Allegheny Technologies Announces Third Quarter Results
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-- Sales were $697.6 million
-- Net income attributable to ATI common stockholders was $1.4 million, or
$0.01 per share
-- Segment operating profit was $54.0 million, or 7.7% of sales
-- Year-to-date gross cost reductions of $121.4 million
-- Cash on hand was $826.3 million
-- Net debt to total capitalization was 10.5%
-- Total debt to total capitalization declined to 34%
PITTSBURGH--(BUSINESS WIRE)-- Allegheny Technologies Incorporated (NYSE: ATI) reported net income for the third quarter 2009 of $1.4 million, or $0.01 per share, on sales of $697.6 million.
In the third quarter 2008, ATI reported net income of $144.1 million, or $1.45 per share, on sales of $1.39 billion.
Results for the nine months ended September 30, 2009 are a net loss including special charges of $6.1 million, or $0.06 per share, on sales of $2.24 billion. The nine months ended September 30, 2009 included non-recurring after-tax charges of $17.0 million, or $0.17 per share, related to second quarter 2009 actions to retire debt and the tax consequences of our $350 million voluntary pension contribution. Excluding special charges, results for the nine months ended September 30, 2009 were net income of $10.9 million, or $0.11 per share. For the nine months ended September 30, 2008, net income was $455.0 million, or $4.51 per share, on sales of $4.20 billion.
"Looking past the remainder of 2009, the worst appears to be behind us, and we remain confident in the intermediate and long-term growth potential of our core markets," said L. Patrick Hassey, Chairman, President and Chief Executive Officer.
"We are having success in the marketplace by developing and expanding strategic relationships with key global customers, and we are well positioned to meet their growing needs as economic conditions improve and our core markets recover. During the third quarter, we completed several new long-term agreements (LTAs) with key global customers. We are working on several more. These LTAs provide a foundation for future growth and position ATI with deep customer relationships in our core markets.
"ATI's financial position is strong. Cash on hand was over $826 million at the end of the third quarter, and net debt to total capitalization was 10.5%. We achieved gross cost reductions of over $121 million in the first nine months, and expect to exceed our 2009 cost reduction goal of over $150 million. Our pension plan remains fully funded.
"Our investments in unsurpassed manufacturing capabilities are progressing. Our new titanium and superalloy forging facility began operation in the third quarter and the start-up is going well. We now expect to begin production at our premium-grade titanium sponge facility before the end of 2009. By the end of October, we expect to close on the Crucible asset acquisition, which is an excellent entry point for ATI into advanced powder metal products. We now expect 2009 capital expenditures and asset acquisitions to be approximately $475 million, which includes the Crucible asset acquisition.
"For the fourth quarter 2009 short-term outlook, we are seeing some positive data points in certain markets; however, many of our customers remain cautious due to the uncertain global economy and are keeping inventories low. This uncertainty is exaggerated by recent volatility in prices of raw materials, particularly nickel, which impacts customer buying patterns from month to month and at year-end. As a result of these conditions, and expected new facility start-up and other costs, we expect ATI's fourth quarter 2009 earnings performance to be similar to that achieved in the third quarter 2009.
"Looking ahead, we expect our operating earnings performance to improve throughout 2010 as compared to 2009. We believe 2010 to be a transition year to the next growth cycle in most of our markets, particularly the aerospace and global infrastructure markets.
"Although we expect only a modest economic recovery in 2010, we are focused on continuing to position ATI in targeted global markets. We expect to benefit greater than the recovery and growth in our core markets in 2010 and beyond by improving our position with key customers, adding new products to our unique specialty metals portfolio, improving our cost structure, maintaining our financial flexibility, and bringing on-line new world-class manufacturing capabilities."
Three Months Ended Nine Months Ended
September 30 September 30
In Millions
2009 2008 2009 2008
Sales $ 697.6 $ 1,392.4 $ 2,239.2 $ 4,197.0
Net income attributable to ATI
common stockholders* before special $ 1.4 $ 144.1 $ 10.9 $ 455.0
charges
Special charges - - $ (17.0 ) -
Net income (loss) attributable to $ 1.4 $ 144.1 $ (6.1 ) $ 455.0
ATI common stockholders*
Per Diluted Share
Net income attributable to ATI
common stockholders* before special $ 0.01 $ 1.45 $ 0.11 $ 4.51
charges
Special charges - - $ (0.17 ) -
Net income (loss) attributable to $ 0.01 $ 1.45 $ (0.06 ) $ 4.51
ATI common stockholders*
* Net income (loss) and net income (loss) per share amounts presented above are attributable to Allegheny Technologies Incorporated common stockholders. As required, in the first quarter 2009 the Company adopted changes to the financial accounting standards regarding the presentation of noncontrolling interests in consolidated financial statements. Under the provisions of this change in accounting standards, the income statement presentation has been revised to separately present consolidated net income (loss), which now includes the amounts attributable to the Company plus noncontrolling interests (minority interests), and net income (loss) attributable solely to the Company.
Third Quarter 2009 Financial Results
-- Sales were $697.6 million, 50% lower than the third quarter 2008 as a
result of significantly lower raw material surcharges and indices and
lower shipments. Direct international sales represented 31.0% of total
sales, compared to 29% for the 2008 comparable period. Compared to the
third quarter 2008, sales decreased 45% in the High Performance Metals
segment, 52% in the Flat-Rolled Products segment, and 54% in the
Engineered Products segment.
-- Segment operating profitwas $54.0 million, or 7.7% of sales, compared to
$251.4 million, or 18.1% of sales, for the third quarter 2008. Third
quarter 2009 results were negatively affected by lower shipments and by
idle facility, workforce reduction, and start-up costs of $18.9 million.
These negative impacts were partially offset by a LIFO inventory
valuation reserve benefit of $4.5 million. The third quarter 2009 LIFO
inventory valuation reserve benefit was $22.5 million lower than the
LIFO reserve benefit recognized in the second quarter 2009 due to rising
raw material costs. The third quarter 2008 included a LIFO inventory
valuation reserve benefit of $41.0 million.
-- Net income attributable to common stockholders was $1.4 million, or
$0.01 per share, compared to net income attributable to common
stockholders of $144.1 million, or $1.45 per share, in the third quarter
2008.
-- Cash flow from operations for the first nine months 2009 was $149.4
million which benefited from a reduction in managed working capital of
$344.8 million due to lower business activity and raw material costs,
partially offset by a voluntary net cash pension contribution of $241.5
million ($350 million contribution less $108.5 million federal income
tax refund) in the second quarter 2009. Excluding the voluntary net cash
pension contribution, cash flow from operations was $390.9 million for
the first nine months 2009.
-- Cash on hand at the end of the third quarter 2009 was $826.3 million, an
increase of $356.4 million from year-end 2008.
-- Gross cost reductions, before the effects of inflation, totaled $121.4
million company-wide in the first nine months 2009.
High Performance Metals Segment
Market Conditions
-- Demand for our titanium alloys and our nickel-based alloys from the
aerospace market was at significantly lower levels as the supply chain
continued to adjust to aircraft production schedule pushouts and reduced
demand from the aeroengine aftermarket. Shipment volumes for our
titanium alloys and our nickel-based alloys declined 8% and 20%,
respectively, compared to the second quarter 2009. Shipments of our
exotic alloys declined 23% compared to the second quarter 2009 primarily
due to timing of projects for the chemical process industry.
Third quarter 2009 compared to third quarter 2008
-- Sales decreased 45% to $279.2 million. Shipments decreased 37% for both
titanium and titanium alloys and nickel-based and specially alloys
primarily due to lower demand from commercial aerospace market.
Shipments of exotic alloys decreased 24% primarily due to the timing of
projects for the chemical process industry. Average selling prices
declined 23% for titanium and titanium alloys and 21% for nickel-based
and specialty alloys. These average selling price decreases were
primarily due to lower raw material indices as a result of lower raw
material costs and a more competitive pricing environment. Average
selling prices for exotic alloys increased 23% due to increased demand
for certain products and a favorable product mix.
-- Segment operating profit decreased to $51.3 million, or 18.4% of sales.
The decrease in operating profit primarily resulted from lower
base-selling prices for most products due to reduced demand and
competitive pricing pressures and reduced shipments for most products.
In addition, operating profit was negatively affected by approximately
$11.7 million for idle facility, workforce reduction, and start-up
costs. These negative impacts were partially offset by higher margins
from exotic alloys and the benefits of gross cost reductions. A LIFO
inventory valuation reserve benefit of $10.0 million was recognized in
the 2009 third quarter. In the third quarter 2008, a LIFO inventory
valuation benefit of $16.7 million was recognized.
-- Results benefited from $17.7 million of gross cost reductions, bringing
the first nine months 2009 gross cost reductions in this segment to
$58.3 million.
Flat-Rolled Products Segment
Market Conditions
-- Demand for certain high-value products, such as Precision Rolled Strip
(R) products and nickel-based alloys, increased compared to the second
quarter 2009 while demand for grain-oriented electrical steel remained
at reasonably good levels. Third quarter Flat-Rolled Products segment
titanium shipments including Uniti conversion were approximately 1.5
million pounds. Demand for most of our standard stainless products
remained low, yet improved 7% compared to the second quarter 2009. In
addition, average prices for standard stainless products increased 14%
compared to the second quarter 2009 primarily due to higher base selling
prices and raw material surcharges.
Third quarter 2009 compared to third quarter 2008
-- Sales were $364.2 million, 52% lower than the third quarter 2008, due
primarily to lower shipments and reduced raw material surcharges.
Shipments of standard stainless products (sheet and plate) decreased 3%
while total high-value products shipments decreased 32%. Average
transaction prices for all products, which include surcharges, were 42%
lower due primarily to significantly reduced raw material surcharges.
-- Segment operating profit decreased to $11.3 million, or 3.1% of sales.
Operating profit was negatively impacted by lower shipments and
approximately $6.0 million of costs associated with idle facilities and
workforce reductions. In addition, operating profit was negatively
affected by a $6.8 million charge to adjust the LIFO inventory valuation
reserve as a result of rising raw material costs. This segment
recognized a $26.1 million benefit in both the first and second quarters
2009. The third quarter 2008 included a LIFO inventory valuation reserve
benefit of $25.1 million.
-- Results benefited from $25.5 million in gross cost reductions, bringing
the first nine months 2009 gross cost reductions in this segment to
$53.5 million.
Engineered Products Segment
Market Conditions
-- Demand for our tungsten and tungsten carbide products, forged products,
and cast products remained weak. Demand for our precision finishing
business was good.
Third quarter 2009 compared to third quarter 2008
-- Sales were $54.2 million, 54% lower than the third quarter 2008.
-- Segment operating results was a loss of $8.6 million primarily due to
significantly lower shipments, reduced selling prices, and costs
associated with workforce reductions and idle facilities, partially
offset by a $1.3 million LIFO benefit and the benefits of gross cost
reductions. The third quarter 2008 included a LIFO inventory valuation
reserve charge of $0.8 million.
-- Results benefited from $4.0 million of gross cost reductions, bringing
the 2009 first nine month gross cost reductions in this segment to $9.6
million.
Other Expenses
-- Corporate expenses for the third quarter 2009 were $15.7 million,
compared to $13.4 million in the year-ago period. This increase was
primarily due to expenses associated with performance-based incentive
compensation programs.
-- Interest expense, net of interest income, was $8.1 million, compared to
$1.7 million in the third quarter 2008. The increase in interest expense
was due to debt issuances completed in the second quarter 2009.
-- In June 2009, we completed the issuance of $350 million of new 9.375%
10-year Senior Notes and a tender offer for our existing $300 million
8.375% Notes due in 2011. As a result of the tender offer, in June 2009
we retired $183.3 million of the 2011 Notes, which resulted in a special
charge for debt extinguishment of $9.2 million pre-tax, or $5.5 million
after-tax, in the second quarter 2009.
Retirement Benefit Expense
-- Retirement benefit expense, which includes pension expense and other
postretirement expense, increased to $25.5 million in the third quarter
2009, compared to $2.5 million in the third quarter 2008. This increase
is primarily a result of lower returns on plan assets in 2008 partially
offset by the positive benefits of voluntary pension contributions made
over the last several years.
-- Retirement benefit expense of $25.5 million in the third quarter 2009
improved from $33.4 million in the second quarter 2009. This improvement
resulted from a $350 million voluntary cash contribution to our U.S.
defined pension benefit pension plan which significantly improved the
plan's funded position.
-- For the third quarter 2009, retirement benefit expense of $15.9 million
was included in cost of sales and $9.6 million was included in selling
and administrative expenses. For the third quarter 2008, the amount of
retirement benefit expense included in cost of sales was $1.6 million,
and the amount included in selling and administrative expenses was $0.9
million.
Income Taxes
-- Third quarter 2009 income taxes were a benefit of $1.4 million. This
resulted from an effective tax rate of 39.6% reduced by an income tax
benefit of $2.4 million for adjustment of taxes paid in a prior year.
Third quarter 2008 included an income tax provision of $83.9 million, or
36.3% of income before tax.
-- The provision for income taxes for the first nine months of 2009
included a non-recurring charge of $11.5 million recognized in the
second quarter 2009 primarily associated with the tax consequences of
the June 2009 $350 million voluntary cash contribution to our pension
plan.
Cash Flow, Working Capital and Debt
-- Cash on hand was $826.3 million at the end of the third quarter 2009, an
increase of $356.4 million from year-end 2008.
-- Cash flow from operations during the first nine months 2009 was $149.4
million including the voluntary net cash contribution in the second
quarter 2009 to the Company's U.S. defined benefit pension plan.
Excluding the $350.0 million voluntary cash pension contribution and the
associated $108.5 million U.S. Federal income tax refund, cash flow from
operations for the first nine months of 2009 was $390.9 million.
-- Managed working capital was reduced by $344.8 million in the first nine
months 2009 primarily as a result of lower business activity and raw
material costs. The reduction in managed working capital resulted from a
$115.3 million decrease in accounts receivable, a $224.2 million
decrease in inventory, and a $5.3 million increase in accounts payable.
-- At September 30, 2009, managed working capital was 35.0% of annualized
sales, compared to 35.2% of annualized sales at year-end 2008. We define
managed working capital as accounts receivable plus gross inventories
less accounts payable.
-- Cash used in investing activities was $302.6 million in the first nine
months 2009 and consisted primarily of capital expenditures.
-- Cash provided by financing activities was $509.6 million in the first
nine months 2009 primarily due to receipt of $734.4 million of net
proceeds from the second quarter 2009 debt issuances, partially offset
by debt retirements of $189.4 million and dividend payments of $35.3
million.
-- Net debt as a percentage of total capitalization was 10.5% at the end of
the third quarter 2009, compared to 2.0% at the end of 2008. Total debt
to total capital was 34.0% at September 30, 2009, compared to 20.7% at
the end of 2008.
-- There were no borrowings outstanding under ATI's $400 million unsecured
domestic borrowing facility, although a portion of the letters of credit
capacity was utilized.
New Accounting Pronouncement Adopted in 2009
-- As required, in the first quarter 2009, we adopted changes to the
financial accounting standards related to the presentation of
noncontrolling interests in consolidated financial statements. Early
adoption of this change in accounting standards was prohibited. The new
accounting standard changes the classification of noncontrolling
(minority) interests on the balance sheet and the accounting for and
reporting of transactions between the reporting entity and holders of
such noncontrolling interests. Under the new standard, net income
encompasses the total income before minority interest expense or
benefit. The income statement includes separate disclosure of the
attribution of income or loss between the controlling and noncontrolling
interests. Increases and decreases in the noncontrolling ownership
interest amount are accounted for as equity transactions. As a result of
adopting the new standard, the balance sheet and the income statement
have been recast retrospectively for the presentation of noncontrolling
(minority) interest in our STAL joint venture.
Allegheny Technologies will conduct a conference call with investors and analysts on October 21, 2009, 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". Replay of the conference call will be available on the Allegheny Technologies website.
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 credit market conditions and related issues, and 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, electrical energy, chemical process industry, oil and gas, medical, automotive, construction and mining, 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, 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) other risk factors summarized in our Annual Report on Form 10-K for the year ended December 31, 2008, 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 $5.3 billion during 2008. ATI has approximately 8,500 full-time employees world-wide who use innovative technologies to offer 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, grain-oriented electrical steel, stainless and specialty steels, zirconium, hafnium, and niobium, tungsten materials, and forgings and castings. The Allegheny Technologies website is www.alleghenytechnologies.com.
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Statements of Operations (a)
(Unaudited, dollars in millions, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
Sales $ 697.6 $ 1,392.4 $ 2,239.2 $ 4,197.0
Costs and expenses:
Cost of sales 603.5 1,085.8 1,989.2 3,267.5
Selling and 83.7 74.3 228.9 223.7
administrative expenses
Income before interest, other 10.4 232.3 21.1 705.8
income and income taxes
Interest expense, net (8.1 ) (1.7 ) (9.3 ) (2.8 )
Debt extinguishment costs 0.0 0.0 (9.2 ) 0.0
Other income, net 0.3 0.4 0.3 2.0
Income before income tax 2.6 231.0 2.9 705.0
provision (benefit)
Income tax provision (benefit) (1.4 ) 83.9 5.3 243.0
Net income (loss) 4.0 147.1 (2.4 ) 462.0
Less: Net income attributable
to
noncontrolling interests 2.6 3.0 3.7 7.0
Net income (loss) attributable $ 1.4 $ 144.1 $ (6.1 ) $ 455.0
to ATI
Basic net income (loss) per
common share
attributable to ATI common $ 0.01 $ 1.46 $ (0.06 ) $ 4.54
stockholders
Diluted net income (loss) per
common share
attributable to ATI common $ 0.01 $ 1.45 $ (0.06 ) $ 4.51
stockholders
Weighted average common shares
outstanding -- basic 97.2 99.0 97.2 100.2
(millions)
Weighted average common shares
outstanding -- diluted 98.0 99.7 97.2 100.9
(millions)
Actual common shares
outstanding--
end of period (millions) 98.1 97.3 98.1 97.3
On January 1, 2009, ATI adopted changes issued by the Financial Accounting
Standards Board to consolidation accounting and reporting. These changes,
among others, required that minority interests be renamed noncontrolling
(a) interests, and the statement of operations presentation has been revised to
separately present consolidated net income (loss), which now includes the
amounts attributable to the Company plus noncontrolling interests (minority
interests) and net income (loss) attributable solely to the Company, for
all periods presented.
Allegheny Technologies Incorporated and Subsidiaries
Sales and Operating Profit by Business Segment
(Unaudited - Dollars in millions)
Three Months Ended Nine Months Ended
September 30 September 30
2009 2008 2009 2008
Sales:
High Performance Metals $ 279.2 $ 510.2 $ 987.6 $ 1,495.7
Flat-Rolled Products 364.2 764.6 1,077.6 2,345.6
Engineered Products 54.2 117.6 174.0 355.7
Total External Sales $ 697.6 $ 1,392.4 $ 2,239.2 $ 4,197.0
Operating Profit (Loss):
High Performance Metals $ 51.3 $ 139.6 $ 146.6 $ 421.8
% of Sales 18.4 % 27.4 % 14.8 % 28.2 %
Flat-Rolled Products 11.3 105.7 41.3 322.2
% of Sales 3.1 % 13.8 % 3.8 % 13.7 %
Engineered Products (8.6 ) 6.1 (24.1 ) 22.8
% of Sales -15.9 % 5.2 % -13.9 % 6.4 %
Operating Profit 54.0 251.4 163.8 766.8
% of Sales 7.7 % 18.1 % 7.3 % 18.3 %
Corporate expenses (15.7 ) (13.4 ) (38.7 ) (46.5 )
Interest expense, net (8.1 ) (1.7 ) (9.3 ) (2.8 )
Debt extinguishment costs 0.0 0.0 (9.2 ) 0.0
Other expense, net of gains on (2.1 ) (2.8 ) (7.5 ) (6.7 )
asset sales
Retirement benefit expense (25.5 ) (2.5 ) (96.2 ) (5.8 )
Income before income taxes $ 2.6 $ 231.0 $ 2.9 $ 705.0
Allegheny Technologies Incorporated and Subsidiaries
Consolidated Balance Sheets (a)
(Current period unaudited--Dollars in millions)
September 30, December 31,
2009 2008
ASSETS
Current Assets:
Cash and cash equivalents $ 826.3 $ 469.9
Accounts receivable, net of allowances for
doubtful accounts of $6.3 at both 415.8 530.5
September 30, 2009 and December 31, 2008
Inventories, net 737.3 887.6
Prepaid expenses and other current assets 67.7 41.4
Total Current Assets 2,047.1 1,929.4
Property, plant and equipment, net 1,852.5 1,633.6
Cost in excess of net assets acquired 196.3 190.9
Prepaid pension asset 124.7 0.0
Deferred income taxes 20.6 281.6
Other assets 138.8 134.9
Total Assets $ 4,380.0 $ 4,170.4
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $ 283.0 $ 278.5
Accrued liabilities 278.6 322.0
Deferred income taxes 0.3 78.2
Short term debt and current portion of long-term 20.2 15.2
debt
Total Current Liabilities 582.1 693.9
Long-term debt 1,050.4 494.6
Accrued postretirement benefits 444.4 446.9
Pension liabilities 33.6 378.2
Other long-term liabilities 116.0 127.8
Total Liabilities 2,226.5 2,141.4
Total ATI stockholders' equity 2,078.7 1,957.4
Noncontrolling interests 74.8 71.6
Total Equity 2,153.5 2,029.0
Total Liabilities and Equity $ 4,380.0 $ 4,170.4
On January 1, 2009, ATI adopted changes issued by the Financial Accounting
Standards Board to consolidation accounting and reporting. These changes,
(a) among others, required that noncontrolling interests, formerly termed
minority interests, be considered a component of equity for all periods
presented. Noncontrolling interests were previously classified within other
long-term liabilities.
Allegheny Technologies Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited - Dollars in millions)
Nine Months Ended
September 30
2009 2008
Operating Activities:
Net income (loss) $ (2.4 ) $ 462.0
Depreciation and amortization 96.6 86.7
Deferred taxes 95.5 64.5
Change in managed working capital 344.8 (185.2 )
Pension contribution (350.0 ) 0.0
Change in retirement benefits 60.2 (16.7 )
Accrued liabilities and other (95.3 ) (66.7 )
Cash provided by operating activities 149.4 344.6
Investing Activities:
Purchases of property, plant and equipment (308.1 ) (365.1 )
Asset disposals and other 5.5 1.3
Cash used in investing activities (302.6 ) (363.8 )
Financing Activities:
Borrowings on long-term debt 752.5 0.0
Payments on long-term debt and capital leases (194.5 ) (14.8 )
Net borrowings under credit facilities 5.1 2.6
Debt issuance costs (18.1 ) 0.0
Dividends paid to shareholders (35.3 ) (54.1 )
Dividends paid to noncontrolling interests (0.8 ) 0.0
Exercises of stock options 0.5 1.1
Taxes on share-based compensation 0.2 (24.5 )
Purchase of treasury stock 0.0 (241.8 )
Cash provided by (used in) financing activities 509.6 (331.5 )
Increase (decrease) in cash and cash equivalents 356.4 (350.7 )
Cash and cash equivalents at beginning of period 469.9 623.3
Cash and cash equivalents at end of period $ 826.3 $ 272.6
Allegheny Technologies Incorporated and Subsidiaries
Selected Financial Data
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
Volume: 2009 2008 2009 2008
High Performance Metals (000's lbs.)
Titanium mill products 5,488 8,707 18,386 25,184
Nickel-based and specialty alloys 6,511 10,365 24,652 31,395
Exotic alloys 1,038 1,365 3,674 4,194
Flat-Rolled Products (000's lbs.)
High value 90,602 133,322 268,720 386,113
Standard 126,911 130,888 346,696 481,372
Flat-Rolled Products total 217,513 264,210 615,416 867,485
Average Prices:
High Performance Metals (per lb.)
Titanium mill products $ 20.08 $ 25.95 $ 21.38 $ 25.93
Nickel-based and specialty alloys $ 14.87 $ 18.82 $ 14.21 $ 18.55
Exotic alloys $ 61.61 $ 49.91 $ 58.85 $ 47.74
Flat-Rolled Products (per lb.)
High value $ 2.33 $ 3.44 $ 2.46 $ 3.29
Standard $ 1.18 $ 2.27 $ 1.14 $ 2.18
Flat-Rolled Products combined $ 1.66 $ 2.86 $ 1.71 $ 2.68
average
Allegheny Technologies Incorporated and Subsidiaries
Other Financial Information
Managed Working Capital
(Unaudited - Dollars in millions)
September 30, December 31,
2009 2008
Accounts receivable $ 415.8 $ 530.5
Inventory 737.3 887.6
Accounts payable (283.0 ) (278.5 )
Subtotal 870.1 1,139.6
Allowance for doubtful accounts 6.3 6.3
LIFO reserve 146.6 205.6
Corporate and other 43.9 60.2
Managed working capital $ 1,066.9 $ 1,411.7
Annualized prior 2 months sales $ 3,051.7 $ 4,008.0
Managed working capital as a % of annualized sales 35.0 % 35.2 %
September 30, 2009 change in managed working $ (344.8 )
capital
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
Debt to Capital
(Unaudited - Dollars in millions)
September 30, December 31,
2009 2008
Total debt $ 1,070.6 $ 509.8
Less: Cash (826.3 ) (469.9 )
Net debt $ 244.3 $ 39.9
Net debt $ 244.3 $ 39.9
Total ATI stockholders' equity 2,078.7 1,957.4
Net ATI capital $ 2,323.0 $ 1,997.3
Net debt to ATI capital 10.5 % 2.0 %
Total debt $ 1,070.6 $ 509.8
Total ATI stockholders' equity 2,078.7 1,957.4
Total ATI capital $ 3,149.3 $ 2,467.2
Total debt to total ATI capital 34.0 % 20.7 %
In managing the overall capital structure of the Company, some of the measures that we focus on are net debt to net capitalization, which is the percentage of debt, net of cash that may be available to reduce borrowings, to the total invested and borrowed capital of ATI (excluding noncontrolling interest), and total debt to total ATI capitalization, which excludes cash balances.
Source: Allegheny Technologies Incorporated
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