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## Message from the President and Chief Executive Officer 

## Year In Review — 2003 

As the year drew to a close, we began to see significant signs that U.S. market conditions were begin- ning to improve. In December, as demand was strengthening, we announced price increases, effective in January 2004, for most of our flat-rolled products as well as a pricing policy revision for our nickel-based alloy and specialty steel alloy long products. We announced additional price increases for our stainless steel flat-rolled products in January, February and March 2004, ending the lowest conversion margins ever experienced in our Company’s history. 

While we were focusing on cash generation, cost reductions and preparing Allegheny Technologies to benefit and take strong advantage of a market recovery, we generated $80 million of cash flow from operations, and had no borrowings under our secured domestic credit facility. 

Our strong emphasis on safety continued. Compared to 2002, ATI’s OSHA Recordable Incident Rate improved by 29 percent and the Lost Workday Incident Rate improved by 38 percent, placing us far better than industry averages. 

We developed and accelerated the implementation of a new “ATI Business System”, which drives our “lean manufacturing” initiatives, improves quality and yields, further reduces overhead structures and cost, and delivers excellent customer reliability and service.The basics of this system begin with dignity and respect for the people who do the work and who drive ever-increasing efficiency and cost reductions by eliminating waste in a people-driven and systemic way across the ATI companies. In addition, we initiated a “Strategic Renewal Process” to refine our product offerings and guide our manufacturing investments for improved results throughout the Company. 

We’ve begun to see the early benefits of these two initiatives. As an example, even though costs to purchase major raw materials increased over 27 percent during 2003, the dollars tied up in our raw materials, in process inventories, and finished goods were up less than 1 percent. 

ATI continued to invest in technology, research and development. We introduced several new alloys to better serve our customers’ needs. Among these alloys are three with significant potential for future growth: TM 

• 718 Plus alloy, a new (patents pending) nickel-based superalloy that increases the temperature capability of the commonly used aerospace 718 alloy. 718 Plus alloy is a cost-effective new alternative to meet the demanding needs of next-generation jet engines. TM 

•A T I 425 titanium, an innovative new patented titanium alloy that is a cost-effective alternative to the most common high-strength titanium alloy. TM 

• AL 2003 alloy, a new patented stainless steel duplex alloy that is an economic alternative to higher nickel-bearing stainless steels and duplex alloys. 

These new proprietary alloys will well serve our markets and customers who choose to use them, and they help keep ATI companies at the leading edge of new product innovation and performance. 

In June, we announced the formation of Uniti LLC, our industrial titanium joint venture with VSMPO-AVISMA of Russia. Uniti is off to a good start and gaining real traction in the global markets for industrial titanium products. 

## Vision for ATI 

We are now able to focus on profitable growth, while transitioning our businesses during 2004 for long-term sustained success. 

I decided to join ATI because I believe this is a potentially great Company, with great opportunities, great people and leading technologies. ATI is committed to providing good jobs for our employees and being a responsible and productive corporate citizen in the communities where we operate...all within 

