CANTON, Ohio, April 15, 2013 /PRNewswire/ --
Recommends Shareholders Vote
AGAINST the Proposal to Spin-Off the Steel Business
Highlights Importance of the
Company's Proven, Integrated Strategy in Creating
Value for Shareholders
The Timken Company (NYSE: TKR; www.timken.com) today announced
that it sent a letter to its shareholders, urging them to support
the Company's proven strategy to create shareholder value and vote
AGAINST Proxy Statement Item No. 6, the shareholder proposal
to spin-off the Steel business.
(Logo:
http://photos.prnewswire.com/prnh/20100210/TIMKENLOGO )
Included below is the full text of the letter, which can also be
found at www.TimkenDrivesValue.com:
April 15, 2013
Dear Fellow Timken Shareholder:
BE SURE TO SIGN AND RETURN YOUR
PROXY CARD TO HAVE YOUR VOTE COUNTED
CALSTRS AND RELATIONAL INVESTORS
WANT TO DISRUPT EXECUTION OF THE TIMKEN COMPANY'S PROVEN
VALUE-CREATION STRATEGY
VOTE AGAINST THE
SHAREHOLDER PROPOSAL TO SPIN-OFF THE STEEL BUSINESS
The Timken Company Board and management team are committed to
act in the best interests of ALL SHAREHOLDERS and to
continue executing the Company's proven strategy. We urge you to
protect the long-term value of your investment in The Timken
Company by voting against the misguided proposal by The California
State Teachers' Retirement System (CalSTRS) and Relational
Investors to force separation of the Timken Steel business from its
Bearings & Power Transmission (B&PT) business. The
CalSTRS and Relational Investors ill-advised proposal asks you to
sacrifice long-term value creation and jeopardize the strength of
the Company in exchange for illusory short-term gains.
YOUR VOTE AT THE MAY 7th ANNUAL MEETING IS
IMPORTANT
IF YOU HAVE NOT ALREADY VOTED,
PLEASE USE THE ENCLOSED PROXY CARD TO VOTE TODAY
AGAINST PROXY STATEMENT ITEM #6
Timken is successfully executing its carefully considered plan
to deliver long-term value to Timken shareholders. In recent
years, we have transformed Timken into a global industrial
technology leader with products that improve the efficiency and
reliability of the machinery that keeps industry in motion.
We produce mechanical components and engineered steel used in
some of the world's most demanding applications.
Relational Investors has acknowledged the strengths of The
Timken Company's current business model and the performance it has
generated, complimenting the management team on its ability to
execute.
"When you
look at the underlying performance of both of these segments of the
company, they are superior to virtually all of their peers actually
in both segments. This company is run very, very well and
managed very, very well. They have very good, what we call
operating metrics when you look at their profit margins and you
look at what we call their asset turns..."
– Ralph
Whitworth, WHBC radio interview, December 5,
2012
|
By highlighting our success but demanding we take action to
separate the businesses, CalSTRS and Relational Investors
demonstrate their fundamental lack of understanding of the
integrated strategy driving that success. If they knew us,
they would understand how we leverage strengths across our Steel
and B&PT businesses, share research and technical expertise,
and benefit from supply chain and operating efficiencies. All
of this differentiates Timken from our competitors and allows us to
deliver value-added solutions across common end markets and
customers. By demanding that we move forward to separate Timken
Steel from the rest of the Company, they are compromising our
future success and competitive advantage. Under current
circumstances, it just doesn't make sense.
WALL STREET ANALYSTS EXPRESS DOUBT
ABOUT THE PROPOSAL, SUPPORT THE COMPANY'S INTEGRATED BUSINESS MODEL
AND OUR PLAN TO DRIVE SHAREHOLDER VALUE
"The
activist situation, which we feel will ultimately end with the
company staying intact, could cause some shareholder churn once
resolved, but we view that as a temporary situation and, to be
fair, based on our conversations with investors we do not know many
investors who own the stock for the activist promoted idea of
splitting the company between its Steel business and Bearings
businesses."
|
- David
Raso, ISI research note, April 7, 2013
|
"We are
raising our price target to $66 from $58 to reflect our higher
conviction with respect to margins through the cycle and what
should be improving free cash flow. Overall, we think TKR has been
proactive in repositioning its businesses, investing in efficiency
initiatives and capacity expansions, funding the pension plan, and
making acquisitions. We think all of these actions suggest TKR is
well positioned for longer-term growth with less volatility and
risk. As investors come to more fully appreciate the Company's
potential for value creation, we expect the shares to trade more in
line with other high-quality Industrial Consumables Companies
peers…"
|
– Steve
Barger, KeyBanc research note, March 27, 2013
|
"I'm not
particularly convinced that (split-up) would be the best move for
Timken… You'd lose all the synergies you get in the (combined
business units) and you'd then have two separate corporate
structures."
|
- Eli
Lustgarten, Longbow Research as quoted in Crain's Cleveland
Business on December 3, 2012
|
DON'T BE FOOLED BY CALSTRS AND
RELATIONAL'S MISLEADING CAMPAIGN
Your Board and management team maintain an ongoing and open
dialogue with shareholders. In fact, we have met with Relational
Investors three times, most recently on April 2, in a meeting we requested that also
included CalSTRS. Despite attempts at reasoned dialogue, we
now know that CalSTRS and Relational Investors are only interested
in aggressively promoting their agenda based on false, misleading
and inflammatory statements regarding the Board and the Company –
statements designed to distract from the truth.
We want to address important flaws in the claims made by CalSTRS
and Relational Investors:
|
The
Reality
|
CalSTRS
and Relational Investors have indicated there is no downside to
supporting their proposal
|
- The
CalSTRS / Relational Investors proposal is not merely a request to
evaluate a spin-off, it seeks to "effectuate" a spin-off of the
Steel business.
- The
Timken Board has gone to great lengths to carefully evaluate a
separation of the businesses, with input from outside advisors,
multiple times in the past, including as recently as last year, and
determined it is NOT in the best interests of
shareholders.
|
CalSTRS
and Relational Investors fundamentally misunderstand and
mischaracterize the synergies between our businesses
|
- The
depth and breadth of the supply chain, technology and
knowledge-sharing benefits across our businesses are key
competitive advantages for us that create significant value for our
shareholders and could not be replicated through normal supply
agreements if the businesses were separated. Our estimate of
these benefits results from detailed, factual analysis based on
years of operating as an integrated company.
- CalSTRS
and Relational first claimed that the synergies between our
businesses were minimal. Then they claimed that we weren't
proposing actions to mitigate the loss of synergies following a
split. If synergies are minimal, why are they worried about
mitigating the loss of those synergies? Their arguments are
inconsistent.
|
CalSTRS
and Relational Investors claim undue credit for the Company's share
price performance
|
- Total shareholder returns were 75% and 40% for
the three- and five-year periods ending November 27[i], the day
prior to the proposal becoming public, ranking Timken second in its
peer group[ii] for both time periods.
- Since the proposal was announced in November,
Timken posted fourth quarter EPS above analyst consensus ($0.80 vs.
$0.62) and a 2015 EPS midpoint target of $7.00, almost 40% above
2012. They also fail to note that the general market
increased by 14% since then.
|
CalSTRS
and Relational Investors are simply wrong in their assessment of
The Timken Company's Board structure and governance
|
- The
Timken Board, 75% of which is independent, has a proven track
record of making difficult decisions, including divestitures and
plant closings, to drive value for ALL
shareholders.
- We
have had separate Chairman and CEO roles for nearly a century,
decades before this became best practice in corporate
governance.
|
Don't be misled by CalSTRS and Relational Investors' aggressive,
misguided campaign designed to attempt to turn a quick profit at
the expense of investors who care about generating long-term
value.
VOTE AGAINST THE MISGUIDED
PROPOSAL TO SPIN-OFF THE STEEL BUSINESS
Your Board and management team have carefully reviewed the
shareholder proposal and have concluded it is not in the best
interests of shareholders. Support the Company's strategy to
achieve long-term value through continued successful execution of
its strategic plan. Please cast your vote today
AGAINST this unwise shareholder proposal. For more
information, please visit www.TimkenDrivesValue.com.
Thank you for your continued support of The Timken Company.
On behalf of the Board of Directors of The Timken Company,
Joseph W. Ralston
Lead Independent Director
Your
Vote Is Important, No Matter How Many Shares You
Own.
|
|
If You
Have Not Already Voted, or if You Previously Voted a Card "For"
Item #6, We Urge You to Vote AGAINST the Proposal by Returning the
Enclosed Card.
|
|
If you
have questions about how to vote your shares, or need additional
assistance, please contact the firm assisting us in the
solicitation of proxy votes:
|
GEORGESON
|
Stockholders Call Toll-Free: 888-666-2594
|
Banks and
Brokers Call: 800-223-2064
|
Email:
timkendrivesvalue@georgeson.com
|
|
IMPORTANT
|
We urge
you to vote AGAINST Proxy Statement Item No. 6.
|
About The Timken Company
The Timken Company (NYSE: TKR; www.timken.com), a global
industrial technology leader, applies its deep knowledge of
materials, friction management and power transmission to improve
the reliability and efficiency of machinery and equipment all
around the world. The company engineers, manufactures and
markets mechanical components and high-performance steel.
Timken® bearings, engineered steel bars and tubes -- as
well as transmissions, gearboxes, chain, related products and
services -- support diversified markets worldwide. With sales
of $5.0 billion in 2012 and
approximately 20,000 people operating from 30 countries, Timken
makes the world more productive and keeps industry in motion.
FORWARD-LOOKING STATEMENTS SAFE HARBOR
Certain statements in this news release (including statements
regarding the company's forecasts, beliefs, 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 The Timken Company's plans, outlook, future
financial performance, targets, projected sales, cash flows and
liquidity 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 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 or regional
economic conditions and financial markets; changes in the expected
costs associated with product warranty claims; the ability to
integrate acquired companies to achieve satisfactory operating
results; the impact on operations of general economic conditions;
higher or lower raw-material and energy costs; fluctuations in
customer demand; the company's ability to achieve the benefits of
its ongoing programs, initiatives & capital investments; the
timing and amount of common share repurchases; and retention of
CDSOA distributions. Additional factors are discussed in the
company's filings with the Securities and Exchange Commission,
including the company's annual report on Form 10-K for the year
ended Dec. 31, 2012, quarterly
reports on Form 10-Q and current reports on Form 8-K. The company
undertakes no obligation to update or revise any forward-looking
statement.
Important Additional Information
The Timken Company, its directors, and certain of its officers
are participants in the solicitation of proxies from Timken
shareholders in connection with the Company's 2013 Annual Meeting
of Shareholders. Important information concerning the
identity and interests of these persons is available in the
definitive proxy statement that Timken filed with the SEC on
March 21, 2013.
Please note that any opinions, estimates or forecasts regarding
The Timken Company made by the individuals noted above are theirs
alone and do not represent opinions, estimates or forecasts of The
Timken Company, its directors or officers. Permission to use
quotations was neither sought nor obtained. The Timken Company does
not by its reference above imply its endorsement of or concurrence
with such opinions, estimates or forecasts.
The definitive proxy statement, any other relevant documents and
other materials filed with the SEC concerning Timken are available
free of charge at www.sec.gov and www.timken.com/investors.
Shareholders should carefully read the definitive proxy statement
before making any voting decision.
Media Contact: Dan
Minnich
Communications Manager
1835 Dueber Avenue, S.W.
Canton, OH 44706-0927 U.S.A.
Telephone: (330)471-7760
dan.minnich@timken.com
Investor Contact: Steve
Tschiegg
Director – Capital Markets & Investor Relations
1835 Dueber Avenue, S.W.
Canton, OH 44706-0927 U.S.A.
Telephone: (330)471-7446
steve.tschiegg@timken.com
[i] Source: Factset as of November 27,
2012.
[ii] Bearings comparable/peer companies include: Altra, JTEKT,
Kennametal, NSK, NTN, and SKF. Steel comparable/peer
companies include: AK Steel, Allegheny Technologies, Carpenter
Technology, Nucor, Steel Dynamics, and US Steel.
SOURCE The Timken Company