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
THE 401(K) 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
The 401(k) Plan
Years ended December 31, 2003 and 2002
with Report of Independent Registered Public Accounting Firm
The 401(k) 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 401(k) 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
The 401(k) Plan
Statements of Net Assets Available for Benefits
DECEMBER 31
2003 2002
--------------------------------------
Investments:
Interest in Allegheny Technologies Incorporated Savings Plan
Trust $ 63,656,539 $ 48,261,282
Interest in registered investment companies 53,795,031 24,440,212
Corporate common stocks 7,643,532 2,758,998
Participant loans 5,162,484 4,759,289
Interest in common collective trusts 124,428 23,349,360
--------------------------------------
Total investments 130,382,014 103,569,141
Other payables, net (116,099) (553,862)
--------------------------------------
Net assets available for benefits $ 130,265,915 $ 103,015,279
======================================
See accompanying notes.
2
The 401(k) Plan
Statements of Changes in Net Assets Available for Benefits
YEARS ENDED DECEMBER 31
2003 2002
----------------------------------------
Contributions:
Employer $ 3,496,473 $ 3,164,787
Employee 8,907,333 10,434,842
----------------------------------------
Total contributions 12,403,806 13,599,629
Investment income (loss):
Net gain (loss) from interest in Allegheny Technologies Incorporated
Savings Plan Trust 8,672,796 (8,100,719)
Net gain (loss) from interest in registered investment companies 8,297,937 (4,413,303)
Net unrealized/realized gain (loss) on corporate common stocks 4,662,239 (3,921,062)
Net gain (loss) from interest in common collective trusts 1,998,905 (3,838,275)
Interest income 327,889 348,298
Dividend income 141,650 242,164
----------------------------------------
Total investment gain (loss) 24,101,416 (19,682,897)
----------------------------------------
36,505,222 (6,083,268)
Distributions to participants (9,094,657) (11,417,423)
Plan transfers, net (121,067) 48,151
Administrative expenses and other, net (38,862) (35,653)
----------------------------------------
(9,254,586) (11,404,925)
----------------------------------------
Net increase (decrease) in net assets available for benefits 27,250,636 (17,488,193)
Net assets available for benefits at beginning of year 103,015,279 120,503,472
----------------------------------------
Net assets available for benefits at end of year $ 130,265,915 $ 103,015,279
========================================
See accompanying notes.
3
The 401(k) Plan
Notes to Financial Statements
Years ended December 31, 2003 and 2002
1. SIGNIFICANT ACCOUNTING POLICIES
Investments are valued as follows:
Bank and insurance investment contracts (investment contacts) 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 401(k) Plan (the Plan) is a defined contribution plan and is 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
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. The Plan allows employees to contribute a portion of
eligible wages each pay period through payroll deductions subject to Internal
Revenue Code limitations. Qualifying employee contributions are partially
matched by the respective employing companies which are affiliates of Allegheny
Technologies Incorporated (ATI, the Plan Sponsor), up to the lesser of a maximum
of $1,000 annually for each participant, or 50% of participants' deferrals up to
a maximum of 3.5% of total eligible wages (except for Allvac and Wah Chang). For
the Allvac and Wah Chang operations, effective January 1, 2002, the $1,000
maximum limit on matching contributions was removed.
In addition, annual flat dollar contributions will be paid into the Plan at the
end of each year provided the following criteria are met: the employee must have
contributed a minimum of 2% of their total earnings for the year into the Plan;
the employee must have completed a minimum
4
The 401(k) Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
of 1,000 hours during the calendar year; and the employee must be an active,
nonunion employee as of December 31st of that year. The exception to this rule
is that employees who retire during the calendar year will remain eligible for
this contribution, so long as they meet the 1,000-hour rule. Such retirees will
receive a prorated contribution, based on the number of months they worked in
the year. However, an employee who terminates (not retires) prior to December
31st will not be eligible for this flat dollar contribution, regardless of the
number of hours worked.
The flat dollar contribution amounts are based on the employee's years of
service, as follows:
YEARS AMOUNT OF CONTRIBUTION
--------------------------------------------------------------
0 to 4 $ 100
5 to 9 500
10 to 14 600
15 to 19 700
20 to 24 800
25 to 29 1,000
30 to 34 1,500
35 or more 2,000
The Plan allows participants to direct their contributions, and contributions
made on their behalf, to any of the investment alternatives. Unless otherwise
specified by the participant, employer contributions are made to the Fixed
Income Master Trust. 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 $1,000
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.
5
The 401(k) Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Further information about the Plan, including eligibility, vesting,
contributions, and withdrawals, is contained in the plan document, summary plan
description, and related contracts. 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 as of December 31, 2003 and 2002.
DECEMBER 31
2003 2002
----------------------------------
Allegheny Technologies Disciplined Stock Fund Master Trust $ 40,044,975 $ 28,994,544
Fixed Income Master Trust 22,728,876 18,879,997
Oakmark Balanced Fund 19,706,939 -*
Prudential Jennison Growth Fund, Class A Shares 9,330,003 7,054,970
Dreyfus Bond Market Index Fund 8,911,329 9,696,550
Allegheny Technologies Incorporated common stock 7,643,532 2,758,998*
Dreyfus Lifestyle Growth and Income Fund -* 15,447,814
Dreyfus Lifestyle Growth Fund -* 5,741,808
*Shown for comparative purposes.
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 Allegheny Technologies Disciplined
Stock Fund Master Trust, the Fixed Income Master Trust, and the Alliance Equity
Master Trust was as follows:
2003 2002
-------------------
Allegheny Technologies Disciplined Stock Fund Master Trust 51.45% 52.79%
Fixed Income Master Trust 11.86 10.44
Alliance Equity Master Trust 2.48 1.46
Investment income and expenses are allocated to the Plan based upon its pro rata
share in the net assets of the Master Trust.
6
The 401(k) 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
The 401(k) 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
The 401(k) 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
The 401(k) 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.
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated July 12, 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 December 31, 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.
10
The 401(k) Plan
Notes to Financial Statements (continued)
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 employing companies have
the right under the Plan to discontinue their contributions at any time and to
terminate their respective participation in 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
The 401(k) Plan
EIN: 25-1792394 Plan: 098
Schedule H, Line 4i--Schedule of Assets (Held at End of Year)
December 31, 2003
DESCRIPTION UNITS/SHARES CURRENT VALUE
------------------------------------------------------------------------------------------------------
Registered Investment Companies
-------------------------------
Dreyfus Bond Market Index Fund* 860,166.905 $ 8,911,329
Prudential Jennison Growth Fund, Class A Shares 714,395.334 9,330,003
Dreyfus Emerging Leaders Fund* 81,775.671 3,166,354
PIMCO NFJ Funds 13,695.854 343,355
Morgan Stanley Small Co Growth Funds 50,787.789 549,016
MFS Value Fund 8,852.876 180,068
Artisan Funds 171,930.462 4,432,367
Dreyfus Appreciation Fund* 6,730.891 249,985
Dreyfus Premier International Fund* 281,831.035 4,658,667
Hartford Midcap Fund 55,037.669 1,355,578
Lord, Abbett Midcap Fund 17,441.514 328,424
Oakmark Balanced Fund 894,956.375 19,706,939
---------------
53,212,085
Self-directed accounts
----------------------
Wasatch Funds - Global Tech 1,895.167 22,951
Vanguard/Windsor Fd II Portfolio 227.885 6,037
Dreyfus Premier Emerging Mkts Fd - C1.A* 113.218 1,903
AIM Equity Funds Large Cap 1,012.033 9,250
AIM Equity Funds LC - Basic Value 725.32 8,972
Dreyfus 100% US Treasury MM Funds* 18,840.860 18,841
Dreyfus Midcap Value Fund* 42.997 1,187
Oakmark International Fund 66.224 1,193
Longleaf Partners Fund 975.419 29,243
PIMCO Funds Pacific Inv Mgmt. 39,211.329 419,953
Vanguard Specialized Portfolio - Health Care 252.259 30,415
Vanguard Primecap Fund 561.685 29,792
Dreyfus Technology Growth Fund* 110.131 2,530
Strong Equity Fds - Technology 100 Fd 115.155 521
Ryder Ser Tr Dynamic Velocity 100 Fd 7.977 158
---------------
Total self-directed accounts 582,946
---------------
Total registered investment companies $ 53,795,031
===============
Corporate Common Stocks
-----------------------
Allegheny Technologies Incorporated common stock* 578,179.431 $ 7,643,532
===============
Participant loans* (5.0% to 10.5%, with maturities through 2017) $ 5,162,484
===============
Common Collective Trusts
------------------------
Dreyfus-Short Term Investment Fund* 124,428.070 $ 124,428
===============
*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
THE 401(K) 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