EX-99 3 exhibit99_1.txt EXHIBIT 99.1 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. Page 1 of 9 "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 Page 2 of 9 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. Page 3 of 9 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. Page 4 of 9 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. Page 5 of 9 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
Page 6 of 9 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.
Page 8 of 9 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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