Allegheny Technologies Inc. reported a net loss of $210.2 million on sales of $484.4 million for the fourth quarter ended December 31, 2003.

Sales, $484.4 million, represent a 7% increase over $454.2 million in the fourth quarter of 2003. The fourth quarter net loss, $210.2 million ($2.61 per share), compares to a net loss of $39.7 million($0.49 per share) in the fourth quarter of 2002. Fourth quarter 2003 results included special charges, after tax, of $175.9 million ($2.18 per share). Excluding these special charges, the net loss for the fourth quarter 2003 was $34.3 million ($0.43 per share). Fourth quarter retirement benefit expense, primarily non-cash, was $20.4 million ($0.25 per share). In addition, fourth quarter 2003 results were negatively impacted by non-cash inventory accounting charges of $11.0 million ($0.14 per share) primarily due to the effects of rapidly rising raw materials costs under the company's LIFO inventory accounting methodology.

Full Year Results — For the full year, the company reported a net loss of $292.1 million on sales of $1937.4 million, which compares to a net loss of $65.8 million on sales of $1907.8 million in 2002. Cost reductions for the year totaled $117 million, surpassing the company’s $115 million goal for 2003.

Management Comments — "During 2003, ATI continued to generate positive cash flow from operations and make important investments in our core businesses. We ended 2003 with $20 million more cash on hand than at the end of 2002 and continued to have no cash borrowings under our secured domestic credit facility," said Pat Hassey, ATI's President and CEO.

"As a result of actions taken in 2003, we believe ATI should benefit from improving business conditions in 2004. We introduced a number of new alloys to better serve our customers' needs, demonstrating our ongoing commitment to technology and product development. Through our joint-venture Uniti Titanium, we expanded our market presence to participate in global growth for industrial titanium. Our 2003 cost reductions reached $117 million, exceeding our goal of $115 million, and we significantly lowered our fixed costs as a result of restructuring actions taken in 2003.

"The ATI Business System is driving lean manufacturing throughout the company. Even though costs of our major raw materials increased approximately 27% during 2003, gross inventory increased by less than 1% as a result of ATI Business System initiatives.

"In 2004, our goal is to achieve profitability in our Flat-Rolled Products segment and improve operating earnings in our High Performance Metals and Engineered Products segments. Our 2004 cost reduction objective is $104 million. While retirement benefit expense will again be a significant negative to financial results, it will remain largely non-cash. Our current 2004 capital expenditures are expected to be between $60 and $70 million, which is within our forecasted depreciation expense of $72 million. While we are concerned about raw material and energy price volatility, especially for nickel and natural gas, we are taking actions to manage the impact of this volatility internally and we are now able to increase selling prices.

"As 2004 begins, we are seeing improvement in market conditions, particularly in our Flat-Rolled Products segment. Price increases announced in December for most of our flat-rolled products and the pricing policy revision for our nickel and cobalt alloys and specialty steel long products are in effect. We announced additional price increases for stainless steel and silicon electrical steel products last week. Our exotic alloys business continues to do very well. The current valuation of the US dollar provides potential for improved non-domestic sales. We expect overall business conditions for most of our major end markets to steadily improve in 2004."