UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
----------- -------------
COMMISSION FILE NUMBER 1-12001
ALLEGHENY LUDLUM CORPORATION PERSONAL
RETIREMENT AND 401(K) SAVINGS ACCOUNT PLAN
------------------------------------------
(Title of Plan)
ALLEGHENY TECHNOLOGIES INCORPORATED
(Name of Issuer of securities held pursuant to the Plan)
1000 Six PPG Place, Pittsburgh, Pennsylvania 15222-5479
(Address of Plan and principal executive offices of Issuer)
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULE
Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan
Years ended December 31, 2003 and 2002
with Report of Independent Registered Public Accounting Firm
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Audited Financial Statements
and Supplemental Schedule
Years ended December 31, 2003 and 2002
CONTENTS
Report of Independent Registered Public Accounting Firm ................... 1
Audited Financial Statements
Statements of Net Assets Available for Benefits............................ 2
Statements of Changes in Net Assets Available for Benefits................. 3
Notes to Financial Statements ............................................. 4
Supplemental Schedule
Schedule H, Line 4i--Schedule of Assets (Held at End of Year).............. 12
Signatures ................................................................ 13
Exhibit
23 Consent of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
Allegheny Technologies Incorporated
We have audited the accompanying statements of net assets available for benefits
of the Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings
Account Plan as of December 31, 2003 and 2002, and the related statements of
changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for the years then ended, in conformity with U.S. generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2003 is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
June 18, 2004
Pittsburgh, Pennsylvania
1
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2003 2002
-----------------------------
Investments:
Interest in Allegheny Technologies Incorporated
Savings Plan Trust $ 77,595,773 $ 68,562,589
Interest in registered investment companies 23,191,284 10,334,374
Corporate common stocks 10,674,790 3,976,412
Participant loans 5,619,359 6,072,273
Interest in common collective trusts 134,103 8,616,603
-----------------------------
Total investments 117,215,309 97,562,251
Other payables, net (126,616) (679,148)
-----------------------------
Net assets available for benefits $ 117,088,693 $ 96,883,103
=============================
See accompanying notes.
2
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Statements of Changes in Net Assets Available for Benefits
YEARS ENDED DECEMBER 31
2003 2002
--------------------------------
Contributions:
Employer $ 2,412,075 $ 2,732,088
Employee 5,375,543 5,187,714
--------------------------------
Total contributions 7,787,618 7,919,802
Investment income (loss):
Net gain (loss) from interest in Allegheny
Technologies Incorporated Savings Plan Trust 6,817,946 (1,152,894)
Net gain (loss) from interest in registered
investment companies 4,396,256 (2,544,431)
Net gain (loss) from interest in common collective
trusts 686,146 (1,309,517)
Interest income 340,017 393,001
Dividend income 197,275 347,604
Net realized/unrealized gain (loss) on corporate
common stocks 6,606,984 (5,668,370)
--------------------------------
Total investment gain (loss) 19,044,624 (9,934,607)
--------------------------------
26,832,242 (2,014,805)
Distributions to participants (6,632,092) (6,709,034)
Plan transfers, net 5,440 (47,906)
--------------------------------
(6,626,652) (6,756,940)
--------------------------------
Net increase (decrease) in net assets available for benefits 20,205,590 (8,771,745)
Net assets available for benefits at beginning of year 96,883,103 105,654,848
--------------------------------
Net assets available for benefits at end of year $ 117,088,693 $ 96,883,103
================================
See accompanying notes.
3
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements
December 31, 2003
1. SIGNIFICANT ACCOUNTING POLICIES
Investments are valued as follows:
Bank and insurance investment contracts (investment contracts) with varying
contract rates and maturity dates are stated at contract value.
Although it is management's intention to hold the investment contracts in
the Fixed Income Master Trust until maturity, certain investment contracts
provide for adjustments to contract value for withdrawals made prior to
maturity.
All other investments are stated at their net asset value, based on the
quoted market prices of the securities held in such funds on applicable
exchanges.
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates that affect
the amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
The Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account
Plan (the Plan) is a defined contribution plan and subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
The purpose of the Plan is to provide retirement benefits to eligible employees
of Allegheny Ludlum Corporation (ALC or the Company) through company
contributions and to encourage employee thrift by permitting eligible employees
to defer a part of their compensation and contribute such deferral to the Plan.
ALC is a wholly owned subsidiary of Allegheny Technologies Incorporated (ATI,
the Plan Sponsor). ALC contributes to the Plan $0.50 per hour worked per
eligible union employee. Unless otherwise specified by the participant, all
contributions are made to the Fixed Income Master Trust. Such contributions are
made only from current income or accumulated earnings of the Plan Sponsor. The
Plan allows participants to direct contributions made on their behalf to any of
the investment alternatives. The Plan allows employees to contribute a portion
of eligible wages each pay period through payroll deductions subject to Internal
Revenue Code limitations. In addition, the employees' annual pretax profit
sharing award and pretax Longevity Incentive Payment Plan award may be
contributed at the employees' discretion as their deferral.
4
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Separate accounts are maintained by the Plan Sponsor for each participating
employee. Trustee fees and asset management fees charged by the Plan's trustee,
Mellon Bank, N.A., for the administration of all funds are charged against net
assets available for benefits of the respective fund. Certain other expenses of
administering the Plan are paid by the Plan Sponsor.
Participants may make "in-service" and hardship withdrawals as outlined in the
plan document.
Active employees can borrow up to 50% of their vested account balances minus any
outstanding loans. The loan amounts are further limited to a minimum of $500 and
a maximum of $50,000, and an employee can obtain no more than three loans at one
time. Interest rates are determined based on commercially accepted criteria, and
payment schedules vary based on the type of the loan. General-purpose loans are
repaid over 6 to 60 months, and primary residence loans are repaid over periods
up to 180 months. Payments are made by payroll deductions.
Further information about the Plan, including eligibility, vesting,
contributions, and withdrawals, is contained in the plan document, summary plan
description, and related contracts. Copies of these documents are available from
the Plan Sponsor.
3. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets:
DECEMBER 31
2003 2002
-------------------------------
Fixed Income Master Trust $ 60,271,858 $ 56,605,733
Allegheny Technologies Incorporated common stock 10,674,790 3,976,412*
Allegheny Technologies Disciplined Stock Fund
Master Trust 9,166,850 6,082,791
Alliance Equity Master Trust 8,157,065 5,874,064
Oakmark Balanced Fund 6,836,824 -*
Dreyfus Emerging Leaders Fund 6,695,196 4,632,483*
Dreyfus Lifestyle Growth and Income Fund -* 5,243,372
*Shown for comparative purposes.
5
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
Certain of the Plan's investments are in the Allegheny Technologies Incorporated
Savings Plan Trust, which has three subsidiary Master Trusts: the Allegheny
Technologies Disciplined Stock Fund Master Trust, the Alliance Equity Master
Trust, and the Fixed Income Master Trust, which are institutional separate
accounts valued on a unitized trust basis (collectively, the "Master Trust").
The Master Trust was established for the investment of assets of the Plan, and
several other ATI sponsored retirement plans. Each participating retirement plan
has an undivided interest in the Master Trust. At December 31, 2003 and 2002,
the Plan's interest in the net assets of the Fixed Income Master Trust, the
Alliance Equity Master Trust, and the Allegheny Technologies Disciplined Stock
Fund Master Trust was as follows:
2003 2002
-----------------
Fixed Income Master Trust 31.46% 31.31%
Alliance Equity Master Trust 22.88 22.12
Allegheny Technologies Disciplined Stock Fund
Master Trust 11.78 11.07
Investment income and expenses are allocated to the Plan based upon its pro rata
share in the net assets of the Master Trust.
6
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of the net assets of the Fixed Income Master Trust at December
31, 2003 and 2002 was as follows:
2003 2002
---------------------------------
Guaranteed investment contracts:
Canada Life $ 2,757,412 $ 2,757,412
GE Life and Annuity 9,583,804 10,420,327
Hartford Life Insurance Company 10,939,222 10,460,185
John Hancock Life Insurance Company 8,848,178 9,854,982
Monumental Life Insurance Company 2,353,862 2,363,422
New York Life Insurance Company 6,814,589 7,808,955
Ohio National Life 4,652,712 5,976,900
Pacific Mutual Life Insurance Company 6,075,054 6,074,436
Principal Life 1,187,962 1,134,634
Protective Life Insurance Company 1,006,456 1,006,463
Pruco Pace Credit Enhanced 8,947,069 8,689,223
Safeco Life Insurance - 1,973,290
Security Life of Denver 6,737,205 6,465,137
Sun America, Inc. - 2,988,024
United of Omaha 7,226,335 7,226,335
---------------------------------
77,129,860 85,199,725
Synthetic guaranteed investment contracts:
Caisse des Depots et Consignations 1,999,995 4,953,210
CIT Equipment - 996,925
Common Wealth Edison - 2,999,980
Commit to purchase FNMA 02-74 LC - 3,071,979
Conn RRB Spec Trust - 2,948,436
Detroit Edison - 2,027,941
FHLMC - 5,977,227
Illinois Power Sp Trust - 1,971,078
MBNA Master CC Trust - 1,993,490
MDA Monumental BGI Wrap 33,990,199 41,868,727
Peco Energy Company - 1,970,899
Peoples Security Life Insurance Company - 2,491,608
Public Service - 2,036,624
Bank of America 17,803,044 -
Rabobank 36,635,330 -
Transamerica Occidental - 6,568,303
Union Bank of Switzerland 14,768,321 174,682
Westdeutsche Landesbank Girozentrale - 3,556,463
---------------------------------
105,196,889 85,607,572
Interest in common collective trusts 8,515,369 7,972,257
Interest-bearing cash - 212,167
Other 764,537 1,817,668
---------------------------------
Total net assets $ 191,606,655 $ 180,809,389
=================================
7
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The Fixed Income Fund (the Fund) invests in guaranteed investment contracts
(GICs) and actively managed structured or synthetic investment contracts (SICs).
The GICs are promises by a bank or insurance company to repay principal plus a
fixed rate of return through contract maturity. SICs differ from GICs in that
there are specific assets supporting the SICs, and these assets are owned by the
Master Trust. The bank or insurance company issues a wrapper contract that
allows participant-directed transactions to be made at contract value. The
assets supporting the SICs are comprised of government agency bonds, corporate
bonds, asset-backed securities (ABOs), and collateralized mortgage obligations
(CMOs) with fair values of $107,926,162 and $88,750,762 at December 31, 2003 and
2002, respectively.
Interest crediting rates on the GICs in the Fund are determined at the time of
purchase. Interest crediting rates on the SICs are either: (1) set at the time
of purchase for a fixed term and crediting rate; (2) set at the time of purchase
for a fixed term and variable crediting rate, or (3) set at the time of purchase
and reset monthly within a "constant duration." A constant duration contract may
specify a duration of 2.5 years and the crediting rate is adjusted monthly based
upon quarterly rebalancing of eligible 2.5 year duration investment instruments
at the time of each resetting; in effect the contract never matures. At December
31, 2003 and 2002, the interest crediting rates for GICs and Fixed Maturity SICs
ranged from 3.58% to 8.02% and 3.27% to 8.05%, respectively.
For the years ended December 31, 2003 and 2002, the average annual yield for the
investment contracts in the Fund was 5.31% and 5.74%, respectively. Fair value
of the GICs was estimated by discounting the weighted average of the Fund's cash
flows at the then-current, interest-crediting rate for a comparable maturity
investment contract. Fair value for the SICs was estimated based on the fair
value of each contract's supporting assets at December 31, 2003 and 2002.
8
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of net assets of the Alliance Equity Master Trust at December
31, 2003 and 2002 was as follows:
2003 2002
---------------------------------
Investment in pooled separate accounts:
Alliance Equity Fund S.A. #4 $ 35,666,427 $ 26,603,639
Operating payables (10,616) (49,895)
---------------------------------
Total net assets $ 35,655,811 $ 26,553,744
=================================
The composition of net assets of the Allegheny Technologies Disciplined Stock
Fund Master Trust at December 31, 2003 and 2002 was as follows:
2003 2002
---------------------------------
Corporate common stocks $ 77,259,404 $ 53,256,475
Interest in common collective trusts 337,451 1,630,752
Receivables 283,072 67,848
Payables (42,301) (25,733)
---------------------------------
Total net assets $ 77,837,626 $ 54,929,342
=================================
9
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of the changes in net assets of the various master trusts is as
follows:
ALLEGHENY TECHNOLOGIES
DISCIPLINED STOCK FUND MASTER
FIXED INCOME MASTER TRUST ALLIANCE EQUITY MASTER TRUST TRUST
------------------------------------------------------------------------------------------------
YEARS ENDED DECEMBER 31
------------------------------------------------------------------------------------------------
2003 2002 2003 2002 2003 2002
------------------------------------------------------------------------------------------------
Investment income (loss):
Interest income $ 9,953,790 $ 9,786,577 $ - $ - $ 214,654 $ -
Net realized/unrealized
gain (loss) on
corporate common
stocks - 1,528 - - 13,699,382 (17,406,255)
Dividends - - - - 1,073,159 948,623
Net gain (loss),
registered invest-
ment companies 45,315 - - - - -
Net gain (loss), pooled
separate accounts - - 9,614,660 (10,652,634) - -
Net gain, common
collective trusts 111,616 172,081 - - 10,183 13,761
Other income - 69,815 - - - -
Administrative expenses (201,917) (236,944) (72,409) (118,618) (660,982) (424,085)
Transfers 888,462 5,374,077 (440,184) (2,634,913) 8,571,888 (5,733,400)
------------------------------------------------------------------------------------------------
Net increase (decrease) 10,797,266 15,167,134 9,102,067 (13,406,165) 22,908,284 (22,601,356)
Total net assets at
beginning of year 180,809,389 165,642,255 26,553,744 39,959,909 54,929,342 77,530,698
------------------------------------------------------------------------------------------------
Total net assets at
end of year $ 191,606,655 $ 180,809,389 $ 35,655,811 $ 26,553,744 $ 77,837,626 $ 54,929,342
================================================================================================
Interest, realized and unrealized gains and losses, and management fees from the
master trusts are included in the net gain (loss) from interest in Allegheny
Technologies Incorporated Savings Plan Trust on the statements of changes in net
assets available for benefits.
10
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated July 25, 2003, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the Code) and, therefore, the related trust is exempt
from taxation. The determination letter does not include Plan amendments
subsequent to July 1, 2001. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan, as amended, is
qualified and the related trust is tax-exempt.
5. PARTIES-IN-INTEREST
Dreyfus Corporation is the manager of the Dreyfus Mutual Funds that are offered
as investment options under this Plan. Dreyfus Service Corporation is the funds'
distributor. Dreyfus Corporation and Dreyfus Service Corporation are both wholly
owned subsidiaries of Mellon Financial Corporation. Mellon Financial Corporation
also owns Mellon Bank, N.A., the trustee for this Plan. Therefore, transactions
with these entities qualify as party-in-interest transactions.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA.
7. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities are
exposed to various risk such as interest rate, market, and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the statements of net
assets available for benefits.
11
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
EIN: 25-1792394 Plan: 005
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2003
DESCRIPTION UNITS/SHARES CURRENT VALUE
---------------------------------------------------------------------------------------------
Registered Investment Companies
-------------------------------
Dreyfus Emerging Leaders Fund* 172,913.112 $ 6,695,196
Dreyfus Bond Market Index * 146,469.653 1,517,426
Dreyfus International Value Fund* 163,994.983 2,710,837
Artisan Funds 99,574.743 2,567,037
Dreyfus Appreciation Fund * 3,401.693 126,339
Oakmark Balanced Fund 310,482.463 6,836,824
Hartford Midcap Fund 29,983.480 738,493
Lord, Abbett Midcap Fund 13,663.709 257,287
MFS Value Fund 8,417.638 171,214
Morgan Stanley Small Growth Fund 21,446.975 231,842
PIMCO - NFJ Fund 10,386.196 260,382
PIMCO - Total Return Fund 18,190.757 194,823
Jennison Growth Fund 67,655.750 883,584
--------------
Total registered investment companies $ 23,191,284
==============
Common Collective Trusts
------------------------
Dreyfus Short-Term Investment Fund* 134,103.470 $ 134,103
==============
Corporate Common Stocks
-----------------------
Allegheny Technologies Incorporated* 807,472.756 $ 10,674,790
==============
Participant loans* (5.0% to 10.5%, with maturities
through 2018) $ 5,619,359
==============
*Party-in-interest
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
administrators of the Plan have duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
ALLEGHENY TECHNOLOGIES INCORPORATED
ALLEGHENY LUDLUM CORPORATION
PERSONAL RETIREMENT AND 401(K)
SAVINGS ACCOUNT PLAN
By: /s/ Richard J. Harshman
-----------------------------------
Date: June 25, 2004 Richard J. Harshman
Executive Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer and Duly
Authorized Officer)
13