In the news release, Timken Posts Strong Third-Quarter Results;
Raises Full-Year Outlook, issued Oct. 28,
2010 by The Timken Company over PR Newswire, we are advised
by the company that the Safe Harbor Statement, second to last
sentence, should read "March 31,
2010" rather than "June 30,
2010" as originally issued inadvertently. The complete,
corrected release follows:
Timken Posts Strong Third-Quarter Results; Raises Full-Year Outlook
-- Third-quarter sales up 39% as global demand strengthens --
Higher volume and operating performance yield increased
profitability and strong cash flow
CANTON, Ohio, Oct. 28 /PRNewswire-FirstCall/ -- The Timken
Company (NYSE: TKR) today reported sales of $1.1 billion in the third quarter of 2010, an
increase of 39 percent over the same period a year ago. The sales
increase reflects stronger global demand across most of the
company's end markets and higher material surcharges.
(Photo: http://photos.prnewswire.com/prnh/20100210/TIMKENLOGO
)
(Photo: http://www.newscom.com/cgi-bin/prnh/20100210/TIMKENLOGO
)
The company generated income from continuing operations, net of
non-controlling interest, in the third quarter of $71.4 million, or $0.73 per diluted share, compared with last
year's third-quarter loss of $19.4
million, or $0.20 per share.
Excluding special items, the company posted $78.1 million in income from continuing
operations, net of non-controlling interest, or $0.80 per diluted share, compared with income of
$7.4 million, or $0.08 per diluted share, a year ago.
The increase in third-quarter earnings reflects the combined
effects of stronger demand, greater manufacturing efficiencies,
surcharges and pricing, partially offset by higher material and
selling and administrative costs.
"The company's strong profitability and cash flow demonstrate a
structural improvement in our level of performance," said
James W. Griffith, Timken president
and chief executive officer. "We are growing the company in global
markets where we create value, and are well positioned to
accelerate that growth."
Special items for continuing operations in the third quarter of
2010 totaled $6.7 million of expense,
net of tax, primarily associated with manufacturing rationalization
activities. Last year, special items in the third quarter totaled
$26.8 million, primarily related to
severance expense.
As of Sept. 30, 2010, total debt
was $493 million, or 21.6 percent of capital. The
company had cash of $900 million, or $407 million in
excess of total debt, compared with a net cash position of
$243 million as of Dec. 31, 2009. The increase in net
cash reflects strong cash flow from earnings, partially offset by
pension contributions and working-capital requirements.
Among recent developments, the company:
- Completed its acquisition of QM Bearings and Power
Transmission, broadening Timken's industrial offering with
spherical roller-bearing steel-housed units and couplings for
especially demanding processes;
- Announced a $50-million
product-finishing investment in its Ohio steel operations, expected to increase
efficiency when completed in 2013; and
- Opened a new office in Jakarta,
Indonesia, to serve growing demand from the metals, mining,
cement, rail, energy and power industries.
Nine Months' Results
For the first nine months of 2010, sales were $3 billion,
an increase of 26 percent from the same period in 2009.
Income from the company's continuing operations, net of
non-controlling interest, for the first nine months of 2010 was
$181.1 million, or $1.86 per diluted share, compared with a loss of
$53.9 million, or $0.55 per share, a year ago. Special items, net
of tax, in the first nine months of 2010 totaled $34.4 million of expense compared with
$75.2 million of expense in the
prior-year period. Special items in 2010 primarily related to a
one-time non-cash charge of $21.6 million to record the deferred tax
impact of U.S. health care legislation enacted in the first quarter
and expense for severance and manufacturing rationalization.
Excluding special items, income from the company's continuing
operations, net of non-controlling interest, was $215.5 million, or $2.22 per diluted share, in the first nine months
of 2010, versus income of $21.3 million, or $0.22 per diluted share, in the prior-year
period. During the first nine months of 2010, the company
benefited from increased demand, improved manufacturing performance
and cost-reduction initiatives, partially offset by higher selling
and administrative costs.
Bearings and Power Transmission Group Results
The Bearings and Power Transmission Group had third-quarter
sales of $719.6 million, up
17 percent from $614.8 million
for the same period last year. Earnings before interest and taxes
(EBIT) for the third quarter were $101.6 million, up from $48.8 million in the third quarter of
2009.
For the first nine months of 2010, Bearings and Power
Transmission Group sales were $2.1 billion, up 12 percent from the
same period a year ago. For the first nine months of 2010,
EBIT was $288.3 million,
compared with EBIT of $149.9 million in the first nine months of
2009.
Mobile Industries Segment Results
In the third quarter, Mobile Industries' sales were $404.1 million, up 23 percent from last
year's third-quarter sales of $327.6 million. Stronger demand drove the
sales increase, led by the off-highway, light-vehicle and
heavy-truck sectors.
EBIT for the segment was $60.6 million for the third quarter, up from
$13.7 million in the same period a
year ago. Higher volume, better manufacturing utilization and
pricing initiatives drove the increase, partially offset by higher
material and selling and administrative costs.
For the first nine months of 2010, Mobile Industries' sales of
$1.2 billion were up
27 percent from the same period a year ago. EBIT for the
first nine months of 2010 was $171.5
million, compared with last year's EBIT loss of
$0.6 million.
Process Industries Segment Results
Process Industries' third-quarter sales were $234.5 million, up 25 percent from
$187 million for the same period a year ago. Stronger
distribution sales, especially in North
America and Asia, were
primary drivers of the increase.
Process Industries' third-quarter EBIT was $37.2 million, up from $16 million a
year ago. Higher volume and better manufacturing utilization drove
the increase, partially offset by higher material and selling and
administrative costs.
For the first nine months of 2010, Process Industries' sales
were $652.7 million, up
5 percent from the same period a year ago. EBIT for the first
nine months of 2010 was $93 million, compared with EBIT of
$94.6 million in the first nine
months of 2009.
Aerospace and Defense Segment Results
Aerospace and Defense had third-quarter sales of $81million, down 19 percent from $100.2 million for the same period last
year. The decline reflects reduced demand from commercial and
general aviation sectors with some weakness in the defense market.
Implementation of new engineering systems and business processes
also temporarily dampened sales in the quarter.
Third-quarter EBIT was $3.8 million, down from $19.1 million a year ago. The decline
primarily reflects lower sales and higher manufacturing costs.
For the first nine months of 2010, Aerospace and Defense sales
were $255.8 million, down
20 percent from the same period a year ago. EBIT for the
first nine months of 2010 was $23.8 million, compared with EBIT of
$55.9 million in the first nine
months of 2009.
Steel Group Results
Sales for the Steel Group, including inter-group sales, were
$371.3 million in the third
quarter, an increase of 135 percent from $157.9 million for the same period last
year. The results reflect strong demand across all markets.
Raw-material surcharges increased approximately $80 million
from the third quarter last year.
Third-quarter EBIT was $41.3 million, compared with an EBIT loss of
$20.2 million for the same
period a year ago. EBIT benefited from improved volume and mix,
manufacturing utilization and surcharges, partially offset by
higher material costs.
For the first nine months of 2010, Steel Group sales were
$979.7 million, up
81 percent from the first nine months of last year. EBIT
for the first nine months of 2010 was $104.2 million, compared with an EBIT loss
of $60.4 million for the same
period a year ago.
Outlook
For the full-year 2010, Timken anticipates an increase in sales
of approximately 25 to 30 percent over 2009, driven primarily
by stronger demand in the Steel and Mobile Industries segments.
For its business segments, Timken expects:
- Steel Group sales to increase 80 to 90 percent, due
to improved demand across all market sectors as well as
surcharges;
- Mobile Industries segment sales to be up approximately 20 to
25 percent, driven by recovery in the light-vehicle,
off-highway and heavy-truck sectors;
- Process Industries segment sales to be up approximately 5 to 10
percent, reflecting growth initiatives in energy and Asia as well as strengthening in industrial
distribution demand; and
- Aerospace and Defense segment sales to decline 15 to 20
percent, with continued weakness in commercial and general
aviation, as well as some softening in defense.
The company is raising its 2010 full-year earnings estimate,
excluding special items, to a range of $2.80
to $2.90 per diluted share, compared with its prior estimate
of $2.40 to $2.60 per diluted share.
The company expects to generate cash from operating activities of
approximately $400 million and free
cash flow (after capital expenditures and dividends) of
approximately $250 million for the full year 2010.
Conference Call Information
The company will host a conference call for investors and
analysts today to discuss financial results.
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Conference Call:
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Thursday, Oct.
28, 2010
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11:00 a.m. Eastern
Time
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Live Dial-In:
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800-344-0593 or
706-634-0975
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(Call in 10 minutes prior to be
included.)
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Conference ID:
10159225
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Replay Dial-In through Nov. 5,
2010:
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800-642-1687 or
706-645-9291
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Live Webcast:
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www.timken.com/investors
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About The Timken Company
The Timken Company (NYSE: TKR, http://www.timken.com) keeps the
world turning with innovative friction management and power
transmission products and services, enabling our customers'
machinery to perform more efficiently and reliably. With sales of
$3.1 billion in 2009, operations in
27 countries/territories and approximately 17,000 employees, Timken
is Where You Turn® for better performance.
Certain statements in this news release (including statements
regarding the company's forecasts, estimates and expectations) that
are not historical in nature are "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. In particular, the statements related to expectations
regarding the company's future financial performance, including
information under the heading "Outlook", are forward-looking. The
company cautions that actual results may differ materially from
those projected or implied in forward-looking statements due to a
variety of important factors, including: the finalization of the
company's financial statements for the third quarter of 2010; the
company's ability to respond to the changes in its end markets that
could affect demand for the company's products; unanticipated
changes in business relationships with customers or their purchases
from the company; changes in the financial health of the company's
customers, which may have an impact on the company's revenues,
earnings and impairment charges; fluctuations in raw-material and
energy costs and their impact on the operation of the company's
surcharge mechanisms; the impact of the company's last-in,
first-out accounting; weakness in global economic conditions and
financial markets; changes in the expected costs associated with
product warranty claims; the impact on operations of general
economic conditions, higher or lower raw-material and energy costs,
fluctuations in customer demand, and the company's ability to
achieve the benefits of its ongoing programs and initiatives. These
and additional factors are described in greater detail in the
company's Annual Report on Form 10-K for the year ended
Dec. 31, 2009, page 50, and in the
Quarterly Report on Form 10-Q for the quarter ended March 31, 2010. The company undertakes no
obligation to update or revise any forward-looking
statement.
Media Contact: Lorrie Paul
Crum
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Manager – Global Media and
Strategic Communications
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Mail Code: GNW-37
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1835 Dueber Avenue,
S.W.
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Canton, OH 44706
U.S.A.
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Telephone: (330)
471-3514
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Mobile:
(330) 224-5021
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lorrie.crum@timken.com
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Investor Contact: Steve
Tschiegg
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Director – Capital Markets and
Investor Relations
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Mail Code: GNE-26
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1835 Dueber Avenue,
S.W.
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Canton, OH 44706
U.S.A.
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Telephone: (330)
471-7446
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steve.tschiegg@timken.com
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(Unaudited)
CONDENSED CONSOLIDATED STATEMENT
OF INCOME
|
|
|
AS
REPORTED
|
|
AS ADJUSTED
(1)
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|
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(Dollars in millions, except
share data)
|
Q3
2010
|
Q3
2009
|
Nine
Months
2010
|
Nine
Months
2009
|
|
Q3
2010
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Q3
2009
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Nine
Months
2010
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Nine
Months
2009
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|
|
Net sales
|
$
1,059.7
|
$
763.6
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$
2,984.8
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$
2,367.0
|
|
$
1,059.7
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$
763.6
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$
2,984.8
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$
2,367.0
|
|
|
Cost of products sold
|
792.3
|
633.1
|
2,224.6
|
1,953.9
|
|
792.3
|
633.1
|
2,224.6
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1,953.9
|
|
|
Manufacturing rationalization /
reorganization expenses - cost of products sold
|
2.3
|
1.0
|
4.1
|
3.6
|
|
-
|
-
|
-
|
-
|
|
|
Gross Profit
|
265.1
|
129.5
|
756.1
|
409.5
|
|
267.4
|
130.5
|
760.2
|
413.1
|
|
|
Selling, general &
administrative expenses (SG&A)
|
139.9
|
106.8
|
413.3
|
357.1
|
|
139.9
|
106.8
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413.3
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357.1
|
|
|
Rationalization / reorganization
expenses - SG&A
|
0.4
|
0.5
|
0.7
|
1.6
|
|
-
|
-
|
-
|
-
|
|
|
Impairment and
restructuring
|
2.9
|
19.6
|
9.4
|
84.1
|
|
-
|
-
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-
|
-
|
|
|
Operating Income
(Loss)
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121.9
|
2.6
|
332.7
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(33.3)
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|
127.5
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23.7
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346.9
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56.0
|
|
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Other (expense)
income
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(3.2)
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(2.0)
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(1.0)
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3.9
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|
(3.2)
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(2.0)
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(1.0)
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3.9
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|
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Special items - other income
(expense)
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0.4
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(2.6)
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0.3
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(0.6)
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|
-
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-
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-
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-
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|
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Earnings (Loss) Before Interest
and Taxes (EBIT) (2)
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119.1
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(2.0)
|
332.0
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(30.0)
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|
124.3
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21.7
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345.9
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59.9
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|
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Interest expense, net
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(8.3)
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(9.9)
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(26.4)
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(25.9)
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(8.3)
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(9.9)
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(26.4)
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(25.9)
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|
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Income (Loss) From Continuing
Operations Before Income Taxes
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110.8
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(11.9)
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305.6
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(55.9)
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|
116.0
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11.8
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319.5
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34.0
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|
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Provision for income
taxes
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38.6
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7.1
|
122.7
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2.9
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|
37.1
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4.0
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102.2
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11.4
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|
|
Income (Loss) From Continuing
Operations
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72.2
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(19.0)
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182.9
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(58.8)
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|
78.9
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7.8
|
217.3
|
22.6
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|
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(Loss) income from discontinued
operations, net of income taxes (3)
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(1.1)
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(30.8)
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3.4
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(59.9)
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-
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(2.3)
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-
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(29.6)
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|
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Net Income (Loss)
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71.1
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(49.8)
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186.3
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(118.7)
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|
78.9
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5.5
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217.3
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(7.0)
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|
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Less: Net Income (Loss)
Attributable to Noncontrolling Interest
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0.8
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0.4
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1.8
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(4.9)
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0.8
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0.4
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1.8
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1.3
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|
|
Net Income (Loss) Attributable
to The Timken Company
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$
70.3
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$
(50.2)
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$
184.5
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$
(113.8)
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$
78.1
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$
5.1
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$
215.5
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$
(8.3)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net Income (Loss) per Common
Share Attributable to
The Timken Company Common
Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings (Loss) Per Share
- Continuing Operations
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$
0.74
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$
(0.20)
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$
1.87
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$
(0.55)
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|
$
0.81
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$
0.08
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$
2.24
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$
0.22
|
|
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Basic Earnings (Loss) Per Share
- Discontinued
Operations
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(0.01)
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(0.32)
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0.04
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(0.62)
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|
-
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(0.03)
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-
|
(0.31)
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|
|
|
Earnings (Loss) Per
Share
|
$
0.73
|
$
(0.52)
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$
1.91
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$
(1.17)
|
|
$
0.81
|
$
0.05
|
$
2.24
|
$
(0.09)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted Earnings (Loss) Per
Share - Continuing Operations
|
$
0.73
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$
(0.20)
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$
1.86
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$
(0.55)
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|
$
0.80
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$
0.08
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$
2.22
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$
0.22
|
|
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Diluted Earnings (Loss) Per
Share - Discontinued
Operations
|
(0.01)
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(0.32)
|
0.03
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(0.62)
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-
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(0.03)
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-
|
(0.31)
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|
|
|
Earnings (Loss) Per
Share
|
$
0.72
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$
(0.52)
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$
1.89
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$
(1.17)
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|
$
0.80
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$
0.05
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$
2.22
|
$
(0.09)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
96,400,592
|
96,176,091
|
96,373,151
|
96,111,847
|
|
96,400,592
|
96,176,091
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96,373,151
|
96,111,847
|
|
|
Average Shares Outstanding -
assuming dilution
|
97,411,682
|
96,176,091
|
97,014,084
|
96,111,847
|
|
97,411,682
|
96,176,091
|
97,014,084
|
96,111,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
BUSINESS
SEGMENTS
|
|
|
(Dollars in millions, except
share data)
|
Q3
2010
|
Q3
2009
|
Nine Months
2010
|
Nine
Months
2009
|
|
|
|
|
|
|
|
|
|
Mobile Industries
Segment
|
|
|
|
|
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Net sales to external
customers
|
$
404.1
|
$ 327.6
|
$ 1,172.0
|
$ 920.4
|
|
|
Adjusted earnings (loss) before
interest and taxes (EBIT) (2)
|
$
60.6
|
$ 13.7
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$
171.5
|
$
(0.6)
|
|
|
Adjusted EBIT Margin
(2)
|
15.0%
|
4.2%
|
14.6%
|
-0.1%
|
|
|
|
|
|
|
|
|
|
Process Industries
Segment
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|
|
|
|
|
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Net sales to external
customers
|
$
233.7
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$ 186.4
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$
650.6
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$ 616.9
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|
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Intergroup sales
|
0.8
|
0.6
|
2.1
|
2.2
|
|
|
Total net sales
|
$
234.5
|
$ 187.0
|
$
652.7
|
$ 619.1
|
|
|
Adjusted earnings (loss) before
interest and taxes (EBIT) (2)
|
$
37.2
|
$ 16.0
|
$
93.0
|
$
94.6
|
|
|
Adjusted EBIT Margin
(2)
|
15.9%
|
8.6%
|
14.2%
|
15.3%
|
|
|
|
|
|
|
|
|
|
Aerospace and Defense
Segment
|
|
|
|
|
|
|
Net sales to external
customers
|
$
81.0
|
$ 100.2
|
$
255.8
|
$ 318.7
|
|
|
Adjusted earnings (loss) before
interest and taxes (EBIT) (2)
|
$
3.8
|
$ 19.1
|
$
23.8
|
$
55.9
|
|
|
Adjusted EBIT Margin
(2)
|
4.7%
|
19.1%
|
9.3%
|
17.5%
|
|
|
|
|
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|
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Total Bearings and Power
Transmission Group
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|
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Net sales to external
customers
|
$
718.8
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$ 614.2
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$ 2,078.4
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$ 1,856.0
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|
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Intergroup sales
|
0.8
|
0.6
|
2.1
|
2.2
|
|
|
Total net sales
|
$
719.6
|
$ 614.8
|
$ 2,080.5
|
$ 1,858.2
|
|
|
Adjusted earnings (loss) before
interest and taxes (EBIT) (2)
|
$
101.6
|
$ 48.8
|
$
288.3
|
$ 149.9
|
|
|
Adjusted EBIT Margin
(2)
|
14.1%
|
7.9%
|
13.9%
|
8.1%
|
|
|
|
|
|
|
|
|
|
Steel Group
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|
|
|
|
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Net sales to external
customers
|
$
340.9
|
$ 149.4
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$
906.4
|
$ 511.0
|
|
|
Intergroup sales
|
30.4
|
8.5
|
73.3
|
30.4
|
|
|
Total net sales
|
$
371.3
|
$ 157.9
|
$
979.7
|
$ 541.4
|
|
|
Adjusted earnings (loss) before
interest and taxes (EBIT) (2)
|
$
41.3
|
$ (20.2)
|
$
104.2
|
$ (60.4)
|
|
|
Adjusted EBIT Margin
(2)
|
11.1%
|
-12.8%
|
10.6%
|
-11.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate
expense
|
$
(17.6)
|
$ (10.3)
|
$
(49.2)
|
$ (35.8)
|
|
|
Intergroup eliminations income
(expense) (4)
|
$
(1.0)
|
$
3.4
|
$
2.6
|
$
6.2
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
Net sales to external
customers
|
$ 1,059.7
|
$ 763.6
|
$ 2,984.8
|
$ 2,367.0
|
|
|
Adjusted earnings (loss) before
interest and taxes (EBIT) (2)
|
$
124.3
|
$ 21.7
|
$
345.9
|
$
59.9
|
|
|
Adjusted EBIT Margin
(2)
|
11.7%
|
2.8%
|
11.6%
|
2.5%
|
|
|
|
|
|
|
|
|
|
(1)
|
"Adjusted" statements exclude
the impact of impairment and restructuring, manufacturing
rationalization/reorganization and special charges and credits for
all periods shown. Management believes that the Adjusted
Consolidated Statement of Income may be helpful in understanding
the company's performance and therefore useful to
investors.
|
|
|
|
|
|
(2)
|
EBIT is defined as operating
income plus other income (expense). EBIT Margin is EBIT as a
percentage of net sales. EBIT and EBIT margin on a segment
basis exclude certain special items set forth above. EBIT and
EBIT Margin are important financial measures used in the management
of the business, including decisions concerning the allocation of
resources and assessment of performance. Management believes that
reporting EBIT and EBIT Margin best reflect the performance of the
company's business segments and EBIT disclosures are responsive to
investors.
|
|
|
|
|
|
(3)
|
Discontinued Operations relate
to the sale of the Needle Roller Bearings (NRB) operations to JTEKT
Corporation on December 31, 2009.
|
|
|
|
|
|
(4)
|
Intergroup eliminations
represent intergroup profit or loss between the Steel Group and the
Bearings and Power Transmission Group.
|
|
|
|
|
|
|
|
|
Reconciliation of net income
(loss) attributable to The Timken Company and EPS -
diluted.
|
|
|
This reconciliation is provided
as additional relevant information about the company's performance.
Management believes adjusted earnings per share are more
representative of the company's performance and therefore useful to
investors. Management also believes that it is appropriate to
compare GAAP income from continuing operations to adjusted income
from continuing operations in light of special items related to
impairment and restructuring and manufacturing
rationalization/reorganization costs, Continued Dumping and Subsidy
Offset Act (CDSOA) receipts and gain/loss on sale of non-strategic
assets.
|
|
|
|
Third
Quarter
|
|
|
Nine Months
Ended
|
|
|
|
2010
|
2009
|
|
|
2010
|
2009
|
|
|
(Dollars in millions, except
share data)
|
$
|
EPS(5)
|
$
|
EPS(5)
|
|
|
$
|
EPS(5)
|
$
|
EPS(5)
|
|
|
Net income (loss) attributable
to The Timken Company
|
$ 70.3
|
$ 0.72
|
$ (50.2)
|
$ (0.52)
|
|
|
$ 184.5
|
$ 1.89
|
$ (113.8)
|
$ (1.17)
|
|
|
Less: loss from discontinued
operations, net of income taxes
|
(1.1)
|
(0.01)
|
(30.8)
|
(0.32)
|
|
|
3.4
|
0.03
|
(59.9)
|
(0.62)
|
|
|
Net income (loss) from
continuing operations attributable to The Timken
Company
|
71.4
|
0.73
|
(19.4)
|
(0.20)
|
|
|
181.1
|
1.86
|
(53.9)
|
(0.55)
|
|
|
Pre-tax special
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
rationalization/reorganization expenses - cost of products
sold
|
2.3
|
0.02
|
1.0
|
0.01
|
|
|
4.1
|
0.04
|
3.6
|
0.04
|
|
|
Rationalization/reorganization
expenses - SG&A
|
0.4
|
0.00
|
0.5
|
0.01
|
|
|
0.7
|
0.01
|
1.6
|
0.02
|
|
|
Impairment and
restructuring
|
2.9
|
0.03
|
19.6
|
0.20
|
|
|
9.4
|
0.10
|
84.1
|
0.88
|
|
|
Special items - other (income)
expense
|
(0.4)
|
(0.00)
|
2.6
|
0.03
|
|
|
(0.3)
|
(0.00)
|
0.6
|
0.01
|
|
|
Provision for income taxes
(6)
|
1.5
|
0.02
|
3.1
|
0.03
|
|
|
20.5
|
0.21
|
(8.5)
|
(0.09)
|
|
|
Special items attributable to
noncontrolling interest
|
-
|
-
|
-
|
-
|
|
|
-
|
-
|
(6.2)
|
(0.06)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income (loss)
from continuing operations attributable to The Timken
Company
|
78.1
|
0.80
|
7.4
|
0.08
|
|
|
215.5
|
2.22
|
21.3
|
0.22
|
|
|
Add: adjusted (loss) from
discontinued operations
|
-
|
-
|
(2.3)
|
(0.03)
|
|
|
-
|
-
|
(29.6)
|
(0.31)
|
|
|
Adjusted net income attributable
to The Timken Company
|
$ 78.1
|
$ 0.80
|
$
5.1
|
$ 0.05
|
|
|
$ 215.5
|
$ 2.22
|
$ (8.3)
|
$ (0.09)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations
|
$ 72.2
|
$ 0.74
|
$ (19.0)
|
$ (0.20)
|
|
|
$ 182.9
|
$ 1.89
|
$ (58.8)
|
$ (0.61)
|
|
|
Less: Net income (loss)
attributable to noncontrolling interest
|
0.8
|
0.01
|
0.4
|
0.00
|
|
|
1.8
|
0.02
|
(4.9)
|
(0.05)
|
|
|
Net income (loss) from
continuing operations attributable to The Timken
Company
|
$ 71.4
|
$ 0.73
|
$ (19.4)
|
$ (0.20)
|
|
|
$ 181.1
|
$ 1.86
|
$ (53.9)
|
$ (0.55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued
operations, net of income taxes
|
$ (1.1)
|
$(0.01)
|
$ (30.8)
|
$ (0.32)
|
|
|
$
3.4
|
$ 0.03
|
$ (59.9)
|
$ (0.62)
|
|
|
Special items, discontinued
operations
|
1.1
|
0.01
|
28.5
|
0.29
|
|
|
(3.4)
|
(0.03)
|
30.3
|
0.31
|
|
|
Adjusted income (loss) from
discontinued operations, net of income taxes
|
$
-
|
$
-
|
$ (2.3)
|
$ (0.03)
|
|
|
$
-
|
$
-
|
$ (29.6)
|
$ (0.31)
|
|
|
|
|
|
(5)
|
EPS amounts may not sum due to
rounding differences
|
|
|
|
|
|
(6)
|
Provision for income taxes
includes the tax impact on pre-tax special items, the impact of
discrete tax items recorded during the respective periods, as well
as adjustments to reflect the use of one overall effective tax rate
on Adjusted pre-tax income in interim periods.
|
|
|
|
|
|
Reconciliation of Outlook
Information: Expected earnings per
diluted share for the 2010 full year excludes
special items. Examples of such special items include
impairment and restructuring, manufacturing
rationalization/reorganization expenses, gain/loss on the sale of
non-strategic assets and payments under the CDSOA. It is not
possible at this time to identify the potential amount or
significance of these special items. Management cannot
predict whether the company will receive any additional payments
under the CDSOA in 2010 and if so, in what amount. If the company
does receive any CDSOA payments, they will most likely be received
in the fourth quarter.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP income
from continuing operations before income
taxes
This reconciliation is provided
as additional relevant information about the company's performance.
Management believes Consolidated adjusted earnings before
interest and taxes (EBIT) and Total Bearings and Power
Transmission adjusted EBIT are more representative of the company's
performance and therefore useful to investors. Management
also believes that it is appropriate to compare GAAP income from
continuing operations before income taxes to Consolidated adjusted
EBIT in light of special items related to impairment and
restructuring and manufacturing rationalization/reorganization
costs, Continued Dumping and Subsidy Offset Act (CDSOA) receipts
and gain/loss on sale of non-strategic assets.
|
|
|
|
|
|
|
|
Third
Quarter
|
|
Nine Months
Ended
|
|
|
2010
|
2009
|
|
2010
|
2009
|
|
|
(Dollars in millions)
(Unaudited)
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations before income taxes
|
$
110.8
|
$
(11.9)
|
|
$
305.6
|
$
(55.9)
|
|
|
|
|
|
|
|
|
|
Pre-tax reconciling
items:
|
|
|
|
|
|
|
|
Interest expense
|
9.1
|
10.3
|
|
28.7
|
27.2
|
|
|
Interest income
|
(0.8)
|
(0.4)
|
|
(2.3)
|
(1.3)
|
|
|
Manufacturing
rationalization/reorganization expenses - cost of products
sold
|
2.3
|
1.0
|
|
4.1
|
3.6
|
|
|
Rationalization/reorganization
expenses - SG&A
|
0.4
|
0.5
|
|
0.7
|
1.6
|
|
|
Impairment and
restructuring
|
2.9
|
19.6
|
|
9.4
|
84.1
|
|
|
Special items - other expense
(income)
|
(0.4)
|
2.6
|
|
(0.3)
|
0.6
|
|
|
Consolidated adjusted earnings
before interest and taxes (EBIT)
|
$
124.3
|
$
21.7
|
|
$
345.9
|
$
59.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Group adjusted (earnings)
loss before interest and taxes (EBIT)
|
$
(41.3)
|
$
20.2
|
|
$
(104.2)
|
$
60.4
|
|
|
Unallocated corporate
expense
|
17.6
|
10.3
|
|
49.2
|
35.8
|
|
|
Intergroup eliminations
expense
|
1.0
|
(3.4)
|
|
(2.6)
|
(6.2)
|
|
|
Total Bearings and Power
Transmission Group adjusted earnings before interest and taxes
(EBIT)
|
$
101.6
|
$
48.8
|
|
$
288.3
|
$
149.9
|
|
|
|
|
|
|
|
Reconciliation of Total Debt to
Net Debt and the Ratio of Net Debt to Capital:
|
|
|
(Dollars in millions)
(Unaudited)
|
September
30,
2010
|
|
December
31,
2009
|
|
|
Short-term debt
|
$
13.6
|
|
$
43.4
|
|
|
Long-term debt
|
479.4
|
|
469.3
|
|
|
Total Debt
|
493.0
|
|
512.7
|
|
|
Less: Cash and cash
equivalents
|
(899.8)
|
|
(755.5)
|
|
|
Net (Cash) Debt
|
$
(406.8)
|
|
$
(242.8)
|
|
|
|
|
|
|
|
Shareholders' equity
|
$
1,794.0
|
|
$
1,595.6
|
|
|
|
|
|
|
|
Ratio of Total Debt to
Capital
|
21.6%
|
|
24.3%
|
|
|
Ratio of Net (Cash) Debt to
Capital (Leverage)
|
(29.3%)
|
|
(17.9%)
|
|
|
|
|
|
|
|
This reconciliation is provided
as additional relevant information about The Timken Company's
financial position. Capital is defined as total debt plus
shareholders' equity.
|
|
|
|
|
Management believes Net (Cash)
Debt is more indicative of Timken's financial position, due to the
amount of cash and cash equivalents.
|
|
|
|
|
|
|
For the
Quarter Ended
|
|
|
Free cash flow:
|
September
30,
2010
|
|
September
30,
2009
|
|
|
(Dollars in millions)
(Unaudited)
|
|
|
|
|
|
Net cash provided by operating
activities
|
$
149.3
|
|
$
170.7
|
|
|
Less: capital
expenditures
|
(22.2)
|
|
(27.7)
|
|
|
Less: cash dividends paid to
shareholders
|
(12.5)
|
|
(8.5)
|
|
|
Free cash flow
|
$
114.6
|
|
$
134.5
|
|
|
|
|
|
|
|
Management believes that free
cash flow is useful to investors because it is a meaningful
indicator of cash generated from operating activities that is
available for the execution of its business strategy.
|
|
|
|
|
Reconciliation of Outlook
Information: Reconciliation of Outlook
Information: For the full year 2010, the company expects to
generate net cash provided by operating activities of approximately
$400 million, spend approximately $110 million on capital
expenditures and approximately $46 million on cash dividends paid
to shareholders. The net effect of these items reflects the
company's free cash flow outlook of approximately $250 million for
the full year 2010.
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEET
(Dollars in millions)
(Unaudited)
|
|
|
|
|
September
30,
2010
|
December
31,
2009
|
|
|
|
|
ASSETS
|
|
|
Cash and cash
equivalents
|
$
899.8
|
$
755.5
|
|
|
Accounts receivable
|
552.2
|
411.2
|
|
|
Inventories, net
|
771.4
|
671.2
|
|
|
Other current assets
|
145.4
|
184.6
|
|
|
Total Current
Assets
|
2,368.8
|
2,022.5
|
|
|
Property, Plant and Equipment -
Net
|
1,256.6
|
1,335.2
|
|
|
Goodwill
|
228.2
|
221.7
|
|
|
Other assets
|
395.4
|
427.5
|
|
|
Total Assets
|
$
4,249.0
|
$
4,006.9
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Accounts payable
|
$
257.8
|
$
156.0
|
|
|
Short-term debt
|
13.6
|
43.4
|
|
|
Income taxes
|
63.3
|
9.2
|
|
|
Accrued expenses
|
380.8
|
331.8
|
|
|
|
Total Current
Liabilities
|
715.5
|
540.4
|
|
|
|
|
|
|
|
|
Long-term debt
|
479.4
|
469.3
|
|
|
Accrued pension cost
|
554.9
|
690.9
|
|
|
Accrued postretirement benefits
cost
|
594.3
|
604.2
|
|
|
Other non-current
liabilities
|
110.9
|
106.5
|
|
|
|
Total Liabilities
|
2,455.0
|
2,411.3
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
The Timken Company shareholders'
equity
|
1,777.1
|
1,577.6
|
|
|
Noncontrolling
Interest
|
16.9
|
18.0
|
|
|
|
Total Equity
|
1,794.0
|
1,595.6
|
|
|
Total Liabilities and
Equity
|
$
4,249.0
|
$
4,006.9
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS
(Dollars in millions)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
three months ended
September
30,
|
|
|
For the nine
months ended
September
30,
|
|
|
|
|
|
|
2010
|
2009
|
|
|
2010
|
2009
|
|
|
Cash Provided
(Used)
|
|
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to The Timken Company
|
$
70.3
|
$
(50.2)
|
|
|
$
184.5
|
$
(113.8)
|
|
|
(Earnings) loss from
discontinued operations
|
1.1
|
30.8
|
|
|
(3.4)
|
59.9
|
|
|
Net income (loss) attributable
to noncontrolling interest
|
0.8
|
0.4
|
|
|
1.8
|
(4.9)
|
|
|
Adjustments to reconcile net
income to net cash
|
|
|
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
47.0
|
49.0
|
|
|
142.2
|
150.8
|
|
|
|
|
Impairment charges
|
-
|
1.3
|
|
|
2.0
|
36.1
|
|
|
|
|
Pension and other postretirement
expense
|
23.1
|
29.4
|
|
|
69.0
|
77.1
|
|
|
|
|
Pension and other postretirement
benefit payments
|
(30.8)
|
(54.5)
|
|
|
(164.4)
|
(89.2)
|
|
|
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
(37.1)
|
(14.7)
|
|
|
(140.9)
|
128.4
|
|
|
|
|
|
Inventories
|
(49.5)
|
107.5
|
|
|
(95.2)
|
311.5
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
63.4
|
42.0
|
|
|
146.2
|
(144.2)
|
|
|
|
|
|
Income taxes
|
65.4
|
29.7
|
|
|
131.5
|
7.6
|
|
|
|
|
|
Other - net
|
(3.3)
|
(4.2)
|
|
|
36.7
|
-
|
|
|
Net Cash Provided by Operating
Activities - Continuing Operations
|
150.4
|
166.5
|
|
|
310.0
|
419.3
|
|
|
Net Cash Provided (Used) by
Operating Activities - Discontinued Operations
|
(1.1)
|
4.2
|
|
|
3.4
|
4.9
|
|
|
|
Net Cash Provided By Operating
Activities
|
149.3
|
170.7
|
|
|
313.4
|
424.2
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Capital expenditures
|
(22.2)
|
(27.7)
|
|
|
(61.2)
|
(81.0)
|
|
|
Acquisitions
|
(16.1)
|
-
|
|
|
(16.1)
|
(0.4)
|
|
|
Investments
|
(30.0)
|
-
|
|
|
(30.0)
|
-
|
|
|
Other
|
(1.5)
|
1.7
|
|
|
0.1
|
7.2
|
|
|
Net Cash Used by Investing
Activities - Continuing Operations
|
(69.8)
|
(26.0)
|
|
|
(107.2)
|
(74.2)
|
|
|
Net Cash Used by Investing
Activities - Discontinued Operations
|
-
|
(0.5)
|
|
|
-
|
(1.5)
|
|
|
|
Net Cash Used by Investing
Activities
|
(69.8)
|
(26.5)
|
|
|
(107.2)
|
(75.7)
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
|
Cash dividends paid to
shareholders
|
(12.5)
|
(8.5)
|
|
|
(33.8)
|
(34.6)
|
|
|
Purchase of treasury shares,
net
|
-
|
-
|
|
|
(29.2)
|
-
|
|
|
Net proceeds from common share
activity
|
10.2
|
0.7
|
|
|
29.5
|
0.7
|
|
|
Net payments on credit
facilities
|
(0.6)
|
(42.1)
|
|
|
(19.4)
|
(84.5)
|
|
|
Other
|
(3.5)
|
-
|
|
|
(3.5)
|
-
|
|
|
|
Net Cash Used by Financing
Activities
|
(6.4)
|
(49.9)
|
|
|
(56.4)
|
(118.4)
|
|
|
Effect of exchange rate changes
on cash
|
30.5
|
11.4
|
|
|
(5.5)
|
19.3
|
|
|
|
Increase In Cash and Cash
Equivalents
|
103.6
|
105.7
|
|
|
144.3
|
249.4
|
|
|
Cash and cash equivalents at
beginning of period
|
796.2
|
277.1
|
|
|
755.5
|
133.4
|
|
|
|
Cash and Cash Equivalents at End
of Period
|
$
899.8
|
$
382.8
|
|
|
$
899.8
|
$
382.8
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE The Timken Company
Copyright . 28 PR Newswire