July 27, 2006 — Allegheny Technologies Inc. reported net income of $140.4 million on record sales of $1.21 billion for the second quarter, and net income of $242.9 million on sales of $2.25 billion for the first six months of 2006.

Second Quarter Results—The $140.4 million net income ($1.37 per share) compares to net income of $91.7 million ($0.91 per share) for the second quarter of 2005. Sales of $1.21 billion compare to sales of $904.2 million for the second quarter of 2005. Income before tax was $203.5 million, which compares to income before tax of $94.7 million in the second quarter 2005.

Six Month Results—Net income of $242.9 million ($2.38 per share) compares to net income of $152.7 million ($1.53 per share) for the first six months of 2005. Sales of $2.25 billion compare to sales of $1.78 billion for the first six months of 2005. Income before tax was $363.7 million, which compares to income before tax of $158.0 million for the first six months of 2005.

Comments—"ATI continued to demonstrate strong profitable growth results and future earnings power," said L. Patrick Hassey, Chairman, President and CEO. "Sales grew by 34% compared to the second quarter 2005 and were 16% higher than the first quarter 2006. Income before tax more than doubled to $203.5 million. Net income increased by 53% to $140.4 million.

"Segment operating profit reached 21% of sales as operational execution continued to improve. Operating profit in our High Performance Metals segment was nearly 35% of sales. In our Flat-Rolled Products segment, operating profit improved to nearly 13% of sales. Operating profit in our Engineered Products segment was just under 14% of sales. These outstanding results were accomplished with a total LIFO inventory valuation reserve charge of $45 million due to higher raw material costs, particularly for nickel, nickel-bearing scrap and titanium alloy scrap. Continued unusual volatility in the cost of these raw materials has the potential to drive LIFO charges in the second half of 2006 higher than in the first half of this year.

"Each of our business units is hitting on all cylinders and each unit is implementing aggressive growth initiatives. Our key growth markets, namely aerospace and defense, chemical process industry, oil and gas, electrical energy, and medical, remain strong, representing just over 63% of ATI's year-to-date 2006 sales. Aerospace and defense was the largest of our markets at 31% of year-to-date 2006 sales.

"Our cash flow continued to support our self-funded growth strategy. Capital investments in the first half of 2006 totaled $102 million, 82% of which were directed towards increasing our high-value products capabilities. We also invested $331 million in managed working capital through the first two quarters of 2006 due to significantly higher sales and operating levels. We expect managed working capital to be relatively flat in the third quarter 2006 and to moderately increase in the fourth quarter 2006 as we bring on our new high-value products capabilities.

"Key financial ratios were very strong in the second quarter 2006. Managed working capital as a percentage of annualized sales remained near all-time lows at just under 28%. Annualized return on capital employed was 34%, annualized return on stockholders' equity was 52%, and net debt to total capitalization improved to 18.6%.

"We remain focused on reducing costs in 2006 and achieved gross cost reductions of $34 million in the second quarter, bringing year-to-date cost reductions to $62 million. Our 2006 cost reduction target is $100 million.

"Our strategic investments for growth in titanium and titanium alloys, and nickel-based alloys and superalloys are on track. Phase I of our Albany, Ore., titanium sponge facility is now fully operational and is expected to be producing sponge at an annualized rate of 7.5 million pounds in the second half of 2006. Albany Phase II and Phase III are progressing. In addition, in June we announced our Board's approval of a greenfield titanium sponge facility in Utah. Our titanium melt expansion projects are also progressing. New nickel-based alloy remelt furnaces at our Latrobe, Pa., and Lockport, N.Y., facilities were successfully started in July. We continue to expect increased mill product shipments of our high-value products from these strategic investments beginning in the fourth quarter 2006.

"This step-up in ATI's production capacity is well-timed. Discussions with existing and new customers last week during the Farnborough Air Show confirm a significant step-up in demand for ATI's titanium and nickel-based superalloy products from the aerospace and defense market. Our outlook for growth in aerospace and defense has further strengthened. Demand also remains strong for these products from the medical, oil and gas, and other capital goods markets.

Outlook—"Looking ahead, we see no seasonal slowing in the third quarter,” said Hassey. “Demand from our key markets, namely aerospace and defense, chemical process industry, oil and gas, electrical energy, and medical, remains very strong for our high performance metals and flat-rolled products. Recent price increases for our flat-rolled stainless products are further evidence of the continued strength in the markets for these products."

Allegheny Technologies is one of the largest and most diversified specialty metals producers in the world with revenues of $4.0 billion during the most recent four quarters ending June 30, 2006. ATI has approximately 9,300 full-time employees world-wide. Products include titanium and titanium alloys, nickel-based alloys and superalloys, stainless and specialty steels, zirconium, hafnium, and niobium, tungsten materials, grain-oriented silicon electrical steel and tool steels, and forgings and castings.