Exhibit 99.1
Allegheny Technologies Announces Strong Profitable Growth in Second Quarter 2006
PITTSBURGH--(BUSINESS WIRE)--July 26, 2006--Allegheny Technologies
Incorporated (NYSE:ATI):
-- Sales increased 34% to over $1.2 billion
-- Net income increased 53% to $140.4 million, or $1.37 per share
-- Segment operating profit increased 78% to $253 million, or 21%
of sales:
-- High Performance Metals: 34.5% of sales
-- Flat-Rolled Products: 12.6% of sales
-- Engineered Products: 13.8% of sales
-- Results include LIFO inventory valuation reserve charge of $45
million and one-time $10 million tax benefit
-- Year-to-date gross cost reductions of $62 million
-- Annualized return on capital employed of 34%
-- Annualized return on stockholders' equity of 52%
-- Net debt to total capitalization improved to 18.6%
-- Cash on hand was $313 million
Allegheny Technologies Incorporated (NYSE:ATI) reported net income
for the second quarter 2006 of $140.4 million, or $1.37 per share, on
sales of $1.21 billion. Income before tax for the second quarter 2006
was $203.5 million.
In the second quarter 2005, ATI reported net income of $91.7
million, or $0.91 per share, on sales of $904.2 million. Income before
tax in the second quarter 2005 was $94.7 million.
For the six months ended June 30, 2006, income before tax was
$363.7 million, and net income was $242.9 million, or $2.38 per share,
on sales of $2.25 billion. For the six months ended June 30, 2005,
income before tax was $158.0 million, and net income was $152.7
million, or $1.53 per share, on sales of $1.78 billion.
"ATI continued to demonstrate strong profitable growth results and
future earnings power," said L. Patrick Hassey, Chairman, President
and Chief Executive Officer. "Sales grew by 34% compared to the second
quarter 2005 and were 16% higher than the first quarter 2006. Income
before tax more than doubled to $203.5 million. Net income increased
by 53% to $140.4 million.
"Segment operating profit reached 21% of sales as operational
execution continued to improve. Operating profit in our High
Performance Metals segment was nearly 35% of sales. In our Flat-Rolled
Products segment, operating profit improved to nearly 13% of sales.
Operating profit in our Engineered Products segment was just under 14%
of sales. These outstanding results were accomplished with a total
LIFO inventory valuation reserve charge of $45 million due to higher
raw material costs, particularly for nickel, nickel-bearing scrap and
titanium alloy scrap. Continued unusual volatility in the cost of
these raw materials has the potential to drive LIFO charges in the
second half of 2006 higher than in the first half of this year.
"Each of our business units is hitting on all cylinders and each
unit is implementing aggressive growth initiatives. Our key growth
markets, namely aerospace and defense, chemical process industry, oil
and gas, electrical energy, and medical, remain strong, representing
just over 63% of ATI's year-to-date 2006 sales. Aerospace and defense
was the largest of our markets at 31% of year-to-date 2006 sales.
"Our cash flow continued to support our self-funded growth
strategy. Capital investments in the first half of 2006 totaled $102
million, 82% of which were directed towards increasing our high-value
products capabilities. We also invested $331 million in managed
working capital through the first two quarters of 2006 due to
significantly higher sales and operating levels. We expect managed
working capital to be relatively flat in the third quarter 2006 and to
moderately increase in the fourth quarter 2006 as we bring on our new
high-value products capabilities.
"Key financial ratios were very strong in the second quarter 2006.
Managed working capital as a percentage of annualized sales remained
near all-time lows at just under 28%. Annualized return on capital
employed was 34%, annualized return on stockholders' equity was 52%,
and net debt to total capitalization improved to 18.6%.
"We remain focused on reducing costs in 2006 and achieved gross
cost reductions of $34 million in the second quarter, bringing
year-to-date cost reductions to $62 million. Our 2006 cost reduction
target is $100 million.
"Our strategic investments for growth in titanium and titanium
alloys, and nickel-based alloys and superalloys are on track. Phase I
of our Albany, OR titanium sponge facility is now fully operational
and is expected to be producing sponge at an annualized rate of 7.5
million pounds in the second half of 2006. Albany Phase II and Phase
III are progressing. In addition, in June we announced our Board's
approval of a greenfield titanium sponge facility in Utah. Our
titanium melt expansion projects are also progressing. New
nickel-based alloy remelt furnaces at our Latrobe, PA and Lockport, NY
facilities were successfully started in July. We continue to expect
increased mill product shipments of our high-value products from these
strategic investments beginning in the fourth quarter 2006.
"This step-up in ATI's production capacity is well-timed.
Discussions with existing and new customers last week during the
Farnborough Air Show confirm a significant step-up in demand for ATI's
titanium and nickel-based superalloy products from the aerospace and
defense market. Our outlook for growth in aerospace and defense has
further strengthened. Demand also remains strong for these products
from the medical, oil and gas, and other capital goods markets.
"Looking ahead, we see no seasonal slowing in the third quarter.
Demand from our key markets, namely aerospace and defense, chemical
process industry, oil and gas, electrical energy, and medical, remains
very strong for our high performance metals and flat-rolled products.
Recent price increases for our flat-rolled stainless products are
further evidence of the continued strength in the markets for these
products."
Three Months Ended Six Months Ended
June 30 June 30
In Millions
-----------------------------------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Sales $1,210.8 $904.2 $2,251.3 $1,783.8
Net income $140.4 $91.7 $242.9 $152.7
Per Diluted Share
-----------------------------------------------
Net income $1.37 $0.91 $2.38 $1.53
Second Quarter 2006 Financial Highlights
-- Sales were a record $1.21 billion, 34% higher than the second
quarter 2005, and 16% higher than the first quarter 2006.
Compared to the second quarter 2005, sales increased 49% in
the High Performance Metals segment, 30% in the Flat-Rolled
Products segment, and 9% in the Engineered Products segment.
Compared to the first quarter 2006, sales increased 9% in the
High Performance Metals segment, 26% in the Flat-Rolled
Products segment, and were essentially the same in the
Engineered Products segment.
-- Segment operating profit was a record $252.7 million, an
increase of $110.9 million, or 78%, compared to the second
quarter 2005, and 21% higher than the first quarter 2006, as a
result of improved performance across all three business
segments. Second quarter 2006 results included a LIFO
inventory valuation reserve charge of $45.5 million, due
primarily to higher nickel, nickel-bearing scrap, and titanium
scrap raw material costs. The LIFO inventory valuation reserve
charge was $26.4 million in the second quarter 2005 and $6.9
million in the first quarter 2006.
-- Net income was $140.4 million, or $1.37 per share, compared to
$91.7 million, or $0.91 per share, in the second quarter 2005.
Results for the second quarter 2006 included a provision for
income taxes of $63.1 million, or 31% of income before tax,
which benefited from a $10.2 million reduction of the deferred
tax valuation allowance due to the expected future realization
of state income tax credits. The second quarter 2005 provision
for income taxes was $3.0 million, or 3.2% of income before
tax, and benefited from a reduction in the valuation allowance
associated with deferred tax assets.
-- Cash flow from operations for the 2006 first half was $29.6
million as improved operating earnings more than offset a
further investment of $331.2 million in managed working
capital.
-- Cash on hand was $313.2 million at the end of the second
quarter 2006.
-- Gross cost reductions, before the effects of inflation,
totaled $62.3 million company-wide for the 2006 first half.
Our 2006 gross cost reduction goal is $100 million.
High Performance Metals Segment
Market Conditions
-- Demand for our titanium alloys, nickel-based alloys and
superalloys, and vacuum-melted specialty alloys was robust
from the aerospace and defense market and strong from the
medical, and oil and gas markets. Demand was strong for our
exotic alloys from the global chemical process industry
markets and from the aerospace and defense, medical, and
electrical energy markets.
Second quarter 2006 compared to second quarter 2005
-- Sales increased 49% to a record $450.2 million. Shipments
increased 7% for titanium and titanium alloys and 13% for
nickel-based and specialty alloys and declined 11% for exotic
alloys due primarily to product mix. Average selling prices
increased 64% for titanium and titanium alloys, 22% for
nickel-based and specialty alloys, and 8% for exotic alloys.
-- Segment operating profit reached a record $155.2 million, or
34.5% of sales, a $78.6 million increase compared to the
second quarter 2005. The significant increase in operating
profit primarily resulted from increased shipments for most
products, higher selling prices, and the benefits of gross
cost reductions, partially offset by start-up expenses of $2.5
million associated with our Albany, OR titanium sponge
facility. In addition, raw material cost inflation and higher
inventory levels resulted in a LIFO inventory valuation
reserve charge of $18.5 million in the second quarter 2006,
compared to a $17.3 million charge in the second quarter 2005.
-- Results benefited from $6.8 million of gross cost reductions.
Flat-Rolled Products Segment
Market Conditions
-- Total second quarter 2006 shipments were a record 379.2
million pounds, an increase of 28% compared to the second
quarter 2005 and 21% compared to the first quarter 2006.
Demand was strong for our stainless products from the chemical
process industry, oil and gas, and electrical energy markets
and from service center customers. Demand was also strong for
our specialty stainless, grain-oriented silicon, and
nickel-based alloy products from the chemical process
industry, oil and gas, electrical energy, and aerospace and
defense markets.
Second quarter 2006 compared to second quarter 2005
-- Sales were $650.8 million, 30% higher than the second quarter
2005, as a result of a 28% increase in pounds shipped, higher
base-selling prices for many products and improved product
mix. Average transaction prices, which include surcharges,
were 5% higher.
-- Segment operating profit increased to $82.3 million, or 12.6%
of sales, primarily as a result of increased shipments,
improved product mix, higher selling prices, and the benefits
of gross cost reductions. This was accomplished in spite of
significantly higher LIFO inventory valuation reserve charges
due primarily to higher nickel and nickel-bearing scrap raw
material costs. This resulted in a LIFO inventory valuation
reserve charge of $27.0 million in the second quarter 2006,
compared to a $3.9 million charge in the second quarter 2005.
-- Results benefited from $25.9 million in gross cost reductions.
Engineered Products Segment
Market Conditions
-- Demand for our tungsten and tungsten carbide products was
strong from the oil and gas, power generation, and medical
markets. Demand was strong for our forged products from the
Class 8 truck, construction and mining, and oil and gas
markets. Demand for our cast products was strong from the
transportation, wind energy, and oil and gas markets. Demand
remained very strong for our titanium precision metal
processing conversion services.
Second quarter 2006 compared to second quarter 2005
-- Sales increased to $109.8 million, 9% higher than the second
quarter 2005, due to increased volume and higher selling
prices.
-- Segment operating profit improved to $15.2 million, or 13.8%
of sales, primarily due to lower raw material cost inflation
and the benefits of gross cost reductions. No LIFO inventory
valuation reserve charge was recorded in the second quarter
2006, compared to a $5.2 million charge in the second quarter
2005.
-- Results benefited from $1.4 million of gross cost reductions.
Retirement Benefit Expense
-- Retirement benefit expense was $20.3 million in the second
quarter 2006, compared to $20.0 million in the second quarter
2005.
-- For the second quarter 2006, retirement benefit expense
included in cost of sales was $14.0 million and in selling and
administrative expenses was $6.3 million. For the second
quarter 2005, the amount of retirement benefit expense
included in cost of sales was $14.1 million, and the amount
included in selling and administrative expenses was $5.9
million.
Other Expenses
-- Selling and administrative expenses as a percentage of sales
declined to 6.2% in the 2006 second quarter from 7.2% in the
same period of 2005.
-- Corporate expenses for the second quarter 2006 were $18.0
million, compared to $11.6 million in the year-ago period.
This increase was due to expenses associated with annual and
long-term performance-based incentive compensation programs.
-- Second quarter 2006 interest expense, net of interest income,
decreased to $5.8 million from $10.6 million in the year-ago
period primarily due to increased interest income resulting
from higher cash balances and capitalization of interest costs
on strategic capital projects, partially offset by higher
interest rates on floating rate debt.
Income Taxes
Results for the second quarter 2006 included a provision for
income taxes of $63.1 million, or 31.0% of income before tax, for U.S.
Federal, foreign and state income taxes. The second quarter 2006
benefited from the elimination of a $10.2 million deferred tax
valuation allowance with respect to certain state tax credits expected
to be realized in future periods. For the remainder of 2006 and future
periods, we expect that our effective tax rate will return to a more
normal percentage rate such as that reflected in our first quarter
2006 results. The second quarter 2005 included a provision of $3.0
million, or 3.2% of income before tax, principally related to foreign
and state income taxes. Prior to the fourth quarter 2005, we
maintained a valuation allowance for a major portion of our U.S.
Federal deferred tax assets and certain state deferred tax assets in
accordance with SFAS No. 109, "Accounting for Income Taxes", due to
uncertainty regarding full utilization of our net deferred tax asset,
including the 2003 and 2004 unutilized net operating losses. In 2005,
we generated taxable income which exceeded the 2003 and 2004 net
operating losses, allowing us to fully realize these U.S. Federal tax
benefits. This realization of tax benefits, together with our improved
profitability, required us to eliminate the remaining valuation
allowance for U.S. Federal income taxes in the fourth quarter 2005 in
accordance with SFAS No. 109.
Cash Flow, Working Capital and Debt
-- Cash on hand was $313.2 million at the end of the second
quarter 2006, a decrease of $49.3 million from year end 2005.
-- Cash flow from operations during the 2006 first half was $29.6
million as improved operating earnings were largely offset by
a further investment of $331.2 million in managed working
capital and payment of previously accrued litigation costs of
$37.5 million.
-- The investment in managed working capital resulted from a
$117.8 million increase in accounts receivable, which reflects
the significantly higher level of sales in the second quarter
2006 compared to the fourth quarter 2005, and a $296.3 million
increase in inventory mostly as a result of increased
operating volumes and higher raw material costs, partially
offset by a $82.9 million increase in accounts payable. Most
of the increase in raw material costs is expected to be
recovered through surcharge and index pricing mechanisms.
-- At June 30, 2006, managed working capital improved to 27.7% of
annualized sales, compared to 30.3% of annualized sales at
year-end 2005. We define managed working capital as accounts
receivable plus gross inventories less accounts payable.
-- Cash used in investing activities was $100.5 million in the
2006 first half and consisted primarily of capital
expenditures.
-- Cash provided by financing activities was $21.4 million in the
2006 first half as $27.3 million of proceeds received from the
exercise of stock options and tax benefits on share-based
compensation of $16.5 million more than offset dividend
payments of $20.0 million and a reduction in borrowings of
$2.4 million.
-- Net debt as a percentage of total capitalization improved to
18.6% at the end of the second quarter 2006, compared to 19.8%
at the end of 2005.
-- There were no borrowings outstanding during the 2006 first
half or all of 2005 under ATI's $325 million secured domestic
borrowing facility, although a portion of the letters of
credit capacity was utilized during both periods.
Allegheny Technologies will conduct a conference call with
investors and analysts on July 26, 2006, 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
"Conference Call". In addition, the conference call will be available
through the CCBN website, located at www.ccbn.com.
This news release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act 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. 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, performance or
achievements to materially differ from those expressed or implied in
the forward-looking statements. Important factors that could cause
actual results to differ materially from those in the forward-looking
statements include: (a) material adverse changes in economic or
industry conditions generally, including global supply and demand
conditions and prices for our specialty metals; (b) material adverse
changes in the markets we serve, including the aerospace and defense,
construction and mining, automotive, electrical energy, chemical
process industry, oil and gas, and other markets; (c) our inability to
achieve the level of cost savings, productivity improvements,
synergies, growth or other benefits anticipated by management,
including those anticipated from strategic investments and the
integration of acquired businesses, whether due to significant
increases in energy, raw materials or employee benefits costs, or
other factors; (d) volatility of prices and availability of supply of
the raw materials that are critical to the manufacture of our
products; (e) declines in the value of our defined benefit pension
plan assets or unfavorable changes in laws or regulations that govern
pension plan funding; (f) significant legal proceedings or
investigations adverse to us; and (g) other risk factors summarized in
our Annual Report on Form 10-K for the year ended December 31, 2005,
and in other reports filed with the Securities and Exchange
Commission. We assume no duty to update our forward-looking
statements.
Building the World's Best Specialty Metals Company(TM)
Allegheny Technologies Incorporated is one of the largest and most
diversified specialty metals producers in the world with revenues of
$4.0 billion during the most recent four quarters ending June 30,
2006. ATI has approximately 9,300 full-time employees world-wide who
use innovative technologies to offer growing global markets a wide
range of specialty metals solutions. Our major markets are aerospace
and defense, chemical process industry/oil and gas, electrical energy,
medical, automotive, food equipment and appliance, machine and cutting
tools, and construction and mining. Our products include titanium and
titanium alloys, nickel-based alloys and superalloys, stainless and
specialty steels, zirconium, hafnium, and niobium, tungsten materials,
grain-oriented silicon electrical steel and tool steels, and forgings
and castings. The Allegheny Technologies website is
www.alleghenytechnologies.com.
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Statements of Income
(Unaudited - Dollars in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Sales $1,210.8 $904.2 $2,251.3 $1,783.8
Costs and expenses:
Cost of sales 924.9 732.5 1,723.5 1,470.8
Selling and administrative
expenses 75.4 65.4 148.3 132.2
--------- --------- --------- ---------
Income before interest, other
income (expense) and income
taxes 210.5 106.3 379.5 180.8
Interest expense, net (5.9) (10.6) (13.4) (21.0)
Other income (expense), net (1.1) (1.0) (2.4) (1.8)
--------- --------- --------- ---------
Income before income tax
provision 203.5 94.7 363.7 158.0
Income tax provision 63.1 3.0 120.8 5.3
--------- --------- --------- ---------
Net income $140.4 $91.7 $242.9 $152.7
========= ========= ========= =========
Basic net income per common
share $1.41 $0.96 $2.45 $1.60
========= ========= ========= =========
Diluted net income per common
share $1.37 $0.91 $2.38 $1.53
========= ========= ========= =========
Weighted average common shares
outstanding -- basic
(millions) 99.7 95.8 99.2 95.6
Weighted average common shares
outstanding -- diluted
(millions) 102.4 100.3 102.1 100.1
Actual common shares
outstanding-- end of period
(millions) 100.7 96.5 100.7 96.5
Allegheny Technologies Incorporated and Subsidiaries
Sales and Operating Profit by Business Segment
(Unaudited - Dollars in millions)
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Sales:
High Performance Metals $450.2 $301.6 $862.3 $564.3
Flat-Rolled Products 650.8 501.8 1,168.0 1,026.7
Engineered Products 109.8 100.8 221.0 192.8
--------- --------- --------- ---------
Total External Sales $1,210.8 $904.2 $2,251.3 $1,783.8
========= ========= ========= =========
Operating Profit:
High Performance Metals $155.2 $76.6 $297.9 $140.1
% of Sales 34.5% 25.4% 34.5% 24.8%
Flat-Rolled Products 82.3 53.4 130.3 92.6
% of Sales 12.6% 10.6% 11.2% 9.0%
Engineered Products 15.2 11.8 32.8 23.0
% of Sales 13.8% 11.7% 14.8% 11.9%
--------- --------- --------- ---------
Operating Profit 252.7 141.8 461.0 255.7
% of Sales 20.9% 15.7% 20.5% 14.3%
Corporate expenses (18.0) (11.6) (31.9) (21.9)
Interest expense, net (5.8) (10.6) (13.3) (21.0)
Other expenses, net of gains
on asset sales (5.1) (4.9) (11.2) (14.6)
Retirement benefit expense (20.3) (20.0) (40.9) (40.2)
--------- --------- --------- ---------
Income before
income taxes $203.5 $94.7 $363.7 $158.0
========= ========= ========= =========
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Balance Sheets
(Current period unaudited--Dollars in millions)
June 30, December 31,
2006 2005
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $313.2 $362.7
Accounts receivable, net of allowances for
doubtful accounts of $7.4 and $8.1 at
June 30, 2006 and December 31, 2005,
respectively 560.4 442.1
Inventories, net 835.6 607.1
Deferred income taxes 18.7 22.8
Prepaid expenses and
other current assets 41.2 49.3
------------ ------------
Total current assets 1,769.1 1,484.0
Property, plant and equipment, net 777.4 704.9
Cost in excess of net assets acquired 206.0 199.7
Deferred income taxes 171.2 155.3
Deferred pension asset 100.6 100.6
Other assets 91.1 87.1
------------ ------------
Total Assets $3,115.4 $2,731.6
============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $396.7 $312.9
Accrued liabilities 205.6 216.1
Accrued income taxes 27.1 18.5
Short term debt and current
portion of long-term debt 21.1 13.4
------------ ------------
Total current liabilities 650.5 560.9
Long-term debt 538.0 547.0
Accrued postretirement benefits 458.5 461.5
Pension liabilities 272.9 242.9
Other long-term liabilities 122.2 119.4
------------ ------------
Total liabilities 2,042.1 1,931.7
------------ ------------
Total stockholders' equity 1,073.3 799.9
------------ ------------
Total Liabilities and Stockholders' Equity $3,115.4 $2,731.6
============ ============
Allegheny Technologies Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited--Dollars in millions)
Six Months Ended
June 30
-----------------
2006 2005
-------- --------
Operating Activities:
Net income $242.9 $152.7
Depreciation and amortization 39.0 37.0
Change in pension assets/liabilities 29.1 29.0
Change in managed working capital (331.2) (222.5)
Accrued liabilities and other 49.8 63.6
-------- --------
Cash provided by operating activities 29.6 59.8
-------- --------
Investing Activities:
Purchases of property, plant and equipment (102.0) (19.8)
Asset disposals and other 1.5 (1.2)
Acquisition of business - (17.7)
-------- --------
Cash used in investing activities (100.5) (38.7)
-------- --------
Financing Activities:
Net decrease in debt (2.4) (13.5)
Dividends paid (20.0) (11.5)
Exercises of stock options 27.3 6.3
Tax benefits on share-based compensation 16.5 -
-------- --------
Cash provided by (used in) financing activities 21.4 (18.7)
-------- --------
Increase (decrease) in cash and cash equivalents (49.5) 2.4
Cash and cash equivalents at beginning of period 362.7 250.8
-------- --------
Cash and cash equivalents at end of period $313.2 $253.2
======== ========
Allegheny Technologies Incorporated and Subsidiaries
Selected Financial Data
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------- -------------------
Volume: 2006 2005 2006 2005
--------- --------- --------- ---------
High Performance Metals
(000's lbs.)
Nickel-based and specialty
alloys 11,162 9,866 22,139 20,215
Titanium mill products 6,735 6,304 13,126 12,441
Exotic alloys 1,028 1,155 2,205 2,182
Flat-Rolled Products
(000's lbs.)
High value 130,905 122,652 258,665 249,468
Commodity 248,248 173,584 433,693 392,342
--------- --------- --------- ---------
Flat-Rolled Products total 379,153 296,236 692,358 641,810
Average Prices:
High Performance Metals
(per lb.)
Nickel-based and specialty
alloys $13.84 $11.34 $13.38 $10.54
Titanium mill products $34.05 $20.72 $32.85 $19.07
Exotic alloys $41.77 $38.69 $39.92 $39.53
Flat-Rolled Products
(per lb.)
High value $2.35 $2.24 $2.29 $2.12
Commodity $1.37 $1.30 $1.31 $1.26
Flat-Rolled Products combined
average $1.71 $1.69 $1.68 $1.59
Volume and Average Price data for Flat-Rolled Products includes the
classification of grain-oriented silicon electrical steel and tool
steel as high-value products for all periods presented.
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Managed Working Capital
(Unaudited - Dollars in millions)
June 30, 2006
June 30, December 31, Change in Managed
2006 2005 Working Capital
----------------- ----------------- -----------------
Accounts
receivable $560.4 $442.1
Inventory 835.6 607.1
Accounts payable (396.7) (312.9)
----------------- -----------------
Subtotal 999.3 736.3
Allowance for
doubtful accounts 7.4 8.1
LIFO reserve 322.1 269.7
Corporate and
other 50.4 33.9
----------------- -----------------
Managed working
capital $1,379.2 $1,048.0 $331.2
================= ================= =================
Annualized prior
2 months sales $4,971.7 $3,461.1
================= =================
Managed working
capital as a % of
annualized sales 27.7% 30.3%
As part of managing the liquidity in our business, we focus on
controlling managed working capital, which is defined as gross
accounts receivable and gross inventories, less accounts payable. In
measuring performance in controlling this managed working capital, we
exclude the effects of LIFO inventory valuation reserves, excess and
obsolete inventory reserves, and reserves for uncollectible accounts
receivable which, due to their nature, are managed separately.
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Net Debt to Capital
(Unaudited - Dollars in millions)
June 30, December 31,
2006 2005
------------ ------------
Total debt $559.1 $560.4
Less: Cash (313.2) (362.7)
------------ ------------
Net debt $245.9 $197.7
Net debt $245.9 $197.7
Stockholders' equity 1,073.3 799.9
------------ ------------
Total capital $1,319.2 $997.6
Net debt to capital ratio 18.6% 19.8%
============ ============
In managing the overall capital structure of the Company, one of the
measures on which we focus is net debt to total capitalization, which
is the percentage of debt to the total invested and borrowed capital
of the Company. In determining this measure, debt and total
capitalization are net of cash on hand which may be available to
reduce borrowings.
CONTACT: Allegheny Technologies
Dan L. Greenfield, 412-394-3004