EXHIBIT 99.1
[LOGO OMITTED]
Contact: Dan L. Greenfield
412/394-3004
ALLEGHENY TECHNOLOGIES ANNOUNCES FIRST QUARTER RESULTS
OPERATIONS
o FLAT-ROLLED PRODUCTS OPERATING LOSS NARROWED SIGNIFICANTLY
o HIGH PERFORMANCE METALS PROFITABILITY REDUCED BY WEAKER AEROSPACE AND
POWER GENERATION MARKETS AND STRIKE AT WAH CHANG
o WEAK MARKET CONDITIONS CAUSED LOSSES IN INDUSTRIAL PRODUCTS
o COST REDUCTIONS REACHED $25 MILLION IN THE QUARTER
FINANCIAL
o CASH FLOW FROM OPERATIONS TOTALED $82 MILLION, OR $1.02 PER SHARE
o MANAGED WORKING CAPITAL REDUCED BY $41 MILLION
o TOTAL DEBT REDUCED BY $56 MILLION
Pittsburgh, PA - April 17, 2002 - Allegheny Technologies Incorporated (NYSE:
ATI) reported a net loss of $(11.1) million, or $(0.14) per share, on sales of
$493.1 million for the first quarter ended March 31, 2002. During the same
period in 2001, net income was $6.4 million, or $0.08 per share, on sales of
$542.5 million.
THREE MONTHS ENDED
MARCH 31 DECEMBER 31
------------- ---------------
DOLLARS IN MILLIONS
2002 2001 2001
---- ---- ----
Sales $493.1 $542.5 $493.1
Net income (loss) $(11.1) $6.4 $ (45.8)*
DOLLARS PER DILUTED SHARE
Net income (loss) $(0.14) $0.08 $ (0.57)*
* Includes after-tax charges of $(47.8) million, or $(0.59)
per share, related to the permanent idling of the Houston,
PA stainless steel melt shop, workforce reductions and
other asset impairments.
"Despite generally weak business conditions which resulted in a net loss in the
first quarter, we made good progress generating cash and reducing costs," said
Jim Murdy, Allegheny Technologies' president and chief executive officer.
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"In our Flat-Rolled Products segment, volumes and prices remained near record
lows in the first quarter; however, the operating losses in the segment narrowed
significantly reflecting the benefits of our aggressive cost reduction actions.
In March, we began to see improved demand for many of our products, which should
result in profitable Flat-Rolled Products segment results in the second quarter.
"The High Performance Metals segment was impacted by lower demand from its two
largest markets, commercial aerospace and electrical energy. Commercial
aerospace orders remain soft and demand for power generation turbines has fallen
substantially. Therefore, we expect shipments of our products to these markets
to remain low for most of the year.
"High Performance Metals segment earnings were also hurt by an operating loss at
our Wah Chang operation, primarily due to the seven-month labor strike. A new
six-year labor agreement for Wah Chang was reached in late March and union
represented employees returned to work during the last week of March. We expect
the 2002 second quarter to be a transition quarter at Wah Chang and anticipate
the operating loss will narrow. We expect Wah Chang to return to profitability
in the 2002 third quarter.
"Operating losses continued in the Industrial Products segment primarily because
demand for tungsten specialty materials remained soft.
"Company-wide cost reductions in the first quarter 2002 resulted in gross
savings of $25 million, before the effects of inflation. We are on plan to
achieve our $100 million 2002 cost reduction goal.
"The success of our cash management efforts through the first quarter was
clearly a positive. We generated $82 million of operating cash flow, including
receipt of a $43 million federal income tax refund resulting from the
accelerated filing of our 2001 tax return. Managed working capital was reduced
by $41 million during the first quarter. This strong cash flow enabled us to
reduce total debt by $56 million. Our goal remains to reduce managed working
capital by a minimum of $65 million for the full year.
"Looking ahead, we expect second quarter 2002 results to improve somewhat from
the first quarter 2002 but still be a net loss. We expect the Flat-Rolled
Products segment to show a modest operating
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profit reversing the losses of the last five quarters. In addition, operating
results for the High Performance Metals and Industrial Products segments should
improve slightly from the first quarter 2002. Assuming the economy continues to
improve, we expect to be profitable in the second half of 2002."
FLAT-ROLLED PRODUCTS
FIRST QUARTER 2002 COMPARED TO FIRST QUARTER 2001
Sales declined 7% to $262.1 million, due to weaker market conditions. The
segment recorded an operating loss of $(0.4) million compared to a loss of
$(4.5) million in the 2001 first quarter. Operating results benefited
significantly from cost reduction initiatives. Total shipments were 2% below the
same period last year. Commodity product shipments decreased 3% and average
prices decreased 7%, primarily due to lower raw material surcharges. High-value
product shipments were comparable to the year-ago period but average prices
decreased 6%.
FIRST QUARTER 2002 COMPARED TO FOURTH QUARTER 2001
Sales increased 6% as a result of improved demand for high-value products. The
benefits from cost reductions and the improvement in sales resulted in
considerably lower operating losses. Total shipments increased 2%. Commodity
product shipments decreased 2% while average prices increased 3%, due to raw
material surcharges. High-value product shipments increased 15% but average
prices decreased 3%.
HIGH PERFORMANCE METALS
FIRST QUARTER 2002 COMPARED TO FIRST QUARTER 2001
Sales declined 8% to $172.9 million due primarily to reduced demand from the
aerospace and electrical energy markets. The decline in sales and the effects of
the Wah Chang labor strike lowered operating profit to $4.3 million compared to
$11.0 million in the year-ago period. Shipments of nickel-based and specialty
steel products decreased 16% with average prices increasing 3%. Shipments of
titanium products decreased 19% with average prices increasing 7%. While average
prices increased due to product mix changes, prices of some products declined
due to weaker market conditions. Shipments of exotic alloys increased 17% but
average prices were 2% lower.
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FIRST QUARTER 2002 COMPARED TO FOURTH QUARTER 2001
Sales declined 8% and operating profit declined 83% due primarily to reduced
demand from the aerospace and electrical energy markets, the impact of lower
operating volumes and the effect of the strike at Wah Chang. Shipments of
nickel-based and specialty steel products decreased 16% with average prices
increasing 1%. Shipments of titanium products decreased 5% with average prices
increasing 3%. While average prices increased due to product mix changes, prices
of some products declined due to weaker market conditions. Shipments of exotic
alloys decreased 10% but average prices were 9% higher, due to favorable product
mix. Backlog of confirmed orders declined to approximately $315 million at March
31, 2002, which is 10% lower than at December 31, 2001, due to lower order entry
and cancellations from the aerospace and electrical energy markets.
INDUSTRIAL PRODUCTS
Due to generally weak demand, first quarter 2002 sales decreased 20% to $58.1
million, compared to the same period last year, and the segment had an operating
loss of $(0.7) million, compared to an operating profit of $4.1 million in the
year-ago period. Compared to the fourth quarter 2001, sales increased 2% while
the operating loss improved slightly. In the 2001 fourth quarter, an $0.8
million charge was recorded for doubtful accounts.
RETIREMENT BENEFITS
A decline in the equities markets in 2001 and higher benefit liabilities from
long-term labor contracts negotiated in 2001 resulted in a pre-tax retirement
benefit expense of $5.7 million in the first quarter 2002 compared to pre-tax
retirement benefit income of $16.5 million in the first quarter 2001. These
factors resulted in a $22.2 million reduction in pre-tax income in the first
quarter 2002 compared to the first quarter 2001. The reduction in retirement
benefit income had a negative effect on both cost of sales, and selling and
administrative expenses for the current quarter. Retirement benefit expense is
expected to increase to approximately $6.8 million a quarter for the remainder
of 2002 as a result of the new Wah Chang labor agreement.
OTHER EARNINGS COMMENTS
Corporate expenses for the first quarter 2002 decreased 19% to $5.7 million
compared to the year-ago period due to continuing cost reductions. First quarter
2002 interest expense increased to $9.9 million from $8.0 million in the
year-ago period due to higher interest costs associated with the 10-year notes
issued in December 2001.
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FINANCIAL HIGHLIGHTS
Cash flow from operating activities totaled $81.9 million in the first quarter
2002, primarily due to a $43.2 million federal income tax refund for the 2001
tax year and managed working capital reductions of $40.9 million. Cash used in
investing activities in the first quarter 2002 was $12.7 million compared to
$24.6 million a year ago. The primary reason for this change was a 40% reduction
in capital expenditures to $15.4 million in the 2002 first quarter. Cash used in
financing activities in the first quarter 2002 was $72.4 million and consisted
of a reduction in debt of $56.3 million and dividend payments of $16.1 million.
Net debt as a percent of total capitalization decreased to 34.7% at the end of
the first quarter 2002 compared to 36.7% at December 31, 2001. Depreciation for
the first quarter 2002 was $22.8 million compared to $24.8 million for the same
year ago period, which included goodwill amortization of $1.5 million. In
accordance with SFAS 142, goodwill is no longer subject to amortization
commencing in 2002.
Comparative data by business segments for the first quarter ended March 31, 2002
is contained in the accompanying statements.
Allegheny Technologies will conduct a conference call with investors and
analysts on April 17, 2002 at 10 a.m. ET to discuss the earnings news release.
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 CCBN website, located at www.ccbn.com.
This news release contains forward-looking statements including those related to
anticipated business, economic, and market conditions, product demand, sales,
order backlog, demand from aerospace and electrical energy, operating profit and
earnings, financial performance, cost reductions and anticipated cost savings,
working capital reductions, cash flow and initiatives to improve cash flow,
dividends, interest expense, and retirement benefit expense. 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 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 for the year ended December 31, 2001.
Allegheny Technologies Incorporated (NYSE: ATI) is one of the largest and most
diversified specialty materials producers in the world with revenues of
approximately $2.1 billion in 2001. The Company has approximately 10,700
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, hafnium and niobium, 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.
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ALLEGHENY TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited - Dollars in millions, except per share amounts)
THREE MONTHS ENDED
MARCH 31 DECEMBER 31
--------- -----------
2002 2001 2001
---- ---- ----
SALES $493.1 $542.5 $493.1
Costs and expenses:
Cost of sales 452.7 476.9 431.3
Selling and administrative expenses 50.5 48.4 52.6
Restructuring costs - - 74.2
----- ----- -------
Income (loss) before interest, other income
(expense) and income taxes (10.1) 17.2 (65.0)
Interest expense, net 9.9 8.0 6.6
Other income (expense), net 2.0 1.2 (0.3)
------- ------- --------
Income (loss) before income taxes (18.0) 10.4 (71.9)
Income tax provision (benefit) (6.9) 4.0 (26.1)
-------- ------- --------
NET INCOME (LOSS) $(11.1) $6.4 $(45.8)
======== ======= =======
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE
$(0.14) $0.08 $(0.57)
======= ======= =======
Weighted average common shares outstanding - basic
(millions) 80.4 80.3 80.3
Weighted average common shares
outstanding - diluted (millions) 80.4 80.4 80.3
Actual common shares outstanding - end
of period (millions) 80.6 80.1 80.3
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ALLEGHENY TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
SALES AND OPERATING PROFIT BY BUSINESS SEGMENT
(Unaudited - Dollars in millions)
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31 DECEMBER 31
--------- -----------
2002 2001 2001
---- ---- ----
SALES:
Flat-Rolled Products $262.1 $282.5 $248.0
High Performance Metals 172.9 187.3 188.3
Industrial Products 58.1 72.7 56.8
--------- --------- ---------
TOTAL SALES $493.1 $542.5 $493.1
--------- --------- ------
OPERATING PROFIT (LOSS):
Flat-Rolled Products $ (0.4) $ (4.5) $ (15.4)
OPERATING PROFIT (LOSS) AS A % OF SALES (0.2%) (1.6%) (6.2%)
High Performance Metals 4.3 11.0 25.6
OPERATING PROFIT AS A % OF SALES 2.5% 5.9% 13.6%
Industrial Products (0.7) 4.1 (1.6)
OPERATING PROFIT (LOSS) AS A % OF SALES (1.2%) 5.6% (2.8%)
---------- --------- ----------
OPERATING PROFIT $ 3.2 $ 10.6 $ 8.6
OPERATING PROFIT AS A % OF SALES 0.6% 2.0% 1.7%
Corporate expenses (5.7) (7.0) (5.8)
Interest expense, net (9.9) (8.0) (6.6)
Restructuring costs and other costs, net of gains
on asset sales 0.1 (1.7) (78.2)
Retirement benefit income (expense) (5.7) 16.5 10.1
---------- --------- ----------
INCOME (LOSS) BEFORE INCOME TAXES $ (18.0) $ 10.4 $ (71.9)
========== ========= ==========
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ALLEGHENY TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Current period unaudited - Dollars in millions) MARCH 31, 2002 DECEMBER 31, 2001
-------------- -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 30.5 $ 33.7
Accounts receivable, net of allowances for doubtful accounts of
$12.0 and $12.3 at March 31, 2002 and December 31, 2001,
respectively 291.2 274.6
Inventories, net 461.2 508.4
Income tax refunds 5.3 48.5
Deferred income taxes and other 69.3 60.9
--------- ---------
Total current assets 857.5 926.1
Property, plant and equipment, net 821.5 828.9
Prepaid pension cost 636.0 632.9
Cost in excess of net assets acquired 188.5 188.4
Other assets 64.1 66.9
--------- ---------
TOTAL ASSETS $2,567.6 $2,643.2
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 155.0 $ 155.3
Accrued liabilities 167.3 168.2
Short-term debt and current portion of long-term debt 16.4 9.2
--------- ---------
Total current liabilities 338.7 332.7
Long-term debt 509.0 573.0
Accrued postretirement benefits 505.5 506.1
Deferred income taxes and other 284.5 286.7
--------- ---------
1,637.7 1,698.5
--------- ---------
Total stockholders' equity 929.9 944.7
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,567.6 $ 2,643.2
========= =========
ALLEGHENY TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited - Dollars in millions)
THREE MONTHS ENDED
MARCH 31, 2002 MARCH 31, 2001
-------------- --------------
OPERATING ACTIVITIES:
Net income (loss) $ (11.1) $ 6.4
Depreciation and amortization 22.8 24.8
Income tax refunds 43.2 -
Change in managed working capital 40.9 41.4
Non-cash pension income, net (3.1) (23.9)
Other (10.8) (21.7)
------------- -------------
CASH PROVIDED BY OPERATING ACTIVITIES 81.9 27.0
Cash used in investing activities (12.7) (24.6)
Cash used in financing activities (debt reduction $56.3 million) (72.4) (5.1)
------------ -------------
DECREASE IN CASH AND CASH EQUIVALENTS (3.2) (2.7)
Cash and cash equivalents at beginning of period 33.7 26.2
------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30.5 $ 23.5
=========== =============
Managed working capital includes gross accounts receivable and gross inventories
excluding LIFO reserves less accounts payable.
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ALLEGHENY TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(Unaudited)
THREE MONTHS ENDED
MARCH 31 DECEMBER 31
2002 2001 2001
---- ---- ----
VOLUME:
Flat-Rolled Products - commodity (finished tons) 87,431 89,764 89,285
Flat-Rolled Products - high value (tons) 34,362 34,212 29,920
------ ------- -------
Total Flat-Rolled Products (finished tons) 121,793 123,976 119,205
High Performance Metals - nickel-based and
specialty steel alloys (000's lbs.) 10,765 12,864 12,859
High Performance Metals - titanium mill products (000's
lbs.) 4,949 6,139 5,219
High Performance Metals - exotic alloys
(000's lbs.) 869 741 964
AVERAGE PRICES:
Flat-Rolled Products - commodity $ 1,487 $ 1,592 $ 1,444
(per finished ton)
Flat-Rolled Products - high value (per ton) $ 3,761 $ 4,017 $ 3,897
High Performance Metals - nickel-based and specialty steel
alloys (per lb.) $ 6.46 $ 6.29 $ 6.40
High Performance Metals - titanium mill products (per lb.)
$ 12.11 $ 11.36 $ 11.73
High Performance Metals - exotic alloys
(per lb.) $ 35.03 $ 35.80 $ 32.16
Certain amounts for prior periods have been reclassified to conform with the
2002 presentation.
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