10-QPeriod: Q2 FY2000

ATI INC Quarterly Report for Q2 Ended Jun 30, 2000

Filed August 7, 2000For Securities:ATI

Summary

Allegheny Technologies Incorporated (ATI) reported a solid financial performance for the six months ended June 30, 2000, with sales increasing to $1.26 billion from $1.16 billion in the prior year period. While net income saw a decrease to $85.0 million from $117.9 million, this was largely due to the prior year's results benefiting significantly from discontinued operations. Income from continuing operations, however, showed improvement, rising to $85.0 million ($1.00 per diluted share) from $77.0 million ($0.79 per diluted share) in the comparable period. The company's financial position strengthened with working capital increasing to $641.3 million and the current ratio improving to 2.5. This was supported by a significant increase in long-term debt, moving from $200.3 million to $529.7 million, while short-term debt was substantially reduced. The company also continued its aggressive share repurchase program, buying back 9.2 million shares for $183.7 million in the first six months of the year.

Key Highlights

  • 1Sales for the six months ended June 30, 2000, increased by 9.1% to $1.26 billion compared to the same period in 1999.
  • 2Income from continuing operations for the six months increased to $85.0 million ($1.00 per diluted share) from $77.0 million ($0.79 per diluted share) in the prior year.
  • 3Net income decreased to $85.0 million for the six months, largely due to the prior year's inclusion of significant gains from discontinued operations.
  • 4Working capital improved significantly, reaching $641.3 million at June 30, 2000, up from $493.5 million at December 31, 1999.
  • 5The company reduced its short-term debt from $152.7 million to $28.7 million while increasing long-term debt from $200.3 million to $529.7 million.
  • 6ATI continued an active stock repurchase program, buying back 9.2 million shares for $183.7 million in the first half of 2000.
  • 7Environmental reserves stood at $57.0 million, with management not expecting costs in excess of accruals to materially impact financial condition or liquidity, though individual period results could be affected.

Frequently Asked Questions

The decrease in net income from $117.9 million in the first six months of 1999 to $85.0 million in the same period of 2000 is primarily due to the prior year benefiting significantly from the sale and spin-off of discontinued operations. Income from continuing operations, however, shows an increase.

ATI has significantly reduced its short-term debt from $152.7 million to $28.7 million. Concurrently, long-term debt has substantially increased from $200.3 million to $529.7 million. This indicates a strategic shift towards longer-term financing.

The company has approximately $57.0 million in reserves for environmental remediation. Management believes that future environmental costs, beyond those accrued, are unlikely to have a material adverse effect on the company's overall financial condition or liquidity. However, the resolution of these matters in any given reporting period could impact the results of operations for that specific period.

In the first six months of 2000, cash generated from operations, along with debt proceeds and investment sales, was used for significant share repurchases ($183.7 million), dividend payments ($33.8 million), and capital expenditures ($28.0 million).