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, 2002
[ ] 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 of principal executive office of Issuer)
AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan
Years ended December 31, 2002 and 2001 with Report of Independent Auditors
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Audited Financial Statements
and Supplemental Schedule
Years ended December 31, 2002 and 2001
CONTENTS
Report of Independent Auditors ................................................................................ 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 4(i)--Schedule of Assets (Held at End of Year)................................................ 12
EXHIBITS
23 Consent of Independent Auditors
99 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Report of Independent Auditors
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, 2002 and 2001, 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 auditing standards generally accepted
in the 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, 2002 and 2001, and the changes in its net assets available for
benefits for the years then ended, in conformity with accounting principles
generally accepted in the United States.
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, 2002 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
Pittsburgh, Pennsylvania
June 11, 2003
1
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2002 2001
---------------- ---------------
Investments:
Interest-bearing cash $ - $ 351
Interest in Allegheny Technologies Incorporated Savings Plan Trust 68,562,589 67,085,891
Interest in registered investment companies 10,334,374 12,684,948
Interest in common collective trusts 8,616,603 9,801,563
Participant loans 6,072,273 6,219,132
Corporate common stocks 3,976,412 9,862,875
--------------------------------
Total investments 97,562,251 105,654,760
Other (payables) receivables, net (679,148) 88
--------------------------------
Net assets available for benefits $ 96,883,103 $105,654,848
================================
See accompanying notes.
2
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Statements of Changes in Net Assets Available for Benefits
YEAR ENDED DECEMBER 31
2002 2001
--------------------------------
Contributions:
Employer $ 2,732,088 $ 2,377,780
Employee 5,187,714 5,046,862
--------------------------------
Total contributions 7,919,802 7,424,642
Investment income (loss):
Net loss from interest in Allegheny Technologies
Incorporated Savings Plan Trust (1,152,894) (26,871)
Net loss from interest in registered investment
Companies (2,544,431) (723,000)
Net loss from interest in common collective trusts (1,309,517) (569,870)
Interest income 393,001 341,696
Dividend income 347,604 260,396
Net realized/unrealized loss on corporate
common stocks (5,668,370) (1,835,120)
--------------------------------
Total investment loss (9,934,607) (2,552,769)
Plan transfers - 17,023,296
--------------------------------
(2,014,805) 21,895,169
Distributions to participants (6,709,034) (4,080,646)
Plan transfers (47,906) (174,980)
--------------------------------
(6,756,940) (4,255,626)
--------------------------------
Net (decrease) increase in net assets available for benefits (8,771,745) 17,639,543
Net assets available for benefits at beginning of year 105,654,848 88,015,305
--------------------------------
Net assets available for benefits at end of year $ 96,883,103 $105,654,848
================================
See accompanying notes.
3
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements
December 31, 2002
1. SIGNIFICANT ACCOUNTING POLICIES
Investments are valued as follows:
Bank and insurance 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 Fund until maturity, certain investment contracts provide
for adjustments to contract value for withdrawals made prior to maturity.
All other funds 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 accounting principles
generally accepted in the United States 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) 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 Fund. 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.
Effective November 29, 1999, Allegheny Teledyne Incorporated's name was changed
to Allegheny Technologies Incorporated. Also, the Aerospace and Electronics and
Consumer segments of Allegheny Teledyne were spun off into two new freestanding
public companies--Teledyne Technologies Incorporated and Water Pik Technologies,
Inc. Stockholders of Allegheny Teledyne became stockholders of Teledyne
Technologies Incorporated and Water Pik Technologies, Inc., thus creating two
new master trusts. Participants continued to hold interests in the two new
companies until December 31, 2002, at which time these two holdings were
terminated and the assets were transferred to one of the other plan investment
options.
Effective November 1, 2001, Oremet employees belonging to the bargaining unit
Local 7150 became eligible to participate in the Plan. Accordingly, plan
investments related to these participants were transferred into the Plan.
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.
5
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's net
assets:
DECEMBER 31
2002 2001
--------------------------------------------
Fixed Income Fund $56,605,733 $50,203,227
Allegheny Technologies Disciplined Stock Fund 6,082,791 8,447,657
Alliance Equity Fund 5,874,064 8,435,007
Dreyfus Lifestyle Growth and Income Fund 5,243,372 6,547,450
Allegheny Technologies Incorporated common stock 3,976,412* 8,450,736
Dreyfus Emerging Leaders 4,632,483* 6,113,187
*Shown for comparative purpose
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, 2002 and 2001,
the Plan's interest in the net assets of the Allegheny Technologies Disciplined
Stock Fund Master Trust, the Alliance Equity Master Trust and the Fixed Income
Master Trust were as follows:
2002 2001
------------------- ------------------
Fixed Income Master Trust 31.31% 30.31%
Alliance Equity Master Trust 22.12 21.11
Allegheny Technologies Disciplined Stock Fund
Master Trust 11.07 10.90
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, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------
Guaranteed investment contracts:
Business Men's Assurance Company of America $ - $ 1,246,890
Canada Life 2,757,412 2,743,536
Combined Life Insurance Company - 3,097,946
GE Life and Annuity 10,420,327 11,812,375
Hartford Life Insurance Company 10,460,185 10,025,160
John Hancock Life Insurance Company 9,854,982 14,218,029
Monumental Life Insurance Company 2,363,422 3,331,280
New York Life Insurance Company 7,808,955 7,729,985
Ohio National Life 5,976,900 7,936,620
Pacific Mutual Life Insurance Company 6,074,436 6,036,924
Principal Life 1,134,634 3,000,000
Protective Life Insurance Company 1,006,463 1,002,333
Pruco Pace Credit Enhanced 8,689,223 9,950,359
Safeco Life Insurance 1,973,290 3,000,505
Security Life of Denver 6,465,137 6,181,488
Sun America, Inc. 2,988,024 2,992,868
United of Omaha 7,226,335 7,188,790
--------------------------------------------
85,199,725 101,495,088
Synthetic guaranteed investment contracts:
Caisse des Depots et Consignations 4,953,210 7,800,826
CIT Equipment 996,925 992,755
Common Wealth Edison 2,999,980 1,976,061
Commit to purchase FNMA 02-74 LC 3,071,979 -
Conn RRB Spec Trust 2,948,436 2,987,164
Detroit Edison 2,027,941 2,018,460
FHLMC 5,977,227 2,466,660
Illinois Power Sp Trust 1,971,078 1,957,161
MBNA Master CC Trust 1,993,490 1,983,492
MDA Monumental BGI Wrap 41,868,727 -
Peco Energy Company 1,970,899 1,982,788
Peoples Security Life Insurance Company 2,491,608 6,602,162
Public Service 2,036,624 1,998,629
Transamerica Occidental 6,568,303 9,559,425
Union Bank of Switzerland 174,682 2,737,675
Westdeutsche Landesbank Girozentrale 3,556,463 9,387,186
--------------------------------------------
85,607,572 54,450,444
Interest in common collective trust 7,972,257 7,680,629
Receivables - 381,024
Interest-bearing cash 212,167 -
Other 1,817,668 1,635,070
--------------------------------------------
Total net assets $180,809,389 $165,642,255
============================================
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 $88,750,762 and $55,854,607 at December 31, 2002 and
2001, respectively. The contract value minus the market value of the wrapper
contracts at December 31, 2002 and 2001 is $(2,667,261) and $(1,397,030),
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, 2002 and 2001, the interest crediting rates for GICs and Fixed Maturity SICs
ranged from 3.27% to 8.05% and 3.49% to 8.05%, respectively.
For the years ended December 31, 2002 and 2001, the average annual yield for the
investment contracts in the Fund was 5.74% and 6.25%, 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, 2002 and 2001.
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, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------
Investment in registered investment companies:
Alliance Equity Fund S.A. #4 $26,603,639 $40,024,274
Operating payables (49,895) (64,365)
--------------------------------------------
Total net assets $26,553,744 $39,959,909
============================================
The composition of net assets of the Allegheny Technologies Disciplined Stock
Fund Master Trust at December 31, 2002 and 2001 was as follows:
2002 2001
--------------------------------------------
Corporate common stocks $53,256,475 $76,016,770
Interest in common collective trusts 1,630,752 1,410,015
Receivables 67,848 103,913
Payables (25,733) -
---------------------- --------------------
Total net assets $54,929,342 $77,530,698
====================== ====================
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
ALLIANCE EQUITY MASTER DISCIPLINED STOCK FUND MASTER
FIXED INCOME MASTER TRUST TRUST TRUST
--------------------------------- ---------------------------- -------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------------------
2002 2001 2002 2001 2002 2001
----------------------------------------------------------------------------------------------
Investment income (loss):
Interest income $ 9,786,577 $ 9,147,492 $ - $ - $ - $ -
Net realized/unrealized
gain (loss) on
corporate common
stocks 1,528 - - - (17,406,255) (12,375,289)
Dividends - - - - 948,623 941,613
Net gain (loss),
registered invest-
ment companies - 32,606 (10,652,634) (9,248,179) - -
Net gain, common
collective trusts 172,081 401,062 - - 13,761 53,202
Other income 69,815 - - - - -
Administrative expenses (236,944) (208,589) (118,618) (170,195) (424,085) (520,128)
Transfers 5,374,077 11,804,280 (2,634,913) (1,786,437) (5,733,400) (1,810,556)
------------ ----------- ---------- ------------ ------------ ------------
Net increase (decrease) 15,167,134 21,176,851 (13,406,165) (11,204,811) (22,601,356) (13,711,158)
Total net assets at
beginning of year 165,642,255 144,465,404 39,959,909 51,164,720 77,530,698 91,241,856
------------ ----------- ---------- ------------ ------------ ------------
Total net assets at
end of year $180,809,389 $165,642,255 $ 26,553,744 $ 39,959,909 $ 54,929,342 $ 77,530,698
============ ============ ============ ============ ============ ============
Interest, realized and unrealized gains and losses, and management fees from the
master trusts are included in the net 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 November 30, 1995, 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. Subsequent to this issuance of the determination letter,
the Plan was amended. 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.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Plan Sponsor has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA.
11
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
EIN 25-1792394 Plan 005
Schedule H, Line 4(i)--Schedule of Assets (Held at End of Year)
December 31, 2002
DESCRIPTION UNITS/SHARES CURRENT VALUE
----------------------------------------------------------------------------------------------------------------------
Registered Investment Companies
Dreyfus Emerging Leaders Fund* 166,876.191 $ 4,632,483
Dreyfus International Value Fund* 147,955.476 1,781,384
Dreyfus Bond Market Index* 141,519.873 1,484,543
MAS Midcap Growth Fund 148,134.235 1,789,462
Jennison Growth Fund 64,264.600 646,502
------------------------
Total registered investment companies $10,334,374
========================
Common Collective Trusts
Dreyfus Lifestyle Growth and Income Fund* 363,915.185 $ 5,243,372
Dreyfus Short-Term Investment Fund* 709,848.570 709,849
Dreyfus Lifestyle Growth Fund* 145,351.251 1,953,562
Dreyfus Lifestyle Income Fund* 47,020.437 709,820
------------------------
Total common collective trusts $ 8,616,603
========================
Participant loans* (5.25% to 10.50% with maturities through 2017)
$ 6,072,273
========================
Corporate Common Stocks
Allegheny Technologies Incorporated* 638,268.361 $3,976,412
========================
*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 27, 2003 Richard J. Harshman
Senior Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer and Duly
Authorized Officer)
13