8-KEarnings & ResultsFinancial EventsOther Events+1

ATI INC 8-K Report, Financial Results (Jan 5, 2006)

Filed January 5, 2006For Securities:ATI

Summary

Allegheny Technologies Incorporated (ATI) has filed an 8-K report detailing expected fourth quarter 2005 financial results and significant events. The company anticipates a net special gain of $14.5 to $19.5 million ($0.14 to $0.19 per share) for the quarter. This gain is primarily driven by a substantial $38 to $42 million net tax benefit resulting from the reversal of a valuation allowance on deferred tax assets. However, this is partially offset by several charges, including asset impairments, legal matters, and an accounting change. Key operational changes include the decision to indefinitely idle ATI Allegheny Ludlum's West Leechburg, PA finishing facility. While this will result in an after-tax charge of $14 to $15 million due to asset impairments, it is projected to generate annual cost savings of approximately $10 million starting in 2007. The company also reported that its appeal in a San Diego Port District lease case was denied, though the previously reserved amount of $22.7 million requires no additional charge.

Key Highlights

  • 1Expects a net special gain of $14.5 - $19.5 million ($0.14 - $0.19/share) for Q4 2005.
  • 2Anticipates a significant $38 - $42 million net tax benefit from reversing a valuation allowance on federal net deferred tax assets.
  • 3Will incur an after-tax charge of $14 - $15 million due to asset impairments from idling the West Leechburg finishing facility.
  • 4The idling of the West Leechburg facility is expected to yield annual cost reductions of approximately $10 million beginning in 2007.
  • 5A $6 million after-tax charge is expected for legal matters.
  • 6A $2.5 million after-tax charge is reported for the adoption of accounting standard FASB Interpretation No. 47.
  • 7ATI's appeal on a $22.7 million San Diego Port District lease case verdict was denied; amounts are fully reserved.

Frequently Asked Questions

The primary driver of the expected net special gain is a $38 to $42 million net tax benefit related to the reversal of ATI's remaining valuation allowance for Federal net deferred tax assets.

Idling the West Leechburg finishing facility will result in an after-tax charge of $14 to $15 million due to asset impairments. However, it is expected to generate annual cost savings of approximately $10 million in the Flat-Rolled Products segment starting in 2007. Employees at the facility will be offered positions at nearby ATI locations.

ATI's appeal of an adverse jury verdict of $22.7 million in favor of the San Diego Unified Port District was denied on January 5, 2006. The company has fully reserved these amounts, so no additional charge is required. ATI is currently evaluating its options for further appeal.

ATI plans to release its full fourth quarter 2005 earnings on January 25, 2006.