1.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 FORM 10Q
[X]Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended March 31, 2002
Commission File No. 1-1169
THE TIMKEN COMPANY
Exact name of registrant as specified in its charter
Ohio 34-0577130
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
1835 Dueber Avenue, S.W., Canton, Ohio 44706-2798
Address of principal executive offices Zip Code
(330) 438-3000
Registrant's telephone number, including area code
Not Applicable
Former name, former address and former fiscal year if changed
since last report.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
YES X NO
___ ___
Common shares outstanding at March 31, 2002, 59,968,725.
PART I. FINANCIAL INFORMATION 2.
THE TIMKEN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
Mar 31 Dec 31
2002 2001
ASSETS ---------- ----------
Current Assets (Thousands of dollars)
Cash and cash equivalents........................... $17,050 $33,392
Accounts receivable, less allowances,
(2002-$14,848; 2001-$14,976)........................ 356,718 307,759
Refundable income taxes............................. 15,092 15,103
Deferred income taxes............................... 43,148 42,895
Inventories (Note 2) ............................... 446,366 429,231
---------- ----------
Total Current Assets...................... 878,374 828,380Property, plant and equipment....................... 2,963,958 2,971,793
Less allowances for depreciation................... 1,682,919 1,666,448
---------- ----------
1,281,039 1,305,345Costs in excess of net assets of acquired business
(Note 8)........................................... 148,431 150,041
Intangible pension asset............................ 136,118 136,118
Intangible assets (Note 8).......................... 5,075 5,058
Deferred income taxes............................... 16,704 27,164
Other assets........................................ 89,531 80,978
---------- ----------
Total Assets.................................. $2,555,272 $2,533,084
========== ==========LIABILITIES
Current Liabilities
Accounts payable and other liabilities.............. $265,156 $258,001
Short-term debt and commercial paper................ 153,824 128,864
Accrued expenses.................................... 253,387 254,291
---------- ----------
Total Current Liabilities................. 672,367 641,156Noncurrent Liabilities
Long-term debt (Note 3) ............................ 367,279 368,151
Accrued pension cost................................ 304,423 317,297
Accrued postretirement benefits cost................ 410,269 406,568
Other noncurrent liabilities........................ 17,631 18,177
---------- ----------
Total Noncurrent Liabilities.............. 1,099,602 1,110,193Shareholders' Equity (Note 4)
Common stock........................................ 249,894 248,863
Earnings invested in the business................... 758,809 757,410
Accumulated other comprehensive income (loss)....... (225,400) (224,538)
---------- ----------
Total Shareholders' Equity................ 783,303 781,735 Total Liabilities and Shareholders' Equity.... $2,555,272 $2,533,084
========== ==========
PART I. FINANCIAL INFORMATION Continued 3.
THE TIMKEN COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
Mar 31 Mar 31
2002 2001
---------- ----------
(Thousands of dollars, except per share data)
Net sales.......................................... $ 615,757 $ 661,516
Cost of products sold.............................. 497,115 543,502
---------- ----------
Gross Profit.................................... 118,642 118,014Selling, administrative and general expenses....... 85,992 96,538
Impairment and restructuring charges (Note 5)...... 3,057 7,907
---------- ----------
Operating Income................................ 29,593 13,569Interest expense................................... (8,035) (8,894)
Interest income.................................... 380 489
Other expense...................................... (7,468) (1,210)
---------- ----------
Income Before Income Taxes...................... 14,470 3,954
Provision for income taxes (Note 6)................ 5,282 1,732
---------- ----------
Net Income...................................... $ 9,188 $ 2,222
========== ========== Earnings Per Share * ........................... $0.15 $0.04
Earnings Per Share - assuming dilution **...... $0.15 $0.04
Dividends Per Share............................. $0.13 $0.18
========== ==========* Average shares outstanding...................... 59,914,680 59,981,237
** Average shares outstanding - assuming dilution.. 60,395,183 60,122,806
PART I. FINANCIAL INFORMATION Continued 4.
THE TIMKEN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
Cash Provided (Used) Mar 31 Mar 31
2002 2001
-------- --------
OPERATING ACTIVITIES (Thousands of dollars)
Net Income............................................. $ 9,188 $ 2,222
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization......................... 36,762 37,898
Provision (credit) for deferred income taxes.......... 29,435 (2,725)
Stock issued in lieu of cash to employee benefit
plans ............................................... 1,031 106
Change in impairment and restructuring charges - net.. (6,671) 4,225
Changes in operating assets and liabilities:
Accounts receivable.................................. (49,862) (54,854)
Inventories.......................................... (17,128) (7,491)
Other assets......................................... (7,526) (11,221)
Accounts payable and accrued expenses................ (11,510) 9,659
Foreign currency translation......................... (465) 2,876
------- -------
Net Cash Used by Operating Activities............... (16,746) (19,305)INVESTING ACTIVITIES
Purchases of property, plant and equipment - net...... (10,439) (14,848)
Acquisitions.......................................... (6,751) (1,170)
------- -------
Net Cash Used by Investing Activities............... (17,190) (16,018)FINANCING ACTIVITIES
Cash dividends paid to shareholders................... (7,789) (10,798)
Purchase of treasury shares - net..................... - 505
Payments on long-term debt............................ (1,727) (884)
Proceeds from issuance of long-term debt.............. - 18
Short-term debt activity - net........................ 27,498 55,701
------- -------
Net Cash Provided by Financing Activities........... 17,982 44,542Effect of exchange rate changes on cash................ (388) (1,274)
(Decrease) increase in Cash and Cash Equivalents....... (16,342) 7,945
Cash and Cash Equivalents at Beginning of Period....... 33,392 10,927
------- -------
Cash and Cash Equivalents at End of Period............. $17,050 $18,872
======= =======
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 5.
Note 1 -- Basis of Presentation
The accompanying consolidated condensed financial statements (unaudited) for
the Timken Company (the "company") have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) and disclosures considered necessary
for a fair presentation have been included. For further information, refer to
the consolidated financial statements and footnotes included in the company's
annual report on Form 10-K for the year ended December 31, 2001. Certain
amounts have been reclassified to conform with current year presentation.
3/31/02 12/31/01
Note 2 -- Inventories -------- ---------
(Thousands of dollars)
Finished products $183,457 $180,533
Work-in-process and raw materials 226,066 212,040
Manufacturing supplies 36,843 36,658
-------- --------
$446,366 $429,231
======== ========
An actual valuation of inventory under the LIFO method can be made only at the
end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on manage-
ment's estimates of expected year-end inventory levels and costs. Because
these are subject to many forces beyond management's control, interim results
are subject to the final year-end LIFO inventory valuation.Note 3 -- Long-term Debt 3/31/02 12/31/01
(Thousands of dollars) -------- ---------
State of Ohio Pollution Control Revenue Refunding Bonds,
maturing on July 1, 2003. The variable interest
rate is tied to the bank's tax exempt weekly interest
rate. The rate at March 31, 2002 is 1.55%. $17,000 $17,000
State of Ohio Water Development Revenue Refunding
Bond, maturing on May 1, 2007. The variable interest
rate is tied to the bank's tax exempt weekly interest
rate. The rate at March 31, 2002 is 1.50%. 8,000 8,000
State of Ohio Air Quality and Water Development Revenue
Refunding Bonds, maturing on November 1, 2025. The
variable interest rate is tied to the bank's tax
exempt weekly interest rate. The rate at
March 31, 2002 is 1.40%. 21,700 21,700
State of Ohio Water Development Authority Solid Waste
Revenue Bonds, maturing on July 1, 2032. The
variable interest rate is tied to the bank's tax
exempt weekly interest rate. The rate at
March 31, 2002 is 1.55%. 24,000 24,000
Fixed Rate Medium-Term Notes, Series A, due at various
dates through May, 2028 with interest rates ranging
from 6.20% to 7.76%. 327,000 327,000
Other 11,059 12,885
-------- --------
408,759 410,585
Less: Current Maturities 41,480 42,434
-------- --------
$367,279 $368,151
======== ========
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited)
Continued 6.
Note 4 -- Shareholders' Equity 3/31/02 12/31/01
-------- --------
Class I and Class II serial preferred stock (Thousands of dollars)
without par value:
Authorized -- 10,000,000 shares each class
Issued - none $ - $ -
Common Stock without par value:
Authorized -- 200,000,000 shares
Issued (including shares in treasury)
2002 - 63,082,626 shares
2001 - 63,082,626 shares
Stated Capital 53,064 53,064
Other paid-in capital 255,172 256,423
Less cost of Common Stock in treasury
2002 - 3,113,901 shares
2001 - 3,226,544 shares 58,342 60,624
-------- --------
$249,894 $248,863
======== ========
An analysis of the change in capital and earnings invested in the business is as follows:
Common Stock Earnings Accumulated
Other Invested Other
Stated Paid-In in the Comprehensive Treasury
Capital Capital Business Loss Stock Total
------- -------- -------- ---------- -------- ----------
(Thousands of dollars)
Balance December 31, 2001 $53,064 $256,423 $757,410 ($224,538) ($60,624) $ 781,735Net Income 9,188 9,188
Foreign currency translation adjustment (2,389) (2,389)
Change in fair value of derivative
financial instruments 2,299 2,299
Reclassification adjustments - contract
settlements (772) (772)
----------
Total comprehensive income 8,326Dividends - $0.13 per share (7,789) (7,789)
Issuance of 112,644 shares from treasury
related to stock option and employee
benefit plans (1,251) 2,282 1,031
------- -------- -------- ---------- --------- ----------
Balance March 31, 2002 $53,064 $255,172 $758,809 ($225,400) ($58,342) $783,303
======= ======== ======== ========== ========= ==========The total comprehensive loss for the three months ended March 31, 2001 was $10,220,000.
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 7.
Continued
Note 5 -- Impairment and Restructuring Charges
In April 2001, the company announced a strategic global refocusing of its manu-
facturing operations to establish a foundation for accelerating the company's
growth initiatives. This second phase of the company's transformation includes
creating focused factories for each product line or component, replacing
specific manufacturing processes with state-of-the-art processes through the
company's global supply chain, rationalize production to the lowest total cost
plants in the company's global manufacturing system and implementing lean manu-
facturing process redesign. The company also announced its intention to close
bearing plants in Columbus, Ohio and Duston, England, and to sell a tooling
plant in Ashland, Ohio. To implement these actions, the company is expecting
to take approximately $100 - $110 million in severance, impairment and
implementation charges from 2001 through the end of 2002.
As a result of the market weakness experienced in 2001, the company accelerated
this strategic refocusing of its manufacturing operations. The Columbus
bearing plant ceased manufacturing operations in November 2001 while the Duston
plant is expected to cease manufacturing operations in September 2002. The
company announced additional cost-saving actions in August 2001. The company
took steps to further reduce capital spending, delay or scale back certain
projects and reduce salaried employment.
The company targeted an annualized pretax rate of savings of approximately
$100 million by the end of 2004 as a result of this program. As of March 31,
2002, the company achieved estimated annual savings of $35 million.
The following chart details the breakdown by segment of the $3.0 million in
restructuring and impairment charges incurred during the first quarter ended
March 31, 2002 (in millions of dollars):
Auto Industrial Steel Total
Restructuring: ------- ---------- ------- -------
Separation costs $ 0.4 $ 0.4 $ 0.2 $ 1.0
Exit costs 0.5 - - 0.5
------- ---------- ------- -------
$ 0.9 $ 0.4 $ 0.2 $ 1.5Impaired assets:
Property, plant and equipment $ 1.0 $ 0.5 $ - $ 1.5
------- ---------- ------- -------
$ 1.9 $ 0.9 $ 0.2 $ 3.0
======= ========== ======= =======The first quarter of 2002 automotive impaired assets charge related to the
Duston plant closure and the impaired assets charge for industrial related to
the Columbus plant closure. The majority of the automotive and industrial
restructuring costs also related to the Duston and Columbus plant closures,
respectively. Implementation charges for the quarter ended March 31, 2002
totaled $5.1 million classified as cost of products sold ($2.3 million) and
selling, administrative and general expenses ($2.8 million).
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 8.
Continued
Note 5 -- Impairment and Restructuring Charges (continued)
Cumulative restructuring and impairment charges related to the second phase of
restructuring by segment as of March 31, 2002 are as follows (in millions of
dollars):
Auto Industrial Steel Total
Restructuring: ------- ---------- ------- -------
Separation costs $ 26.3 $ 4.0 $ 1.5 $ 31.8
Exit costs 0.9 1.0 - 1.9
------- ---------- ------- -------
$ 27.2 $ 5.0 $ 1.5 $ 33.7Impaired assets:
Property, plant and equipment $ 2.1 $ 0.9 $ - $ 3.0
Special Charges:
SFAS 88/106 curtailment $ - $ 15.1 $ - $ 15.1
------- ---------- ------- -------
$ 29.3 $ 21.0 $ 1.5 $ 51.8
======= ========== ======= =======Cumulative implementation charges related to the second phase of restructuring
as of March 31, 2002 totaled $13.1 million classified as cost of products sold
($6.4 million) and selling, administrative and general expenses ($6.7 million).
As of March 31, 2002, the remaining severance accrual balance was $14.7 million.
This was the result of $1.0 million in additional expense incurred during the
first quarter, of which $0.4 million was paid and expensed when incurred.
Total payments made during the first quarter of 2002 totaled $7.3 million.
Since the announcement in April 2001, 1,131 associates left the company as of
March 31, 2002. Of that number, 855 people were from the Duston and Columbus
plants, Canton bearing plants, Canadian Timken Ltd., and associates included in
the worldwide salaried workforce for whom severance has been paid. The
remaining 276 associates have retired or voluntarily left the company as of
March 31, 2002 and their positions have been eliminated.
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited)
Continued 9.
Note 6 -- Income Tax Provision Three Months Ended
Mar 31 Mar 31
2002 2001
-------- --------
U.S. (Thousands of dollars)
Federal $ 4,219 $ (805)
State & Local 730 (112)
Foreign 333 2,649
------- -------
$ 5,282 $ 1,732
======= =======
Although the effective tax rate as of March 31, 2002 continues to exceed the
U.S. statutory tax rate due to state and local taxes and current foreign losses
reserved for a lack of expected tax benefit, the tax rate has decreased from
the first quarter of 2001. This decrease is primarily the result of current
utilization of previously reserved foreign losses generated in prior years and
a decrease in current year foreign losses for which a tax benefit reserve is
required.Note 7 -- Segment Information
(Thousands of Dollars) Three Months Ended
March 31 March 31
2002 2001
Automotive Bearings -------- --------
Net sales to external customers $203,696 $194,257
Depreciation and amortization 8,574 8,936
Goodwill amortization - 23
Impairment and restructuring 1,932 82
Earnings (loss) before interest and taxes 11,213 (1,986)Industrial Bearings
Net sales to external customers $212,940 $241,994
Depreciation and amortization 11,261 10,987
Goodwill Amortization - 1,208
Impairment and restructuring 956 7,393
(Loss) earnings before interest and taxes (606) 4,774
Steel
Net sales to external customers $199,121 $225,265
Intersegment sales 39,273 42,477
Depreciation and amortization 16,927 16,431
Goodwill Amortization - 313
Impairment and restructuring 169 432
Earnings before interest and taxes 11,950 9,282
Profit Before Taxes
Total EBIT for reportable segments 22,557 12,070
Interest expense (8,035) (8,894)
Interest income 380 489
Intersegment adjustments 432 289
Income before income taxes 14,470 3,954
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 10.
Continued
Note 8 - Change in Method of Accounting
Effective January 2002, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." In
accordance with SFAS No. 142, goodwill and indefinite lived intangible assets
are no longer amortized but are reviewed at least annually for impairment. The
application of the nonamortization provisions is expected to result in an
increase in annual net income of $6.1 million, of which $1.5 million is related
to the first quarter. Changes in the estimated useful lives of intangible
assets will not result in a material change to net income. Intangible assets
that are separable and have a definite life will continue to be amortized over
the estimated useful lives.
As part of the adoption, the company evaluated the impairment of indefinite
lived intangible assets and determined that none were impaired based on
estimations in market value. Fair value of each of the company's five
reporting units was determined by discounted cash flows and validated with
various market-comparable approaches. It was determined that the fair value of
the Industrial and Aerospace reporting units exceeded the book value. However,
the book value exceeded the fair value for the Automotive, Consolidated Steel
and Specialty Steel reporting units. Based on preliminary results, which are
currently under review, the company estimates the transitional impairment loss
to be between $25 - $30 million, the majority of which is primarily related to
the Steel Business. Once the review has been completed, the related
transitional impairment loss is expected to be recorded in the second quarter
of 2002 as a non-cash charge and reflected as the cumulative effect of a change
in accounting principle.
Prior to the adoption of SFAS No. 142, amortization expense was recorded for
goodwill and other intangible assets. The following table reflects reported net
income for the first quarter of 2001 adjusted for purposes of comparison:
(Thousands of Dollars) Three Months Ended
March 31 March 31
2002 2001
-------- --------
Reported net income $ 9,188 $ 2,222
Plus: Goodwill and indefinite lived intangible
asset amortization - 1,555
-------- --------
Adjusted net income $ 9,188 $ 3,777
======== ========
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 11.
Continued
Note 8 - Change in Method of Accounting (continued)
Three Months Ended
March 31 March 31
2002 2001
-------- --------
Earnings per share (basic and diluted):
Reported net income $ 0.15 $ 0.04
Plus: Goodwill and indefinite lived intangible
asset amortization, net of tax 0.00 0.03
-------- --------
Adjusted net income $ 0.15 $ 0.07The changes in the carrying amount of goodwill and indefinite lived intangible
assets for the quarter ended March 31, 2002 are as follows:
(Thousands of Dollars) Balance Balance
12/31/01 Reclass Other 3/31/02
-------- ---------- -------- --------
Goodwill:
Automotive $ 1,577 $ - $ (56) $ 1,521
Industrial 120,426 (1,219) (258) 118,949
Steel 28,038 - (77) 27,961
-------- ---------- --------- --------
$150,041 $ (1,219) $ (391) $148,431The indefinite lived intangible assets are immaterial.
The following table displays intangible assets subject to amortization, and not
subject to amortization as of March 31, 2002 and December 31, 2001:
(Thousands of Dollars) As of March 31, 2002
Gross Net
Carrying Accumulated Carrying
Amount Amortization Amount
-------- ------------ --------
Amortized intangible assets:
Industrial trademarks $ 541 $ 294 $ 247
Industrial land use rights 4,484 777 3,707
Industrial know-how transfer 416 343 73
-------- ----------- --------
$ 5,441 $ 1,414 $ 4,027
======== =========== ========Unamortized intangible assets:
Goodwill $148,431 $ - $148,431
Automotive land use rights 104 - 104
Industrial license agreements 944 - 944
-------- ----------- --------
$149,479 $ - $149,479
======== =========== ========
Total Intangible Assets $154,920 $ 1,414 $153,506
======== =========== ========
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 12.
Continued
Note 8 - Change in Method of Accounting (continued)
As of December 31, 2001
Gross Net
Carrying Accumulated Carrying
Amount Amortization Amount
-------- ------------ --------
Amortized intangible assets:
Industrial trademarks $ 532 $ 289 $ 243
Industrial land use rights 4,484 798 3,686
Industrial know-how transfer 417 341 76
-------- ----------- --------
$ 5,433 $ 1,428 $ 4,005
======== =========== ========Unamortized intangible assets:
Goodwill $197,329 $ 47,288 $150,041
Automotive land use rights 108 - 108
Industrial license agreements 1,042 97 945
-------- ----------- --------
$198,479 $ 47,385 $151,094
======== =========== ========
Total Intangible Assets $203,912 $ 48,813 $155,099
======== =========== ========Amortization expense for intangible assets was approximately $72,000 for the
three months ended March 31, 2002, and is estimated to be approximately
$342,000 annually for the next five fiscal years.
13.Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
- ---------------------
The Timken Company reported net sales of $615.8 million for the first quarter
of 2002, a decrease of 6.9% from $661.5 million in the first quarter of 2001.
The company reported net income of $9.2 million for the first quarter of 2002,
compared to net income of $2.2 million in the same quarter a year ago. In the
first quarter of 2002, the company incurred total pretax restructuring and
implementation charges of $8.1 million. These charges included $3.0 million
related to impairment and restructuring charges and $5.1 million related to
implementation expenses, which were reflected in the company's cost of products
sold and selling, administrative and general expenses for the quarter. The
first quarter of 2001 included pretax charges of $12.5 million. Of this,
$7.9 million represented impairment and restructuring charges and $4.6 million
represented implementation charges. In addition, net income for the first
quarter of 2002 was favorably impacted by the non-amortization of goodwill,
which was $1.5 million in first quarter of 2001.
Despite lower sales, the company's first quarter 2002 earnings increased
compared to a year ago. U.S. automotive sales, especially in the light truck
and SUV segment, continued at a robust level and contributed to the company's
higher earnings in the first quarter of 2002. Sales increased 7% from the
depressed levels experienced in the fourth quarter of 2001. Industrial markets
around the world, while stabilizing, have shown few signs of recovery. The
Steel business benefited from the strong shipments made to automotive customers
during the first quarter of 2002, while shipments to customers in other
industries were lower compared to first quarter of 2001. The company's higher
performance in the first quarter of 2002 also reflected cost reductions
achieved through its ongoing restructuring of manufacturing operations and
lower administrative spending levels.
Gross profit was $118.6 million (19.2% of net sales) in the first quarter of
2002, compared to $118.0 million (17.8% of net sales) in the first quarter of
2001. Although sales volume in the first quarter of 2002 was lower compared to
the same period a year ago, gross profit performance increased as a result of
the company's manufacturing strategy initiatives and cost containment. In
addition, the first quarter 2002 gross profit was favorably impacted by the
non-amortization of goodwill, which was $1.5 million in first quarter of 2001.
Selling, administrative and general expenses were $86.0 million (14.0% of net
sales) in the first quarter of 2002, compared to $96.5 million (14.6% of net
sales) recorded in the same quarter a year ago. The decrease in expense
resulted from savings related to the salaried workforce reduction, reduced
expense incurred for performance-based pay and continuing focused control on
discretionary spending.
In April 2001, the company announced a strategic global refocusing of its manu-
facturing operations to establish a foundation for accelerating the company's
growth initiatives. This second phase of the company's transformation includes
creating focused factories for each product line or component, replacing
specific manufacturing processes with state-of-the-art processes through the
14.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
company's global supply chain, rationalizing production to the lowest total
cost plants in the company's global manufacturing system and implementing lean
manufacturing process redesign. The company also announced its intention to
close bearing plants in Columbus, Ohio and Duston, England, and to sell a
tooling plant in Ashland, Ohio. To implement these actions, the company is
expecting to take approximately $100 - $110 million in severance, impairment
and implementation charges from 2001 through the end of 2002.
As a result of the market weakness experienced in 2001, the company accelerated
this strategic refocusing of its manufacturing operations. The Columbus
bearing plant ceased manufacturing operations in November 2001 while the Duston
plant is expected to cease manufacturing operations by September 2002. The
company announced additional cost-saving actions in August 2001. The company
took steps to further reduce capital spending, delay or scale back certain
projects and reduce salaried employment.
The company targeted an annualized pretax rate of savings of approximately
$100 million by the end of 2004 as a result of this program. Through March 31,
2002, the company achieved estimated annual savings of $35 million.
The following chart details the breakdown by segment of the $3.0 million in
restructuring and impairment charges incurred during the first quarter ended
March 31, 2002 (in millions of dollars):
Auto Industrial Steel Total
Restructuring: ------- ---------- ------ -------
Separation costs $ 0.4 $ 0.4 $ 0.2 $ 1.0
Exit costs 0.5 - - 0.5
------- ---------- ------ -------
$ 0.9 $ 0.4 $ 0.2 $ 1.5Impaired assets:
Property, plant and equipment $ 1.0 $ 0.5 $ - $ 1.5
------- ---------- ------ -------
$ 1.9 $ 0.9 $ 0.2 $ 3.0
======= ========== ====== =======The first quarter of 2002 Automotive Bearings Business impaired assets charge
related to the Duston plant closure and the impaired assets charge for the
Industrial Bearings Business related to the Columbus plant closure. The
majority of the Automotive and Industrial restructuring costs also related to
the Duston and Columbus plant closures, respectively. Implementation charges
for the quarter ended March 31, 2002 totaled $5.1 million, classified as cost
of products sold of $2.3 million and selling, administrative and general
expenses of $2.8 million.
15.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Cumulative restructuring and impairment charges related to the second phase of
restructuring by segment as of March 31, 2002 are as follows (in millions of
dollars):
Auto Industrial Steel Total
Restructuring: ------- ---------- ------ -------
Separation costs $ 26.3 $ 4.0 $ 1.5 $ 31.8
Exit costs 0.9 1.0 - 1.9
------- ---------- ------ -------
$ 27.2 $ 5.0 $ 1.5 $ 33.7Impaired assets:
Property, plant and equipment $ 2.1 $ 0.9 $ - $ 3.0
Special Charges:
SFAS 88/106 curtailment $ - $ 15.1 $ - $ 15.1
------- ---------- ------ -------
$ 29.3 $ 21.0 $ 1.5 $ 51.8
======= ========== ====== =======Cumulative implementation charges related to the second phase of restructuring
as of March 31, 2002 totaled $13.1 million, classified as cost of products sold
of $6.4 million and selling, administrative and general expenses of
$6.7 million. As of March 31, 2002, the remaining severance accrual balance
was $14.7 million including $1.0 million in additional expense incurred during
the first quarter, of which $0.4 million was paid and expensed when incurred.
Total payments made during the first quarter of 2002 totaled $7.3 million.
Since the announcement in April 2001, 1,131 associates left the company as of
March 31, 2002. Of that number, 855 people were from the Duston and Columbus
plants, Canton bearing plants, Canadian Timken Ltd., and associates included
in the worldwide salaried workforce for whom severance has been paid. The
remaining 276 associates retired or voluntarily left the company as of
March 31, 2002 and their positions have been eliminated.
Other expense reflected higher expense in the first quarter of 2002 compared to
the same period a year ago, primarily due to one-time charges related to legal
expenses and loss on sale of fixed assets. In addition, the first quarter of
2001 reflected a one-time gain on disposal of land of $1.7 million.
Although the effective tax rate as of March 31, 2002 continues to exceed the
U.S. statutory tax rate due to state and local taxes and certain foreign
losses reserved for a lack of expected tax benefit, the tax rate has decreased
from the first quarter of 2001. This decrease is primarily the result of
current utilization of previously reserved foreign losses generated in prior
years and a decrease in current year foreign losses for which a tax benefit
reserve is required. The tax provision for the three months ended March 31,
2002 was not impacted by the Job Creation and Worker Assistance Act of 2002.
16.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
Automotive Bearings
The Automotive Bearings Business includes products for passenger cars, light
and heavy trucks and trailers. Global Automotive Bearings' sales for the first
quarter of 2002 increased 4.8% to $203.7 million, from $194.3 million in the
first quarter of 2001. This increase reflected continued strength in vehicle
production in North America and new automotive platforms launched using Timken
products. North American passenger car production is up slightly from 2001,
while production in Europe is weaker. North American light truck production is
up 8% from 2001. Although it is projected that light truck production could
increase 3% for the year, this projection could be impacted by gasoline prices
driven by the current situations in the Middle East and South America. Medium
and heavy truck production globally continues to be weak. In North America,
production is down 20% versus 2001. For 2002, North American production is
expected to increase 12% over 2001 levels, which is approximately 35% below
2000. In the near-term, North American demand for heavy trucks is being
favorably impacted by the October 1, 2002 emissions change. Latin American
automotive markets are being negatively impacted by the current economic and
political situations in that region.
Excluding $4.1 million and $0.4 million in restructuring and implementation
charges and goodwill amortization for the first quarters of 2002 and 2001,
respectively, and before interest and taxes, Automotive Bearings' had earnings
of $15.3 million, compared to a loss of $1.6 million in 2001's first quarter.
Adjusted for these charges, Automotive Bearings' had EBIT of $11.2 million,
compared with a loss before interest and taxes of $2.0 million in the first
quarter of 2001. The increase in EBIT resulted from increased sales volume
compared to the same period a year ago, increased plant utilization and
efficiencies enhanced by the manufacturing strategy and salaried cost reduction
initiatives and aggressive business cost control.
Automotive Bearings' selling, administrative and general expenses in the first
quarter of 2002 were approximately 13% lower compared to the same period a year
ago. This was the result of savings realized from the salaried cost reduction
initiatives, focused business cost spending and reduction in expense incurred
for performance-based pay.
Industrial Bearings
The Industrial Bearings Business includes industrial, rail, aerospace and super
precision products as well as emerging markets in China, India and Central and
Eastern Europe. Industrial Bearings' net sales were $212.9 million, a decrease
of 12% below the first quarter 2001 net sales of $242.0 million. North American
and European industrial markets are weaker than a year ago, and orders for
industrial bearings have not risen appreciably from very low levels in the
fourth quarter of 2001. Sales to North American rail customers continue to
decrease significantly. Rail car build has decreased from 31,000 cars in 2001
to a forecasted 15,000 in 2002. First quarter 2001 rail car build was 8,400
compared to only 2,600 for first quarter of 2002. Rail markets are expected to
17.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
remain depressed. The company anticipates that industrial markets will start
to improve in the second half of 2002. While aerospace activity has stabilized
since the events of September 11, the aerospace customer demand remains
depressed as anticipated, and is approximately 25% lower compared to the same
quarter a year ago. While there has been some select improvement noticed in
the commercial business, the military business has not demonstrated the demand
previously anticipated. In general, aerospace customers have been slow to in-
crease deliveries both in the U.S. and Europe. Revenues for the first quarter
of 2002 reflect the lower passenger traffic and the reduced aircraft build
rates.
Excluding $3.8 million and $11.8 million in restructuring and implementation
charges and goodwill amortization for the first quarters of 2002 and 2001,
respectively, Industrial Bearings' EBIT was $3.2 million, down from
$16.6 million in first quarter of 2001. Including these charges, Industrial
Bearings' EBIT for the first quarter was a loss of $0.6 million, compared to
$4.8 million in the first quarter of 2001. The decline in EBIT reflected lower
sales to North American industrial, rail and super precision customers.
Although the business noted increased plant utilization, efficiencies enhanced
by the manufacturing strategy and salaried cost reduction initiatives as well
as aggressive business cost control, the benefits were exceeded by the reduced
volume impact.
Industrial Bearings' selling, administrative and general expenses in the first
quarter of 2002 were 12% lower compared to the same period a year ago. This was
the result of savings realized from the salaried cost reduction initiatives,
focused business cost spending and reduction in expense incurred for
performance-based pay.
Steel
Steel's net sales, including intersegment sales, decreased 11% to
$238.4 million from $267.7 million a year ago. Although sales in the first
quarter of 2002 were lower compared to the same period a year ago, a 10%
increase was noted from the fourth quarter's depressed sales levels.
Automotive sales in the first quarter of 2002 increased 17% compared to first
quarter of 2001. However, sales to other customers continue to be sluggish.
Sales to the bearing industry, other than automotive suppliers, were weak and
sales to industrial customers decreased 4% compared to the same period a year
ago. While aerospace sales increased 27% compared to first quarter of 2001,
sales to oil country and steel service center customers decreased over 50%.
In general, steel demand across most business sectors is expected to remain
weak through the second quarter of 2002. While the automotive segment is
expected to remain strong through the second quarter of 2002, there is
uncertainty regarding the continuation of strong automotive demand in the
second half of the year. Although aerospace sales were higher than the first
quarter of 2001, the company expects sales will drop as customers cut
production of passenger planes.
Excluding Steel's portion of the restructuring and implementation charges of
$0.2 million, Steel's EBIT for the first quarter of 2002 was $12.2 million.
18.Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
This compares with EBIT of $11.0 million in the first quarter of 2001,
excluding restructuring and implementation charges and goodwill amortization of
$1.7 million. Including these charges, Steel EBIT was $12.0 million, compared
to $9.3 million a year ago. Increase in EBIT was the result of continuing
cost-control actions. The business has reduced purchasing costs through a
combination of price reductions, substitute products and reduced consumption.
Compared to the first quarter of 2001, the cost for scrap, alloy and energy
decreased and contributed to the improved EBIT performance for the first three
months of 2002. Although plant capacity utilization improved from the very low
levels noted in the fourth quarter of 2001, the capacity utilization for the
first quarter of 2002 was slightly lower compared to the same period a year
ago. The Steel business announced price increases on selected bar products
during the first quarter of 2002.
Steel's selling, administrative and general expenses in the first quarter of
2002 decreased by approximately $1.3 million compared to the same period a year
ago. The majority of the decrease related to a reduction of expense in first
quarter 2002 related to performance-based pay and controlled business cost
spending.
Financial Condition
- -------------------
Total assets as shown on the Consolidated Condensed Balance Sheets increased by
approximately $22 million from December 31, 2001. Inventory balances at the
end of the first quarter of 2002 increased approximately 4% compared to year-
end 2001 levels. The company's number of days' supply in inventory as of
March 31, 2002 was 111 days compared to 105 days as of December 31, 2001.
Total Bearings' number of days' supply in inventory increased five days while
Steel's inventory increased seven days. The increase in Bearings' inventories
was primarily impacted by the higher automotive sales volume anticipated early
in the second quarter and the acquired inventory of an industrial equipment
facility located in Niles, Ohio. This acquisition was completed in March 2002.
The increase in Steel's inventories was a result of the increase in operating
levels to meet increased demand in second quarter of 2002. Accounts receivable
have increased by $49.0 million since December 31, 2001. The increase is due
primarily to the timing of customer payments and increase in sales levels
compared to the fourth quarter of 2001. The number of days' sales in
receivables at March 31, 2002 was comparable to December 31, 2001, which was
51 days. Although the accounts receivable balance increased from December 31,
2001, the first quarter 2002's customer sales average increased significantly
from the fourth quarter 2001's depressed sales levels.
As shown on the Consolidated Condensed Statement of Cash Flows, the increase in
inventories used $17.1 million of cash during the first three months of 2002.
The increase in other assets used $7.5 million in cash during the first quarter
of 2002, primarily resulting from the company funding the e-business joint
ventures and other affiliations. Accounts payable and accrued expenses used
$11.5 million of cash in the first three months of 2002, primarily as a result
of significant pension contributions made during the quarter, which were offset
by the adjustment for non-cash transactions related to accrued pensions and
restructuring. Purchases of property, plant and equipment, net used
$10.4 million of cash in the first three months of 2002, below the
$14.8 million spent during the same period in 2001.
19.Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
The 39.9% debt-to-total-capital ratio at March 31, 2002 was higher than the
38.9% at year-end 2001. Debt increased by $24.1 million during the first three
months, to $521.1 million at March 31, 2002. The increase in total debt was
used primarily to fund increases in working capital and to fund the manu-
facturing strategy initiatives. The company expects that any cash requirements
in excess of cash generated from operating activities will be met by short-term
borrowing and issuance of medium-term notes. The company continues to focus on
working capital management and discretionary spending.
The company's contractual debt obligations and contractual commitments out-
standing as of March 31, 2002 are as follows (in millions):
Payments Due by Period
------------------------------------------------
Total Less than 1-3 4-5 After 5
1 year years years years
------- --------- ------- ------- -------
Long-term Debt $ 408.8 $ 41.5 $ 26.1 $ 103.5 $ 237.7
Commercial Paper $ 28.0 $ 28.0 - - -
Other Lines of Credit $ 84.3 $ 84.3 - - -
Operating Leases $ 57.1 $ 13.3 $ 21.9 $ 5.7 $ 16.2The company's capital lease obligations are immaterial. At March 31, 2002, the
company had available $272.0 million through an unsecured $300.0 million
revolving credit agreement with a group of banks. The company is the guarantor
of a $12.3 million letter of credit for Pel Technologies, LLC.
Total shareholders' equity has increased by approximately $1.6 million since
December 31, 2001. The increase in equity was primarily the result of net
income of $9.2 million and favorable impact of $1.5 million related to net
change in derivative financial instruments, less a non-cash foreign currency
translation adjustment of $2.4 million, a $1.0 million adjustment related to
the issuance of the company's treasury shares and the payment of $7.8 million
in dividends. The majority of the increase in the foreign currency translation
adjustment resulted from the fluctuation in exchange rates for currencies such
as the Euro and the Argentine peso.
During the first quarter of 2002, the company did not purchase any shares of
its common stock under the company's 2000 common stock purchase plan. This
plan authorizes the company to buy in the open market or in privately
negotiated transactions up to 4 million shares of common stock, which are to be
held as treasury shares and used for specified purposes. The company may exer-
cise this authorization until December 31, 2006. The company does not expect
to be active in repurchasing shares under this plan in the near-term.
Other Information
- ----------------------
In the second quarter of 2000, the U.S. International Trade Commission (ITC)
voted to revoke the industry's antidumping orders on imports of tapered roller
bearings from Japan, Romania and Hungary. The ITC determined that revocation
20.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
of the antidumping duty orders on tapered roller bearings from those countries
was not likely to lead to continuation or recurrence of material injury to the
domestic industry within a reasonably foreseeable time. The ITC upheld the
antidumping duty order against China. The company has filed an appeal of the
ITC's decision regarding Japan, which is still pending.
On March 5, 2002, President Bush announced that the U.S. would impose tariffs
on hot and cold-finished bar imports. The remedy for these product categories
is three years of tariffs at 30%, 24% and 18%. Hot-rolled bars are a major
product line for the company's Steel business, which also manufactures some
cold-finished bar products. Steel made in Mexico, Canada and developing
nations are generally exempt from the tariffs announced. No relief was granted
with respect to tool steels, which is a major product line for the Timken
Latrobe Steel subsidiary in Latrobe, Pennsylvania.
Assets and liabilities of subsidiaries, other than Timken Romania, which is
considered to operate in a highly inflationary economy, are translated at the
rate of exchange in effect on the balance sheet date; income and expenses are
translated at the average rates of exchange prevailing during the quarter.
Related translation adjustments are reflected as a separate component of
accumulated other comprehensive loss. Foreign currency gains and losses
resulting from transactions and the translation of financial statements are
included in the results of operations.
Foreign currency exchange losses included in the company's operating results
for the first quarter of 2002 totaled $0.6 million, compared to $3.7 million
in the same year-ago period. The decrease in translation losses is related to
the fluctuation in exchange rates for the Euro and Brazilian Real, which had
significant devaluation during the first quarter of 2001. Also, for the first
three months of 2002, the company recorded a non-cash foreign currency trans-
lation adjustment of $2.4 million that reduced shareholders' equity, compared
to a non-cash foreign currency translation adjustment of $3.7 million that
decreased equity in the first three months of 2001. Although the first quarter
of 2002 was impacted by the fluctuation in the Euro and the Argentine Peso, the
adverse impact was not as significant as the adjustment in the first quarter of
2001 caused by continued weakening of currencies in many of the countries in
which the company operates.
On April 8, 2002, it was announced that the company and NSK Ltd. have agreed to
form a joint venture that will build a plant near Shanghai, China to manu-
facture certain tapered roller bearing product lines. Construction of the
plant is to begin later in 2002, and production is scheduled to start early in
2004. Ownership of this joint venture, Timken-NSK Bearings (Suzhou) Co. Ltd.,
will be divided evenly between the company and NSK.
At the company's annual meeting of shareholders held on April 16, 2002, Ward J.
Timken, Jr., was elected to the board of directors for a three-year term
expiring at the 2005 annual meeting. Mr. Timken serves as corporate vice
president - office of the chairman at the company.
21.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
On April 16, 2002, the board of directors declared a quarterly cash dividend of
$0.13 per share payable June 3, 2002 to shareholders of record as of May 17,
2002. This is the 320th consecutive dividend in over 80 years paid on the
common stock of the company.
Change in Method of Accounting:
Effective January 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets." In accord-
ance with SFAS No. 142, goodwill and indefinite lived intangible assets are no
longer amortized but are reviewed at least annually for impairment. The appli-
cation of the nonamortization provisions is expected to result in an increase
in annual net income of $6.1 million, of which $1.5 million is related to the
first quarter. Changes in the estimated useful lives of intangible assets
will not result in a material increase to net income. Intangible assets that
are separable and have a definite life will continue to be amortized over the
estimated useful lives.
In accordance with the adoption of SFAS No. 142, the company evaluated the
impairment of indefinite lived intangible assets and determined that none were
impaired based on estimations in market value. Fair value for each of the
company's five reporting units was determined by discounted cash flows and
validated with various market-comparable approaches. It was determined that
the fair value of the Industrial and Aerospace reporting units exceeded the
book value. The book value exceeded the fair value for the Automotive,
Consolidated Steel and Specialty Steel reporting units. Based on preliminary
results, which are currently under review, the company estimates the
transitional impairment loss to be between $25 - $30 million, the majority of
which is primarily related to the Steel Business. Once the review has been
completed, the related transitional impairment loss is expected to be recorded
in the second quarter as a non-cash charge and reflected as the cumulative
effect of a change in accounting principle.
Refer to Note 8 on page 10 of "Notes to Financial Statements (Unaudited)" for
further discussion of this change in method of accounting.
Certain statements set forth in this document (including the company's fore-
casts, beliefs and expectations) that are not historical in nature are
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The company cautions readers that actual
results may differ materially from those projected or implied in forward-
looking statements made by or on behalf of the company due to a variety of
important factors, such as:
a) changes in world economic conditions, including additional adverse effects
from terrorism or hostilities. This includes the potential instability of
governments and legal systems in countries in which the company or its
customers conduct business and significant changes in currency valuations. 22.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (continued)
b) the effects of changes in customer demand on sales, product mix, and
prices. This includes the effects of customer strikes, the impact of
changes in industrial business cycles and whether conditions of fair trade
continue in the U.S. market, in light of the ITC voting in second quarter
2000 to revoke the antidumping orders on imports of tapered roller
bearings from Japan, Romania and Hungary.c) competitive factors, including changes in market penetration, increasing
price competition by existing or new foreign and domestic competitors, the
introduction of new products by existing and new competitors, and new
technology that may impact the way the company's products are sold or
distributed.d) changes in operating costs. This includes the effect of changes in the
company's manufacturing processes; changes in costs associated with
varying levels of operations; changes resulting from inventory management
and cost reduction initiatives and different levels of customer demands;
the effects of unplanned work stoppages; changes in the cost of labor and
benefits; and the cost and availability of raw materials and energy.e) the success of the company's operating plans, including its ability to
achieve the benefits from its global restructuring, manufacturing trans-
formation, and administrative cost reduction as well as its ongoing con-
tinuous improvement and rationalization programs; its ability to integrate
acquisitions into company operations; the ability of acquired companies to
achieve satisfactory operating results; its ability to maintain
appropriate relations with unions that represent company associates in
certain locations in order to avoid disruptions of business and its
ability to successfully implement its new organizational structure.f) unanticipated litigation, claims or assessments. This includes, but is
not limited to, claims or problems related to intellectual property,
product warranty and environmental issues.g) changes in worldwide financial markets, to the extent they affect the
company's ability or costs to raise capital, have an impact on the overall
performance of the company's pension fund investments and/or cause changes
in the economy which affect customer demand.The company undertakes no obligation to publicly update or revise any forward-
looking statement, whether as a result of new information, future events or
otherwise.
23.Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On May 22, 2001, eight current or former employees of the company
filed a lawsuit in the Court of Common Pleas, Stark County, Ohio against the
company and fifteen current or former employees of the company. The lawsuit
was removed to the United States District Court, Northern District of Ohio,
Eastern Division on June 20, 2001. The lawsuit alleged, among other things,
sexual harassment and employment discrimination. The plaintiffs sought
compensatory and punitive damages of approximately $95 million.
During the third quarter of 2001, this case was dismissed, without pre-
judice, pursuant to a sua sponte order of the presiding judge. In February
2002, the lawsuit was refiled in the Court of Common Pleas, Stark County,
Ohio, by two of the original plaintiffs naming only the company as a
defendant. The allegations contained in the complaint are similar to those
made in the May 22, 2001 filing. In April 2002, the plaintiffs voluntarily
dismissed a number of the counts contained in the new complaint. The new
lawsuit does not specify the amount of damages the plaintiffs are seeking.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
(1) The Board of Directors recommended the four individuals set
forth below be Directors in Class II at the 2002 Annual
Meeting of Shareholders of The Timken Company held on April
16, 2002 to serve a term of three years expiring at the
Annual Meeting in 2005 (or until their respective successors
are elected and qualified). The first three individuals had
been previously elected as Directors by the shareholders and
were re-elected at the 2002 meeting. Affirmative Withheld
Robert W. Mahoney 52,083,654 3,179,517
Jay A. Precourt 52,131,016 3,132,155
Joseph F. Toot, Jr. 51,171,187 4,091,984
Ward J. Timken, Jr. 42,498,111 12,765,060 (2) Shareholders approved The Timken Company Long-Term Incentive
Plan, as amended and restated as of January 30, 2002. Affirmative Negative Abstain
36,725,250 17,093,483 1,444,438Item 5. Other Information
Not applicable.
24.
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
10 The Timken Company Long-Term Incentive Plan for directors,
officers and other key employees as amended and restated
as of January 30, 2002 and approved by shareholders on
April 16, 2002, was filed as Appendix A to Proxy Statement
dated February 20, 2002, and is incorporated herein by
reference. 10.1 The form of The Timken Company 1996 Deferred Compensation
Plan Election Agreement as adopted on April 16, 2002.
Each differs only as to name and date executed. 10.2 The form of The Timken Company Nonqualified Stock Option
Agreement for transferable options as adopted on April 16,
2002. 10.3 The form of The Timken Company Restricted Shares
Agreement as adopted on April 16, 2002. 10.4 The form of The Timken Company Performance Unit Agreement
as adopted on April 16, 2002. 11 Computation of Per Share Earnings
12 Computation of Ratio of Earnings to Fixed Charges
(b) Reports on Form 8-K:
On April 16, 2002, the company filed a Form 8-K regarding
Other Events, which contained a press release, dated April 16,
2002 titled "Earnings Up, Despite Sales Decline The Timken
Announces First Quarter Results." A consolidated statement of
income, consolidated statement of cash flows and balance sheet
as of March 31, 2002 were included in the filing. On April 15, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed. On April 8, 2002, the company filed a Form 8-K regarding
Other Events, which contained a press release, dated April 8,
2002 titled "Timken and NSK form joint venture to build plant
in China." No financial statements were filed. On March 20, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed. 25.
(b) Reports on Form 8-K (continued): On February 22, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed. On February 19, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
a recent development of rating agency activity related to the
company's debt ratings. No financial statements were filed. On January 22, 2002, the company filed a Form 8-K regarding
Other Events and Regulation FD Disclosure, which contained
estimated market data and industry trend information relating
to a number of industry segments in which the company sells
bearing and steel products. No financial statements were
filed.
26.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
The Timken Company
_______________________________
Date May 14, 2002 BY /s/ W. R. Timken, Jr.
________________________ _______________________________
W. R. Timken, Jr.,
Director and Chairman;
Chief Executive Officer
Date May 14, 2002 BY /s/ G. E. Little
________________________ _______________________________
G. E. Little
Senior Vice President - Finance