CANTON, Ohio, Jan. 27, 2011 /PRNewswire/ --
- Sales of $4.1 billion
up 29%, fueled by mobile and industrial demand
- Company delivers strong operating
performance
- Record earnings forecasted for 2011
The Timken Company (NYSE: TKR) today reported sales of
$4.1 billion for 2010, an increase of
29 percent from the prior year. Light-vehicle demand provided an
early boost in sales and remained strong throughout the year. In
the second half, accelerated demand in the heavy-truck,
off-highway, energy and industrial distribution sectors further
increased top-line growth. Surcharges and pricing contributed to
the sales increase as well.
(Logo: http://photos.prnewswire.com/prnh/20100210/TIMKENLOGO
)
In 2010, Timken earned $267.4
million from continuing operations net of non-controlling
interest, or $2.73 per diluted share.
In the prior year, the company's continuing operations incurred a
loss of $61.4 million net of
non-controlling interest, or $0.64
per share.
"We are pleased with our performance in 2010. Our strong
profitability and cash flow, leveraging this mild economic
recovery, demonstrate that our efforts over the past few years to
transform the company are succeeding," said James W. Griffith, Timken president and chief
executive officer. "Timken is emerging as a stronger company,
focused on performance for our customers and our
shareholders. These improvements provide a firm foundation
for our future growth."
In 2010, excluding special items, Timken posted $288.9 million in income from continuing
operations net of non-controlling interest, or $2.95 per diluted share. That compares with 2009
income of $50.9 million from
continuing operations, net of non-controlling interest, or
$0.53 per share.
Compared with the prior year, the company's 2010 performance
benefited from higher volume, pricing and surcharges, as well as an
improved cost structure and greater manufacturing efficiencies.
Increased raw-material costs and related LIFO charges partially
offset these benefits, in addition to higher selling and
administrative costs from the company's performance-based
compensation plans.
Special items for continuing operations in 2010 totaled
$21.5 million of expense, net of
tax, principally associated with manufacturing rationalization and
restructuring activities. In 2009, special items for continuing
operations amounted to $112.3 million of expense, net of tax, and
included impairment charges as well as severance associated with
the company's cost-reduction efforts.
During the past year, the company took significant actions to
strengthen both its operational and performance capabilities. The
company:
- Introduced a record number of new products, including
materials, components and assemblies. Examples include wind energy
products for multi-megawatt wind turbines and proprietary new
wear-resistant bearing technology that outperforms conventional
coatings;
- Launched a new engineering system to reduce
concept-to-commercialization time;
- Opened its wind bearing facility in Xiangtan, China, and a distribution center in
Duncan, South Carolina, as well as
announced a number of investments in its Canton, Ohio, steel operations to improve
productivity and safety;
- Expanded its sales infrastructure in Asia, adding offices in Indonesia, China and Vietnam;
- Completed the last major implementation phase of its SAP
"Project O.N.E." global enterprise system;
- Acquired QM Bearings, headquartered in Ferndale, Wash., extending its industrial
product line with spherical roller bearing steel-housed units and
couplings;
- Purchased the assets of City Scrap & Salvage Co. in
Akron, Ohio, to improve supply of
raw materials to its steel facilities in Canton;
- Increased shareholder dividends twice during the year,
restoring the quarterly dividend to the pre-recession level of
18 cents per share; and
- Made $230 million in
contributions to defined benefit pension plans and established a
VEBA (voluntary employee benefits arrangement) trust to pre-fund
retiree-medical costs with an initial $54-million contribution.
Fourth-Quarter Results
For the quarter ended Dec. 31,
2010, Timken reported sales of $1.1 billion, an increase of 38 percent
from the same period in 2009. The increase reflects strengthening
global demand across most of the company's end markets, higher
surcharges and pricing.
In the fourth quarter of 2010, the company generated income from
continuing operations of $0.87 per
diluted share net of non-controlling interest, compared with a
fourth-quarter loss of $0.08 per
share in 2009. Special items recorded in the fourth quarter
totaled $0.13 per share of income,
including a one-time tax benefit related to the VEBA trust. That
benefit was partially offset by restructuring charges.
Excluding special items, income from continuing operations was
$0.74 per diluted share net of
non-controlling interest, compared with $0.31 per share for the same period last year.
When compared with the year-earlier period, the company's
performance benefited from higher volume, surcharges, pricing and
manufacturing efficiencies, partially offset by higher raw-material
costs and related LIFO charges, as well as higher selling and
administrative costs.
As of Dec. 31, 2010, total debt
was $514 million, or 20.9 percent of capital. At
year-end, the company had cash of $877 million, or
$363 million in excess of total debt, compared with a net cash
position of $243 million as of Dec. 31,
2009. The company generated $313 million in net cash
from operating activities in 2010, with free cash flow (net of
capital expenditures and dividends) of $146 million. The
improvement reflects the benefit of strong earnings, partially
offset by working capital requirements in support of higher demand,
as well as pension and VEBA trust contributions. Excluding the
fourth-quarter discretionary pension and VEBA contributions of
$154 million, free cash flow was $249 million. The
company's available liquidity was $1.8 billion at Dec.
31, 2010.
Bearings and Power Transmission Group Results
Timken's Bearings and Power Transmission Group posted sales of
$2.8 billion in 2010, up
13 percent from the prior year. The group earned
$383 million before interest and taxes (EBIT) during the year,
an increase of 73 percent from 2009.
The group's fourth-quarter sales in 2010 were $721.8 million, up 17 percent from the
2009 comparison. The group's EBIT in the fourth quarter was
$94.6 million, an increase of
32 percent from the previous year.
Mobile Industries Segment Results
Mobile Industries' sales were $1.6
billion in 2010, up 25 percent from $1.2 billion a year ago. The increase
reflects recovering demand across all mobile sectors, except rail,
as well as pricing.
Mobile Industries achieved record EBIT of $223.5 million for the year, up significantly
from $30.5 million earned in 2009.
Higher volume, better manufacturing utilization and pricing drove
the increase, partially offset by a change in LIFO reserve and
higher selling and administrative costs.
Fourth-quarter sales for the Mobile Industries segment in 2010
were $388.6 million, compared with
$324.6 million in sales the same
period last year. The 20-percent increase reflects stronger demand,
led by the off-highway and heavy-truck market sectors, and pricing.
EBIT in the fourth quarter of 2010 was $52
million, up from $31.1 million
earned in the fourth quarter of 2009. Higher volume and pricing
drove the increase, partially offset by higher LIFO charges and
selling and administrative costs.
Process Industries Segment Results
Sales for the Process Industries segment were $903.4 million in 2010, an increase of
12 percent from $808.7 million a year ago. Recovering
industrial distribution demand in the second half of the year and
growth in Asia drove the
increase.
Process Industries generated $138.2 million in EBIT for the year, up
17 percent from the prior year's EBIT of $118.5 million. The increase reflects
the impact of higher volume and better manufacturing utilization,
partially offset by higher material costs, related LIFO charges,
and selling and administrative costs.
Process Industries' fourth quarter 2010 sales were $250.7 million, compared with $189.6 million in the fourth quarter last
year. The 32-percent increase reflects stronger industrial
distribution demand, principally in North
America, as well as continued growth in Asia, including wind energy. Fourth quarter
EBIT was $45.2 million, up
89 percent from last year's EBIT of $23.9 million. Higher volume and better
manufacturing utilization drove the increase, partially offset by
LIFO charges and higher selling and administrative costs.
Aerospace and Defense Segment Results
The Aerospace and Defense segment reported sales of $338.3 million in 2010, down 19 percent
from $417.7 million a year ago.
The decline reflects weak demand in the defense, commercial and
general aviation sectors.
The segment's 2010 EBIT fell to $21.2 million, compared with EBIT of
$72.5 million a year ago. The
decline reflects lower sales and manufacturing utilization, higher
LIFO inventory expense and selling and administrative costs.
Aerospace and Defense sales fell 17 percent to $82.5 million in fourth quarter, compared
with $99 million the prior year. The decline reflects reduced
demand, especially in the defense sector. The business incurred a
loss of $2.6 million for the
quarter, versus EBIT of $16.6 million a year ago, driven by lower
sales volume and manufacturing utilization, as well as a change in
LIFO reserve and higher selling and administrative costs.
Also during the quarter, the business incurred
$7 million of expense to increase inventory and warranty
reserves.
Steel Group Results
Timken's Steel Group posted 2010 sales of $1.4 billion, including inter-group sales,
an increase of 90 percent over 2009 sales of $714.9 million, reflecting increased demand
across all of the group's major markets. Raw material surcharges
increased approximately $250 million from a year ago.
The Steel Group achieved EBIT income of $146.3 million in 2010, compared with a loss
of $57.9 million in 2009.
The increase reflects strong demand, surcharges and improved
manufacturing utilization, which was partially offset by higher
material costs and a change in LIFO reserve.
The Steel Group recorded $379.8 million in sales, including
inter-group sales, in the fourth quarter, up 119 percent from
the prior year's fourth-quarter sales of $173.5 million. Stronger demand,
particularly in the industrial and oil and gas market sectors, and
surcharges contributed to the improvement. Surcharges
increased approximately $65 million from the fourth quarter
last year. EBIT in the fourth quarter was $42 million, up from
last year's fourth-quarter EBIT of $2.5 million. Stronger demand, improved mix,
surcharges and manufacturing utilization were the primary drivers
of the increase, partially offset by higher material costs and the
change in LIFO reserve.
Outlook
The company expects the global economy to grow modestly in 2011
following 2010's recovery. Timken is projecting its 2011 sales to
increase approximately 10 to 15 percent from 2010 sales. In
its business segments for the full year, Timken expects:
- Mobile Industries sales to be up slightly, as growth in
the segment's end markets should be mostly offset by sales
attrition in the light-vehicle sector from past pricing
actions;
- Process Industries sales to be up approximately 10 to
15 percent, reflecting strengthening global industrial
distribution, growth in Asia and
sales from new product lines;
- Aerospace and Defense segment sales to increase
approximately 5 to 10 percent, driven by increased demand in
commercial aerospace, and health and positioning control markets;
and
- Steel Group sales to increase 20 to 25 percent,
reflecting improved demand across all market sectors, as well as
surcharges.
Beginning in 2011, Timken will discontinue its practice of
excluding special items when providing earnings estimates. On that
basis, the company expects to achieve full-year 2011 earnings from
continuing operations ranging from $3.30 to
$3.60 per diluted share, assuming a 34-percent tax rate,
versus 2010 results of $2.73 per
share. The company expects cash from operating activities to be
approximately $340 million, after $100 million of
discretionary pension contributions. Free cash flow is expected to
be approximately $50 million after capital expenditures of
around $220 million and dividends of approximately
$70 million.
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, Jan.
27, 2011
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1:00 p.m. Eastern
Time
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All Callers:
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Live Dial-In: 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: 15482433
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Replay Dial-In through Feb.
4, 2011:
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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 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 $4.1 billion in 2010 and operations in 27
countries with approximately 20,000 people, 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 fourth quarter and full year
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.
Contacts - Media: Lorrie Paul
Crum, Ofc: 330.471.3514; Mob: 330.224.5021.
lorrie.crum@timken.com; Investors: Steve
Tschiegg, Ofc: 330.471.7446. steve.tschiegg@timken.com, The
Timken Company.
(Unaudited)
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CONDENSED CONSOLIDATED STATEMENT
OF INCOME
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AS
REPORTED
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AS ADJUSTED
(1)
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(Dollars in millions, except
share data)
|
Q4
2010
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Q4
2009
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Full Year
2010
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Full Year
2009
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Q4
2010
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Q4
2009
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Full Year
2010
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Full Year
2009
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|
Net sales
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$
1,070.7
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$
774.6
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$
4,055.5
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$
3,141.6
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$
1,070.7
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$
774.6
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$
4,055.5
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$
3,141.6
|
|
Cost of products sold
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803.7
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596.8
|
3,028.3
|
2,550.7
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|
803.7
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596.8
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3,028.3
|
2,550.7
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Manufacturing rationalization /
reorganization
expenses - cost of products
sold
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1.4
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4.6
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5.5
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8.2
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-
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-
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-
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-
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Gross Profit
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265.6
|
173.2
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1,021.7
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582.7
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|
267.0
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177.8
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1,027.2
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590.9
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Selling, general &
administrative expenses (SG&A)
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149.7
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112.7
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563.0
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469.8
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|
149.7
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112.7
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563.0
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469.8
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Rationalization / reorganization
expenses - SG&A
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0.1
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1.3
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0.8
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2.9
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-
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-
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-
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-
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Impairment and
restructuring
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12.3
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80.0
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21.7
|
164.1
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|
-
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-
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-
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-
|
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Operating Income
(Loss)
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103.5
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(20.8)
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436.2
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(54.1)
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117.3
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65.1
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464.2
|
121.1
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Other income
(expense)
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2.5
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(2.0)
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1.5
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1.9
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|
2.5
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(2.0)
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1.5
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1.9
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Special items - other income
(expense)
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2.0
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(1.4)
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2.3
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(2.0)
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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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108.0
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(24.2)
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440.0
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(54.2)
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119.8
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63.1
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465.7
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123.0
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Interest expense, net
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(8.1)
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(14.1)
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(34.5)
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(40.0)
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(8.1)
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(14.1)
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(34.5)
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(40.0)
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Income (Loss) From Continuing
Operations
Before Income
Taxes
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99.9
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(38.3)
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405.5
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(94.2)
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111.7
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49.0
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431.2
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83.0
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Provision (benefit) for income
taxes
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13.3
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(31.1)
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136.0
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(28.2)
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37.6
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19.2
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139.8
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30.6
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Income (Loss) From Continuing
Operations
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86.6
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(7.2)
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269.5
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(66.0)
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|
74.1
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29.8
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291.4
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52.4
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Income (loss) from discontinued
operations, net of income taxes (3)
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4.0
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(12.7)
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7.4
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(72.6)
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-
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9.4
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-
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(20.2)
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Net Income (Loss)
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90.6
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(19.9)
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276.9
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(138.6)
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74.1
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39.2
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291.4
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32.2
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Less: Net Income (Loss)
Attributable to Noncontrolling Interest
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0.3
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0.3
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2.1
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(4.6)
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0.7
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0.2
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2.5
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1.5
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Net Income (Loss) Attributable
to The Timken Company
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$
90.3
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$
(20.2)
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$
274.8
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$
(134.0)
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$
73.4
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$
39.0
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$
288.9
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$
30.7
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|
|
|
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Net Income (Loss) per Common
Share Attributable to The Timken Company Common
Shareholders
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Basic Earnings (Loss) Per Share
- Continuing Operations
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$
0.89
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$
(0.08)
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$
2.76
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$
(0.64)
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$
0.76
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$
0.31
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$
2.98
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$
0.53
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Basic Earnings (Loss) Per Share
- Discontinued
Operations
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0.04
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(0.13)
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0.07
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(0.75)
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-
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0.09
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-
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(0.21)
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Earnings (Loss) Per
Share
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$
0.93
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$
(0.21)
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$
2.83
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$
(1.39)
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$
0.76
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$
0.40
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$
2.98
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$
0.32
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|
|
|
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Diluted Earnings (Loss) Per
Share - Continuing Operations
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$
0.87
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$
(0.08)
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$
2.73
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$
(0.64)
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$
0.74
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$
0.31
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$
2.95
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$
0.53
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Diluted Earnings (Loss) Per
Share - Discontinued
Operations
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0.04
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(0.13)
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0.08
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(0.75)
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-
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0.09
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-
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(0.21)
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Earnings (Loss) Per
Share
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$
0.91
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$
(0.21)
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$
2.81
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$
(1.39)
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$
0.74
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$
0.40
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$
2.95
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$
0.32
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Average Shares
Outstanding
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96,953,340
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96,212,813
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96,535,273
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96,135,783
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96,953,340
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96,212,813
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96,535,273
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96,135,783
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Average Shares Outstanding -
assuming dilution
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98,493,583
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96,212,813
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97,516,202
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96,135,783
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98,493,583
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96,212,813
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97,516,202
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96,135,783
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|
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|
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|
|
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(Unaudited)
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BUSINESS SEGMENTS
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(Dollars in millions, except
share data)
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|
Q4
2010
|
Q4
2009
|
Full Year
2010
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Full Year
2009
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Mobile Industries
Segment
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Net sales to external
customers
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$
388.3
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$ 324.6
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$ 1,560.3
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$ 1,245.0
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Intergroup sales
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0.3
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-
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0.3
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-
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Total net sales
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$
388.6
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$ 324.6
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$ 1,560.6
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$ 1,245.0
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Adjusted earnings before
interest and taxes (EBIT) (2)
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|
$
52.0
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$ 31.1
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$
223.5
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$
30.5
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Adjusted EBIT Margin
(2)
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13.4%
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9.6%
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14.3%
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2.4%
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Process Industries
Segment
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Net sales to external
customers
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$
249.4
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$ 189.1
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$
900.0
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$ 806.0
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Intergroup sales
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1.3
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0.5
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3.4
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2.7
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|
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Total net sales
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$
250.7
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$ 189.6
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$
903.4
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$ 808.7
|
|
|
Adjusted earnings before
interest and taxes (EBIT) (2)
|
|
$
45.2
|
$ 23.9
|
$
138.2
|
$ 118.5
|
|
|
Adjusted EBIT Margin
(2)
|
|
18.0%
|
12.6%
|
15.3%
|
14.7%
|
|
|
|
|
|
|
|
|
|
|
Aerospace and Defense
Segment
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|
|
|
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Net sales to external
customers
|
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$
82.5
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$ 99.0
|
$
338.3
|
$ 417.7
|
|
|
Adjusted (loss) earnings before
interest and taxes (EBIT) (2)
|
|
$
(2.6)
|
$ 16.6
|
$
21.2
|
$
72.5
|
|
|
Adjusted EBIT Margin
(2)
|
|
-3.2%
|
16.8%
|
6.3%
|
17.4%
|
|
|
|
|
|
|
|
|
|
|
Total Bearings and Power
Transmission Group
|
|
|
|
|
|
|
|
Net sales to external
customers
|
|
$
720.2
|
$ 612.7
|
$ 2,798.6
|
$ 2,468.7
|
|
|
Intergroup sales
|
|
1.6
|
0.5
|
3.7
|
2.7
|
|
|
Total net sales
|
|
$
721.8
|
$ 613.2
|
$ 2,802.3
|
$ 2,471.4
|
|
|
Adjusted earnings before
interest and taxes (EBIT) (2)
|
|
$
94.6
|
$ 71.6
|
$
382.9
|
$ 221.5
|
|
|
Adjusted EBIT Margin
(2)
|
|
13.1%
|
11.7%
|
13.7%
|
9.0%
|
|
|
|
|
|
|
|
|
|
|
Steel Group
|
|
|
|
|
|
|
|
Net sales to external
customers
|
|
$
350.5
|
$ 161.9
|
$ 1,256.9
|
$ 672.9
|
|
|
Intergroup sales
|
|
29.3
|
11.6
|
102.6
|
42.0
|
|
|
Total net sales
|
|
$
379.8
|
$ 173.5
|
$ 1,359.5
|
$ 714.9
|
|
|
Adjusted earnings (loss) before
interest and taxes (EBIT) (2)
|
|
$
42.1
|
$ 2.5
|
$
146.3
|
$ (57.9)
|
|
|
Adjusted EBIT Margin
(2)
|
|
11.1%
|
1.4%
|
10.8%
|
-8.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated corporate
expense
|
|
$
(17.6)
|
$ (12.9)
|
$
(66.8)
|
$ (48.7)
|
|
|
Intergroup eliminations income
(4)
|
|
$
0.7
|
$ 1.9
|
$
3.3
|
$
8.1
|
|
|
|
|
|
|
|
|
|
|
Consolidated
|
|
|
|
|
|
|
|
Net sales to external
customers
|
|
$ 1,070.7
|
$ 774.6
|
$ 4,055.5
|
$ 3,141.6
|
|
|
Adjusted earnings before
interest and taxes (EBIT) (2)
|
|
$
119.8
|
$ 63.1
|
$
465.7
|
$ 123.0
|
|
|
Adjusted EBIT Margin
(2)
|
|
11.2%
|
8.1%
|
11.5%
|
3.9%
|
|
|
|
|
|
|
|
|
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
Full
Year
|
|
|
|
|
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
|
|
$
90.3
|
$ 0.91
|
$ (20.2)
|
$ (0.21)
|
|
$ 274.8
|
$ 2.81
|
$ (134.0)
|
$ (1.39)
|
|
|
Less: Income (loss) from
discontinued operations, net of income taxes
|
|
4.0
|
0.04
|
(12.7)
|
(0.13)
|
|
7.4
|
0.08
|
(72.6)
|
(0.75)
|
|
|
Net income (loss) from
continuing operations attributable to The Timken
Company
|
|
86.3
|
0.87
|
(7.5)
|
(0.08)
|
|
267.4
|
2.73
|
(61.4)
|
(0.64)
|
|
|
Pre-tax special
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
rationalization/reorganization expenses - cost of products
sold
|
|
1.4
|
0.01
|
4.6
|
0.05
|
|
5.5
|
0.06
|
8.2
|
0.09
|
|
|
Rationalization/reorganization
expenses - SG&A
|
|
0.1
|
0.00
|
1.3
|
0.01
|
|
0.8
|
0.01
|
2.9
|
0.03
|
|
|
Impairment and
restructuring
|
|
12.3
|
0.12
|
80.0
|
0.83
|
|
21.7
|
0.22
|
164.1
|
1.71
|
|
|
Special items - other (income)
expense
|
|
(2.0)
|
(0.02)
|
1.4
|
0.01
|
|
(2.3)
|
(0.02)
|
2.0
|
0.02
|
|
|
Provision for income taxes
(6)
|
|
(24.3)
|
(0.25)
|
(50.3)
|
(0.52)
|
|
(3.8)
|
(0.04)
|
(58.8)
|
(0.61)
|
|
|
Special items attributable to
noncontrolling interest
|
|
(0.4)
|
(0.00)
|
0.1
|
0.00
|
|
(0.4)
|
(0.00)
|
(6.1)
|
(0.06)
|
|
|
Adjusted net income from
continuing operations attributable to The Timken
Company
|
|
73.4
|
0.74
|
29.6
|
0.31
|
|
288.9
|
2.95
|
50.9
|
0.53
|
|
|
Add: adjusted (loss) from
discontinued operations
|
|
-
|
-
|
9.4
|
0.09
|
|
-
|
-
|
(20.2)
|
(0.21)
|
|
|
Adjusted net income attributable
to The Timken Company
|
|
$
73.4
|
$ 0.74
|
$ 39.0
|
$ 0.40
|
|
$ 288.9
|
$ 2.95
|
$ 30.7
|
$ 0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing
operations
|
|
$
86.6
|
$ 0.88
|
$ (7.2)
|
$ (0.07)
|
|
$ 269.5
|
$ 2.76
|
$ (66.0)
|
$ (0.69)
|
|
|
Less: Net income (loss)
attributable to noncontrolling interest
|
|
0.3
|
0.00
|
0.3
|
0.00
|
|
2.1
|
0.02
|
(4.6)
|
(0.05)
|
|
|
Net income (loss) from
continuing operations attributable to The Timken
Company
|
|
$
86.3
|
$ 0.87
|
$ (7.5)
|
$ (0.08)
|
|
$ 267.4
|
$ 2.73
|
$ (61.4)
|
$ (0.64)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued
operations, net of income taxes
|
|
$
4.0
|
$ 0.04
|
$ (12.7)
|
$ (0.13)
|
|
$
7.4
|
$ 0.08
|
$ (72.6)
|
$ (0.75)
|
|
|
Special items, discontinued
operations
|
|
(4.0)
|
(0.04)
|
22.1
|
0.22
|
|
(7.4)
|
(0.08)
|
52.4
|
0.54
|
|
|
Adjusted income (loss) from
discontinued operations, net of income taxes
|
|
$
-
|
$
-
|
$ 9.4
|
$ 0.09
|
|
$
-
|
$
-
|
$ (20.2)
|
$ (0.21)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 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.
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
Full
Year
|
|
|
2010
|
2009
|
|
2010
|
2009
|
|
(Dollars in millions)
(Unaudited)
|
|
|
|
|
|
|
Income (loss) from continuing
operations before income taxes
|
$ 99.9
|
$ (38.3)
|
|
$ 405.5
|
$ (94.2)
|
|
|
|
|
|
|
|
|
Pre-tax reconciling
items:
|
|
|
|
|
|
|
Interest expense
|
9.5
|
14.7
|
|
38.2
|
41.9
|
|
Interest income
|
(1.4)
|
(0.6)
|
|
(3.7)
|
(1.9)
|
|
Manufacturing
rationalization/reorganization expenses - cost of products
sold
|
1.4
|
4.6
|
|
5.5
|
8.2
|
|
Rationalization/reorganization
expenses - SG&A
|
0.1
|
1.3
|
|
0.8
|
2.9
|
|
Impairment and
restructuring
|
12.3
|
80.0
|
|
21.7
|
164.1
|
|
Special items - other (income)
expense
|
(2.0)
|
1.4
|
|
(2.3)
|
2.0
|
|
Consolidated adjusted earnings
before interest and taxes (EBIT)
|
$ 119.8
|
$ 63.1
|
|
$ 465.7
|
$ 123.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steel Group adjusted (earnings)
loss before interest and taxes (EBIT)
|
$ (42.1)
|
$ (2.5)
|
|
$ (146.3)
|
$ 57.9
|
|
Unallocated corporate
expense
|
17.6
|
12.9
|
|
66.8
|
48.7
|
|
Intergroup eliminations
expense
|
(0.7)
|
(1.9)
|
|
(3.3)
|
(8.1)
|
|
Total Bearings and Power
Transmission Group adjusted earnings before interest and taxes
(EBIT)
|
$ 94.6
|
$ 71.6
|
|
$ 382.9
|
$ 221.5
|
|
|
|
|
|
|
|
Reconciliation of Total Debt to
Net Debt and the Ratio of Net Debt to Capital:
|
|
|
|
|
|
(Dollars in millions)
(Unaudited)
|
|
|
|
|
December
31,
2010
|
|
December
31,
2009
|
|
Short-term debt
|
|
|
|
|
$
32.0
|
|
$
43.4
|
|
Long-term debt
|
|
|
|
|
481.7
|
|
469.3
|
|
Total Debt
|
|
|
|
|
513.7
|
|
512.7
|
|
Less: Cash and cash
equivalents
|
|
|
|
|
(877.1)
|
|
(755.5)
|
|
Net (Cash) Debt
|
|
|
|
|
$
(363.4)
|
|
$
(242.8)
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
$
1,941.8
|
|
$
1,595.6
|
|
|
|
|
|
|
|
|
|
|
Ratio of Total Debt to
Capital
|
|
|
|
|
20.9%
|
|
24.3%
|
|
Ratio of Net (Cash) Debt to
Capital (Leverage)
|
|
|
|
|
(23.0%)
|
|
(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
|
|
For the Year
Ended
|
|
Free cash flow:
|
December
31,
2010
|
|
December
31,
2009
|
|
December
31,
2010
|
|
December
31,
2009
|
|
(Dollars in millions)
(Unaudited)
|
|
|
|
|
|
|
|
|
Net cash provided by operating
activities
|
$
(0.7)
|
|
$
163.4
|
|
$
312.7
|
|
$
587.6
|
|
Less: capital
expenditures
|
(54.6)
|
|
(33.1)
|
|
(115.8)
|
|
(114.1)
|
|
Less: cash dividends paid to
shareholders
|
(17.5)
|
|
(8.7)
|
|
(51.3)
|
|
(43.3)
|
|
Free cash flow
|
$
(72.8)
|
|
$
121.6
|
|
$
145.6
|
|
$
430.2
|
|
|
|
|
|
|
|
|
|
|
Plus: fourth quarter
discretionary pension and postretirement contributions of $154
million, net of the tax benefit of $50.3 million
|
103.7
|
|
|
|
103.7
|
|
|
|
Free cash flow less fourth
quarter discretionary contributions
|
$
30.9
|
|
|
|
$
249.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Management believes that
free cash flow and free cash flow
less discretionary pension and postretirement contributions are
useful to investors because they are meaningful indicators of cash
generated from operating activities available for the execution of
its business strategy.
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEET
|
|
|
(Dollars in millions)
(Unaudited)
|
December
31,
|
December
31,
|
|
|
|
2010
|
2009
|
|
|
|
|
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
877.1
|
$
755.5
|
|
|
|
Accounts receivable
|
516.6
|
411.2
|
|
|
|
Inventories, net
|
828.5
|
671.2
|
|
|
|
Other current assets
|
177.0
|
184.6
|
|
|
|
Total Current
Assets
|
2,399.2
|
2,022.5
|
|
|
|
Property, Plant and Equipment -
Net
|
1,267.7
|
1,335.2
|
|
|
|
Goodwill
|
224.4
|
221.7
|
|
|
|
Other assets
|
289.1
|
427.5
|
|
|
Total Assets
|
$
4,180.4
|
$
4,006.9
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Accounts payable
|
$
263.5
|
$
156.0
|
|
|
|
Short-term debt
|
32.0
|
43.4
|
|
|
|
Income taxes
|
14.7
|
9.2
|
|
|
|
Accrued expenses
|
409.7
|
331.8
|
|
|
|
|
Total Current
Liabilities
|
719.9
|
540.4
|
|
|
|
|
|
|
|
|
Long-term debt
|
481.7
|
469.3
|
|
|
|
Accrued pension cost
|
394.5
|
690.9
|
|
|
|
Accrued postretirement benefits
cost
|
531.2
|
604.2
|
|
|
|
Other non-current
liabilities
|
111.3
|
106.5
|
|
|
|
|
Total Liabilities
|
2,238.6
|
2,411.3
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
The Timken Company shareholders'
equity
|
1,925.0
|
1,577.6
|
|
|
|
Noncontrolling
Interest
|
16.8
|
18.0
|
|
|
|
|
Total Equity
|
1,941.8
|
1,595.6
|
|
|
Total Liabilities and
Equity
|
$
4,180.4
|
$
4,006.9
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS
|
|
(Dollars in millions)
(Unaudited)
|
|
|
|
|
|
|
|
For the
three months ended
December 31,
|
|
For the year
ended
December 31,
|
|
|
2010
|
2009
|
|
2010
|
2009
|
|
Cash Provided
(Used)
|
|
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
|
|
|
Net income (loss) attributable
to The Timken Company
|
$ 90.3
|
$ (20.2)
|
|
$ 274.8
|
$ (134.0)
|
|
|
(Earnings) loss from
discontinued operations
|
(4.0)
|
12.7
|
|
(7.4)
|
72.6
|
|
|
Net income (loss) attributable
to noncontrolling interest
|
0.3
|
0.3
|
|
2.1
|
(4.6)
|
|
|
Adjustments to reconcile net
income to net cash
|
|
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
47.5
|
50.7
|
|
189.7
|
201.5
|
|
|
|
|
Impairment charges
|
2.7
|
77.6
|
|
4.7
|
113.7
|
|
|
|
|
Pension and other postretirement
expense
|
24.1
|
19.6
|
|
93.1
|
96.7
|
|
|
|
|
Pension and other postretirement
benefit contributions and payments
|
(172.6)
|
(24.3)
|
|
(337.0)
|
(113.5)
|
|
|
|
|
Changes in operating assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
36.1
|
46.1
|
|
(104.8)
|
174.5
|
|
|
|
|
|
Inventories
|
(54.8)
|
44.6
|
|
(150.0)
|
356.1
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
27.4
|
(11.9)
|
|
173.6
|
(156.1)
|
|
|
|
|
|
Income taxes
|
9.2
|
(32.6)
|
|
156.0
|
(25.8)
|
|
|
|
|
|
Other - net
|
(10.9)
|
18.1
|
|
10.5
|
18.9
|
|
|
Net Cash (Used) Provided by
Operating Activities - Continuing Operations
|
(4.7)
|
180.7
|
|
305.3
|
600.0
|
|
|
Net Cash Provided (Used) by
Operating Activities - Discontinued Operations
|
4.0
|
(17.3)
|
|
7.4
|
(12.4)
|
|
|
|
Net Cash (Used) Provided By
Operating Activities
|
(0.7)
|
163.4
|
|
312.7
|
587.6
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
|
|
Capital expenditures
|
(54.6)
|
(33.1)
|
|
(115.8)
|
(114.1)
|
|
|
Acquisitions
|
|
(6.5)
|
-
|
|
(22.6)
|
(0.4)
|
|
|
Investments - net
|
|
15.0
|
-
|
|
(15.0)
|
-
|
|
|
Divestments
|
|
-
|
303.6
|
|
-
|
303.6
|
|
|
Other
|
0.4
|
0.3
|
|
0.5
|
7.5
|
|
|
Net Cash (Used) Provided by
Investing Activities - Continuing Operations
|
(45.7)
|
270.8
|
|
(152.9)
|
196.6
|
|
|
Net Cash Used by Investing
Activities - Discontinued Operations
|
-
|
(0.8)
|
|
-
|
(2.3)
|
|
|
|
Net Cash (Used) Provided by
Investing Activities
|
(45.7)
|
270.0
|
|
(152.9)
|
194.3
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
|
|
Cash dividends paid to
shareholders
|
(17.5)
|
(8.7)
|
|
(51.3)
|
(43.3)
|
|
|
Purchase of treasury shares,
net
|
-
|
-
|
|
(29.2)
|
-
|
|
|
Net proceeds from common share
activity
|
20.9
|
0.2
|
|
50.4
|
0.9
|
|
|
Net proceeds (payments) from
credit facilities
|
20.1
|
(288.6)
|
|
0.7
|
(124.9)
|
|
|
Decrease in restricted
cash
|
-
|
248.2
|
|
-
|
-
|
|
|
Other
|
-
|
(10.8)
|
|
(3.5)
|
(10.8)
|
|
|
|
Net Cash Provided (Used) by
Financing Activities
|
23.5
|
(59.7)
|
|
(32.9)
|
(178.1)
|
|
Effect of exchange rate changes
on cash
|
0.2
|
(1.0)
|
|
(5.3)
|
18.3
|
|
|
|
(Decrease) Increase In Cash and
Cash Equivalents
|
(22.7)
|
372.7
|
|
121.6
|
622.1
|
|
Cash and cash equivalents at
beginning of period
|
899.8
|
382.8
|
|
755.5
|
133.4
|
|
|
|
Cash and Cash Equivalents at End
of Period
|
$ 877.1
|
$ 755.5
|
|
$ 877.1
|
$ 755.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE The Timken Company