-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K3GcPX3+yPtSKNkfy70DBAXE3tnp9XYnTTx24TTJEvJHVeq1jxs5hc8J80+82ltQ wukv+gIcy+MwneNg+6vBiw== 0000950128-98-000876.txt : 19980629 0000950128-98-000876.hdr.sgml : 19980629 ACCESSION NUMBER: 0000950128-98-000876 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLEGHENY TELEDYNE INC CENTRAL INDEX KEY: 0001018963 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 251792394 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 001-12001 FILM NUMBER: 98655362 BUSINESS ADDRESS: STREET 1: 1000 SIX PPG PLACE CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 4123942800 MAIL ADDRESS: STREET 1: 100 SIX PPG PLACE CITY: PITTSBURGH STATE: PA ZIP: 15222 10-K405/A 1 ALLEGHENY TELEDYNE INCORPORATED 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, 1997 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 filers 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 20, 1998, the Registrant had outstanding 174,934,668 shares of its Common Stock. The aggregate market value of the Registrant's voting stock held by non-affiliates at this date was approximately $4.2 billion, based on the closing price of $28.25 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. 1 2 DOCUMENTS INCORPORATED BY REFERENCE Selected portions of the 1997 Annual Report to Shareholders ("1997 Annual Report") - Part I, Part II and Part IV of this Report. Selected portions of the 1998 Proxy Statement - Part III of this Report. 2 3 EXPLANATORY NOTE: Pursuant to this Form 10-K/A (Amendment No. 1) ("Amendment No. 1"), Allegheny Teledyne Incorporated (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, 1997 ("1997 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 Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation; (4) Savings and Security Plan of the Lockport and Waterbury Facilities of Allegheny Ludlum Corporation; (5) Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan; (6) Teledyne, Inc. 401(k) Plan; and (7) Oregon Metallurgical Corporation Savings Plan. As of January 1, 1998, the Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation was terminated as the remaining plan assets were merged into the Allegheny Ludlum Retirement Savings Plan. "Item 8. Financial Statements and Supplementary Data" of Part II of the 1997 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)(A) are incorporated by reference from pages 30 to 53 of the 1997 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........ 24 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation....................... 43 Savings and Security Plan of the Lockport and Waterbury Facilities of Allegheny Ludlum Corporation............................... 65 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan.............................................. 85 Teledyne, Inc. 401(k) Plan............................................... 105 Oregon Metallurgical Corporation Savings Plan............................ 117 3 4 Audited Financial Statements ALLEGHENY LUDLUM RETIREMENT SAVINGS PLAN Years ended December 31, 1997 and 1996 with Report of Independent Auditors 4 5 Allegheny Ludlum Retirement Savings Plan Audited Financial Statements Years ended December 31, 1997 and 1996 CONTENTS Report of Independent Auditors ................................................... 6 Audited Financial Statements Statements of Net Assets Available for Benefits with Fund Information............. 7 Statements of Changes in Net Assets Available for Benefits with Fund Information.. 10 Notes to Financial Statements .................................................... 11 Schedules Item 27a--Schedule of Assets Held for Investment Purposes ........................ 22 Item 27d--Schedule of Reportable Transactions..................................... 23
5 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 (the Plan) as of December 31, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 statement of net assets available for benefits and the statement 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 June 5, 1998 6 7 Allegheny Ludlum Retirement Savings Plan Statement of Net Assets Available for Benefits with Fund Information December 31, 1997
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS GROWTH AND GROWTH INCOME EQUITY INCOME DISCIPLINED INCOME FUND FUND FUND FUND FUND STOCK FUND ---------------------------------------------------------------------------------------------- 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 -- -- -- -- -- 27,858,603 Participant notes receivable -- -- -- -- -- -- Other -- -- -- -- -- -- ---------------------------------------------------------------------------------------------- Net assets available for benefits $18,995,349 $4,156,514 $1,492,055 $49,094,068 $99,746,033 $27,858,603 ==============================================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY SELF- VALUE VALUE STOCK DIRECTED PARTICIPANT FUND FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $ -- $ -- $27,656,220 $ -- $ -- $201,140,239 Interest in registered investment company 15,446,354 2,964,614 -- 340,241 -- 46,609,812 Participant notes receivable -- -- -- -- 4,367,721 4,367,721 Other -- -- -- (30,000) -- (30,000) ------------------------------------------------------------------------------------------- Net assets available for benefits $15,446,354 $2,964,614 $27,656,220 $310,241 $4,367,721 $252,087,772 ===========================================================================================
See accompanying notes. 7 8 Allegheny Ludlum Retirement Savings Plan Statement of Net Assets Available for Benefits with Fund Information December 31, 1996
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS GROWTH AND GROWTH INCOME EQUITY INCOME DISCIPLINED INCOME FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $14,879,939 $1,611,821 $439,188 $44,539,226 $104,124,226 $ -- Interest in registered investment company -- -- -- -- -- 14,395,124 Participant notes receivable -- -- -- -- -- -- ------------------------------------------------------------------------------------------- Net assets available for benefits $14,879,939 $1,611,821 $439,188 $44,539,226 $104,124,226 $14,395,124 ===========================================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL ---------------------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $ -- $ -- $27,817,471 $ -- $193,411,871 Interest in registered investment company 3,896,312 797,458 -- -- 19,088,894 Participant notes receivable -- -- -- 3,920,878 3,920,878 ---------------------------------------------------------------------------- Net assets available for benefits $3,896,312 $797,458 $27,817,471 $3,920,878 $216,421,643 ============================================================================
See accompanying notes. 8 9 Allegheny Ludlum Retirement Savings Plan Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended December 31, 1997
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS GROWTH AND GROWTH INCOME EQUITY INCOME DISCIPLINED INCOME FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------------------------ ADDITIONS Cash contributions: Employer $ 702,727 $ 249,631 $ 62,837 $ 2,004,482 $ 3,677,232 $ 1,145,475 Employee 565,903 183,655 47,169 1,510,645 2,153,794 964,562 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 3,216,461 728,854 122,079 11,149,275 6,587,944 -- Earnings from registered investment companies -- -- -- -- -- 5,946,391 Interest income -- -- -- -- 1,396 -- Interfund transfers 243,216 1,525,897 907,445 (7,998,026) (7,564,050) 6,009,014 ------------------------------------------------------------------------------------------------ 4,728,307 2,688,037 1,139,530 6,666,376 4,856,316 14,065,442 Deductions: Distributions to participants 612,897 143,344 86,663 2,111,534 9,234,509 601,963 Administrative expenses -- -- -- -- -- -- ------------------------------------------------------------------------------------------------ Net additions (deductions) 4,115,410 2,544,693 1,052,867 4,554,842 (4,378,193) 13,463,479 Net assets available for benefits at beginning of year 14,879,939 1,611,821 439,188 44,539,226 104,124,226 14,395,124 ------------------------------------------------------------------------------------------------ Net assets available for benefits at end of year $18,995,349 $4,156,514 $1,492,055 $49,094,068 $ 99,746,033 $27,858,603 ================================================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY SELF- VALUE VALUE STOCK DIRECTED PARTICIPANT FUND FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------------------------ ADDITIONS Cash contributions: Employer $ 625,035 $ 160,574 $ 398,923 $ -- $ -- $ 9,026,916 Employee 566,507 134,766 311,109 -- -- 6,438,110 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- -- 3,977,292 -- -- 25,781,905 Earnings from registered investment companies 2,345,108 89,494 -- 28,693 -- 8,409,686 Interest income -- -- -- -- 377,707 379,103 Interfund transfers 8,238,142 1,802,110 (3,514,614) 281,730 69,136 -- ------------------------------------------------------------------------------------------ 11,774,792 2,186,944 1,172,710 310,423 446,843 50,035,720 Deductions: Distributions to participants 224,750 19,788 1,333,961 -- -- 14,369,409 Administrative expenses -- -- -- 182 -- 182 ------------------------------------------------------------------------------------------ Net additions (deductions) 11,550,042 2,167,156 (161,251) 310,241 446,843 35,666,129 Net assets available for benefits at beginning of year 3,896,312 797,458 27,817,471 -- 3,920,878 216,421,643 ------------------------------------------------------------------------------------------ Net assets available for benefits at end of year $15,446,354 $2,964,614 $27,656,220 $310,241 $4,367,721 $252,087,772 ==========================================================================================
See accompanying notes. 9 10 Allegheny Ludlum Retirement Savings Plan Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended December 31, 1996
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS GROWTH AND GROWTH INCOME EQUITY INCOME DISCIPLINED INCOME FUND FUND FUND FUND FUND STOCK FUND ================================================================================================== ADDITIONS Cash contributions: Employer $ 386,847 $ 57,089 $ 18,517 $ 1,848,054 $ 4,489,026 $ 416,100 Employee 270,372 39,757 15,274 1,739,640 2,657,007 311,427 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 1,125,886 86,964 19,237 5,992,506 6,502,404 -- Net gain from collective -- -- -- -- -- -- investment funds Earnings from registered investment 319 1,263 579 -- -- 2,028,289 companies Interest -- -- -- 437 4,216 -- Dividend income -- -- -- -- -- -- Net appreciation in fair value of -- -- -- -- -- -- assets Transfer (to) from other ALC savings plans -- (9,380) -- 8,421 (15,060) 7,829 Interfund transfers 13,475,766 1,436,440 386,380 1,572,011 (8,122,082) 11,765,432 -------------------------------------------------------------------------------------------------- 15,259,190 1,612,133 439,987 11,161,069 5,515,511 14,529,077 Deductions: Distributions to participants 379,251 312 799 1,426,689 10,537,442 133,953 Fees -- -- -- 741 3,426 -- -------------------------------------------------------------------------------------------------- 379,251 312 799 1,427,430 10,540,868 133,953 -------------------------------------------------------------------------------------------------- Net additions 14,879,939 1,611,821 439,188 9,733,639 (5,025,357) 14,395,124 (deductions) Net assets available for benefits at beginning of year -- -- -- 34,805,587 109,149,583 -- -------------------------------------------------------------------------------------------------- Net assets available for benefits at end of year $14,879,939 $1,611,821 $439,188 $44,539,226 $104,124,226 $14,395,124 ==================================================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY STOCK VALUE VALUE STOCK INDEX DIVERSIFIED PARTICIPANT FUND FUND FUND FUND FUND LOANS TOTAL ====================================================================================================== ADDITIONS Cash contributions: Employer $ 79,076 $ 28,971 $ 1,449,105 $ 150,926 $ 191,521 $ -- $ 9,115,232 Employee 63,784 22,649 381,914 193,218 287,014 -- 5,982,056 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- -- 4,553,778 56 520,330 -- 18,801,161 Net gain from collective -- -- -- 308,832 -- -- 308,832 investment funds Earnings from registered investment 255,400 30,519 99 38,837 -- -- 2,355,305 companies Interest -- -- 1,438 1,457 104 304,416 312,068 Dividend income -- -- 184,751 -- -- -- 184,751 Net appreciation in fair value of -- -- 2,102,392 -- -- -- 2,102,392 assets Transfer (to) from other ALC savings plans 10,443 -- (23,657) -- -- -- (21,404) Interfund transfers 3,528,950 715,915 (5,732,031) (6,080,798) (12,852,269) (93,714) -- ------------------------------------------------------------------------------------------------------ 3,937,653 798,054 2,917,789 (5,387,472) (11,853,300) 210,702 39,140,393 Deductions: Distributions to participants 41,341 596 1,139,278 75,302 277,037 -- 14,012,000 Fees -- -- 2,646 4,716 482 -- 12,011 ------------------------------------------------------------------------------------------------------ 41,341 596 1,141,924 80,018 277,519 -- 14,024,011 ------------------------------------------------------------------------------------------------------ Net additions 3,896,312 797,458 1,775,865 (5,467,490) (12,130,819) 210,702 25,116,382 (deductions) Net assets available for benefits at beginning of year -- -- 26,041,606 5,467,490 12,130,819 3,710,176 191,305,261 ------------------------------------------------------------------------------------------------------ Net assets available for benefits at end of year $3,896,312 $ 797,458 $27,817,471 $ -- $ -- $3,920,878 $216,421,643 ======================================================================================================
See accompanying notes. 10 11 Allegheny Ludlum Retirement Savings Plan Notes to Financial Statements December 31, 1997 1. SIGNIFICANT ACCOUNTING POLICIES Investments are stated at fair value determined as follows: Allegheny Teledyne Incorporated (Allegheny Teledyne) common stock in the Company Stock Fund is stated at the quoted market price on the New York Stock Exchange. The Fixed Income Fund is stated at cost plus net earnings. 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. Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 presentation. 2. DESCRIPTION OF THE PLAN The Allegheny Ludlum Retirement Savings Plan (the Plan) is a defined contribution plan within the meaning of the Employee Retirement Income Security Act of 1974 (ERISA). 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. 11 12 2. DESCRIPTION OF THE PLAN (CONTINUED) During 1996, the Plan was amended to allow for additional investment options and to discontinue the Stock Index Fund and Diversified investment options. The investment options provided by the Plan for the years ended December 31, 1997 and 1996 are as follows: Lifestyle Growth and Income Fund--invests in equity and fixed income securities and may invest up to 15% of its assets in international securities. Lifestyle Growth Fund--invests in equity and fixed income securities and may invest up to 25% of its assets in international securities. Lifestyle Income Fund--consists of common stock, fixed income securities and short-term money market instruments. Alliance Equity Fund--consists of common stocks. 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. Dreyfus Disciplined Stock Fund--invests in equity securities and may invest up to 20% of its assets in high quality money market accounts. 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. Stock Index Fund--invests in a collective trust that invests in common stocks of companies comprising the S&P 500. Diversified Fund--consists of a combination of common or preferred capital stocks, bonds, notes, and debentures. 12 13 2. DESCRIPTION OF THE PLAN (CONTINUED) 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 contributions by the employer and were $189,738 and $3,370 during 1997 and 1996, respectively. 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. 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 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. Effective January 1, 1998, Plan assets of $880,000 were transferred in from another plan sponsored by ALC. 13 14 2. DESCRIPTION OF THE PLAN (CONTINUED) Information about the Plan is contained in the Summary Plan Description. Copies of this Summary Plan Description are available from the Allegheny Teledyne Personnel and Compensation Committee (Committee). 3. INVESTMENTS 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, ALC Lifestyle Growth Fund Master Trust, the ALC Lifestyle Income Fund Master Trust, and the ALC Lifestyle Growth and Income Fund Master Trust. The Plan's participating interests in these master trusts as of December 31 were as follows: 1997 1996 --------------------------- ALC Fixed Income Master Trust 73.72% 73.50% ALC Alliance Equity Master Trust 81.57% 83.15% ALC ATI Common Stock Master Trust 77.65% 78.46% ALC Lifestyle Growth Fund Master Trust 81.23% 82.69% ALC Lifestyle Income Fund Master Trust 81.72% 74.41% ALC Lifestyle Growth and Income Fund Master Trust 83.53% 82.44% The composition of the net assets of the ALC Fixed Income Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------------- Guaranteed investment contracts: Confederation Life Insurance Company $ 29,118 $ 4,024,149 Continental Assurance Company 6,718,924 9,404,989 John Hancock Life Insurance Company 2,600,000 -- Life Insurance Company of Virginia 8,725,219 15,918,713 New York Life Insurance Company 15,169,828 14,124,589 Pacific Mutual Life Insurance Company 5,793,190 5,441,658 Peoples Security Life Insurance Company 11,038,629 10,403,430 Prudential Insurance Company 6,144,220 14,396,590 Southland Life Insurance Company 16,288,645 15,200,545 Security Life of Denver -- 5,000,000 Protective Life Insurance Company -- 3,751,970 Transamerica Occidental 10,936,663 10,597,526 ----------------------------------- 83,444,436 108,264,159 14 15 3. INVESTMENTS (CONTINUED) 1997 1996 -------------------------------- Synthetic contracts: Caisse des Depots et Consignations 3,879,321 3,642,950 Peoples Security 2,948,698 -- Transamerica Occidental 13,865,850 -- Union Bank of Switzerland 5,937,712 5,920,612 Westdeutsche Landesbank 13,727,581 13,668,143 -------------------------------- 40,359,162 23,231,705 Temporary short-term investments 10,765,309 9,512,226 Accrued interest receivable 733,753 655,473 Other payables (6,169) (4,306) -------------------------------- Total net assets $135,296,491 $141,659,257 ================================ In May 1997, the Allegheny Ludlum Corporation 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 Allegheny Ludlum Corporation Fixed Income Master Trust. The composition of net assets of the ALC Alliance Equity Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 -------------------------------- Investment in registered investment companies: Alliance Equity Fund S.A. #4 (865.1940 and 994.6310 shares, respectively) $60,199,619 $53,579,310 Cash 90 -- Operating payables (10,341) (16,348) -------------------------------- Total net assets $60,189,368 $53,562,962 ================================ 15 16 3. INVESTMENTS (CONTINUED) The composition of net assets of the ALC ATI Common Stock Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------- Allegheny Teledyne Incorporated Common Stock (1,347.732 and 1,537.708 shares, respectively) $34,872,566 $35,367,284 Receivables 4,527 58,750 Short Term Investment Fund 738,595 48,275 Operating payables (822) (564) ----------------------------- Total net assets $35,614,866 $35,473,745 ============================= The composition of assets of the ALC Lifestyle Growth Fund Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------- Dreyfus Lifestyle Growth Fund $5,117,053 $1,949,121 Operating payables (5) (1) ----------------------------- $5,117,048 $1,949,120 ============================= The composition of assets of the ALC Lifestyle Income Fund Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------- Dreyfus Lifestyle Income Fund $1,825,632 $590,191 Operating payables (2) -- ----------------------------- $1,825,630 $590,191 ============================= 16 17 3. INVESTMENTS (CONTINUED) The composition of assets of the ALC Lifestyle Growth and Income Fund Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ------------------------------------- Dreyfus Lifestyle Growth and Income Fund $22,740,752 $18,049,004 Receivables 56 1 ------------------------------------- $22,740,808 $18,049,005 ===================================== Detail information regarding the composition of the various Lifestyle funds are reported in the separate collective trust filings. The composition of the changes in net assets of the various master trusts is as follows:
ALC FIXED INCOME MASTER ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER TRUST TRUST TRUST ----------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31 ----------------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 ----------------------------------------------------------------------------------------------------- Investment income: Interest income (loss) $ 8,694,877 $ 8,225,640 $ -- $ 16,937 $ (1,554) $ 15,713 Realized gains on sale of investments -- -- -- -- 1,835,342 1,588,011 Unrealized appreciation in fair value of investments -- -- -- -- 2,318,151 3,346,346 Dividends -- -- -- -- 837,662 537,617 Net gain, registered registered companies -- -- 13,819,313 7,335,440 -- -- Net gain, common collective funds 468,281 743,008 -- -- 73,411 -- Other income 1,343 -- -- -- -- -- Administrative expenses (189,938) (256,059) (211,873) (173,713) (27,286) (14,043) Transfers (15,337,329) (10,804,451) (6,981,034) 5,469,649 (4,894,605) 30,000,101 --------------------------------------------------------------------------------------------------- Net increase (decrease) (6,362,766) (2,091,862) 6,626,406 12,648,313 141,121 35,473,745 Total net assets at beginning of year 141,659,257 143,751,119 53,562,962 40,914,649 35,473,745 -- --------------------------------------------------------------------------------------------------- Total net assets at end of year $135,296,491 $141,659,257 $60,189,368 $53,562,962 $35,614,866 $35,473,745 ===================================================================================================
17 18 3. INVESTMENTS (CONTINUED)
ALC LIFESTYLE GROWTH FUND ALC LIFESTYLE INCOME FUND ALC LIFESTYLE GROWTH AND MASTER TRUST MASTER TRUST INCOME FUND MASTER TRUST ------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31 ------------------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 ------------------------------------------------------------------------------------------------------- Investment income: Interest income $ -- $ -- $ 105 $ -- $ 1 $ 110 Realized gains on sale of -- -- -- -- -- 3,769,730 investments Unrealized depreciation in fair value of -- -- -- -- -- (3,794,673) investments Net gain, common collective funds 882,650 113,120 152,034 24,356 3,853,009 1,384,385 Transfers 2,285,394 1,836,065 1,083,338 565,870 838,793 762,689 Administrative expenses (116) (65) (38) (35) -- (402) ------------------------------------------------------------------------------------------------------- Net increase 3,167,928 1,949,120 1,235,439 590,191 4,691,803 2,121,839 Total net assets at beginning of year 1,949,120 -- 590,191 -- 18,049,005 15,927,166 ------------------------------------------------------------------------------------------------------- Total net assets at end of year $ 5,117,048 $ 1,949,120 $ 1,825,630 $ 590,191 $22,740,808 $ 18,049,005 =======================================================================================================
The average yield for 1997 and 1996 for the ALC Fixed Income Master Trust was 6.57% and 6.43%, respectively. Credited interest rates on the contracts ranged from 5.60% to 8.18% and 5.24% to 8.18% for 1997 and 1996, 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 allocation of net earnings (losses) from master trusts on the statement of changes in net assets available for benefits. 18 19 3. INVESTMENTS (CONTINUED) The changes in cumulative net unrealized gain (loss) for the years ended December 31, 1997 and 1996 are as follows:
LIFESTYLE GROWTH DREYFUS AND LIFESTYLE LIFESTYLE ALLIANCE DISCIPLINED INCOME GROWTH INCOME EQUITY STOCK FUND FUND FUND FUND FUND -------------------------------------------------------------------------- Balance at December 31, 1995 $ 2,841,405 $ -- $ -- $12,961,877 $ -- Unrealized gain (loss) (1,776,840) 81,197 8,777 5,733,121 169,246 -------------------------------------------------------------------------- Balance at December 31, 1996 1,064,565 81,197 8,777 18,694,998 169,246 Unrealized gain (loss) 2,588,204 463,784 52,212 (7,699,031) 2,133,690 -------------------------------------------------------------------------- Balance at December 31, 1997 $ 3,652,769 $544,981 $60,989 $10,995,967 $2,302,936 ==========================================================================
DREYFUS DREYFUS SMALL INTER- COMPANY NATIONAL COMPANY STOCK VALUE VALUE STOCK INDEX FUND FUND FUND FUND TOTAL ------------------------------------------------------------------------------- Balance at December 31, 1995 $ -- $ -- $ 5,516,526 $ 728,110 $22,047,918 Unrealized gain (loss) (199,140) 14,680 2,102,392 (728,110) 5,405,323 ------------------------------------------------------------------------------- Balance at December 31, 1996 (199,140) 14,680 7,618,918 -- 27,453,241 Unrealized gain (loss) 1,529,186 (88,996) (4,166,023) -- (5,186,974) ------------------------------------------------------------------------------- Balance at December 31, 1997 $1,330,046 $(74,316) $ 3,452,895 $ -- $22,266,267 ===============================================================================
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 that the trust, therefore, is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code and ERISA to maintain its tax-exempt status. The 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. 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. 19 20 6. YEAR 2000 (UNAUDITED) Allegheny Teledyne has initiated formal communications with its significant service providers (plan trustee and plan recordkeeper) to determine the extent to which the Plan's systems or operations are vulnerable to those parties' failure to remediate their own Year 2000 issues. In addition, Allegheny Teledyne has been reviewing its own internal systems that impact the processing of employee benefits. Allegheny Teledyne expects that all necessary modifications to these internal systems will be completed prior to any significant impact on these internal systems. The Plan's service providers have indicated that they are presently taking steps to ensure that the Plan's systems and operations will be Year 2000 compliant. 20 21 SCHEDULES 21 22 Allegheny Ludlum Retirement Savings Plan Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1997
MARKET DESCRIPTION UNITS/SHARES COST VALUE VALUE - --------------------------------------------------------------------------------------------------------------------- Dreyfus Disciplined Stock Fund*: Interest in Dreyfus Disciplined Stock Fund 895,199.333 shares $25,555,667 $27,858,603 Dreyfus Small Company Value Fund*: Interest in Dreyfus Small Company Value Fund 733,097.031 shares 14,116,308 15,446,354 Dreyfus International Value Fund*: Interest in Dreyfus International Value Fund 203,055.763 shares 3,038,930 2,964,614 Self-Directed Fund: Dreyfus 100% U.S. Treasury Money Market Fund* 30,435.300 shares 30,435 30,435 Dreyfus Appreciation Fund, Inc.* 658.430 shares 20,209 21,320 Dreyfus/Laurel Funds, Inc. Premier Midcap Stock Fund* 218.223 shares 3,643 3,341 Dreyfus Growth & Value Funds--Midcap Value* 1,817.114 shares 40,033 37,287 Dreyfus Growth & Income Small Co. Value Fund* 214.839 shares 4,527 4,527 Fidelity Puritan Tr. Puritan Fund 1,082.136 shares 19,940 20,972 Fidelity Low Priced Stock Fund 460.092 shares 10,808 11,562 Fidelity Secs. Fund Growth & Income Portfolio 299.125 shares 10,488 11,397 Fidelity Secs. Fund Dividend Growth Fund 491.449 shares 11,066 11,436 Janus Investment Fund Sh. Ben. Int. 705.607 shares 18,282 17,570 Janus Investment Fund Growth & Income Fund 713.463 shares 14,856 16,517 Janus Investment Fund Worldwide Fund 2,102.039 shares 75,000 79,415 Janus Investment Fund Overseas Fund 1,312.649 shares 22,035 22,827 T. Rowe Price Mid Cap Growth Fund 561.174 shares 15,010 16,050 T. Rowe Price Intl. Funds Inc. European Stock Fund 783.325 shares 15,000 15,165 Templeton Funds Inc. World Fund Class I 1,214.114 shares 20,758 20,420 ------------------------------------ 332,090 340,241 Participant Loans: Interest in Participant Loans 9.25% to 9.50% - 4,367,721 ------------------------------------ $43,042,995 $50,977,533 ====================================
*Party-in-interest 22 23 Allegheny Ludlum Retirement Savings Plan Item 27d--Schedule of Reportable Transactions Year ended December 31, 1997
PURCHASE PURCHASE SALE SELLING DESCRIPTION OF ASSETS TRANSACTIONS PRICE TRANSACTIONS PRICE GAIN - --------------------------------------------------------------------------------------------------------------------- Type (iii) transactions: Dreyfus Disciplined Stock Fund 159 $16,707,971 -- $ -- $ -- Dreyfus Disciplined Stock Fund -- -- 104 9,195,020 925,568 Dreyfus Small Company Value Fund 166 15,781,953 -- -- -- Dreyfus Small Company Value Fund -- -- 100 6,572,006 530,983 Dreyfus International Value Fund 128 3,598,523 -- -- -- Dreyfus International Value Fund -- -- 72 1,520,736 84,197
There were no Type (i), (ii), or (iv) transactions during the year ended December 31, 1997. 23 24 Audited Financial Statements 401(k) SAVINGS ACCOUNT PLAN FOR EMPLOYEES OF THE WASHINGTON PLANT Year ended December 31, 1997 and period April 1, 1996 through December 31, 1996 with Report of Independent Auditors 24 25 401(k) Savings Account Plan for Employees of the Washington Plant Audited Financial Statements Year ended December 31, 1997 and period April 1, 1996 through December 31, 1996 CONTENTS Report of Independent Auditors .................................................... 26 Audited Financial Statements Statements of Net Assets Available for Benefits with Fund Information.............. 27 Statements of Changes in Net Assets Available for Benefits with Fund Information... 29 Notes to Financial Statements ..................................................... 31 Schedules Item 27a--Schedule of Assets Held for Investment Purposes.......................... 41 Item 27d--Schedule of Reportable Transactions...................................... 42
25 26 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 (the Plan) as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the year ended December 31, 1997 and the period April 1, 1996 (date of the Plan's inception) through December 31, 1996. 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 as of December 31, 1997 and 1996, and the changes in net assets available for benefits for the year ended December 31, 1997 and the period April 1, 1996 through December 31, 1996, 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, 1997 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 June 5, 1998 26 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
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED GROWTH AND GROWTH INCOME EQUITY INCOME INCOME FUND FUND FUND FUND FUND ----------------------------------------------------------------------------- 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 =============================================================================
DREYFUS SMALL DREYFUS DREYFUS COMPANY INTERNATIONAL COMPANY DISCIPLINED VALUE VALUE STOCK STOCK FUND FUND FUND FUND TOTAL ------------------------------------------------------------------------------ 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 ==============================================================================
See accompanying notes. 27 28 401(k) Savings Account Plan for Employees of the Washington Plant Statement of Net Assets Available for Benefits with Fund Information December 31, 1996
LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS GROWTH AND GROWTH EQUITY INCOME DISCIPLINED INCOME FUND FUND FUND FUND STOCK FUND ---------------------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $36,746 $127 $133,664 $20,871 $ -- Interest in registered investment companies -- -- -- -- 83,181 ---------------------------------------------------------------------------- Net assets available for benefits $36,746 $127 $133,664 $20,871 $83,181 ============================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK FUND FUND FUND TOTAL -------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $ -- $ -- $13,752 $205,160 Interest in registered investment companies 938 3,001 -- 87,120 -------------------------------------------------------------- Net assets available for benefits $938 $3,001 $13,752 $292,280 ==============================================================
See accompanying notes. 28 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
LIFESTYLE GROWTH LIFESTYLE LIFESTYLE ALLIANCE FIXED AND INCOME GROWTH INCOME EQUITY INCOME FUND FUND FUND FUND FUND ------------------------------------------------------------------ ADDITIONS Employee contributions $37,068 $3,085 $151 $108,583 $35,755 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 11,610 513 6 53,012 3,154 Earnings from registered investment companies -- -- -- -- -- Interfund transfers 12,661 874 -- (31,297) 8,642 ------------------------------------------------------------------ 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 ==================================================================
DREYFUS DREYFUS SMALL DREYFUS DISCIPLINED COMPANY INTERNATIONAL COMPANY STOCK VALUE VALUE STOCK FUND FUND FUND FUND TOTAL ---------------------------------------------------------------------- ADDITIONS Employee contributions $ 95,405 $43,193 $6,849 $15,781 $345,870 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- -- -- 1,773 70,068 Earnings from registered investment companies 40,440 4,084 209 -- 44,733 Interfund transfers 5,016 1,016 (614) 3,702 -- ----------------------------------------------------------------------- 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 =======================================================================
See accompanying notes. 29 30 401(k) Savings Account Plan for Employees of the Washington Plant Statement of Changes in Net Assets Available for Benefits with Fund Information Period April 1, 1996 through December 31, 1996
LIFESTYLE DREYFUS GROWTH LIFESTYLE ALLIANCE FIXED DISCIPLINED AND INCOME GROWTH EQUITY INCOME STOCK FUND FUND FUND FUND FUND ------------------------------------------------------------------- ADDITIONS Employee contributions $36,271 $313 $123,206 $19,407 $74,617 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 2,183 48 8,671 576 -- Net gain from Collective Investment Funds -- -- -- -- 5,130 Earnings from registered investment companies -- -- -- -- 6,405 Dividend income -- -- -- -- -- Net appreciation in fair value of investments -- -- -- -- -- Interfund transfers (1,708) (234) 1,787 888 (2,971) ------------------------------------------------------------------- 36,746 127 133,664 20,871 83,181 Deductions: Distributions to participants -- -- -- -- -- ------------------------------------------------------------------- -- -- -- -- -- ------------------------------------------------------------------- Net additions 36,746 127 133,664 20,871 83,181 Net assets available for benefits at beginning of period -- -- -- -- -- ------------------------------------------------------------------- Net assets available for benefits at end of period $36,746 $127 $133,664 $20,871 $83,181 ===================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK FUND FUND FUND TOTAL ------------------------------------------------------- ADDITIONS Employee contributions $887 $ 877 $11,269 $266,847 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- -- 1,648 13,126 Net gain from Collective Investment Funds 1 -- 7 5,138 Earnings from registered investment companies 50 65 -- 6,520 Dividend income -- -- 39 39 Net appreciation in fair value of investments -- -- 610 610 Interfund transfers -- 2,059 179 -- ------------------------------------------------------- 938 3,001 13,752 292,280 Deductions: Distributions to participants -- -- -- -- ------------------------------------------------------- -- -- -- -- ------------------------------------------------------- Net additions 938 3,001 13,752 292,280 Net assets available for benefits at beginning of period -- -- -- -- ------------------------------------------------------- Net assets available for benefits at end of period $938 $3,001 $13,752 $292,280 =======================================================
See accompanying notes. 30 31 401(k) Savings Account Plan for Employees of the Washington Plant Notes to Financial Statements December 31, 1997 1. SIGNIFICANT ACCOUNTING POLICIES Investments are stated at fair value determined as follows: Allegheny Teledyne Incorporated (Allegheny Teledyne) common stock in the Company Stock Fund is stated at the quoted market price on the New York Stock Exchange. The Fixed Income Fund is stated at cost plus net earnings, which approximates market value. 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 within the meaning of the Employee Retirement Income Security Act of 1974 (ERISA). The purpose of the Plan is to encourage thrift and to assist union employees accumulate 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. 31 32 2. DESCRIPTION OF THE PLAN (CONTINUED) The investment options provided by the Plan are as follows: Lifestyle Growth and Income Fund--invests in equity and fixed income securities and may invest up to 15% of its assets in international securities. Lifestyle Growth Fund--invests in equity and fixed income securities and may invest up to 25% of its assets in international securities. 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. Dreyfus Disciplined Stock Fund--invests in equity securities and may invest up to 20% of its assets in high quality money market accounts. 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. 32 33 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. Information about the Plan is contained in the Summary Plan Description. Copies of this Summary Plan Description are available from the Allegheny Teledyne Personnel and Compensation Committee (the Committee). 3. INVESTMENTS The Plan is a participant in the ALC Fixed Income Master Trust, the ALC Alliance Equity Master Trust, ALC ATI Common Stock Master Trust, ALC Lifestyle Growth Fund Master Trust, ALC Lifestyle Income Fund Master Trust and ALC Lifestyle Growth and Income Fund Master Trust. The Plan's participating interests in these master trusts as of December 31 were as follows: 1997 1996 ------------------------- ALC Fixed Income Master Trust 0.05% 0.01% ALC Alliance Equity Master Trust 0.44% 0.25% ALC ATI Common Stock Master Trust 0.10% 0.04% ALC Lifestyle Growth Fund Master Trust .09% .01% ALC Lifestyle Income Fund Master Trust -- -- ALC Lifestyle Growth and Income Fund Master Trust .43% .20% The composition of the net assets of the ALC Fixed Income Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------------- Guaranteed investment contracts: Confederation Life Insurance Company $ 29,118 $ 4,024,149 Continental Assurance Company 6,718,924 9,404,989 John Hancock Life Insurance Company 2,600,000 -- Life Insurance Company of Virginia 8,725,219 15,918,713 New York Life Insurance Company 15,169,828 14,124,589 Pacific Mutual Life Insurance Company 5,793,190 5,441,658 Peoples Security Life Insurance Company 11,038,629 10,403,430 Prudential Insurance Company 6,144,220 14,396,590 Southland Life Insurance Company 16,288,645 15,200,545 Security Life of Denver -- 5,000,000 Protective Life Insurance Company -- 3,751,970 Transamerica Occidental 10,936,663 10,597,526 ----------------------------------- 83,444,436 108,264,159 33 34 3. INVESTMENTS (CONTINUED) 1997 1996 ---------------------------------- Synthetic contracts: Caisse des Depots et Consignations 3,879,321 3,642,950 Peoples Security 2,948,698 -- Transamerica Occidental 13,865,850 -- Union Bank of Switzerland 5,937,712 5,920,612 Westdeutsche Landesbank 13,727,581 13,668,143 ---------------------------------- 40,359,162 23,231,705 Temporary short-term investments 10,765,309 9,512,226 Accrued interest receivable 733,753 655,473 Other payables (6,169) (4,306) ---------------------------------- Total net assets $135,296,491 $141,659,257 ================================== In May 1997, the Allegheny Ludlum Corporation 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 Allegheny Ludlum Corporation Fixed Income Master Trust. The composition of net assets of the ALC Alliance Equity Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ---------------------------------- Investment in registered investment companies: Alliance Equity Fund S.A. #4 (865.1940 and 994.6310 shares, respectively) $60,199,619 $53,579,310 Cash 90 -- Operating payables (10,341) (16,348) ---------------------------------- Total net assets $60,189,368 $53,562,962 ================================== 34 35 3. INVESTMENTS (CONTINUED) The composition of net assets of the ALC ATI Common Stock Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------- Allegheny Teledyne Incorporated Common Stock (1,347.732 and 1,537.708 shares, respectively) $34,872,566 $35,367,284 Receivables 4,527 58,750 Short Term Investment Fund 738,595 48,275 Operating payables (822) (564) ----------------------------- Total net assets $35,614,866 $35,473,745 ============================= The composition of assets of the ALC Lifestyle Growth Fund Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------- Dreyfus Lifestyle Growth Fund $5,117,053 $1,949,121 Operating payables (5) (1) ----------------------------- $5,117,048 $1,949,120 ============================= The composition of assets of the ALC Lifestyle Income Fund Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------- Dreyfus Lifestyle Income Fund $1,825,632 $590,191 Operating payables (2) -- ----------------------------- $1,825,630 $590,191 ============================= The composition of assets of the ALC Lifestyle Growth and Income Fund Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------- Dreyfus Lifestyle Growth & Income Fund $22,740,752 $18,049,004 Receivables 56 1 ----------------------------- $22,740,808 $18,049,005 ============================= Detail information regarding the composition of the various lifestyle funds are reported in the separate collective trust filings. 35 36 3. INVESTMENTS (CONTINUED) The composition of the changes in net assets of the various master trusts is as follows:
ALC FIXED INCOME MASTER ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER TRUST TRUST TRUST ---------------------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31 ---------------------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 ---------------------------------------------------------------------------------------------------------- Investment income: Interest income (loss) $ 8,694,877 $ 8,225,640 $ -- $ 16,937 $ (1,554) $ 15,713 Realized gains on sale of investments -- -- -- -- 1,835,342 1,588,011 Unrealized appreciation in fair value of investments -- -- -- -- 2,318,151 3,346,346 Dividends -- -- -- -- 837,662 537,617 Net gain, registered investment companies -- -- 13,819,313 7,335,440 -- -- Net gain, common collective funds 468,281 743,008 -- -- 73,411 -- Other income 1,343 -- -- -- -- -- Administrative expenses (189,938) (256,059) (211,873) (173,713) (27,286) (14,043) Transfers (15,337,329) (10,804,451) (6,981,034) 5,469,649 (4,894,605) 30,000,101 ---------------------------------------------------------------------------------------------------------- Net increase (decrease) (6,362,766) (2,091,862) 6,626,406 12,648,313 141,121 35,473,745 Total net assets at beginning of year 141,659,257 143,751,119 53,562,962 40,914,649 35,473,745 -- ---------------------------------------------------------------------------------------------------------- Total net assets at end of year $135,296,491 $141,659,257 $60,189,368 $53,562,962 $35,614,866 $35,473,745 ==========================================================================================================
36 37 3. INVESTMENTS (CONTINUED)
ALC LIFESTYLE GROWTH FUND ALC LIFESTYLE INCOME FUND ALC LIFESTYLE GROWTH AND MASTER TRUST MASTER TRUST INCOME FUND MASTER TRUST ---------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31 ---------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 ---------------------------------------------------------------------------------------------- Investment income: Interest income $ -- $ -- $ 105 $ -- $ 1 $ 110 Realized gains on sale of -- -- -- -- -- 3,769,730 investments Unrealized depreciation in fair value of -- -- -- -- -- (3,794,673) investments Net gain, common collective funds 882,650 113,120 152,034 24,356 3,853,009 1,384,385 Transfers 2,285,394 1,836,065 1,083,338 565,870 838,793 762,689 Administrative expenses (116) (65) (38) (35) -- (402) ---------------------------------------------------------------------------------------------- Net increase 3,167,928 1,949,120 1,235,439 590,191 4,691,803 2,121,839 Total net assets at beginning of year 1,949,120 -- 590,191 -- 18,049,005 15,927,166 ---------------------------------------------------------------------------------------------- Total net assets at end of year $5,117,048 $1,949,120 $1,825,630 $590,191 $22,740,808 $18,049,005 ==============================================================================================
The average yield for 1997 and 1996 for the ALC Fixed Income Master Trust was 6.57% and 6.43%, respectively. Credited interest rates on the contracts ranged from 5.60% to 8.18% and 5.24% to 8.18% for 1997 and 1996, 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 allocation of net earnings (losses) from master trusts on the statement of changes in net assets available for benefits. 37 38 3. INVESTMENTS (CONTINUED) The changes in cumulative net unrealized gain (loss) for the period April 1, 1996 through December 31, 1997 are as follows:
LIFESTYLE DREYFUS DREYFUS GROWTH DREYFUS SMALL INTER- AND LIFESTYLE LIFESTYLE ALLIANCE DISCIPLINED COMPANY NATIONAL COMPANY INCOME GROWTH INCOME EQUITY STOCK VALUE VALUE STOCK FUND FUND FUND FUND FUND FUND FUND FUND TOTAL ---------------------------------------------------------------------------------------------------- Balance at April 1, 1996 $ -- $ -- $-- $ -- $ -- $ -- $ -- $ -- $ -- Unrealized gain (loss) 2,046 6 -- 6,084 884 (41) 17 1,647 10,643 ---------------------------------------------------------------------------------------------------- Balance at December 31, 1996 2,046 6 -- 6,084 884 (41) 17 1,647 10,643 Unrealized gain (loss) 10,614 378 6 46,060 15,774 2,598 (89) (77) 75,264 ---------------------------------------------------------------------------------------------------- Balance at December 31, 1997 $12,660 $384 $ 6 $52,144 $16,658 $2,557 $(72) $1,570 $85,907 ====================================================================================================
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 that the trust, therefore, is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code and ERISA to maintain its tax-exempt status. The 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. 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 (UNAUDITED) Allegheny Teledyne has initiated formal communications with its significant service providers (plan trustee and plan recordkeeper) to determine the extent to which the Plan's systems or operations are vulnerable to those parties' failure to remediate their own Year 2000 issues. In addition, Allegheny Teledyne has been reviewing its own internal systems that impact the processing of employee benefits. Allegheny Teledyne expects that all necessary modifications to these internal systems will be completed prior to any significant impact on these internal systems. 38 39 6. YEAR 2000 (UNAUDITED) (CONTINUED) The Plan's service providers have indicated that they are presently taking steps to ensure that the Plan's systems and operations will be Year 2000 compliant. 39 40 SCHEDULES 40 41 401(k) Savings Account Plan for Employees of the Washington Plant Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1997
DESCRIPTION UNITS/SHARES COST MARKET VALUE - ----------------------------------------------------------------------------------------------------------------------- Dreyfus Disciplined Stock Fund*: Interest in Dreyfus Disciplined Stock Fund 7,179.137 shares $206,757 $223,415 Dreyfus Small Company Value Fund*: Interest in Dreyfus Small Company Value Fund 2,336.477 shares 46,673 49,231 Dreyfus International Value Fund*: Interest in Dreyfus International Value Fund 638.833 shares 9,399 9,328 ----------------------------------- Total investments $262,829 $281,974 ===================================
*Represents party-in-interest. 41 42 401(k) Savings Account Plan for Employees of the Washington Plant Item 27d--Schedule of Reportable Transactions Year ended December 31, 1997
PURCHASE PURCHASE SALE SELLING GAIN DESCRIPTION OF ASSETS TRANSACTIONS PRICE TRANSACTIONS PRICE (LOSS) - --------------------------------------------------------------------------------------------------------------------- Type (i) Transactions Dreyfus Disciplined Stock Fund 1 $ 10,587 -- $ -- $ -- Dreyfus Disciplined Stock Fund -- -- 1 6,005 924 Dreyfus Small Co. Value Fund 1 5,331 -- -- -- Dreyfus Small Co. Value Fund 1 4,401 -- -- -- Dreyfus Disciplined Stock Fund 1 9,085 -- -- -- Type (iii) Transactions Dreyfus Disciplined Stock Fund 40 113,621 -- -- -- Dreyfus Disciplined Stock Fund -- -- 6 13,827 1,939 Dreyfus Small Company Value Fund 29 49,670 -- -- -- Dreyfus Small Company Value Fund -- -- 2 5,462 659 Dreyfus International Value Fund 29 7,729 -- -- -- Dreyfus International Value Fund -- -- 3 1,611 7
There were no Type (ii) or (iv) transactions during the year ended December 31, 1997. 42 43 Audited Financial Statements SAVINGS AND SECURITY PLAN OF THE TUBULAR PRODUCTS/PLATE PRODUCTS DIVISIONS OF ALLEGHENY LUDLUM CORPORATION One Month ended January 31, 1998 and the years ended December 31, 1997 and 1996 with Report of Independent Auditors 43 44 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Audited Financial Statements One Month ended January 31, 1998 and the years ended December 31, 1997 and 1996 CONTENTS Report of Independent Auditors .......................................... 45 Audited Financial Statements Statements of Net Assets Available for Benefits with Fund Information ................................................ 46 Statements of Changes in Net Assets Available for Benefits with Fund Information ................................................ 49 Notes to Financial Statements ........................................... 52 Schedules Item 27a--Schedule of Assets Held for Investment Purposes ............... 63 Item 27d--Schedule of Reportable Transactions............................ 64 44 45 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 Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation (the Plan) as of January 31, 1998 and December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the one-month period and 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 Tubular Products/Plate Products Division of Allegheny Ludlum Corporation at January 31, 1998 and December 31, 1997 and 1996, and the changes in its net assets available for benefits for the one-month period and 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, 1997, 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 statement of net assets available for benefits and the statement 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 June 5, 1998 45 46 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Statement of Net Assets Available for Benefits with Fund Information January 31, 1998
LIFESTYLE GROWTH AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------- Net assets available for benefits $-- $-- $-- $-- $-- $-- ===============================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------ Net assets available for benefits $-- $-- $-- $-- $-- ========================================================================
See accompanying notes. 46 47 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Statement of Net Assets Available for Benefits with Fund Information December 31, 1997
LIFESTYLE GROWTH AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------ ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $73,012 $23,373 $9,801 $142,442 $297,806 $ -- Interest in registered investment companies -- -- -- -- -- 122,220 Participant notes receivable -- -- -- -- -- -- ------------------------------------------------------------------------------ Net assets available for benefits $73,012 $23,373 $9,801 $142,442 $297,806 $122,220 ==============================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL --------------------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $ -- $ -- $154,795 $ -- $701,229 Interest in registered investment companies 15,106 10,413 -- -- 147,739 Participant notes receivable -- -- -- 31,290 31,290 ---------------------------------------------------------------------------- Net assets available for benefits $15,106 $10,413 $154,795 $31,290 $880,258 ============================================================================
See accompanying notes. 47 48 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Statement of Net Assets Available for Benefits with Fund Information December 31, 1996
LIFESTYLE GROWTH AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------ ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $254,640 $50,898 $29,770 $636,462 $3,554,103 $ -- Interest in registered investment companies -- -- -- -- -- 233,970 Participant notes receivable -- -- -- -- -- -- ============================================================================== Net assets available for benefits $254,640 $50,898 $29,770 $636,462 $3,554,103 $233,970 ==============================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL -------------------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $ -- $ -- $817,568 $ -- $5,343,441 Interest in registered investment companies 31,553 54,275 -- -- 319,798 Participant notes receivable -- -- -- 369,623 369,623 ========================================================================== Net assets available for benefits $31,553 $54,275 $817,568 $369,623 $6,032,862 ==========================================================================
See accompanying notes. 48 49 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Statement of Changes in Net Assets Available for Benefits with Fund Information One Month ended January 31, 1998
LIFESTYLE GROWTH AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------ Additions: Cash contributions: Employer $ -- $ -- $ -- $ -- $ -- $ -- Employee -- -- -- -- -- -- Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- -- -- -- -- -- Earnings from registered investment companies -- -- -- -- -- -- Interest income -- -- -- -- -- -- Transfer to other plans (73,012) (23,373) (9,801) (142,442) (297,806) (122,220) Interfund transfers -- -- -- -- -- -- ------------------------------------------------------------------------------ (73,012) (23,373) (9,801) (142,442) (297,806) (122,220) Deductions: Distributions to participants -- -- -- -- -- -- Fees -- -- -- -- -- -- ------------------------------------------------------------------------------ -- -- -- -- -- -- ------------------------------------------------------------------------------ Net deductions (73,012) (23,373) (9,801) (142,442) (297,806) (122,220) Net assets available for benefits at beginning of period 73,012 23,373 9,801 142,442 297,806 122,220 ------------------------------------------------------------------------------ Net assets available for benefits at end of period $ -- $ -- $ -- $ -- $ -- $ -- ==============================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------- Additions: Cash contributions: Employer $ -- $ -- $ -- $ -- $ -- Employee -- -- -- -- -- Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- -- -- -- -- Earnings from registered investment companies -- -- -- -- -- Interest income -- -- -- -- -- Transfer to other plans (15,106) (10,413) (154,795) (31,290) (880,258) Interfund transfers -- -- -- -- -- ------------------------------------------------------------------------- (15,106) (10,413) (154,795) (31,290) (880,258) Deductions: Distributions to participants -- -- -- -- -- Fees -- -- -- -- -- ------------------------------------------------------------------------- -- -- -- -- -- ------------------------------------------------------------------------- Net deductions (15,106) (10,413) (154,795) (31,290) (880,258) Net assets available for benefits at beginning of period 15,106 10,413 154,795 31,290 880,258 ------------------------------------------------------------------------- Net assets available for benefits at end of period $ -- $ -- $ -- $ -- $ -- =========================================================================
See accompanying notes. 49 50 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended December 31, 1997
LIFESTYLE GROWTH AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------- Additions: Cash contributions: Employer $ 14,822 $ 2,558 $ 990 $ 25,084 $ 83,312 $ 17,563 Employee 6,822 1,754 389 14,009 42,698 8,791 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 34,609 8,566 4,890 94,248 134,927 -- Earnings from registered investment companies -- -- -- -- -- 63,976 Interest income -- -- -- -- -- -- Transfer to other plans (191,129) (28,205) (98,380) (592,687) (3,326,938) (275,985) Interfund transfers (36,119) (7,908) 72,235 (17,285) 171,695 86,629 ------------------------------------------------------------------------------- (170,995) (23,235) (19,876) (476,631) (2,894,306) (99,026) Deductions: Distributions to participants 10,633 4,290 93 17,389 360,591 12,724 Fees -- -- -- -- 1,400 -- ------------------------------------------------------------------------------- 10,633 4,290 93 17,389 361,991 12,724 ------------------------------------------------------------------------------- Net deductions (181,628) (27,525) (19,969) (494,020) (3,256,297) (111,750) Net assets available for benefits at beginning of year 254,640 50,898 29,770 636,462 3,554,103 233,970 ------------------------------------------------------------------------------- Net assets available for benefits at end of year $ 73,012 $23,373 $ 9,801 $142,442 $ 297,806 $122,220 ===============================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------- Additions: Cash contributions: Employer $ 3,023 $ 3,099 $ 23,801 $ -- $ 174,252 Employee 1,791 1,904 9,902 -- 88,060 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- -- 123,211 -- 400,451 Earnings from registered investment companies 13,685 8,049 -- -- 85,710 Interest income -- -- -- 9,127 9,127 Transfer to other plans (106,003) (60,995) (476,390) (297,720) (5,454,432) Interfund transfers 72,167 4,451 (296,125) (49,740) -- ------------------------------------------------------------------------- (15,337) (43,492) (615,601) (338,333) (4,696,832) Deductions: Distributions to participants 1,110 370 47,144 -- 454,344 Fees -- -- 28 -- 1,428 ------------------------------------------------------------------------- 1,110 370 47,172 -- 455,772 ------------------------------------------------------------------------- Net deductions (16,447) (43,862) (662,773) (338,333) (5,152,604) Net assets available for benefits at beginning of year 31,553 54,275 817,568 369,623 6,032,862 ------------------------------------------------------------------------- Net assets available for benefits at end of year $ 15,106 $ 10,413 $ 154,795 $ 31,290 $ 880,258 =========================================================================
See accompanying notes. 50 51 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended December 31, 1996
DREYFUS LIFESTYLE DREYFUS SMALL GROWTH LIFESTYLE LIFESTYLE ALLIANCE FIXED DISCIPLINED COMPANY AND INCOME GROWTH INCOME EQUITY INCOME STOCK VALUE FUND FUND FUND FUND FUND FUND FUND ------------------------------------------------------------------------------ Additions: Cash contributions: Employer $ 9,312 $ 898 $ 766 $ 31,745 $ 256,863 $ 14,857 $ 412 Employee 5,151 785 472 35,473 136,058 10,767 372 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 16,317 5,386 1,436 83,357 221,715 -- -- Earnings from registered investment companies -- -- -- -- -- 37,487 3,537 Interest income -- -- -- 4 37 -- -- Dividend income -- -- -- -- -- -- -- Net appreciation in fair value of investments -- -- -- -- -- -- -- Transfer (to) from other plans (1,565) -- -- (7,395) (58,701) 11 (10,860) Interfund transfers 251,085 43,859 27,096 144,953 (379,553) 189,389 38,092 ------------------------------------------------------------------------------ 280,300 50,928 29,770 288,137 176,419 252,511 31,553 Deductions: Distributions to participants 25,660 30 -- 42,763 330,808 18,541 -- Fees -- -- -- -- 1,241 -- -- ------------------------------------------------------------------------------ 25,660 30 -- 42,763 332,049 18,541 -- ------------------------------------------------------------------------------ Net additions 254,640 50,898 29,770 245,374 (155,630) 233,970 31,553 (deductions) Net assets available for benefits at beginning of year -- -- -- 391,088 3,709,733 -- -- ------------------------------------------------------------------------------ Net assets available for benefits at end of year $254,640 $50,898 $29,770 $636,462 $3,554,103 $233,970 $31,553 ==============================================================================
DREYFUS INTERNATIONAL COMPANY STOCK VALUE STOCK INDEX DIVERSIFIED PARTICIPANT FUND FUND FUND FUND LOANS TOTAL ---------------------------------------------------------------------- Additions: Cash contributions: Employer $ 1,747 $ 71,220 $ 11,300 $ 5,294 $ -- $ 404,414 Employee 1,241 31,537 9,747 8,621 -- 240,224 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- 122,236 -- 8,224 -- 458,671 Earnings from registered investment companies 2,932 -- 6,685 -- -- 50,641 Interest income -- 32 120 2 24,409 24,604 Dividend income -- 5,119 -- -- -- 5,119 Net appreciation in fair value of investments -- 62,690 -- -- -- 62,690 Transfer (to) from other plans -- 6,304 (9,861) 862 -- (81,205) Interfund transfers 48,355 (111,806) (107,732) (202,192) 58,454 -- ---------------------------------------------------------------------- 54,275 187,332 (89,741) (179,189) 82,863 1,165,158 Deductions: Distributions to participants -- 123,415 11,868 3,913 -- 556,998 Fees -- 1,100 -- -- -- 2,341 ---------------------------------------------------------------------- -- 124,515 11,868 3,913 -- 559,339 ---------------------------------------------------------------------- Net additions 54,275 62,817 (101,609) (183,102) 82,863 605,819 (deductions) Net assets available for benefits at beginning of year -- 754,751 101,609 183,102 286,760 5,427,043 ---------------------------------------------------------------------- Net assets available for benefits at end of year $54,275 $817,568 $ -- $ -- $369,623 $6,032,862 ======================================================================
See accompanying notes. 51 52 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Notes to Financial Statements January 31, 1998 and December 31, 1997 1. SIGNIFICANT ACCOUNTING POLICIES Investments are stated at fair value determined as follows: Allegheny Teledyne Incorporated (Allegheny Teledyne) common stock in the Company Stock Fund is stated at the quoted market price on the New York Stock Exchange. The Fixed Income Fund is stated at cost plus net earnings, which approximates market value. 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. Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 presentation. 2. DESCRIPTION OF THE PLAN The purpose of the Savings and Security Plan of the Tubular Products/Plate Products Division of Allegheny Ludlum Corporation (the Plan) is to provide a savings and retirement plan to eligible employees of the Tubular Products/Plate Products Divisions 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 participant's 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. Union represented participants can elect to defer up to 18% effective July 1, 1997. ALC will match 50% of participant deferrals up to 8% of each participant's deferral based on years of continuous service as described in the Plan. In addition, ALC will contribute 6.5% of nonrepresented participant's monthly eligible wages regardless if they elect to contribute to the savings part of the Plan and 5% for represented participants. Effective July 1, 1997, the security contribution for represented participants increased to 6.5%. Participants at the Tubular Products Division also receive a Company contribution of $43.34 per month. 52 53 2. DESCRIPTION OF THE PLAN (CONTINUED) During 1996, the Plan was amended to allow for additional investment options and to discontinue the Stock Index Fund and Diversified Fund investment options. The investment options provided by the Plan are as follows: Lifestyle Growth and Income Fund--invests in equity and fixed income securities and may invest up to 15% of its assets in international securities. Lifestyle Growth Fund--invests in equity and fixed income securities and may invest up to 25% of its assets in international securities. Lifestyle Income Fund--consists of common stock, fixed income securities and short-term money market instruments. Alliance Equity Fund--consists of common stocks. 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. Dreyfus Disciplined Stock Fund--invests in equity securities and may invest up to 20% of its assets in high quality money market accounts. 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. Stock Index Fund--invests in a collective trust that invests in common stocks of companies comprising the S&P 500. Diversified Fund--consists of a combination of common or preferred capital stocks, bonds, notes, and debentures. 53 54 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 $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 6 to 60 months, and primary residence loans are repaid up to 180 months. Payments are made by payroll deductions. In the event that the Plan is partially or completely terminated, or ALC permanently discontinues making contributions, all amounts credited to the accounts of affected participants become fully vested and nonforfeitable. In March 1997, the Tubular Products Division of Allegheny Ludlum Corporation was sold to International Tubular Products Corporation (ITPC). As a result, ITPC has assumed all net assets and administrative responsibilities for the active employees of the Tubular Products Division. The net assets related to the employees of the Plate Products Division and the terminated employees of the Tubular Products Division have remained in the Plan. Effective January 1, 1998, the remaining Plan assets were merged into another plan, the Allegheny Ludlum Corporation Retirement Savings Plan (RSP Plan), sponsored by ALC. The investment options in the RSP Plan are consistent with the Plan with the availability of an additional self-directed investment option. Participants' contributions will be limited to 14% versus 16% of compensation and participants at the Plate Products Division are not eligible to receive the fixed dollar contribution. All other provisions are generally consistent with that of the Plan. Information about the Plan is contained in the Summary Plan Description. Copies of the Summary Plan Description are available from the Allegheny Teledyne Personnel and Compensation Committee (the Committee). 54 55 3. INVESTMENTS The Plan is a participant in the ALC Fixed Income Master Trust, the ALC Alliance Equity Master Trust, ALC ATI Common Stock Master Trust, ALC Lifestyle Growth Fund Master Trust, ALC Lifestyle Income Fund Master Trust and ALC Lifestyle Growth and Income Fund Master Trust. The Plan's participating interests in these master trusts as of December 31 were as follows:
1997 1996 -------------------------------------------- ALC Fixed Income Master Trust 0.22% 2.51% ALC Alliance Equity Master Trust 0.24% 1.19% ALC ATI Common Stock Master Trust 0.43% 2.30% ALC Lifestyle Growth Fund Master Trust 0.45% 2.61% ALC Lifestyle Income Fund Master Trust 0.54% 5.04% ALC Lifestyle Growth and Income Fund Master Trust 0.32% 1.41%
The composition of the net assets of the ALC Fixed Income Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 -------------------------------- Guaranteed investment contracts: Confederation Life Insurance Company $ 29,118 $ 4,024,149 Continental Assurance Company 6,718,924 9,404,989 John Hancock Life Insurance Company 2,600,000 -- Life Insurance Company of Virginia 8,725,219 15,918,713 New York Life Insurance Company 15,169,828 14,124,589 Pacific Mutual Life Insurance Company 5,793,190 5,441,658 Peoples Security Life Insurance Company 11,038,629 10,403,430 Prudential Insurance Company 6,144,220 14,396,590 Southland Life Insurance Company 16,288,645 15,200,545 Security Life of Denver -- 5,000,000 Protective Life Insurance Company -- 3,751,970 Transamerica Occidental 10,936,663 10,597,526 -------------------------------- 83,444,436 108,264,159 55 56 3. INVESTMENTS (CONTINUED) 1997 1996 ------------------------------------ Synthetic contracts: Caisse des Depots et Consignations $ 3,879,321 $ 3,642,950 Peoples Security 2,948,698 -- Transamerica Occidental 13,865,850 -- Union Bank of Switzerland 5,937,712 5,920,612 Westdeutsche Landesbank 13,727,581 13,668,143 ------------------------------------ 40,359,162 23,231,705 Temporary short-term investments 10,765,309 9,512,226 Accrued interest receivable 733,753 655,473 Other payables (6,169) (4,306) ------------------------------------ Total net assets $135,296,491 $141,659,257 ==================================== In May 1997, the Allegheny Ludlum Corporation 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 Allegheny Ludlum Corporation Fixed Income Master Trust. The composition of net assets of the ALC Alliance Equity Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ------------------------------------ Investment in registered investment companies: Alliance Equity Fund S.A. #4 (865.1940 and 994.6310 shares, respectively) $60,199,619 $53,579,310 Cash 90 -- Operating payables (10,341) (16,348) ------------------------------------ Total net assets $60,189,368 $53,562,962 ==================================== 56 57 3. INVESTMENTS (CONTINUED) The composition of net assets of the ALC ATI Common Stock Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------- Allegheny Teledyne Incorporated Common Stock (1,347.732 and 1,537.708 shares, respectively) $34,872,566 $35,367,284 Receivables 4,527 58,750 Short Term Investment Fund 738,595 48,275 Operating payables (822) (564) -------------------------------- Total net assets $35,614,866 $35,473,745 ================================
The composition of assets of the ALC Lifestyle Growth Fund Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------- Dreyfus Lifestyle Growth Fund $5,117,053 $1,949,121 Operating payables (5) (1) -------------------------------- $5,117,048 $1,949,120 ================================
The composition of assets of the ALC Lifestyle Income Fund Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------- Dreyfus Lifestyle Income Fund $1,825,632 $590,191 Operating payables (2) -- -------------------------------- $1,825,630 $590,191 ================================
57 58 3. INVESTMENTS (CONTINUED) The composition of assets of the ALC Lifestyle Growth and Income Fund Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ----------------------------------- Dreyfus Lifestyle Growth and Income Fund $22,740,752 $18,049,004 Receivables 56 1 ----------------------------------- $22,740,808 $18,049,005 =================================== Detail information regarding the composition of the various Lifestyle Funds are reported in the separate collective trust filings. The composition of the changes in net assets of the various Master Trusts is as follows:
ALC FIXED INCOME MASTER ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER TRUST TRUST TRUST ---------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31 ---------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 ---------------------------------------------------------------------------------------------- Investment income: Interest income (loss) $ 8,694,877 $ 8,225,640 $ -- $ 16,937 $ (1,554) $ 15,713 Realized gains on sale of investments -- -- -- -- 1,835,342 1,588,011 Unrealized appreciation in fair value of investments -- -- -- -- 2,318,151 3,346,346 Dividends -- -- -- -- 837,662 537,617 Net gain, registered investment companies -- -- 13,819,313 7,335,440 -- -- Net gain, common collective funds 468,281 743,008 -- -- 73,411 -- Other income 1,343 -- -- -- -- -- Administrative expenses (189,938) (256,059) (211,873) (173,713) (27,286) (14,043) Transfers (15,337,329) (10,804,451) (6,981,034) 5,469,649 (4,894,605) 30,000,101 ---------------------------------------------------------------------------------------------- Net increase (decrease) (6,362,766) (2,091,862) 6,626,406 12,648,313 141,121 35,473,745 Total net assets at beginning of year 141,659,257 143,751,119 53,562,962 40,914,649 35,473,745 -- ---------------------------------------------------------------------------------------------- Total net assets at end of year $135,296,491 $141,659,257 $60,189,368 $53,562,962 $35,614,866 $35,473,745 ==============================================================================================
58 59 3. INVESTMENTS (CONTINUED)
ALC LIFESTYLE GROWTH FUND ALC LIFESTYLE INCOME FUND ALC LIFESTYLE GROWTH AND MASTER TRUST MASTER TRUST INCOME FUND MASTER TRUST ---------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31 ---------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 ---------------------------------------------------------------------------------------------- Investment income: Interest income $ -- $ -- $ 105 $ -- $ 1 $ 110 Realized gains on sale of -- -- -- -- -- 3,769,730 investments Unrealized depreciation in fair value of -- -- -- -- -- (3,794,673) investments Net gain, common collective funds 882,650 113,120 152,034 24,356 3,853,009 1,384,385 Transfers 2,285,394 1,836,065 1,083,338 565,870 838,793 762,689 Administrative expenses (116) (65) (38) (35) -- (402) ---------------------------------------------------------------------------------------------- Net increase 3,167,928 1,949,120 1,235,439 590,191 4,691,803 2,121,839 Total net assets at beginning of year 1,949,120 -- 590,191 -- 18,049,005 15,927,166 ---------------------------------------------------------------------------------------------- Total net assets at end of year $5,117,048 $1,949,120 $1,825,630 $590,191 $22,740,808 $18,049,005 ==============================================================================================
The average yield for 1997 and 1996 for the ALC Fixed Income Master Trust was 6.57% and 6.43%, respectively. Credited interest rates on the contracts ranged from 5.60% to 8.18% and 5.24% to 8.18% for 1997 and 1996, 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 allocation of net earnings (losses) from master trusts on the statement of changes in net assets available for benefits. 59 60 3. INVESTMENTS (CONTINUED) The changes in cumulative net unrealized gain (loss) for the years ended December 31, 1997 and 1996 are as follows:
DREYFUS DREYFUS LIFESTYLE DREYFUS SMALL INTER- GROWTH LIFESTYLE LIFESTYLE ALLIANCE DISCIPLINED COMPANY NATIONAL COMPANY STOCK AND INCOME GROWTH INCOME EQUITY STOCK VALUE VALUE STOCK INDEX DIVERSIFIED FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND TOTAL --------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1995 $ -- $ -- $ -- $ 144,868 $ -- $ -- $ -- $146,177 $ 18,002 $ 42,776 $ 351,823 Unrealized gain (loss) 15,499 4,503 1,293 (112,208) 4,313 (1,168) 1,569 (33,310) (18,002) (42,776) (180,287) --------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1996 15,499 4,503 1,293 32,660 4,313 (1,168) 1,569 112,867 -- -- 171,536 Unrealized gain (loss) (1,553) 420 (1,037) 63 8,319 2,966 (1,039) (81,643) -- -- (73,504) --------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1997 $13,946 $4,923 $ 256 $ 32,723 $12,632 $ 1,798 $ 530 $ 31,224 $ -- $ -- $ 98,032 =====================================================================================================================
4. INCOME TAX STATUS The Plan has received a determination letter from the Internal Revenue Service dated January 1, 1996, 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. Once qualified, the Plan is required to operate in conformity with the Code and ERISA to maintain its tax-exempt status. The 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. 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. 60 61 6. YEAR 2000 (UNAUDITED) Allegheny Teledyne has initiated formal communications with its significant service providers (plan trustee and plan recordkeeper) to determine the extent to which the Plan's systems or operations are vulnerable to those parties' failure to remediate their own Year 2000 issues. In addition, Allegheny Teledyne has been reviewing its own internal systems that impact the processing of employee benefits. Allegheny Teledyne expects that all necessary modifications to these internal systems will be completed prior to any significant impact on these internal systems. The Plan's service providers have indicated that they are presently taking steps to ensure that the Plan's systems and operations will be Year 2000 compliant. 61 62 SCHEDULES 62 63 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1997
DESCRIPTION UNITS/SHARES COST VALUE MARKET VALUE - --------------------------------------------------------------------------------------------------------------------- Dreyfus Disciplined Stock Fund*: Interest in Dreyfus Disciplined Stock Fund 3,927.389 shares $109,588 $122,220 Dreyfus Small Company Value Fund*: Interest in Dreyfus Small Company Value Fund 716.929 shares 13,308 15,106 Dreyfus International Value Fund*: Interest in Dreyfus International Value Fund 713.190 shares 9,883 10,413 Participant loans 9.25% to 9.50% -- 31,290 -------------------------------------------- $132,779 $179,029 ============================================
*Represents party-in-interest. 63 64 Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Item 27d--Schedule of Reportable Transactions Year ended December 31, 1997
PURCHASE PURCHASE SALE SELLING GAIN DESCRIPTION OF ASSETS TRANSACTIONS PRICE TRANSACTIONS PRICE (LOSS) - ----------------------------------------------------------------------------------------------------------------------- Type (i) Transactions Dreyfus Disciplined Stock Fund 1 $ 76,945 -- $ -- $ -- Dreyfus Disciplined Stock Fund -- -- 1 275,985 38,743 Dreyfus Small Company Value Fund 1 42,973 -- -- -- Dreyfus Small Company Value Fund -- -- 1 106,004 10,116 Dreyfus International Value Fund -- -- 1 60,995 8,406 Type (iii) Transactions Dreyfus Disciplined Stock Fund 37 156,730 -- -- -- Dreyfus Disciplined Stock Fund -- -- 32 332,455 42,538 Dreyfus Small Company Value Fund 36 117,112 -- -- -- Dreyfus Small Company Value Fund -- -- 9 147,244 10,446 Dreyfus International Value Fund 30 12,812 -- -- -- Dreyfus International Value Fund -- -- 4 64,724 8,766
There were no Type (ii) or (iv) transactions during the year ended December 31, 1997. 64 65 Audited Financial Statements SAVINGS AND SECURITY PLAN OF THE LOCKPORT AND WATERBURY FACILITIES OF ALLEGHENY LUDLUM CORPORATION Years ended December 31, 1997 and 1996 with Report of Independent Auditors 65 66 Savings and Security Plan of the Lockport and Waterbury Facilities of Allegheny Ludlum Corporation Audited Financial Statements Years ended December 31, 1997 and 1996 CONTENTS Report of Independent Auditors ...................................................... 67 Audited Financial Statements Statements of Net Assets Available for Benefits with Fund Information................ 68 Statements of Changes in Net Assets Available for Benefits with Fund Information..... 70 Notes to Financial Statements ....................................................... 72 Schedules Item 27a--Schedule of Assets Held for Investment Purposes ........................... 83 Item 27d--Schedule of Reportable Transactions........................................ 84
66 67 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 (the Plan) as of December 31, 1997 and 1996, 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, 1997 and 1996, 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, 1997, and reportable transactions for the year ended December 31, 1997, 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 statement of net assets available for benefits and the statement 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 June 5, 1998 67 68 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
LIFESTYLE GROWTH AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------ 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 ==============================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------- 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 =========================================================================
See accompanying notes. 68 69 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, 1996
LIFESTYLE GROWTH AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DREYFUS INCOME GROWTH INCOME EQUITY INCOME DISCIPLINED FUND FUND FUND FUND FUND STOCK FUND ------------------------------------------------------------------------------ ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $184,475 $30,780 $12,023 $323,553 $2,664,327 $ -- Interest in registered investment companies -- -- -- -- -- 150,006 Participant notes receivable -- -- -- -- -- -- ------------------------------------------------------------------------------ Net assets available for benefits $184,475 $30,780 $12,023 $323,553 $2,664,327 $150,006 ==============================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------ ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $ -- $ -- $636,089 $ -- $3,851,247 Interest in registered investment companies 24,817 17,917 -- -- 192,740 Participant notes receivable -- -- -- 117,137 117,137 ------------------------------------------------------------------------ Net assets available for benefits $24,817 $17,917 $636,089 $117,137 $4,161,124 ========================================================================
See accompanying notes. 69 70 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
LIFESTYLE GROWTH DREYFUS AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DISCIPLINED INCOME GROWTH INCOME EQUITY INCOME STOCK FUND FUND FUND FUND FUND FUND -------------------------------------------------------------------------------- ADDITIONS Cash 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: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 36,335 10,847 1,453 80,992 180,421 -- Earnings from 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 ================================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY VALUE VALUE STOCK PARTICIPANT FUND FUND FUND LOANS TOTAL -------------------------------------------------------------------------- ADDITIONS Cash contributions: Employer $ 13,963 $ 646 $ 15,303 $ -- $ 352,869 Employee 11,256 269 9,991 -- 213,427 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- -- 88,729 -- 398,777 Earnings from 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 ==========================================================================
See accompanying notes. 70 71 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, 1996
LIFESTYLE DREYFUS GROWTH DREYFUS SMALL AND LIFESTYLE LIFESTYLE ALLIANCE FIXED DISCIPLINED COMPANY INCOME GROWTH INCOME EQUITY INCOME STOCK VALUE FUND FUND FUND FUND FUND FUND FUND ------------------------------------------------------------------------------- ADDITIONS Cash contributions: Employer $ 7,798 $ 2,490 $ 100 $ 19,325 $ 327,408 $ 11,367 $ 1,994 Employee 6,939 2,134 132 29,848 159,431 12,076 2,109 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 11,857 2,293 181 43,018 141,856 -- -- Net gain from collective investment funds -- -- -- -- -- -- -- Earnings from registered investment companies -- -- -- -- -- 22,728 1,917 Interest income -- -- -- 3 36 -- -- Dividend income -- -- -- -- -- -- -- Net appreciation in fair value of investments -- -- -- -- -- -- -- Interfund transfers 158,660 23,863 11,610 14,108 (124,394) 104,133 18,797 Transfers from other plans -- -- -- -- -- -- -- ------------------------------------------------------------------------------- 185,254 30,780 12,023 106,302 504,337 150,304 24,817 Deductions: Distributions to participants 779 -- -- 2,339 33,596 298 -- Other -- -- -- -- 953 -- -- ------------------------------------------------------------------------------- 779 -- -- 2,339 34,549 298 -- ------------------------------------------------------------------------------- Net additions (deductions) 184,475 30,780 12,023 103,963 469,788 150,006 24,817 Net assets available for benefits at beginning of year -- -- -- 219,590 2,194,539 -- -- ------------------------------------------------------------------------------- Net assets available for benefits at end of year $184,475 $30,780 $12,023 $323,553 $2,664,327 $150,006 $24,817 ===============================================================================
DREYFUS INTERNATIONAL COMPANY STOCK VALUE STOCK INDEX DIVERSIFIED PARTICIPANT FUND FUND FUND FUND LOANS TOTAL ---------------------------------------------------------------------------------- ADDITIONS Cash contributions: Employer $ 703 $ 45,600 $ 3,012 $ 1,968 $ -- $ 421,765 Employee 840 30,785 7,007 11,667 -- 262,968 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts -- 99,569 -- 4,946 -- 303,720 Net gain from collective investment funds -- -- 1,969 -- -- 1,969 Earnings from registered investment companies 982 -- -- -- -- 25,627 Interest income -- 43 32 2 7,805 7,921 Dividend income -- 3,756 -- -- -- 3,756 Net appreciation in fair value of investments -- 43,671 -- -- -- 43,671 Interfund transfers 15,392 (86,743) (48,676) (126,872) 40,122 - Transfers from other plans -- 141 -- -- -- 141 ---------------------------------------------------------------------------------- 17,917 136,822 (36,656) (108,289) 47,927 1,071,538 Deductions: Distributions to participants -- 17,029 -- 267 -- 54,308 Other -- 1,192 -- -- -- 2,145 ---------------------------------------------------------------------------------- -- 18,221 -- 267 -- 56,453 ---------------------------------------------------------------------------------- Net additions (deductions) 17,917 118,601 (36,656) (108,556) 47,927 1,015,085 Net assets available for benefits at beginning of year -- 517,488 36,656 108,556 69,210 3,146,039 ---------------------------------------------------------------------------------- Net assets available for benefits at end of year $17,917 $636,089 $ -- $ -- $117,137 $4,161,124 ==================================================================================
See accompanying notes. 71 72 Savings and Security Plan of the Lockport and Waterbury Facilities of Allegheny Ludlum Corporation Notes to Financial Statements December 31, 1997 1. SIGNIFICANT ACCOUNTING POLICIES Investments are stated at fair value determined as follows: Allegheny Teledyne Incorporated (Allegheny Teledyne) common stock in the Company Stock Fund is stated at the quoted market price on the New York Stock Exchange. The Fixed Income Fund is stated at cost plus net earnings, which approximates market value. 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. Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 presentation. 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 subjected 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. In addition, ALC will contribute 5% of monthly eligible wages regardless if participants elect to contribute to the savings portion of the Plan. Effective July 1, 1996, the security contribution increased to 6.5%. ALC also contributes $.50 for each hour participants work. 72 73 2. DESCRIPTION OF THE PLAN (CONTINUED) An employee can elect to contribute an additional amount up to a maximum of 16% of the employee's salary. Additional contributions over the basic amount are not matched by the Plan Sponsor. In addition, the Plan Sponsor contributes 5% of all eligible employees' salaries to the Security part of the Plan regardless of whether or not the employee elects to participate in the Savings part. During 1996, the Plan was amended to allow for additional investment options and to discontinue the Stock Index Fund and Diversified Fund investment options. The investment options provided by the Plan are as follows: Lifestyle Growth and Income Fund--invests in equity and fixed income securities and may invest up to 15% of its assets in international securities. Lifestyle Growth Fund--invests in equity and fixed income securities and may invest up to 25% of its assets in international securities. Lifestyle Income Fund--consists of common stock, fixed income securities and short-term money market instruments. Alliance Equity Fund--consists of common stocks. 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. Dreyfus Disciplined Stock Fund--invests in equity securities and may invest up to 20% of its assets in high quality money market accounts. 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. 73 74 2. DESCRIPTION OF THE PLAN (CONTINUED) Stock Index Fund--invests in a collective trust that invests in common stocks of companies comprising the S&P 500. Diversified Fund--consists of a combination of common or preferred capital stocks, bonds, notes, and debentures. 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 $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 6 to 60 months, and primary residence loans are repaid up to 180 months. Payments are made by payroll deductions and cannot exceed 15% of the participant's monthly base salary. 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. Information about the Plan is contained in the Summary Plan Description. Copies of the Summary Plan Description are available from the Allegheny Teledyne Personnel and Compensation Committee (the Committee). 74 75 3. INVESTMENTS 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, the ALC Lifestyle Growth Fund Master Trust, the ALC Lifestyle Income Fund Master Trust, and the ALC Lifestyle Growth and Income Fund Master Trust. The Plan's participating interests in these master trusts as of December 31 were as follows: 1997 1996 ------------------------- ALC Fixed Income Master Trust 2.13% 1.88% ALC Alliance Equity Master Trust .39% 0.60% ALC ATI Common Stock Master Trust 1.44% 1.79% ALC Lifestyle Growth Fund Master Trust .83% 1.58% ALC Lifestyle Income Fund Master Trust 1.31% 2.04% ALC Lifestyle Growth and Income Fund Master Trust .79% 1.02% The composition of the net assets of the ALC Fixed Income Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 ------------------------------------ Guaranteed investment contracts: Confederation Life Insurance Company $ 29,118 $ 4,024,149 Continental Assurance Company 6,718,924 9,404,989 John Hancock Life Insurance Company 2,600,000 - Life Insurance Company of Virginia 8,725,219 15,918,713 New York Life Insurance Company 15,169,828 14,124,589 Pacific Mutual Life Insurance Company 5,793,190 5,441,658 Peoples Security Life Insurance Company 11,038,629 10,403,430 Prudential Insurance Company 6,144,220 14,396,590 Southland Life Insurance Company 16,288,645 15,200,545 Security Life of Denver - 5,000,000 Protective Life Insurance Company - 3,751,970 Transamerica Occidental 10,936,663 10,597,526 ------------------------------------ 83,444,436 108,264,159 75 76 3. INVESTMENTS (CONTINUED) 1997 1996 -------------------------------- Synthetic contracts: Caisse des Depots et Consignations 3,879,321 3,642,950 Peoples Security 2,948,698 -- Transamerica Occidental 13,865,850 -- Union Bank of Switzerland 5,937,712 5,920,612 Westdeutsche Landesbank 13,727,581 13,668,143 -------------------------------- 40,359,162 23,231,705 Temporary short-term investments 10,765,309 9,512,226 Accrued interest receivable 733,753 655,473 Other payables (6,169) (4,306) -------------------------------- Total net assets $135,296,491 $141,659,257 ================================ In May 1997, the Allegheny Ludlum Corporation 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 Allegheny Ludlum Corporation Fixed Income Master Trust. The composition of net assets of the ALC Alliance Equity Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 -------------------------------- Investment in registered investment companies: Alliance Equity Fund S.A. #4 (865.1940 and 994.6310 shares, respectively) $60,199,619 $53,579,310 Cash 90 -- Operating payables (10,341) (16,348) -------------------------------- Total net assets $60,189,368 $53,562,962 ================================ 76 77 3. INVESTMENTS (CONTINUED) The composition of net assets of the ALC ATI Common Stock Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 ------------------------------------- Allegheny Teledyne Incorporated Common Stock (1,347.732 and 1,537.708 shares, respectively) $34,872,566 $35,367,284 Receivables 4,527 58,750 Short Term Investment Fund 738,595 48,275 Operating payables (822) (564) ------------------------------------- Total net assets $35,614,866 $35,473,745 =====================================
The composition of assets of the ALC Lifestyle Growth Fund Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 ------------------------------------- Dreyfus Lifestyle Growth Fund $5,117,053 $1,949,121 Operating payables (5) (1) ------------------------------------- $5,117,048 $1,949,120 =====================================
The composition of assets of the ALC Lifestyle Income Fund Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 ------------------------------------- Dreyfus Lifestyle Income Fund $1,825,632 $590,191 Operating payables (2) -- ------------------------------------- $1,825,630 $590,191 =====================================
77 78 3. INVESTMENTS (CONTINUED) The composition of assets of the ALC Lifestyle Growth and Income Fund Master Trust at December 31, 1997 and 1996 was as follows: 1997 1996 --------------------------------- Dreyfus Lifestyle Growth and Income Fund $22,740,752 $18,049,004 Receivables 56 1 --------------------------------- $22,740,808 $18,049,005 ================================= Detail information regarding the composition of the various Lifestyle funds are reported in the separate collective trust filings. The composition of the changes in net assets of the various master trusts is as follows:
ALC FIXED INCOME MASTER ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER TRUST TRUST TRUST ---------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31 ---------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 ---------------------------------------------------------------------------------------------- Investment income: Interest income (loss) $ 8,694,877 $ 8,225,640 $ -- $ 16,937 $ (1,554) $ 15,713 Realized gains on sale of -- -- -- -- 1,835,342 1,588,011 investments Unrealized appreciation in fair value of -- -- -- -- 2,318,151 3,346,346 investments Dividends -- -- -- -- 837,662 537,617 Net gain, registered investment -- -- 13,819,313 7,335,440 -- -- companies Net gain, common collective funds 468,281 743,008 -- -- 73,411 -- Other income 1,343 -- -- -- -- -- Administrative (189,938) (256,059) (211,873) (173,713) (27,286) (14,043) expenses Transfers (15,337,329) (10,804,451) (6,981,034) 5,469,649 (4,894,605) 30,000,101 ---------------------------------------------------------------------------------------------- Net increase (6,362,766) (2,091,862) 6,626,406 12,648,313 141,121 35,473,745 (decrease) Total net assets at beginning of year 141,659,257 143,751,119 53,562,962 40,914,649 35,473,745 -- ---------------------------------------------------------------------------------------------- Total net assets at end of year $135,296,491 $141,659,257 $60,189,368 $53,562,962 $35,614,866 $35,473,745 ==============================================================================================
78 79 3. INVESTMENTS (CONTINUED)
ALC LIFESTYLE GROWTH FUND ALC LIFESTYLE INCOME FUND ALC LIFESTYLE GROWTH AND MASTER TRUST MASTER TRUST INCOME FUND MASTER TRUST ---------------------------------------------------------------------------------------------- YEAR ENDED DECEMBER 31 ---------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 ---------------------------------------------------------------------------------------------- Investment income: Interest income $ -- $ -- $ 105 $ -- $ 1 $ 110 Realized gains on sale of investments -- -- -- -- -- 3,769,730 Unrealized depreciation in fair value of investments -- -- -- -- -- (3,794,673) Net gain, common collective funds 882,650 113,120 152,034 24,356 3,853,009 1,384,385 Transfers 2,285,394 1,836,065 1,083,338 565,870 838,793 762,689 Administrative expenses (116) (65) (38) (35) -- (402) ---------------------------------------------------------------------------------------------- Net increase 3,167,928 1,949,120 1,235,439 590,191 4,691,803 2,121,839 Total net assets at beginning of year 1,949,120 -- 590,191 -- 18,049,005 15,927,166 ---------------------------------------------------------------------------------------------- Total net assets at end of year $5,117,048 $1,949,120 $1,825,630 $590,191 $22,740,808 $18,049,005 ==============================================================================================
The average yield for 1997 and 1996 for the ALC Fixed Income Master Trust was 6.57% and 6.43%, respectively. Credited interest rates on the contracts ranged from 5.60% to 8.18% and 5.24% to 8.18% for 1997 and 1996, 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 allocation of net earnings (losses) from master trusts on the statement of changes in net assets available for benefits. 79 80 3. INVESTMENTS (CONTINUED) The changes in cumulative net unrealized gain (loss) for the years ended December 31, 1997 and 1996 are as follows:
LIFESTYLE DREYFUS DREYFUS GROWTH DREYFUS SMALL INTER- AND LIFESTYLE LIFESTYLE ALLIANCE DISCIPLINED COMPANY NATIONAL COMPANY STOCK INCOME GROWTH INCOME EQUITY STOCK VALUE VALUE STOCK DIVERSIFIED INDEX FUND FUND FUND FUND FUND FUND FUND FUND FUND FUND TOTAL ----------------------------------------------------------------------------------------------------------------- Balance at December 31, 1995 $ -- $ -- $ -- $82,346 $ -- $ -- $ -- $67,259 $ 25,598 $19,498 $194,701 Unrealized gain (loss) 11,461 1,931 181 (67,296) 1,348 (1,010) 503 21,594 (25,598) (19,498) (76,384) ----------------------------------------------------------------------------------------------------------------- Balance at December 31, 1996 11,461 1,931 181 15,050 1,348 (1,010) 503 88,853 -- -- 118,317 Unrealized gain (loss) 22,418 5,681 (55) 41,900 (15,234) 35,252 (1,215) 9,417 -- -- 98,164 ----------------------------------------------------------------------------------------------------------------- Balance at December 31, 1997 $33,879 $7,612 $126 $56,950 $(13,886) $34,242 $ (712) $98,270 $ -- $ -- $216,481 =================================================================================================================
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 that the trust, therefore, is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code and ERISA to maintain its tax-exempt status. The 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. 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. 80 81 6. YEAR 2000 (UNAUDITED) Allegheny Teledyne has initiated formal communications with its significant service providers (plan trustee and plan recordkeeper) to determine the extent to which the Plan's systems or operations are vulnerable to those parties' failure to remediate their own Year 2000 issues. In addition, Allegheny Teledyne has been reviewing its own internal systems that impact the processing of employee benefits. Allegheny Teledyne expects that all necessary modifications to these internal systems will be completed prior to any significant impact on these internal systems. The Plan's service providers have indicated that they are presently taking steps to ensure that the Plan's systems and operations will be Year 2000 compliant. 81 82 SCHEDULES 82 83 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, 1997
DESCRIPTION UNITS/SHARES COST MARKET VALUE - --------------------------------------------------------------------------------------------------------------------- Dreyfus Disciplined Stock Fund*: Interest in Dreyfus Disciplined Stock Fund 17,625.152 shares $ 562,381 $ 548,495 Dreyfus Small Company Value Fund*: Interest in Dreyfus Small Company Value Fund 29,088.890 shares 578,661 612,903 Dreyfus International Value Fund*: Interest in Dreyfus International Value Fund 1,209.206 shares 18,366 17,654 Participant loans 9.25% to 9.50% -- 152,629 -------------------------------------------- $1,159,408 $1,331,681 ============================================
* Party-in-interest 83 84 Savings and Security Plan of the Lockport and Waterbury Facilities of Allegheny Ludlum Corporation Item 27d--Schedule of Reportable Transactions Year ended December 31, 1997
PURCHASE PURCHASE SALE SELLING GAIN DESCRIPTION OF ASSETS TRANSACTIONS PRICE TRANSACTIONS PRICE (LOSS) - ---------------------------------------------------------------------------------------------------------------------- Type (i) Transactions Dreyfus Small Company Value Fund 1 $ 28,338 -- $ -- $ -- Dreyfus Small Company Value Fund 1 40,616 -- -- -- Dreyfus Small Company Value Fund 1 45,271 -- -- -- Dreyfus Small Company Value Fund 1 36,319 -- -- -- Dreyfus Small Company Value Fund 1 84,830 -- -- -- Dreyfus Small Company Value Fund 1 58,913 -- -- -- Dreyfus Small Company Value Fund 1 26,943 -- -- -- Dreyfus Small Company Value Fund 1 31,491 -- -- -- Dreyfus Small Company Value Fund -- -- 1 85,237 13,608 Dreyfus Small Company Value Fund 1 57,883 -- -- -- Dreyfus Small Company Value Fund -- -- 1 58,889 5,965 Dreyfus Small Company Value Fund 1 49,683 -- -- -- Dreyfus Small Company Value Fund 1 16,954 -- -- -- Dreyfus Small Company Value Fund 1 21,961 -- -- -- Dreyfus Small Company Value Fund 1 24,676 -- -- -- Dreyfus Small Company Value Fund 1 16,700 -- -- -- Dreyfus Small Company Value Fund 1 19,022 -- -- -- Dreyfus Disciplined Stock Fund 1 16,209 -- -- -- Dreyfus Disciplined Stock Fund -- 18,455 -- -- -- Dreyfus Disciplined Stock Fund 1 16,994 -- -- -- Dreyfus Disciplined Stock Fund 1 36,319 -- -- -- Dreyfus Disciplined Stock Fund -- -- 1 60,738 10,690 Dreyfus Disciplined Stock Fund 1 86,825 -- -- -- Dreyfus Disciplined Stock Fund -- -- 1 90,908 14,093 Dreyfus Disciplined Stock Fund 1 149,768 -- -- -- Dreyfus Disciplined Stock Fund -- -- 1 152,809 18,796 Dreyfus Disciplined Stock Fund 1 152,625 -- -- -- Dreyfus Disciplined Stock Fund 1 49,683 -- -- -- Type (iii) Transactions Dreyfus Disciplined Stock Fund 73 664,005 -- -- -- Dreyfus Disciplined Stock Fund -- -- 14 355,400 47,797 Dreyfus Small Company Value Fund 77 697,812 -- -- -- Dreyfus Small Company Value Fund -- -- 12 174,096 18,710 Dreyfus International Value Fund 29 19,007 -- -- -- Dreyfus International Value Fund -- -- 6 18,941 290
There were no Type (ii) or (iv) transactions during the year ended December 31, 1997. 84 85 Audited Financial Statements ALLEGHENY LUDLUM CORPORATION PERSONAL RETIREMENT AND 401(k) SAVINGS ACCOUNT PLAN Years ended December 31, 1997 and 1996 with Report of Independent Auditors 85 86 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Audited Financial Statements Years ended December 31, 1997 and 1996 CONTENTS Report of Independent Auditors ................................................................................. 87 Audited Financial Statements Statements of Net Assets Available for Benefits with Fund Information........................................... 88 Statements of Changes in Net Assets Available for Benefits with Fund Information................................ 90 Notes to Financial Statements .................................................................................. 92 Schedules Item 27a--Schedule of Assets Held for Investment Purposes........................................................ 103 Item 27d--Schedule of Reportable Transactions.................................................................... 104
86 87 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 (the Plan) as of December 31, 1997 and 1996, 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, 1997 and 1996, 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, 1997 and reportable transactions for the year ended December 31, 1997, 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 statement of net assets available for benefits and the statement 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 June 5, 1998 87 88 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Statement of Net Assets Available for Benefits with Fund Information December 31, 1997
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED GROWTH AND GROWTH INCOME EQUITY INCOME INCOME FUND FUND FUND FUND FUND -------------------------------------------------------------------- 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 Participant loans - - - - - ==================================================================== Net assets available for benefits $3,395,294 $890,297 $299,973 $10,447,614 $32,302,520 ====================================================================
DREYFUS SMALL DREYFUS DREYFUS COMPANY INTERNATIONAL COMPANY DISCIPLINED VALUE VALUE STOCK PARTICIPANT STOCK FUND FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------------------ ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $ - $ - $ - $7,256,888 $ - $54,592,586 Interest in registered 5,119,259 2,939,535 586,660 - - 8,645,454 investment companies Participant loans - - - - 2,607,131 2,607,131 ==================================================================================== Net assets available for benefits $5,119,259 $2,939,535 $586,660 $7,256,888 $2,607,131 $65,845,171 ====================================================================================
See accompanying notes. 88 89 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Statement of Net Assets Available for Benefits with Fund Information December 31, 1996
LIFESTYLE LIFESTYLE LIFESTYLE ALLIANCE FIXED GROWTH AND GROWTH INCOME EQUITY INCOME INCOME FUND FUND FUND FUND FUND -------------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $2,692,942 $255,493 $109,210 $7,928,265 $31,266,989 Interest in registered investment - - - - - companies Participant loans - - - - - ==================================================================== Net assets available for benefits $2,692,942 $255,493 $109,210 $7,928,265 $31,266,989 ====================================================================
DREYFUS SMALL DREYFUS DREYFUS COMPANY INTERNATIONAL COMPANY DISCIPLINED VALUE VALUE STOCK PARTICIPANT STOCK FUND FUND FUND FUND LOANS TOTAL --------------------------------------------------------------------------------------- ASSETS Investments: Interest in Allegheny Ludlum Corporation Master Trusts $ - $ - $ - $6,173,124 $ - $48,426,023 Interest in registered investment 2,338,361 498,316 208,387 - - 3,045,064 companies Participant loans - - - - 1,964,483 1,964,483 ======================================================================================= Net assets available for benefits $2,338,361 $498,316 $208,387 $6,173,124 $1,964,483 $53,435,570 =======================================================================================
See accompanying notes. 89 90 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
LIFESTYLE GROWTH LIFESTYLE LIFESTYLE ALLIANCE FIXED AND INCOME GROWTH INCOME EQUITY INCOME FUND FUND FUND FUND FUND ---------------------------------------------------------------- ADDITIONS Cash contributions: Employer $ 68,380 $ 28,734 $ 8,998 $ $ 1,975,995 201,521 Employee 241,851 114,142 37,916 751,807 2,098,166 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 570,237 134,743 25,255 2,223,395 2,075,054 Earnings from registered investment companies - - - - - Interest income - - - - - Interfund transfers (95,907) 362,740 119,771 (511,598) (3,241,130) ---------------------------------------------------------------- 784,561 640,359 191,940 2,665,125 2,908,085 Deductions: Distributions to participants 82,209 5,555 1,177 145,776 1,872,554 ---------------------------------------------------------------- 82,209 5,555 1,177 145,776 1,872,554 ---------------------------------------------------------------- Net additions 702,352 634,804 190,763 2,519,349 1,035,531 Net assets available for benefits at beginning of year 2,692,942 255,493 109,210 7,928,265 31,266,989 ---------------------------------------------------------------- Net assets available for benefits at end of year $3,395,294 $890,297 $299,973 $10,447,614 $32,302,520 ================================================================
DREYFUS DREYFUS SMALL DREYFUS DISCIPLINED COMPANY INTERNATIONAL COMPANY STOCK VALUE VALUE STOCK PARTICIPANT FUND FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------------------------- ADDITIONS Cash contributions: Employer $ 152,920 $ 91,965 $ 27,724 $ 229,621 $ $ 2,785,858 - Employee 509,756 316,135 110,902 503,062 - 4,683,737 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts - - - 847,855 - 5,876,539 Earnings from registered investment companies 979,736 393,809 27,398 - - 1,400,943 Interest income - - - - 197,613 197,613 Interfund transfers 1,203,696 1,668,466 231,424 (182,497) 445,035 - ------------------------------------------------------------------------------------------- 2,846,108 2,470,375 397,448 1,398,041 642,648 14,944,690 Deductions: Distributions to participants 65,210 29,156 19,175 314,277 - 2,535,089 ------------------------------------------------------------------------------------------- 65,210 29,156 19,175 314,277 - 2,535,089 ------------------------------------------------------------------------------------------- Net additions 2,780,898 2,441,219 378,273 1,083,764 642,648 12,409,601 Net assets available for benefits at beginning of year 2,338,361 498,316 208,387 6,173,124 1,964,483 53,435,570 ------------------------------------------------------------------------------------------- Net assets available for benefits at end of year $5,119,259 $2,939,535 $586,660 $7,256,888 $2,607,131 $65,845,171 ===========================================================================================
See accompanying notes. 90 91 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, 1996
LIFESTYLE DREYFUS GROWTH LIFESTYLE LIFESTYLE ALLIANCE FIXED DISCIPLINED AND INCOME GROWTH INCOME EQUITY INCOME STOCK DIVERSIFIED FUND FUND FUND FUND FUND FUND FUND ---------------------------------------------------------------------------------------- ADDITIONS Cash contributions: Employer $ 24,772 $ 5,491 $ 2,339 $ 141,489 $ 2,327,020 $ 46,719 $ 9,854 Employee 77,598 21,486 7,778 1,028,715 2,121,949 140,656 260,122 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts 202,963 18,207 3,466 1,051,113 1,848,325 - 89,867 Earnings from registered investment companies - 274 134 (126) (2) 187,323 42 Net gain from collective - - - - 1,792 120,163 - investment fund Interest income - - - 143 469 - - Dividend income - - - - - - - Net appreciation in fair value of investments - - - - - - - Transfer (to) from other ALC savings plans (8,810) (771) (770) 124,441 (230,235) (9,680) 82,921 Interfund transfers 2,424,263 211,059 96,505 219,643 (2,776,394) 1,863,139 (2,384,841) ---------------------------------------------------------------------------------------- 2,720,786 255,746 109,452 2,565,418 3,292,924 2,348,320 (1,942,035) Deductions: Distributions to participants 27,844 253 242 164,352 1,628,885 9,959 15,882 Other - - - 702 2,417 - 430 ---------------------------------------------------------------------------------------- 27,844 253 242 165,054 1,631,302 9,959 16,312 ---------------------------------------------------------------------------------------- Net additions (deductions) 2,692,942 255,493 109,210 2,400,364 1,661,622 2,338,361 (1,958,347) Net assets available for benefits at beginning of year - - - 5,527,901 29,605,367 - 1,958,347 ---------------------------------------------------------------------------------------- Net assets available for benefits at end of year $2,692,942 $255,493 $109,210 $7,928,265 $31,266,989 $2,338,361 $ - ========================================================================================
DREYFUS SMALL DREYFUS COMPANY INTERNATIONAL COMPANY STOCK VALUE VALUE STOCK INDEX PARTICIPANT FUND FUND FUND FUND LOANS TOTAL ------------------------------------------------------------------------------ ADDITIONS Cash contributions: Employer $ 6,717 $ 4,300 $ 306,033 $ 20,707 $ - $ 2,895,441 Employee 20,616 15,846 513,926 134,178 - 4,342,870 Investment income: Allocation of net earnings from Allegheny Ludlum Corporation Master Trusts - - 977,001 - - 4,190,942 Earnings from registered investment companies 35,615 7,195 74 348 - 230,877 Net gain from collective 5,279 490 - 34,058 - 161,782 investment fund Interest income - - 217 - 122,462 123,291 Dividend income - - 30,865 - - 30,865 Net appreciation in fair value of investments - - 298,987 - - 298,987 Transfer (to) from other ALC savings plans (15,879) (14,462) 162,340 22,757 - 111,852 Interfund transfers 453,224 195,156 (227,541) (790,143) 715,930 - ------------------------------------------------------------------------------ 505,572 208,525 2,061,902 (578,095) 838,392 12,386,907 Deductions: Distributions to participants 7,256 138 204,121 12,735 - 2,071,667 Other - - 3,397 899 - 7,845 ------------------------------------------------------------------------------ 7,256 138 207,518 13,634 - 2,079,512 ------------------------------------------------------------------------------ Net additions (deductions) 498,316 208,387 1,854,384 (591,729) 838,392 10,307,395 Net assets available for benefits at beginning of year - - 4,318,740 591,729 1,126,091 43,128,175 ------------------------------------------------------------------------------ Net assets available for benefits at end of year $498,316 $208,387 $6,173,124 $ - $1,964,483 $53,435,570 ==============================================================================
See accompanying notes. 91 92 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Notes to Financial Statements December 31, 1997 1. SIGNIFICANT ACCOUNTING POLICIES Investments are stated at fair value determined as follows: Allegheny Teledyne Incorporated (Allegheny Teledyne) common stock in the Company Stock Fund is stated at the quoted market price on the New York Stock Exchange. The Fixed Income Fund is stated at cost plus net earnings, which approximates market value. 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. Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 presentation. 2. DESCRIPTION OF THE PLAN The purpose of 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. 92 93 2. DESCRIPTION OF THE PLAN (CONTINUED) 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. During 1996, the Plan was amended to allow for additional investment options and to discontinue the Stock Index Fund and Diversified Fund investment options. The investment options provided by the Plan for the years ended December 31, 1997 and 1996 are as follows: Lifestyle Growth and Income Fund--invests in equity and fixed income securities and may invest up to 15% of its assets in international securities. Lifestyle Growth Fund--invests in equity and fixed income securities and may invest up to 25% of its assets in international securities. Lifestyle Income Fund--consists of common stock, fixed income securities and short-term money market instruments. Alliance Equity Fund--consists of common stocks. 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. Dreyfus Disciplined Stock Fund--invests in equity securities and may invest up to 20% of its assets in high quality money market accounts. Diversified Fund--consists of a combination of common or preferred capital stocks, bonds, notes, and debentures. 93 94 2. DESCRIPTION OF THE PLAN (CONTINUED) 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. Stock Index Fund--invests in a collective trust that invests in common stocks of companies comprising the S&P 500. 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 and earnings on such contributions. Contributions made to an employee's 401(k) account may 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 then credited to the accounts of the affected participants shall immediately become fully vested and nonforfeitable. Information about the Plan is contained in the Summary Plan Description. Copies of this Summary Plan Description are available from the Allegheny Teledyne Personnel and Compensation Committee (Committee). 94 95 3. INVESTMENTS 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, the ALC Lifestyle Growth Fund Master Trust, the ALC Lifestyle Income Fund Master Trust, and the ALC Lifestyle Growth and Income Fund Master Trust. The Plan's participating interests in these master trusts as of December 31 were as follows:
1997 1996 -------------------------------------------- ALC Fixed Income Master Trust 23.88% 22.07% ALC Alliance Equity Master Trust 17.36% 14.80% ALC ATI Common Stock Master Trust 20.38% 17.40% ALC Lifestyle Growth Fund Master Trust 17.40% 13.11% ALC Lifestyle Income Fund Master Trust 16.43% 18.50% ALC Lifestyle Growth and Income Fund Master Trust 14.93% 14.92% The composition of the net assets of the ALC Fixed Income Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------------------- Guaranteed investment contracts: Confederation Life Insurance Company $ 29,118 $ 4,024,149 Continental Assurance Company 6,718,924 9,404,989 John Hancock Life Insurance Company 2,600,000 - Life Insurance Company of Virginia 8,725,219 15,918,713 New York Life Insurance Company 15,169,828 14,124,589 Pacific Mutual Life Insurance Company 5,793,190 5,441,658 Peoples Security Life Insurance Company 11,038,629 10,403,430 Prudential Insurance Company 6,144,220 14,396,590 Southland Life Insurance Company 16,288,645 15,200,545 Security Life of Denver - 5,000,000 Protective Life Insurance Company - 3,751,970 Transamerica Occidental 10,936,663 10,597,526 -------------------------------------------- 83,444,436 108,264,159
95 96 3. INVESTMENTS (CONTINUED)
1997 1996 -------------------------------------------- Synthetic contracts: Caisse des Depots et Consignations 3,879,321 3,642,950 Peoples Security 2,948,698 - Transamerica Occidental 13,865,850 - Union Bank of Switzerland 5,937,712 5,920,612 Westdeutsche Landesbank 13,727,581 13,668,143 -------------------------------------------- 40,359,162 23,231,705 Temporary short-term investments 10,765,309 9,512,226 Accrued interest receivable 733,753 655,473 Other payables (6,169) (4,306) ============================================ Total net assets $135,296,491 $141,659,257 ============================================
In May 1997, the Allegheny Ludlum Corporation 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 Allegheny Ludlum Corporation Fixed Income Master Trust. The composition of net assets of the ALC Alliance Equity Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------------------- Investment in registered investment companies: Alliance Equity Fund S.A. #4 (865.1940 and 994.6310 shares, respectively) $60,199,619 $53,579,310 Cash 90 - Operating payables (10,341) (16,348) ============================================ Total net assets $60,189,368 $53,562,962 ============================================
96 97 3. INVESTMENTS (CONTINUED) The composition of net assets of the ALC ATI Common Stock Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------------------- Allegheny Teledyne Incorporated Common Stock (1,347.732 and 1,537.708 shares, respectively) $34,872,566 $35,367,284 Receivables 4,527 58,750 Short Term Investment Fund 738,595 48,275 Operating payables (822) (564) ============================================ Total net assets $35,614,866 $35,473,745 ============================================
The composition of assets of the ALC Lifestyle Growth Fund Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------------------- Dreyfus Lifestyle Growth Fund $5,117,053 $1,949,121 Operating payables (5) (1) ============================================ $5,117,048 $1,949,120 ============================================
The composition of assets of the ALC Lifestyle Income Fund Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------------------- Dreyfus Lifestyle Income Fund $1,825,632 $590,191 Operating payables (2) - ============================================ $1,825,630 $590,191 ============================================
97 98 3. INVESTMENTS (CONTINUED) The composition of assets of the ALC Lifestyle Growth and Income Fund Master Trust at December 31, 1997 and 1996 was as follows:
1997 1996 -------------------------------------------- Dreyfus Lifestyle Growth and Income Fund $22,740,752 $18,049,004 Receivables 58 1 ============================================ $22,740,808 $18,049,005 ============================================
Detail information regarding the composition of the various Lifestyle funds are reported in the separate collective trust filings. The composition of the changes in net assets of the various master trusts is as follows:
ALC FIXED INCOME MASTER TRUST ALC ALLIANCE EQUITY MASTER ALC ATI COMMON STOCK MASTER TRUST TRUST ------------------------------ ------------------------------- ------------------------------ YEAR ENDED DECEMBER 31 --------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 --------------- -------------- ---------------- -------------- --------------- -------------- Investment income: Interest income (loss) $ 8,694,877 $ 8,255,640 $ - $ 16,937 $ (1,554) $ 15,713 Realized gains on sale of investments - - - - 1,835,342 1,588,011 Unrealized appreciation in fair value of investments - - - - 2,318,151 3,346,346 Dividends - - - - 837,662 537,617 Net gain, registered investment companies - - 13,819,313 7,335,440 - - Net gain, common collective funds 468,281 743,008 - - 73,411 - Other income 1,343 - - - - - Administrative expenses (189,938) (256,059) (211,873) (173,713) (27,286) (14,043) Transfers (15,337,329) (10,804,451) (6,981,034) 5,469,649 (4,894,605) 30,000,101 -------------------------------------------------------------------------------------------- Net increase (decrease) (6,362,766) (2,091,862) 6,626,406 12,648,313 141,121 35,473,745 Total net assets at beginning of year 141,659,257 143,751,119 53,562,962 40,914,649 35,473,745 - ============================================================================================ Total net assets at end of year $135,296,491 $141,659,257 $60,189,368 $53,562,962 $35,614,866 $35,473,745 ============================================================================================
98 99 3. INVESTMENTS (CONTINUED)
ALC LIFESTYLE GROWTH FUND ALC LIFESTYLE INCOME FUND ALC LIFESTYLE GROWTH AND MASTER TRUST MASTER TRUST INCOME FUND MASTER TRUST ------------------------------ ------------------------------- ------------------------------ YEAR ENDED DECEMBER 31 --------------------------------------------------------------------------------------------- 1997 1996 1997 1996 1997 1996 --------------- -------------- ---------------- -------------- --------------- -------------- Investment income: Interest income $ - $ - $ 105 $ - $ - $ 110 Realized gains on sale of - - - - - 3,769,730 investments Unrealized depreciation in fair value of - - - - - (3,794,673) investments Net gain, common collective funds 882,650 113,120 152,034 24,356 3,853,009 1,384,385 Transfers 2,285,394 1,836,065 1,083,338 565,870 838,793 762,689 Administrative (116) (65) (38) (35) - (402) expenses ------------------------------------------------------------------------------------------- Net increase 3,167,928 1,949,120 1,235,439 590,191 4,691,803 2,121,839 Total net assets at beginning of year 1,949,120 - 590,191 - 18,049,005 15,927,166 =========================================================================================== Total net assets at end of year $5,117,048 $1,949,120 $1,825,630 $590,191 $22,740,808 $18,049,005 ===========================================================================================
The average yield for 1997 and 1996 for the ALC Fixed Income Master Trust was 6.57% and 6.43%, respectively. Credited interest rates on the contracts ranged from 5.60% to 8.18% and 5.24% to 8.18% for 1997 and 1996, 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 allocation of net earnings (losses) from master trusts on the statement of changes in net assets available for benefits. 99 100 3. INVESTMENTS (CONTINUED) The changes in cumulative net unrealized gain (loss) for the years ended December 31, 1997 and 1996 are as follows:
DREYFUS DREYFUS LIFESTYLE DREYFUS SMALL INTER- GROWTH LIFESTYLE LIFESTYLE ALLIANCE DISCIPLINED COMPANY NATIONAL AND INCOME GROWTH INCOME EQUITY STOCK VALUE VALUE FUND FUND FUND FUND FUND FUND FUND --------------------------------------------------------------------------------------------- Balance at December 31, 1995 $ - $ - $ - $ 2,060,176 $ - $ - $ - Unrealized gain (loss) 196,606 16,304 3,120 (1,711,785) 16,419 (16,463) 3,608 --------------------------------------------------------------------------------------------- Balance at December 31, 1996 196,606 16,304 3,120 348,391 16,419 (16,463) 3,608 Unrealized gain (loss) 487,633 112,824 12,082 1,981,168 267,954 262,658 (20,924) --------------------------------------------------------------------------------------------- Balance at December 31, 1997 $684,239 $129,128 $15,202 $ 2,329,559 $284,373 $246,195 $(17,316) =============================================================================================
COMPANY STOCK STOCK INDEX DIVERSIFIED FUND FUND FUND TOTAL -------------------------------------------------------- Balance at December 31, 1995 $284,448 $ 65,352 $ 458,411 $ 2,868,387 Unrealized gain (loss) 556,710 (65,352) (458,411) (1,459,244) -------------------------------------------------------- Balance at December 31, 1996 841,158 - - 1,409,143 Unrealized gain (loss) 113,745 - - 3,217,140 -------------------------------------------------------- Balance at December 31, 1997 $954,903 $ - $ - $ 4,626,283 ========================================================
100 101 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 that the trust, therefore, is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code and ERISA to maintain its tax-exempt status. The 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. 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 (UNAUDITED) Allegheny Teledyne has initiated formal communications with its significant service providers (plan trustee and plan recordkeeper) to determine the extent to which the Plan's systems or operations are vulnerable to those parties' failure to remediate their own Year 2000 issues. In addition, Allegheny Teledyne has been reviewing its own internal systems that impact the processing of employee benefits. Allegheny Teledyne expects that all necessary modifications to these internal systems will be completed prior to any significant impact on these internal systems. The Plan's service providers have indicated that they are presently taking steps to ensure that the Plan's systems and operations will be Year 2000 compliant. 101 102 SCHEDULES 102 103 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1997
DESCRIPTION UNIT/SHARE COST VALUE MARKET VALUE - --------------------------------------------------------------------------------------------------------------------- Dreyfus Disciplined Stock Fund*: Interest in Dreyfus Disciplined Stock Fund 164,500.6140 shares $4,834,886 $ 5,119,259 Dreyfus Small Company Value Fund*: Interest in Dreyfus Small Company Value Fund 139,512.8390 shares 2,693,340 2,939,535 Dreyfus International Value Fund*: Interest in Dreyfus International Value Fund 40,182.1880 shares 603,977 586,660 Participant loans 9.25% to 9.50% - 2,607,131 -------------------------------------------- $8,132,203 $11,252,585 ============================================
*Represents party-in-interest. 103 104 Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Item 27d--Schedule of Reportable Transactions Year ended December 31, 1997
PURCHASE PURCHASE SALE SELLING GAIN DESCRIPTION OF ASSETS TRANSACTIONS PRICE TRANSACTIONS PRICE (LOSS) - ----------------------------------------------------------------------------------------------------------------------- Type (iii) Transactions - ----------------------- Dreyfus Disciplined Stock Fund 152 $3,692,460 - $ - $ - Dreyfus Disciplined Stock Fund - - 100 1,704,653 186,113 Dreyfus Small Company Value Fund 164 3,014,427 - - - Dreyfus Small Company Value Fund - - 77 892,776 73,891 Dreyfus International Value Fund 127 871,352 - - - Dreyfus International Value Fund - - 70 490,446 29,922
There were no Type (i), (ii) or (iv) transactions during the year ended December 31, 1997. 104 105 Audited Financial Statements TELEDYNE 401(k) PLAN Years ended December 31, 1997 and 1996 with Report of Independent Auditors 105 106 Teledyne 401(k) Plan Audited Financial Statements Years ended December 31, 1997 and 1996 CONTENTS Report of Independent Auditors ................................................................................. 107 Audited Financial Statements Statements of Net Assets Available for Benefits ................................................................ 108 Statements of Changes in Net Assets Available for Benefits with Fund Information ....................................................................................... 109 Notes to Financial Statements .................................................................................. 111 Schedules Item 27a--Schedule of Assets Held for Investment Purposes........................................................ 115 Item 27d--Schedule of Reportable Transactions.................................................................... 116
106 107 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 ("the Plan") as of December 31, 1997 and 1996, 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, 1997 and 1996, 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, 1997, 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 statement of net assets available for benefits and the statement 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 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 June 5, 1998 107 108 Teledyne 401(k) Plan Statements of Net Assets Available for Benefits (000s Omitted)
DECEMBER 31 1997 1996 ----------------------------------- Investments at fair value: Income Accumulation Fund $ 14,695 $ 12,097 Growth Stock Fund 21,453 18,457 Bond Index Fund 5,475 4,126 Country Selector Fund 4,450 4,121 Allegheny Teledyne Stock Fund 18,329 14,626 S&P 500 Stock Fund 78,949 51,413 LifePath 2000 Fund 2,067 1,691 LifePath 2010 Fund 5,904 4,228 LifePath 2020 Fund 24,741 19,969 LifePath 2030 Fund 4,967 3,187 LifePath 2040 Fund 4,298 2,191 Loans receivable from participants 5,385 3,483 =================================== Net assets available for benefits $190,713 $139,589 ===================================
See accompanying notes. 108 109 Teledyne 401(k) Plan Notes to Financial Statements December 31, 1997 1. 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 Funds managed by the Plan Trustee are valued at market. Allegheny Teledyne Incorporated ("Allegheny Teledyne") stock is publicly traded and valued at market. 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 The Plan is a defined contribution plan available to employees of eligible Allegheny Teledyne Incorporated subsidiaries (primarily Teledyne Industries, Inc.) and divisions ("companies"). Qualifying employee contributions are partially matched by Allegheny Teledyne up to a maximum of $300 annually for each participant. Effective January 1, 1998, the match was increased to $1,000 annually per participant. A more detailed description of plan provisions is found in the formal plan documents and in summary materials distributed to participants. 3. CHANGE IN TRUSTEE Effective January 1, 1996, BZW Barclays Global Investors, N.A. ("Barclays") became the Trustee of the Plan. In 1997, the retirement services division of Barclays was sold to Merrill Lynch, Pierce, Fenner & Smith, Inc. ("Merrill Lynch"). Accordingly, Merrill Lynch became the plan trustee and recordkeeper. 111 110 4. INVESTMENT PROGRAMS 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 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 principle fluctuations. Growth Stock Fund: This fund invests in stocks expected to have above-average rates in revenues and earnings. Approximately 60% of the holdings are of well-known established companies with stable long-term growth prospects. The remaining 40% includes newly issued stocks as well as smaller, more aggressive companies. This fund seeks to outperform the S&P 500 Index over a period of three to five years and limit the level of risk through diversification. Bond Index Fund: This 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. Country Selector Fund: This fund invests in international stocks from 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 fund invests in Allegheny Teledyne stock. The rate of return is based on the performance of Allegheny Teledyne stock and dividends received, and may increase or decrease in value. S&P 500 Stock Fund: This 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. 112 111 4. INVESTMENT PROGRAMS (CONTINUED) LifePath Funds: There are five LifePath Funds: LifePath 2000, LifePath 2010, LifePath 2020, LifePath 2030, and LifePath 2040. The numbers in the names refer to the target date of the fund. These 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. 5. FEDERAL 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 that the trust, therefore, is exempt from taxation. Once qualified, the Plan is required to operate in conformity with the Code and ERISA to maintain its tax-exempt status. The 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. YEAR 2000 (UNAUDITED) Allegheny Teledyne has initiated formal communications with its significant service providers (plan trustee and plan recordkeeper) to determine the extent to which the Plan's systems or operations are vulnerable to those parties' failure to remediate their own Year 2000 issues. In addition, Allegheny Teledyne has been reviewing its own internal systems that impact the processing of employee benefits. Allegheny Teledyne expects that all necessary modifications to these internal systems will be completed prior to any significant impact on these internal systems. The Plan's service providers have indicated that they are presently taking steps to ensure that the Plan's systems and operations will be Year 2000 compliant. 113 112 SCHEDULES 114 113 Teledyne 401(k) Plan Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1997 (000s Omitted) Except for share/unit information
ISSUE, INVESTMENT DESCRIPTION, SHARES/ MARKET VALUE RATE OF INTEREST, MATURITY DATE UNITS COST - -------------------------------------------------------- ---------------------- ----------------- ---------------- Collective/Common Trust funds - ----------------------------- Income Accumulation Fund 1,053,084.849 $ 14,695 $ 14,695 Growth Stock Fund 1,043,426.987 19,955 21,453 Bond Index Fund 481,493.555 4,919 5,475 Country Selector Fund 445,439.210 4,602 4,450 Allegheny Teledyne Stock Fund* 885,900.624 12,725 18,329 S&P 500 Stock Fund 4,837,566.418 52,785 78,949 LifePath 2000 Fund 177,424.209 1,856 2,067 LifePath 2010 Fund 473,807.864 4,979 5,904 LifePath 2020 Fund 1,828,633.782 18,969 24,741 LifePath 2030 Fund 364,961.643 3,922 4,967 LifePath 2040 Fund 307,459.216 3,533 4,298 Participant loans 5.85% to 9% - 5,385 ---------------------------------- $142,940 $190,713 ==================================
* Party-in-interest 115 114 Teledyne 401(k) Plan Item 27d--Schedule of Reportable Transactions Year ended December 31, 1997 (000s Omitted) Except for purchase and sale transactions
PURCHASE PURCHASE SALE DESCRIPTION OF ASSETS TRANSACTIONS PRICE TRANSACTIONS SELLING PRICE GAIN (LOSS) - ---------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------- Type (iii) transactions: - ------------------------ Income Accumulation Fund 138 $7,528 - $ - $ - Income Accumulation Fund - - 115 5,773 - Growth Stock Fund 140 6,117 - - - Growth Stock Fund - - 113 3,941 138 Allegheny Teledyne Stock Fund 144 6,954 - - - Allegheny Teledyne Stock Fund - - 109 5,329 2,233 S&P 500 Stock Fund 164 12,925 - - - S&P 500 Stock Fund - - 89 3,925 1,095
There were no Type (i), (ii) or (iv) transactions during the year ended December 31, 1997. 116 115 Teledyne 401(k) Plan Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended December 31, 1997 (000s Omitted)
INCOME GROWTH BOND COUNTRY ALLEGHENY S&P 500 LIFEPATH LIFEPATH ACCUMULATION STOCK INDEX SELECTOR TELEDYNE STOCK 2000 2010 FUND FUND FUND FUND STOCK FUND FUND FUND FUND -------------------------------------------------------------------------------------------------- Net investments income: Interest $ 841 $ - $ - $ - $ - $ - $ - $ - income Net realized/ unrealized appreciation (depreciation) in fair value of investments - 821 452 (163) 2,079 18,536 178 732 Expenses (11) (8) (1) (1) (10) (29) (1) - -------------------------------------------------------------------------------------------------- 830 813 451 (164) 2,069 18,507 177 732 Contributions from participants 2,408 5,409 1,268 1,391 2,434 10,475 387 1,170 Contributions from employer 346 555 147 144 280 1,050 41 113 Rollover contributions 495 417 117 84 130 713 5 68 Other, net 289 82 - (2) 10 (5) (2) (7) -------------------------------------------------------------------------------------------------- 4,368 7,276 1,983 1,453 4,923 30,740 608 2,076 Distributions to participant or their beneficiaries (2,505) (1,161) (432) (378) (1,726) (4,381) (175) (320) Interfund transfers 784 (3,027) (197) (738) 589 1,280 (48) (75) Transfers of plan assets (49) (92) (5) (8) (83) (103) (9) (5) -------------------------------------------------------------------------------------------------- Increase in net assets available for benefits 2,598 2,996 1,349 329 3,703 27,536 376 1,676 Net assets available for benefits at beginning of year 12,097 18,457 4,126 4,121 14,626 51,413 1,691 4,228 -------------------------------------------------------------------------------------------------- Net assets available for benefits at end of year $14,695 $21,453 $5,475 $4,450 $18,329 $78,949 $2,067 $5,904 ==================================================================================================
LIFEPATH LIFEPATH LIFEPATH 2020 2030 2040 LOAN SWEEP FUND FUND FUND FUND ACCOUNT TOTAL ------------------------------------------------------------- Net investments income: Interest $ - $ - $ - $ 372 $ 1 $ 1,214 income Net realized/ unrealized appreciation (depreciation) in fair value of investments 3,898 812 668 - - 28,013 Expenses (10) (2) (3) - (10) (86) ------------------------------------------------------------- 3,888 810 665 372 (9) 29,141 Contributions from participants 3,089 1,048 948 - - 30,027 Contributions from employer 343 120 111 - - 3,250 Rollover contributions 150 69 69 - - 2,317 Other, net 50 (1) (1) - (8) 405 ------------------------------------------------------------- 7,520 2,046 1,792 372 (17) 65,140 Distributions to participant or their beneficiaries (1,563) (256) Interfund transfers (1,105) (10) 473 2,054 20 - Transfers of plan assets (80) - - - - (434) ------------------------------------------------------------- Increase in net assets available for benefits 4,772 1,780 2,107 1,902 - 51,124 Net assets available for benefits at beginning of year 19,969 3,187 2,191 3,483 - 139,589 ------------------------------------------------------------- Net assets available for benefits at end of year $24,741 $4,967 $4,298 $5,385 $ - $190,713 =============================================================
See accompanying notes. 109 116 Teledyne 401(k) Plan Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended December 31, 1996 (000s Omitted)
INCOME GROWTH BOND COUNTRY ALLEGHENY S&P 500 LIFEPATH LIFEPATH ACCUMULATION STOCK INDEX SELECTOR TELEDYNE STOCK 2000 2010 FUND FUND FUND FUND STOCK FUND FUND FUND FUND -------------------------------------------------------------------------------------------------- Net investments income: Interest income $ 633 $ $ - $ - $ - $ - $ - $ - Net realized/ unrealized appreciation in fair value of investments - 846 189 35 6,426 9,409 90 304 Expenses (6) (3) (1) (1) (5) (15) - - -------------------------------------------------------------------------------------------------- 627 843 188 34 6,421 9,394 90 304 Contributions from participants 2,904 4,466 1,019 1,180 1,972 9,684 328 871 Contributions from employer 654 309 91 90 290 1,150 24 61 Rollover contributions 118 223 48 25 29 358 26 38 Other, net 282 7 9 6 24 45 8 1 -------------------------------------------------------------------------------------------------- 4,585 5,848 1,355 1,335 8,736 20,631 476 1,275 Distributions to participant or their beneficiaries (1,845) (450) (169) (92) (1,100) (3,617) (80) (36) Interfund transfers (4,673) 13,059 2,944 2,880 (1,666) (10,076) 1,299 2,989 Transfers of plan assets (34) - (4) (2) (68) (124) (4) - -------------------------------------------------------------------------------------------------- Increase (decrease) in net assets available for benefits (1,967) 18,457 4,126 4,121 5,902 6,814 1,691 4,228 Net assets available for benefits at beginning of year 14,064 - - - 8,724 44,599 - - ================================================================================================== Net assets available for benefits at end of year $12,097 $18,457 $4,126 $4,121 $14,626 $51,413 $1,691 $4,228 ==================================================================================================
LIFEPATH LIFEPATH LIFEPATH 2020 2030 2040 LOAN SWEEP FUND FUND FUND FUND ACCOUNT TOTAL ------------------------------------------------------------ Net investments income: Interest income $ $ - $ - $ 179 $ 4 $ 816 Net realized/ unrealized appreciation in fair value of investments 2,600 307 209 - - 20,415 Expenses (7) (1) (1) - (4) (44) ------------------------------------------------------------ 2,593 306 208 179 - 21,187 Contributions from participants 3,873 726 569 - - 27,592 Contributions from employer 557 72 67 - - 3,365 Rollover contributions 175 28 38 - - 1,106 Other, net 2 2 2 - (19) 369 ------------------------------------------------------------ 7,200 1,134 884 179 (19) 53,619 Distributions to participant or their beneficiaries (1,895) (51) (59) (272) (3) (9,669) Interfund transfers (12,640) 2,104 1,366 2,392 22 - Transfers of plan assets (60) - - - - (296) ------------------------------------------------------------ Increase (decrease) in net assets available for benefits (7,395) 3,187 2,191 2,299 - 43,654 Net assets available for benefits at beginning of year 27,364 - - 1,184 - 95,935 ============================================================ Net assets available for benefits at end of year $19,969 $3,187 $2,191 $3,483 $ - $139,589 ============================================================
See accompanying notes. 110 117 Audited Financial Statements OREGON METALLURGICAL CORPORATION SAVINGS PLAN Employer Identification Number 93-0448167 Plan Number 004 Years ended December 31, 1997 and 1996 with Report of Independent Auditors 117 118 Audited Financial Statements Oregon Metallurgical Corporation Savings Plan Employer Identification Number 93-0448167 Plan Number 004 Years ended December 31, 1997 and 1996 with Report of Independent Auditors 118 119 Oregon Metallurgical Corporation Savings Plan Employer Identification Number 93-0448167 Plan Number 004 Audited Financial Statements Years ended December 31, 1997 and 1996 CONTENTS Report of Independent Auditors ................................................................................. 120 Audited Financial Statements Statement of Net Assets Available for Benefits with Fund Information-- December 31, 1997 ........................................................................................... 121 Statement of Net Assets Available for Benefits with Fund Information-- December 31, 1996 ........................................................................................... 122 Statement of Changes in Net Assets Available for Benefits with Fund Information-- Year ended December 31, 1997 ................................................................................ 123 Statement of Changes in Net Assets Available for Benefits with Fund Information-- Year ended December 31, 1996 ................................................................................ 124 Notes to Financial Statements .................................................................................. 125 Schedules Item 27a--Schedule of Assets Held for Investment Purposes ....................................................... 132 Item 27d--Schedule of Reportable Transactions.................................................................... 133
119 120 Report of Independent Auditors To the Plan Administrator and Plan Participants Oregon Metallurgical Corporation Savings Plan We have audited the accompanying statement of net assets available for benefits of Oregon Metallurgical Corporation Savings Plan (the Plan) as of December 31, 1997, and the related statement of changes in net assets available for benefits for the year 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 audit. The financial statements of the Plan as of December 31, 1996, and for the year then ended, were audited by other auditors whose report dated June 10, 1997 expressed an unqualified opinion on those statements. We conducted our audit 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 audit provides 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 at December 31, 1997, and the changes in net assets available for benefits for the year then ended in conformity with generally accepted accounting principles. Our audit was 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 as of December 31, 1997 and reportable transactions for the year ended December 31, 1997 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 statement of net assets available for benefits and the statement 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 audit of the 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 financial statements taken as a whole. The schedule of assets held for investment purposes that accompanies the Plan's financial statements does not disclose the historical cost of certain 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 June 15, 1998 120 121 Oregon Metallurgical Corporation Savings Plan Statement of Net Assets Available for Benefits with Fund Information December 31, 1997
FUND INFORMATION ----------------------------------------------------------------------------------------- PARTICIPANT DIRECTED FUNDS ----------------------------------------------------------------------------------------- U.S. FIXED COMMON INTERNATIONAL REAL GOVERNMENT BALANCED INCOME STOCK STOCK SPECIAL ESTATE ----------------------------------------------------------------------------------------- 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 =========================================================================================
FUND INFORMATION ------------------------------ NONPARTICIPANT DIRECTED ---------------- OREGON METALLURGICAL CORPORATION PARTICIPANT STOCK LOANS TOTAL ----------------------------------------------- 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 ===============================================
See accompanying notes. 121 122 Oregon Metallurgical Corporation Savings Plan Statement of Net Assets Available for Benefits with Fund Information December 31, 1996
FUND INFORMATION -------------------------------------------------------------------------------------------- PARTICIPANT DIRECTED FUNDS -------------------------------------------------------------------------------------------- U.S. FIXED COMMON INTERNATIONAL GOVERNMENT BALANCED INCOME STOCK STOCK SPECIAL -------------------------------------------------------------------------------------------- ASSETS Investments, at fair value $100,053 $503,709 $178,513 $430,309 $285,029 $752,236 Receivables: Participants' contribution 2,171 10,194 2,496 9,116 5,300 15,898 Employer's matching contribution - - - - - - Employer's share-per-day - - - - - - contribution Interfund transfers (4,343) (3,122) (1,106) 9,289 (1,665) 947 -------------------------------------------------------------------------------------------- Total assets 97,881 510,781 179,903 448,714 288,664 769,081 LIABILITIES Payable to participants 7,556 47,478 10,444 44,560 23,521 72,761 ============================================================================================ Net assets available for benefits $ 90,325 $463,303 $169,459 $404,154 $265,143 $696,320 ============================================================================================
FUND INFORMATION -------------------------------- NONPARTICIPANT DIRECTED ----------------- OREGON METALLURGICAL CORPORATION PARTICIPANT STOCK LOANS TOTAL ----------------------------------------------- ASSETS Investments, at fair value $5,207,245 $28,745 $ 7,485,839 Receivables: Participants' contribution - - 45,175 Employer's matching contribution 291,895 - 291,895 Employer's share-per-day 2,209,480 - 2,209,480 contribution Interfund transfers - - - ----------------------------------------------- Total assets 7,708,620 28,745 10,032,389 LIABILITIES Payable to participants - - 206,320 =============================================== Net assets available for benefits $7,708,620 $28,745 $ 9,826,069 ===============================================
See accompanying notes. 122 123 Oregon Metallurgical Corporation Savings Plan Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended December 31, 1997
FUND INFORMATION ------------------------------------------------------------------------------------------ PARTICIPANT DIRECTED FUNDS ------------------------------------------------------------------------------------------ U.S. FIXED COMMON INTERNATIONAL REAL GOVERNMENT BALANCED INCOME STOCK STOCK SPECIAL ESTATE ------------------------------------------------------------------------------------------ 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 - - - - - - - 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 ==========================================================================================
FUND INFORMATION ------------------------------ NONPARTICIPANT DIRECTED ---------------- OREGON METALLURGICAL CORPORATION PARTICIPANT STOCK LOANS TOTAL --------------------------------------------- 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 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 =============================================
See accompanying notes. 123 124 Oregon Metallurgical Corporation Savings Plan Statement of Changes in Net Assets Available for Benefits with Fund Information Year ended December 31, 1996
FUND INFORMATION -------------------------------------------------------------------------------------------- PARTICIPANT DIRECTED FUNDS -------------------------------------------------------------------------------------------- U.S. FIXED COMMON INTERNATIONAL GOVERNMENT BALANCED INCOME STOCK STOCK SPECIAL -------------------------------------------------------------------------------------------- Additions: Additions to net assets attributed to: Contributions: Participants' pretax wage reductions $53,883 $232,714 $ 54,585 $194,864 $120,675 $361,795 Participants' after-tax wage reductions 2,070 7,027 1,510 7,866 8,014 9,578 Employer's matching contribution - - - - - - Employer's share-per-day - - - - - - Participants' rollovers 4,769 40,755 67,578 8,243 1,045 5,555 -------------------------------------------------------------------------------------------- Total contributions 60,722 280,496 123,673 210,973 129,734 376,928 Investment income: Dividend and interest income 3,241 14,522 7,637 3,530 4,307 - Net appreciation (depreciation) in fair value of investments (216) 30,897 (379) 51,070 26,456 62,100 -------------------------------------------------------------------------------------------- Total investment income 3,025 45,419 7,258 54,600 30,763 62,100 -------------------------------------------------------------------------------------------- Total additions 63,747 325,915 130,931 265,573 160,497 439,028 Deductions: Benefits paid to participants (3,194) (53,892) (1,033) (26,634) (14,236) (48,241) -------------------------------------------------------------------------------------------- Increase prior to interfund transfers 60,553 272,023 129,898 238,939 146,261 390,787 Participant directed transfers (7,410) (12,885) (6,016) 11,782 (4,158) (9,939) -------------------------------------------------------------------------------------------- Net increase 53,143 259,138 123,882 250,721 142,103 380,848 Net assets available for benefits: Beginning of year 37,182 204,165 45,577 153,433 123,040 315,472 ============================================================================================ End of year $90,325 $463,303 $169,459 $404,154 $265,143 $696,320 ============================================================================================
FUND INFORMATION ---------------------------------- NONPARTICIPANT DIRECTED ----------------- OREGON METALLURGICAL CORPORATION PARTICIPANT STOCK LOANS TOTAL ------------------------------------------------- Additions: Additions to net assets attributed to: Contributions: Participants' pretax wage reductions $ - $ - $1,018,516 Participants' after-tax wage reductions - - 36,065 Employer's matching contribution 764,648 - 764,648 Employer's share-per-day 3,265,688 - 3,265,688 Participants' rollovers - - 127,945 ------------------------------------------------- Total contributions 4,030,336 - 5,212,862 Investment income: Dividend and interest income - 119 33,356 Net appreciation (depreciation) in fair value of investments 2,864,795 - 3,034,723 ------------------------------------------------- Total investment income 2,864,795 119 3,068,079 ------------------------------------------------- Total additions 6,895,131 119 8,280,941 Deductions: Benefits paid to participants (436,601) - (583,831) ------------------------------------------------- Increase prior to interfund transfers 6,458,530 119 7,697,110 Participant directed transfers - 28,626 - ------------------------------------------------- Net increase 6,458,530 28,745 7,697,110 Net assets available for benefits: Beginning of year 1,250,090 - 2,128,959 ================================================= End of year $7,708,620 $28,745 $9,826,069 =================================================
See accompanying notes. 124 125 Oregon Metallurgical Corporation Savings Plan Notes to Financial Statements December 31, 1997 1. PLAN DESCRIPTION The following description of the Oregon Metallurgical Corporation (Company) 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 The Plan is a profit sharing plan covering all employees of the Company who have completed 120 calendar days of employment with the Company. 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 hour worked up to 12 hours by hourly employees subject to collective bargaining agreements. 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 1997 and 1996. PARTICIPANT ACCOUNTS The Company maintains separate accounts for each participant including a Company Discretionary Contribution Account, a Salary Reduction Contribution Account, a Matching Contribution Account, an Equity Contribution Account, and an ESOP (or other) rollover account. 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. 125 126 1. PLAN DESCRIPTION (CONTINUED) VESTING Participants are immediately vested in their salary reduction and equity contributions plus actual earnings thereon. Vesting in the Company 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. INVESTMENT OPTIONS Upon enrollment in the Plan, a participant may direct employee and employer contributions in any of seven Columbia Common Trust Fund investment options offered by the Plan: U.S. Government Securities Fund--This fund invests substantially all assets in direct obligations of the U.S. Government. These include treasury bills, notes and bonds, all having a maturity of three years or less. Balanced Fund--This fund invests in common stocks and fixed income securities. Generally, the fund may allocate 35% to 65% of fund assets between common stock and fixed income securities and allocate up to 10% to cash. Fixed Income Securities Fund--This fund invests in a broad range of intermediate to long-term fixed income securities. Generally, at least 95% of the fund's assets will be invested in investment-grade securities. Common Stock Fund--This fund invests in a diversified portfolio of common stock. The fund typically invests in larger companies that are well established. One-third of its portfolio may be in common stocks issued by companies located in developed foreign countries, principally those companies located in North America, Western Europe or Asia. International Stock Fund--This fund invests primarily in equity securities of companies based outside the United States. The fund invests at least 75% of the portfolio in stocks of established companies with market valuations over $500 million. Special Fund--This fund invests in small to mid-size companies. In special situations investments may be made in new issues; companies that may benefit from technological or product development or new management; or companies involved in tender offers, leveraged buyouts or mergers. The fund may invest up to 33% of the fund assets in foreign securities. 126 127 1. PLAN DESCRIPTION (CONTINUED) INVESTMENT OPTIONS (CONTINUED) Real Estate Fund--This fund is an open-ended fund whose investment objective seeks capital appreciation and above-average current income, with equal emphasis. The fund seeks to achieve its objective by investing primarily in equity securities of companies that are principally engaged in the real estate industry. Participants may change their investment options quarterly. 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 terms range from 1 to 5 years or up to 10 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. 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. 127 128 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INVESTMENT VALUATION AND INCOME RECOGNITION (CONTINUED) 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 Plan has receivables from the Company for matching and share-per-day contributions of $912,105 and $3,062,606, respectively, at December 31, 1997 ($291,895 and $2,209,480, respectively, in 1996). The receivable for the employer share-per-day contribution is determined based upon the number of shares to be contributed and the value of the per-share price of the Company common stock at year-end. Employer share-per-day contributions are valued based upon the share price of the Company's common stock on the dates earned. Changes in stock price between the date shares are earned and the date delivered to the trustee are reflected as net appreciation (depreciation) in fair value of investments. 4. TRANSACTIONS WITH RELATED PARTIES Certain legal and accounting fees, and certain administrative expense relating to the maintenance of participant eligibility records are paid by the Company. 128 129 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. Once qualified, the Plan is required to operate in conformity with the Code and ERISA to maintain its tax-exempt status. The 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. SUBSEQUENT EVENT Effective March 24, 1998, the Company was acquired via merger by Allegheny Teledyne Inc. (ATI). As a result of the merger, each share of the Company stock was converted into 1.296 shares of ATI stock. The terms of the Plan other than the conversion of stock have not changed at the current time. 8. YEAR 2000 (UNAUDITED) ATI has initiated communications with its significant service providers (plan trustee and plan recordkeeper) to determine the extent to which the Plan's systems or operations are vulnerable to those parties' failure to remediate their own Year 2000 issues. In addition, ATI has been reviewing its own internal systems that impact the processing of employee benefits. ATI expects that all necessary modifications to these internal systems will be completed prior to any significant impact on these internal systems. The Plan's service providers have indicated that they are presently taking steps to ensure that the Plan's systems and operations will be Year 2000 compliant. 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:
DECEMBER 31 1997 Net assets available for benefits per the financial statements $18,439,158 Amounts allocated to withdrawing participants (142,574) ----------- Net assets available for benefits per the Form 5500 $18,296,584
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500: 129 130
YEAR ENDED DECEMBER 31 1997 Benefits paid to participants per the financial statements $224,151 Add: Amounts allocated to withdrawing participants at December 31, 1997 142,574 -------- Benefits paid to participants per the Form 5500 $366,725
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date. 130 131 SCHEDULES 131 132 Oregon Metallurgical Corporation Savings Plan Item 27a--Schedule of Assets Held for Investment Purposes December 31, 1997
CURRENT IDENTITY OF ISSUE NUMBER OF SHARES COST VALUE - ------------------------------------------------------------------------------------------------------------------- Columbia Funds*: U.S. Government 25,065 N/A $ 208,315 Balanced 54,209 N/A 1,162,980 Fixed Income 23,516 N/A 315,615 Common Stock 54,421 N/A 1,199,560 International 43,639 N/A 598,492 Special 73,804 N/A 1,499,511 Real Estate 11,801 N/A 222,199 Oregon Metallurgical Corporation Stock* 278,652 N/A 9,336,361 Participant loans - 263,943 ----------------------------------- - $14,806,976 ===================================
* Party-in-interest N/A--Not Available 132 133 Oregon Metallurgical Corporation Savings Plan Item 27d--Schedule of Reportable Transactions Year ended December 31, 1997 Transactions which, when aggregated, involved more than 5% of the current values of beginning plan assets for the year ended December 31, 1997 were as follows:
PURCHASE PURCHASE SALES SELLING DESCRIPTION OF ASSETS TRANSACTIONS PRICE TRANSACTIONS PRICE GAIN - --------------------------------- ----------------- -------------- ---------------- -------------- ----------------- Type (iii) Transactions: - ------------------------ Columbia Common Stock Fund 98 $ 806,731 26 $107,938 $13,067 Columbia Special Fund 93 1,015,936 33 282,726 4,220 Columbia Balanced Fund 95 768,234 23 129,723 11,158 Oregon Metallurgical Corporation Stock 1 7,864 26 846,999 84,923 Victory Institutional Money Market Fund 42 846,362 29 854,118 -
There were no Type (i), (ii) or (iv) transactions during the year ended December 31, 1997. 133 134 "Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K" of Part IV of the 1997 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 53 of the 1997 Annual Report are incorporated herein by reference: Consolidated Statements of Income - Years Ended December 31, 1997, 1996 and 1995 Consolidated Balance Sheets at December 31, 1997 and 1996 Consolidated Statements of Cash Flows - Years Ended December 31, 1997, 1996 and 1995 Consolidated Statements of Stockholders' Equity - Years Ended December 31, 1997, 1996 and 1995 Report of Ernst & Young LLP, Independent Auditors Notes to Consolidated Financial Statements The report of Arthur Anderson LLP relating to the consolidated statements of operations, shareholders' equity, and cash flows of Teledyne, Inc. for the year ended December 31, 1995 is filed as Exhibit 99.1 to the 1997 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 - December 31, 1997 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, 1997 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1996 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 - December 31, 1997 Statement of Net Assets Available for Benefits with Fund Information 134 135 - December 31, 1996 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1997 Statement of Changes in Net Assets Available for Benefits with Fund Information - Period April 1, 1996 through December 31, 1996 Notes to Financial Statements (iii) Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Report of Independent Auditors Statement of Net Assets Available for Benefits with Fund Information - January 31, 1996 Statement of Net Assets Available for Benefits with Fund Information - December 31, 1997 Statement of Net Assets Available for Benefits with Fund Information -December 31, 1996 Statement of Changes in Net Assets Available for Benefits with Fund Information - One Month Ended January 31, 1998 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1997 Statement of Changes in Net Assets Available for Benefits with Fund Information Year Ended December 31, 1996 Notes to Financial Statements (iv) 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 - December 31, 1997 Statement of Net Assets Available for Benefits with Fund Information - December 31, 1996 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1997 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1996 Notes to Financial Statements (v) 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 - December 31, 1997 Statement of Net Assets Available for Benefits with Fund Information - December 31, 1996 135 136 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1997 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1996 Notes to Financial Statements (vi) Teledyne, Inc. 401(k) Plan Report of Independent Auditors Statement of Net Assets Available for Benefits - December 31, 1997 and December 31, 1996 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1997 Statement of Changes in Net Assets Available for Benefits with Fund Information - Year Ended December 31, 1996 Notes to Financial Statements (vii) Oregon Metallurgical Corporation Savings Plan Report of Independent Auditors Statement of Net Assets Available for Benefits with Fund Information --December 31, 1997 Statement of Net Assets Available for Benefits with Fund Information -- December 31, 1996 Statement of Changes in net Assets Available for Benefits with Fund Information -- Year Ended December 31, 1997 Statement of Changes in Net Assets Available for Benefits with Fund Information -- Year Ended December 31, 1996 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, 1997 Item 27d - Schedule of Reportable Transactions - Year Ended December 31, 1997 (ii) 401(k) Savings Account Plan for Employees of the Washington Plant Item 27a - Schedule of Assets Held for Investment Purposes - December 31, 1997 136 137 Item 27d - Schedule of Reportable Transactions - Year Ended December 31, 1997 (iii) Savings and Security Plan of the Tubular Products/Plate Products Divisions of Allegheny Ludlum Corporation Item 27a - Schedule of Assets Held for Investment Purposes - December 31, 1997 Item 27d - Schedule of Reportable Transactions - Year Ended December 31, 1997 (iv) 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, 1997 Item 27d - Schedule of Reportable Transactions - Year Ended December 31, 1997 (v) Allegheny Ludlum Corporation Personal Retirement and 401(k) Savings Account Plan Item 27a - Schedule of Assets Held for Investment Purposes - December 31, 1997 Item 27d - Schedule of Reportable Transactions - Year Ended December 31, 1997 (vi) Teledyne, Inc. 401(k) Plan Item 27a - Schedule of Assets Held for Investment Purposes - December 31, 1997 Item 27d - Schedule of Reportable Transactions - Year Ended December 31, 1997 (vii) Oregon Metallurgical Corporation Savings Plan Item 27a - Schedule of Assets Held for Investment Purposes-December 31, 1997 Item 27d - Schedule of Reportable Transactions-Year Ended December 31, 1997 (3) EXHIBITS A list of exhibits included in the 1997 Form 10-K or incorporated therein by reference is found in the Exhibit Index beginning on page 29 of the 1997 Form 10-K and incorporated herein by reference. In addition, by virtue of Amendment No. 1, the following two exhibits are added to such Exhibit Index, after Exhibit 23.2, and filed with Amendment No. 1: 137 138 Exhibit No. Description ----------- ----------- 23.3 Consent of Ernst & Young LLP 23.4 Consent of Coopers & Lybrand L.L.P. (b) REPORTS ON FORM 8-K FILED IN THE FOURTH QUARTER OF 1997: Current Reports on Form 8-K were filed by the Company on November 3, 1997 (with respect to a press release concerning Registrant's agreement to acquire Oregon Metallurgical Corporation) and December 23, 1997 (with respect to a press release concerning Registrant's proposal to acquire Lukens Inc.). 138 139 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 26, 1998 By: /s/ JUDD R. COOL ---------------- Judd R. Cool Senior Vice President, Human Resources 139 140 EXHIBIT INDEX
Exhibit No. Description Method of Filing ----------- ----------- ---------------- 23.3 Consent of Ernst & Young LLP Filed herewith 23.4 Consent of Coopers & Lybrand L.L.P. Filed herewith
140 EX-23.3 2 ALLEGHENY TELEDYNE INCORPORATED 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, Savings and Security Plan of the Tubular Products/Plate Products Divisions 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 5, 1998 with respect to the financial statements and schedules of the Savings and Security Plan of the Lockport and Waterbury Facilities of Allegheny Ludlum Corporation, Savings and Security Plan of the Tubular Products/Plate Products Divisions 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 5, 1998 with respect to the financial statements and 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 June 15, 1998 with respect to the financial statements and 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, 1997. /s/ ERNST & YOUNG LLP Pittsburgh, Pennsylvania June 26, 1998 141 2 Exhibit 23.4 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of Allegheny Teledyne Incorporated on Form S-8 (File No. 333-48649) of our report, dated June 10, 1997, on our audit of the financial statements of Oregon Metallurgical Corporation Savings Plan as of December 31, 1996, and for the year then ended, which report is incorporated by reference in this Annual Report on Form 10-K, as amended. /s/ COOPERS & LYBRAND L.L.P. ---------------------------- Coopers & Lybrand L.L.P. Portland, Oregon June 19, 1998 142 EX-23.34 3 ALLEGHENY TELEDYNE INCORPORATED 1 Exhibit 23.4 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of Allegheny Teledyne Incorporated on Form S-8 (File No. 333-48649) of our report, dated June 10, 1997, on our audit of the financial statements of Oregon Metallurgical Corporation Savings Plan as of December 31, 1996, and for the year then ended, which report is incorporated by reference in this Annual Report on Form 10-K, as amended. /s/ COOPERS & LYBRAND L.L.P. ---------------------------- Coopers & Lybrand L.L.P. Portland, Oregon June 19, 1998 142 -----END PRIVACY-ENHANCED MESSAGE-----