46 Annual Report 2003 ATI Stockholders’ Rights Plan Note 7. Income Taxes — Under the Company’s stockholder rights plan, each share of Allegheny Technologies common stock is accompanied by one right to purchase two one-hundredths of a share of preferred stock for $100. Each two hundredths of a share of preferred stock would be entitled to dividends and to vote on an equivalent basis with one share of common stock. The rights are neither exercisable nor separately transferable from shares of common stock unless a party acquires or effects a tender offer for more than 15% of Allegheny Technologies common stock. If a party acquired more than 15% of the Allegheny Technologies common stock or acquired the Company in a business combination, each right (other than those held by the acquiring party) would entitle the holder to purchase common stock or preferred stock at a substantial discount. The rights expire on March 12, 2008, and the Company’s Board of Directors can amend certain provisions of the plan or redeem the rights at any time prior to their becoming exercisable. In accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”), in the 2003 fourth quarter, the Company recorded a $138.5 million charge as part of its income tax provision to establish a valuation allowance for the majority of its net deferred tax assets in recognition of uncertainty regarding full realization. No valuation allowance was required on $34.3 million of net deferred tax assets based upon the Company’s ability to utilize these assets within the carryback, carryforward period, including consideration of tax planning strategies that the Company would undertake to prevent an operating loss or tax credit carryforward from expiring unutilized. The Company intends to maintain a valuation allowance on the net deferred tax assets until a realization event occurs to support reversal of all or a portion of the reserve.  Income tax provision (benefit) was as follows: In general, the Company is responsible for filing consolidated U.S., foreign and combined, unitary or separate state income tax returns. The Company is responsible for paying the taxes relating to such returns, including any subsequent adjustments resulting from the redetermination of such tax liability by the applicable taxing authorities. Income taxes paid were $3.9 million, $2.0 million and $3.4 million in 2003, 2002 and 2001, respectively. The Company received $65.6 million in federal income tax refunds and $4.4 million in state and foreign income tax refunds in 2003, and has recognized $7.2 million of federal income taxes receivable at December 31, 2003 for refunds to be received in 2004, based upon the carryback character of certain deferred tax assets, to recover income taxes paid in prior years. No provision has been made for U.S., state or additional foreign taxes related to undistributed earnings of foreign subsidiaries which have been or are intended to be permanently re-invested. It is not practical to estimate the income tax expense or benefit that might be incurred if earnings were remitted to the U.S. Loss before income taxes included loss from domestic operations of $(279.1) million in 2003, $(99.8) million in 2002 and $(45.3) million in 2001. The following is a reconciliation of income taxes computed at the statutory federal income tax rate to the actual effective income tax provision (benefit): Income Tax Provision (Benefit) (In millions) 2003) 2002) 2001) Taxes computed at federal tax rate $(98.1) $(36.3) $(12.7) State and local income taxes, net of federal tax benefit (3.4) (0.8) (1.0) Valuation allowance 138.5) —) —) Other (3.9) (0.9) 2.5) Income tax provision (benefit) $ 33.1) $(38.0) $(11.2) (In millions) 2003) 2002) 2001) Current: Federal $(36.6) $(64.1) $(40.4) State 2.8) 0.1) 0.5) Foreign 2.6) 0.4) 2.5) Total  (31.2) (63.6) (37.4) Deferred: Federal 67.5) 21.0) 25.9) State (2.6) 4.6) 0.3) Foreign (0.6) —) —) Total 64.3) 25.6) 26.2) Income tax provision (benefit) $)33.1) $(38.0) $(11.2)