Exhibit 99.1
Allegheny Technologies Announces Record Quarterly Earnings
PITTSBURGH--(BUSINESS WIRE)--July 25, 2007--Allegheny Technologies
Incorporated (NYSE:ATI):
- -- Sales increased 21.5% to $1.47 billion
- -- Net income increased 43% to $206.5 million, or $2.00 per share
- -- Segment operating profit increased 38% to $357.2 million, or 24.3%
of sales:
-- High Performance Metals: 32.3% of sales
-- Flat-Rolled Products: 20.7% of sales
-- Engineered Products: 9.8% of sales
- -- Year-to-date gross cost reductions of $54 million
- -- Return on capital employed of 36.3%
- -- Return on stockholders' equity of 49.0%
- -- Net debt to total capitalization improved to 0.6%
- -- Cash on hand was $530 million
Allegheny Technologies Incorporated (NYSE:ATI) reported net income
for the second quarter 2007 of $206.5 million, or $2.00 per share, on
sales of $1.47 billion.
In the second quarter 2006, ATI reported net income of $144.3
million, or $1.41 per share, on sales of $1.21 billion.
For the six months ended June 30, 2007, net income was $404.3
million, or $3.93 per share, on sales of $2.84 billion. For the six
months ended June 30, 2006, net income was $250.8 million, or $2.46
per share, on sales of $2.25 billion.
"ATI's diversified global markets, broad product offerings, and
operational execution delivered another quarter of double digit sales
and earnings growth," said L. Patrick Hassey, Chairman, President and
Chief Executive Officer.
"Over 63% of year-to-date sales were generated by our key growth
markets namely aerospace and defense, chemical process industry, oil
and gas, and electrical energy. These key markets remain strong. We
saw the benefits of our strategic growth initiatives as total
shipments of ATI's titanium and titanium alloy products were 8.8
million pounds in the second quarter, nearly 14% higher than the
second quarter 2006.
"In our High Performance Metals segment, sales were over $557
million and operating profit was over 32% of sales. Sales of our
premium titanium alloys and nickel-based superalloys remained strong
to jet engine customers, for both OEM applications and spare parts.
Sales of our titanium alloys to airframe customers continued to grow.
High Performance Metals segment titanium product shipments in the
second quarter 2007 were 16% higher than the second quarter 2006 and
10% higher than the first quarter 2007. Part of this increase is due
to the expanding use of titanium in airframes. Specifically, in the
second quarter 2007 sales of our titanium alloys to airframe customers
were 43% higher than the first quarter 2007 and more than four times
higher than the second quarter 2006. Looking at our nickel-based
alloys and superalloys and specialty alloys, segment shipments were 6%
higher than the second quarter 2006 and 14% higher than the first
quarter 2007 driven largely by increased demand from the jet engine
market.
"We think we have good visibility into the demand from the
aerospace market, and we believe ATI is very well positioned to
benefit from exciting growth prospects in this market for many years.
"In addition, our exotic alloys shipments grew by nearly 40%
compared to last year's second quarter, primarily due to demand from
the chemical process industry and electrical energy markets.
"Our Flat-Rolled Products segment has been transformed into a
highly profitable diversified specialty metals business. The magnitude
of this transformation continued in the second quarter 2007 as sales
were approximately $805 million and operating profit reached a record
$166 million, or nearly 21% of sales, even while total shipments were
comparatively low. Sales of our specialty and titanium sheet,
specialty plate, and grain-oriented silicon electrical steel were all
strong. In addition, substitution to lower nickel-bearing alloys
continued to accelerate. However, many customers were cautious due to
volatile raw materials prices, particularly for nickel, and the
resulting high surcharges in the second quarter. This resulted in weak
demand throughout the quarter for many stainless steel products.
"Here are some points to consider about the transformation of our
Flat-Rolled Products segment. Productivity has improved by over 40%
since 2004. Gross cost reductions totaled nearly $300 million during
the same period. New capital investments are paying off with improved
productivity and reduced costs. In addition, we decoupled product
pricing, and are more focused on key global growth markets,
specifically chemical process industry, oil and gas, electrical
energy, and aerospace and defense, which together accounted for nearly
50% of year-to-date segment sales.
"Turning to our Engineered Products segment, operating profit was
lower than the level we expect. Results in the tungsten products
business were negatively impacted by the slower than planned ramp up
of the use of ore in producing APT (ammonium paratungstate) in our
newly expanded APT plant. This forced us to consume more scrap in the
production of APT, which drove scrap material costs higher than
expected in the quarter. This higher cost inventory will carry well
into the third quarter. While we are now self-sufficient for our APT
needs, including the flexibility to use either tungsten ore or scrap
to produce APT, we don't expect to see the cost benefits of this
capability until the fourth quarter 2007.
"Looking ahead, we expect ATI's overall performance in the second
half 2007 to be at least as good as that achieved in the first half
2007, with fourth quarter earnings stronger than third quarter
earnings. We expect the third quarter to reflect higher costs of
approximately $0.07 to $0.09 per share associated with scheduled major
maintenance outages at several plants. The second half 2007 outlook
could be impacted by continued volatility in raw materials costs."
In concluding his remarks, Mr. Hassey said, "Our key growth
markets remain strong, and we are well positioned to benefit from
these markets. ATI's strategic capital projects remain on track and
are expected to contribute significant growth with very good returns.
We are in the process of replacing our existing $325 million secured
domestic revolving credit facility with a new $400 million unsecured
domestic revolving credit facility. We are pleased that this new
credit facility has been extremely well received by our bank group.
The new facility should be in place by the end of July.
"In our High Performance Metals segment, titanium alloy shipments
under long-term agreements are expected to continue to grow with the
robust aerospace build rate. We also expect key growth markets in our
Flat-Rolled Products segment to remain strong in 2007. Flat-rolled
products orders and shipments should improve once the price of nickel
stabilizes."
Three Months Ended Six Months Ended
June 30 June 30
In Millions
-------------------------------------
2007 2006(a) 2007 2006(a)
-------- --------- -------- ---------
Sales $1,471.3 $1,210.8 $2,843.9 $2,251.3
Net income $ 206.5 $ 144.3 $ 404.3 $ 250.8
Per Diluted Share
-------------------------------------
Net income $ 2.00 $ 1.41 $ 3.93 $ 2.46
(a) Net income and net income per diluted share for 2006 have been
restated in accordance with the adoption of the FASB Staff Position
titled "Accounting for Planned Major Maintenance Activities".
Second Quarter 2007 Financial Highlights
-- Sales increased to $1.47 billion, 21.5% higher than the second
quarter 2006. Compared to the second quarter 2006, sales
increased 24% in the High Performance Metals segment, 24% in
the Flat-Rolled Products segment, and were essentially flat
for the Engineered Products segment.
-- Segment operating profit improved to $357.2 million, an
increase of $98.3 million, or 38%, compared to the second
quarter 2006 as a result of improved performance of the High
Performance Metals and Flat-Rolled Products segments. Second
quarter 2007 results included a LIFO inventory valuation
reserve charge of $21.7 million, due primarily to higher
nickel and nickel-bearing scrap prices. The LIFO inventory
valuation reserve charge was $45.5 million in the second
quarter 2006.
-- Net income was $206.5 million, or $2.00 per share, compared to
$144.3 million, or $1.41 per share, in the second quarter
2006. Results for the second quarter 2007 included a provision
for income taxes of $119.4 million, or 36.6% of income before
tax. The second quarter 2006 provision for income taxes was
$65.4 million, or 31.2% 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.
-- Cash flow from operations for the 2007 first half was $186.7
million as improved operating earnings were partially offset
by a further investment of $318.7 million in managed working
capital.
-- Cash on hand was $529.6 million at the end of the second
quarter 2007.
-- Gross cost reductions, before the effects of inflation,
totaled $54.3 million company-wide for the 2007 first half.
High Performance Metals Segment
Market Conditions
-- Demand for our titanium alloys, nickel-based alloys and
superalloys, and vacuum-melted specialty alloys was strong
from the aerospace and defense, and oil and gas markets.
Demand was strong for our exotic alloys from the global
chemical process industry, aerospace and defense, and nuclear
electrical energy markets.
Second quarter 2007 compared to second quarter 2006
-- Sales increased 24% to $557.7 million. Shipments increased 16%
for titanium and titanium alloys, 6% for nickel-based and
specialty alloys, and 39% for exotic alloys. The improvement
for titanium and titanium alloy shipments reflects the
increasing business activity associated with supplying
material for aircraft airframes. Average selling prices
increased 43% for nickel-based and specialty alloys, but
decreased 7% for both titanium and titanium alloys, and for
exotic alloys. The increase in the average selling price for
nickel-based and specialty alloys was primarily due to
improved product mix and increased index pricing associated
with higher raw material costs, primarily nickel. The decline
in titanium and titanium alloy pricing was primarily due to
reduced index pricing associated with lower raw material
costs. The decline in the average price of exotic alloys was
primarily due to product mix.
-- Segment operating profit increased to $180.2 million, or 32.3%
of sales, a $23.0 million increase compared to the second
quarter 2006. The increase in operating profit primarily
resulted from increased shipments and the benefits of gross
cost reductions. Raw material cost inflation and higher
inventory levels resulted in a LIFO inventory valuation
reserve charge of $1.6 million in the second quarter 2007,
compared to a $18.5 million charge in the second quarter 2006.
-- Results benefited from $11.6 million of gross cost reductions.
Flat-Rolled Products Segment
Market Conditions
-- Demand was strong for our specialty and titanium sheet,
specialty plate, and grain-oriented silicon electrical steel
products from the chemical process industry, oil and gas,
electrical energy, and aerospace and defense markets. Demand
for stainless sheet commodity products was lower primarily due
to U.S. service center customers reducing inventories and
remaining cautious due to volatile nickel costs and the
related surcharges.
Second quarter 2007 compared to second quarter 2006
-- Sales were $804.6 million, 24% higher than the second quarter
2006, as significantly higher raw material surcharges and
improved product mix offset a 29% decrease in pounds shipped.
While total high-value products shipments were 8% lower than
the second quarter 2006, shipments of specialty and titanium
sheet, specialty plate, and grain-oriented silicon electrical
steel increased 4%. Shipments of commodity products decreased
40%. Average transaction prices for all products, which
include surcharges, were 73% higher.
-- Segment operating profit increased to $166.3 million, or 20.7%
of sales, a $79.8 million increase compared to the second
quarter 2006. The significant increase in operating profit was
primarily as a result of improved product mix for higher value
products and the benefits of gross cost reductions. Raw
material cost inflation, primarily nickel and nickel-bearing
scrap, resulted in a LIFO inventory valuation reserve charge
of $20.2 million in the second quarter 2007, compared to a
$27.0 million charge in the second quarter 2006.
-- Results benefited from $14.2 million in gross cost reductions.
Engineered Products Segment
Market Conditions
-- Demand for our tungsten and tungsten carbide products was
strong from the power generation, aerospace and defense, and
medical markets, and demand was soft from the oil and gas
market for down-hole drilling applications. Demand was strong
for our forged products from the construction and mining, and
oil and gas markets, and demand was soft from the
transportation market. Demand for our cast products was strong
from the wind energy market, and was good from the
transportation and oil and gas markets. Demand remained very
strong for our titanium precision metal processing conversion
services.
Second quarter 2007 compared to second quarter 2006
-- Sales of $109.0 million were comparable to the second quarter
2006.
-- Segment operating profit was $10.7 million, or 9.8% of sales,
compared to $15.2 million, or 13.8% of sales, for the
comparable 2006 period. The decline in operating profit was
primarily due to higher purchased raw material costs and
start-up costs associated with fully expanding our capacity to
internally source all of our ammonium paratungstate (APT)
requirements.
-- Results benefited from $0.8 million of gross cost reductions.
Retirement Benefit Expense
-- Retirement benefit expense decreased to $7.5 million in the
second quarter 2007, compared to $20.3 million in the second
quarter 2006, primarily as a result of higher than expected
returns on plan assets in 2006 and the positive benefits of
the voluntary pension contribution made in 2006.
-- For the second quarter 2007, retirement benefit expense
included in cost of sales was $5.1 million and in selling and
administrative expenses was $2.4 million. For the second
quarter 2006, the amount of retirement benefit expense
included in cost of sales was $14.0 million, and the amount
included in selling and administrative expenses was $6.3
million.
Other Expenses
-- Selling and administrative expenses as a percentage of sales
declined to 4.9% in the 2007 second quarter from 6.2% in the
same period of 2006.
-- Corporate expenses for the second quarter 2007 were $17.4
million, compared to $18.0 million in the year-ago period.
This decrease was primarily due to lower expenses associated
with long-term performance-based cash incentive compensation
programs.
-- Second quarter 2007 interest expense, net of interest income,
decreased to $2.6 million from $5.8 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.
Income Taxes
Results for the second quarter 2007 included a provision for
income taxes of $119.4 million, or 36.6% of income before tax, for
U.S. Federal, foreign and state income taxes. The second quarter 2006
included a provision of $65.4 million, or 31.2% of income before tax.
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.
Cash Flow, Working Capital and Debt
-- Cash on hand was $529.6 million at the end of the second
quarter 2007, an increase of $27.3 million from year end 2006.
-- Cash flow from operations during the 2007 first half was
$186.7 million as improved operating earnings were partially
offset by a further investment of $318.7 million in managed
working capital.
-- The investment in managed working capital resulted from a
$98.7 million increase in accounts receivable, which reflects
the significantly higher level of sales in the second quarter
2007 compared to the fourth quarter 2006, and a $309.1 million
increase in inventory mostly as a result of increased
operating volumes and higher raw material costs, partially
offset by a $89.1 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, 2007, managed working capital was 31.5% of
annualized sales, compared to 29.0% of annualized sales at
year-end 2006. We define managed working capital as accounts
receivable plus gross inventories less accounts payable.
-- Cash used in investing activities was $147.3 million in the
2007 first half and consisted primarily of capital
expenditures.
-- Cash used in financing activities was $12.1 million in the
2007 first half as dividend payments of $26.5 million and a
reduction in borrowings of $13.0 million were partially offset
by $5.0 million of proceeds received from the exercise of
stock options and tax benefits on share-based compensation of
$22.4 million.
-- Net debt as a percentage of total capitalization improved to
0.6% at the end of the second quarter 2007, compared to 3.3%
at the end of 2006.
-- There were no borrowings outstanding during the 2007 first
half or all of 2006 under ATI's $325 million secured domestic
borrowing facility, although a portion of the letters of
credit capacity was utilized during both periods.
-- In July 2007, we began the process of replacing our existing
$325 million secured domestic revolving credit facility with a
new $400 million unsecured domestic revolving credit facility.
The new credit facility provides ATI with reduced letter of
credit and borrowing rates, and removes an impediment
identified by one of the credit rating agencies to achieving
an investment grade corporate credit rating. We anticipate
that new facility will be in place by the end of July.
New Accounting Pronouncement Adopted in 2007
-- As required, in the first quarter 2007 we adopted Financial
Accounting Standards Board Staff ("FASB") Position titled
"Accounting for Planned Major Maintenance Activities" ("FSP
PMMA"). The FSP PMMA prohibits the use of the
accrue-in-advance method of accounting for planned major
maintenance activities, which is the policy we had used to
record planned plant outage costs on an interim basis within a
fiscal year, and also to record the costs of major equipment
rebuilds which extend the life of capital equipment. Under the
FSP PMMA, we now report results using the deferral method
whereby major equipment rebuilds are capitalized as costs are
incurred and amortized to expense over the estimated useful
lives, and planned plant outage costs are fully recognized in
the interim period of the outage. As required by the FSP PMMA,
the Company's financial statements have been restated for all
periods as if the FSP PMMA had been applied to the earliest
period presented. The adoption of the FSP PMMA on January 1,
2007, resulted in an increase to retained earnings of $10.3
million, net of related taxes. Additionally, net income for
the three and six months ended June 30, 2006, increased $3.9
million, or $0.04 per share, and $7.9 million, or $0.08 per
share, respectively.
Allegheny Technologies will conduct a conference call with
investors and analysts on July 25, 2007, 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, the
possibility of project cost overruns or unanticipated costs and
expenses, 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; (g) our ability to replace existing
credit arrangements on the terms or timing anticipated; and (h) other
risk factors summarized in our Annual Report on Form 10-K for the year
ended December 31, 2006, 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
$5.5 billion during the most recent four quarters ending June 30,
2007. ATI has approximately 9,500 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
------------------- -------------------
2007 2006 (a) 2007 2006 (a)
--------- --------- --------- ---------
Sales $1,471.3 $1,210.8 $2,843.9 $2,251.3
Costs and expenses:
Cost of sales 1,069.8 918.7 2,055.9 1,711.1
Selling and administrative
expenses 72.7 75.4 150.8 148.3
--------- --------- --------- ---------
Income before interest, other
income (expense) and income
taxes 328.8 216.7 637.2 391.9
Interest expense, net (2.6) (5.8) (6.9) (13.3)
Other income (expense), net (0.3) (1.2) 0.2 (2.5)
--------- --------- --------- ---------
Income before income tax
provision 325.9 209.7 630.5 376.1
Income tax provision 119.4 65.4 226.2 125.3
--------- --------- --------- ---------
Net income $ 206.5 $ 144.3 $ 404.3 $ 250.8
========= ========= ========= =========
Basic net income per common
share $ 2.03 $ 1.45 $ 3.98 $ 2.53
========= ========= ========= =========
Diluted net income per common
share $ 2.00 $ 1.41 $ 3.93 $ 2.46
========= ========= ========= =========
Weighted average common shares
outstanding -- basic
(millions) 101.8 99.7 101.6 99.2
Weighted average common shares
outstanding -- diluted
(millions) 103.1 102.4 102.9 102.1
Actual common shares
outstanding--end of period
(millions) 102.2 100.7 102.2 100.7
(a) Results for 2006 have been restated in accordance with the
adoption of the FASB Staff Position titled "Accounting for Planned
Major Maintenance Activities".
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
------------------- -------------------
2007 2006 (a) 2007 2006 (a)
--------- --------- --------- ---------
Sales:
High Performance Metals $ 557.7 $ 450.2 $1,035.1 $ 862.3
Flat-Rolled Products 804.6 650.8 1,588.3 1,168.0
Engineered Products 109.0 109.8 220.5 221.0
--------- --------- --------- ---------
Total External Sales $1,471.3 $1,210.8 $2,843.9 $2,251.3
========= ========= ========= =========
Operating Profit:
High Performance Metals $ 180.2 $ 157.2 $ 347.7 $ 302.4
% of Sales 32.3% 34.9% 33.6% 35.1%
Flat-Rolled Products 166.3 86.5 326.5 138.0
% of Sales 20.7% 13.3% 20.6% 11.8%
Engineered Products 10.7 15.2 23.3 33.0
% of Sales 9.8% 13.8% 10.6% 14.9%
--------- --------- --------- ---------
Operating Profit 357.2 258.9 697.5 473.4
% of Sales 24.3% 21.4% 24.5% 21.0%
Corporate expenses (17.4) (18.0) (38.4) (31.9)
Interest expense, net (2.6) (5.8) (6.9) (13.3)
Other expense, net of gains on
asset sales (3.8) (5.1) (6.6) (11.2)
Retirement benefit expense (7.5) (20.3) (15.1) (40.9)
--------- --------- --------- ---------
Income before income taxes $ 325.9 $ 209.7 $ 630.5 $ 376.1
========= ========= ========= =========
(a) Results for 2006 have been restated in accordance with the
adoption of the FASB Staff Position titled "Accounting for Planned
Major Maintenance Activities".
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Balance Sheets
(Current period unaudited--Dollars in millions)
June 30, December 31,
2007 2006 (a)
-------- ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 529.6 $ 502.3
Accounts receivable, net of allowances for
doubtful accounts of $5.7 at June 30, 2007 and
December 31, 2006, respectively 709.9 610.9
Inventories, net 1,054.0 798.7
Deferred income taxes 26.4 26.6
Prepaid expenses and other current assets 34.7 49.4
---------------------
Total Current Assets 2,354.6 1,987.9
Property, plant and equipment, net 980.2 871.7
Cost in excess of net assets acquired 209.4 206.5
Deferred income taxes 117.9 119.0
Other assets 124.0 95.4
-------- ------------
Total Assets $3,786.1 $3,280.5
======== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 445.3 $ 355.1
Accrued liabilities 229.9 241.6
Accrued income taxes 66.2 22.7
Short term debt and current portion of long-term
debt 22.2 23.7
---------------------
Total Current Liabilities 763.6 643.1
Long-term debt 518.5 529.9
Retirement benefits 452.0 464.4
Other long-term liabilities 170.2 140.2
-------- ------------
Total Liabilities 1,904.3 1,777.6
-------- ------------
Total Stockholders' Equity 1,881.8 1,502.9
-------- ------------
Total Liabilities and Stockholders' Equity $3,786.1 $3,280.5
======== ============
(a) 2006 has been restated in accordance with the adoption of the FASB
Staff Position titled "Accounting for Planned Major Maintenance
Activities".
Allegheny Technologies Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited - Dollars in millions)
Six Months Ended
June 30
-----------------
2007 2006 (a)
-------- --------
Operating Activities:
Net income $ 404.3 $ 250.8
Depreciation and amortization 48.6 39.9
Change in managed working capital (318.7) (331.2)
Change in retirement benefits 4.4 26.1
Accrued liabilities and other 48.1 45.5
-------- --------
Cash provided by operating activities 186.7 31.1
-------- --------
Investing Activities:
Purchases of property, plant and equipment (151.5) (103.5)
Asset disposals and other 4.2 1.5
-------- --------
Cash used in investing activities (147.3) (102.0)
-------- --------
Financing Activities:
Net decrease in debt (13.0) (2.4)
Dividends paid (26.5) (20.0)
Exercises of stock options 5.0 27.3
Tax benefits on share-based compensation 22.4 16.5
-------- --------
Cash provided by (used in) financing activities (12.1) 21.4
-------- --------
Increase (decrease) in cash and cash equivalents 27.3 (49.5)
Cash and cash equivalents at beginning of period 502.3 362.7
-------- --------
Cash and cash equivalents at end of period $ 529.6 $ 313.2
======== ========
(a) Results for 2006 have been restated in accordance with the
adoption of the FASB Staff Position titled "Accounting for Planned
Major Maintenance Activities".
Allegheny Technologies Incorporated and Subsidiaries
Selected Financial Data
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
Volume: 2007 2006 2007 2006
--------- -------- ------- --------
High Performance Metals (000's
lbs.)
Nickel-based and specialty
alloys 11,837 11,162 22,189 22,139
Titanium mill products 7,809 6,735 14,877 13,126
Exotic alloys 1,426 1,028 2,411 2,205
Flat-Rolled Products (000's lbs.)
High value 120,869 130,905 248,677 258,665
Commodity 149,437 248,248 311,117 433,693
--------- -------- ------- --------
Flat-Rolled Products total 270,306 379,153 559,794 692,358
Average Prices:
High Performance Metals (per lb.)
Nickel-based and specialty
alloys $19.75 $13.84 $18.89 $13.38
Titanium mill products $31.75 $34.05 $32.29 $32.85
Exotic alloys $38.66 $41.77 $40.65 $39.92
Flat-Rolled Products (per lb.)
High value $3.34 $2.35 $3.28 $2.29
Commodity $2.63 $1.37 $2.46 $1.31
Flat-Rolled Products combined
average $2.95 $1.71 $2.82 $1.68
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Managed Working Capital
(Unaudited - Dollars in millions)
June 30, December 31,
2007 2006
--------- ------------
Accounts receivable $ 709.9 $ 610.9
Inventory 1,054.0 798.7
Accounts payable (445.3) (355.1)
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Subtotal 1,318.6 1,054.5
Allowance for doubtful accounts 5.7 5.7
LIFO reserve 509.3 466.7
Corporate and other 67.3 55.3
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Managed working capital $1,900.9 $1,582.2
========= ============
Annualized prior 2 months sales $6,038.4 $5,453.5
========= ============
Managed working capital as a % of annualized
sales 31.5% 29.0%
June 30, 2007 change in managed working capital $ 318.7
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,
2007 2006 (a)
--------- ------------
Total debt $ 540.7 $ 553.6
Less: Cash (529.6) (502.3)
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Net debt $ 11.1 $ 51.3
Net debt $ 11.1 $ 51.3
Stockholders' equity 1,881.8 1,502.9
--------- ------------
Total capital $1,892.9 $1,554.2
Net debt to capital ratio 0.6% 3.3%
========= ============
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.
(a) 2006 has been restated in accordance with the adoption of the FASB
Staff Position titled "Accounting for Planned Major Maintenance
Activities".
CONTACT: Allegheny Technologies Incorporated
Dan L. Greenfield, 412-394-3004