----------------------------------
Total
External
$1,907.8 $2,128.0 Sales $454.2 $469.3 $491.2 $493.1 $493.1
===================== ===================================
Operating
Profit
(Loss):
Flat-Rolled
$(7.9) $(38.1) Products $(12.1) $3.9 $0.7 $(0.4)$(15.4)
Operating
Profit
(Loss) as a
(0.8%) (3.5%) % of Sales (5.0%) 1.5% 0.3% (0.2%) (6.2%)
High
Performance
31.2 82.0 Metals 9.0 9.3 8.6 4.3 25.6
Operating
Profit as a
5.0% 10.6% % of Sales 5.8% 6.4% 5.6% 2.5% 13.6%
Industrial
4.0 10.4 Products 0.9 1.6 2.2 (0.7) (1.6)
Operating
Profit
(Loss) as a
1.7% 3.9% % of Sales 1.6% 2.8% 3.7% (1.2%) (2.8%)
--------------------- -----------------------------------
Operating
Profit
$27.3 $54.3 (Loss) $(2.2) $14.8 $11.5 $3.2 $8.6
Operating
Profit
(Loss) as a
1.4% 2.6% % of Sales (0.5%) 3.2% 2.3% 0.6% 1.7%
Corporate
(20.6) (25.5) expenses (4.8) (5.6) (4.5) (5.7) (5.8)
Interest
(34.3) (29.3) expense, net (8.2) (8.3) (7.9) (9.9) (6.6)
--------------------- -----------------------------------
$(27.6) $(0.5) Subtotal $(15.2) $0.9 $(0.9)$(12.4) $(3.8)
Restructuring
costs and
other
costs, net
of gains
on asset
(54.4) (89.0) sales (41.3) (9.1) (4.1) 0.1 (78.2)
Retirement
benefit
(expense)
(21.8) 53.1 income (5.2) (5.4) (5.5) (5.7) 10.1
--------------------- -----------------------------------
Loss before
income tax
$(103.8) $(36.4) benefit $(61.7)$(13.6)$(10.5)$(18.0)$(71.9)
===================== ===================================
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Balance Sheets
(Dollars in millions)
December 31,
-----------------------
2002 2001
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $59.4 $33.7
Accounts receivable, net of allowances for
doubtful accounts of $10.1 and $12.3 at
December 31, 2002 and 2001,
respectively 239.3 274.6
Inventories, net 409.0 508.4
Income tax refunds receivable 37.0 48.5
Deferred income taxes 35.7 33.5
Prepaid expenses and
other current assets 32.0 27.4
----------- -----------
Total current assets 812.4 926.1
Property, plant and equipment, net 757.6 828.9
Deferred pension asset 165.1 632.9
Cost in excess of net assets acquired 194.4 188.4
Deferred income taxes 85.4 -
Other assets 78.3 66.9
----------- -----------
Total Assets $2,093.2 $2,643.2
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $171.3 $155.3
Accrued liabilities 161.0 168.2
Short term debt and current
portion of long-term debt 9.7 9.2
----------- -----------
Total current liabilities 342.0 332.7
Long-term debt 509.4 573.0
Accrued postretirement benefits 496.4 506.1
Pension liabilities 216.0 35.8
Deferred income taxes - 153.7
Other long-term liabilities 80.6 97.2
----------- -----------
1,644.4 1,698.5
----------- -----------
Total stockholders' equity 448.8 944.7
----------- -----------
Total Liabilities and Stockholders'
Equity $ 2,093.2 $ 2,643.2
=========== ===========
Allegheny Technologies Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Dollars in millions) Twelve Months
Ended
December 31
---------------
2002 2001
------- -------
Operating Activities:
Net loss $(65.8) $(25.2)
Depreciation and amortization 90.0 98.6
Change in managed working capital 145.6 127.1
Income tax refunds received 45.6 -
Income tax refunds receivable (37.0) (48.5)
Non-cash restructuring charges 32.7 79.7
Non-cash pension income, net (4.2) (49.0)
Accrued liabilities and other (2.7) (59.9)
------- -------
Cash provided by operating activities 204.2 122.8
------- -------
Investing Activities:
Purchases of property, plant and equipment (48.7) (104.2)
Asset disposals and other 8.9 19.2
------- -------
Cash used in investing activities (39.8) (85.0)
------- -------
Financing Activities:
Net (decrease) increase in debt (85.5) 36.7
Dividends paid (53.2) (64.2)
Other - (2.8)
------- -------
Cash used in financing activities (138.7) (30.3)
------- -------
Increase in cash and cash equivalents 25.7 7.5
Cash and cash equivalents at beginning of period 33.7 26.2
------- -------
Cash and cash equivalents at end of period $59.4 $33.7
======= =======
Managed working capital includes gross accounts receivable and gross
inventories excluding LIFO reserves less accounts payable.
Allegheny Technologies Incorporated and Subsidiaries
Selected Financial Data
(Unaudited)
Q4 Q3 Q2 Q1 Q4
2002 2001 2002 2002 2002 2002 2001
---------------- ----------------------------------------
Volume:
Flat-Rolled
Products
(finished
487,335 498,066 tons) 114,803 122,249 128,490 121,793 119,205
---------------- ----------------------------------------
Commodity
(finished
350,301 367,894 tons) 82,503 87,884 92,483 87,431 89,285
High value
137,034 130,172 (tons) 32,300 34,365 36,007 34,362 29,920
High
Performance
Metals -
nickel-
based and
specialty
35,832 51,899 steel 8,719 7,901 8,447 10,765 12,859
alloys
(000's
lbs.)
High
Performance
Metals -
19,044 23,070 titanium 4,633 4,186 5,276 4,949 5,219
mill
products
(000's
lbs.)
High
Performance
Metals -
3,712 3,457 exotic 861 967 1,015 869 964
alloys
(000's
lbs.)
Average
Prices:
Flat-Rolled
Products
(per
finished
$2,134 $2,162 ton) $2,102 $2,163 $2,141 $2,129 $2,060
Commodity
(per
finished
$1,529 $1,527 tons) $1,490 $1,594 $1,541 $1,487 $1,436
High value
$3,677 $3,956 (per ton) $3,663 $3,617 $3,668 $3,761 $3,921
High
Performance
Metals -
nickel-
based and
specialty
steel
alloys
$6.39 $6.31 (per lb.) $6.09 $6.72 $6.32 $6.46 $6.40
High
Performance
Metals -
titanium
mill
products
$11.83 $11.70 (per lb.) $12.36 $12.25 $10.76 $12.11 $11.73
High
Performance
Metals -
exotic
alloys
$36.29 $33.52 (per lb.) $43.33 $35.16 $32.45 $35.03 $32.16
Certain amounts for prior periods have been reclassified to conform
with the 2002 presentation.
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