401(K) SAVINGS ACCOUNT PLAN FOR EMPLOYEES OF THE EXTON
FACILITY
Financial Statements And Supplemental Schedule
401(k) Savings Account Plan for Employees of the Exton Facility
401(k) Savings Account Plan for Employees of the Exton Facility
Financial Statements and Supplemental Schedule
Financial Statements (Unaudited)
Statements of Net Assets Available for Benefits ......................... 1
Statement of Changes in Net Assets Available for Benefits................ 2
Notes to Financial Statements ........................................... 3
Supplemental Schedule
Schedule H, Line 4i -- Schedule of Assets (Held at End of Year)......... 11
401(k) Savings Account Plan for Employees of the Exton Facility
DECEMBER 31
2003 2002
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Investments:
Interest in Allegheny Technologies Incorporated Savings Plan Trust $669,522 $630,207
Interest in registered investment companies 162,565 140,731
Participant loans 129,757 81,853
Interest in common collective trusts - 31,853
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Net assets available for benefits $961,844 $884,644
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See accompanying notes.
Employee contributions $ 1,984
Investment income:
Net gain from interest in Allegheny Technologies Incorporated
Savings Plan Trust 75,976
Net gain from interest in registered investment companies 10,295
Net gain from interest in common collective trusts 1,755
Net realized/unrealized gains 7
Interest income 5,688
---------
Total investment gain 93,721
---------
95,705
Distributions to participants (18,505)
---------
Net increase in net assets available for benefits 77,200
Net assets available for benefits at beginning of year 884,644
---------
Net assets available for benefits at end of year $ 961,844
=========
See accompanying notes.
1. SIGNIFICANT ACCOUNTING POLICIES
Investments are valued as follows:
Bank and insurance investment contracts ("investment contracts")
with varying contract rates and maturity dates are stated at contract value.
Although it is management's intention to hold the investment contracts in
the Fixed Income Master Trust until maturity, certain investment contracts
provide for adjustments to contract value for withdrawals made prior to maturity.
All other investments are stated at their net asset value, based on the
quoted market prices of the securities held in such funds on applicable exchanges.
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
2. DESCRIPTION OF THE PLAN
The 401(k) Savings Account Plan for Employees of the Exton Facility, formerly
known as the Allegheny Rodney (ALstrip) Profit Sharing Plan (the Plan) is
a defined contribution plan and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
The purpose of the Plan is to encourage employee thrift by permitting eligible
employees of the Exton facility of Allegheny Ludlum Corporation (the Company)
to defer a part of their compensation and contribute such deferral to the
Plan. The Company is a wholly-owned subsidiary of Allegheny Technologies Incorporated
(ATI, the Plan Sponsor). The Plan allows employees to contribute a portion
of eligible wages each pay period through payroll deductions subject to Internal
Revenue Code limitations. The Plan allows participants to direct their contributions
to any of the investment alternatives. Unless otherwise specified by the participant,
contributions are made to the Fixed Income Master Trust.
Separate accounts are maintained by the Plan Sponsor for each participating
employee. Trustee fees and asset management fees charged by the Plan's trustee,
Mellon Bank, N.A., for the administration of all funds are charged against
net assets available for benefits of the respective fund. Certain other expenses
of administering the Plan are paid by the Plan Sponsor.
Participants may make "in-service" (age 59-1/2 only) and hardship
withdrawals as outlined in the plan document.
Active employees can borrow up to 50% of their vested account balances minus
any outstanding loans. The loan amounts are further limited to a minimum of
$500 and a maximum of $50,000, and an employee can obtain no more than three
loans at one time. Interest rates are determined based on commercially accepted
criteria, and payment schedules vary based on the type of the loan. General-purpose
loans are repaid over 6 to 60 months, and primary residence loans are repaid
over periods from 6 months up to 180 months. Payments are made by payroll
deductions.
Further information about the Plan, including eligibility, vesting, contributions,
and withdrawals, is contained in the plan documents. Copies of these documents
are available from the Plan Sponsor.
3. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's
net assets as of December 31, 2003.
Certain of the Plan's investments are in the Allegheny Technologies Incorporated
Savings Plan Trust, which has three subsidiary Master Trusts; the Allegheny
Technologies Disciplined Stock Fund Master Trust, the Alliance Equity Master
Trust and the Fixed Income Master Trust, which are institutional separate
accounts valued on a unitized trust basis (collectively, the "Master
Trust"). The Master Trust was established for the investment of assets
of the Plan, and several other ATI sponsored retirement plans. Each participating
retirement plan has an undivided interest in the Master Trust. At December
31, 2003, the Plan's interest in the net assets of the Allegheny Technologies
Disciplined Stock Fund Master Trust, the Fixed Income Master Trust and the
Alliance Equity Master Trust were as follows:
Investment income and expenses are allocated to the Plan based upon its
pro rata share in the net assets of the Master Trust.
The composition of the net assets of the Fixed Income Master Trust at December
31, 2003 was as follows:
The Fixed Income Fund (the Fund) invests in guaranteed investment contracts
(GICs) and actively managed structured or synthetic investment contracts (SICs).
The GICs are promises by a bank or insurance company to repay principal plus
a fixed rate of return through contract maturity. SICs differ from GICs in
that there are specific assets supporting the SICs, and these assets are owned
by the Master Trust. The bank or insurance company issues a wrapper contract
that allows participant-directed transactions to be made at contract value.
The assets supporting the SICs are comprised of government agency bonds, corporate
bonds, asset-backed securities (ABOs) and collateralized mortgage obligations
(CMOs) with fair values of $107,926,162 at December 31, 2003. The contract
value minus the market value of the wrapper contracts at December 31, 2003
was $2,356,779.
Interest crediting rates on the GICs in the Fund are determined at the time
of purchase. Interest crediting rates on the SICs are either: (1) set at the
time of purchase for a fixed term and crediting rate; (2) set at the time
of purchase for a fixed term and variable crediting rate or (3) set at the
time of purchase and reset monthly within a "constant duration."
A constant duration contract may specify a duration of 2.5 years and the crediting
rate is adjusted monthly based upon quarterly rebalancing of eligible 2.5
year duration investment instruments at the time of each resetting; in effect
the contract never matures. At December 31, 2003, the interest crediting rates
for GICs and Fixed Maturity SICs ranged from 3.58% to 8.02%.
For the year ended December 31, 2003, the average annual yield for the investment
contracts in the Fund was 5.31%. Fair value of the GICs was estimated by discounting
the weighted average of the Fund's cash flows at the then-current interest
crediting rate for a comparable maturity investment contract. Fair value for
the SICs was estimated based on the fair value of each contract's supporting
assets at December 31, 2003.
The composition of net assets of the Alliance Equity Master Trust at December
31, 2003 was as follows:
The composition of net assets of the Allegheny Technologies Disciplined
Stock Fund Master Trust at December 31, 2003 was as follows:
The composition of the changes in net assets of the various master trusts
is as follows:
Interest, realized and unrealized gains and losses, and management fees
from the master trusts are included in the net loss from interest in Allegheny
Technologies Incorporated Savings Plan Trust on the statement of changes in
net assets available for benefits.
4. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated August 4, 2003, stating that the Plan is qualified under Section 401(a)
of the Internal Revenue Code (the Code) and, therefore, the related trust
is exempt from taxation. Subsequent to this issuance of the determination
letter, the Plan was amended. Once qualified, the Plan is required to operate
in conformity with the Code to maintain its qualification. The plan administrator
believes the Plan is being operated in compliance with the applicable requirements
of the Code and, therefore, believes that the Plan, as amended, is qualified
and the related trust is tax-exempt.
5. PARTIES-IN-INTEREST
Dreyfus Corporation is the manager of the Dreyfus Mutual Funds that are
offered as investment options under this Plan. Dreyfus Service Corporation
is the funds' distributor. Dreyfus Corporation and Dreyfus Service Corporation
are both wholly owned subsidiaries of Mellon Financial Corporation. Mellon
Financial Corporation also owns Mellon Bank, N.A., the Trustee for this Plan.
Therefore, transactions with these entities qualify as party-in-interest transactions.
Trustee and investment fees paid during 2003 were based upon customary and
reasonable rates for such services.
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.
7. RISKS AND UNCERTAINTIES
The Plan invests in various investment securities. Investment securities
are exposed to various risk such as interest rate, market and credit risks.
Due to the level of risk associated with certain investment securities, it
is at least reasonably possible that changes in the values of investment securities
will occur in the near term and that such changes could materially affect
participants' account balances and the amounts reported in the statements
of net assets available for benefits.
2003
-----------
(Unaudited)
Fixed Income Master Trust $381,705
Allegheny Technologies Disciplined Stock Fund Master Trust 283,151
Dreyfus Bond Market Index 128,495
2003
-----------
(Unaudited)
Allegheny Technologies Disciplined Stock Fund Master Trust 0.36%
Fixed Income Master Trust 0.20
Alliance Equity Master Trust 0.01
2003
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Guaranteed investment contracts:
Canada Life $ 2,757,412
GE Life and Annuity 9,583,804
Hartford Life Insurance Company 10,939,222
John Hancock Life Insurance Company 8,848,178
Monumental Life Insurance Company 2,353,862
New York Life Insurance Company 6,814,589
Ohio National Life 4,652,712
Pacific Mutual Life Insurance Company 6,075,054
Principal Life 1,187,962
Protective Life Insurance Company 1,006,456
Pruco Pace Credit Enhanced 8,947,069
Security Life of Denver 6,737,205
United of Omaha 7,226,335
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77,129,860
Synthetic guaranteed investment contracts:
Caisse des Depots et Consignations 1,999,995
MDA Monumental BGI Wrap 33,990,199
Bank of America 17,803,044
Rabobank 36,635,330
Union Bank of Switzerland 14,768,321
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105,196,889
Interest in common/collective trusts 8,515,369
Other 764,537
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Total net assets $191,606,655
============
2003
-----------
(Unaudited)
Investment in registered investment companies:
Alliance Equity Fund S.A. #4 $35,666,427
Operating payables (10,616)
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Total net assets $35,655,811
===========
2003
-----------
(Unaudited)
Corporate common stocks $77,259,404
Investment in common collective trusts 337,451
Receivables 283,072
Operating Payables (42,301)
-----------
Total net assets $77,837,626
===========
ALLEGHENY
ALLIANCE TECHNOLOGIES
EQUITY DISCIPLINED
FIXED INCOME MASTER STOCK FUND
MASTER TRUST TRUST MASTER TRUST
------------- ------------- -------------
YEAR ENDED DECEMBER 31, 2003
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(Unaudited)
Investment income:
Interest income $ 9,953,790 $ - $ 214,654
Net realized/unrealized gain on
Corporate common stocks - - 13,699,382
Dividends - - 1,073,159
Net gain, registered
investment companies 45,315 9,614,660 -
Net gain, common collective trusts 111,616 - 10,183
Administrative expenses (201,917) (72,409) (660,982)
Transfers 888,462 (440,184) 8,571,888
------------- ------------- -------------
Net increase 10,797,266 9,102,067 22,908,284
Total net assets at beginning of year 180,809,389 26,553,744 54,929,342
------------- ------------- -------------
Total net assets at end of year $ 191,606,655 $ 35,655,811 $ 77,837,626
============= ============= =============
CURRENT
INVESTMENT DESCRIPTION UNITS/SHARES VALUE
---------------------- ------------ -------
Registered investment companies:
Dreyfus Bond Market Index Fund* 12,403.010 $128,495
Dreyfus Emerging Leaders Fund* 144.931 5,612
Harris Associates - Oakmark Balanced Fund 1,048.671 23,092
Artisan Funds 35.776 922
Dreyfus Growth & Value International Fund* 188.386 3,114
Prudential Jennison Growth Fund, Class A Shares 101.811 1,330
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$162,565
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Participant loans (5.00% to 10.5%)* $129,757
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* Party-in-interest
Pursuant to the requirements of the Securities Exchange Act of 1934, the administrators of the Plan have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
By: /s/ Richard J. Harshman
Date: June 22, 2004 ---------------------------------
Richard J. Harshman
Executive Vice President-Finance and
Chief Financial Officer
(Principal Financial Officer and Duly
Authorized Officer)
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