ATI Annual Report 2003 0 3 03 During this extended commercial aerospace cyclical slump, we were fortunate to have the means to invest in our business.Today, we are better positioned to supply both sides of the ocean with our high performance metals as a result of investments made in our Monroe, NC and Sheffield, U.K. facilities. In addition, we plan to  finish the expansion of our high performance metals long products rolling mill in the second quarter 2004.This rolling mill, located in Richburg, SC, provides enhanced technological capabilities enabling ATI to grow market positions for our nickel-based superalloy, titanium alloy, zirconium and specialty steel product lines. Tu r ning to our High Performance Metals segment, commercial aerospace, this segment’s largest end-use market, was still suffering in 2003 from the dramatic downturn that resulted from the tragic events of September 11, 2001. By the end of 2003, demand for our nickel-based superalloys and premium titanium alloys from commercial aerospace stabilized. Most analysts see a commercial aerospace recovery in the 2005/2006 time period, which means that we should begin to see some signs of improvement in our orders 12 to 18 months before that, due to the lead times of our specialty materials. We’ve invested in this business and most of our capital base is relatively new. Our melt shop upgrade  in Brackenridge, PA is on plan.The first of our two new electric arc furnaces began operation in November 2003.The second is on plan to be completed during the fourth quarter 2004. We now have an ongoing dialogue with the United Steelworkers of America (USWA) leadership. The USWA leadership is aware of the competitive challenges facing the U.S. stainless steel industry. By working together, under a new framework, combining the investments we are making with the right cost structure, and utilizing the new ATI Business System, Allegheny Ludlum can sustain its position as one of the premier metals companies in the world. In February of 2004, we announced the J&L Specialty Steel Asset Purchase Agreement, contingent  upon certain conditions and normal governmental approvals.This acquisition is expected to complement and enhance our competitive position in the North American stainless steel marketplace. To “ fix” our stainless steel business means returning Allegheny Ludlum to long-term profitable growth and cash generation. Market conditions have been difficult in this business since 2001. Domestic  consumption of stainless steel sheet and strip, our Flat-Rolled Products segment’s largest product line, fell by 18 percent in 2001, compared to 2000, and consumption remained at low levels through 2003. Compounding the problem, stainless steel capacity was added in the U.S. during this period. Pricing  suffered, falling to historically low levels. a values-based framework of integrity and leadership.Yet, it is a Company needing to overcome some difficult circumstances and challenges. On January 29, 2004, I presented to the ATI Board of Directors our strategic direction and what we intend to accomplish in 2004: • “Fix” our stainless steel business —returning Allegheny Ludlum to long-term profitable growth and  cash generation  • Finish the expansion of our high performance metals long products rolling mill in Richburg, SC —  profitably growing our Allvac business market position and returns  • Expand our exotic alloys business through yearly incremental investment in our Wah Chang  operations with increasing profitability and returns  • Manage our Engineered Products segment businesses to contribute as a core business sector with good returns and cash generation  • Grow in China • Improve the ATI balance sheet • Deliver positive earnings per share growth