UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From _____ to _____
Commission File Number 1-12001
ALLEGHENY TELEDYNE INCORPORATED
_____________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware 25-1792394
_________________________________ _______________________________
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1000 Six PPG Place
Pittsburgh, Pennsylvania 15222-5479
________________________________________ _______________________________
(Address of Principal Executive Offices) (Zip Code)
(412) 394-2800
____________________________________________________
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
_____ ____
At August 7, 1998, the Registrant had outstanding 197,030,306 shares of its
Common Stock.
<PAGE>
ALLEGHENY TELEDYNE INCORPORATED
SEC FORM 10-Q
QUARTER ENDED JUNE 30, 1998
INDEX
Page No.
PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 14
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 21
PART II. - OTHER INFORMATION
Item 4. Submission of Matters to Vote of
Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
<S> 1998 1997
- --- ---- ----
ASSETS <C> <C>
Cash and cash equivalents $ 89.8 $ 53.7
Short-term investments available for sale -- 34.4
Accounts receivable 576.5 576.0
Inventories 706.7 697.9
Deferred income taxes 80.8 40.3
Tax refund 9.0 9.4
Prepaid expenses and other current assets 29.4 32.3
-------------- --------------
Total Current Assets 1,492.2 1,444.0
Property, plant and equipment 791.2 753.8
Prepaid pension cost 401.0 379.7
Cost in excess of net assets acquired 251.3 186.5
Other assets 101.8 134.2
-------------- --------------
Total Assets $ 3,037.5 $ 2,898.2
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 244.7 $ 267.9
Accrued liabilities 276.8 328.8
Current portion of long-term debt 3.0 4.7
-------------- --------------
Total Current Liabilities 524.5 601.4
Long-term debt 446.0 330.4
Accrued postretirement benefits 574.5 574.5
Other 191.3 147.3
-------------- --------------
Total Liabilities 1,736.3 1,653.6
-------------- --------------
Stockholders' Equity:
Preferred stock, par value $0.10: authorized-
50,000,000 shares; issued-None -- --
Common stock, par value $0.10: authorized-600,000,000
shares; issued-197,937,664 shares at June 30, 1998 and 197,730,720 shares
at December 31, 1997; outstanding-196,781,483 shares at June 30, 1998
and 195,713,604 shares at December 31, 1997 19.8 19.8
Additional paid-in capital 466.1 463.5
Retained earnings 854.8 822.6
Treasury stock: 1,156,181 shares at June 30, 1998
and 2,017,116 shares at December 31, 1997 (34.4) (60.2)
Foreign currency translation losses (6.0) (2.4)
Unrealized gains on securities 0.9 1.3
-------------- --------------
Total Stockholders' Equity 1,301.2 1,244.6
-------------- --------------
Total Liabilities and Stockholders' Equity $ 3,037.5 $ 2,898.2
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In millions except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------- ----------------------------------
1998 1997 1998 1997
---------------- ----------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Sales $1,019.1 $1,024.5 $2,021.3 $2,054.4
Costs and expenses:
Cost of sales 767.7 766.1 1,541.0 1,551.6
Selling and administrative expenses 122.4 125.2 241.4 251.0
Merger and restructuring costs 7.2 3.2 67.8 10.4
Interest expense, net 4.8 3.9 8.7 9.0
---------------- ----------------- ----------------- ---------------
902.1 898.4 1,858.9 1,822.0
Earnings before other income 117.0 126.1 162.4 232.4
Other income 1.8 27.1 2.1 37.6
---------------- ----------------- ----------------- ---------------
Income before income taxes 118.8 153.2 164.5 270.0
Provision for income taxes 43.3 58.6 62.1 104.3
---------------- ----------------- ----------------- ---------------
Net income $ 75.5 $ 94.6 $ 102.4 $ 165.7
================ ================= ================= ===============
Basic net income per common share $ 0.38 $ 0.48 $ 0.52 $ 0.84
================ ================= ================= ===============
Diluted net income per common share $ 0.38 $ 0.47 $ 0.52 $ 0.83
================ ================= ================= ===============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------------------------
1998 1997
---- ----
<S> <C> <C>
Operating Activities:
Net income $ 102.4 $165.7
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 55.2 52.0
Non-cash restructuring costs 51.7 --
Deferred income taxes 5.2 11.9
Gains on sales of businesses and investments (0.2) (45.3)
Change in operating assets and liabilities:
Prepaid pension cost (45.0) (24.5)
Accrued income taxes (38.7) 16.6
Accounts payable (38.3) (33.1)
Accounts receivable 16.9 (56.3)
Accrued liabilities (9.3) (6.9)
Inventories 6.6 6.8
Accrued postretirement benefits -- 7.9
Other 10.6 (4.1)
--------------------- ----------------------
Cash provided by operating activities 117.1 90.7
Investing Activities:
Short-term investments - sales 34.4 12.3
Short-term investments - purchases -- (2.5)
--------------------- ----------------------
34.4 9.8
Purchases of businesses and investment in ventures (118.3) (11.4)
Purchases of property, plant and equipment (76.9) (43.2)
Proceeds from the sale of businesses and investments 16.4 58.4
Disposals of property, plant and equipment 3.1 8.2
Other (1.0) (4.1)
--------------------- ----------------------
Cash (used) provided by investing activities (142.3) 17.7
Financing Activities:
Increase in long-term debt 122.0 1.8
Payments on long-term debt (6.8) (51.9)
--------------------- ----------------------
Net increase (decrease) in long-term debt 115.2 (50.1)
Cash dividends (59.4) (56.2)
Exercises of stock options 5.5 26.6
Purchases of treasury stock -- (46.1)
--------------------- ----------------------
Cash provided (used) in financing activities 61.3 (125.8)
Increase (decrease) in cash and cash equivalents 36.1 (17.4)
Cash and cash equivalents at beginning of the year 53.7 64.0
--------------------- ----------------------
Cash and cash equivalents at end of period $ 89.8 $46.6
===================== ======================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
Basis of Presentation
The interim consolidated financial statements include the accounts of
Allegheny Teledyne Incorporated and its subsidiaries ("Allegheny Teledyne" or
the "Company"). As described in Note 6, on March 24, 1998, Allegheny Teledyne
acquired the stock of Oregon Metallurgical Corporation ("OREMET"). The merger
was accounted for under the pooling of interests method of accounting and these
unaudited consolidated financial statements reflect the combined financial
position, operating results and cash flows of Allegheny Teledyne and OREMET as
if they had been combined for all periods presented.
These unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and note
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company, all adjustments (which
include only normal recurring adjustments) considered necessary for a fair
presentation have been included. These unaudited consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 1997 Annual Report. The
results of operations for these interim periods are not necessarily indicative
of the operating results for a full year.
Accounting Pronouncements
Financial Accounting Standards Board Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information" was issued in June 1997. This
statement has been adopted by the Company in 1998, and did not have a material
effect on the consolidated financial statements.
Financial Accounting Standards Board Statement No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," was issued in
February 1998. This statement revises employers' disclosures about pension and
postretirement benefit plans. It does not change the measurement or recognition
of those plans. The Company will adopt this statement in 1998.
Financial Accounting Standards Board Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" was issued in June 1998. This
statement establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
The Company is presently evaluating the effect of adopting this statement.
6
<PAGE>
Note 2. Inventories
Inventories were as follows (in millions):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
<S> <C> <C>
Raw materials and supplies $ 194.7 $ 212.8
Work-in-process 547.6 561.2
Finished goods 155.1 145.5
------------ ------------
Total inventories at current cost 897.4 919.5
Less allowances to reduce current cost
values to LIFO basis (182.1) (206.4)
Progress payments (8.6) (15.2)
------------ ------------
Total inventories $ 706.7 $ 697.9
============ ============
</TABLE>
Note 3. Business Segments
Information on the Company's business segments was as follows (in
millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------- -------------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Sales:
Specialty metals $ 527.7 $ 540.3 $ 1,072.5 $ 1,102.9
Aerospace and electronics 257.1 231.5 495.0 467.2
Industrial 138.4 133.5 270.3 262.1
Consumer 60.2 67.2 111.7 121.3
---------------- ---------------- ---------------- ----------------
Total continuing
operations 983.4 972.5 1,949.5 1,953.5
Operations sold or held
for sale 35.7 52.0 71.8 100.9
---------------- ---------------- ---------------- ----------------
Total sales $ 1,019.1 $ 1,024.5 $ 2,021.3 $ 2,054.4
================ ================ ================ ================
Operating Profit:
Specialty metals $ 78.8 $ 87.4 $ 149.2 $ 170.7
Aerospace and electronics 27.6 20.9 49.5 45.8
Industrial 18.3 18.9 32.6 34.4
Consumer 6.0 11.9 7.8 14.8
---------------- ---------------- ---------------- ----------------
Total operating profit 130.7 139.1 239.1 265.7
Merger and restructuring
costs (7.2) (3.2) (67.8) (10.4)
Corporate expenses (9.3) (10.6) (18.4) (21.9)
Interest expense, net (4.8) (3.9) (8.7) (9.0)
Investments and
operations sold or held
for sale (1.2) 28.0 (0.9) 38.0
Excess pension income 10.6 3.8 21.2 7.6
---------------- ---------------- ---------------- ----------------
Income before income
taxes $ 118.8 $ 153.2 $ 164.5 $ 270.0
================ ================ ================ ================
</TABLE>
7
<PAGE>
In the 1998 second quarter, restructuring costs resulted in a $7.2 million
pretax charge, primarily attributable to the previously announced planned
salaried workforce reduction at Allegheny Ludlum.
In the 1998 first quarter, merger and restructuring costs included deal costs
of $10.3 million related to the acquisition of OREMET, along with pretax charges
of $5.8 million for a planned salaried workforce reduction related to
integrating the operations of OREMET and Wah Chang. Allegheny Ludlum also
recorded a $12.1 million pretax charge due to a planned salaried workforce
reduction. In addition, pretax charges of $32.4 million were recorded for
equipment write-offs and other reserves at Allegheny Ludlum and reserves for
pending asset sales at other specialty metals units.
In the 1997 second quarter, investments and operations sold or held for sale
included a pretax gain of $27.6 on the sale of the Company's investment in
Semtech Corporation common stock and a $3.1 million pretax gain on other
investments. These gains were partially offset by a pretax charge of $6.8
million for a legal settlement of an U.S. government contract dispute related to
a unit divested in 1995. The 1997 first quarter included a pretax gain of $15.3
million on the sale of the Company's investment in Nitinol Development
Corporation and a pretax charge of $5.3 million to write-off a research and
development venture.
Pension income in excess of amounts allocated to business segments to offset
pension and other postretirement benefit expenses is presented separately.
Note 4. Net Income Per Share
In 1997, the Company adopted Financial Accounting Standards Board Statement
No. 128, "Earnings per Share." Statement No. 128 replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is computed in a manner similar to fully diluted earnings per
share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to Statement No. 128 requirements.
8
<PAGE>
The following table sets forth the computation of basic and diluted net
income per common share (in millions, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------------- ----------------------------------
1998 1997 1998 1997
---------------------------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Numerator:
Numerator for basic and diluted
net income per common share -
net income available to common
stockholders $ 75.5 $ 94.6 $ 102.4 $ 165.7
================================== ================= ================
Denominator:
Weighted average shares 196.7 196.9 196.4 196.5
Contingent issuable stock 0.1 0.2 0.1 0.2
---------------------------------- ----------------- ----------------
Denominator for basic net income
per common share 196.8 197.1 196.5 196.7
Effect of dilutive securities:
Employee stock options 1.6 3.4 1.9 3.8
---------------------------------- ----------------- ----------------
Dilutive potential common shares 1.6 3.4 1.9 3.8
Denominator for diluted net
income per common share -
adjusted weighted average
shares and assumed conversions 198.4 200.5 198.4 200.5
================================== ================= ================
Basic net income per common share $ 0.38 $ 0.48 $ 0.52 $ 0.84
================================== ================= ================
Diluted net income per common share $ 0.38 $ 0.47 $ 0.52 $ 0.83
================================== ================= ================
</TABLE>
Note 5. Comprehensive Income
As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement No. 130, "Reporting Comprehensive Income." Statement No. 130
establishes new rules for the reporting and display of comprehensive income and
its components. Statement No. 130 requires unrealized gains or losses on the
Company's available-for-sale securities and foreign currency translation gains
or losses, which are reported separately in stockholders' equity, to be included
in other comprehensive income. The adoption of this statement had no impact on
the Company's net income or stockholders' equity.
9
<PAGE>
The components of comprehensive income, net of tax, were as follows (in
millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income $ 75.5 $ 94.6 $102.4 $165.7
Foreign currency translation losses (2.3) (0.5) (3.6) (3.4)
Unrealized losses on securities:
Unrealized holding gains (losses)
arising during period (1.1) 8.5 (0.4) 10.8
Less: realized gain included
in net income -- (17.0) -- (17.0)
------------ ------------ ------------ ------------
(1.1) (8.5) (0.4) (6.2)
Comprehensive income $ 72.1 $ 85.6 $ 98.4 $156.1
============ ============ ============ ============
</TABLE>
Note 6. Acquisition of OREMET
On March 24, 1998, Allegheny Teledyne completed its acquisition of the stock
of OREMET. Under the terms of the merger agreement, OREMET shareholders received
1.296 shares of Allegheny Teledyne common stock in a tax-free exchange for each
share of OREMET common stock. There were 21.6 million shares of Allegheny
Teledyne stock issued in connection with the merger. The merger was accounted
for under the pooling of interests accounting method. Revenues and net income
for the year ended December 31, 1997 (the most recent period prior to the
pooling) were $3,745.1 million and $297.6 million, respectively, for Allegheny
Teledyne and $285.0 million and $31.2 million, respectively, for OREMET.
Intercompany transactions prior to the merger were not material. The effect of
conforming accounting policies is not expected to be material.
The Company recorded merger and restructuring costs of $16.1 million ($13.8
million net of tax) in the 1998 first quarter for financial advisory, legal,
accounting, severance and other costs associated with the merger.
OREMET is an integrated producer and distributor of titanium sponge, ingot,
mill products and castings for use in the aerospace, industrial, recreational
and military markets. It operates manufacturing and finishing facilities in
Oregon and Pennsylvania and has nine service centers in the United States, with
additional centers in the United Kingdom, Germany, Singapore and Canada.
Note 7. Aerospace Division of Sheffield Forgemasters
In February 1998, the Company acquired the assets of the aerospace division
of Sheffield Forgemasters Limited, a private company in the United Kingdom, for
approximately $110 million in an all-cash transaction. This acquisition is being
accounted for under the purchase method of accounting. The financial statements
reflect results since the date of acquisition.
Sheffield Forgemasters' aerospace division, now known as Allvac-SMP, produces
high integrity vacuum melted and remelted steel and nickel alloys in various
forms and non-magnetic drill collars and downhole components for the oil and gas
industry. It also offers high technology testing services to the steel and
related metals manufacturing industries.
10
<PAGE>
Note 8. Agreements with Bethlehem Steel Corporation
In January 1998, Bethlehem Steel Corporation ("Bethlehem") and the Company
jointly announced that they had entered into three agreements that would become
effective after Bethlehem closed its previously announced acquisition of Lukens
Inc. ("Lukens"). Bethlehem completed its acquisition of Lukens on May 29, 1998.
Under these agreements, Bethlehem would provide the Company with conversion
services for stainless steel hot bands and coiled plate wider than the Company
can currently produce; the Company would purchase certain assets that Lukens
uses in the manufacture of stainless steel products; and the Company would
supply hot roll bands to Bethlehem for further processing on the stainless steel
coil finishing facilities that Lukens currently owns.
Under the conversion agreement, Bethlehem has agreed, for a 20-year period,
to provide the Company with up to 15 percent of the available time on Lukens'
Coatesville, Pennsylvania electric furnace melt shop and caster and Lukens'
Conshohocken, Pennsylvania Steckel mill for the melting, casting and rolling of
the Company's requirements for wide stainless steel products.
Under the asset sales agreement, the Company would acquire certain assets of
Lukens for $175 million. These assets include the Houston, Pennsylvania plant of
Lukens' Washington Steel Division, which is used for the melting, casting and
rolling of stainless steel hot bands; the wide anneal and pickle line recently
installed at the Lukens' Massillon, Ohio plant; and the vacuum-oxygen
decarburization unit used in the refining of stainless steel at Lukens'
Coatesville, Pennsylvania plant.
Under the hot band supply agreement, the Company would supply Bethlehem with
up to 150,000 tons of stainless bands for further processing at Lukens'
stainless cold finishing facilities at its Washington, Pennsylvania and
Massillon, Ohio plants until Bethlehem sells these facilities, as previously
announced.
The agreements are subject to the satisfactory completion of the Company's
due diligence and transition planning. The Company currently anticipates that
the Company's due diligence will be completed during the third quarter of 1998
and that the agreements will be effective and that the asset purchases will
begin to be consummated soon thereafter.
Note 9. Stockholders' Equity
Allegheny Teledyne paid a cash dividend of $0.16 per common share in each of
the 1998 and 1997 first and second quarters. OREMET did not pay any dividends
during these quarters.
On March 12, 1998, the Company's Board of Directors unanimously adopted a
stockholder rights plan under which preferred share purchase rights were
distributed as a dividend on shares of Allegheny Teledyne common stock.
The rights will be exercisable only if a person or group acquires 15 percent
or more of the Company's common stock or announces a tender offer, the
consummation of which would result in ownership by a person or group of 15
percent or more of the common stock. Each right will entitle stockholders to buy
one one-hundredth of a share of a new series of junior participating preferred
stock at an exercise price of $100.
The dividend distribution was made on March 23, 1998, payable to
stockholders of record on that date. The rights will expire on March 12, 2008,
subject to earlier redemption or exchange by Allegheny Teledyne as described in
the plan. The rights distribution is not taxable to stockholders.
11
<PAGE>
Note 10. Commitments and Contingencies
The Company is subject to federal, state and local environmental laws and
regulations which require that it investigate and remediate the effects of the
release or disposal of materials at sites associated with past and present
operations, including sites at which the Company has been identified as a
potentially responsible party under the federal Superfund laws and comparable
state laws. The Company is currently involved in the investigation and
remediation of a number of sites under these laws.
Environmental liabilities are recorded when the Company's liability is
probable and the costs are reasonably estimable. In many cases, however,
investigations are not yet at a stage where the Company has been able to
determine whether it is liable or, if liability is probable, to reasonably
estimate the loss or range of loss, or certain components thereof. Estimates of
the Company's liability are further subject to uncertainties regarding the
nature and extent of site contamination, the range of remediation alternatives
available, evolving remediation standards, imprecise engineering evaluations and
estimates of appropriate cleanup technology, methodology and cost, the extent of
corrective actions that may be required, and the number and financial condition
of other potentially responsible parties, as well as the extent of their
responsibility for the remediation. Accordingly, as investigation and
remediation of these sites proceeds, it is likely that adjustments in the
Company's accruals will be necessary to reflect new information. The amounts of
any such adjustments could have a material adverse effect on the Company's
results of operations in a given period, but the amounts, and the possible range
of loss in excess of amounts accrued, are not reasonably estimable. Based on
currently available information, however, management does not believe future
environmental costs in excess of those accrued with respect to sites with which
the Company has been identified are likely to have a material adverse effect on
the Company's financial condition or liquidity. However, there can be no
assurance that additional future developments, administrative actions or
liabilities relating to environmental matters will not have a material adverse
effect on the Company's financial condition or results of operations.
At June 30, 1998, the Company's reserves for environmental remediation
obligations totaled approximately $41.6 million, of which approximately $7.4
million was included in other current liabilities. The reserve includes
estimated probable future costs of $12.2 million for federal Superfund and
comparable state-managed sites; $8.3 million for formerly owned or operated
sites for which the Company has remediation or indemnification obligations; $6.8
million for owned or controlled sites at which Company operations have been
discontinued; and $14.3 million for sites utilized by the Company in its ongoing
operations. The Company is evaluating whether it may be able to recover a
portion of future costs for environmental liabilities from its insurance
carriers and from third parties other than participating potentially responsible
parties.
The timing of expenditures depends on a number of factors that vary by site,
including the nature and extent of contamination, the number of potentially
responsible parties, the timing of regulatory approvals, the complexity of the
investigation and remediation, and the standards for remediation. The Company
expects that it will expend present accruals over many years, and will complete
remediation of all sites for which it has identified remediation obligations in
up to thirty years.
Various claims (whether based on U.S. Government or Company audits and
investigations or otherwise) have been or may be asserted against the Company
related to its U.S. Government contract work, including claims based on
12
<PAGE>
business practices and cost classifications and actions under the False
Claims Act. Although such claims are generally resolved by detailed fact-finding
and negotiation, on those occasions when they are not so resolved, civil or
criminal legal or administrative proceedings may ensue. Depending on the
circumstances and the outcome, such proceedings could result in fines,
penalties, compensatory and treble damages or the cancellation or suspension of
payments under one or more U.S. Government contracts. Under government
regulations, a company, or one or more of its operating divisions or units, can
also be suspended or debarred from government contracts based on the results of
investigations. However, although the outcome of these matters cannot be
predicted with certainty, management does not believe there is any audit, review
or investigation currently pending against the Company of which management is
aware that is likely to result in suspension or debarment of the Company, or
that is otherwise likely to have a material adverse effect on the Company's
financial condition or liquidity, although the resolution in any reporting
period of one or more of these matters could have a material adverse effect on
the Company's results of operations for that period.
The Company learns from time to time that it has been named as a defendant in
civil actions filed under seal pursuant to the False Claims Act. Generally,
since such cases are under seal, the Company does not in all cases possess
sufficient information to determine whether the Company will sustain a material
loss in connection with such cases, or to reasonably estimate the amount of any
loss attributable to such cases.
A number of other lawsuits, claims and proceedings have been or may be
asserted against the Company relating to the conduct of its business, including
those pertaining to product liability, patent infringement, commercial,
employment, employee benefits, tax, and stockholder matters. While the outcome
of litigation cannot be predicted with certainty, and some of these lawsuits,
claims or proceedings may be determined adversely to the Company, management
does not believe that the disposition of any such pending matters is likely to
have a material adverse effect on the Company's financial condition or
liquidity, although the resolution in any reporting period of one or more of
these matters could have a material adverse effect on the Company's results of
operations for that period.
13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the information in
the Company's consolidated financial statements and notes to the consolidated
financial statements contained herein and in the Company's 1997 Annual Report
and Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's 1997 Annual Report.
Results of Operations
Allegheny Teledyne Incorporated is a group of technology-based manufacturing
businesses with significant concentration in specialty metals, complemented by
aerospace and electronics, industrial, and consumer products. The Company's
specialty metals business segment accounted for 55 percent of the Company's
total sales from continuing operations of $1,949.5 million for the six months
ended June 30, 1998. Its aerospace and electronics, industrial and consumer
business segments accounted for 25 percent, 14 percent and 6 percent,
respectively, of total sales from continuing operations. Such percentages were
approximately the same for the first six months of 1997, where total sales from
continuing operations were $1,953.5 million.
For the six months ended June 30, 1998, operating profit was $239.1 million
compared to $265.7 million for the same 1997 period. Sales from continuing
operations were $1,949.5 million for the first six months of 1998 compared to
$1,953.5 million for the 1997 period. The results reflect the continuing
softness in titanium and commodity stainless steel prices, continuing inventory
adjustments associated with commercial aerospace and the impacts of the Asian
financial crisis.
Net income was $102.4 million, or $0.52 per diluted share, for the six months
ended June 30, 1998, compared to $165.7 million, or $0.83 per diluted share, for
the same 1997 period. Net income for the six month 1998 period was adversely
affected by merger and restructuring charges of $45.8 million after-tax, while
net income for the same period of 1997 included gains on the sales of
investments offset by merger, restructuring and other charges, resulting in a
net after-tax gain of $15.7 million.
Sales and operating profit for the Company's four business segments are
discussed below.
Specialty Metals
Second quarter 1998 operating profit declined to $78.8 million from $87.4
million in the same year-ago period and sales decreased 2 percent to $527.7
million. For the 1998 six months compared to the same period in 1997, operating
profit declined 13 percent to $149.2 million and sales declined 3 percent to
$1,072.5 million.
Flat-Rolled Products
Combined sales and operating profits for Allegheny Ludlum and Rodney Metals,
whose products consist primarily of flat-rolled products, declined 9 and 8
percent, respectively, for the 1998 second quarter from the 1997 second quarter
and 10 and 21 percent, respectively, for the 1998 six months from the 1997 six
months. This decline is due to the continuing impact of European and Asian
pricing pressure and increased imports into the U.S. market of commodity
stainless steel products.
Tons of flat-rolled specialty materials shipped in the second quarter and six
months of 1998 were 133,000 tons and 272,000 tons, respectively, compared to
137,000 tons and 284,000 tons for the same periods of 1997. The average
14
<PAGE>
price of flat-rolled specialty materials in the second quarter and six
months of 1998 was $2,255 and $2,254 per ton, respectively, compared to $2,414
and $2,412 per ton in the same 1997 periods. Tight cost controls and cost
reduction efforts continue. The Company expects that the previously announced
salaried workforce reduction at Allegheny Ludlum will result in annualized net
pre-tax savings of $16 million beginning in the third quarter of 1998.
Raw material costs were lower for flat-rolled products in 1998, as compared
to the same year-ago periods. Costs of nickel, a key raw material in the
manufacture of stainless steel, continued to decline during the first six months
of 1998.
In June 1998, Allegheny Ludlum and other domestic producers of flat-rolled
stainless steel sheet and strip products filed petitions with the International
Trade Commission ("ITC") and the U.S. Department of Commerce charging eight
foreign countries with violations of U.S. trade laws. In response, on July 7,
1998, the Department of Commerce formally initiated antidumping and
countervailing duty cases. On July 24, 1998, the ITC found preliminarily that
imports of stainless steel sheet and strip from certain countries are materially
injuring the domestic industry. As a result, the U.S. Department of Commerce
will continue to conduct countervailing duty and antidumping investigations of
imports of certain stainless steel sheet and strip, with its preliminary
determinations expected to be made in mid-November 1998.
On August 5, 1998, the Company announced that it would be increasing prices
for stainless steel hot rolled and cold rolled sheet, strip and coiled plate
effective with shipments October 5, 1998. These price increases will range from
4 to 6 percent depending on the product, and are intended to support additional
investment in the flat-rolled products business to further improve product
quality and continue the Company's position as a low-cost world-class supplier
of specialty steels. The ability to effect and maintain these price increases
will depend in part on market pricing pressures, including pricing by foreign
producers.
High Performance Metals
Operating profit and sales for high performance metals such as nickel-based
superalloys, titanium and zirconium declined 12 percent and increased 9 percent,
respectively, in the 1998 second quarter over the 1997 second quarter and
declined 5 percent and increased 10 percent, respectively, in the 1998 six
months over the 1997 six months. The decline in operating results in both 1998
periods occurred primarily in titanium products as aircraft and jet engine
manufacturers continued to adjust production rates. In addition, production
inefficiencies and equipment outages negatively affected operating margins for
titanium products. These developments were partially offset by strong
performance at Wah Chang, especially in zirconium and niobium products, at
Allvac, and at Allvac-SMP, a nickel-based superalloys producer acquired in the
1998 first quarter, and lower raw material costs. Lower costs benefited all of
these businesses.
Operating results for high performance metals include the results of two
acquisitions: OREMET, which was accounted for using the pooling of interests
method of accounting; and Allvac-SMP, acquired for $110 million in an all-cash
transaction in February 1998.
Aerospace and Electronics Segment
Operating profit increased 32 percent to $27.6 million for the 1998 second
quarter from $20.9 million in the same 1997 period, and sales increased 11
15
<PAGE>
percent to $257.1 million. For the 1998 six months compared to the 1997 six
months, operating profit increased 8 percent to $49.5 million and sales
increased 6 percent to $495.0 million.
Sales and operating profit improved in both 1998 periods for most companies
in the segment. Margins on higher sales and lower new product development costs,
particularly for electronic components and piston engines, contributed to the
strong results. In addition, the 1998 periods benefited from improved results
for instrumentation products and increased systems engineering efforts on
defense programs. However, operating results for the 1998 six months in the
unmanned aerial vehicle business did not match the strong six months results of
1997 which included the result when a major unmanned aerial target and vehicles
program concluded in 1997.
Industrial Segment
Operating profit for the 1998 second quarter was $18.3 million compared to
$18.9 million for the same quarter of 1997, and sales increased 4 percent to
$138.4 million. For the 1998 six months compared to the same 1997 period,
operating profit decreased 5 percent to $32.6 million while sales increased 3
percent to $270.3 million.
Operating profit and sales continued to improve at the segment's forging
operation and for material handling equipment for the mining and quarry
industries. Sales increased but operating margins were adversely affected for
tungsten and tungsten carbide products in both 1998 periods due to increased
marketing costs for business expansion. Sales and profit for the Company's gray
iron casting business in both periods of 1998 were adversely affected by the
discontinuation of certain product lines.
Consumer Segment
Operating profit decreased to $6.0 million in the second quarter from $11.9
million in the same 1997 period and sales declined 10 percent to $60.2 million.
For the 1998 six months, operating profit decreased to $7.8 million from $14.8
million and sales decreased 8 percent to $111.7 million from the comparable 1997
period.
Sales and operating profit decreased compared to both of the 1997 periods
when the segment benefited from strong demand for a new showerhead product and
oral health products. In addition, sales and operating margins for both 1998
periods for swimming pool products were adversely affected primarily by
unfavorable weather conditions and new product introduction costs. Operating
profit decreased in the swimming pool heating systems business compared to the
same periods a year ago when the business benefited from a new product
introduction.
In relation to the businesses in the consumer segment, consisting of Water
Pik and Laars, the Company continues to examine the possibility of a limited
public offering of shares of a new stand-alone company and/or its tax-free
spin-off to the Company's stockholders.
Special Items
Restructuring charges in the second quarter 1998 resulted in an after-tax
non-cash charge of $4.9 million, or $0.02 per diluted share, primarily
attributable to the previously announced planned salaried workforce reduction at
Allegheny Ludlum.
Non-recurring events resulted in an after-tax charge of $40.9 million, or
$0.21 per diluted share in the 1998 first quarter. These events included deal
16
<PAGE>
costs of $10.3 million, or $0.05 per diluted share, related to the acquisition
of OREMET, along with charges of $3.5 million, or $0.02 per diluted share, for a
planned salaried workforce reduction related to integrating the operations of
OREMET and Wah Chang. Allegheny Ludlum also recorded a $7.4 million, or $0.04
per diluted share, charge due to a planned salaried workforce reduction. In
addition, charges of $19.7 million, or $0.10 per diluted share, were recorded
for equipment write-offs and other reserves at Allegheny Ludlum and reserves for
pending asset sales at other specialty metals units.
In the 1997 second quarter, special items resulted in a gain of $14.4
million, or $0.07 per diluted share. This after-tax gain included a $17.0
million gain on the sale of the Company's investment in Semtech Corporation
common stock that was partially offset by $2.6 million charge related to merger
and restructuring costs.
In the 1997 first quarter, special items resulted in gains of $1.3 million,
or $0.01 per diluted share. These items included a gain of $9.2 million on the
sale of a company investment, largely offset by $7.9 million from merger and
restructuring costs and the write-off of a research and development venture.
New Accounting Pronouncements
Financial Accounting Standards Board Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information" was issued in June 1997. This
statement has been adopted by the Company in 1998, and did not have a material
effect on the consolidated financial statements.
Financial Accounting Standards Board Statement No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits," was issued in
February 1998. This statement revises employers' disclosures about pension and
postretirement benefit plans. It does not change the measurement or recognition
of those plans. The Company will adopt this statement in 1998.
Financial Accounting Standards Board Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" was issued in June 1998. This
statement establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
The Company is presently evaluating the effect of adopting this statement.
Income Taxes
The Company's effective tax rate decreased to 36.4 percent and 37.8 percent,
respectively, for the 1998 second quarter and six months from 38.3 percent and
38.6 percent, respectively, for the same periods in 1997 primarily due to the
net effect of favorable adjustments to prior years' tax liabilities and
non-deductible business combination costs incurred during 1998.
Financial Condition and Liquidity
Working capital increased to $967.7 million at June 30, 1998, compared to
$842.6 million at December 31, 1997. The current ratio increased to 2.8 from 2.4
in this same period. The increase in working capital was primarily due to higher
cash and deferred tax assets and lower accounts payable and accrued liabilities
offset by lower short-term investments available for sale.
17
<PAGE>
In the first six months of 1998, cash generated from operations of $117.1
million, proceeds from the sale of short-term investments of $34.4 million,
proceeds from the increase in long-term debt of $115.2 million, proceeds from
the sale of businesses and investments of $16.4 million and proceeds from the
exercise of stock options of $5.5 million were used to invest $195.2 million in
capital equipment and business expansion and to pay dividends of $59.4 million.
Cash transactions plus cash on hand at the beginning of the year resulted in a
cash position of $89.8 million at June 30, 1998. Capital expenditures for 1998
are expected to approximate $150 million, of which $76.9 million were spent
during the first six months.
On August 13, 1998, the Board of Directors declared a regular quarterly
dividend of $0.16 per share of common stock. The dividend is payable on
September 15, 1998 to stockholders of record at the close of business on August
31, 1998.
The Company believes that internally generated funds, current cash on hand
and borrowing from existing credit lines will be adequate to meet foreseeable
needs.
Other Matters
Environmental
The Company is subject to federal, state and local environmental laws and
regulations which require that it investigate and remediate the effects of the
release or disposal of materials at sites associated with past and present
operations, including sites at which the Company has been identified as a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act, commonly known as Superfund, and comparable
state laws. The Company is currently involved in the investigation and
remediation of a number of sites under these laws. The Company's reserves for
environmental investigation and remediation totaled approximately $41.6 million
at June 30, 1998. Based on currently available information, management does not
believe future environmental costs at sites with which the Company has been
identified in excess of those accrued are likely to have a material adverse
effect on the Company's financial condition or liquidity, although the
resolution in any reporting period of one or more of these matters could have a
material adverse effect on the Company's results of operations for that period.
With respect to proceedings brought under the federal Superfund laws, or
similar state statutes, the Company has been identified as a potentially
responsible party at approximately 36 such sites, excluding those at which it
believes it has no future liability. The Company's involvement is very limited
or de minimus at approximately 16 of these sites, and the potential loss
exposure with respect to any of remaining 20 sites is not considered to be
material.
For additional discussion of environmental matters, see Note 10 to the
consolidated financial statements of the Company.
18
<PAGE>
Government Contracts
A number of the Company's operating companies performs work on contracts with
the U.S. government. Many of these contracts include price redetermination
clauses, and most are terminable at the convenience of the government. Certain
of these contracts are fixed-price or fixed-price incentive development
contracts which involve a risk that costs may exceed those expected when the
contracts were negotiated. Absent modification of these contracts, any costs
incurred in excess of the fixed or ceiling prices must be borne by the Company.
In addition, virtually all defense programs are subject to curtailment or
cancellation due to the year-to-year nature of the government appropriations and
allocations process. A material reduction in U.S. Government appropriations may
have an adverse effect on the Company's business, depending upon the specific
programs affected by any such reduction. Since certain contracts extend over a
long period of time, all revisions in cost and funding estimates during the
progress of work have the effect of adjusting the current period earnings on a
cumulative catch-up basis. When the current contract estimate indicates a loss,
provision is made for the total anticipated loss. The Company obtains many U.S.
Government contracts through the process of competitive bidding. There can be no
assurance that the Company will continue to be successful in having its bids
accepted.
Various claims (whether based on U.S. Government or Company audits and
investigations or otherwise) have been or may be asserted against the Company
related to its U.S. Government contract work, including claims based on business
practices and cost classifications and actions under the False Claims Act. The
False Claims Act permits a person to assert the rights of the U.S. Government by
initiating a suit under seal against a contractor if such person purports to
have information that the contractor falsely submitted a claim to the U.S.
Government for payment. If it chooses, the U.S. Government may intervene and
assume control of the case.
Although government contracting claims may be resolved by detailed
fact-finding and negotiation, on those occasions when they are not so resolved,
civil or criminal legal or administrative proceedings may ensue. Depending on
the circumstances and the outcome, such proceedings could result in fines,
penalties, compensatory and treble damages or the cancellation or suspension of
payments under one or more U.S. Government contracts. Under government
regulations, a company, or one or more of its operating divisions or units, can
also be suspended or debarred from government contracts based on the results of
investigations. Given the extent of the Company's business with the U.S.
Government, a suspension or debarment of the Company could have a material
adverse effect on the future operating results and consolidated financial
condition of the Company. However, although the outcome of these matters cannot
be predicted with certainty, management does not believe there is any audit,
review or investigation currently pending against the Company of which
management is aware that is likely to result in suspension or debarment of the
Company, or that is otherwise likely to have a material adverse effect on the
Company's financial condition or liquidity, although the resolution in any
reporting period of one or more of these matters could have a material adverse
effect on the Company's results of operations for that period.
For additional discussion of government contract matters, see Note 10 to the
consolidated financial statements of the Company.
19
<PAGE>
Impact of Year 2000 on Computer Systems
Over the past several years, the Company has put in place committees at its
operating companies to identify whether its computer systems, which include
business computers, mill equipment and process control computers and other
devices using a microprocessor, as well as telecommunication and payroll and
employee benefit processing systems, would function properly with respect to
dates in the Year 2000 and thereafter. These committees report to the Executive
Resource Information Committee, a senior management committee charged with
reviewing and establishing priorities for information technology-related
matters, including Year 2000 issues, and which reports to the Audit and Finance
Committee of the Company's Board of Directors. Through these committees'
efforts, Year 2000 identification, solution development, testing and
implementation initiatives, and more recently contingency planning initiatives,
are in process at Allegheny Teledyne and each of the operating companies and are
included in the Company's integration plans for OREMET and Allvac-SMP.
In part as a result of its Year 2000 initiatives, but mostly due to evolving
business needs and continuing technological advancements, the Company has been
modifying and replacing portions of its computer software and hardware systems.
The Company currently targets having substantially all internal solutions
relating to Year 2000 functionality of its computer systems developed and
implemented by June 1999. This targeted completion date depends, however, on
numerous assumptions, including continued availability of trained personnel in
this area. In addition, efforts continue to be made to identify and resolve
customer and supplier-based Year 2000 issues that could affect the Company and
its operating and support systems. The Company believes that it has identified
substantially all material customer and supplier-based Year 2000 issues.
Excluding expenditures necessitated by ordinary business needs and continuing
technological advancements in the computer industry, the Company anticipates
spending approximately $11 million in 1998 and another estimated $7 million in
1999 to address the Year 2000 issue. Substantially all costs related to the
Company's Year 2000 initiatives are expensed as incurred and funded through
operating cash flows. Additional amounts may be spent in subsequent years.
Based upon internal assessments, formal communications with suppliers and
customers with which the Company exchanges electronic data, and work completed
to date, the Company believes that the Year 2000 issue should not pose
significant operational problems or have a material impact on the Company's
consolidated financial position, results of operations or cash flow. A failure
of third party vendors to be Year 2000 ready could adversely affect these
beliefs and is not quantifiable. Also, while the Company has been conducting a
comprehensive Year 2000 review of its computer systems, there may be Year
2000-related matters that have not been identified. Actual dollar amounts spent
by the Company to address Year 2000 issues could materially differ from the
estimates for a number of reasons, including changes in the availability or
costs of personnel trained in this area or changes made to remediation plans or
identification of other Year 2000-related matters.
Forward-Looking Statements
From time to time the Company has made and may continue to make
forward-looking statements. Certain forward-looking statements are contained in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Note 10 to the consolidated financial statements of the Company,
including statements concerning the expected adequacy of available funds to
meet foreseeable needs, proposed divestitures, proposed and completed
acquisitions, anticipated expenditures to address and the impact of Year 2000-
20
<PAGE>
computer-systems issues, the Company's use of financial derivative instruments,
the outcome of any government inquiries, litigation or other future proceedings
related to government contract or other matters, and environmental costs. These
statements are based on current expectations that involve a number of risks and
uncertainties, including those described above under the captions "Other Matters
- - Environmental" and "Other Matters - Government Contracts" and elsewhere
herein. In addition, realization of the anticipated benefits of the acquisition
of OREMET and other acquisitions could take longer than expected and
implementation difficulties, market factors and adverse changes in economic
conditions could alter the anticipated benefits. Realization of the anticipated
benefits of the Company's international sales and manufacturing expansion
initiatives could be affected by export controls, exchange rate fluctuations and
domestic and foreign political and economic conditions, among other factors.
Actual results may differ materially from the results anticipated in the
forward-looking statements. Additional risk factors are described from time to
time in the Company's filings with the Securities and Exchange Commission,
including its Report on Form 10-K for the year ended December 31, 1997. The
Company assumes no duty to update its forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company uses derivative financial instruments from time to time to hedge
ordinary business risks regarding foreign currencies on product sales and to
partially hedge against volatile raw material cost fluctuations in the specialty
metals segment.
Foreign currency exchange contracts are used to limit transactional exposure
to changes in currency exchange rates. The Company sometimes purchases foreign
currency forward contracts that effectively permit it to sell specified amounts
of foreign currencies expected to be received from its export sales for
pre-established U.S. dollar amounts at specified dates. The forward contracts
are denominated in the same foreign currencies in which export sales are
denominated. These contracts, which are not financially material, are designated
as hedges of export sales transactions in which settlement will occur in future
periods, which otherwise would expose the Company, on the basis of its aggregate
net cash flows in respective currencies, to foreign currency risk.
A portion of the Company's operations consists of investments in foreign
subsidiaries. As a result, the Company's financial results could be affected by
changes in foreign currency exchange rates. To mitigate this foreign currency
translation risk, the Company has a practice of recapitalizing operations using
local foreign currency debt to replace direct equity investment. The average
interest rate to service this foreign debt is favorable to current U.S. interest
rates.
As part of its risk management strategy, the Company purchases
exchange-traded futures contracts to manage exposure to changes in nickel
prices, a component of raw material cost for some of the specialty metals
companies. The nickel futures contracts obligate the Company to make or receive
a payment equal to the net change in value of the contract at its maturity. Some
of these contracts can be designated as hedges of the Company' firm sales
commitments and are short-term in nature to correspond to the commitment period.
The gains and losses on these contracts are deferred and recognized in earnings
when realized as an adjustment to cost of goods sold. Historically, the Company
has not closed any contracts prior to the execution of the underlying sale
transaction, nor have any of the underlying sales transactions failed to occur.
The Company guarantees the outstanding Allegheny Ludlum fixed rate 6.95%
debentures due in 2025. In a period of declining interest rates, the Company
faces the risk of required interest payments exceeding those based on the then
21
<PAGE>
current market rate. To mitigate interest rate risk, the Company attempts to
maintain a reasonable balance between fixed and variable rate debt to keep
financing costs as low as possible.
The Company believes that adequate controls are in place to monitor these
activities, which are not financially material. However, many factors, including
those beyond the control of the Company such as changes in domestic and foreign
political and economic conditions, as well as the magnitude and timing of
interest rate changes, could adversely affect these activities.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company's 1998 annual meeting of stockholders was held on May 14, 1998.
At that meeting, the five nominees for director named in the proxy statement for
the meeting were elected, having received the following number of votes:
<TABLE>
<CAPTION>
Number of Votes Number of Votes
Name For Withheld
- ---- --- --------
<S> <C> <C>
Arthur H. Aronson 153,321,828 895,140
Paul S. Brentlinger 153,375,449 841,519
Ray J. Groves 153,366,795 850,173
William G. Ouchi 153,394,871 822,097
James E. Rohr 153,394,236 822,732
</TABLE>
In addition, the stockholders voted on and approved the ratification of the
selection of Ernst & Young LLP as independent auditors of the Company for the
1998 fiscal year. The number of votes cast for approval was 153,558,492, against
approval was 248,268 and to abstain was 410,208. There were no broker non-votes
in connection with the ratification of the selection of Ernst & Young LLP.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits -
Exhibit
No. Description
--- -----------
27 Financial Data Schedule for Six Months Ended June 30, 1998.
(b) Current Reports on Form 8-K were filed by the Company on April 4,
1998 (with respect to consummation by the Company of the
acquisition of Oregon Metallurgical Corporation) and May 29, 1998
(with respect to restated sales and operating profit by business
segment).
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Allegheny Teledyne Incorporated
(Registrant)
/s/ James L. Murdy
Date: August 14, 1998 By _____________________________________
James L. Murdy
Executive Vice President, Finance and
Administration and Chief Financial
Officer
(Duly Authorized Officer)
/s/ Dale G. Reid
Date: August 14, 1998 By _____________________________________
Dale G. Reid
Vice President - Controller and Chief
Accounting Officer
(Principal Accounting Officer)
23
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule for Six Months Ended June 30, 1998.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
registrant's consolidated statement of income for the six months ended June 30,
1998 and consolidated balance sheet as of June 30, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001018963
<NAME> 0
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 90
<SECURITIES> 0
<RECEIVABLES> 592
<ALLOWANCES> 15
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<CURRENT-ASSETS> 1,492
<PP&E> 1,793
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0
0
<COMMON> 20
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</TABLE>
