The Timken Company (TKR) 8-K Other Events

Exhibit 99.1

THE TIMKEN COMPANY AND SUBSIDIARIES
CONDENSED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The following unaudited condensed pro forma consolidated financial statements are based upon the historical financial statements of The Timken Company (“the Company”) and subsidiaries, adjusted to reflect the disposition of the Company’s Needle Roller Bearings “NRB” business. The following unaudited condensed pro forma consolidated financial statements of the Company should be read in conjunction with the related notes and with the historical consolidated financial statements of the Company and the related notes included in previous filings with the Securities and Exchange Commission. The unaudited condensed pro forma consolidated balance sheet reflects the disposition of the NRB business as if it had occurred on June 30, 2009, while the unaudited condensed pro forma statements of consolidated income for the six months ended June 30, 2009 and the years ended December 31, 2008, December 31, 2007 and December 31, 2006, respectively, give effect to the disposition as if it had occurred at the beginning of each period presented. The pro forma adjustments, described in the related notes, are based on the best available information and certain assumptions that the Company’s management believes to be reasonable.

The unaudited condensed pro forma consolidated financial statements are provided for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the disposition of the NRB business closed on June 30, 2009 for the unaudited condensed pro forma consolidated balance sheet or at the beginning of each period presented for the unaudited condensed pro forma statements of consolidated income.

THE TIMKEN COMPANY AND SUBSIDIARIES
Condensed Pro Forma Consolidated Balance Sheet
June 30, 2009
(unaudited)

				Pro Forma
(Dollars in thousands)	Historical			Adjustments			Pro Forma
ASSETS
Current Assets
Cash and cash equivalents	$	277,086		$	305,603	(a)	$	582,689
Accounts receivable, net		465,068			(28,191	)  (b)		436,877
Inventories, net		930,141			(123,885	)  (c)		806,256
Deferred income taxes		84,830			(11,675	)  (d)		73,155
Deferred charges and prepaid expenses		15,806			(465	)  (c)		15,341
Other current assets		45,846			(3,065	)  (e)		42,781
Total Current Assets		1,818,777			138,322			1,957,099
Property, Plant and Equipment		4,066,686			(439,156	)  (c)		3,627,530
Less allowances for depreciation		(2,413,474	)		226,369	(c)		(2,187,105	)
Property, Plant and Equipment, net		1,653,212			(212,787	)		1,440,425
Other Assets
Goodwill		229,699			(8,329	)  (c)		221,370
Other intangible assets		166,264			(30,240	)  (c)		136,024
Deferred income taxes		312,782			(8,897	)  (d)		303,885
Other non-current assets		41,421			(1,394	)  (c)		40,027
Total Other Assets		750,166			(48,860	)		701,306
Total Assets	$	4,222,155		$	(123,325	)	$	4,098,830
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and other liabilities	$	316,284		$	(8,922	)  (f)	$	307,362
Short-term debt and current portion of long-term debt		337,697			—			337,697
Income taxes payable		—			—			—
Deferred Income taxes		5,186			(556	)  (d)		4,630
Salaries, wages and benefits		146,608			(14,675	)  (g)		131,933
Total Current Liabilities		805,775			(24,153	)		781,622
Non-Current Liabilities
Long-term debt		254,845			—			254,845
Accrued pension cost		844,333			(15,816	)  (h)		828,517
Accrued postretirement benefits cost		609,038			3,399	(i)		612,437
Other non-current liabilities		107,017			(35,038	)  (g)		71,979
Total Non-Current Liabilities		1,815,233			(47,455	)		1,767,778
Shareholders’ Equity
Common Stock		888,537			—			888,537
Earnings invested in the business		1,490,299			(11,012	)  (j)		1,479,287
Accumulated other comprehensive loss		(791,226	)		(40,705	)  (k)		(831,931	)
Treasury Shares		(4,206	)		—			(4,206	)
Total Shareholders’ Equity		1,583,404			(51,717	)		1,531,687
Noncontrolling interest		17,743			—			17,743
Total Equity		1,601,147			(51,717	)		1,549,430
Total Liabilities and Shareholders’ Equity	$	4,222,155		$	(123,325	)	$	4,098,830

See Notes to Unaudited Condensed Pro Forma Financial Statements.

THE TIMKEN COMPANY AND SUBSIDIARIES
Condensed Pro Forma Statement of Consolidated Income
Six months ended June 30, 2009
(unaudited)

				Pro Forma
(Dollars in thousands, except per share data)	Historical			Adjustments (l)			Pro Forma
Net sales	$	1,789,305		$	(185,928	)	$	1,603,377
Cost of products sold		1,518,344			(194,695	)		1,323,649
Gross Profit		270,961			8,767			279,728
Selling, administrative and general expenses		281,311			(30,583	)		250,728
Impairment and restructuring charges		69,659			(5,198	)		64,461
Operating Loss		(80,009	)		44,548			(35,461	)
Interest expense		(16,965	)		96			(16,869	)
Interest income		939			(43	)		896
Other income — net		6,895			873			7,768
Loss from Continuing Operations before Income Taxes		(89,140	)		45,474			(43,666	)
Benefit from income taxes		(20,192	)		18,630			(1,562	)
Loss from continuing operations	$	(68,948	)	$	26,844		$	(42,104	)
Loss per share from continuing operations
Basic	$	(0.72	)				$	(0.44	)
Diluted		(0.72	)					(0.44	)
Average common shares outstanding
Basic		96,082,491						96,082,491
Diluted		96,082,491						96,082,491

See Notes to Unaudited Condensed Pro Forma Financial Statements.

THE TIMKEN COMPANY AND SUBSIDIARIES
Condensed Pro Forma Statement of Consolidated Income
Year ended December 31, 2008
(unaudited)

				Pro Forma
(Dollars in thousands, except per share data)	Historical			Adjustments (l)			Pro Forma
Net sales	$	5,663,660		$	(620,655	)	$	5,043,005
Cost of products sold		4,422,191			(532,412	)		3,889,779
Gross Profit		1,241,469			(88,243	)		1,153,226
Selling, administrative and general expenses		724,987			(70,773	)		654,214
Impairment and restructuring charges		64,383			(31,606	)		32,777
Gain on divestitures		(8	)		—			(8	)
Operating Income		452,107			14,136			466,243
Interest expense		(44,934	)		49			(44,885	)
Interest income		5,971			304			6,275
Receipt of Continued Dumping & Subsidy Offset
Act (CDSOA) payment, net of expenses		10,207			(1,071	)		9,136
Other income — net		5,827			1,278			7,105
Income from continuing operations before income taxes		429,178			14,696			443,874
Provision for income taxes		157,926			555			158,481
Income from continuing operations	$	271,252		$	14,141		$	285,393
Earnings per share from continuing operations
Basic	$	2.82					$	2.96
Diluted		2.81						2.96
Average common shares outstanding
Basic		95,650,104						95,650,104
Diluted		95,947,643						95,947,643

See Notes to Unaudited Condensed Pro Forma Financial Statements.

THE TIMKEN COMPANY AND SUBSIDIARIES
Condensed Pro Forma Statement of Consolidated Income
Year ended December 31, 2007
(unaudited)

				Pro Forma
(Dollars in thousands, except per share data)	Historical			Adjustments (l)			Pro Forma
Net sales	$	5,236,020		$	(696,287	)	$	4,539,733
Cost of products sold		4,182,186			(599,294	)		3,582,892
Gross Profit		1,053,834			(96,993	)		956,841
Selling, administrative and general expenses		695,283			(67,340	)		627,943
Impairment and restructuring charges		40,378			(11,973	)		28,405
Loss on divestitures		528			—			528
Operating Income		317,645			(17,680	)		299,965
Interest expense		(42,684	)		372			(42,312	)
Interest income		7,045			(182	)		6,863
Receipt of Continued Dumping & Subsidy Offset Act (CDSOA) payment, net of expenses		7,854			(1,405	)		6,449
Other expense — net		(4,001	)		3,274			(727	)
Income from continuing operations before income taxes		285,859			(15,621	)		270,238
Provision for income taxes		62,868			(6,403	)		56,465
Income from continuing operations	$	222,991		$	(9,218	)	$	213,773
Earnings per share from continuing operations
Basic	$	2.34					$	2.24
Diluted		2.32						2.23
Average common shares outstanding
Basic		94,639,065						94,639,065
Diluted		95,281,799						95,281,799

See Notes to Unaudited Condensed Pro Forma Financial Statements.

THE TIMKEN COMPANY AND SUBSIDIARIES
Condensed Pro Forma Statement of Consolidated Income
Year ended December 31, 2006
(unaudited)

				Pro Forma
(Dollars in thousands, except per share data)	Historical			Adjustments (l)			Pro Forma
Net sales	$	4,973,365		$	(695,291	)	$	4,278,074
Cost of products sold		3,968,271			(583,301	)		3,384,970
Gross Profit		1,005,094			(111,990	)		893,104
Selling, administrative and general expenses		677,342			(64,030	)		613,312
Impairment and restructuring charges		44,881			(13,933	)		30,948
Loss on divestitures		64,271			—			64,271
Operating Income		218,600			(34,027	)		184,573
Interest expense		(49,387	)		351			(49,036	)
Interest income		4,605			(1,101	)		3,504
Receipt of Continued Dumping & Subsidy Offset Act (CDSOA) payment, net of expenses		87,907			(20,328	)		67,579
Other expense — net		(4,148	)		579			(3,569	)
Income from continuing operations before income taxes		257,577			(54,526	)		203,051
Provision for income taxes		77,795			(17,292	)		60,503
Income from continuing operations	$	179,782		$	(37,234	)	$	142,548
Earnings per share from continuing operations
Basic	$	1.91					$	1.51
Diluted		1.90						1.50
Average common shares outstanding
Basic		93,325,729						93,325,729
Diluted		94,092,657						94,092,657

See Notes to Unaudited Condensed Pro Forma Financial Statements.

THE TIMKEN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(a)	Reflects the gross proceeds of $330 million, less the value of certain receivables and payables retained by the Company, from the sale of the Needle Roller Bearings (NRB) business. In addition, pursuant to the Sale and Purchase Agreement (the “Purchase Agreement”), cash is excluded from assets transferred to the Buyer.
(b)	Reflects the elimination of assets of the NRB business acquired by the Buyer, net of assets that will be retained by the Company, in accordance with the Purchase Agreement.
(c)	Reflects the elimination of assets of the NRB business acquired by the Buyer in accordance with the Purchase Agreement.
(d)	Reflects adjustments to deferred taxes resulting from the sale of the NRB business.
(e)	Reflects the elimination of assets of the NRB business acquired by the Buyer, as well as estimated current tax expense from the loss on the sale of the NRB business, in accordance with the Purchase Agreement.
(f)	Reflects the elimination of liabilities of the NRB business that transfer to the Buyer, net of liabilities that will be retained by the Company, in accordance with the Purchase Agreement as well as transaction costs and transfer taxes.
(g)	Reflects the elimination of liabilities of the NRB business that transfer to the Buyer in accordance with the Purchase Agreement.
(h)	Reflects the elimination of pension liabilities of the NRB business that transfer to the Buyer in accordance with the Purchase Agreement and the curtailment of certain U.S. pension plans.
(i)	Reflects the elimination of accumulated postretirement benefit obligations attributable to NRB business associates and retirees and the curtailment of this plan.
(j)	Reflects the after-tax pro forma impact of the loss on the sale of the NRB business, assuming an estimated effective tax rate of 37%. The Company had previously disclosed that it expected to incur a pretax loss on the sale of the NRB business of approximately $20 million to $60 million upon completion of the sale. The Company currently expects to incur an after-tax loss on the sale of the NRB business of up to approximately $20 million upon completion of the sale. The change in the expected amount of loss on the sale of the NRB business was primarily due to foreign currency translation adjustments. The expected loss is only an estimate and is subject to change based on the final balance sheet amounts and jurisdictional tax computations as of the effective date of the sale.
(k)	Reflects the elimination of pension adjustments, net of deferred taxes, associated with certain pension plans of the NRB business that transfer to the Buyer and foreign currency translation adjustments associated with the NRB business.
(l)	Reflects the elimination of the operating results of the NRB business as if the transaction occurred at the beginning of the each period presented. These results have been adjusted to reflect federal and state income taxes of the NRB business on a stand-alone basis. The pro forma loss on the sale of the NRB business is not included in the income statement.