<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
(Mark One)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 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 (IRS Employer
incorporation or organization) Identification No.)
1000 Six PPG Place, Pittsburgh, Pennsylvania 15222-5479
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 394-8400
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
- -------------------- ------------------------------------------
Common Stock, $0.10 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the 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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent files pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---
At March 15, 1999, the Registrant had outstanding 193,696,608 shares of
its Common Stock. The aggregate market value of the Registrant's voting stock
held by non-affiliates at this date was approximately $3.4 billion, based on the
closing price per share of Common Stock on this date of $20.00 as reported on
the New York Stock Exchange. Shares of Common Stock known by the Registrant to
be owned beneficially by directors of the Registrant and officers of the
Registrant subject to the reporting requirements of Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are not included in the
computation. The Registrant, however, has made no determination that such
persons are "affiliates" within the meaning of Rule 12b-2 under the Exchange
Act.
<PAGE> 2
Documents Incorporated By Reference
Selected portions of the 1998 Annual Report to Stockholders ("1998
Annual Report") - Part I, Part II and Part IV of this Report.
Selected portions of the Proxy Statement for the 1999 Annual Meeting of
Stockholders - Part III of this Report. The information included in the
Proxy Statement as required by paragraphs (k) and (l) of Item 402 of
Regulation S-K is not incorporated by reference in this Form 10-K/A
(Amendment No. 1).
2
<PAGE> 3
EXPLANATORY NOTE: Pursuant to this Form 10-K/A (Amendment No. 1)
("Amendment No. 1"), Allegheny Teledyne Incorporated (the "Registrant"
or the "Company") amends and restates in its entirety "Item 8.
Financial Statements and Supplementary Data" of Part II and "Item 14.
Exhibits, Financial Statement Schedules, and Reports on Form 8-K" of
Part IV of its Annual Report on Form 10-K for the year ended December
31, 1998 ("1998 Form 10-K"), in order to file in accordance with Rule
15d-21 under the Exchange Act, financial statements required by Form
11-K for the following plans: (1) Allegheny Ludlum Retirement Savings
Plan; (2) 401(k) Savings Account Plan for Employees of the Washington
Plant; (3) Savings and Security Plan of the Lockport and Waterbury
Facilities of Allegheny Ludlum Corporation; (4) Allegheny Ludlum
Corporation Personal Retirement and 401(k) Savings Account Plan; (5)
Teledyne 401(k) Plan; and (6) Oregon Metallurgical Corporation Savings
Plan.
"Item 8. Financial Statements and Supplementary Data" of Part II of the 1998
Form 10-K is hereby amended and restated in its entirety to read as follows:
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and Notes to Consolidated
Financial Statements listed in Item 14(a)(1) are incorporated by reference from
pages 30 to 51 of the 1998 Annual Report.
The following financial statements are filed by the Company with
respect to the following plans in accordance with Rule 15d-21 under the Exchange
Act:
Plan Page No.
---- --------
Allegheny Ludlum Retirement Savings Plan............................... 4
401(k) Savings Account Plan for
Employees of the Washington Plant...................................... 23
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation........................................ 40
Allegheny Ludlum Corporation Personal
Retirement and 401(k) Savings Account Plan............................. 60
Teledyne 401(k) Plan................................................... 78
Oregon Metallurgical Corporation Savings Plan.......................... 92
3
<PAGE> 4
Audited Financial Statements
Allegheny Ludlum
Retirement Savings Plan
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
4
<PAGE> 5
Allegheny Ludlum Retirement Savings Plan
Audited Financial Statements
Years ended December 31, 1998 and 1997
CONTENTS
Report of Independent Auditors .............................................6
Audited Financial Statements
Statement of Net Assets Available for Benefits, with Fund Information
as of December 31, 1998 .................................................7
Statement of Net Assets Available for Benefits, with Fund Information
as of December 31, 1997 .................................................8
Statement of Changes in Net Assets Available for Benefits, with Fund
Information, Year ended December 31, 1998................................9
Statement of Changes in Net Assets Available for Benefits, with Fund
Information, Year ended December 31, 1997...............................10
Notes to Financial Statements .............................................11
Supplemental Schedules
Line 27a--Schedule of Assets Held for Investment Purposes .................20
Line 27d--Schedule of Reportable Transactions..............................22
5
<PAGE> 6
Report of Independent Auditors
Personnel and Compensation Committee
Allegheny Ludlum Corporation
We have audited the accompanying statements of net assets available for benefits
of the Allegheny Ludlum Retirement Savings Plan as of December 31, 1998 and
1997, 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 generally accepted auditing
standards. 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 Allegheny
Ludlum Retirement Savings Plan at December 31, 1998 and 1997, and the changes in
its net assets available for benefits for the years then ended, in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The Fund Information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in our audit of the financial statements and, in our opinion, are fairly
stated in all material respects in relation to the financial statements taken as
a whole.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
June 11, 1999
6
<PAGE> 7
Allegheny Ludlum Retirement Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED
GROWTH AND GROWTH INCOME EQUITY INCOME
INCOME FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation
Master Trusts $ -- $ -- $ -- $ 38,128,531 $ 87,165,844
Interest in
registered
investment company -- -- -- -- --
Interest in common
collective trusts 20,612,832 7,043,546 2,265,859 -- --
Participant notes
receivable -- -- -- -- --
Other -- -- -- -- --
Other (payables)
receivables (95,293) 38,623 (34,511) (415,472) (104,171)
----------------------------------------------------------------------------------------------
Net assets available
for benefits $ 20,517,539 $ 7,082,169 $ 2,231,348 $ 37,713,059 $ 87,061,673
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
ALLEGHENY SMALL DREYFUS
TELEDYNE COMPANY INTERNATIONAL COMPANY SELF-
DISCIPLINED VALUE VALUE STOCK DIRECTED
STOCK FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation
Master Trusts $ 35,230,900 $ -- $ -- $ 22,853,067 $ --
Interest in
registered
investment company -- 10,425,125 3,097,947 -- 1,237,357
Interest in common
collective trusts -- -- -- -- --
Participant notes
receivable -- -- -- -- --
Other -- -- -- -- 29,124
Other (payables)
receivables (84,271) 104,499 46,454 (28,619) --
--------------------------------------------------------------------------------------------
Net assets available
for benefits $ 35,146,629 $ 10,529,624 $ 3,144,401 $ 22,824,448 $ 1,266,481
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
LOANS TOTAL
--------------------------------
<S> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation
Master Trusts $ -- $ 183,378,342
Interest in
registered
investment company -- 14,760,429
Interest in common
collective trusts -- 29,922,237
Participant notes
receivable 3,749,111 3,749,111
Other -- 29,124
Other (payables)
receivables 5,673 (567,088)
--------------------------------
Net assets available
for benefits $ 3,754,784 $ 231,272,155
================================
</TABLE>
See accompanying notes.
7
<PAGE> 8
Allegheny Ludlum Retirement Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED
GROWTH AND GROWTH INCOME EQUITY INCOME
INCOME FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation
Master Trusts $ 18,995,349 $ 4,156,514 $ 1,492,055 $ 49,094,068 $ 99,746,033
Interest in
registered
investment company -- -- -- -- --
Participant notes
receivable -- -- -- -- --
Other -- -- -- -- --
----------------------------------------------------------------------------------------------
Net assets available
for benefits $ 18,995,349 $ 4,156,514 $ 1,492,055 $ 49,094,068 $ 99,746,033
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
DREYFUS COMPANY INTERNATIONAL COMPANY SELF-
DISCIPLINED VALUE VALUE STOCK DIRECTED
STOCK FUND FUND FUND FUND FUND
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation
Master Trusts $ -- $ -- $ -- $ 27,656,220 $ --
Interest in
registered
investment company 27,858,603 15,446,354 2,964,614 -- 340,241
Participant notes
receivable -- -- -- -- --
Other -- -- -- -- (30,000)
-------------------------------------------------------------------------------------------
Net assets available
for benefits $ 27,858,603 $ 15,446,354 $ 2,964,614 $ 27,656,220 $ 310,241
===========================================================================================
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
LOANS TOTAL
--------------------------------
<S> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation
Master Trusts $ -- $ 201,140,239
Interest in
registered
investment company -- 46,609,812
Participant notes
receivable 4,367,721 4,367,721
Other -- (30,000)
--------------------------------
Net assets available
for benefits $ 4,367,721 $ 252,087,772
================================
</TABLE>
See accompanying notes.
8
<PAGE> 9
Allegheny Ludlum Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED
GROWTH AND GROWTH INCOME EQUITY INCOME
INCOME FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 753,484 $ 363,687 $ 102,129 $ 1,897,236 $ 3,311,379
Employee 618,058 333,937 88,607 1,458,599 2,197,227
Investment income:
Net gain (loss)
from interest in
Allegheny Ludlum
Corporation
Master Trusts 1,375,578 441,132 101,399 (1,744,436) 6,577,957
Net gain (loss)
from interest in
registered
investment
companies -- -- -- -- --
Net gain from
common interest
in collective
trusts 2,167,257 726,497 157,406 -- --
Interest income -- -- -- -- --
Other income (loss) 3,643 955 (247) (763) 3,285
Transfers in from
outside of Plan 312,833 204,551 -- 176,557 206,138
Interfund transfers (253,340) 1,454,628 1,080,791 (7,866,805) 6,926,458
----------------------------------------------------------------------------------------------
Total additions 4,977,513 3,525,387 1,530,085 (6,079,612) 19,222,444
Deductions:
Distributions to
participants 3,455,323 599,728 790,784 5,301,355 31,906,541
Administrative
expenses -- 4 8 42 263
----------------------------------------------------------------------------------------------
Total deductions 3,455,323 599,732 790,792 5,301,397 31,906,804
----------------------------------------------------------------------------------------------
Net additions
(deductions) 1,522,190 2,925,655 739,293 (11,381,009) (12,684,360)
Net assets available
for benefits at
beginning of year 18,995,349 4,156,514 1,492,055 49,094,068 99,746,033
----------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 20,517,539 $ 7,082,169 $ 2,231,348 $ 37,713,059 $ 87,061,673
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
ALLEGHENY SMALL DREYFUS
TELEDYNE COMPANY INTERNATIONAL COMPANY SELF-
DISCIPLINED VALUE VALUE STOCK DIRECTED
STOCK FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 1,417,870 $ 735,018 $ 202,162 $ 430,142 $ --
Employee 1,166,369 597,598 155,845 376,066 --
Investment income:
Net gain (loss)
from interest in
Allegheny Ludlum
Corporation
Master Trusts 3,662,203 -- -- (3,941,336) --
Net gain (loss)
from interest in
registered
investment
companies 3,180,359 (1,003,817) 269,959 -- 142,045
Net gain from
common interest
in collective
trusts -- -- -- -- --
Interest income -- -- -- -- --
Other income (loss) (17,366) (2,921) (254) 2,496 --
Transfers in from
outside of Plan 983,304 -- 99,438 185,261 --
Interfund transfers 1,511,346 (3,750,226) 21,801 663,451 814,195
----------------------------------------------------------------------------------------------
Total additions 11,904,085 (3,424,348) 748,951 (2,283,920) 956,240
Deductions:
Distributions to
participants 4,615,901 1,492,315 569,164 2,547,844 --
Administrative
expenses 158 67 -- 8 --
----------------------------------------------------------------------------------------------
Total deductions 4,616,059 1,492,382 569,164 2,547,852 --
----------------------------------------------------------------------------------------------
Net additions
(deductions) 7,288,026 (4,916,730) 179,787 (4,831,772) 956,240
Net assets available
for benefits at
beginning of year 27,858,603 15,446,354 2,964,614 27,656,220 310,241
----------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 35,146,629 $ 10,529,624 $ 3,144,401 $ 22,824,448 $ 1,266,481
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
LOANS TOTAL
---------------------------------
<S> <C> <C>
Additions:
Contributions:
Employer $ -- $ 9,213,107
Employee -- 6,992,306
Investment income:
Net gain (loss)
from interest in
Allegheny Ludlum
Corporation
Master Trusts -- 6,472,497
Net gain (loss)
from interest in
registered
investment
companies -- 2,588,546
Net gain from
common interest
in collective
trusts -- 3,051,160
Interest income 377,538 377,538
Other income (loss) -- (11,172)
Transfers in from
outside of Plan 40,632 2,208,714
Interfund transfers (602,299) --
---------------------------------
Total additions (184,129) 30,892,696
Deductions:
Distributions to
participants 428,808 51,707,763
Administrative
expenses -- 550
---------------------------------
Total deductions 428,808 51,708,313
---------------------------------
Net additions
(deductions) (612,937) (20,815,617)
Net assets available
for benefits at
beginning of year 4,367,721 252,087,772
---------------------------------
Net assets available
for benefits at end
of year $ 3,754,784 $ 231,272,155
=================================
</TABLE>
See accompanying notes.
9
<PAGE> 10
Allegheny Ludlum Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1997
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED
GROWTH AND GROWTH INCOME EQUITY INCOME
INCOME FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 702,727 $ 249,631 $ 62,837 $ 2,004,482 $ 3,677,232
Employee 565,903 183,655 47,169 1,510,645 2,153,794
Investment income:
Net gain from
interest in
Allegheny Ludlum
Corporation
Master Trusts 3,216,461 728,854 122,079 11,149,275 6,587,944
Net gain from
interest in
registered
investment
companies -- -- -- -- --
Interest income -- -- -- -- 1,396
Interfund transfers 243,216 1,525,897 907,445 (7,998,026) (7,564,050)
----------------------------------------------------------------------------------------------
Total additions 4,728,307 2,688,037 1,139,530 6,666,376 4,856,316
Deductions:
Distributions to
participants 612,897 143,344 86,663 2,111,534 9,234,509
Administrative
expenses -- -- -- -- --
----------------------------------------------------------------------------------------------
Total deductions 612,897 143,344 86,663 2,111,534 9,234,509
----------------------------------------------------------------------------------------------
Net additions
(deductions) 4,115,410 2,544,693 1,052,867 4,554,842 (4,378,193)
Net assets available
for benefits at
beginning of year 14,879,939 1,611,821 439,188 44,539,226 104,124,226
----------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 18,995,349 $ 4,156,514 $ 1,492,055 $ 49,094,068 $ 99,746,033
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
DREYFUS COMPANY INTERNATIONAL COMPANY SELF-
DISCIPLINED VALUE VALUE STOCK DIRECTED
STOCK FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 1,145,475 $ 625,035 $ 160,574 $ 398,923 $ --
Employee 964,562 566,507 134,766 311,109 --
Investment income:
Net gain from
interest in
Allegheny Ludlum
Corporation
Master Trusts -- -- -- 3,977,292 --
Net gain from
interest in
registered
investment
companies 5,946,391 2,345,108 89,494 -- 28,693
Interest income -- -- -- -- --
Interfund transfers 6,009,014 8,238,142 1,802,110 (3,514,614) 281,730
----------------------------------------------------------------------------------------------
Total additions 14,065,442 11,774,792 2,186,944 1,172,710 310,423
Deductions:
Distributions to
participants 601,963 224,750 19,788 1,333,961 --
Administrative
expenses -- -- -- -- 182
----------------------------------------------------------------------------------------------
Total deductions 601,963 224,750 19,788 1,333,961 182
----------------------------------------------------------------------------------------------
Net additions
(deductions) 13,463,479 11,550,042 2,167,156 (161,251) 310,241
Net assets available
for benefits at
beginning of year 14,395,124 3,896,312 797,458 27,817,471 --
----------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 27,858,603 $ 15,446,354 $ 2,964,614 $ 27,656,220 $ 310,241
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
PARTICIPANT
LOANS TOTAL
---------------------------------
<S> <C> <C>
Additions:
Contributions:
Employer $ -- $ 9,026,916
Employee -- 6,438,110
Investment income:
Net gain from
interest in
Allegheny Ludlum
Corporation
Master Trusts -- 25,781,905
Net gain from
interest in
registered
investment
companies -- 8,409,686
Interest income 377,707 379,103
Interfund transfers 69,136 --
---------------------------------
Total additions 446,843 50,035,720
Deductions:
Distributions to
participants -- 14,369,409
Administrative
expenses -- 182
---------------------------------
Total deductions -- 14,369,591
---------------------------------
Net additions
(deductions) 446,843 35,666,129
Net assets available
for benefits at
beginning of year 3,920,878 216,421,643
---------------------------------
Net assets available
for benefits at end
of year $ 4,367,721 $ 252,087,772
=================================
</TABLE>
See accompanying notes.
10
<PAGE> 11
Allegheny Ludlum Retirement Savings Plan
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Investments are stated at fair value determined as follows:
The Company Stock Fund consists of investments in Allegheny Teledyne
Incorporated (Allegheny Teledyne) common stock and is stated at the
quoted market price as listed on the New York Stock Exchange.
The Fixed Income Fund is stated at cost plus net earnings, which
approximates market value and is provided by the Plan's trustee.
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 generally accepted
accounting principles requires management to make estimates and assumptions 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 Retirement Savings Plan (the Plan) is a defined
contribution plan and is subject to the provisions of the Employee Retirement
Income Security Act of 1974. Allegheny Ludlum Corporation (ALC) is a wholly
owned subsidiary of Allegheny Teledyne.
Depending on participants' years of service, participants can defer between 1%
and 14%, subject to Internal Revenue Service limitations, of their eligible
wages, including profit sharing awards, and contribute them to the Plan. ALC
contributes 6.5% of participants' monthly pensionable earnings, as described in
the Plan, and in addition contributes $43.34 per month per participant.
The investment options provided by the Plan are as follows:
Dreyfus Lifestyle Growth and Income Fund--invests in equity and fixed
income securities and may invest up to 15% of its assets in international
securities.
Dreyfus Lifestyle Growth Fund--invests in equity and fixed income
securities and may invest up to 25% of its assets in international
securities.
11
<PAGE> 12
Allegheny Ludlum Retirement Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
Dreyfus Lifestyle Income Fund--consists of common stock, fixed income
securities and short-term money market instruments.
Alliance Equity Fund--consists of common stock.
Fixed Income Fund--consists of amounts invested in insurance companies or
other financial institutions under an agreement with repayment in full,
plus interest at a fixed rate.
Allegheny Teledyne Disciplined Stock Fund--invests in equity securities
and may invest up to 20% of its assets in high quality money market
accounts. Effective November 1, 1998, the Dreyfus Disciplined Stock Fund
changed from a mutual fund to a separate account structure, and will be
known as the Allegheny Teledyne Disciplined Stock Fund. Investment
objective and strategy remain the same.
Dreyfus Small Company Value Fund--invests primarily in small company
equities, and to a limited degree, in bonds and money market instruments.
Dreyfus International Value Fund--consists of equity securities of
foreign company equities, and to a limited degree, in bonds and money
market instruments.
Company Stock Fund--consists of Allegheny Teledyne common stock.
Effective April 1, 1997, participants can elect to participate in the
self-directed account if they have at least a $10,000 balance in the Plan. The
minimum initial investment amount in the self-directed fund, which is comprised
of various mutual funds, is $5,000.
Separate accounts are maintained by the Plan Sponsor for each participating
employee. Trustee fees and asset management fees charged 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.
Under certain provisions of the Plan, contributions by the Plan Sponsor, which
have been allocated to the accounts of the participants, may be subject to
forfeiture upon participants' termination of employment. Such forfeitures will
be used to reduce future contributions by the employer. Employer contributions
allocated to a participant's account become fully vested after a participant
completes five full years of service. Employee contributions and the fixed
dollar retirement contributions are fully vested at all times.
12
<PAGE> 13
Allegheny Ludlum Retirement Savings Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
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 12 to 60 months, and primary residence loans are repaid over
periods up to 180 months. Payments are made by payroll deductions.
In the event that the Plan is partially or completely terminated, or the Plan
Sponsor permanently discontinues making contributions, all amounts credited to
the accounts of the affected participants become fully vested and
nonforfeitable.
Further information about the Plan, including eligibility, vesting,
contributions, and withdrawals, is contained in the Summary Plan Description and
related contracts. Copies of this Summary Plan Description are available from
the Allegheny Teledyne Personnel and Compensation Committee.
3. INVESTMENTS
As of December 31, 1998, the Plan is a participant in the ALC Fixed Income
Master Trust, the ALC Alliance Equity Master Trust, the ALC ATI Common Stock
Master Trust, and the ALC Dreyfus Disciplined Stock Fund Master Trust. During
1998, the Dreyfus Lifestyle Growth and Income Fund, the Dreyfus Lifestyle Growth
Fund, and the Dreyfus Lifestyle Income Fund were reclassified as common
collective trusts from master trusts while the Allegheny Teledyne Disciplined
Stock Fund was reclassified to a master trust from the Dreyfus Disciplined Stock
Fund, a registered investment company. The Plan's participating interests in
these master trusts as of December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
ALC Fixed Income Master Trust 68.81% 73.72%
ALC Alliance Equity Master Trust 80.47% 81.57%
ALC ATI Common Stock Master Trust 70.95% 77.65%
ALC Lifestyle Growth Fund Master Trust --% 81.23%
ALC Lifestyle Income Fund Master Trust --% 81.72%
ALC Lifestyle Growth and Income Fund Master Trust --% 83.53%
Allegheny Teledyne Disciplined Stock Fund Master Trust 81.55% --%
</TABLE>
13
<PAGE> 14
Allegheny Ludlum Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of the net assets of the ALC Fixed Income Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------------------------
<S> <C> <C>
Guaranteed investment contracts:
Confederation Life Insurance Company $ 2,575 $ 29,118
Continental Assurance Company -- 6,718,924
John Hancock Life Insurance Company 5,100,000 2,600,000
Life Insurance Company of Virginia -- 8,725,219
New York Life Insurance Company 13,258,607 15,169,828
Pacific Mutual Life Insurance Company 6,167,430 5,793,190
Peoples Security Life Insurance Company 10,367,671 11,038,629
Prudential Insurance Company -- 6,144,220
Southland Life Insurance Company 10,752,479 16,288,645
Transamerica Occidental 11,296,810 10,936,663
Sun America, Inc. 3,000,000 --
Business Mens Assurance Company of America 2,505,536 --
Protective Life Insurance Company 3,002,482 --
Safeco Life Insurance 3,000,000 --
-------------------------------------
68,453,590 83,444,436
Synthetic contracts:
Caisse des Depots et Consignations 12,865,126 3,879,321
Peoples Security Life Insurance Company 2,968,196 2,948,698
Transamerica Occidental 13,859,523 13,865,850
Union Bank of Switzerland 5,935,391 5,937,712
Westdeutsche Landesbank Girozentrale 16,952,480 13,727,581
-------------------------------------
52,580,716 40,359,162
Temporary short-term investments 4,248,515 10,765,309
Accrued interest receivable 1,443,795 733,753
Other payables (88,501) (6,169)
-------------------------------------
Total net assets $ 126,638,115 $ 135,296,491
=====================================
</TABLE>
In May 1997, the ALC Fixed Income Master Trust received approximately $4,500,000
related to the Confederation Life Insurance Company Guaranteed Investment
Contract in accordance with the liquidation plan. Management is unable to
determine additional amounts, if any, that will be received by the ALC Fixed
Income Master Trust.
14
<PAGE> 15
Allegheny Ludlum Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of net assets of the ALC Alliance Equity Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------------
<S> <C> <C>
Investment in registered investment companies:
Alliance Equity Fund S.A. #4 (6,966.434 and 865.194 shares,
respectively) $ 47,408,255 $ 60,199,619
Cash 117 90
Operating payables (26,007) (10,341)
----------------------------------
Total net assets $ 47,382,365 $ 60,189,368
==================================
</TABLE>
The composition of net assets of the ALC ATI Common Stock Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------------
<S> <C> <C>
Allegheny Teledyne Incorporated common stock (1,544,975 and
1,347,732 shares, respectively) $ 31,575,427 $ 34,872,566
Receivables 196,291 4,527
Short-Term Investment Fund 450,324 738,595
Operating payables (10,492) (822)
----------------------------------
Total net assets $ 32,211,550 $ 35,614,866
==================================
</TABLE>
The composition of assets of the ALC Lifestyle Growth Fund Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------------
<S> <C> <C>
Dreyfus Lifestyle Growth Fund $ -- $ 5,117,053
Operating payables -- (5)
----------------------------------
$ -- $ 5,117,048
==================================
</TABLE>
The composition of assets of the ALC Lifestyle Income Fund Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------------
<S> <C> <C>
Dreyfus Lifestyle Income Fund $ -- $ 1,825,632
Operating payables -- (2)
----------------------------------
$ -- $ 1,825,630
==================================
</TABLE>
15
<PAGE> 16
Allegheny Ludlum Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of assets of the ALC Lifestyle Growth and Income Fund Master
Trust at December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------------
<S> <C> <C>
Dreyfus Lifestyle Growth and Income Fund $ -- $ 22,740,752
Receivables -- 56
----------------------------------
$ -- $ 22,740,808
==================================
</TABLE>
The composition of net assets of the Allegheny Teledyne Disciplined Stock Fund
Master Trust at December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------------
<S> <C> <C>
Corporate common stock $ 41,699,413 $ --
Noninterest-bearing cash (5,217) --
Receivables 58,761 --
Short-Term Investment Fund 1,499,311 --
Operating payables (51,809) --
----------------------------------
Total net assets $ 43,200,459 $ --
==================================
</TABLE>
16
<PAGE> 17
Allegheny Ludlum Retirement Savings 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:
<TABLE>
<CAPTION>
ALC FIXED INCOME MASTER ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER
TRUST TRUST TRUST
---------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
---------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Interest income (loss) $ 8,359,937 $ 8,694,877 $ -- $ -- $ (113) $ (1,554)
Realized (loss) gain
on sale of -- -- -- -- (620,712) 1,835,342
investments
Unrealized
(depreciation)
appreciation in fair
value of investments -- -- -- -- (5,308,345) 2,318,151
Dividends -- -- -- -- 934,022 837,662
Net (loss) gain,
registered
investment companies -- -- (2,106,215) 13,819,313 -- --
Net gain, common
collective trusts 408,717 468,281 -- -- 41,352 73,411
Other income 1,147 1,343 -- -- -- --
Administrative expenses (191,163) (189,938) (237,876) (211,873) (24,196) (27,286)
Transfers (17,237,014) (15,337,329) (10,462,912) (6,981,034) 1,574,676 (4,894,605)
---------------------------------------------------------------------------------------------
Net increase (decrease) (8,658,376) (6,362,766) (12,807,003) 6,626,406 (3,403,316) 141,121
Total net assets at
beginning of year 135,296,491 141,659,257 60,189,368 53,562,962 35,614,866 35,473,745
---------------------------------------------------------------------------------------------
Total net assets at end
of year $126,638,115 $135,296,491 $47,382,365 $60,189,368 $32,211,550 $35,614,866
=============================================================================================
</TABLE>
17
<PAGE> 18
Allegheny Ludlum Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
ALC LIFESTYLE GROWTH ALC LIFESTYLE INCOME ALC LIFESTYLE GROWTH AND
FUND MASTER TRUST FUND MASTER TRUST INCOME FUND MASTER TRUST
----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------------
1998* 1997 1998* 1997 1998* 1997
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Interest income (loss) $ -- $ -- $ -- $ 105 $ -- $ 1
Realized gain on sale
of investments -- -- -- -- -- --
Unrealized
appreciation in
fair value of
investments -- -- -- -- -- --
Dividends -- -- -- -- -- --
Net gain, common
collective trusts 514,556 882,650 109,828 152,034 1,558,031 3,853,009
Other loss (14) -- -- -- (10) --
Administrative expenses (94) (116) (34) (38) (229) --
Transfers (5,631,496) 2,285,394 (1,935,424) 1,083,338 (24,298,600) 838,793
----------------------------------------------------------------------------------------
Net increase (decrease) (5,117,048) 3,167,928 (1,825,630) 1,235,439 (22,740,808) 4,691,803
Total net assets at
beginning of year 5,117,048 1,949,120 1,825,630 590,191 22,740,808 18,049,005
----------------------------------------------------------------------------------------
Total net assets at end
of year $ -- $ 5,117,048 $ -- $ 1,825,630 $ -- $ 22,740,808
========================================================================================
</TABLE>
<TABLE>
<CAPTION>
ALLEGHENY TELEDYNE
DISCIPLINED STOCK FUND
MASTER TRUST
------------------------
YEAR ENDED DECEMBER 31
------------------------
1998 1997
------------------------
<S> <C> <C>
Investment income (loss):
Interest income (loss) $ (925) $ --
Realized gain on sale
of investments 107,964 --
Unrealized
appreciation in
fair value of
investments 4,322,009 --
Dividends 87,868 --
Net gain, common
collective trusts 26,165 --
Other loss -- --
Administrative expenses (51,809) --
Transfers 38,709,187 --
------------------------
Net increase (decrease) 43,200,459 --
Total net assets at
beginning of year -- --
------------------------
Total net assets at end
of year $ 43,200,459 $ --
========================
</TABLE>
* Partial year only. Reclassified as common collective trusts.
The average yield for 1998 and 1997 for the ALC Fixed Income Master Trust was
6.55% and 6.57%, respectively. Credited interest rates on the contracts ranged
from 5.13% to 8.18% and 5.60% to 8.18% for 1998 and 1997, respectively, and are
determined at contract inception.
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
Ludlum Corporation Master Trusts on the statement of changes in net assets
available for benefits.
18
<PAGE> 19
Allegheny Ludlum Retirement Savings Plan
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated July 23, 1996, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code of 1986 (the Code) and, therefore, the related trust
is exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan administrator
believes that the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax-exempt.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
Investment fees paid during the year for services rendered were based on
customary and reasonable rates for such services.
6. YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
Year 2000 dates. The Plan Sponsor is taking a two-phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Internal resources are being utilized to upgrade or modify existing
software applications, and test the software and equipment for the Year 2000
modifications. The Plan Sponsor believes that it has substantially completed
this phase of the project. Costs associated with modifying software and
equipment are not estimated to be significant and will be paid by the Plan
Sponsor.
For the second phase of the project, plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own Year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they expect to be Year 2000 compliant by mid-1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the Year 2000 problem could have a material
impact on the operations of the Plan. Plan management has not developed a
contingency plan because they are confident that all material systems will be
Year 2000 ready.
7. SUBSEQUENT EVENT
Effective July 1, 1999, the Plan will no longer offer the Dreyfus Small Company
Value Fund as an investment option. The Dreyfus Emerging Leaders Fund will be
offered to participants as a new investment option as of this date.
19
<PAGE> 20
Allegheny Ludlum Retirement Savings Plan
EIN 25-1364894 Plan 004
Line 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
CURRENT
DESCRIPTION UNITS/SHARES COST VALUE VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Collective Trusts
- ------------------------
Dreyfus Lifestyle Growth and Income Fund*:
Interest in Dreyfus Lifestyle Growth and
Income Fund 1,319,441.510 shares $18,553,762 $20,612,832
Dreyfus Lifestyle Growth Fund*:
Interest in Dreyfus Lifestyle Growth Fund 396,724.803 shares 6,309,277 7,043,546
Dreyfus Lifestyle Income Fund*:
Interest in Dreyfus Lifestyle Income Fund 171,183.496 shares 2,159,031 2,265,859
-------------------------------------
Total Common Collective Trusts 27,022,070 29,922,237
Registered Investment Companies
- -------------------------------
Dreyfus Small Company Value Fund*:
Interest in Dreyfus Small Company Value Fund 527,854.405 shares 10,119,212 10,425,125
Dreyfus International Value Fund*:
Interest in Dreyfus International Value Fund 204,620.016 shares 3,109,456 3,097,947
Self-Directed Fund:
American Century Quantitative Equity Growth Fund 1,380.485 shares 30,643 31,351
American Century 20th Century Ultra Fund 300.726 shares 10,854 10,047
Barron Asset Fund 834.709 shares 43,034 42,186
Berger Small Cap Value Fund 1,680.335 shares 31,474 32,464
Dreyfus 100% U.S. Treasury Money Market Fund* 162,294.820 shares 162,295 162,295
Dreyfus Appreciation Fund, Inc.* 663.109 shares 20,405 27,897
Dreyfus Technology Growth Fund* 3,005.487 shares 50,245 62,364
Fidelity Puritan Fund 1,218.333 shares 22,422 24,452
Fidelity Low Priced Stock Fund 508.686 shares 11,803 11,623
Fidelity Growth & Income Fund 318.998 shares 12,198 14,623
Fidelity Dividend Growth Fund 540.766 shares 12,221 15,536
Fidelity Select Financial Services Portfolio 96.358 shares 10,109 9,504
Fidelity Select Home Finance Portfolio 190.367 shares 10,035 8,239
Fidelity Select Biotechnology Portfolio 305.157 shares 10,035 12,136
Fidelity Select Brokerage and Investment Management 220.459 shares 10,035 8,481
Fidelity Select Electronics Portfolio 345.873 shares 11,853 16,104
Fidelity Select Computer Portfolio 207.383 shares 10,035 14,042
Gabelli Global Interactive Couch Potato Fund 126.291 shares 2,091 2,146
Gabelli Growth Fund 1,249.010 shares 41,182 44,215
Invesco Health Science Portfolio 42.852 shares 2,794 2,616
Janus Growth and Income Fund 1,500.554 shares 37,228 43,666
Janus Worldwide Fund 2,622.608 shares 100,606 124,207
Janus Twenty Fund 2,559.909 shares 111,708 136,443
Janus Special Situations Fund 607.227 shares 9,176 10,572
Janus Overseas Fund 3,034.335 shares 55,706 60,929
Janus Fund 1,193.072 shares 32,827 40,147
Guardian Park Ave Fund 937.402 shares 46,508 48,632
Phoenix Strategic Theme Fund Class A 121.569 shares 2,002 1,980
T. Rowe Price Equity Income Fund 407.642 shares 10,843 10,729
</TABLE>
20
<PAGE> 21
Line 27a--Schedule of Assets Held for Investment Purposes (continued)
<TABLE>
<CAPTION>
CURRENT
DESCRIPTION UNITS/SHARES COST VALUE VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
T. Rowe Price Mid-Cap Growth Fund 1,196.476 shares 37,562 40,776
T. Rowe Price Value Fund 1,813.642 shares 34,400 33,208
Safeco Growth Fund 390.930 shares 10,035 8,874
Strong American Utilities Fund 4,178.117 shares 63,829 70,234
Vanguard/Windsor II Portfolio 173.899 shares 5,559 5,191
Vanguard Index Trust 500 Portfolio 433.947 shares 43,000 49,448
-------------------------------------
Total Self-Directed Fund 1,116,752 1,237,357
-------------------------------------
Total Registered Investment Companies 14,345,420 14,760,429
Participant loans 8.75% to 9.50% -- 3,749,111
-------------------------------------
$41,367,490 $48,431,777
=====================================
</TABLE>
*Party-in-interest
21
<PAGE> 22
Allegheny Ludlum Retirement Savings Plan
EIN 25-1364894 Plan 004
Line 27d--Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT
VALUE OF
ASSETS ON
PURCHASE SELLING COST OF TRANSACTION NET
DESCRIPTION PRICE PRICE ASSET DATE GAIN
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Type (i) transactions:
Dreyfus Disciplined Stock
Fund $ -- $31,378,316 $27,898,261 $31,378,316 $ 3,480,055
Dreyfus Lifestyle Growth
and Income Fund 20,277,990 -- 20,277,990 20,277,990 --
Type (iii) transactions:
Dreyfus Disciplined Stock Fund 16,957,031 -- 16,957,031 16,957,031 --
Dreyfus Disciplined Stock Fund -- 47,960,058 42,709,908 47,960,058 5,250,150
Dreyfus Small Company Value
Fund 5,971,806 -- 5,971,806 5,971,806 --
Dreyfus Small Company Value
Fund -- 9,993,746 9,986,738 9,993,746 7,008
Dreyfus Lifestyle Growth and
Income Fund 22,349,396 -- 22,349,396 22,349,396 --
Dreyfus Lifestyle Growth and
Income Fund -- 3,903,821 3,795,634 3,903,821 108,187
</TABLE>
There were no Type (ii) or (iv) transactions during the year ended December 31,
1998.
22
<PAGE> 23
Audited Financial Statements
401(k) Savings Account Plan
for Employees of the
Washington Plant
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
23
<PAGE> 24
401(k) Savings Account Plan
for Employees of the Washington Plant
Audited Financial Statements
Years ended December 31, 1998 and 1997
CONTENTS
Report of Independent Auditors ...........................................25
Audited Financial Statements
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1998 ...................................26
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1997 ...................................27
Statement of Changes in Net Assets Available for Benefits, with Fund
Information, Year ended December 31, 1998 .............................28
Statement of Changes in Net Assets Available for Benefits, with Fund
Information, Year ended December 31, 1997 .............................29
Notes to Financial Statements ............................................30
Supplemental Schedules
Line 27a--Schedule of Assets Held for Investment Purposes.................38
Line 27d--Schedule of Reportable Transactions.............................39
24
<PAGE> 25
Report of Independent Auditors
The Plan Administrator
401(k) Savings Account Plan for Employees
of the Washington Plant
We have audited the accompanying statements of net assets available for benefits
of the 401(k) Savings Account Plan for Employees of the Washington Plant as of
December 31, 1998 and 1997, 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 generally accepted auditing
standards. 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 401(k)
Savings Account Plan for Employees of the Washington Plant as of December 31,
1998 and 1997, and the changes in net assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The Fund Information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in our audits of the financial statements and, in our opinion, are
fairly stated in all material respects in relation to the financial statements
taken as a whole.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
June 11, 1999
25
<PAGE> 26
401(k) Savings Account Plan
for Employees of the Washington Plant
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED
GROWTH AND GROWTH INCOME EQUITY INCOME
INCOME FUND FUND FUND FUND FUND
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in Allegheny
Ludlum Corporation
Master Trusts $ -- $ -- $ -- $ 279,582 $ 143,364
Interest in registered
investment companies -- -- -- -- --
Interest in common
collective trusts 143,554 57,108 7,667 -- --
--------------------------------------------------------------------------
Net assets available for
benefits $ 143,554 $ 57,108 $ 7,667 $ 279,582 $ 143,364
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
ALLEGHENY SMALL DREYFUS
TELEDYNE COMPANY INTERNATIONAL COMPANY
DISCIPLINED VALUE VALUE STOCK
STOCK FUND FUND FUND FUND TOTAL
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in Allegheny
Ludlum Corporation
Master Trusts $ 403,630 $ -- $ -- $ 115,325 $ 941,901
Interest in registered
investment companies -- 56,201 12,472 -- 68,673
Interest in common
collective trusts -- -- -- -- 208,329
----------------------------------------------------------------------
Net assets available for
benefits $ 403,630 $ 56,201 $ 12,472 $ 115,325 $1,218,903
=====================================================================-
</TABLE>
See accompanying notes.
26
<PAGE> 27
401(k) Savings Account Plan
for Employees of the Washington Plant
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED
GROWTH AND GROWTH INCOME EQUITY INCOME
INCOME FUND FUND FUND FUND FUND
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in Allegheny
Ludlum Corporation
Master Trusts $ 98,019 $ 4,596 $ 157 $263,569 $ 67,853
Interest in registered
investment companies -- -- -- -- --
----------------------------------------------------------------------
Net assets available for
benefits $ 98,019 $ 4,596 $ 157 $263,569 $ 67,853
======================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
DREYFUS COMPANY INTERNATIONAL COMPANY
DISCIPLINED VALUE VALUE STOCK
STOCK FUND FUND FUND FUND TOTAL
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in Allegheny
Ludlum Corporation
Master Trusts $ -- $ -- $ -- $ 35,008 $469,202
Interest in registered
investment companies 223,415 49,231 9,328 -- 281,974
--------------------------------------------------------------------
Net assets available for
benefits $223,415 $ 49,231 $ 9,328 $ 35,008 $751,176
====================================================================
</TABLE>
See accompanying notes.
27
<PAGE> 28
401(k) Savings Account Plan
for Employees of the Washington Plant
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
DREYFUS
LIFESTYLE DREYFUS DREYFUS
GROWTH LIFESTYLE LIFESTYLE ALLIANCE FIXED
AND INCOME GROWTH INCOME EQUITY INCOME
FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 42,302 $ 32,556 $ 6,467 $ 84,765 $ 39,230
Investment income (loss):
Net gain from interest
in common collective
trusts 14,421 5,624 362 -- --
Net gain (loss) from
interest in Allegheny
Ludlum Corporation Master
Trusts 5,945 850 61 (11,578) 7,192
Net gain (loss) from
interest in
registered investment
companies -- -- -- -- --
Interfund transfers (17,133) 13,482 620 (57,174) 29,089
--------------------------------------------------------------------------------
Total additions 45,535 52,512 7,510 16,013 75,511
Deductions:
Distributions to
participants -- -- -- -- --
--------------------------------------------------------------------------------
Net additions 45,535 52,512 7,510 16,013 75,511
Net assets available for
benefits at beginning of year 98,019 4,596 157 263,569 67,853
--------------------------------------------------------------------------------
Net assets available for
benefits at end of year $ 143,554 $ 57,108 $ 7,667 $ 279,582 $ 143,364
================================================================================
</TABLE>
<TABLE>
<CAPTION>
ALLEGHENY DREYFUS
TELEDYNE SMALL DREYFUS
DISCIPLINED COMPANY INTERNATIONAL COMPANY
STOCK VALUE VALUE STOCK
FUND FUND FUND FUND TOTAL
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 112,162 $ 41,426 $ 6,606 $ 20,658 $ 386,172
Investment income (loss):
Net gain from interest
in common collective
trusts -- -- -- -- 20,407
Net gain (loss) from
interest in Allegheny
Ludlum Corporation Master
Trusts 41,780 -- -- (116) 44,134
Net gain (loss) from
interest in
registered investment
companies 22,373 (6,368) 1,009 -- 17,014
Interfund transfers 3,900 (28,088) (4,471) 59,775 --
---------------------------------------------------------------------------------
Total additions 180,215 6,970 3,144 80,317 467,727
Deductions:
Distributions to
participants -- -- -- -- --
---------------------------------------------------------------------------------
Net additions 180,215 6,970 3,144 80,317 467,727
Net assets available for
benefits at beginning of year 223,415 49,231 9,328 35,008 751,176
---------------------------------------------------------------------------------
Net assets available for
benefits at end of year $ 403,630 $ 56,201 $ 12,472 $ 115,325 $1,218,903
=================================================================================
</TABLE>
See accompanying notes.
28
<PAGE> 29
401(k) Savings Account Plan
for Employees of the Washington Plant
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1997
<TABLE>
<CAPTION>
DREYFUS
LIFESTYLE DREYFUS DREYFUS
GROWTH LIFESTYLE LIFESTYLE ALLIANCE FIXED
AND INCOME GROWTH INCOME EQUITY INCOME
FUND FUND FUND FUND FUND
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Employee contributions $37,068 $3,085 $151 $108,583 $35,755
Investment income:
Net gain from interest
in Allegheny Ludlum
Corporation Master
Trusts 11,610 513 6 53,012 3,154
Net gain from interest
in registered
investment companies -- -- -- -- --
Interfund transfers 12,661 874 -- (31,297) 8,642
----------------------------------------------------------------
Total additions 61,339 4,472 157 130,298 47,551
Deductions:
Distributions to
participants 66 3 -- 393 569
----------------------------------------------------------------
Net additions 61,273 4,469 157 129,905 46,982
Net assets available for
benefits at beginning of
year 36,746 127 -- 133,664 20,871
----------------------------------------------------------------
Net assets available for
benefits at end of year $98,019 $4,596 $157 $263,569 $67,853
================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
DREYFUS SMALL DREYFUS
DISCIPLINED COMPANY INTERNATIONAL COMPANY
STOCK VALUE VALUE STOCK
FUND FUND FUND FUND TOTAL
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Employee contributions $ 95,405 $43,193 $6,849 $15,781 $345,870
Investment income:
Net gain from interest
in Allegheny Ludlum
Corporation Master
Trusts -- -- -- 1,773 70,068
Net gain from interest
in registered
investment companies 40,440 4,084 209 -- 44,733
Interfund transfers 5,016 1,016 (614) 3,702 --
-------------------------------------------------------------------
Total additions 140,861 48,293 6,444 21,256 460,671
Deductions:
Distributions to
participants 627 -- 117 -- 1,775
-------------------------------------------------------------------
Net additions 140,234 48,293 6,327 21,256 458,896
Net assets available for
benefits at beginning of
year 83,181 938 3,001 13,752 292,280
-------------------------------------------------------------------
Net assets available for
benefits at end of year $ 223,415 $49,231 $9,328 $35,008 $751,176
===================================================================
</TABLE>
See accompanying notes.
29
<PAGE> 30
401(k) Savings Account Plan
for Employees of the Washington Plant
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Investments are stated at fair value determined as follows:
The Company Stock Fund consists of investments in Allegheny Teledyne
Incorporated (Allegheny Teledyne) common stock and is stated at the
quoted market price as listed on the New York Stock Exchange.
The Fixed Income Fund is stated at cost plus net earnings, which
approximates market value and is provided by the Plan's trustee.
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 generally accepted
accounting principles requires management to make estimates and assumptions 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) Savings Account Plan for Employees of the Washington Plant (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 encourage thrift and to assist union employees in
accumulating a fund to supplement retirement income by allowing eligible
employees to make tax-deferred contributions to the Plan. Employee contributions
to the Plan can range between 1% and 18% of eligible wages subject to Internal
Revenue Service (IRS) limitations. In addition, the employee's annual pretax
profit sharing award and pretax Longevity Incentive Payment Plan award may be
contributed at the employee's discretion. The Plan is comprised, solely, of
employee contributions.
30
<PAGE> 31
401(k) Savings Account Plan
for Employees of the Washington Plant
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The investment options provided by the Plan are as follows:
Dreyfus Lifestyle Growth and Income Fund--invests in equity and fixed
income securities and may invest up to 15% of its assets in international
securities.
Dreyfus Lifestyle Growth Fund--invests in equity and fixed income
securities and may invest up to 25% of its assets in international
securities.
Dreyfus Lifestyle Income Fund--consists of common stock, fixed income
securities and short-term money market instruments.
Alliance Equity Fund--consists of common stock.
Fixed Income Fund--consists of amounts invested in insurance companies or
other financial institutions under an agreement with repayment in full,
plus interest at a fixed rate.
Allegheny Teledyne Disciplined Stock Fund--invests in equity securities
and may invest up to 20% of its assets in high quality money market
accounts. Effective November 1, 1998, the Dreyfus Disciplined Stock Fund
changed from a mutual fund to a separate account structure, and will be
known as the Allegheny Teledyne Disciplined Stock Fund. Investment
objective and strategy remain the same.
Dreyfus Small Company Value Fund--invests primarily in small domestic and
foreign company equities, and to a limited degree, in bonds and money
market instruments.
Dreyfus International Value Fund--consists of equity securities of
foreign company equities, and to a limited degree, in bonds and money
market instruments.
Company Stock Fund--consists of Allegheny Teledyne common stock.
Separate accounts are maintained by the Plan Sponsor for each participating
employee. Trustee fees and asset management fees charged 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.
31
<PAGE> 32
401(k) Savings Account Plan
for Employees of the Washington Plant
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
In the event that the Plan is partially or completely terminated, all amounts
credited to the accounts of the affected participants become fully vested.
Further information about the Plan, including eligibility, vesting,
contributions, and withdrawals, is contained in the Summary Plan Description and
related contracts. Copies of this Summary Plan Description are available from
the Allegheny Teledyne Personnel and Compensation Committee.
3. INVESTMENTS
As of December 31, 1998, the Plan is a participant in the ALC Fixed Income
Master Trust, the ALC Alliance Equity Master Trust, the ALC ATI Common Stock
Master Trust, and the ALC Dreyfus Disciplined Stock Fund Master Trust. During
1998, the Dreyfus Lifestyle Growth and Income Fund, the Dreyfus Lifestyle Growth
Fund, and the Dreyfus Lifestyle Income Fund were reclassified as common
collective trusts from master trusts, while the Allegheny Teledyne Disciplined
Stock Fund was reclassified to a master trust from the Dreyfus Disciplined Stock
Fund, a registered investment company. The Plan's participating interests in
these master trusts as of December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------------------
<S> <C> <C>
ALC Fixed Income Master Trust 0.11% 0.05%
ALC Alliance Equity Master Trust 0.59% 0.44%
ALC ATI Common Stock Master Trust 0.36% 0.10%
ALC Lifestyle Growth Fund Master Trust --% .09%
ALC Lifestyle Income Fund Master Trust --% --%
ALC Lifestyle Growth and Income Fund Master Trust --% 0.43%
Allegheny Teledyne Disciplined Stock Fund Master Trust 0.93% --%
</TABLE>
The composition of the net assets of the ALC Fixed Income Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------
<S> <C> <C>
Guaranteed investment contracts:
Confederation Life Insurance Company $ 2,575 $ 29,118
Continental Assurance Company -- 6,718,924
John Hancock Life Insurance Company 5,100,000 2,600,000
Life Insurance Company of Virginia -- 8,725,219
New York Life Insurance Company 13,258,607 15,169,828
Pacific Mutual Life Insurance Company 6,167,430 5,793,190
Peoples Security Life Insurance Company 10,367,671 11,038,629
Prudential Insurance Company -- 6,144,220
</TABLE>
32
<PAGE> 33
401(k) Savings Account Plan
for Employees of the Washington Plant
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
--------------------------------------
<S> <C> <C>
Southland Life Insurance Company 10,752,479 16,288,645
Transamerica Occidental 11,296,810 10,936,663
Sun America, Inc. 3,000,000 --
Business Mens Assurance Company of America 2,505,536 --
Protective Life Insurance Company 3,002,482 --
Safeco Life Insurance 3,000,000 --
--------------------------------------
68,453,590 83,444,436
Synthetic contracts:
Caisse des Depots et Consignations 12,865,126 3,879,321
Peoples Security Life Insurance Company 2,968,196 2,948,698
Transamerica Occidental 13,859,523 13,865,850
Union Bank of Switzerland 5,935,391 5,937,712
Westdeutsche Landesbank Girozentrale 16,952,480 13,727,581
--------------------------------------
52,580,716 40,359,162
Temporary short-term investments 4,248,515 10,765,309
Accrued interest receivable 1,443,795 733,753
Other payables (88,501) (6,169)
--------------------------------------
Total net assets $126,638,115 $135,296,491
======================================
</TABLE>
In May 1997, the ALC Fixed Income Master Trust received approximately $4,500,000
related to the Confederation Life Insurance Company Guaranteed Investment
Contract in accordance with the liquidation plan. Management is unable to
determine additional amounts, if any, that will be received by the ALC Fixed
Income Master Trust.
The composition of net assets of the ALC Alliance Equity Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
------------------------------------
<S> <C> <C>
Investment in registered investment companies:
Alliance Equity Fund S.A. #4 (6,966.434 and 865.194 shares,
respectively) $47,408,255 $60,199,619
Cash 117 90
Operating payables (26,007) (10,341)
------------------------------------
Total net assets $47,382,365 $60,189,368
====================================
</TABLE>
33
<PAGE> 34
401(k) Savings Account Plan
for Employees of the Washington Plant
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of net assets of the ALC ATI Common Stock Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
-------------------------------------
<S> <C> <C>
Allegheny Teledyne Incorporated common stock (1,544,975 and 1,347,732
shares, respectively) $31,575,427 $34,872,566
Receivables 196,291 4,527
Short-Term Investment Fund 450,324 738,595
Operating payables (10,492) (822)
-------------------------------------
Total net assets $32,211,550 $35,614,866
=====================================
</TABLE>
The composition of assets of the ALC Lifestyle Growth Fund Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
------------------ -------------------
<S> <C> <C>
Dreyfus Lifestyle Growth Fund $-- $5,117,053
Operating payables -- (5)
------------------ -------------------
$-- $5,117,048
================== ===================
</TABLE>
The composition of assets of the ALC Lifestyle Income Fund Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
------------------ -------------------
<S> <C> <C>
Dreyfus Lifestyle Income Fund $-- $1,825,632
Operating payables -- (2)
------------------ -------------------
$-- $1,825,630
================== ===================
</TABLE>
The composition of assets of the ALC Lifestyle Growth and Income Fund Master
Trust at December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
------------------ -------------------
<S> <C> <C>
Dreyfus Lifestyle Growth and Income Fund $-- $22,740,752
Receivables -- 56
------------------ -------------------
$-- $22,740,808
================== ===================
</TABLE>
34
<PAGE> 35
401(k) Savings Account Plan
for Employees of the Washington Plant
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of net assets of the Allegheny Teledyne Disciplined Stock Fund
Master Trust at December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
------------------ -------------------
<S> <C> <C>
Corporate common stock $41,699,413 $--
Noninterest-bearing cash (5,217) --
Receivables 58,761 --
Short-Term Investment Fund 1,499,311 --
Operating payables (51,809) --
------------------ -------------------
Total net assets $43,200,459 $--
================== ===================
</TABLE>
The composition of the changes in net assets of the various master trusts is as
follows:
<TABLE>
<CAPTION>
ALC FIXED INCOME MASTER ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER
TRUST TRUST TRUST
-----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-----------------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Interest income (loss) $ 8,359,937 $ 8,694,877 $ -- $ -- $ (113) $ (1,554)
Realized (loss) gain
on sale of investments -- -- -- -- (620,712) 1,835,342
Unrealized
(depreciation)
appreciation in fair
value of investments -- -- -- -- (5,308,345) 2,318,151
Dividends -- -- -- -- 934,022 837,662
Net (loss) gain,
registered
investment companies -- -- (2,106,215) 13,819,313 -- --
Net gain, common
collective trusts 408,717 468,281 -- -- 41,352 73,411
Other income 1,147 1,343 -- -- -- --
Administrative expenses (191,163) (189,938) (237,876) (211,873) (24,196) (27,286)
Transfers (17,237,014) (15,337,329) (10,462,912) (6,981,034) 1,574,676 (4,894,605)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) (8,658,376) (6,362,766) (12,807,003) 6,626,406 (3,403,316) 141,121
Total net assets at
beginning of year 135,296,491 141,659,257 60,189,368 53,562,962 35,614,866 35,473,745
------------- ------------- ------------- ------------- ------------- -------------
Total net assets at end
of year $ 126,638,115 $ 135,296,491 $ 47,382,365 $ 60,189,368 $ 32,211,550 $ 35,614,866
============= ============= ============= ============= ============= =============
</TABLE>
35
<PAGE> 36
401(k) Savings Account Plan
for Employees of the Washington Plant
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
ALLEGHENY TELEDYNE
ALC LIFESTYLE GROWTH ALC LIFESTYLE INCOME ALC LIFESTYLE GROWTH AND DISCIPLINED STOCK FUND
FUND MASTER TRUST FUND MASTER TRUST INCOME FUND MASTER TRUST MASTER TRUST
----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------------------------
1998* 1997 1998* 1997 1998* 1997 1998 1997
----------- ---------- ----------- ----------- ------------ ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest income (loss) $ -- $ -- $ -- $ 105 $ -- $ 1 $ (925) $ --
Realized gain on sale
of investments -- -- -- -- -- -- 107,964 --
Unrealized
appreciation in
fair value of
investments -- -- -- -- -- -- 4,322,009 --
Dividends -- -- -- -- -- -- 87,868 --
Net gain, common
collective trusts 514,556 882,650 109,828 152,034 1,558,031 3,853,009 26,165 --
Other loss (14) -- -- -- (10) -- -- --
Administrative expenses (94) (116) (34) (38) (229) -- (51,809) --
Transfers (5,631,496) 2,285,394 (1,935,424) 1,083,338 (24,298,600) 838,793 38,709,187 --
----------- ---------- ----------- ----------- ------------ ----------- ----------- ----
Net increase (decrease) (5,117,048) 3,167,928 (1,825,630) 1,235,439 (22,740,808) 4,691,803 43,200,459 --
Total net assets at
beginning of year 5,117,048 1,949,120 1,825,630 590,191 22,740,808 18,049,005 -- --
----------- ---------- ----------- ----------- ------------ ----------- ----------- ----
Total net assets at end
of year $ -- $5,117,048 $ -- $ 1,825,630 $ -- $22,740,808 $43,200,459 $ --
=========== ========== =========== =========== ============ =========== =========== ====
</TABLE>
* Partial year only. Reclassified as common collective trusts.
The average yield for 1998 and 1997 for the ALC Fixed Income Master Trust was
6.55% and 6.57%, respectively. Credited interest rates on the contracts ranged
from 5.13% to 8.18% and 5.60% to 8.18% for 1998 and 1997, respectively, and are
determined at contract inception.
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
Ludlum Corporation Master Trusts on the statement of changes in net assets
available for benefits.
36
<PAGE> 37
401(k) Savings Account Plan
for Employees of the Washington Plant
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated March 3, 1998, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code of 1986 (the Code) and, therefore, the related trust
is exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The plan administrator
believes that the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax-exempt.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
Investment fees paid during the period for services rendered were based on
customary and reasonable rates for such services.
6. YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
Year 2000 dates. The Plan Sponsor is taking a two-phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Internal resources are being utilized to upgrade or modify existing
software applications, and test the software and equipment for the Year 2000
modifications. The Plan Sponsor believes that it has substantially completed
this phase of the project. Costs associated with modifying software and
equipment are not estimated to be significant and will be paid by the Plan
Sponsor.
For the second phase of the project, plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own Year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they expect to be Year 2000 compliant by mid-1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the Year 2000 problem could have a material
impact on the operations of the Plan. Plan management has not developed a
contingency plan because they are confident that all material systems will be
Year 2000 ready.
7. SUBSEQUENT EVENT
Effective July 1, 1999, the Plan will no longer offer the Dreyfus Small Company
Value Fund as an investment option. The Dreyfus Emerging Leaders Fund will be
offered to participants as a new investment option as of this date.
37
<PAGE> 38
401(k) Savings Account Plan
for Employees of the Washington Plant
EIN 25-0575410 Plan 020
Line 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
CURRENT
DESCRIPTION UNITS/SHARES COST VALUE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Collective Trusts
- ------------------------
Dreyfus Lifestyle Growth and Income Fund* 9,188.988 shares 129,203 143,554
Dreyfus Lifestyle Growth Fund* 3,216.593 shares 51,364 57,108
Dreyfus Lifestyle Income Fund* 579.241 shares 7,277 7,667
-----------------------
Total Common Collective Trusts 187,844 208,329
Registered Investment Companies
- -------------------------------
Dreyfus Small Company Value Fund*:
Interest in Dreyfus Small Company Value Fund 2,845.644 shares $ 56,846 $ 56,201
Dreyfus International Value Fund*:
Interest in Dreyfus International Value Fund 823.753 shares 12,485 12,472
-----------------------
Total Registered Investment Companies 69,331 68,673
-----------------------
$257,175 $277,002
=======================
</TABLE>
*Party-in-interest
38
<PAGE> 39
401(k) Savings Account Plan
for Employees of the Washington Plant
EIN 25-0575410 Plan 020
Line 27d--Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT
VALUE OF
ASSETS ON NET
PURCHASE SELLING COST OF TRANSACTION GAIN
DESCRIPTION PRICE PRICE ASSET DATE (LOSS)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Type (i) Transactions
- ---------------------
Dreyfus Disciplined Stock Fund $ -- $311,849 $283,329 $311,849 $28,520
Dreyfus Lifestyle Growth and Income Fund 113,074 -- 113,074 113,074 --
Type (iii) Transactions
- -----------------------
Dreyfus Disciplined Stock Fund 223,069 -- 223,069 223,069 --
Dreyfus Disciplined Stock Fund -- 468,294 430,706 468,294 37,588
Dreyfus Small Company Value Fund 41,012 -- 41,012 41,012 --
Dreyfus Small Company Value Fund -- 27,628 30,840 27,628 (3,212)
Dreyfus Lifestyle Growth and Income Fund 133,733 -- 133,733 133,733 --
Dreyfus Lifestyle Growth and Income Fund -- 4,600 4,530 4,600 70
Dreyfus Lifestyle Growth Fund 53,522 -- 53,522 53,522 --
Dreyfus Lifestyle Growth Fund -- 2,037 2,157 2,037 (120)
</TABLE>
There were no Type (ii) or (iv) transactions during the year ended December 31,
1998.
39
<PAGE> 40
Audited Financial Statements
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
40
<PAGE> 41
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Audited Financial Statements
Years ended December 31, 1998 and 1997
CONTENTS
Report of Independent Auditors .............................................42
Audited Financial Statements
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1998 .....................................43
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1997 .....................................44
Statement of Changes in Net Assets Available for Benefits,
with Fund Information, Year ended December 31, 1998 .....................45
Statement of Changes in Net Assets Available for Benefits,
with Fund Information, Year ended December 31, 1997 .....................46
Notes to Financial Statements ..............................................47
Supplemental Schedules
Line 27a--Schedule of Assets Held for Investment Purposes ..................58
Line 27d--Schedule of Reportable Transactions...............................59
41
<PAGE> 42
Report of Independent Auditors
Personnel and Compensation Committee
Allegheny Ludlum Corporation
We have audited the accompanying statements of net assets available for benefits
of the Savings and Security Plan of the Lockport and Waterbury Facilities of
Allegheny Ludlum Corporation as of December 31, 1998 and 1997, 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 generally accepted auditing
standards. 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 Savings and
Security Plan of the Lockport and Waterbury Facilities of Allegheny Ludlum
Corporation at December 31, 1998 and 1997, and the changes in its net assets
available for benefits for the years then ended, in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The Fund Information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in our audits of the financial statements and, in our opinion, are
fairly stated in all material respects in relation to the financial statements
taken as a whole.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
June 11, 1999
42
<PAGE> 43
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
DREYFUS
LIFESTYLE
GROWTH DREYFUS DREYFUS ALLEGHENY
AND LIFESTYLE LIFESTYLE ALLIANCE FIXED TELEDYNE
INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED
FUND FUND FUND FUND FUND STOCK FUND
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in Allegheny
Ludlum Corporation
Master Trusts $ -- $ -- $ -- $283,093 $3,092,525 $721,478
Interest in registered
investment companies -- -- -- -- -- --
Interest in common
collective trusts 188,843 152,562 30,833 -- -- --
Participant notes receivable -- -- -- -- -- --
Contributions receivable 192 236 70 436 9,010 773
Other receivables -- 13 6 74 802 183
----------------------------------------------------------------------------
Net assets available for
benefits $189,035 $152,811 $30,909 $283,603 $3,102,337 $722,434
============================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
COMPANY INTERNATIONAL COMPANY
VALUE VALUE STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in Allegheny
Ludlum Corporation
Master Trusts $ -- $ -- $403,931 $ -- $4,501,027
Interest in registered
investment companies 507,604 15,511 -- -- 523,115
Interest in common
collective trusts -- -- -- -- 372,238
Participant notes receivable -- -- -- 128,691 128,691
Contributions receivable 446 66 344 -- 11,573
Other receivables 180 17 21 15 1,311
-------------------------------------------------------------------------
Net assets available for
benefits $508,230 $15,594 $404,296 $128,706 $5,537,955
=========================================================================
</TABLE>
See accompanying notes.
43
<PAGE> 44
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
DREYFUS
LIFESTYLE
GROWTH DREYFUS DREYFUS
AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS
INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED
FUND FUND FUND FUND FUND STOCK FUND
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in Allegheny
Ludlum Corporation
Master Trusts $179,113 $42,269 $23,644 $241,674 $2,876,809 $ --
Interest in registered
investment companies -- -- -- -- -- 548,495
Participant notes receivable -- -- -- -- -- --
-----------------------------------------------------------------------------
Net assets available for
benefits $179,113 $42,269 $23,644 $241,674 $2,876,809 $548,495
=============================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
COMPANY INTERNATIONAL COMPANY
VALUE VALUE STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in Allegheny
Ludlum Corporation
Master Trusts $ -- $ -- $511,952 $ -- $3,875,461
Interest in registered
investment companies 612,903 17,654 -- -- 1,179,052
Participant notes receivable -- -- -- 152,629 152,629
--------------------------------------------------------------------------
Net assets available for
benefits $612,903 $17,654 $511,952 $152,629 $5,207,142
==========================================================================
</TABLE>
See accompanying notes.
44
<PAGE> 45
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
DREYFUS
LIFESTYLE ALLEGHENY
GROWTH DREYFUS DREYFUS TELEDYNE
AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DISCIPLINED
INCOME GROWTH INCOME EQUITY INCOME STOCK
FUND FUND FUND FUND FUND FUND
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions
Contributions:
Employer $ 7,846 $ 5,964 $ 2,285 $ 15,234 $ 176,984 $ 19,644
Employee 6,130 5,092 1,597 12,929 148,226 17,512
Investment income
(loss):
Net gain (loss)
from interest in
Allegheny Ludlum
Corporation
Master
Trusts 11,865 3,322 1,447 (9,993) 182,650 72,986
Net gain (loss)
from interest in
registered
investment
companies -- -- -- -- -- 75,615
Net gain from
interest in common
collective trusts 19,217 17,026 2,984 -- -- --
Interest income -- -- -- -- -- --
Other income -- -- -- 38 1 31
Interfund transfers (16,406) 81,710 (1,048) 51,634 (23,997) 6,840
------------------------------------------------------------------------------------
Total additions 28,652 113,114 7,265 69,842 483,864 192,628
Deductions:
Distributions to
participants 18,730 2,572 -- 27,913 258,336 18,689
------------------------------------------------------------------------------------
Net additions
(deductions) 9,922 110,542 7,265 41,929 225,528 173,939
Net assets available
for benefits at
beginning of year 179,113 42,269 23,644 241,674 2,876,809 548,495
------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 189,035 $152,811 $ 30,909 $ 283,603 $ 3,102,337 $722,434
====================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
COMPANY INTERNATIONAL COMPANY
VALUE VALUE STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions
Contributions:
Employer $ 21,134 $ 1,294 $ 15,508 $ -- $ 265,893
Employee 17,691 873 10,222 -- 220,272
Investment income
(loss):
Net gain (loss)
from interest in
Allegheny Ludlum
Corporation
Master Trusts -- -- (106,228) -- 156,049
Net gain (loss)
from interest in
registered
investment
companies (24,486) 1,827 -- -- 52,956
Net gain from
interest in common
collective trusts -- -- -- -- 39,227
Interest income -- -- -- 12,981 12,981
Other income 24 -- -- 15 109
Interfund transfers (110,585) (3,657) 33,724 (18,215) --
----------------------------------------------------------------------
Total additions (96,222) 337 (46,774) (5,219) 747,487
Deductions:
Distributions to
participants 8,451 2,397 60,882 18,704 416,674
----------------------------------------------------------------------
Net additions
(deductions) (104,673) (2,060) (107,656) (23,923) 330,813
Net assets available
for benefits at
beginning
of year 612,903 17,654 511,952 152,629 5,207,142
----------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 508,230 $ 15,594 $ 404,296 $ 128,706 $5,537,955
======================================================================
</TABLE>
See accompanying notes.
45
<PAGE> 46
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1997
<TABLE>
<CAPTION>
DREYFUS
LIFESTYLE
GROWTH DREYFUS DREYFUS DREYFUS
AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DISCIPLINED
INCOME GROWTH INCOME EQUITY INCOME STOCK
FUND FUND FUND FUND FUND FUND
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 12,129 $ 3,640 $ 1,630 $ 16,223 $ 270,256 $ 19,079
Employee 10,826 2,555 1,582 14,258 145,270 17,420
Investment income:
Net gain from
interest in
Allegheny Ludlum
Corporation
Master Trusts 36,335 10,847 1,453 80,992 180,421 --
Net gain from
interest in
registered
investment
companies -- -- -- -- -- 90,547
Interest income -- -- -- -- -- --
Interfund transfers (62,902) (2,136) 6,956 (183,386) (349,504) 272,994
--------------------------------------------------------------------------------
(3,612) 14,906 11,621 (71,913) 246,443 400,040
Deductions:
Distributions to
participants 1,750 3,417 -- 9,966 33,961 1,551
--------------------------------------------------------------------------------
Net additions (deductions) (5,362) 11,489 11,621 (81,879) 212,482 398,489
Net assets available for
benefits at beginning
of year 184,475 30,780 12,023 323,553 2,664,327 150,006
--------------------------------------------------------------------------------
Net assets available for
benefits at end of year $179,113 $42,269 $23,644 $ 241,674 $2,876,809 $548,495
================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
COMPANY INTERNATIONAL COMPANY
VALUE VALUE STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 13,963 $ 646 $ 15,303 $ -- $ 352,869
Employee 11,256 269 9,991 -- 213,427
Investment income:
Net gain from
interest in
Allegheny Ludlum
Corporation
Master Trusts -- -- 88,729 -- 398,777
Net gain from
interest in
registered
investment
companies 64,370 264 -- -- 155,181
Interest income -- -- -- 12,137 12,137
Interfund transfers 504,045 (890) (208,532) 23,355 --
------------------------------------------------------------------------
593,634 289 (94,509) 35,492 1,132,391
Deductions:
Distributions to
participants 5,548 552 29,628 -- 86,373
------------------------------------------------------------------------
Net additions (deductions) 588,086 (263) (124,137) 35,492 1,046,018
Net assets available
for benefits at
beginning
of year 24,817 17,917 636,089 117,137 4,161,124
------------------------------------------------------------------------
Net assets available
for benefits at end of
year $612,903 $17,654 $ 511,952 $152,629 $5,207,142
========================================================================
</TABLE>
See accompanying notes.
46
<PAGE> 47
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Investments are stated at fair value determined as follows:
The Company Stock Fund consists of investments in Allegheny Teledyne
Incorporated (Allegheny Teledyne) common stock and is stated at the
quoted market price as listed on the New York Stock Exchange.
The Fixed Income Fund is stated at cost plus net earnings, which
approximates market value and is provided by the Plan's trustee.
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 generally accepted
accounting principles requires management to make estimates and assumptions 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 purpose of the Savings and Security Plan of the Lockport and Waterbury
Facilities of Allegheny Ludlum Corporation (the Plan) is to provide a savings
and retirement plan to eligible employees of the Lockport and Waterbury
Facilities of Allegheny Ludlum Corporation (ALC) by allowing a portion of their
salary to be set aside each month through payroll deductions. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974. ALC is a wholly owned subsidiary of Allegheny Teledyne.
Depending on participants' years of service, participants can defer between 1%
and 16%, subject to Internal Revenue Service limitations, of their eligible
wages and contribute them to the Plan. ALC will match 50% of participant
deferrals up to 8% of each participant's deferral based on years of service as
described in the Plan. Any contributions made by participants in excess of the
eligible matched portion will not be matched by ALC. In addition, ALC will
contribute 6.5% of monthly eligible wages regardless if participants elect to
contribute to the savings portion of the Plan. ALC also contributes $.50 for
each hour participants work. Effective July 1, 1998, ALC increased this
contribution to $.59 for each hour participants work.
47
<PAGE> 48
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The investment options provided by the Plan are as follows:
Dreyfus Lifestyle Growth and Income Fund--invests in equity and fixed
income securities and may invest up to 15% of its assets in international
securities.
Dreyfus Lifestyle Growth Fund--invests in equity and fixed income
securities and may invest up to 25% of its assets in international
securities.
Dreyfus Lifestyle Income Fund--consists of common stock, fixed income
securities and short-term money market instruments.
Alliance Equity Fund--consists of common stock.
Fixed Income Fund--consists of amounts invested in insurance companies or
other financial institutions under an agreement with repayment in full,
plus interest at a fixed rate.
Allegheny Teledyne Disciplined Stock Fund--invests in equity securities
and may invest up to 20% of its assets in high quality money market
accounts. Effective November 1, 1998, the Dreyfus Disciplined Stock Fund
changed from a mutual fund to a separate account structure, and will be
known as the Allegheny Teledyne Disciplined Stock Fund. Investment
objective and strategy remain the same.
Dreyfus Small Company Value Fund--invests primarily in small company
equities, and to a limited degree, in bonds and money market instruments.
Dreyfus International Value Fund--consists of equity securities of
foreign company equities, and to a limited degree, in bonds and money
market instruments.
Company Stock Fund--consists of Allegheny Teledyne common stock.
48
<PAGE> 49
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
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 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.
Active employees can borrow up to 50% of their vested account balances. 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.
In the event that the Plan is partially or completely terminated, or the Plan
Sponsor permanently discontinues making contributions, all amounts credited to
the accounts of affected participants become fully vested and nonforfeitable.
Further information about the Plan, including eligibility, vesting,
contributions, and withdrawals, is contained in the Summary Plan Description and
related contracts. Copies of this Summary Plan Description are available from
the Allegheny Teledyne Personnel and Compensation Committee.
49
<PAGE> 50
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
3. INVESTMENTS
As of December 31, 1998, the Plan is a participant in the ALC Fixed Income
Master Trust, the ALC Alliance Equity Master Trust, the ALC ATI Common Stock
Master Trust, and the ALC Dreyfus Disciplined Stock Fund Master Trust. During
1998, the Dreyfus Lifestyle Growth and Income Fund, the Dreyfus Lifestyle Growth
Fund and the Dreyfus Lifestyle Income Fund were reclassified as common
collective trusts from master trusts while the Allegheny Teledyne Disciplined
Stock Fund was reclassified to a master trust from the Dreyfus Disciplined Stock
Fund, a registered investment company. The Plan's participating interests in
these master trusts as of December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
ALC Fixed Income Master Trust 2.44% 2.13%
ALC Alliance Equity Master Trust 0.60% .39%
ALC ATI Common Stock Master Trust 1.25% 1.44%
ALC Lifestyle Growth Fund Master Trust --% .83%
ALC Lifestyle Income Fund Master Trust --% 1.31%
ALC Lifestyle Growth and Income Fund Master Trust --% .79%
Allegheny Teledyne Disciplined Stock Fund Master Trust 1.67% --%
</TABLE>
The composition of the net assets of the ALC Fixed Income Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Guaranteed investment contracts:
Confederation Life Insurance Company $ 2,575 $ 29,118
Continental Assurance Company -- 6,718,924
John Hancock Life Insurance Company 5,100,000 2,600,000
Life Insurance Company of Virginia -- 8,725,219
New York Life Insurance Company 13,258,607 15,169,828
Pacific Mutual Life Insurance Company 6,167,430 5,793,190
Peoples Security Life Insurance Company 10,367,671 11,038,629
Prudential Insurance Company -- 6,144,220
Southland Life Insurance Company 10,752,479 16,288,645
Transamerica Occidental 11,296,810 10,936,663
Sun America, Inc. 3,000,000 --
Business Mens Assurance Company of America 2,505,536 --
Protective Life Insurance Company 3,002,482 --
Safeco Life Insurance 3,000,000 --
--------------------------------------------
68,453,590 83,444,436
</TABLE>
50
<PAGE> 51
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Synthetic contracts:
Caisse des Depots et Consignations 12,865,126 3,879,321
Peoples Security Life Insurance Company 2,968,196 2,948,698
Transamerica Occidental 13,859,523 13,865,850
Union Bank of Switzerland 5,935,391 5,937,712
Westdeutsche Landesbank Girozentrale 16,952,480 13,727,581
--------------------------------------------
52,580,716 40,359,162
Temporary short-term investments 4,248,515 10,765,309
Accrued interest receivable 1,443,795 733,753
Other payables (88,501) (6,169)
--------------------------------------------
Total net assets $126,638,115 $135,296,491
============================================
</TABLE>
In May 1997, the ALC Fixed Income Master Trust received approximately $4,500,000
related to the Confederation Life Insurance Company Guaranteed Investment
Contract in accordance with the liquidation plan. Management is unable to
determine additional amounts, if any, that will be received by the ALC Fixed
Income Master Trust.
The composition of net assets of the ALC Alliance Equity Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Investment in registered investment companies:
Alliance Equity Fund S.A. #4 (6,966.434 and 865.194 shares,
respectively) $47,408,255 $60,199,619
Cash 117 90
Operating payables (26,007) (10,341)
--------------------------------------------
Total net assets $47,382,365 $60,189,368
============================================
</TABLE>
51
<PAGE> 52
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of net assets of the ALC ATI Common Stock Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Allegheny Teledyne Incorporated common stock (1,544,975 and 1,347,732
shares, respectively) $31,575,427 $34,872,566
Receivables 196,291 4,527
Short-Term Investment Fund 450,324 738,595
Operating payables (10,492) (822)
--------------------------------------------
Total net assets $32,211,550 $35,614,866
============================================
</TABLE>
The composition of assets of the ALC Lifestyle Growth Fund Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Dreyfus Lifestyle Growth Fund $-- $5,117,053
Operating payables -- (5)
--------------------------------------------
$-- $5,117,048
============================================
</TABLE>
The composition of assets of the ALC Lifestyle Income Fund Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Dreyfus Lifestyle Income Fund $-- $1,825,632
Operating payables -- (2)
--------------------------------------------
$-- $1,825,630
============================================
</TABLE>
52
<PAGE> 53
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of assets of the ALC Lifestyle Growth and Income Fund Master
Trust at December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Dreyfus Lifestyle Growth and Income Fund $-- $22,740,752
Receivables -- 56
--------------------------------------------
$-- $22,740,808
============================================
</TABLE>
The composition of net assets of the Allegheny Teledyne Disciplined Stock Fund
Master Trust at December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------- --------------------
<S> <C> <C>
Corporate common stock $41,699,413 $--
Noninterest-bearing cash (5,217) --
Receivables 58,761 --
Short-Term Investment Fund 1,499,311 --
Operating payables (51,809) --
---------------------- --------------------
Total net assets $43,200,459 $--
====================== ====================
</TABLE>
53
<PAGE> 54
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of the changes in net assets of the various master trusts is as
follows:
<TABLE>
<CAPTION>
ALC FIXED INCOME MASTER ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER
TRUST TRUST TRUST
----------------------------- ------------------------------- -------------------------------
YEAR ENDED DECEMBER 31
---------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
-------------- --------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Interest income (loss) $ 8,359,937 $ 8,694,877 $ -- $ -- $ (113) $ (1,554)
Realized (loss) gain
on sale of investments -- -- -- -- (620,712) 1,835,342
Unrealized
(depreciation)
appreciation in fair
value of investments -- -- -- -- (5,308,345) 2,318,151
Dividends -- -- -- -- 934,022 837,662
Net (loss) gain,
registered
investment companies -- -- (2,106,215) 13,819,313 -- --
Net gain, common
collective trusts 408,717 468,281 -- -- 41,352 73,411
Other income 1,147 1,343 -- -- -- --
Administrative expenses (191,163) (189,938) (237,876) (211,873) (24,196) (27,286)
Transfers (17,237,014) (15,337,329) (10,462,912) (6,981,034) 1,574,676 (4,894,605)
-------------- --------------- -------------- --------------- --------------- ---------------
Net increase (decrease) (8,658,376) (6,362,766) (12,807,003) 6,626,406 (3,403,316) 141,121
Total net assets at
beginning of year 135,296,491 141,659,257 60,189,368 53,562,962 35,614,866 35,473,745
-------------- --------------- -------------- --------------- --------------- ---------------
Total net assets at end
of year $126,638,115 $135,296,491 $47,382,365 $60,189,368 $32,211,550 $35,614,866
============== =============== ============== =============== =============== ===============
</TABLE>
54
<PAGE> 55
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
ALC LIFESTYLE GROWTH ALC LIFESTYLE INCOME ALC LIFESTYLE GROWTH AND
FUND MASTER TRUST FUND MASTER TRUST INCOME FUND MASTER TRUST
------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
------------------------------------------------------------------------------------------------------
1998* 1997 1998* 1997 1998* 1997
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Interest income (loss) $ -- $ -- $ -- $ 105 $ -- $ 1
Realized gain on sale
of investments -- -- -- -- -- --
Unrealized
appreciation in
fair value of
investments -- -- -- -- -- --
Dividends -- -- -- -- -- --
Net gain, common
collective trusts 514,556 882,650 109,828 152,034 1,558,031 3,853,009
Other loss (14) -- -- -- (10) --
Administrative expenses (94) (116) (34) (38) (229) --
Transfers (5,631,496) 2,285,394 (1,935,424) 1,083,338 (24,298,600) 838,793
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) (5,117,048) 3,167,928 (1,825,630) 1,235,439 (22,740,808) 4,691,803
Total net assets at
beginning of year 5,117,048 1,949,120 1,825,630 590,191 22,740,808 18,049,005
------------ ------------ ------------ ------------ ------------ ------------
Total net assets at end
of year $ -- $ 5,117,048 $ -- $ 1,825,630 $ -- $ 22,740,808
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
ALLEGHENY TELEDYNE
DISCIPLINED STOCK FUND
MASTER TRUST
-------------------------
YEAR ENDED DECEMBER 31
-------------------------
1998 1997
-------------------------
<S> <C> <C>
Investment income (loss):
Interest income (loss) $ (925) $ --
Realized gain on sale
of investments 107,964 --
Unrealized
appreciation in
fair value of
investments 4,322,009 --
Dividends 87,868 --
Net gain, common
collective trusts 26,165 --
Other loss -- --
Administrative expenses (51,809) --
Transfers 38,709,187 --
------------ ----
Net increase (decrease) 43,200,459 --
Total net assets at
beginning of year -- --
------------ ----
Total net assets at end
of year $ 43,200,459 $ --
============ ====
</TABLE>
* Partial year only. Reclassified as common collective trusts.
The average yield for 1998 and 1997 for the ALC Fixed Income Master Trust was
6.55% and 6.57%, respectively. Credited interest rates on the contracts ranged
from 5.13% to 8.18% and 5.60% to 8.18% for 1998 and 1997, respectively, and are
determined at contract inception.
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
Ludlum Corporation Master Trusts on the statement of changes in net assets
available for benefits.
55
<PAGE> 56
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated February 1, 1996, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code of 1986 (the Code) and, therefore, the related
trust is exempt from taxation. Once qualified, the Plan is required to operate
in conformity with the Code to maintain its qualification. The plan
administrator believes that the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan is
qualified and the related trust is tax-exempt.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
Investment fees paid during the year for services rendered were based on
customary and reasonable rates for such services.
6. YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
Year 2000 dates. The Plan Sponsor is taking a two-phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Internal resources are being utilized to upgrade or modify existing
software applications, and test the software and equipment for the Year 2000
modifications. The Plan Sponsor believes that it has substantially completed
this phase of the project. Costs associated with modifying software and
equipment are not estimated to be significant and will be paid by the Plan
Sponsor.
For the second phase of the project, plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own Year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they expect to be Year 2000 compliant by mid-1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the Year 2000 problem could have a material
impact on the operations of the Plan. Plan management has not developed a
contingency plan because they are confident that all material systems will be
Year 2000 ready.
56
<PAGE> 57
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
Notes to Financial Statements (continued)
7. SUBSEQUENT EVENT
Effective July 1, 1999, the Plan will no longer offer the Dreyfus Small Company
Value Fund as an investment option. The Dreyfus Emerging Leaders Fund will be
offered to participants as a new investment option as of this date.
57
<PAGE> 58
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
EIN 25-1364874 Plan 007
Line 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
DESCRIPTION UNITS/SHARES COST CURRENT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Collective Trusts
Dreyfus Lifestyle Growth and Income Fund* 12,087.957 shares $169,644 $ 188,843
Dreyfus Lifestyle Growth Fund* 8,593.007 shares 135,527 152,562
Dreyfus Lifestyle Income Fund* 2,329.426 shares 29,010 30,833
--------------------------------------------
Total Common Collective Trusts 334,181 372,238
Registered Investment Companies
Dreyfus Small Company Value Fund*:
Interest in Dreyfus Small Company Value Fund 25,701.455 shares 507,561 507,604
Dreyfus International Value Fund*:
Interest in Dreyfus International Value Fund 1,024.492 shares 15,688 15,511
--------------------------------------------
Total Registered Investment Companies 523,249 523,115
Participant loans 8.75% to 9.50% - 128,691
--------------------------------------------
$857,430 $1,024,044
============================================
</TABLE>
* Party-in-interest
58
<PAGE> 59
Savings and Security Plan of the
Lockport and Waterbury Facilities
of Allegheny Ludlum Corporation
EIN 25-1364894 Plan 007
Line 27d--Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT
VALUE OF
ASSETS ON
PURCHASE SELLING COST OF TRANSACTION NET
DESCRIPTION PRICE PRICE ASSET DATE GAIN
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Type (i) Transactions
- ---------------------
Dreyfus Disciplined Stock Fund $ -- $ 696,463 $ 680,132 $ 696,463 $ 16,331
Type (iii) Transactions
- -----------------------
Dreyfus Disciplined Stock Fund 1,003,544 -- 1,003,544 1,003,544 --
Dreyfus Disciplined Stock Fund -- 1,626,969 1,567,313 1,626,969 59,656
Dreyfus Small Company Value Fund 382,092 -- 382,092 382,092 --
Dreyfus Small Company Value Fund -- 462,905 453,192 462,905 9,713
Dreyfus Lifestyle Income Fund 359,342 -- 359,342 359,342 --
Dreyfus Lifestyle Income Fund -- 331,493 330,332 331,493 1,161
</TABLE>
There were no Type (ii) or (iv) transactions during the year ended December 31,
1998.
59
<PAGE> 60
Audited Financial Statements
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
60
<PAGE> 61
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Audited Financial Statements
Years ended December 31, 1998 and 1997
CONTENTS
Report of Independent Auditors ...............................................62
Audited Financial Statements
Statement of Net Assets Available for Benefits, with Fund Information
as of December 31, 1998 ...................................................63
Statement of Net Assets Available for Benefits, with Fund Information
as of December 31, 1997 ...................................................64
Statement of Changes in Net Assets Available for Benefits, with Fund
Information, Year ended December 31, 1998 .................................65
Statement of Changes in Net Assets Available for Benefits, with Fund
Information, Year ended December 31, 1997 .................................66
Notes to Financial Statements ................................................67
Supplemental Schedules
Line 27a--Schedule of Assets Held for Investment Purposes.....................76
Line 27d--Schedule of Reportable Transactions.................................77
61
<PAGE> 62
Report of Independent Auditors
Personnel and Compensation Committee
Allegheny Ludlum Corporation
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, 1998 and 1997, 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 generally accepted auditing
standards. 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 Allegheny
Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan as of
December 31, 1998 and 1997, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the financial statements. The Fund Information in the
statements of net assets available for benefits and the statements of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in our audits of the financial statements and, in our opinion, are
fairly stated in all material respects in relation to the financial statements
taken as a whole.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
June 11, 1999
62
<PAGE> 63
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS ALLEGHENY
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED TELEDYNE
GROWTH AND GROWTH INCOME EQUITY INCOME DISCIPLINED
INCOME FUND FUND FUND FUND FUND STOCK FUND
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation Master
Trusts $ -- $ -- $ -- $ 8,691,158 $ 36,265,505 $ 6,844,452
Interest in
registered
investment companies -- -- -- -- -- --
Interest in common
collective trusts 4,543,488 1,633,809 636,848 -- -- --
Participant notes
receivable -- -- -- -- -- --
Contributions receivable 380 339 265 379 5,577 655
Other receivables
(payables) 482 2,958 (5,753) (24,153) (22,957) (4,570)
-------------------------------------------------------------------------------------------------------
Net assets available
for benefits $ 4,544,350 $ 1,637,106 $ 631,360 $ 8,667,384 $ 36,248,125 $ 6,840,537
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
COMPANY INTERNATIONAL COMPANY
VALUE VALUE STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation Master
Trusts $ -- $ -- $ 8,839,227 $ -- $ 60,640,342
Interest in
registered
investment companies 2,469,580 649,083 -- -- 3,118,663
Interest in common
collective trusts -- -- -- -- 6,814,145
Participant notes
receivable -- -- -- 2,933,000 2,933,000
Contributions receivable 442 91 1,202 -- 9,330
Other receivables
(payables) (6,315) 4,741 (12,235) 1,631 (66,171)
--------------------------------------------------------------------------------------
Net assets available
for benefits $ 2,463,707 $ 653,915 $ 8,828,194 $ 2,934,631 $ 73,449,309
======================================================================================
</TABLE>
See accompanying notes.
63
<PAGE> 64
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
DREYFUS DREYFUS DREYFUS
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS
GROWTH AND GROWTH INCOME EQUITY INCOME DISCIPLINED
INCOME FUND FUND FUND FUND FUND STOCK FUND
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation Master
Trusts $ 3,395,294 $ 890,297 $ 299,973 $10,447,614 $32,302,520 $ --
Interest in
registered
investment
companies -- -- -- -- -- 5,119,259
Participant notes
receivable -- -- -- -- -- --
--------------------------------------------------------------------------------------------------
Net assets available
for benefits $ 3,395,294 $ 890,297 $ 299,973 $10,447,614 $32,302,520 $ 5,119,259
==================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
COMPANY INTERNATIONAL COMPANY
VALUE VALUE STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Interest in
Allegheny Ludlum
Corporation Master
Trusts $ -- $ -- $ 7,256,888 $ -- $54,592,586
Interest in
registered
investment
companies 2,939,535 586,660 -- -- 8,645,454
Participant notes
receivable -- -- -- 2,607,131 2,607,131
----------------------------------------------------------------------------
Net assets available
for benefits $ 2,939,535 $ 586,660 $ 7,256,888 $ 2,607,131 $65,845,171
=============================================================================
</TABLE>
See accompanying notes.
64
<PAGE> 65
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
DREYFUS ALLEGHENY
LIFESTYLE DREYFUS DREYFUS TELEDYNE
GROWTH LIFESTYLE LIFESTYLE ALLIANCE FIXED DISCIPLINED
AND INCOME GROWTH INCOME EQUITY INCOME STOCK
FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 79,040 $ 46,437 $ 12,287 $ 186,107 $ 1,748,743 $ 194,787
Employee 303,146 193,229 50,999 715,924 2,060,043 660,058
Investment income
(loss):
Net gain (loss)
from interest in
Allegheny Ludlum
Corporation
Master Trusts 237,100 92,517 16,687 (436,144) 2,131,558 714,305
Net gain (loss)
from interest in
registered
investment
companies -- -- -- -- -- 539,236
Net gain from
interest in
common collective
trusts 447,790 165,195 29,974 -- -- --
Interest income -- -- -- -- -- --
Other income (loss) 2 12 (14) 2,068 (148) 2,014
Interfund transfers 224,638 286,786 233,801 (1,993,467) (50,215) (120,595)
-----------------------------------------------------------------------------------------------------------
Total additions 1,291,716 784,176 343,734 (1,525,512) 5,889,981 1,989,805
Deductions:
Distributions to
participants 142,660 37,367 12,347 254,718 1,944,376 268,527
-----------------------------------------------------------------------------------------------------------
Net additions
(deductions) 1,149,056 746,809 331,387 (1,780,230) 3,945,605 1,721,278
Net assets available
for benefits at
beginning of year 3,395,294 890,297 299,973 10,447,614 32,302,520 5,119,259
-----------------------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 4,544,350 $ 1,637,106 $ 631,360 $ 8,667,384 $ 36,248,125 $ 6,840,537
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
COMPANY INTERNATIONAL COMPANY
VALUE VALUE STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
--------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 108,429 $ 27,702 $ 192,191 $ -- $ 2,595,723
Employee 368,202 116,677 428,865 -- 4,897,143
Investment income
(loss):
Net gain (loss)
from interest in
Allegheny Ludlum
Corporation
Master Trusts -- -- (776,221) -- 1,979,802
Net gain (loss)
from interest in
registered
investment
companies (247,964) 61,006 -- -- 352,278
Net gain from
interest in
common collective
trusts -- -- -- -- 642,959
Interest income -- -- -- 246,535 246,535
Other income (loss) 598 178 471 4 5,185
Interfund transfers (621,794) (126,367) 2,020,274 146,939 --
--------------------------------------------------------------------------------------
Total additions (392,529) 79,196 1,865,580 393,478 10,719,625
Deductions:
Distributions to
participants 83,299 11,941 294,274 65,978 3,115,487
--------------------------------------------------------------------------------------
Net additions
(deductions) (475,828) 67,255 1,571,306 327,500 7,604,138
Net assets available
for benefits at
beginning of year 2,939,535 586,660 7,256,888 2,607,131 65,845,171
--------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 2,463,707 $ 653,915 $ 8,828,194 $ 2,934,631 $ 73,449,309
=======================================================================================
</TABLE>
See accompanying notes.
65
<PAGE> 66
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1997
<TABLE>
<CAPTION>
DREYFUS
LIFESTYLE DREYFUS DREYFUS DREYFUS
GROWTH LIFESTYLE LIFESTYLE ALLIANCE FIXED DISCIPLINED
AND INCOME GROWTH INCOME EQUITY INCOME STOCK
FUND FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 68,380 $ 28,734 $ 8,998 $ 201,521 $ 1,975,995 $ 152,920
Employee 241,851 114,142 37,916 751,807 2,098,166 509,756
Investment income:
Net gain from
interest in
Allegheny Ludlum
Corporation
Master Trusts 570,237 134,743 25,255 2,223,395 2,075,054 --
Net gain from
interest in
registered
investment
companies -- -- -- -- -- 979,736
Interest income -- -- -- -- -- --
Interfund transfers (95,907) 362,740 119,771 (511,598) (3,241,130) 1,203,696
-----------------------------------------------------------------------------------------------------------
Total additions 784,561 640,359 191,940 2,665,125 2,908,085 2,846,108
Deductions:
Distributions to
participants 82,209 5,555 1,177 145,776 1,872,554 65,210
-----------------------------------------------------------------------------------------------------------
Net additions 702,352 634,804 190,763 2,519,349 1,035,531 2,780,898
Net assets available
for benefits at
beginning of year 2,692,942 255,493 109,210 7,928,265 31,266,989 2,338,361
-----------------------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 3,395,294 $ 890,297 $ 299,973 $ 10,447,614 $ 32,302,520 $ 5,119,259
===========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
DREYFUS
SMALL DREYFUS
COMPANY INTERNATIONAL COMPANY
VALUE VALUE STOCK PARTICIPANT
FUND FUND FUND LOANS TOTAL
----------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
Additions:
Contributions:
Employer $ 91,965 $ 27,724 $ 229,621 $ -- $ 2,785,858
Employee 316,135 110,902 503,062 -- 4,683,737
Investment income:
Net gain from
interest in
Allegheny Ludlum
Corporation
Master Trusts -- -- 847,855 -- 5,876,539
Net gain from
interest in
registered
investment
companies 393,809 27,398 -- -- 1,400,943
Interest income -- -- -- 197,613 197,613
Interfund transfers 1,668,466 231,424 (182,497) 445,035 --
----------------------------------------------------------------------------------
Total additions 2,470,375 397,448 1,398,041 642,648 14,944,690
Deductions:
Distributions to
participants 29,156 19,175 314,277 -- 2,535,089
----------------------------------------------------------------------------------
Net additions 2,441,219 378,273 1,083,764 642,648 12,409,601
Net assets available
for benefits at
beginning of year 498,316 208,387 6,173,124 1,964,483 53,435,570
----------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $ 2,939,535 $ 586,660 $ 7,256,888 $ 2,607,131 $ 65,845,171
==================================================================================
</TABLE>
See accompanying notes.
66
<PAGE> 67
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Investments are stated at fair value determined as follows:
The Company Stock Fund consists of investments in Allegheny Teledyne
Incorporated (Allegheny Teledyne) common stock and is stated at the
quoted market price as listed on the New York Stock Exchange.
The Fixed Income Fund is stated at cost plus net earnings, which
approximates market value and is provided by the Plan's trustee.
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 generally accepted
accounting principles requires management to make estimates and assumptions 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 purpose of the Allegheny Ludlum Corporation Personal Retirement and 401(k)
Savings Account Plan (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. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974. ALC is a wholly owned subsidiary of Allegheny Teledyne.
ALC, the Plan Sponsor, contributes to the Plan fifty cents per hour worked per
eligible 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 set aside up to 18%
of eligible wages each pay period through payroll deductions subject to Internal
Revenue Service (IRS) limitations.
67
<PAGE> 68
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
The investment options provided by the Plan are as follows:
Dreyfus Lifestyle Growth and Income Fund--invests in equity and fixed
income securities and may invest up to 15% of its assets in international
securities.
Dreyfus Lifestyle Growth Fund--invests in equity and fixed income
securities and may invest up to 25% of its assets in international
securities.
Dreyfus Lifestyle Income Fund--consists of common stock, fixed income
securities and short-term money market instruments.
Alliance Equity Fund--consists of common stock.
Fixed Income Fund--consists of amounts invested in insurance companies or
other financial institutions under an agreement with repayment in full,
plus interest at a fixed rate.
Allegheny Teledyne Disciplined Stock Fund--invests in equity securities
and may invest up to 20% of its assets in high quality money market
accounts. Effective November 1, 1998, the Dreyfus Disciplined Stock Fund
changed from a mutual fund to a separate account structure, and will be
known as the Allegheny Teledyne Disciplined Stock Fund. Investment
objective and strategy remain the same.
Dreyfus Small Company Value Fund--invests primarily in small company
equities, and to a limited degree, in bonds and money market instruments.
Dreyfus International Value Fund--consists of equity securities of
foreign company equities, and to a limited degree, in bonds and money
market instruments.
Company Stock Fund--consists of Allegheny Teledyne common stock.
Separate accounts are maintained by the Plan Sponsor for each participating
employee. Trustee fees and asset management fees charged 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.
A participant may make an "in-service" withdrawal of all or part of the value of
his account attributable to employer contributions. Contributions made to an
employee's 401(k) account may
68
<PAGE> 69
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
2. DESCRIPTION OF THE PLAN (CONTINUED)
be withdrawn at age 59-1/2, or in the event of financial hardship prior to age
59-1/2. Upon termination of employment or retirement, a participant is fully
entitled to his account balance.
In the event that the Plan is completely or partially terminated or ALC
completely discontinues contributions, all amounts credited to the accounts of
the affected participants shall immediately become fully vested and
nonforfeitable.
Further information about the Plan, including eligibility, vesting,
contributions and withdrawals, is contained in the Summary Plan Description and
related contracts. Copies of this Summary Plan Description are available from
the Allegheny Teledyne Personnel and Compensation Committee.
3. INVESTMENTS
As of December 31, 1998, the Plan is a participant in the ALC Fixed Income
Master Trust, the ALC Alliance Equity Master Trust, the ALC ATI Common Stock
Master Trust, and the ALC Dreyfus Disciplined Stock Fund Master Trust. During
1998, the Dreyfus Lifestyle Growth and Income Fund, the Dreyfus Lifestyle Growth
Fund, and the Dreyfus Lifestyle Income Fund were reclassified as common
collective trusts from master trusts, while the Allegheny Teledyne Disciplined
Stock Fund was reclassified to a master trust from the Dreyfus Disciplined Stock
Fund, a registered investment company. The Plan's participating interests in
these master trusts as of December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
ALC Fixed Income Master Trust 28.63% 23.88%
ALC Alliance Equity Master Trust 18.34% 17.36%
ALC ATI Common Stock Master Trust 27.44% 20.38%
ALC Lifestyle Growth Fund Master Trust --% 17.40%
ALC Lifestyle Income Fund Master Trust --% 16.43%
ALC Lifestyle Growth and Income Fund Master Trust --% 14.93%
Allegheny Teledyne Disciplined Stock Fund Master Trust 15.84% --%
</TABLE>
69
<PAGE> 70
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 ALC Fixed Income Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------------------------
<S> <C> <C>
Guaranteed investment contracts:
Confederation Life Insurance Company $ 2,575 $ 29,118
Continental Assurance Company -- 6,718,924
John Hancock Life Insurance Company 5,100,000 2,600,000
Life Insurance Company of Virginia -- 8,725,219
New York Life Insurance Company 13,258,607 15,169,828
Pacific Mutual Life Insurance Company 6,167,430 5,793,190
Peoples Security Life Insurance Company 10,367,671 11,038,629
Prudential Insurance Company -- 6,144,220
Southland Life Insurance Company 10,752,479 16,288,645
Transamerica Occidental 11,296,810 10,936,663
Sun America, Inc. 3,000,000 --
Business Mens Assurance Company of America 2,505,536 --
Protective Life Insurance Company 3,002,482 --
Safeco Life Insurance 3,000,000 --
----------------------------------------
68,453,590 83,444,436
Synthetic contracts:
Caisse des Depots et Consignations 12,865,126 3,879,321
Peoples Security Life Insurance Company 2,968,196 2,948,698
Transamerica Occidental 13,859,523 13,865,850
Union Bank of Switzerland 5,935,391 5,937,712
Westdeutsche Landesbank Girozentrale 16,952,480 13,727,581
----------------------------------------
52,580,716 40,359,162
Temporary short-term investments 4,248,515 10,765,309
Accrued interest receivable 1,443,795 733,753
Other payables (88,501) (6,169)
----------------------------------------
Total net assets $ 126,638,115 $ 135,296,491
========================================
</TABLE>
70
<PAGE> 71
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
In May 1997, the ALC Fixed Income Master Trust received approximately $4,500,000
related to the Confederation Life Insurance Company Guaranteed Investment
Contract in accordance with the liquidation plan. Management is unable to
determine additional amounts, if any, that will be received by the ALC Fixed
Income Master Trust.
The composition of net assets of the ALC Alliance Equity Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Investment in registered investment companies:
Alliance Equity Fund S.A. #4 (6,966.434 and 865.194 shares,
respectively) $ 47,408,255 $ 60,199,619
Cash 117 90
Operating payables (26,007) (10,341)
--------------------------------------------
Total net assets $ 47,382,365 $ 60,189,368
============================================
</TABLE>
The composition of net assets of the ALC ATI Common Stock Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Allegheny Teledyne Incorporated common stock (1,544,975 and 1,347,732
shares, respectively) $ 31,575,427 $ 34,872,566
Receivables 196,291 4,527
Short-Term Investment Fund 450,324 738,595
Operating payables (10,492) (822)
--------------------------------------------
Total net assets $ 32,211,550 $ 35,614,866
============================================
</TABLE>
71
<PAGE> 72
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
The composition of assets of the ALC Lifestyle Growth Fund Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Dreyfus Lifestyle Growth Fund $ -- $ 5,117,053
Operating payables -- (5)
--------------------------------------------
$ -- $ 5,117,048
============================================
</TABLE>
The composition of assets of the ALC Lifestyle Income Fund Master Trust at
December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Dreyfus Lifestyle Income Fund $ -- $ 1,825,632
Operating payables -- (2)
--------------------------------------------
$ -- $ 1,825,630
============================================
</TABLE>
The composition of assets of the ALC Lifestyle Growth and Income Fund Master
Trust at December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Dreyfus Lifestyle Growth and Income Fund $ -- $22,740,752
Receivables -- 56
============================================
$ -- $22,740,808
============================================
</TABLE>
The composition of net assets of the Allegheny Teledyne Disciplined Stock Fund
Master Trust at December 31, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------------------------------
<S> <C> <C>
Corporate common stock $41,699,413 $ --
Noninterest-bearing cash (5,217) --
Receivables 58,761 --
Short-Term Investment Fund 1,499,311 --
Operating payables (51,809) --
--------------------------------------------
Total net assets $43,200,459 $ --
============================================
</TABLE>
72
<PAGE> 73
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:
<TABLE>
<CAPTION>
ALC FIXED INCOME MASTER ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER
TRUST TRUST TRUST
----------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
----------------------------------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment income (loss):
Interest income (loss) $ 8,359,937 $ 8,694,877 $ -- $ -- $ (113) $ (1,554)
Realized (loss) gain
on sale of investments -- -- -- -- (620,712) 1,835,342
Unrealized
(depreciation)
appreciation in fair
value of investments -- -- -- -- (5,308,345) 2,318,151
Dividends -- -- -- -- 934,022 837,662
Net (loss) gain,
registered
investment companies -- -- (2,106,215) 13,819,313 -- --
Net gain, common
collective trusts 408,717 468,281 -- -- 41,352 73,411
Other income 1,147 1,343 -- -- -- --
Administrative expenses (191,163) (189,938) (237,876) (211,873) (24,196) (27,286)
Transfers (17,237,014) (15,337,329) (10,462,912) (6,981,034) 1,574,676 (4,894,605)
----------------------------------------------------------------------------------------------
Net increase (decrease) (8,658,376) (6,362,766) (12,807,003) 6,626,406 (3,403,316) 141,121
Total net assets at
beginning of year 135,296,491 141,659,257 60,189,368 53,562,962 35,614,866 35,473,745
----------------------------------------------------------------------------------------------
Total net assets at end
of year $126,638,115 $135,296,491 $47,382,365 $60,189,368 $32,211,550 $35,614,866
==============================================================================================
</TABLE>
73
<PAGE> 74
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
ALC LIFESTYLE GROWTH ALLEGHENY TELEDYNE
ALC LIFESTYLE GROWTH ALC LIFESTYLE INCOME FUND AND INCOME FUND MASTER DISCIPLINED STOCK
FUND MASTER TRUST MASTER TRUST TRUST FUND MASTER TRUST
-------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------------------
1998* 1997 1998* 1997 1998* 1997 1998 1997
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest income (loss) $ -- $ -- $ -- $ 105 $ -- $ 1 $ (925) $ --
Realized gain on sale
of investments -- -- -- -- -- -- 107,964 --
Unrealized
appreciation in fair
value of investments -- -- -- -- -- -- 4,322,009 --
Dividends -- -- -- -- -- -- 87,868 --
Net gain, common
collective trusts 514,556 882,650 109,828 152,034 1,558,031 3,853,009 26,165 --
Other loss (14) -- -- -- (10) -- -- --
Administrative expenses (94) (116) (34) (38) (229) -- (51,809) --
Transfers (5,631,496) 2,285,394 (1,935,424) 1,083,338 (24,298,600) 838,793 38,709,187 --
-------------------------------------------------------------------------------------------------------
Net increase (decrease) (5,117,048) 3,167,928 (1,825,630) 1,235,439 (22,740,808) 4,691,803 43,200,459 --
Total net assets at
beginning of year 5,117,048 1,949,120 1,825,630 590,191 22,740,808 18,049,005 -- --
-------------------------------------------------------------------------------------------------------
Total net assets at end
of year $ -- $5,117,048 $ -- $1,825,630 $ -- $22,740,808 $43,200,459 $ --
=======================================================================================================
</TABLE>
* Partial year only. Reclassed as common collective trusts.
The average yield for 1998 and 1997 for the ALC Fixed Income Master Trust was
6.55% and 6.57%, respectively. Credited interest rates on the contracts ranged
from 5.13% to 8.18% and 5.60% to 8.18% for 1998 and 1997, respectively, and are
determined at contract inception.
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
Ludlum Corporation Master Trusts on the statement of changes in net assets
available for benefits.
74
<PAGE> 75
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 of 1986 (the Code) and, therefore, the related
trust is exempt from taxation. Once qualified, the Plan is required to operate
in conformity with the Code to maintain its qualification. The plan
administrator believes that the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan is
qualified and the related trust is tax-exempt.
5. TRANSACTIONS WITH PARTIES-IN-INTEREST
Investment fees paid during the year for services rendered were based on
customary and reasonable rates for such services.
6. YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
Year 2000 dates. The Plan Sponsor is taking a two-phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Internal resources are being utilized to upgrade or modify existing
software applications, and test the software and equipment for the Year 2000
modifications. The Plan Sponsor believes that it has substantially completed
this phase of the project. Costs associated with modifying software and
equipment are not estimated to be significant and will be paid by the Plan
Sponsor.
For the second phase of the project, plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own Year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they expect to be Year 2000 compliant by mid-1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the Year 2000 problem could have a material
impact on the operations of the Plan. Plan management has not developed a
contingency plan because they are confident that all material systems will be
Year 2000 ready.
7. SUBSEQUENT EVENT
Effective July 1, 1999, the Plan will no longer offer the Dreyfus Small Company
Value Fund as an investment option. The Dreyfus Emerging Leaders Fund will be
offered to participants as a new investment plan as of this date.
75
<PAGE> 76
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
EIN 25-1364894 Plan 005
Line 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
DESCRIPTION UNITS/SHARES COST VALUE CURRENT VALUE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Collective Trusts
- ------------------------
Dreyfus Lifestyle Growth and Income Fund* 290,831.764 shares $4,092,946 $ 4,543,488
Dreyfus Lifestyle Growth Fund* 92,023.631 shares 1,458,356 1,633,809
Dreyfus Lifestyle Income Fund* 48,113.299 shares 607,095 636,848
--------------------------------------------
Total Common Collective Trusts 6,158,397 6,814,145
Registered Investment Companies
- -------------------------------
Dreyfus Small Company Value Fund*:
Interest in Dreyfus Small Company Value Fund 125,042.004 shares 2,444,924 2,469,580
Dreyfus International Value Fund*:
Interest in Dreyfus International Value Fund 42,872.062 shares 656,677 649,083
--------------------------------------------
Total Registered Investment Companies 3,101,601 3,118,663
Participant loans 8.75% to 9.50% -- 2,933,000
--------------------------------------------
$9,259,998 $12,865,808
============================================
</TABLE>
*Party-in-interest
76
<PAGE> 77
Allegheny Ludlum Corporation
Personal Retirement and 401(k) Savings Account Plan
EIN 25-1364894 Plan 005
Line 27d--Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT
VALUE OF
ASSETS ON NET
PURCHASE SELLING COST OF TRANSACTION GAIN
DESCRIPTION PRICE PRICE ASSET DATE (LOSS)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Type (i) Transactions
- ---------------------
Dreyfus Disciplined Stock Fund $ -- $5,863,898 $5,316,402 $5,863,898 $547,496
Dreyfus Lifestyle Growth and Income Fund 3,918,436 -- 3,918,436 3,918,436 --
Type (iii) Transactions
- -----------------------
Dreyfus Disciplined Stock Fund 3,175,393 -- 3,175,393 3,175,393 --
Dreyfus Disciplined Stock Fund - 8,827,353 8,026,593 8,827,353 800,760
Dreyfus Lifestyle Growth and Income Fund 4,418,302 -- 4,418,302 4,418,302 --
Dreyfus Lifestyle Growth and Income Fund -- 322,604 325,355 322,604 (2,751)
</TABLE>
There were no Type (ii) or (iv) transactions during the year ended December 31,
1998.
77
<PAGE> 78
Audited Financial Statements
Teledyne
401(k) Plan
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
78
<PAGE> 79
Teledyne
401(k) Plan
Audited Financial Statements
Years ended December 31, 1998 and 1997
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors .......................................................80
Audited Financial Statements
Statements of Net Assets Available for Benefits ......................................81
Statement of Changes in Net Assets Available for Benefits, with Fund Information,
Year ended December 31, 1998 ......................................................82
Statement of Changes in Net Assets Available for Benefits, with Fund Information,
Year ended December 31, 1997 ......................................................83
Notes to Financial Statements ........................................................84
Supplemental Schedules
Line 27a--Schedule of Assets Held for Investment Purposes.............................90
Line 27d--Schedule of Reportable Transactions.........................................91
</TABLE>
79
<PAGE> 80
Report of Independent Auditors
Personnel and Compensation Committee
Allegheny Teledyne Incorporated
We have audited the accompanying statements of net assets available for benefits
of the Teledyne 401(k) Plan as of December 31, 1998 and 1997, 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 generally accepted auditing
standards. 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, information regarding the Plan's net assets available for
benefits at December 31, 1998 and 1997, and the changes therein for the years
then ended, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1998, and reportable transactions for
the year then ended, are presented for the purpose of additional analysis and
are not a required part of the basic 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 Fund Information in the statements of changes in net assets available
for benefits is presented for purposes of additional analysis rather than to
present the changes in net assets available for benefits of each fund. The
supplemental schedules and Fund Information have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
June 11, 1999
80
<PAGE> 81
Teledyne
401(k) Plan
Statements of Net Assets Available for Benefits
(000s Omitted)
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
------------------------
<S> <C> <C>
Investments at fair value:
Interest in collective investment fund:
Income Accumulation Fund $ 18,689 $ 14,695
Growth Stock Fund -- 21,453
-----------------------
Total interest in collective investment funds 18,689 36,148
Mutual funds:
Pioneer Growth Fund 23,626 --
Teledyne custom funds:
Teledyne Bond Index Fund 9,266 5,475
Teledyne Country Selector Fund 5,793 4,450
Allegheny Teledyne Stock Fund 15,936 18,329
Teledyne S&P 500 Stock Fund 109,171 78,949
Teledyne LifePath 2000 Fund 2,696 2,067
Teledyne LifePath 2010 Fund 7,845 5,904
Teledyne LifePath 2020 Fund 30,589 24,741
Teledyne LifePath 2030 Fund 7,120 4,967
Teledyne LifePath 2040 Fund 6,623 4,298
-----------------------
Total Teledyne custom funds 195,039 149,180
Loans receivable from participants 7,002 5,385
-----------------------
Net assets available for benefits $244,356 $190,713
=======================
</TABLE>
See accompanying notes.
81
<PAGE> 82
Teledyne
401(k) Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1998
(000s Omitted)
<TABLE>
<CAPTION>
TELEDYNE TELEDYNE TELEDYNE
INCOME GROWTH PIONEER BOND COUNTRY ALLEGHENY S&P 500 TELEDYNE
ACCUMULATION STOCK GROWTH INDEX SELECTOR TELEDYNE STOCK LIFEPATH
FUND FUND FUND FUND FUND STOCK FUND FUND 2000 FUND
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions:
Interest income $ 982 $ -- $ -- $ -- $ -- $ -- $ -- $ --
Net realized/
unrealized
appreciation
(depreciation)
in fair value of
investments -- 261 1,614 638 903 (3,340) 23,350 223
Contributions from
participants 2,476 4,585 238 1,412 1,162 2,348 11,699 339
Contributions from
employer 693 1,156 26 346 281 653 2,768 87
Rollover
contributions 116 217 11 137 48 62 419 10
Other, net 255 (16) -- 12 (7) (6) (72) 4
Interfund transfers 2,205 (25,571) 21,798 1,851 (478) (736) (412) 257
--------- --------- --------- --------- --------- --------- --------- ---------
Total additions 6,727 (19,368) 23,687 4,396 1,909 (1,019) 37,752 920
Deductions:
Distributions to
participants or
their beneficiaries 2,562 1,906 61 556 464 1,171 6,506 286
Transfers of plan
assets 171 179 -- 49 102 203 1,024 5
--------- --------- --------- --------- --------- --------- --------- ---------
Total deductions 2,733 2,085 61 605 566 1,374 7,530 291
--------- --------- --------- --------- --------- --------- --------- ---------
Net additions
(deductions) 3,994 (21,453) 23,626 3,791 1,343 (2,393) 30,222 629
Net assets available
for benefits at
beginning of year 14,695 21,453 -- 5,475 4,450 18,329 78,949 2,067
--------- --------- --------- --------- --------- --------- --------- ---------
Net assets available
for benefits at
end of year $ 18,689 $ -- $ 23,626 $ 9,266 $ 5,793 $ 15,936 $ 109,171 $ 2,696
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
TELEDYNE TELEDYNE TELEDYNE TELEDYNE
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LOAN SWEEP
2010 FUND 2020 FUND 2030 FUND 2040 FUND FUND ACCOUNT TOTAL
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Interest income $ -- $ -- $ -- $ -- $ 549 $ -- $ 1,531
Net realized/
unrealized
appreciation
(depreciation)
in fair value of
investments 944 4,703 1,185 1,178 -- (13) 31,646
Contributions from
participants 1,156 3,022 1,098 1,216 -- -- 30,751
Contributions from
employer 267 771 283 308 -- -- 7,639
Rollover
contributions 29 187 87 87 -- -- 1,410
Other, net 46 (27) (11) (4) -- (1) 173
Interfund transfers 27 (1,024) 155 87 1,816 25 --
--------- --------- --------- --------- --------- --------- ---------
Total additions 2,469 7,632 2,797 2,872 2,365 11 73,150
Deductions:
Distributions to
participants or
their beneficiaries 386 1,482 553 425 748 11 17,117
Transfers of plan
assets 142 302 91 122 -- -- 2,390
--------- --------- --------- --------- --------- --------- ---------
Total deductions 528 1,784 644 547 748 11 19,507
--------- --------- --------- --------- --------- --------- ---------
Net additions
(deductions) 1,941 5,848 2,153 2,325 1,617 -- 53,643
Net assets available
for benefits at
beginning of year 5,904 24,741 4,967 4,298 5,385 -- 190,713
--------- --------- --------- --------- --------- --------- ---------
Net assets available
for benefits at
end of year $ 7,845 $ 30,589 $ 7,120 $ 6,623 $ 7,002 $ -- $ 244,356
========= ========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes.
82
<PAGE> 83
Teledyne
401(k) Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year ended December 31, 1997
(000s Omitted)
<TABLE>
<CAPTION>
TELEDYNE TELEDYNE
INCOME GROWTH BOND COUNTRY ALLEGHENY TELEDYNE TELEDYNE
ACCUMULATION STOCK INDEX SELECTOR TELEDYNE S&P 500 LIFEPATH
FUND FUND FUND FUND STOCK FUND STOCK FUND 2000 FUND
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Interest income $ 830 $ -- $ -- $ -- $ -- $ -- $ --
Net realized/
unrealized
appreciation
(depreciation)
in fair value of
investments -- 813 451 (164) 2,069 18,507 177
Contributions from
participants 2,408 5,409 1,268 1,391 2,434 10,475 387
Contributions from
employer 346 555 147 144 280 1,050 41
Rollover
contributions 495 417 117 84 130 713 5
Other, net 289 82 -- (2) 10 (5) (2)
Interfund transfers 784 (3,027) (197) (738) 589 1,280 (48)
-------- -------- -------- -------- -------- -------- --------
Total additions 5,152 4,249 1,786 715 5,512 32,020 560
Deductions:
Distributions to
participants or
their beneficiaries 2,505 1,161 432 378 1,726 4,381 175
Transfers of plan
assets 49 92 5 8 83 103 9
-------- -------- -------- -------- -------- -------- --------
Total deductions 2,554 1,253 437 386 1,809 4,484 184
-------- -------- -------- -------- -------- -------- --------
Net additions
(deductions) 2,598 2,996 1,349 329 3,703 27,536 376
Net assets available
for benefits at
beginning of year 12,097 18,457 4,126 4,121 14,626 51,413 1,691
-------- -------- -------- -------- -------- -------- --------
Net assets available
for benefits at
end of year $ 14,695 $ 21,453 $ 5,475 $ 4,450 $ 18,329 $ 78,949 $ 2,067
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
TELEDYNE TELEDYNE TELEDYNE TELEDYNE
LIFEPATH LIFEPATH LIFEPATH LIFEPATH LOAN SWEEP
2010 FUND 2020 FUND 2030 FUND 2040 FUND FUND ACCOUNT TOTAL
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Interest income $ -- $ -- $ -- $ -- $ 372 $ 1 $ 1,203
Net realized/
unrealized
appreciation
(depreciation)
in fair value of
investments 732 3,888 810 665 -- (10) 27,938
Contributions from
participants 1,170 3,089 1,048 948 -- -- 30,027
Contributions from
employer 113 343 120 111 -- -- 3,250
Rollover
contributions 68 150 69 69 -- -- 2,317
Other, net (7) 50 (1) (1) -- (8) 405
Interfund transfers (75) (1,105) (10) 473 2,054 20 --
-------- -------- -------- -------- -------- -------- ---------
Total additions 2,001 6,415 2,036 2,265 2,426 3 65,140
Deductions:
Distributions to
participants or
their beneficiaries 320 1,563 256 158 524 3 13,582
Transfers of plan
assets 5 80 -- -- -- -- 434
-------- -------- -------- -------- -------- -------- ---------
Total deductions 325 1,643 256 158 524 3 14,016
-------- -------- -------- -------- -------- -------- ---------
Net additions
(deductions) 1,676 4,772 1,780 2,107 1,902 -- 51,124
Net assets available
for benefits at
beginning of year 4,228 19,969 3,187 2,191 3,483 -- 139,589
-------- -------- -------- -------- -------- -------- ---------
Net assets available
for benefits at
end of year $ 5,904 $ 24,741 $ 4,967 $ 4,298 $ 5,385 $ -- $ 190,713
======== ======== ======== ======== ======== ======== =========
</TABLE>
See accompanying notes.
83
<PAGE> 84
Teledyne
401(k) Plan
Notes to Financial Statements
December 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements of the Teledyne 401(k) Plan ("the Plan")
have been prepared on an accrual basis.
VALUATION OF INVESTMENTS
The Teledyne custom funds are stated at their unit values established for each
fund at each valuation date, which fluctuate with the value of the assets in the
fund. Units of the Allegheny Teledyne Stock Fund are valued principally on the
basis of the market value of the Allegheny Teledyne Incorporated ("Allegheny
Teledyne") common stock in which it invests. Although the performance of the
Allegheny Teledyne Stock Fund is based on the performance of the underlying
stock, the value of a fund unit is different from the price of one share of the
stock, which is stated at the quoted market price as listed on the New York
Stock Exchange. All other funds of the Plan are stated at their net asset value,
based on the quoted market prices of the securities held in such funds on
applicable exchanges.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions 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 Plan is a defined contribution plan available to employees of eligible
Allegheny Teledyne Incorporated subsidiaries (primarily Teledyne Industries,
Inc.) and divisions ("companies"). The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974.
Participants can defer between 1% and 15%, subject to Internal Revenue Service
limitations, of their eligible wages and contribute them to the Plan. Qualifying
employee contributions are partially matched by Allegheny Teledyne up to a
maximum of $1,000 annually for each participant. Prior to January 1, 1998, the
maximum match was $300 annually per participant.
84
<PAGE> 85
Teledyne
401(k) 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 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.
Active employees can borrow up to 50% of their vested account balances. The loan
amounts are further limited to a minimum of $500 and a maximum of $50,000, and
an employee can have no more than one loan outstanding at any given time.
Interest rates are determined based on commercially accepted criteria, and
payment schedules vary based on the type of the loan. Loans may be prepaid in
full or in part at any time. The participant may choose the loan repayment
period which should not exceed five years, except primary residence loans, which
can be repaid over periods up to 180 months. Payments are generally made by
payroll deductions.
In the event that the Plan is partially or completely terminated, or the plan
sponsor permanently discontinues making contributions, all amounts credited to
the accounts of affected participants become fully vested and nonforfeitable.
Further information about the Plan, including eligibility, vesting,
contributions, and withdrawals, is contained in the Summary Plan Description.
Copies of this Summary Plan Description are available from the Allegheny
Teledyne Personnel and Compensation Committee.
3. INVESTMENTS
Plan participants can invest their contributions in any or all of the eleven
investment programs managed by the plan trustee listed below:
Income Accumulation Fund: This collective investment fund invests in
U.S. Government and agency securities, investment contracts, and other
short-term, fixed-income securities. The objective of this fund is to
provide a stable level of income without significant principal
fluctuations.
85
<PAGE> 86
Teledyne
401(k) Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
Pioneer Growth Fund: The objective of this mutual fund is to seek
appreciation of capital by investing in common stocks, preferred
stocks, bonds and convertible securities. In selecting its investments,
this fund seeks companies that have competitive strengths and benefit
from industry dynamics and broader trends. This fund also seeks to
invest in companies in a variety of industries in order to reduce its
overall exposure to investment and market risks. This fund may also
invest in the securities of foreign issuers. All balances in the Growth
Stock Fund, a collective investment fund, were automatically
transferred to this fund on December 18, 1998.
Teledyne Bond Index Fund: This Teledyne custom fund invests in a
diversified portfolio of high-quality U.S. Government and
investment-grade corporate bonds. The objective of this fund is to earn
moderate returns with a moderate level of risk.
Teledyne Country Selector Fund: This Teledyne custom fund invests in
international stocks from up to 20 countries, after first determining
the appropriate allocation among the countries. The fund seeks high
returns by selecting the mix of foreign equities believed to offer the
best reward given the overall fund risk.
Allegheny Teledyne Stock Fund: This Teledyne custom fund invests
principally in Allegheny Teledyne stock. The rate of return is based on
the performance of Allegheny Teledyne stock and dividends received.
Teledyne S&P 500 Stock Fund: This Teledyne custom fund invests in a
large portfolio of stocks, represented in the Standard and Poor's 500
Composite Index, and emphasizes long-term performance. There is no
fixed rate of return; the fund is designed to conform as closely as
possible to the performance of the Standard and Poor's 500 Composite
Index, and may increase or decrease in value.
86
<PAGE> 87
Teledyne
401(k) Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
Teledyne LifePath Funds: There are five Teledyne LifePath Funds:
Teledyne LifePath 2000, Teledyne LifePath 2010, Teledyne LifePath 2020,
Teledyne LifePath 2030, and Teledyne LifePath 2040. The numbers in the
names refer to the target date of the fund. These Teledyne custom funds
invest in a mix of U.S. and international stocks, bonds, and money
market instruments. Each fund adjusts its mix of investments based on
the expected risk and return of the different asset classes in which
they invest. The objective of each fund is to maximize returns while
maintaining a level of risk appropriate to its target date.
The nearer the target date, the more conservatively the fund invests.
Teledyne custom funds are unregistered separate accounts created for the Plan.
Although these investments are referred to as funds, they are legally structured
as nonpooled separate accounts. The only investors in these accounts are
participants in the Plan. The funds, with the exception of the Allegheny
Teledyne Stock Fund, invest in underlying collective investment funds, which in
turn invest in securities. The Allegheny Teledyne Stock Fund provides the
participant with a vehicle for investing in Allegheny Teledyne common stock. The
funds or the underlying funds may also invest in cash and use derivatives
(including futures) for nonspeculative purposes which involves certain risks.
All income, dividends, and capital gains are reinvested in the funds and are
reflected in the unit values.
The number of units held by the Teledyne custom funds was as follows as of
December 31, 1998 and 1997 (000s omitted, except for unit information):
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------------
NUMBER OF UNITS FAIR VALUE
-----------------------------------------
<S> <C> <C>
Teledyne Bond Index Fund 743,084.951 $ 9,266
Teledyne Country Selector Fund 485,954.533 5,793
Allegheny Teledyne Stock Fund 948,007.286 15,936
Teledyne S&P 500 Stock Fund 5,203,557.376 109,171
Teledyne LifePath 2000 Fund 210,445.745 2,696
Teledyne LifePath 2010 Fund 548,237.301 7,845
Teledyne LifePath 2020 Fund 1,905,859.634 30,589
Teledyne LifePath 2030 Fund 429,929.649 7,120
Teledyne LifePath 2040 Fund 379,574.551 6,623
---------
$ 195,039
=========
</TABLE>
87
<PAGE> 88
Teledyne
401(k) Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------
NUMBER OF UNITS FAIR VALUE
-----------------------------------------
<S> <C> <C>
Teledyne Bond Index Fund 481,493.555 $ 5,475
Teledyne Country Selector Fund 445,439.210 4,450
Allegheny Teledyne Stock Fund 885,900.624 18,329
Teledyne S&P 500 Stock Fund 4,837,566.418 78,949
Teledyne LifePath 2000 Fund 177,424.209 2,067
Teledyne LifePath 2010 Fund 473,807.864 5,904
Teledyne LifePath 2020 Fund 1,828,633.782 24,741
Teledyne LifePath 2030 Fund 364,961.643 4,967
Teledyne LifePath 2040 Fund 307,459.216 4,298
---------
$ 149,180
=========
</TABLE>
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated December 2, 1997, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code of 1986 ("the Code") and, therefore, the related
trust is exempt from taxation. Once qualified, the Plan is required to operate
in conformity with the Code to maintain its qualification. The plan
administrator believes that the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan is
qualified and the related trust is tax-exempt.
5. YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
The Plan Sponsor has determined that it will be necessary to take certain steps
in order to ensure that the Plan's information systems are prepared to handle
Year 2000 dates. The Plan Sponsor is taking a two-phase approach. The first
phase addresses internal systems that must be modified or replaced to function
properly. Both internal and external resources are being utilized to replace or
modify existing software applications, and test the software and equipment for
the Year 2000 modifications. The Plan Sponsor anticipates substantially
completing this phase of the project by June 1999. Costs associated with
modifying software and equipment are not estimated to be significant and will be
paid by the Plan Sponsor.
88
<PAGE> 89
Teledyne
401(k) Plan
Notes to Financial Statements (continued)
5. YEAR 2000 READINESS DISCLOSURE (UNAUDITED) (CONTINUED)
For the second phase of the project, plan management established formal
communications with its third party service providers to determine that they
have developed plans to address their own Year 2000 problems as they relate to
the Plan's operations. All third party service providers have indicated that
they expect to be Year 2000 compliant by mid-1999. If modification of data
processing systems of either the Plan, the Plan Sponsor, or its service
providers are not completed timely, the Year 2000 problem could have a material
impact on the operations of the Plan. Plan management has not developed a
contingency plan because they are confident that all material systems will be
Year 2000 ready.
6. SUBSEQUENT EVENTS
On January 19, 1999, Allegheny Teledyne announced that it intends to pursue a
course of action that would result in a significant transformation and
reconfiguration of the company during 1999. Assuming legal, tax, financial and
other considerations can be resolved successfully, the anticipated
transformation would include a tax-free spin-off of a new public company and a
public offering of the new company's stock. The new company would be comprised
of four former Teledyne companies in the Aerospace and Electronics Segment. The
four businesses are Electronic Technologies headquartered in Los Angeles,
California; Brown Engineering headquartered in Huntsville, Alabama; Continental
Motors headquartered in Mobile, Alabama; and Cast Parts located in southern
California. Additionally, Allegheny Teledyne will be proceeding simultaneously
with a spin-off and public offering of the Consumer Segment into a freestanding
public company that will be headquartered in the Los Angeles area.
On May 27, 1999, Allegheny Teledyne announced that Northrop Grumman Corporation
has agreed to acquire Ryan Aeronautical for $140 million in cash. A definitive
agreement has been signed which should lead to a closing in the third quarter of
1999. The closing is subject to various regulatory approvals and conditions.
Allegheny Teledyne is currently working with the Plan Trustee to determine how
the proposed transformation and reconfiguration of Allegheny Teledyne will
affect the Plan.
89
<PAGE> 90
Teledyne
401(k) Plan
EIN 95-2282626 Plan 098
Line 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
(000s Omitted)
Except for unit/share information
<TABLE>
<CAPTION>
INVESTMENT DESCRIPTION UNITS/SHARES COST VALUE CURRENT VALUE
- ---------------------------------------------------------- ---------------------- ---------------- -----------------
<S> <C> <C> <C>
Collective Investment Fund:
Income Accumulation Fund* 1,261,659.667 $ 18,689 $ 18,689
Mutual Fund:
Pioneer Growth Fund 1,162,704.932 22,013 23,626
Teledyne Custom Funds:
Teledyne Bond Index Fund* 743,084.951 8,288 9,266
Teledyne Country Selector Fund* 485,954.533 5,167 5,793
Allegheny Teledyne Stock Fund* 948,007.286 14,621 15,936
Teledyne S&P 500 Stock Fund* 5,203,557.376 62,582 109,171
Teledyne LifePath 2000 Fund* 210,445.745 2,355 2,696
Teledyne LifePath 2010 Fund* 548,237.301 6,174 7,845
Teledyne LifePath 2020 Fund* 1,905,859.634 20,842 30,589
Teledyne LifePath 2030 Fund* 429,929.649 5,125 7,120
Teledyne LifePath 2040 Fund* 379,574.551 4,980 6,623
---------------- -----------------
Total Teledyne Custom Funds 130,134 195,039
Participant loans 5.95% to 8.9% -- 7,002
---------------- -----------------
$ 170,836 $ 244,356
================ =================
</TABLE>
* Party-in-interest
90
<PAGE> 91
Teledyne
401(k) Plan
EIN 95-2282626 Plan 098
Line 27d--Schedule of Reportable Transactions
Year ended December 31, 1998
(000s Omitted)
<TABLE>
<CAPTION>
CURRENT VALUE
OF ASSETS ON
PURCHASE SELLING TRANSACTION
DESCRIPTION OF ASSETS PRICE PRICE COST OF ASSET DATE NET GAIN
- ------------------------------------------------------------------------------------------------------------------------
Type (iii) transactions
- -----------------------
<S> <C> <C> <C> <C> <C>
Income Accumulation Fund $ 9,202 $ -- $ 9,202 $ 9,202 $ --
Income Accumulation Fund -- 6,200 6,200 6,200 --
Growth Stock Fund 4,958 -- 4,958 4,958 --
Growth Stock Fund -- 26,682 24,914 26,682 1,768
Pioneer Growth Fund 22,056 -- 22,056 22,056 --
Pioneer Growth Fund -- 45 42 45 3
Allegheny Teledyne Stock Fund 6,104 -- 6,104 6,104 --
Allegheny Teledyne Stock Fund -- 5,170 4,208 5,170 962
Teledyne S&P 500 Stock Fund 15,035 -- 15,035 15,035 --
Teledyne S&P 500 Stock Fund -- 8,201 5,237 8,201 2,964
</TABLE>
There were no Type (i), (ii) or (iv) transactions during the year ended December
31, 1998.
91
<PAGE> 92
Audited Financial Statements
Oregon Metallurgical Corporation Savings Plan
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
92
<PAGE> 93
Oregon Metallurgical Corporation Savings Plan
Audited Financial Statements
Years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
CONTENTS
<S> <C>
Report of Independent Auditors ......................................................94
Audited Financial Statements
Statement of Net Assets Available for Benefits, with Fund Information--
December 31, 1998 ................................................................96
Statement of Net Assets Available for Benefits, with Fund Information--
December 31, 1997 ................................................................97
Statement of Changes in Net Assets Available for Benefits, with Fund Information--
Year ended December 31, 1998 .....................................................98
Statement of Changes in Net Assets Available for Benefits, with Fund Information--
Year ended December 31, 1997 .....................................................99
Notes to Financial Statements ......................................................100
Supplemental Schedules
Line 27a--Schedule of Assets Held for Investment Purposes .........................105
Line 27d--Schedule of Reportable Transactions......................................106
Line 27f--Schedule of Nonexempt Transactions.......................................107
</TABLE>
93
<PAGE> 94
Report of Independent Auditors
To the Plan Administrator and Plan Participants
Oregon Metallurgical Corporation Savings Plan
We have audited the accompanying statements of net assets available for benefits
of Oregon Metallurgical Corporation Savings Plan as of December 31, 1998 and
1997, 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 generally accepted auditing
standards. 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, 1998 and 1997, and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedules of assets held for
investment purposes and nonexempt transactions as of December 31, 1998, and
reportable transactions for the year then ended, are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements, but are 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 Fund Information in the statements
of net assets available for benefits and the statements of changes in net assets
available for benefits is presented for purposes of additional analysis rather
than to present the net assets available for benefits and changes in net assets
available for benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the audits
of the financial statements and, in our opinion, are fairly stated in all
material respects in relation to the financial statements taken as a whole.
94
<PAGE> 95
The schedule of assets held for investment purposes that accompanies the Plan's
financial statements does not disclose the historical cost of plan assets held
by the plan trustee because this information is not available. Disclosure of
this information is required by the Department of Labor's Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
May 20, 1999
95
<PAGE> 96
Oregon Metallurgical Corporation Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1998
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
----------------------------------------------------------------------------------------------
U.S. FIXED COMMON INTERNATIONAL REAL
GOVERNMENT BALANCED INCOME STOCK STOCK SPECIAL ESTATE
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 38 $ 133 $ 15,126 $ 283 $ 34,558 $ 712 $ 45,645
Investments, at fair value 305,418 1,941,291 367,893 2,415,140 910,253 2,286,917 731,848
Receivables:
Participants' contribution 3,970 23,726 3,532 30,687 11,049 30,886 9,111
Employer's matching contribution -- -- -- -- -- -- --
Employer's share-per-day
contribution -- -- -- -- -- -- --
Interfund transfers 21,768 9,535 (14,228) 91,050 (58,578) (1,251) (48,296)
----------------------------------------------------------------------------------------------
Total assets 331,194 1,974,685 372,323 2,537,160 897,282 2,317,264 738,308
LIABILITIES
Payable to participants (1,432) (18,536) (3,119) (23,298) (5,654) (17,358) (1,694)
Other 12,754 18,212 (2,663) 20,403 (5,952) 28,822 4,304
----------------------------------------------------------------------------------------------
Net assets available for benefits $ 342,516 $ 1,974,361 $ 366,541 $ 2,534,265 $ 885,676 $ 2,328,728 $ 740,918
==============================================================================================
</TABLE>
<TABLE>
<CAPTION>
NONPARTICIPANT
DIRECTED
--------------
ALLEGHENY
TELEDYNE
INCORPORATED PARTICIPANT
COMMON STOCK LOANS TOTAL
--------------------------------------------
<S> <C> <C> <C>
ASSETS
Cash $ 75,227 $ -- $ 171,722
Investments, at fair value 7,596,884 1,164,764 17,720,408
Receivables:
Participants' contribution -- -- 112,961
Employer's matching contribution 690,595 -- 690,595
Employer's share-per-day
contribution 3,045,790 -- 3,045,790
Interfund transfers -- -- --
--------------------------------------------
Total assets 11,408,496 1,164,764 21,741,476
LIABILITIES
Payable to participants -- -- (71,091)
Other (94,110) -- (18,230)
--------------------------------------------
Net assets available for benefits $ 11,314,386 $ 1,164,764 $ 21,652,155
============================================
</TABLE>
See accompanying notes.
96
<PAGE> 97
Oregon Metallurgical Corporation Savings Plan
Statement of Net Assets Available for Benefits, with Fund Information
December 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
---------------------------------------------------------------------------------------------
U.S. FIXED COMMON INTERNATIONAL REAL
GOVERNMENT BALANCED INCOME STOCK STOCK SPECIAL ESTATE
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value $ 208,315 $1,162,980 $ 315,615 $1,199,560 $ 598,492 $1,499,511 $ 222,199
Receivables:
Participants' contribution 2,248 13,861 4,225 12,955 10,799 19,945 1,531
Employer's matching contribution -- -- -- -- -- -- --
Employer's share-per-day
contribution -- -- -- -- -- -- --
Interfund transfers (1,680) 11,879 (949) 7,326 3,556 2,822 (22,954)
---------------------------------------------------------------------------------------------
Total assets 208,883 1,188,720 318,891 1,219,841 612,847 1,522,278 200,776
LIABILITIES
Payable to participants 13,656 86,008 15,097 114,863 45,376 122,192 10,901
---------------------------------------------------------------------------------------------
Net assets available for benefits $ 195,227 $1,102,712 $ 303,794 $1,104,978 $ 567,471 $1,400,086 $ 189,875
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
NONPARTICIPANT
DIRECTED
--------------
OREGON
METALLURGICAL
CORPORATION PARTICIPANT
STOCK LOANS TOTAL
------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments, at fair value $ 9,336,361 $ 263,943 $14,806,976
Receivables:
Participants' contribution -- -- 65,564
Employer's matching contribution 912,105 -- 912,105
Employer's share-per-day
contribution 3,062,606 -- 3,062,606
Interfund transfers -- -- --
------------------------------------------
Total assets 13,311,072 263,943 18,847,251
LIABILITIES
Payable to participants -- -- 408,093
------------------------------------------
Net assets available for benefits $13,311,072 $ 263,943 $18,439,158
==========================================
</TABLE>
See accompanying notes.
97
<PAGE> 98
Oregon Metallurgical Corporation Savings Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1998
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
--------------------------------------------------------------------------------------------
U.S. FIXED COMMON INTERNATIONAL REAL
GOVERNMENT BALANCED INCOME STOCK STOCK SPECIAL ESTATE
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Additions to net assets
attributed to:
Contributions:
Participants' pretax wage
reductions $ 74,019 $ 361,202 $ 57,060 $ 465,305 $ 197,298 $ 512,954 $ 132,329
Participants' after-tax wage
reductions 1,000 3,929 -- 4,929 4,429 3,429 4,429
Employer's matching
contribution -- -- -- -- -- -- --
Employer's share-per-day
contribution -- -- -- -- -- -- --
Participants' rollovers 3,351 13,912 4,104 18,052 3,633 14,289 32,364
--------------------------------------------------------------------------------------------
Total contributions 78,370 379,043 61,164 488,286 205,360 530,672 169,122
Investment income (loss):
Dividend and interest income 13,690 190,779 25,955 295,345 442 1,142 34,514
Net appreciation (depreciation)
in fair value of investments 2,971 112,914 604 160,366 95,574 314,849 (126,915)
--------------------------------------------------------------------------------------------
Total investment income (loss) 16,661 303,693 26,559 455,711 96,016 315,991 (92,401)
--------------------------------------------------------------------------------------------
Total additions 95,031 682,736 87,723 943,997 301,376 846,663 76,721
Deductions:
Benefits paid to participants (34,000) (104,987) (23,384) (138,452) (60,170) (200,899) (11,085)
--------------------------------------------------------------------------------------------
Increase prior to transfers 61,031 577,749 64,339 805,545 241,206 645,764 65,636
Transfers:
Stock transfer -- -- -- -- -- -- --
Participant directed transfers 86,258 293,900 (1,592) 623,742 76,999 282,878 485,407
--------------------------------------------------------------------------------------------
Net increase (decrease) 147,289 871,649 62,747 1,429,287 318,205 928,642 551,043
Net assets available for benefits:
Beginning of year 195,227 1,102,712 303,794 1,104,978 567,471 1,400,086 189,875
--------------------------------------------------------------------------------------------
End of year $ 342,516 $ 1,974,361 $ 366,541 $ 2,534,265 $ 885,676 $ 2,328,728 $ 740,918
============================================================================================
</TABLE>
<TABLE>
<CAPTION>
NONPARTICIPANT DIRECTED
-------------------------------
ALLEGHENY
OREGON TELEDYNE
METALLURGICAL INCORPORATED
CORPORATION COMMON PARTICIPANT
STOCK STOCK LOANS TOTAL
------------------------------------------------------------
<S> <C> <C> <C> <C>
Additions:
Additions to net assets
attributed to:
Contributions:
Participants' pretax wage
reductions $ -- $ -- $ -- $ 1,800,167
Participants' after-tax wage
reductions -- -- -- 22,145
Employer's matching
contribution -- 690,595 -- 690,595
Employer's share-per-day
contribution -- 3,045,790 -- 3,045,790
Participants' rollovers -- -- -- 89,705
------------------------------------------------------------
Total contributions -- 3,736,385 -- 5,648,402
Investment income (loss):
Dividend and interest income -- 185,828 45,495 793,190
Net appreciation (depreciation)
in fair value of investments 1,264,328 (3,531,108) -- (1,706,417)
------------------------------------------------------------
Total investment income (loss) 1,264,328 (3,345,280) 45,495 (913,227)
------------------------------------------------------------
Total additions 1,264,328 391,105 45,495 4,735,175
Deductions:
Benefits paid to participants (99,090) (832,473) (17,638) (1,522,178)
------------------------------------------------------------
Increase prior to transfers 1,165,238 (441,368) 27,857 3,212,997
Transfers:
Stock transfer (12,524,143) 12,524,143 -- --
Participant directed transfers (1,952,167) (768,389) 872,964 --
------------------------------------------------------------
Net increase (decrease) (13,311,072) 11,314,386 900,821 3,212,997
Net assets available for benefits:
Beginning of year 13,311,072 -- 263,943 18,439,158
------------------------------------------------------------
End of year $ -- $ 11,314,386 $ 1,164,764 $ 21,652,155
============================================================
</TABLE>
See accompanying notes.
98
<PAGE> 99
Oregon Metallurgical Corporation Savings Plan
Statement of Changes in Net Assets Available for Benefits, with Fund Information
Year ended December 31, 1997
<TABLE>
<CAPTION>
PARTICIPANT DIRECTED
-----------------------------------------------------------------------------------------
U.S. FIXED COMMON INTERNATIONAL REAL
GOVERNMENT BALANCED INCOME STOCK STOCK SPECIAL ESTATE
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions:
Additions to net assets attributed
to:
Contributions:
Participants' pretax wage
reductions $ 71,499 $ 322,180 $ 73,143 $ 305,135 $ 173,582 $ 490,465 $ 13,303
Participants' after-tax wage
reductions 560 6,015 -- 5,112 4,832 4,692 945
Employer's matching contribution -- -- -- -- -- -- --
Employer's share-per-day
contribution -- -- -- -- -- -- --
Participants' rollovers 15,510 70,471 27,362 75,135 15,648 54,220 --
-----------------------------------------------------------------------------------------
Total contributions 87,569 398,666 100,505 385,382 194,062 549,377 14,248
Investment income:
Dividend and interest income 8,153 126,210 16,729 103,496 67,748 140,425 10,199
Net appreciation (depreciation)
in fair value of investments 1,343 18,774 7,648 73,008 (24,988) 7,977 3,267
-----------------------------------------------------------------------------------------
Total investment income 9,496 144,984 24,377 176,504 42,760 148,402 13,466
-----------------------------------------------------------------------------------------
Total additions 97,065 543,650 124,882 561,886 236,822 697,779 27,714
Deductions:
Benefits paid to participants (44) (18,987) (594) (7,671) (8,447) (39,895) (6,664)
-----------------------------------------------------------------------------------------
Increase prior to interfund transfers 97,021 524,663 124,288 554,215 228,375 657,884 21,050
Participant directed transfers 7,881 114,746 10,047 146,609 73,953 45,882 168,825
-----------------------------------------------------------------------------------------
Net increase 104,902 639,409 134,335 700,824 302,328 703,766 189,875
Net assets available for benefits:
Beginning of year 90,325 463,303 169,459 404,154 265,143 696,320 --
-----------------------------------------------------------------------------------------
End of year $ 195,227 $ 1,102,712 $ 303,794 $ 1,104,978 $ 567,471 $ 1,400,086 $ 189,875
=========================================================================================
</TABLE>
<TABLE>
<CAPTION>
NONPARTICIPANT
DIRECTED
----------------
OREGON
METALLURGICAL
CORPORATION PARTICIPANT
STOCK LOANS TOTAL
---------------------------------------------
<S> <C> <C> <C>
Additions:
Additions to net assets attributed
to:
Contributions:
Participants' pretax wage
reductions $ -- $ -- $ 1,449,307
Participants' after-tax wage
reductions -- -- 22,156
Employer's matching contribution 912,105 -- 912,105
Employer's share-per-day
contribution 4,489,154 -- 4,489,154
Participants' rollovers -- -- 258,346
---------------------------------------------
Total contributions 5,401,259 -- 7,131,068
Investment income:
Dividend and interest income -- 6,650 479,610
Net appreciation (depreciation)
in fair value of investments 1,139,533 -- 1,226,562
---------------------------------------------
Total investment income 1,139,533 6,650 1,706,172
---------------------------------------------
Total additions 6,540,792 6,650 8,837,240
Deductions:
Benefits paid to participants (139,079) (2,770) (224,151)
---------------------------------------------
Increase prior to interfund transfers 6,401,713 3,880 8,613,089
Participant directed transfers (799,261) 231,318 --
---------------------------------------------
Net increase 5,602,452 235,198 8,613,089
Net assets available for benefits:
Beginning of year 7,708,620 28,745 9,826,069
---------------------------------------------
End of year $ 13,311,072 $ 263,943 $ 18,439,158
=============================================
</TABLE>
See accompanying notes.
99
<PAGE> 100
Oregon Metallurgical Corporation Savings Plan
Notes to Financial Statements
December 31, 1998
1. PLAN DESCRIPTION
The following description of the Oregon Metallurgical Corporation Savings Plan
(the Plan) provides only general information. Participants should refer to the
plan agreement for a more complete description of the Plan's provisions.
GENERAL
On March 24, 1998, the common stock of Oregon Metallurgical Corporation (OREMET
or Company) was acquired by Allegheny Teledyne Incorporated (ATI). Under the
terms of the merger agreement, OREMET shareholders received 1.296 shares of ATI
common stock in a tax-free exchange for each share of OREMET common stock. Other
than the exchange of shares, the acquisition had no effect on the operation or
administration of the Plan.
The Plan is a profit sharing plan covering all employees of the former OREMET
who have completed 120 calendar days of employment. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
CONTRIBUTIONS
Salary Reduction and Matching Contributions--Each year, participants
may contribute up to 15%, subject to Internal Revenue Service
limitations, of pretax annual compensation, as defined in the Plan.
Participants may also contribute amounts representing distributions
from other qualified defined benefit or defined contribution plans. The
Company contributes, based on its return on equity, matching
contributions of up to 3% of participant's salary reduction
contributions.
Equity Contributions--Each year the Company will contribute 1 share of
Company common stock for each day worked by a salaried employee, and
.125 shares of Company common stock for each regular hour worked by
hourly employees subject to collective bargaining agreements. The
equity contributions are subject to an annual limitation.
Company Voluntary Contributions--Each year the Company may contribute a
supplemental Company contribution in an amount to be determined by the
discretion of the Board of Directors. These contributions are subject
to certain provisions of the Plan. There were no Company voluntary
contributions in 1998 and 1997.
100
<PAGE> 101
Oregon Metallurgical Corporation Savings Plan
Notes to Financial Statements (continued)
1. PLAN DESCRIPTION (CONTINUED)
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of (a) the Company's matching, equity and discretionary
contributions and (b) plan earnings. A participant is entitled to the total
benefit which can be provided from the account, subject to the Plan's vesting
provisions.
VESTING
Participants are immediately vested in their salary reduction and equity
contributions plus actual earnings thereon. Vesting in the Company's matching
and discretionary contribution portion of their accounts plus actual earnings
thereon is based on years of continuous service. A participant is 100% vested
after five years of credited service.
LOANS TO PARTICIPANTS
Active participants may borrow from their salary reduction contribution,
voluntary contribution and rollover accounts a minimum of $1,000 up to a maximum
of $50,000 or 50% of their account balance. Loan transactions are treated as a
transfer from (to) the investment fund to (from) the loan fund. Loan payments
are credited to participant directed funds in accordance with participant
contribution instructions. For participants who have not provided the plan
administrators with contribution instructions, loan payments are credited to the
U.S. Government fund. Loan terms range from one to five years or up to ten years
for the purchase of a primary residence. The loans are secured by the balance in
the participant's account and bear interest at a rate commensurate with local
prevailing rates as determined quarterly by the plan administrator. Principal
and interest are paid ratably through monthly payroll deductions.
PAYMENT OF BENEFITS
On termination of service, a participant may receive a lump-sum amount equal to
the vested value of his or her account, or upon death, disability or retirement,
elect to receive annual installments over a ten-year period.
101
<PAGE> 102
Oregon Metallurgical Corporation Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method of
accounting.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. The shares of registered
investment companies are valued at quoted market prices which represent the net
asset values of shares held by the Plan at year-end. Company common stock is
stated at the quoted market price on the New York Stock Exchange. The
participant notes receivable are valued at their outstanding balances, which
approximate fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
USE OF ESTIMATES
The preparation of financial statements in conformity with 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.
RISKS AND UNCERTAINTIES
The Plan provides for various investment options in several mutual funds and the
Company's common stock. Investment options are exposed to certain risks, such as
interest rate, market and credit. Due to the level of risk associated with these
investment options and the level of uncertainty related to changes in the value
of these investments, it is at least reasonably possible that changes in risks
in the near term would materially affect participants' account balances and the
amounts reported in the statements of net assets available for benefits and the
statements of changes in net assets available for benefits.
3. CONTRIBUTIONS RECEIVABLE
The receivable for the employer share-per-day contribution is determined based
upon the number of shares to be contributed and based upon the share price of
the Company's common stock on the dates contributed.
102
<PAGE> 103
Oregon Metallurgical Corporation Savings Plan
Notes to Financial Statements (continued)
4. TRANSACTIONS WITH RELATED PARTIES
Certain legal and accounting fees, and administrative fees are paid by the
Company.
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated February 4, 1997, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code of 1986 (the Code) and that the trust, therefore,
is exempt from taxation under Section 501(a) of the Code. Once qualified, the
Plan is required to operate in conformity with the Code and ERISA to maintain
its tax-exempt status. The Plan was amended subsequent to the IRS determination
letter. Therefore, the amendment is not covered by the determination letter. The
plan administrator is not aware of any course of action or series of events that
have occurred that might adversely affect the Plan's qualified status.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of plan termination,
participants will become 100% vested in their accounts.
7. YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
OREMET determined that it was necessary to take certain steps in order to ensure
that the Plan's information systems will be prepared to handle Year 2000 dates.
OREMET took a two-phase approach. The first phase addressed internal systems
that were modified or replaced to function properly. Both internal and external
resources were utilized to replace or modify existing software applications, and
test the software and equipment for the Year 2000 modifications. OREMET believes
that the phase of the project relating to systems which affect the Plan's
operations is complete. Costs associated with modifying software and equipment
were not significant and were paid by OREMET.
For the second phase of the project, plan management established communications
with its third party service providers to determine that they have developed
plans to address their own Year 2000 problems as they relate to the Plan's
operations. OREMET believes that third party service providers will be Year 2000
compliant. If modification of data processing systems of either the Plan,
OREMET, or its service providers are not completed timely, the Year 2000 problem
could have a material impact on the operations of the Plan. Plan management has
not developed a contingency plan, because they are confident that all material
systems will be Year 2000 ready.
103
<PAGE> 104
Oregon Metallurgical Corporation Savings Plan
Notes to Financial Statements (continued)
8. SUBSEQUENT EVENT
Effective January 1, 1999, salaried employees became participants in another
plan sponsored by ATI, the Teledyne 401(k) Plan (Teledyne Plan). In April 1999,
approximately $6.3 million was transferred out of the Plan into the
Teledyne Plan.
9. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
-------------------------------------------
<S> <C> <C>
Net assets available for benefits per the financial statements $ 21,652,155 $ 18,439,158
Amounts allocated to withdrawing participants (750,755) (142,574)
-------------------------------------------
Net assets available for benefits per the Form 5500 $ 20,901,400 $ 18,296,584
===========================================
</TABLE>
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997
-------------------------------------------
<S> <C> <C>
Benefits paid to participants per the financial statements $ 1,522,178 $ 224,151
Add: Amounts allocated to withdrawing participants at December 31,
1998 750,755 142,574
Deduct: Amounts allocated to withdrawing participants at December 31,
1997 (142,574) --
-------------------------------------------
Benefits paid to participants per the Form 5500 $ 2,130,359 $ 366,725
===========================================
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
requests for benefit payments that have been processed and approved for payment
prior to December 31 but not yet paid as of that date.
104
<PAGE> 105
Oregon Metallurgical Corporation Savings Plan
EIN 93-0448167 Plan 004
Line 27a--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
DESCRIPTION CURRENT
IDENTITY OF ISSUE OF INVESTMENT COST VALUE
- ----------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
<C> <S> <C> <C> <C>
* Columbia Funds:
U.S. Government 36,403 shares N/A $ 305,418
Balanced 83,785 shares N/A 1,941,291
Fixed Income 27,414 shares N/A 367,893
Common Stock 98,981 shares N/A 2,415,140
International Stock 58,916 shares N/A 910,253
Special 96,821 shares N/A 2,286,917
Real Estate 46,437 shares N/A 731,848
* Allegheny Teledyne
Incorporated
Common Stock 371,713 shares N/A 7,596,884
Participant loans 6.00% to 7.25% -- 1,164,764
---------------------------------------
-- $ 17,720,408
=======================================
</TABLE>
*Party-in-interest to the Plan
N/A--Not Available
105
<PAGE> 106
Oregon Metallurgical Corporation Savings Plan
EIN 93-0448167 Plan 004
Line 27d--Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT
EXPENSE VALUE ON
IDENTITY OF PURCHASE SELLING INCURRED WITH COST OF TRANSACTION NET GAIN OR
PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE TRANSACTION ASSET DATE (LOSS)
- ------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (f) (g) (h) ( i )
<S> <C> <C> <C> <C> <C> <C> <C>
Category (i)--Individual transactions in excess of 5% of plan assets:
- ---------------------------------------------------------------------
Key Trust Oregon Metallurgical
Corporation Common Stock $ -- $ 735,174 $ 25 $ 569,176 $ 735,174 $165,973
Category (iii)--Series of transactions in excess of 5% of plan assets:
- ----------------------------------------------------------------------
Key Trust Allegheny Teledyne
Incorporated
Common Stock 6,385 -- -- -- 6,385 --
Allegheny Teledyne
Incorporated
Common Stock -- 958,753 3,191 836,765 958,753 118,797
Colombia Common Stock 1,295,624 -- -- 1,295,624 1,295,624 --
Colombia Common Stock -- 525,448 70 479,936 525,448 45,442
Columbia Balanced Fund 1,107,337 -- -- 1,107,337 1,107,337 --
Columbia Balanced Fund -- 441,913 90 417,782 441,913 24,041
Columbia International Stock 483,040 -- -- 483,040 483,040 --
Columbia International Stock -- 266,192 30 260,148 266,192 6,014
Columbia Real Estate 945,444 -- -- 945,444 945,444 --
Columbia Real Estate -- 264,301 60 279,503 264,301 (15,262)
Columbia Special Fund 1,172,163 -- -- 1,172,163 1,172,163 --
Columbia Special Fund -- 695,321 110 686,500 695,321 8,711
Mutual Fund Receivable -- 3,849,067 -- 3,849,067 3,849,067 --
Mutual Fund Receivable 3,849,067 -- -- 3,849,067 3,849,067 --
Oregon Metallurgical
Corporation Common Stock -- 2,002,681 562 1,499,373 2,002,681 502,746
Victory Institutional Money
Market Fund -- 6,857,070 -- 6,857,070 6,857,070 --
Victory Institutional Money
Market Fund 6,960,851 -- -- 6,968,851 6,960,851 --
</TABLE>
There were no Category (ii) or (iv) transactions during the year ended December
31, 1998.
Column (e) was not used.
106
<PAGE> 107
Oregon Metallurgical Corporation Savings Plan
EIN 93-0448167 Plan 004
Line 27f--Schedule of Nonexempt Transactions
December 31, 1998
<TABLE>
<CAPTION>
IDENTITY RELATIONSHIP TO PLAN, EMPLOYER
OF PARTY INVOLVED OR OTHER PARTY-IN-INTEREST DESCRIPTION OF TRANSACTION
- ----------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OREMET Plan Sponsor Failure to timely segregate participant
contributions for October 1998 in the
amount of $18,058.
</TABLE>
No information to report in columns (d) through (j).
107
<PAGE> 108
"Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K" of
Part IV of the 1998 Form 10-K is hereby amended and restated in its entirety to
read as follows:
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES:
(a) EXHIBITS AND FINANCIAL STATEMENT SCHEDULES:
(1) FINANCIAL STATEMENTS
(A) The following consolidated financial statements included on pages
30 to 51 of the 1998 Annual Report are incorporated herein by reference:
Consolidated Statements of Income - Years Ended December 31, 1998, 1997 and
1996
Consolidated Balance Sheets at December 31, 1998 and 1997
Consolidated Statements of Cash Flows - Years Ended December 31, 1998, 1997
and 1996
Consolidated Statements of Stockholders' Equity - Years Ended December 31,
1998, 1997 and 1996
Report of Ernst & Young LLP, Independent Auditors Notes
to Consolidated Financial Statements
The report of Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers LLP)
relating to the consolidated financial statements of Oregon Metallurgical
Corporation as of December 31, 1997 and 1996 and for the years then ended is
filed as Exhibit 99.1 to the 1998 Form 10-K.
(B) The following financial statements for the plans listed below are
filed with this Amendment No. 1 under Item 8 of Part II:
(i) Allegheny Ludlum Retirement Savings Plan
Report of Independent Auditors
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1998
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1997
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1998
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1997
Notes to Financial Statements
(ii) 401(k) Savings Account Plan for Employees of the Washington Plant
Report of Independent Auditors
Statement of Net Assets Available for Benefits, with Fund
Information, as of December 31, 1998
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1997
108
<PAGE> 109
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1998
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1997
Notes to Financial Statements
(iii) Savings and Security Plan of the Lockport and Waterbury Facilities of
Allegheny Ludlum Corporation
Report of Independent Auditors
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1998
Statement of Net Assets Available for Benefits, with Fund
Information as of December 31, 1997
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1998
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1997
Notes to Financial Statements
(iv) Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings
Account Plan
Report of Independent Auditors
Statement of Net Assets Available for Benefits, with Fund
Information, as of December 31, 1998
Statement of Net Assets Available for Benefits, with Fund
Information, as of December 31, 1997
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1998
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1997
Notes to Financial Statements
(v) Teledyne 401(k) Plan
Report of Independent Auditors
Statement of Net Assets Available for Benefits, December 31, 1998
and December 31, 1997
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1998
Statement of Changes in Net Assets Available for Benefits, with
Fund Information, Year Ended December 31, 1997
Notes to Financial Statements
(vi) Oregon Metallurgical Corporation Savings Plan
Report of Independent Auditors
109
<PAGE> 110
Statement of Net Assets Available for Benefits, with Fund
Information -- December 31, 1998
Statement of Net Assets Available for Benefits, with Fund
Information -- December 31, 1997
Statement of Changes in Net Assets Available for Benefits, with
Fund Information -- Year Ended December 31, 1998
Statement of Changes in Net Assets Available for Benefits, with
Fund Information -- Year Ended December 31, 1997
Notes to Financial Statements
(2) FINANCIAL STATEMENT SCHEDULES
The following financial statement schedules with respect to the plans
listed below are filed with this Amendment No. 1 under Item 8 of Part II:
(i) Allegheny Ludlum Retirement Savings Plan
Item 27a - Schedule of Assets Held for Investment Purposes -
December 31, 1998
Item 27d - Schedule of Reportable Transactions - Year Ended
December 31, 1998
(ii) 401(k) Savings Account Plan for Employees of the Washington
Plant
Item 27a - Schedule of Assets Held for Investment Purposes -
December 31, 1998
Item 27d - Schedule of Reportable Transactions - Year Ended
December 31, 1998
(iii) Savings and Security Plan of the Lockport and Waterbury
Facilities of Allegheny Ludlum Corporation
Item 27a - Schedule of Assets Held for Investment Purposes -
December 31, 1998
Item 27d - Schedule of Reportable Transactions - Year Ended
December 31, 1998
(iv) Allegheny Ludlum Corporation Personal Retirement and 401(k)
Savings Account Plan
Item 27a - Schedule of Assets Held for Investment Purposes -
December 31, 1998
Item 27d - Schedule of Reportable Transactions - Year Ended
December 31, 1998
(v) Teledyne 401(k) Plan
Item 27a - Schedule of Assets Held for Investment Purposes -
December 31, 1998
Item 27d - Schedule of Reportable Transactions - Year Ended
December 31, 1998
(vi) Oregon Metallurgical Corporation Savings Plan
Item 27a - Schedule of Assets Held for Investment Purposes -
December 31, 1998
Item 27d - Schedule of Reportable Transactions - Year Ended
December 31, 1998
Item 27f - Schedule of Nonexempt Transactions - Year Ended
December 31, 1998
110
<PAGE> 111
(3) EXHIBITS
A list of exhibits included in the 1998 Form 10-K or incorporated by
reference is found in the Exhibit Index beginning on page 33 of the 1998 Form
10-K and incorporated herein by reference. In addition, by virtue of Amendment
No. 1, the following exhibit is added to such Exhibit Index, after Exhibit 23.2,
and filed with Amendment No. 1:
Exhibit No. Description
----------- -----------
23.3 Consent of Ernst & Young LLP
(b) REPORTS ON FORM 8-K FILED IN THE FOURTH QUARTER OF 1998:
None.
111
<PAGE> 112
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Form 10-K/A (Amendment No. 1)
to be signed on its behalf by the undersigned duly authorized.
Allegheny Teledyne Incorporated
Date: June 28, 1999 By: /s/ Judd R. Cool
---------------------------------------
Judd R. Cool
Senior Vice President, Human Resources
112
<PAGE> 113
EXHIBIT INDEX
Exhibit No. Description Method of Filing
- ----------- ----------- ----------------
23.3 Consent of Ernst & Young LLP Filed herewith
113
<PAGE> 1
Exhibit 23.3
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-10225) pertaining to the Savings and Security Plan of the Lockport
and Waterbury Facilities of Allegheny Ludlum Corporation, Allegheny Ludlum
Corporation Personal Retirement and 401(k) Savings Account Plan, 401(k) Savings
Account Plan for Employees of the Washington Plant and Allegheny Ludlum
Retirement Savings Plan of our report dated June 11, 1999 with respect to the
financial statements and supplemental schedules of the Savings and Security Plan
of the Lockport and Waterbury Facilities of Allegheny Ludlum Corporation,
Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account
Plan, 401(k) Savings Account Plan for Employees of the Washington Plant and
Allegheny Ludlum Retirement Savings Plan Teledyne 401(k) Plan and in the
Registration Statement (Form S-8 No. 333-10227) pertaining to the Teledyne
401(k) Plan of our report dated June 11, 1999 with respect to the financial
statements and supplemental schedules of the Teledyne 401(k) Plan and in the
Registration Statement, as amended (Form S-8 No. 333-48649) pertaining to the
Oregon Metallurgical Corporation Savings Plan of our report dated May 20, 1999
with respect to the financial statements and supplemental schedules of the
Oregon Metallurgical Corporation Savings Plan, all of which are included in the
Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31,
1998.
/s/ ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
June 28, 1999
11
