Allegheny Technologies Incorporated and Subsidiaries
Non-GAAP
Financial Measures
(Unaudited, dollars in millions, except per share amounts)
The Company
reports its financial results in accordance with accounting principles generally accepted in the United States of America (GAAP). However, management believes that certain
non-GAAP
financial
measures, used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods.
Non-GAAP
financial measures
should be viewed in addition to, and not as an alternative for, the Companys reported results prepared in accordance with GAAP. The following table provides the calculation of the
non-GAAP
financial
measures discussed in this annual report.
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Fiscal Year Ended
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December 31
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2016
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2017
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Net loss attributable to ATI
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$
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(641
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)
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$
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(92
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)
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Adjustments:
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Debt extinguishment charge, net of tax (a)
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-
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37
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Impairment of goodwill, net of tax (b)
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-
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114
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Restructuring and other charges, net of tax (c)
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355
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-
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Rowley excess operating costs, net of tax (d)
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19
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-
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Work stoppage and
return-to-work
costs (e)
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28
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-
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Income tax items including valuation allowances (f)
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142
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(4
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)
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Net income (loss) attributable to ATI, as adjusted
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$
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(97
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)
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$
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55
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Per Diluted Share
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Net loss attributable to ATI
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$
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(5.97
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)
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$
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(0.83
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)
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Adjustments:
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Debt extinguishment charge, net of tax (a)
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-
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0.29
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Impairment of goodwill, net of tax (b)
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-
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1.05
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Restructuring and other charges, net of tax (c)
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3.30
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-
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Rowley excess operating costs, net of tax (d)
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0.18
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-
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Work stoppage and
return-to-work
costs (e)
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0.27
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-
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Income tax items including valuation allowances (f)
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1.31
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(0.03
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)
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Net income (loss) attributable to ATI, as adjusted
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$
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(0.91
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)
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$
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0.48
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The following adjustments are more fully described in Item 7. Managements Discussion and Analysis of Financial Condition and Results
of Operations, and Item 8. Financial Statements and Supplementary Data in the 2017 annual report on Form
10-K.
The presentation of adjusted results per diluted share includes the effects of convertible debt,
if dilutive.
(a) Fiscal year December 31, 2017 results include a debt extinguishment charge of $37
after-tax,
or $0.29
per share, for the full redemption of the $350, 9.375% Senior Notes due 2019.
(b) During the third quarter of 2017, the Company performed an interim goodwill
impairment analysis, as required by accounting standards, for our Cast Products business and determined that all goodwill assigned to this business unit was impaired. As a result, the Company recorded a $114
non-cash
goodwill impairment charge, or $1.05 per share.
(c) During 2016, the Company restructured
its titanium operations in the HPMC segment, closed the FRP segments Midland, PA and Bagdad, PA facilities, and implemented salaried workforce reduction actions in the FRP segment. Restructuring and other charges totaled $539
pre-tax,
including $471 asset impairment charges primarily related to the indefinite idling of the Rowley, UT titanium sponge production facility, $32 of facility shutdown and idling costs, $24 million of
employee benefit costs and $12 million of inventory valuation charges, or $355
after-tax,
or $3.30 per share.
(d) These
amounts represent the above-market production costs and other operating expenses for the Rowley, UT titanium sponge production facility prior to the indefinite idling, net of expected ongoing carrying costs, and have been adjusted out of the
Companys GAAP amounts to provide Company results that are more representative of the future, which exclude these costs.
(e) For the
first six months of fiscal year 2016, the Company incurred costs associated with the work stoppage and
return-to-work
of
USW-represented
employees including reduced operating efficiencies,
out-of-phase
raw material costs, and provisions of the new
labor agreements.
(f) Amounts for the year ended December 31, 2017 include $4 of tax benefits, or $0.03 per share, from the 2017 Tax Cuts and Jobs Act
legislation. Amounts for the fiscal year ended December 31, 2016 include $150 of income tax valuation allowance adjustments for U.S. federal deferred tax assets, partially offset by other
non-operational
income tax benefits, compared to the tax benefit that would apply at a standard 35% tax rate.
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Fiscal Year Ended
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December 31, 2017
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Cash provided by operating activities
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$
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22
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ATI Pension Plan contribution
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135
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Cash provided by operating activities, as adjusted
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$
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157
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