ß/2ÿñH@    d 1$&%*ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ7ñ'ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIESNñ'CONSOLIDATED STATEMENTS OF INCOME(In millions except per share amounts)'ñ'For the Years Ended December 31, ñ"1998 ñ"1997 ñ"1996 ñ'SALESñ"$ 3,923.4ñ"$ 4,030.1ñ"$ 4,052.6ñ'Costs and expenses:ñ'Cost of salesñ"2,950.2ñ"3,039.6ñ"3,081.0*ñ'Selling and administrative expenses ñ"503.6 ñ"510.3 ñ"538.2%ñ 'Merger and restructuring costs ñ "67.8 ñ "12.0 ñ "57.5ñ 'Interest expense, net ñ "19.3 ñ "16.9 ñ "35.1ñ "3,540.9ñ "3,578.8ñ "3,711.8#ñ'Earnings before other income ñ"382.5 ñ"451.3 ñ"340.8ñ'Other income ñ"8.7 ñ"72.9 ñ"77.68ñ'INCOME BEFORE INCOME TAXES AND EXTRAORDINARY LOSS ñ"391.2 ñ"524.2 ñ"418.4!ñ'Provision for income taxes ñ"150.0 ñ"195.4 ñ"169.6'ñ'INCOME BEFORE EXTRAORDINARY LOSS ñ"241.2 ñ"328.8 ñ"248.8'ñ'Extraordinary loss on redemption)ñ'of debt, net of income tax benefit ñ"-- ñ"-- ñ"(13.5)ñ'NET INCOME ñ"241.2 ñ"328.8 ñ"235.3#ñ'Dividends on preferred stock ñ"-- ñ"-- ñ"2.02ñ'NET INCOME AVAILABLE TO COMMON STOCKHOLDERSñ"$ 241.2ñ"$ 328.8ñ"$ 233.3)ñ'Basic net income per common share:'ñ'Income before extraordinary lossñ"$ 1.23ñ"$ 1.67ñ"$ 1.29ñ'Extraordinary loss ñ"-- ñ"-- ñ"(0.07)(ñ!'BASIC NET INCOME PER COMMON SHAREñ!"$ 1.23ñ!"$ 1.67ñ!"$ 1.22+ñ#'Diluted net income per common share:'ñ$'Income before extraordinary lossñ$"$ 1.22ñ$"$ 1.64ñ$"$ 1.27ñ%'Extraordinary loss ñ%"-- ñ%"-- ñ%"(0.07)*ñ''DILUTED NET INCOME PER COMMON SHAREñ'"$ 1.22ñ'"$ 1.64ñ'"$ 1.20Gñ)'The accompanying notes are an integral part of these statements.'ñ+'ALLEGHENY TELEDYNE INCORPORATED 2ñ,'AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS7ñ-'(In millions except share and per share amounts)ñ."DECEMBER 31,ñ."December 31, ñ/"1998 ñ/"1997 ñ1'ASSETS ñ2'Cash and cash equivalentsñ2"$ 74.8ñ2"$ 53.70ñ3'Short-term investments available for sale ñ3"-- ñ3"34.4ñ4'Accounts receivable ñ4"534.7 ñ4"576.0ñ5'Inventories ñ5"659.9 ñ5"697.9ñ6'Deferred income taxes ñ6"59.3 ñ6"40.3ñ7'Tax refund ñ7"5.9 ñ7"9.40ñ8'Prepaid expenses and other current assets ñ8"29.9 ñ8"32.3ñ:'TOTAL CURRENT ASSETSñ:"1,364.5ñ:"1,444.0$ñ;'Property, plant and equipmentñ;"1,003.6 ñ;"753.8ñ<'Prepaid pension cost ñ<"418.6 ñ<"379.7,ñ='Cost in excess of net assets acquired ñ="256.0 ñ="186.5ñ>'Other assets ñ>"132.8 ñ>"134.2ñ@'TOTAL ASSETSñ@"$ 3,175.5ñ@"$ 2,898.2+ñB'Liabilities and Stockholders' EquityñC'Accounts payableñC"$ 227.0ñC"$ 267.9ñD'Accrued liabilities ñD"327.1 ñD"328.8<ñE'Short-term debt and current portion of long-term debt ñE"68.2 ñE"4.7 ñG'TOTAL CURRENT LIABILITIES ñG"622.3 ñG"601.4ñH'Long-term debt ñH"446.8 ñH"330.4&ñI'Accrued postretirement benefits ñI"582.6 ñI"574.5 ñJ'Other ñJ"183.9 ñJ"147.3ñL'TOTAL LIABILITIESñL"1,835.6ñL"1,653.6ñN'Stockholders' Equity:VñO'Preferred stock, par value $0.10: authorized - 50,000,000 shares; issued - none ñO"-- ñO"--OñP'Common stock, par value $0.10: authorized - 600,000,000 shares; issued -MñQ'197,937,664 in 1998 and 197,730,720 in 1997; outstanding - 194,873,1514ñR'shares in 1998 and 195,713,604 shares in 1997 ñR"19.8 ñR"19.8!ñS'Additional paid-in capital ñS"467.3 ñS"463.5ñT'Retained earnings ñT"923.9 ñT"822.6LñU'Treasury stock: 3,064,513 shares in 1998 and 2,017,116 shares in 1997 ñU"(67.6) ñU"(60.2)*ñV'Foreign currency translation losses ñV"(5.9) ñV"(2.4)%ñW'Unrealized gains on securities ñW"2.4 ñW"1.3!ñY'TOTAL STOCKHOLDERS' EQUITYñY"1,339.9ñY"1,244.61ñ['TOTAL LIABILITIES AND STOCKHOLDERS' EQUITYñ["$ 3,175.5ñ["$ 2,898.2Gñ]'The accompanying notes are an integral part of these statements.7ñ_'ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES9ñ`'CONSOLIDATED STATEMENTS OF CASH FLOWS(In millions)'ña'For the Years Ended December 31, ña"1998 ña"1997 ña"1996ñc'OPERATING ACTIVITIES:ñd'Net incomeñd"$ 241.2ñd"$ 328.8ñd"$ 235.3-ñe'Adjustments to reconcile net income to1ñf'net cash provided by operating activities:$ñg'Depreciation and amortization ñg"109.0 ñg"104.4 ñg"109.7#ñh'Non-cash restructuring costs ñh"50.9 ñh"-- ñh"--ñi'Deferred income taxes ñi"(7.3) ñi"(4.3) ñi"19.13ñj'Gains on sales of businesses and investments ñj"(1.6) ñj"(69.2) ñj"(64.5)/ñk'Extraordinary loss on redemption of debt ñk"-- ñk"-- ñk"13.52ñl'Change in operating assets and liabilities:ñm'Accounts payable ñm"(57.4) ñm"11.1 ñm"26.6ñn'Accounts receivable ñn"57.0 ñn"(25.5) ñn"1.6ño'Prepaid pension cost ño"(50.2) ño"(24.7) ño"(41.8)ñp'Inventories ñp"49.5 ñp"(64.8)ñp"(120.6)ñq'Accrued liabilities ñq"7.0 ñq"(48.6) ñq"(3.1)ñr'Tax refund ñr"6.1 ñr"37.7 ñr"--ñs'Accrued income taxes ñs"0.1 ñs"36.4 ñs"17.9 ñt'Other ñt"(4.9) ñt"3.3 ñt"27.2,ñv'CASH PROVIDED BY OPERATING ACTIVITIES ñv"399.4 ñv"284.6 ñv"220.9ñx'INVESTING ACTIVITIES:%ñy'Short-term investments - sales ñy"34.4 ñy"31.5 ñy"6.1)ñz'Short-term investments - purchases ñz"-- ñz"(2.5) ñz"(73.8)8ñ|'Net (increase) decrease in short-term investments ñ|"34.4 ñ|"29.0 ñ|"(67.7)9ñ}'Purchases of businesses and investment in venturesñ}"(229.1) ñ}"(40.4) ñ}"(23.6)1ñ~'Purchases of property, plant and equipmentñ~"(172.6)ñ~"(122.8) ñ~"(92.2)<ñ'Proceeds from the sales of businesses and investments ñ"28.9 ñ"112.1 ñ"124.81ñ€'Disposals of property, plant and equipment ñ€"19.3 ñ€"30.7 ñ€"16.0 ñ'Other ñ"(9.4) ñ"(5.8) ñ"(9.1)6ñƒ'CASH PROVIDED BY (USED IN) INVESTING ACTIVITIESñƒ"(328.5) ñƒ"2.8 ñƒ"(51.8)ñ…'FINANCING ACTIVITIES:!ñ†'Increase in long-term debt ñ†"123.3 ñ†"4.4 ñ†"290.74ñ‡'Payments on long-term debt and capital leases ñ‡"(9.7)ñ‡"(117.6)ñ‡"(456.0)0ñ‰'Net increase (decrease) in long-term debt ñ‰"113.6ñ‰"(113.2)ñ‰"(165.3)ñŠ'Dividends paidñŠ"(122.3)ñŠ"(112.2)ñŠ"(106.1) ñ‹'Purchases of common stock ñ‹"(49.4)ñ‹"(107.7) ñ‹"(23.7)!ñŒ'Exercises of stock options ñŒ"8.3 ñŒ"35.4 ñŒ"13.9&ñ'Issuance of OREMET common stock ñ"-- ñ"-- ñ"103.2-ñŽ'Redemption of Teledyne preferred stock ñŽ"-- ñŽ"-- ñŽ"(41.4) ñ'Other ñ"-- ñ"-- ñ"1.1(ñ‘'CASH USED IN FINANCING ACTIVITIES ñ‘"(49.8)ñ‘"(297.7)ñ‘"(218.3)7ñ“'INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ñ“"21.1 ñ“"(10.3) ñ“"(49.2)5ñ”'Cash and cash equivalents at beginning of year ñ”"53.7 ñ”"64.0 ñ”"113.2/ñ–'CASH AND CASH EQUIVALENTS AT END OF YEARñ–"$ 74.8ñ–"$ 53.7ñ–"$ 64.0ñ˜'NON-CASH TRANSACTIONS:,ñ™'Assets acquired under promissory noteñ™"$ 65.9ñ™"$ --ñ™"$ --0ñš'Preferred stock dividends on common stock ñš"-- ñš"-- ñš"8.3Vñœ'Amounts presented on the Consolidated Statements of Cash Flows may not agree toQñ'the corresponding changes in balance sheet items due to the accounting forLñž'purchases and sales of businesses and the effects of foreign currencySñŸ'translation.The accompanying notes are an integral part of these statements.7ñ¡'ALLEGHENY TELEDYNE INCORPORATED AND SUBSIDIARIES6ñ¢'CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY-ñ£'(In millions except per share amounts)ñ¤"Accumulatedñ¥"Additional ñ¥"Other ñ¦"Commonñ¦"Paid-Inñ¦"Retainedñ¦"Treasuryñ¦"Comprehensiveñ¦"Stockholders' ñ§"Stockñ§"Capitalñ§"Earnings ñ§"Stock ñ§"Income ñ§"Equity!ñ©'BALANCE, DECEMBER 31, 1995 ñ©"$ 18.8 ñ©"$303.8 ñ©"$514.6 ñ©"$ -- ñ©"$ 14.5ñ©"$ 851.7ñ«'Net income ñ«"-- ñ«"-- ñ«"235.3 ñ«"-- ñ«"-- ñ«"235.3.ñ¬'Other comprehensive income, net of tax:*ñ­'Foreign currency translation losses ñ­"-- ñ­"-- ñ­"-- ñ­"-- ñ­"(1.7) ñ­"(1.7)(ñ®'Unrealized holding losses arisingñ¯'during period ñ¯"-- ñ¯"-- ñ¯"-- ñ¯"-- ñ¯"(1.6) ñ¯"(1.6)ñ±'Comprehensive income ñ±"-- ñ±"-- ñ±"235.3 ñ±"-- ñ±"(3.3) ñ±"232.0Sñ²'Cash dividends on common and preferred stock (Allegheny Teledyne $0.16 perRñ³'common share, Allegheny Ludlum $0.42 per common share, Teledyne $0.44 per!ñ´'common share and $1.20 perñµ'preferred share) ñµ"-- ñµ"--ñµ"(106.1) ñµ"-- ñµ"--ñµ"(106.1)#ñ¶'OREMET common stock offering ñ¶"0.6 ñ¶"102.6 ñ¶"-- ñ¶"-- ñ¶"-- ñ¶"103.2ñ·'Employee stock plans ñ·"0.1 ñ·"26.5 ñ·"-- ñ·"-- ñ·"-- ñ·"26.6 ñ¸'Purchase and cancellationñ¹'of common stock ñ¹"-- ñ¹"(23.7) ñ¹"-- ñ¹"-- ñ¹"-- ñ¹"(23.7)*ñº'Preferred stock dividends on common'ñ»'stock (Teledyne $0.08 per share) ñ»"-- ñ»"-- ñ»"(8.3) ñ»"-- ñ»"-- ñ»"(8.3)!ñ½'BALANCE, DECEMBER 31, 1996 ñ½"19.5 ñ½"409.2 ñ½"635.5 ñ½"-- ñ½"11.2ñ½"1,075.4ñ¿'Net income ñ¿"-- ñ¿"-- ñ¿"328.8 ñ¿"-- ñ¿"-- ñ¿"328.8.ñÀ'Other comprehensive income, net of tax:*ñÁ'Foreign currency translation losses ñÁ"-- ñÁ"-- ñÁ"-- ñÁ"-- ñÁ"(5.0) ñÁ"(5.0)LñÂ'Unrealized losses on securities: Unrealized holding gains arisingñÃ'during period ñÃ"-- ñÃ"-- ñÃ"-- ñÃ"-- ñÃ"9.7 ñÃ"9.7#ñÄ'Less: realized gain includedñÅ'in net income ñÅ"-- ñÅ"-- ñÅ"-- ñÅ"-- ñÅ"(17.0) ñÅ"(17.0)ñÇ'Comprehensive income ñÇ"-- ñÇ"-- ñÇ"328.8 ñÇ"-- ñÇ"(12.3) ñÇ"316.5%ñÈ'Cash dividends on common stockñÉ'($0.64 per common share) ñÉ"-- ñÉ"--ñÉ"(112.2) ñÉ"-- ñÉ"--ñÉ"(112.2)ñÊ'Purchase of common stock ñÊ"-- ñÊ"-- ñÊ"--ñÊ"(107.7) ñÊ"--ñÊ"(107.7)ñË'Employee stock plans ñË"0.3 ñË"54.3 ñË"(29.5) ñË"47.5 ñË"-- ñË"72.6!ñÍ'BALANCE, DECEMBER 31, 1997 ñÍ"19.8 ñÍ"463.5 ñÍ"822.6 ñÍ"(60.2) ñÍ"(1.1)ñÍ"1,244.6ñÏ'Net income ñÏ"-- ñÏ"-- ñÏ"241.2 ñÏ"-- ñÏ"-- ñÏ"241.2.ñÐ'Other comprehensive income, net of tax:*ñÑ'Foreign currency translation losses ñÑ"-- ñÑ"-- ñÑ"-- ñÑ"-- ñÑ"(3.5) ñÑ"(3.5)KñÒ'Unrealized gains on securities: Unrealized holding gains arisingñÓ'during period ñÓ"-- ñÓ"-- ñÓ"-- ñÓ"-- ñÓ"2.2 ñÓ"2.2#ñÔ'Less: realized gain includedñÕ'in net income ñÕ"-- ñÕ"-- ñÕ"-- ñÕ"-- ñÕ"(1.1) ñÕ"(1.1)ñ×'Comprehensive income ñ×"-- ñ×"-- ñ×"241.2 ñ×"-- ñ×"(2.4) ñ×"238.8%ñØ'Cash dividends on common stockñÙ'($0.64 per common share) ñÙ"-- ñÙ"--ñÙ"(122.3) ñÙ"-- ñÙ"--ñÙ"(122.3)ñÚ'Purchase of common stock ñÚ"-- ñÚ"-- ñÚ"-- ñÚ"(49.4) ñÚ"-- ñÚ"(49.4)ñÛ'Employee stock plans ñÛ"-- ñÛ"3.8 ñÛ"(17.6) ñÛ"42.0 ñÛ"-- ñÛ"28.2!ñÝ'BALANCE, DECEMBER 31, 1998 ñÝ"$ 19.8 ñÝ"$467.3 ñÝ"$923.9ñÝ"$(67.6)ñÝ"$ (3.5)ñÝ"$1,339.9Gñß'The accompanying notes are an integral part of these statements.