-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H4UVgFBSfmOg+zRgdu5GRo08N+yb74C7CvVReB5vFiB246X4m8UgEmuBQ8Ev6Vs5 Uk6eZORzHRsuPv731J7/qg== 0001018963-99-000002.txt : 19990518 0001018963-99-000002.hdr.sgml : 19990518 ACCESSION NUMBER: 0001018963-99-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLEGHENY TELEDYNE INC CENTRAL INDEX KEY: 0001018963 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 251792394 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-12001 FILM NUMBER: 99627723 BUSINESS ADDRESS: STREET 1: 1000 SIX PPG PLACE CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4123942800 MAIL ADDRESS: STREET 1: 100 SIX PPG PLACE CITY: PITTSBURGH STATE: PA ZIP: 15222 10-Q 1 FIRST QUARTER 1999 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1999 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From _____ to _____ Commission File Number 1-12001 ALLEGHENY TELEDYNE INCORPORATED _____________________________________________________________________________ (Exact Name of Registrant as Specified in its Charter) Delaware 25-1792394 _______________________________________ ___________________________ (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 1000 Six PPG Place Pittsburgh, Pennsylvania 15222-5479 _______________________________________ ___________________________ Address of Principal Executive Offices) (Zip Code) (412) 394-2800 ___________________________________________________ Registrant's Telephone Number, Including Area Code) Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- At May 10, 1999, Registrant had outstanding 192,708,670 shares of its Common Stock. ALLEGHENY TELEDYNE INCORPORATED SEC FORM 10-Q QUARTER ENDED MARCH 31, 1999 INDEX Page No. PART I. - FINANCIAL INFORMATION Item 1. Financial Statements 3 Consolidated Balance Sheets 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 18 PART II. - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 20 SIGNATURES 21 EXHIBIT INDEX 22 2 PART I. FINANCIAL INFORMATION Item 1. Financial Statements ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions except share and per share amounts)
March 31, December 31, 1999 1998 ---- ---- (Unaudited) ASSETS Cash and cash equivalents $ 57.5 $ 74.8 Accounts receivable 565.7 534.7 Inventories 632.9 659.9 Deferred income taxes 58.6 59.3 Tax refund 3.6 5.9 Prepaid expenses and other current assets 28.4 29.9 -------- -------- Total Current Assets 1,346.7 1,364.5 Property, plant and equipment 997.4 1,003.6 Prepaid pension cost 445.8 418.6 Cost in excess of net assets acquired 253.3 256.0 Other assets 119.3 132.8 -------- -------- Total Assets $ 3,162.5 $ 3,175.5 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 221.0 $ 227.0 Accrued liabilities 296.4 327.1 Short-term debt and current portion of long-term debt 133.7 68.2 -------- -------- Total Current Liabilities 651.1 622.3 Long-term debt 394.8 446.8 Accrued postretirement benefits 582.1 582.6 Other 201.2 183.9 -------- -------- Total Liabilities 1,829.2 1,835.6 -------- -------- Stockholders' Equity: Preferred value, par value $0.10: authorized- 50,000,000 shares; issued-None -- -- Common stock, par value $0.10, authorized-600,000,000 shares; issued-197,937,664 shares at March 31, 1999 and 197,937,664 shares at December 31, 1998; outstanding-193,160,199 shares at March 31, 1999 and 194,873,151 shares at December 31, 1998 19.8 19.8 Additional paid-in capital 468.8 467.3 Retained earnings 948.6 923.9 Treasury stock: 4,777,465 shares at March 31, 1999 and 3,064,513 shares at December 31, 1998 (101.0) (67.6) Foreign currency translation losses (6.1) (5.9) Unrealized gains on securities 3.2 2.4 -------- -------- Total Stockholders' Equity 1,333.3 1,339.9 -------- -------- Total Liabilities and Stockholders' Equity $ 3,162.5 $ 3,175.5 ======== ========
The accompanying notes are an integral part of these statements. 3 ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In millions except per share amounts) (Unaudited)
Three Months Ended March 31, ----------------------- 1999 1998 --------- --------- Sales $ 934.6 $ 1,002.2 Costs and expenses: Cost of sales 716.9 773.3 Selling and administrative expenses 114.9 121.5 Merger and restructuring costs 0.9 60.6 Interest expense, net 8.9 3.9 -------- -------- 841.6 959.3 Earnings before other income 93.0 42.9 Other income 0.2 2.8 -------- -------- Income before income taxes 93.2 45.7 Provision for income taxes 32.6 18.8 -------- -------- Net income $ 60.6 $ 26.9 ======== ======== Basic net income per common share $ 0.31 $ 0.14 ======== ======== Diluted net income per common share $ 0.31 $ 0.14 ======== ========
The accompanying notes are an integral part of these statements. 4 ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
Three Months Ended March 31, ------------------ 1999 1998 ---- ---- Operating Activities: Net income $ 60.6 $ 26.9 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32.0 28.0 Deferred income taxes 3.4 (1.6) Non-cash restructuring costs -- 33.9 Change in operating assets and liabilities: Prepaid pension cost (27.3) (25.2) Inventories 27.0 22.9 Accounts receivable (25.6) (24.4) Accrued liabilities (17.2) 6.8 Accrued income taxes 6.5 (19.9) Accounts payable (6.3) (26.7) Other 16.3 2.2 ------ ------ Cash provided by operating activities 69.4 22.9 Investing Activities: Purchases of property, plant and equipment (24.1) (32.7) Proceeds from the sales of businesses and investments 5.8 -- Purchases of businesses and investment in ventures (1.1) (107.7) Disposals of property, plant and equipment 0.9 1.6 Sales of short-term investments -- 34.4 Other (1.9) (0.5) ------ ------ Cash used in investing activities (20.4) (104.9) Financing Activities: Net borrowings under credit agreements 15.1 105.1 Payments on long-term debt and capital leases (1.0) (1.4) ------ ------ Net increase in debt 14.1 103.7 Purchases of treasury stock (52.2) -- Cash dividends (31.1) (27.9) Exercises of stock options 2.9 3.9 ------ ------ Cash provided by (used in) financing activities (66.3) 79.7 Decrease in cash and cash equivalents (17.3) (2.3) Cash and cash equivalents at beginning of the year 74.8 53.7 ------ ------ Cash and cash equivalents at end of period $ 57.5 $ 51.4 ====== ======
The accompanying notes are an integral part of these statements 5 ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Accounting Policies Basis of Presentation These interim consolidated financial statements include the accounts of Allegheny Teledyne Incorporated and its subsidiaries ("Allegheny Teledyne" or the "Company"). These unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of the Company, all adjustments (which include only normal recurring adjustments) considered necessary for a fair presentation have been included. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's 1998 Annual Report. The results of operations for these interim periods are not necessarily indicative of the operating results for a full year. Accounting Pronouncements Financial Accounting Standards Board Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June 1998. This statement establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Company is presently evaluating the effect of adopting this statement. Note 2. Inventories Inventories were as follows (in millions):
March 31, December 31, 1999 1998 ----------- ------------ Raw materials and supplies $ 169.2 $ 196.1 Work-in-process 453.7 471.6 Finished goods 137.8 133.4 ------ ------ Total inventories at current cost 760.7 801.1 Less allowances to reduce current cost values to LIFO basis (112.6) (128.7) Progress payments (15.2) (12.5) ------ ------ Total inventories $ 632.9 $ 659.9 ====== ======
6 Note 3. Business Segments Information on the Company's business segments was as follows (in millions):
Three Months Ended March 31, ------------------ 1999 1998 ------- ------- Sales: Specialty metals $ 507.2 $ 544.8 Aerospace and electronics 242.3 237.9 Industrial 122.1 131.9 Consumer 56.4 51.5 ------- -------- Total continuing operations 928.0 966.1 Operations sold or held for sale 6.6 36.1 ------- -------- Total sales $ 934.6 $1,002.2 ======= ======== Operating Profit: Specialty metals $ 59.3 $ 70.4 Aerospace and electronics 25.7 21.9 Industrial 12.6 14.3 Consumer 2.3 1.8 ------- -------- Total operating profit 99.9 108.4 Merger and restructuring costs (0.9) (60.6) Corporate expenses (9.2) (10.3) Interest expense, net (8.9) (3.9) Investments and operations sold or held for sale (3.8) 1.5 Excess pension income 16.1 10.6 ------- -------- Income before income taxes $ 93.2 $ 45.7 ======= ========
In the 1999 first quarter, merger and restructuring costs included costs of $0.9 million related to the previously announced proposed spin-offs of the Aerospace and Electronics and the Consumer Segments into two freestanding public companies. In the 1998 first quarter, merger and restructuring costs included deal costs of $10.3 million related to the acquisition of OREMET, along with pretax charges of $5.8 million for a planned salaried workforce reduction related to integrating the operations of OREMET and Wah Chang. Allegheny Ludlum also recorded a $12.1 million pretax charge due to a planned salaried workforce reduction. In addition, pretax charges of $32.4 million were recorded for costs associated with exiting certain product lines and asset impairments resulting from recently completed capital expenditure programs. Pension income in excess of amounts allocated to business segments to offset pension and other postretirement benefit expenses is presented separately. 7 Note 4. Net Income Per Share The following table sets forth the computation of basic and diluted net income per common share (in millions, except per share amounts):
Three Months Ended March 31, ------------------------- 1999 1998 -------- -------- Numerator: Numerator for basic and diluted net income per common share - net income available to common stockholders $ 60.6 $ 26.9 ======= ======= Denominator: Weighted average shares 194.2 196.1 Contingent issuable stock 0.2 0.1 ------- ------- Denominator for basic net income per common share 194.4 196.2 Effect of dilutive securities: Employee stock options 1.0 2.2 ------- ------- Dilutive potential common shares 1.0 2.2 Denominator for diluted net income per common share - adjusted weighted average shares 195.4 198.4 ======= ======= Basic net income per common share $ 0.31 $ 0.14 ======= ======= Diluted net income per common share $ 0.31 $ 0.14 ======= =======
Note 5. Comprehensive Income The components of comprehensive income, net of tax, were as follows (in millions):
Three Months Ended March 31, -------------------- 1999 1998 -------- -------- Net income $ 60.6 $ 26.9 Foreign currency translation losses (0.2) (1.3) Unrealized gains on securities 0.8 0.7 ------- ------- Comprehensive income $ 61.2 $ 26.3 ======= =======
Note 6. Stockholders' Equity Allegheny Teledyne paid a cash dividend of $0.16 per share of common stock in both the 1999 and 1998 first quarters. On May 13, 1999, the Company's Board of Directors declared a regular quarterly dividend of $0.16 per share of common stock. The dividend is payable on June 15, 1999 to stockholders of record at the close of business on June 1, 1999. 8 On October 1, 1998, the Company's Board of Directors authorized a stock repurchase program to acquire up to 20 million shares of Allegheny Teledyne's common stock. The shares may be purchased from time-to-time in the open market or in negotiated transactions. In the 1999 first quarter, the Company had purchased 2.6 million shares for $52.2 million under this program. From the inception of the share repurchase program through May 12, 1999, the Company has repurchased approximately 5.8 million shares at an aggregate cost of $118.0 million. Note 7. Commitments and Contingencies The Company is subject to federal, state and local environmental laws and regulations which require that it investigate and remediate the effects of the release or disposal of materials at sites associated with past and present operations, including sites at which the Company has been identified as a potentially responsible party under the federal Superfund laws and comparable state laws. The Company is currently involved in the investigation and remediation of a number of sites under these laws. Environmental liabilities are recorded when the Company's liability is probable and the costs are reasonably estimable. In many cases, however, investigations are not yet at a stage where the Company has been able to determine whether it is liable or, if liability is probable, to reasonably estimate the loss or range of loss, or certain components thereof. Estimates of the Company's liability are further subject to uncertainties regarding the nature and extent of site contamination, the range of remediation alternatives available, evolving remediation standards, imprecise engineering evaluations and estimates of appropriate cleanup technology, methodology and cost, the extent of corrective actions that may be required, and the number and financial condition of other potentially responsible parties, as well as the extent of their responsibility for the remediation. Accordingly, as investigation and remediation of these sites proceeds, it is likely that adjustments in the Company's accruals will be necessary to reflect new information. The amounts of any such adjustments could have a material adverse effect on the Company's results of operations in a given period, but the amounts, and the possible range of loss in excess of amounts accrued, are not reasonably estimable. Based on currently available information, however, management does not believe future environmental costs in excess of those accrued with respect to sites with which the Company has been identified are likely to have a material adverse effect on the Company's financial condition or liquidity. However, there can be no assurance that additional future developments, administrative actions or liabilities relating to environmental matters will not have a material adverse effect on the Company's financial condition or results of operations. At March 31, 1999, the Company's reserves for environmental remediation obligations totaled approximately $31.7 million, of which approximately $8.3 million was included in other current liabilities. The reserve includes estimated probable future costs of $11.7 million for federal Superfund and comparable state-managed sites; $4.1 million for formerly owned or operated sites for which the Company has remediation or indemnification obligations; $8.1 million for owned or controlled sites at which Company operations have been discontinued; and $7.8 million for sites utilized by the Company in its ongoing operations. The Company is evaluating whether it may be able to recover a portion of future costs for environmental liabilities from its insurance carriers and from third parties other than participating potentially responsible parties. The timing of expenditures depends on a number of factors that vary by site, including the nature and extent of contamination, the number of potentially responsible parties, the timing of regulatory approvals, the complexity of the investigation and remediation, and the standards for 9 remediation. The Company expects that it will expend present accruals over many years, and will complete remediation of all sites for which it has identified remediation obligations in up to thirty years. Various claims (whether based on U.S. Government or Company audits and investigations or otherwise) have been or may be asserted against the Company related to its U.S. Government contract work, including claims based on business practices and cost classifications and actions under the False Claims Act. Although such claims are generally resolved by detailed fact-finding and negotiation, on those occasions when they are not so resolved, civil or criminal legal or administrative proceedings may ensue. Depending on the circumstances and the outcome, such proceedings could result in fines, penalties, compensatory and treble damages or the cancellation or suspension of payments under one or more U.S. Government contracts. Under government regulations, a company, or one or more of its operating divisions or units, can also be suspended or debarred from government contracts based on the results of investigations. However, although the outcome of these matters cannot be predicted with certainty, management does not believe there is any audit, review or investigation currently pending against the Company of which management is aware that is likely to result in suspension or debarment of the Company, or that is otherwise likely to have a material adverse effect on the Company's financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company's results of operations for that period. The Company learns from time to time that it has been named as a defendant in civil actions filed under seal pursuant to the False Claims Act. Generally, since such cases are under seal, the Company does not in all cases possess sufficient information to determine whether the Company will sustain a material loss in connection with such cases, or to reasonably estimate the amount of any loss attributable to such cases. A number of other lawsuits, claims and proceedings have been or may be asserted against the Company relating to the conduct of its business, including those pertaining to product liability, patent infringement, commercial, employment, employee benefits, tax, and stockholder matters. While the outcome of litigation cannot be predicted with certainty, and some of these lawsuits, claims or proceedings may be determined adversely to the Company, management does not believe that the disposition of any such pending matters is likely to have a material adverse effect on the Company's financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company's results of operations for that period. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Allegheny Teledyne Incorporated is a group of technology-based manufacturing businesses with significant concentration in specialty metals, complemented by aerospace and electronics, industrial, and consumer products. The Company's Specialty Metals Segment accounted for 55 percent of the Company's total sales from continuing operations of $928.0 million for the 1999 first quarter. Its Aerospace and Electronics, Industrial and Consumer Segments accounted for 26 percent, 13 percent and 6 percent, respectively, of total sales from continuing operations for the 1999 first quarter. Such percentages were approximately the same for the 1998 first quarter, where total sales from continuing operations were $966.1 million. For the 1999 first quarter, operating profit was $99.9 million compared to $108.4 million for the same 1998 period. Sales from continuing operations declined 3.9 percent to $928.0 million for the 1999 first quarter compared to $966.1 million for the 1998 period. The lower results were due mainly to continuing difficult pricing conditions in stainless steel, titanium and tungsten carbide markets and reduced demand for high performance metals in the commercial aerospace and oil and gas markets. Continuing cost reduction efforts, lower raw material costs, and the diversification of the Company's specialty metals businesses partially offset the impacts of continuing weak conditions in several of the Company's markets. Net income was $60.6 million, or $0.31 per diluted share, for the 1999 first quarter, compared to $26.9 million, or $0.14 per diluted share, for the same 1998 period. Net income in the first quarter 1999 was impacted by $4.4 million, or $0.02 per diluted share, relating to start-up costs associated with several recent major strategic capital investments in the Specialty Metals Segment, operating losses associated with businesses sold during the quarter, and costs relating to the previously announced proposed spin-offs of the Aerospace and Electronics and Consumer Segments. In addition, net income for the first quarter 1999 was also impacted by higher interest expenses as a result of higher levels of debt from more than $400 million in cash outlays for strategic acquisitions and capital investments in 1998. Net income in the first quarter 1998 was reduced by $40.9 million, or $0.21 per diluted share, relating to merger and restructuring costs in the Specialty Metals Segment. The Company continues to be cautious of the uncertain business outlook in the United States and concerned about the global economic outlook. During 1999, the Company has continued to conserve its financial resources by reinforcing cost reduction efforts, maintaining tighter controls on working capital and lowering capital spending plans. Sales and operating profit for the Company's four business segments are discussed below. Specialty Metals First quarter 1999 operating profit decreased to $59.3 million from $70.4 million in the same year-ago period. Sales decreased 6.9 percent to $507.2 million compared to the prior year period due mainly to reduced prices for commodity stainless steel and titanium, reduced demand in commercial aerospace markets, and lower demand for nickel-based and specialty steel alloys in U.S. and European oil and gas markets. Special items relating to start-up costs associated with several recent strategic capital projects reduced first quarter 1999 operating profit by approximately $3.4 million. These projects include Allegheny Ludlum's new Sendzimir mill and wide anneal and pickle line, Allvac's new vacuum induction furnace, and Oremet-Wah 11 Chang's new electron beam melt facility. In addition to these special items, the quarter was negatively impacted during the early period of integrating the stainless steel melting, rolling and finishing assets purchased in November 1998 from Bethlehem Steel. Allegheny Ludlum ---------------- Operating profit after special items for Allegheny Ludlum increased 20.6 percent in the first quarter 1999 compared to the same period in 1998. First quarter 1999 sales declined less than 1.0 percent compared to the 1998 first quarter in spite of lower prices for commodity stainless steel products. The increase in operating profit was achieved despite lower prices for commodity stainless steel products and the impact of the special items, due to reasonably good demand, lower raw material costs and continuing cost reductions. The average price of flat-rolled specialty metals, excluding semi-finished products, declined 4.6 percent in the quarter, to $2,148 per ton from $2,251 per ton in the first quarter 1998, due primarily to lower prices for commodity stainless steel sheet and strip. The average price in the quarter of total flat-rolled specialty metals products, including semi-finished products, declined 10.0 percent, to $2,025 per ton from $2,251 per ton in the first quarter 1998. Semi-finished product shipments increased in the first quarter 1999 following completion of the asset purchases from Bethlehem Steel in November 1998. Total tons of flat-rolled specialty metals shipped in the first quarter 1999 increased 10.1 percent to 153,400 tons, compared to 139,300 tons in the year ago period. High Performance Metals ----------------------- Operating profit after special items for high performance metals declined 40.9 percent in the first quarter 1999 compared to the same period in 1998. Sales decreased 15.0 percent in the quarter compared to the same period a year ago. The decline in operating results occurred primarily in the titanium business due to lower prices, continuing inventory adjustments in commercial aerospace and leveling-off of new aircraft production, and reduced demand from chemical processing and recreational markets. Also, reduced demand in U.S. and European oil and gas markets for nickel-based and specialty steel alloys and the special items at Oremet-Wah Chang and Allvac negatively impacted this year's first quarter. These items were partially offset by strong demand for nickel-based superalloys for large land-based power generation turbines, reasonably good demand for premium titanium alloys for jet engines and spares, lower raw material costs, and continuing cost reduction efforts. Aerospace and Electronics Segment Operating profit increased 17.4 percent to $25.7 million for the first quarter 1999 from $21.9 million in the same 1998 period. Sales increased 1.8 percent to $242.3 million compared to the prior year period. Increased sales and operating profit at Brown Engineering, Continental Motors and Ryan Aeronautical more than offset declines at Electronic Technologies and Cast Parts. At Brown Engineering and Continental Motors, sales and operating margins increased in most product lines with especially strong results for Continental Motors' turbine engines. Ryan Aeronautical sales increased in all product lines except the Apache helicopter program, which completed deliveries of airframes in the fourth quarter of 1998, and operating 12 margins improved in all product lines. At Electronic Technologies, increased demand for advanced data acquisition and communication products partially offset reduced demand for contract manufacturing services and precision electronic devices. Operating results for Cast Parts were adversely affected by reduced demand from commercial aerospace markets. Industrial Segment Operating profit for the first quarter 1999 decreased 11.9 percent to $12.6 million from $14.3 million in the same period of 1998. Sales decreased 7.4 percent to $122.1 million compared to the prior year period. The decline in sales and operating profit in the 1999 first quarter resulted primarily from reduced demand for tungsten, tungsten carbide, and carbide cutting tools due to weaker global market conditions affecting Metalworking Products. Consumer Segment Operating profit increased to $2.3 million in the first quarter 1999 from $1.8 million in the same 1998 period. Sales increased 9.5 percent to $56.4 million compared to the prior year period. Sales and operating profit improved at both Laars and Water Pik. The first quarter is normally the weakest quarter for the seasonal businesses of the Consumer Segment. Corporate Items Corporate expenses for the first quarter 1999 decreased by 10.7 percent to $9.2 million. Net interest expense increased $5.0 million from the first quarter 1998 due to higher levels of debt resulting from more than $400 million of purchases of businesses and investments in ventures and increased capital spending during 1998. Excess pension income increased to $16.1 million in the first quarter 1999 compared to $10.6 million in the same 1998 period due to higher pension assets as a result of strong investment performance during 1998. Special Items In the 1999 first quarter, special items reduced net income by $4.4 million, or $0.02 per diluted share. These items, net of taxes, included start-up costs of $2.2 million, or $0.01 per share, in the Specialty Metals Segment associated with recently completed strategic capital investments, operating losses on businesses sold during the quarter of $1.6 million, or $0.01 per share, and costs of $0.6 million related to the previously announced proposed spin-offs of the Aerospace and Electronics and the Consumer Segments into two freestanding public companies. Non-recurring events resulted in an after-tax charge of $40.9 million, or $0.21 per diluted share in the 1998 first quarter. These events included deal costs of $10.3 million, or $0.05 per share, related to the acquisition of OREMET, along with charges of $3.5 million, or $0.02 per share, for a planned salaried workforce reduction related to integrating the operations of OREMET and Wah Chang. Also, Allegheny Ludlum recorded a $7.4 million charge, or $0.04 per share, due to a salaried workforce reduction. In addition, costs of $19.7 million, or $0.10 per share, relating to the Specialty Metals Segment were recorded associated with exiting certain product lines and asset impairments resulting from recently completed capital expenditure programs. 13 Transformation and Reconfiguration Initiatives In early April 1999, the Company submitted a request for a private letter ruling to the Internal Revenue Service with respect to the tax-free nature of the two proposed spin-offs. New Accounting Pronouncements Financial Accounting Standards Board Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued in June 1998. This statement establishes accounting and reporting standards for derivative instruments and hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Company is presently evaluating the effect of adopting this statement. Income Taxes The Company's first quarter 1999 effective tax rate was 35.0 percent, compared to 41.1 percent for the same period in 1998. This lower rate reflects the impact of non-deductible merger and restructuring charges in the first quarter of 1998 and benefits from federal and state tax planning initiatives. Financial Condition and Liquidity - --------------------------------- Working capital decreased to $695.6 million at March 31, 1999, compared to $742.2 million at December 31, 1998. The current ratio decreased to 2.1 from 2.2 in this same period. The decrease in working capital was primarily due to lower inventories and higher short-term debt and current portion of long-term debt offset by higher receivables and lower accrued liabilities balances. In the first quarter of 1999, cash generated from operations of $69.4 million, proceeds from the net increase in debt of $14.1 million and proceeds from the sale of businesses and investments of $5.8 million were used to repurchase shares for $52.2 million, pay dividends of $31.1 million, and invest $25.2 million in capital equipment and business expansion. Cash transactions plus cash on hand at the beginning of the year resulted in a cash position of $57.5 million at March 31, 1999. Capital expenditures for 1999 are expected to approximate $128 million, of which $24.1 million were spent during the first three months of 1999. On October 1, 1998, the Company's Board of Directors authorized a stock repurchase program to acquire up to 20 million shares of Allegheny Teledyne's common stock. The shares may be purchased from time-to-time in the open market. During the first quarter of 1999, the Company repurchased 2.6 million shares at a cost of $52.2 million. From the inception of the share repurchase program through May 12, 1999, the Company has repurchased a total of approximately 5.8 million shares at a cost of $118.0 million. On May 13, 1999, the Board of Directors declared a regular quarterly dividend of $0.16 per share of common stock. The dividend is payable June 15, 1999 to shareholders of record at the close of business June 1, 1999. The Company believes that internally generated funds, current cash on hand and borrowing from existing credit lines will be adequate to meet foreseeable needs. The Company may choose, however, to issue additional debt depending on market conditions. 14 Other Matters - ------------- Environmental The Company is subject to federal, state and local environmental laws and regulations which require that it investigate and remediate the effects of the release or disposal of materials at sites associated with past and present operations, including sites at which the Company has been identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund, and comparable state laws. The Company is currently involved in the investigation and remediation of a number of sites under these laws. The Company's reserves for environmental investigation and remediation totaled approximately $31.7 million at March 31, 1999. Based on currently available information, management does not believe future environmental costs at sites with which the Company has been identified in excess of those accrued are likely to have a material adverse effect on the Company's financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company's results of operations for that period. With respect to proceedings brought under the federal Superfund laws, or similar state statutes, the Company has been identified as a potentially responsible party at approximately 34 such sites, excluding those at which it believes it has no future liability. The Company's involvement is very limited or de minimus at approximately 12 of these sites, and the potential loss exposure with respect to any of remaining 22 sites is not considered to be material. For additional discussion of environmental matters, see Note 7 to the consolidated financial statements of the Company. Government Contracts A number of the Company's operating companies perform work on contracts with the U.S. Government. Many of these contracts include price redetermination clauses, and most are terminable at the convenience of the government. Certain of these contracts are fixed-price or fixed-price incentive development contracts which involve a risk that costs may exceed those expected when the contracts were negotiated. Absent modification of these contracts, any costs incurred in excess of the fixed or ceiling prices must be borne by the Company. In addition, virtually all defense programs are subject to curtailment or cancellation due to the year-to-year nature of the government appropriations and allocations process. A material reduction in U.S. Government appropriations may have an adverse effect on the Company's business, depending upon the specific programs affected by any such reduction. Since certain contracts extend over a long period of time, all revisions in cost and funding estimates during the progress of work have the effect of adjusting the current period earnings on a cumulative catch-up basis. When the current contract estimate indicates a loss, provision is made for the total anticipated loss. The Company obtains many U.S. Government contracts through the process of competitive bidding. There can be no assurance that the Company will continue to be successful in having its bids accepted. Various claims (whether based on U.S. Government or Company audits and investigations or otherwise) have been or may be asserted against the Company related to its U.S. Government contract work, including claims based on business practices and cost classifications and actions under the False Claims Act. The False Claims Act permits a person to assert the rights of the U.S. Government by initiating a suit under seal against a contractor if such person purports to have information that the contractor falsely 15 submitted a claim to the U.S. Government for payment. If it chooses, the U.S. Government may intervene and assume control of the case. Although government contracting claims may be resolved by detailed fact-finding and negotiation, on those occasions when they are not so resolved, civil or criminal legal or administrative proceedings may ensue. Depending on the circumstances and the outcome, such proceedings could result in fines, penalties, compensatory and treble damages or the cancellation or suspension of payments under one or more U.S. Government contracts. Under government regulations, a company, or one or more of its operating divisions or units, can also be suspended or debarred from government contracts based on the results of investigations. Given the extent of the Company's business with the U.S. Government, a suspension or debarment of the Company could have a material adverse effect on the future operating results and consolidated financial condition of the Company. However, although the outcome of these matters cannot be predicted with certainty, management does not believe there is any audit, review or investigation currently pending against the Company of which management is aware that is likely to result in suspension or debarment of the Company, or that is otherwise likely to have a material adverse effect on the Company's financial condition or liquidity, although the resolution in any reporting period of one or more of these matters could have a material adverse effect on the Company's results of operations for that period. For additional discussion of government contract matters, see Note 7 to the consolidated financial statements of the Company. Impact of the Introduction of the Euro The Company has continued to evaluate effects of the January 1, 1999 conversion and related transition by 11 member states of the European Union to a common currency, the "euro". The United Kingdom, where a significant portion of the Company's European operations is located, is not currently a participating country. Based on preliminary findings, the Company does not expect the euro conversion to have a material impact on the Company's results of operation or financial condition. Like other companies with European sales and operations, the Company anticipates that it will face wage and product pricing transparency issues in participating countries; however, the Company does not expect the resolution of these issues to have a material adverse effect on the Company. Additionally, while the Company expects to encounter some technical challenges to adapt information technology and other systems to accommodate euro-denominated transactions, it does not anticipate associated costs to be material. Mostly due to evolving business needs and continuing technological advances, the Company has been modifying and replacing its computer software and hardware at its European operations. The Company believes that the euro conversion will not have a material adverse effect on its foreign currency activities described below. Year 2000 Readiness Disclosure Over the past several years, the Company has put in place management task forces at its operating companies to identify whether its computer systems, which include business computers, mill equipment and process control computers and other devices using a microprocessor, as well as telecommunication and payroll and employee benefit processing systems, would function properly with respect to dates in the Year 2000 and thereafter. These task forces report to the Executive Resource Information Committee, a senior management committee charged with reviewing and establishing priorities for information technology-related matters, including Year 2000 issues, and which reports to the Audit and Finance Committee of the Company's Board of Directors. Through these efforts, Year 2000 identification, solution development, testing and implementation initiatives, and contingency planning initiatives are in process at Allegheny Teledyne and each of the operating companies. 16 In part as a result of its Year 2000 initiatives, but mostly due to evolving business needs and continuing technological advancements, the Company has been modifying and replacing portions of its computer software and hardware systems. The Company estimates, based on dollars expended, that installation of solutions to identified Year 2000 issues relating to its information technology systems is approximately 95 percent complete. While the Company estimates that based on dollars expended, about 95 percent of solutions have been implemented for its non-information technology systems, the Company continues to work to resolve various manufacturing-related Year 2000 issues. The Company continues to target having substantially all internal solutions relating to Year 2000 functionality of its computer systems developed and implemented by June 1999. This targeted completion date depends, however, on numerous assumptions, including continued availability of trained personnel in this area. Efforts continue to be made to identify and resolve customer- and supplier-based Year 2000 issues that could affect the Company and its operating and support systems. The Company believes that it has identified substantially all material customer- and supplier-based Year 2000 issues. Efforts also continue to be made to identify whether products produced and sold by Allegheny Teledyne's operating companies have Year 2000 issues. The Company believes that it has identified substantially all products that have Year 2000 issues and is working to resolve such issues. The Company believes that there are no significant product-related Year 2000 issues. The Company has not conducted any review of products manufactured and sold by discontinued businesses or businesses that it has sold. Excluding expenditures necessitated by ordinary business needs and continuing technological advancements in the computer industry, the Company spent approximately $11 million in 1998 and anticipates spending another estimated $7 million in 1999 to address Year 2000 issues. These expenditures do not include expenditures that may be required to address Year 2000 issues associated with some products. Substantially all costs related to the Company's Year 2000 initiatives are expensed as incurred and funded through operating cash flows. Additional amounts may be spent in subsequent years. Based upon internal assessments, formal communications with suppliers and customers with which the Company exchanges electronic data, and work completed to date, the Company believes that Year 2000 issues should not pose significant operational problems or have a material impact on the Company's consolidated financial position, results of operations or cash flow. A failure of third party vendors or customers to be Year 2000 ready, however, could adversely affect these beliefs and is not quantifiable. Such failure could have a material adverse effect on the Company's consolidated financial position, results of operations or cash flow in a given period, but probably not over the long-term. The most reasonably likely worst case scenario of failure by the Company or its suppliers or customers to resolve Year 2000 problems would be a temporary slowdown or cessation of manufacturing operations at one or more of the Company's facilities and a temporary inability on the part of the Company to timely process orders and to deliver finished products to customers. Delays in meeting customers' orders would affect the timing of billings to and payments received from customers in respect of orders and could result in other liabilities. Customers' Year 2000 problems could also delay the timing of payments to the Company for orders. Efforts continue to be underway to identify contingency plans should unplanned situations arise as a result of January 1, 2000. While the Company has been conducting a comprehensive Year 2000 review of its computer systems, there may be Year 2000-related matters that have not been identified. Actual dollar amounts spent by the Company to address Year 2000 issues could materially differ from the estimates for a number of reasons, 17 including changes in the availability or costs of personnel trained in this area, changes made to the Company's remediation plans, the ability of the Company's significant suppliers, customers and others with which it conducts business, including governmental agencies, to identify and resolve their own Year 2000 issues or identification of other Year 2000-related matters. Forward-Looking Statements From time to time the Company has made and may continue to make forward-looking statements. Certain forward-looking statements are contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 7 to the consolidated financial statements of the Company, including statements concerning the anticipated effects of the proposed strategic transformation and dispositions by the Company, completed acquisitions, further cost reduction efforts, new material costs, capital spending plans, adequacy of available funds to meet foreseeable needs, anticipated effects of the euro conversion, anticipated expenditures to address and the impact of Year 2000-computer-systems issues, the Company's use of financial derivative instruments, the outcome of any government inquiries, litigation or other future proceedings related to government contract or other matters, and environmental costs. These statements are based on current expectations that involve a number of risks and uncertainties, including those described above under the captions "Other Matters - Environmental" and "Other Matters - Government Contracts" and elsewhere herein. Completion of the proposed spin-offs and public offerings and achieving anticipated results involve inherent uncertainties, including those related to whether legal, financial and other considerations can be successfully resolved. In addition, realization of the anticipated benefits of such proposed strategic transactions, as well as the Company's completed acquisitions, including OREMET, Allvac-SMP and the Bethlehem agreements, could take longer than expected and implementation difficulties, market factors and further deterioration in domestic or global economic conditions could alter the anticipated benefits. Actual results may differ materially from the results anticipated in the forward-looking statements. Additional risk factors are described from time to time in the Company's filings with the Securities and Exchange Commission, including its Report on Form 10-K for the year ended December 31, 1998. The Company assumes no duty to update its forward-looking statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company uses derivative financial instruments from time to time to hedge ordinary business risks regarding foreign currencies on product sales and to partially hedge against volatile raw material cost fluctuations in the Specialty Metals Segment. Foreign currency exchange contracts are used to limit transactional exposure to changes in currency exchange rates. The Company sometimes purchases foreign currency forward contracts that effectively permit it to sell specified amounts of foreign currencies expected to be received from its export sales for pre-established U.S. dollar amounts at specified dates. The forward contracts are denominated in the same foreign currencies in which export sales are denominated. These contracts, which are not financially material, are designated as hedges of export sales transactions in which settlement will occur in future periods, which otherwise would expose the Company, on the basis of its aggregate net cash flows in respective currencies, to foreign currency risk. A portion of the Company's operations consists of investments in foreign subsidiaries. As a result, the Company's financial results could be affected by changes in foreign currency exchange rates. To mitigate this foreign currency translation risk, the Company has a practice of recapitalizing operations using local foreign currency debt to replace direct equity investment. The average interest rate to service this foreign debt is favorable to current U.S. interest rates. 18 As part of its risk management strategy, the Company purchases exchange-traded futures contracts to manage exposure to changes in nickel prices, a component of raw material cost for some of the specialty metals companies. The nickel futures contracts obligate the Company to make or receive a payment equal to the net change in value of the contract at its maturity. Some of these contracts can be designated as hedges of the Company's firm sales commitments and are short-term in nature to correspond to the commitment period. The gains and losses on these contracts are deferred and recognized in earnings when realized as an adjustment to cost of goods sold. Historically, the Company has not closed any significant contracts prior to the execution of the underlying sale transaction, nor have any of the underlying sales transactions failed to occur which resulted in a material adverse effect on the Company. The Company guarantees the outstanding Allegheny Ludlum fixed rate 6.95% debentures due in 2025. In a period of declining interest rates, the Company faces the risk of required interest payments exceeding those based on the then current market rate. To mitigate interest rate risk, the Company attempts to maintain a reasonable balance between fixed and variable rate debt to keep financing costs as low as possible. The Company believes that adequate controls are in place to monitor these activities, which are not financially material. However, many factors, including those beyond the control of the Company such as changes in domestic and foreign political and economic conditions, as well as the magnitude and timing of interest rate changes, could adversely affect these activities. 19 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - The following exhibits are filed herewith: 4 Third Amendment to Credit Agreement dated as of March 30, 1999, to certain Credit Agreement dated as of August 30, 1996, as amended by the First Amendment dated as of August 31, 1997, and the Second Amendment dated as of March 24, 1998. 27 Financial data schedule. (b) The Registrant did not file any Current Reports on Form 8-K during the quarter for which this report is filed. 20 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Allegheny Teledyne Incorporated (Registrant) /s/ James L. Murdy Date: May 14, 1999 By______________________________________ James L. Murdy Executive Vice President, Finance and Administration and Chief Financial Officer (Duly Authorized Officer) /s/ Dale G. Reid Date: May 14, 1999 By______________________________________ Dale G. Reid Vice President - Controller and Chief Accounting Officer (Principal Accounting Officer) 21 EXHIBIT INDEX Exhibit No. Description - ---------- ------------ 4 Third Amendment to Credit Agreement dated as of March 30, 1999, to certain Credit Agreement dated as of August 30, 1996, as amended by the First Amendment dated as of August 31, 1997, and the Second Amendment dated as of March 24, 1998. 27 Financial Data Schedule for Three Months Ended March 31, 1999. EX-4 2 THIRD AMENDMENT TO CREDIT AGREEMENT THIRD AMENDMENT TO CREDIT AGREEMENT Among ALLEGHENY TELEDYNE INCORPORATED as the Borrower THE FINANCIAL INSTITUTIONS PARTY THERETO as the Lenders BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION THE CHASE MANHATTAN BANK MELLON BANK, N.A. and PNC BANK, NATIONAL ASSOCIATION as Managing Agents and PNC BANK, NATIONAL ASSOCIATION as the Documentation and Administrative Agent Dated as of March 30, 1999 THIRD AMENDMENT TO CREDIT AGREEMENT THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Third Amendment") made as of March 30, 1999, to that certain Credit Agreement dated as of August 30, 1996 as amended by the First Amendment to Credit Agreement dated as of August 31, 1997 and the Second Amendment to Credit Agreement dated as of March 24, 1998 (the Credit Agreement together with the exhibits and schedules thereto and all modifications, amendments, extensions, renewals, substitutions or replacements prior to the date hereof, the "Existing Agreement") among the FINANCIAL INSTITUTIONS listed on the signature pages hereto and each other financial institution which from time to time becomes a party hereto in accordance with Section 9.6a (individually a "Lender" and collectively the "Lenders"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, THE CHASE MANHATTAN BANK, MELLON BANK, N.A. and PNC BANK, NATIONAL ASSOCIATION as Managing Agents (individually a "Managing Agent" and collectively the "Managing Agents")and PNC BANK, NATIONAL ASSOCIATION, a national banking association, Documentation and Administrative Agent for the Lenders (in such capacity the "Agent"). WITNESSETH: WHEREAS, the Borrower and the initial Lenders, the Managing Agent and the Agent entered into the Existing Agreement pursuant to which the Lenders made certain financial accommodations available to the Borrower including a Revolving Credit Commitment; WHEREAS, the Borrower and the Lenders, the Managing Agents and the Agent desire to amend the Existing Agreement as set forth herein. NOW THEREFORE, in consideration of the mutual premises contained herein and other good and valuable consideration, the Borrower and the Bank with the intent to be legally bound hereby, agree that the Existing Agreement shall be amended as follows: ARTICLE I AMENDMENTS TO EXISTING AGREEMENT Section 1.01. Additional Definitions. Section 1.1 of the Existing Agreement is hereby amended such that the following definition shall be added thereto in the appropriate alphabetical order: "ATI Funding" means ATI Funding Corporation, a Delaware corporation. "Teledyne Industries" means Teledyne Industries, Inc., a California corporation. 1 "Third Amendment" means the Third Amendment to Credit Agreement among the Borrower, the Lenders, the Managing Agents and the Agent dated as of March 30, 1999. "Third Amendment Effective Date" shall mean March 30, 1999. Section 1.02. Amendment to Section 4.11. Section 4.11 of the Existing Agreement is amended and restated in its entirety to read as follows: Section 4.11 Ownership of ALC, ATI, OREMET, Teledyne Industries and TI. On and after the Third Amendment Effective Date (i) the Borrower shall be the legal and beneficial owner of and shall retain all voting rights relating to all of the issued and outstanding capital stock of ATI Funding and (ii) ATI Funding shall be the legal and beneficial owner of and shall retain all voting rights relating to all of the issued and outstanding capital stock of each of ALC and OREMET. Until such time as TI merges with and into the Borrower in accordance with the terms of Section 5.6, the Borrower shall be the legal and beneficial owner of and shall retain all voting rights relating to all of the issued and outstanding capital stock of TI. Upon the merger of TI with and into the Borrower in accordance with the terms of Section 5.6 with the Borrower being the surviving Person, the Borrower shall be the legal and beneficial owner of and thereafter during the term hereof shall retain all voting rights relating to all of the issued and outstanding capital stock of Teledyne Industries. Section 1.03. No Other Amendments or Waivers. The amendments to the Existing Agreement set forth in Sections 1.01 and 1.02 inclusive above do not either implicitly or explicitly alter, waive or amend, except as expressly provided in this Third Amendment, the provisions of the Existing Agreement. The amendments set forth in Sections 1.01 and 1.02 hereof do not waive, now or in the future, compliance with any other covenant, term or condition to be performed or complied with nor do they impair any rights or remedies of the Lenders or the Agent under the Existing Agreement with respect to any such violation. Nothing in this Third Amendment shall be deemed or construed to be a waiver or release of, or a limitation upon, the Lenders' or the Agents' exercise of any of their respective rights and remedies under the Existing Agreement and the other Loan Documents, whether arising as a consequence of any Events of Default which may now exist or otherwise, and all such rights and remedies are hereby expressly reserved. ARTICLE II BORROWER'S SUPPLEMENTAL REPRESENTATIONS Section 2.01 Incorporation by Reference. As an inducement to the Lenders to enter into this Third Amendment, the Borrower hereby repeats herein, for the benefit of the Lenders, the representations and warranties made by the Borrower in Sections 3.1 through 3.15, inclusive, of the Existing Agreement, as amended hereby, except that for purposes 2 hereof such representations and warranties shall be deemed to extend to and cover this Third Amendment. ARTICLE III CONDITIONS PRECEDENT Section 3.01. Conditions Precedent. Each of the following shall be a condition precedent to the effectiveness of this Third Amendment: (i) The Lenders shall have received, on or before the Third Amendment Effective Date, duly executed counterpart originals of this Third Amendment. (ii) The following statements shall be true and correct on the Third Amendment Effective Date: (A) except to the extent modified in writing by the Borrower heretofore delivered to the Lenders, the representations and warranties made pursuant to Section 2.01 of this Third Amendment and in the other Loan Documents are true and correct on and as of the Third Amendment Effective Date as though made on and as of such date in all material respects; (B) no Event of Default or event which with the giving of notice or passage of time or both would become an Event of Default has occurred and is continuing, or would result from the execution of or performance under this Third Amendment;(C) the Borrower has in all material respects performed all agreements, covenants and conditions required to be performed on or prior to the date hereof under the Existing Agreement and the other Loan Documents. ARTICLE IV GENERAL PROVISIONS Section 4.01. Ratification of Terms. Except as expressly amended by this Third Amendment, the Existing Agreement and each and every representation, warranty, covenant, term and condition contained therein is specifically ratified and confirmed in all material respects. Section 4.02. References. All notices, communications, agreements, certificates, documents or other instruments executed and delivered after the execution and delivery of this Third Amendment in connection with the Agreement, any of the other Loan Documents or the transactions contemplated thereby may refer to the Existing Agreement without making specific reference to this Third Amendment, but nevertheless all such references shall include this Third Amendment unless the context requires otherwise. From and after the Third Amendment Effective Date, all references in the Existing Agreement and 3 each of the other Loan Documents to the "Agreement" shall be deemed to be references to the Existing Agreement as amended hereby. Section 4.03. Counterparts. This Third Amendment may be executed in different counterparts, each of which when executed by the Borrower and a Lender shall be regarded as an original, and all such counterparts shall constitute one Third Amendment. Section 4.04. Capitalized Terms. Except for proper nouns and as otherwise defined herein, capitalized terms used herein as defined terms shall have the meanings ascribed to them in the Existing Agreement, as amended hereby. Section 4.05. Governing Law. THIS THIRD AMENDMENT AND THE RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO THE PROVISIONS THEREOF REGARDING CONFLICTS OF LAW. Section 4.06. Headings. The headings of the sections in this Third Amendment are for purposes of reference only and shall not be deemed to be a part hereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4 IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Third Amendment to be duly executed by their proper and duly authorized officers the day first above written. ALLEGHENY TELEDYNE INCORPORATED /s/ R. S. Park By______________________________________ R. S. Park Name____________________________________ Vice President, Treasurer Title___________________________________ PNC BANK, NATIONAL ASSOCIATION, BANK OF AMERICA NATIONAL as Lender, Managing Agent and Agent TRUST AND SAVINGS ASSOCIATION, as Lender and Managing Agent /s/ David B. Gookin /s/ Lisa S. Donoghue By_______________________________ By______________________________________ David B. Gookin Lisa S. Donoghue Name_____________________________ Name____________________________________ Vice President Senior Vice President Title____________________________ Title___________________________________ THE CHASE MANHATTAN BANK, MELLON BANK, N.A., as Lender and Managing Agent as Lender and Managing Agent /s/ James H. Ramage /s/ Peter K. Lee By_______________________________ By______________________________________ James H. Ramage Peter K. Lee Name_____________________________ Name____________________________________ Vice President Vice President Title____________________________ Title___________________________________ THE BANK OF NEW YORK MORGAN GUARANTY TRUST COMPANY OF NEW YORK /s/ Robert J. Joyce /s/ Robert Bottamedi By_______________________________ By______________________________________ Robert J. Joyce Robert Bottamedi Name_____________________________ Name____________________________________ Vice President Vice President Title____________________________ Title___________________________________ 5 [SIGNATURES CONTINUED ON NEXT PAGE] [CONTINUATION OF SIGNATURE PAGE] NATIONSBANK, N.A. THE TORONTO-DOMINION BANK /s/ Lisa S. Donoghue By_______________________________ By______________________________________ Lisa S. Donoghue Name_____________________________ Name____________________________________ Senior Vice President Title____________________________ Title___________________________________ BANK OF TOKYO-MITSUBISHI TRUST FIRST UNION NATIONAL BANK, COMPANY Successor by merger to CoreStates Bank, NA /s/ Stephanie B. Geesey /s/ Donna J. Emhart By_______________________________ By______________________________________ Stephanie B. Geesey Donna J. Emhart Name_____________________________ Name____________________________________ Vice President Vice President Title____________________________ Title___________________________________ THE FIRST NATIONAL BANK OF NATIONAL CITY BANK OF PENNSYLVANIA CHICAGO /s/ Kenneth J. Kramer /s/ Michael A. Heinricher By_______________________________ By______________________________________ Kenneth J. Kramer Michael A. Heinricher Name_____________________________ Name____________________________________ Vice President Assistant Vice President Title____________________________ Title___________________________________ UBS AG Stamford Branch, a successor to THE FUJI BANK LIMITED, NEW YORK UNION BANK OF SWITZERLAND, NEW YORK BRANCH BRANCH /s/ Paul R. Morrison By_______________________________ By______________________________________ Paul R. Morrison Name_____________________________ Name____________________________________ Executive Director Title____________________________ Title___________________________________ /s/ Harry Welten By______________________________________ Harry Welten Name____________________________________ Assistant Vice President Title___________________________________ 6 EX-27 3 FDS--
5 The schedule contains summary financial information extracted from the Registrant's consolidated statement of income for the three months ended March 31, 1999 and consolidated balance sheet as of March 31, 1999 and is qualified in its entirety by reference to such financial statements. 0001018963 Allegheny Teledyne Incorporated 1,000,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 58 0 579 13 633 1,347 2,039 1,042 3,163 651 395 0 0 20 1,313 3,163 935 935 717 717 0 0 9 93 32 61 0 0 0 61 0.31 0.31
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