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, 1999.
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, 1999, 61,876,631.
PART I. FINANCIAL INFORMATION 2.
THE TIMKEN COMPANY AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
Mar. 31 Dec. 31
1999 1998
ASSETS ---------- ----------
Current Assets (Thousands of dollars)
Cash and cash equivalents........................... $11,012 $320
Accounts receivable, less allowances,
(1999-$8,741; 1998-$7,949).......................... 373,814 350,483
Deferred income taxes............................... 41,444 42,288
Inventories (Note 2) ............................... 456,220 457,246
---------- ----------
Total Current Assets...................... 882,490 850,337
Property, Plant and Equipment....................... 2,827,739 2,789,131
Less allowances for depreciation................... 1,459,725 1,439,592
---------- ----------
1,368,014 1,349,539
Costs in excess of net assets of acquired business,
less amortization, (1999-$30,338; 1998-$28,936)..... 160,178 150,140
Deferred income taxes............................... 25,079 20,409
Other assets........................................ 88,222 79,606
---------- ----------
Total Assets.................................. $2,523,983 $2,450,031
========== ==========
LIABILITIES
Current Liabilities
Accounts payable and other liabilities.............. $226,176 $221,823
Short-term debt and commercial paper................ 183,865 144,312
Accrued expenses.................................... 149,845 124,288
---------- ----------
Total Current Liabilities................. 559,886 490,423
Noncurrent Liabilities
Long-term debt (Note 3) ............................ 327,076 325,086
Accrued pension cost................................ 155,524 149,366
Accrued postretirement benefits cost................ 391,897 390,804
Other noncurrent liabilities........................ 38,994 38,271
---------- ----------
Total Noncurrent Liabilities.............. 913,491 903,527
Shareholders' Equity (Note 4)
Common stock........................................ 289,636 287,003
Earnings invested in the business................... 824,235 818,794
Accumulated other comprehensive income.............. (63,265) (49,716)
---------- ----------
Total Shareholders' Equity................ 1,050,606 1,056,081
Total Liabilities and Shareholders' Equity.... $2,523,983 $2,450,031
========== ==========
PART I. FINANCIAL INFORMATION Continued 3.
THE TIMKEN COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
Mar. 31 Mar. 31
1999 1998
-------- --------
(Thousands of dollars,
except per share data)
Net sales......................................... $625,370 $707,381
Cost of product sold.............................. 498,811 533,015
-------- --------
Gross Profit................................... 126,559 174,366
Selling, administrative and general expenses...... 89,330 88,141
-------- --------
Operating Income............................... 37,229 86,225
Interest expense.................................. (6,656) (5,863)
Interest income................................... 427 451
Other income (expense)............................ (3,415) (1,305)
-------- --------
Income Before Income Taxes..................... 27,585 79,508
Provision for income taxes (Note 5)............... 11,006 30,372
-------- --------
Net Income..................................... $16,579 $49,136
======== ========
Earnings Per Share * .......................... $0.27 $0.79
Earnings Per Share - assuming dilution **..... $0.27 $0.78
Dividends Per Share............................ $0.18 $0.18
======== ========
* Per average shares outstanding..................... 61,859,612 62,481,627
** Per average shares outstanding - assuming dilution. 62,018,468 63,331,559
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
1999 1998
------- -------
OPERATING ACTIVITIES (Thousands of dollars)
Net Income............................................. $16,579 $49,136
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization......................... 36,597 33,756
(Credit) provision for deferred income taxes.......... (5,724) 1,094
Stock issued in lieu of cash to employee benefit plans 2,972 10,091
Changes in operating assets and liabilities:
Accounts receivable.................................. (21,820) (38,721)
Inventories.......................................... (2,807) (35,391)
Other assets......................................... (10,196) (1,879)
Accounts payable and accrued expenses................ 37,210 13,506
Foreign currency translation......................... 2,623 595
------- -------
Net Cash Provided by Operating Activities........... 55,434 32,187
INVESTING ACTIVITIES
Purchases of property, plant and equipment - net...... (46,599) (65,014)
Purchase of subsidiaries.............................. (27,923) 0
------- -------
Net Cash Used by Investing Activities............... (74,522) (65,014)
FINANCING ACTIVITIES
Cash dividends paid to shareholders................... (11,138) (11,258)
Purchase of Treasury Shares........................... (339) (36,803)
Payments on long-term debt............................ (78) (23,108)
Proceeds from issuance of long-term debt.............. 1,819 38,228
Short-term debt activity - net........................ 39,763 71,714
------- -------
Net Cash Provided by Financing Activities........... 30,027 38,773
Effect of exchange rate changes on cash................ (247) 215
Increase in Cash and Cash Equivalents.................. 10,692 6,161
Cash and Cash Equivalents at Beginning of Period....... 320 9,824
------- -------
Cash and Cash Equivalents at End of Period............. $11,012 $15,985
======= =======
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, 1998.
3/31/99 12/31/98
Note 2 -- Inventories -------- ---------
(Thousands of dollars)
Finished products $183,206 $183,950
Work-in-process and raw materials 231,667 229,397
Manufacturing supplies 41,347 43,899
-------- --------
$456,220 $457,246
======== ========
Note 3 -- Long-term Debt 3/31/99 12/31/98
-------- ---------
(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, 1999 is 2.95%. $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, 1999 is 3.05%. 8,000 8,000
State of Ohio Air Quality and Water Development Revenue
Refunding Bonds, maturing on June 1, 2001. The
variable interest rate is tied to the bank's tax
exempt weekly interest rate. The rate at
March 31, 1999 is 3.05%. 21,700 21,700
State of Ohio Water Development Authority Solid Waste
Revenue Bonds, maturing on July 2, 2032. The
variable interest rate is tied to the bank's tax
exempt weekly interest rate. The rate at
March 31, 1999 is 3.10%. 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%. 267,000 267,000
Other 12,071 5,105
-------- --------
349,771 342,805
Less: Current Maturities 22,695 17,719
-------- --------
$327,076 $325,086
======== ========
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited)
Continued 6.
Note 4 -- Shareholders' Equity 3/31/99 12/31/98
-------- --------
Class I and Class II serial preferred stock (Thousands of dollars)
without par value:
Authorized -- 10,000,000 shares each class
Issued - none $0 $0
Common Stock without par value:
Authorized -- 200,000,000 shares
Issued (including shares in treasury)
1999 - 63,082,626 shares
1998 - 63,082,626 shares
Stated Capital 53,064 53,064
Other paid-in capital 263,056 261,156
Less cost of Common Stock in treasury
1999 - 1,205,994 shares
1998 - 1,234,462 shares 26,484 27,217
-------- --------
$289,636 $287,003
======== ========
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 Income Stock Total
------- -------- -------- ---------- -------- ----------
(Thousands of dollars)
Balance December 31, 1998 $53,064 $261,156 $818,794 ($49,716) ($27,217) $1,056,081
Net Income 16,579 16,579
Foreign currency translation adjustment (13,549) (13,549)
----------
Total comprehensive income 3,030
Dividends - $.18 per share (11,138) (11,138)
Stock Options, employee benefit and dividend
reinvestment plans: 1,900 733 2,633
Treasury - (issued)/acquired (28,468) shares
------- -------- -------- ---------- -------- ----------
Balance March 31, 1999 $53,064 $263,056 $824,235 ($63,265) ($26,484) $1,050,606
======= ======== ======== ========== ======== ==========
PART I. NOTES TO FINANCIAL STATEMENTS (Unaudited) 7.
Continued
Note 5 -- Income Tax Provision Three Months Ended
Mar. 31 Mar. 31
1999 1998
------- -------
U.S. (Thousands of dollars)
Federal $9,106 $24,126
State & Local 1,035 2,984
Foreign 865 3,262
------- -------
$11,006 $30,372
======= =======
Taxes provided exceed the U.S. statutory rate primarily due to state and
local taxes and losses without current tax benefits.
Note 6 -- Segment Information
(Thousands of Dollars) Three Months Ended
Mar. 31 Mar. 31
Bearings 1999 1998
------- -------
Net sales to external customers 438,717 462,779
Depreciation and amortization 20,486 19,287
Earnings before interest and taxes 23,249 48,748
Interest expense (5,080) (4,938)
Interest income 448 458
Steel
Net sales to external customers 186,653 244,602
Intersegment sales 55,378 56,677
Depreciation and amortization 16,111 14,483
Earnings before interest and taxes 11,029 37,606
Interest expense (2,316) (1,630)
Interest income 719 698
Profit Before Taxes
Total EBIT for reportable segments 34,278 86,354
Interest expense (6,656) (5,863)
Interest income 427 451
Intersegment adjustments (464) (1,434)
Income before income taxes 27,585 79,508
8.
Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
- - ---------------------
The Timken Company reported net sales of $625.4 million for the first
quarter of 1999, down 11.6% from $707.4 million in 1998's first
quarter. Net income declined by 66.2% to $16.6 million compared to
$49.1 million in the first quarter of 1998. During the quarter,
the company recorded month-to-month improvements in both sales
and earnings. First quarter earnings were higher than those
recorded during the third and fourth quarters of 1998 when markets
were deteriorating rapidly. At this point, sales for the second
quarter are expected to improve somewhat over first quarter levels
while earnings are expected to be near first quarter results.
Sales were lower in the current year's quarter as a result of
lower demand for bearing and steel products in most markets
throughout the world. Global weakness in industrial markets and
continued deterioration of steel oil country and service center
markets fueled by inventory adjustments by key industry producers
contributed to the sales decline. Markets in Europe and Latin
America also continued to weaken. In North America, aftermarket
sales remained depressed; however, automotive and rail markets
maintained their strength and Asia Pacific markets are showing
some signs of strengthening.
Gross profit was $126.6 million (20.2% of net sales) in the first
quarter of 1999, compared to $174.4 million (24.6% of net sales)
in 1998's first quarter. Lower sales and production volumes
combined with weakness in more profitable aftermarket and
industrial market segments contributed to the decline.
Selling, administrative, and general expenses were $89.3 million
(14.3% of net sales) in the first quarter of 1999 compared to
$88.1 million (12.5% of net sales) in 1998. First quarter 1999
expenses would have been lower except for the addition of
Desford Steel Tubes Ltd., now Timken Desford Steel, acquired in
the fourth quarter of 1998. The company has been successful in
containing administrative costs through the installation of new
software systems and focused continuous improvement efforts.
The company is continuing to implement cost cutting initiatives
in administrative and manufacturing areas and has taken
aggressive actions in Bearings and Steel to improve
competitiveness and to produce on-going returns for its
shareholders. In the fourth quarter 1998, the company recorded
expense of $21.4 million related to these actions. A portion of
this expense related to the elimination of 515 positions by
December 31, 1999. To-date, 312 positions have been eliminated,
with separation cash payments of $4.4 million being made to
terminated associates. At this point, the expenses recorded in
the fourth quarter 1998 are deemed sufficient to cover the
remaining costs associated with the improvement initiatives.
9.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
"Other income (expense)" reflects higher expense due primarily to
foreign currency exchange losses recorded in the first quarter of
1999.
Bearings
Bearings' net sales were $438.7 million in the first quarter of
1999, down 5.2% from the $462.8 million recorded in the year-
earlier period. Sales to North American automotive markets
increased by 11% compared to the year-ago quarter as the strong
levels of activity in light and heavy truck production
experienced in 1998 continued into 1999. North American
locomotive and freight car markets also remained strong.
Industrial markets, however, continued to weaken from already low
levels at year-end 1998 showing a decrease of 18% compared to the
first quarter 1998. Global weakness in agricultural and
commodity prices as well as inventory adjustments on the part of
key industry producers hurt industrial bearing sales,
particularly in the aftermarket.
First quarter 1999 sales in Europe were down by 14% as weakness
in the economy in both Western and Eastern Europe continued.
Many of the factors influencing North American markets are also
impacting Europe. Sales in Latin American markets are down by
29% as a result of the financial crisis in that part of the
world. Asia Pacific markets are showing some signs of
strengthening from 1998's extremely depressed levels.
Bearings' earnings before interest and income taxes (EBIT) for
the first quarter was $23.2 million compared to $48.7 million in
the year-earlier period. Lower manufacturing volumes combined
with lower sales in industrial original equipment and aftermarket
distribution segments in North America and Europe contributed to
the decline in profits. Lower levels of production aimed at
controlling inventory also hurt EBIT in the first quarter of
1999. Selling and administrative expenses were up slightly from
the first quarter of last year as Bearings continued to invest in
growth initiatives while closely controlling day-to-day spending.
In February 1999, the company agreed to increase its ownership in
Tata Timken Limited (Tata), a joint venture with The Tata Iron
and Steel Company (TISCO) of India, to 80 percent by acquiring
the 40 percent stake held by TISCO. The transaction was approved
by the Indian government and completed in March. The Indian
public continues to hold the remaining 20 percent.
Steel
Steel's net sales, including intersegment sales, were
$242 million in the first quarter of 1999, down 19.7% from the
$301.3 million recorded a year earlier. The reduction in demand
that began late in the second quarter of 1998 continued into the
10.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
first quarter 1999. Sales were lower in all markets. Weakness
in oil country markets continued as first quarter sales were down
by more than 80% compared to the year-ago quarter. Service
center markets were also weak with first quarter 1999 sales 65%
below last year's first quarter as distributors continue to
reduce excess inventories. However, it appears as though the
bottom of this inventory correction may have been reached as
bookings have begun to stabilize. Industrial sales were off by
about 24% while sales to external bearing customers dropped by
29%. Tool steel and aerospace sales also declined by 15% and 44%
respectively. Precision steel component sales to automotive
customers were up by about 8% in the first quarter. Overall,
alloy steel automotive demand is off slightly from the first
quarter 1998 record levels; however, it has continued to provide
the main source of consistent demand for the Steel business in
1999. The company does not expect significant improvement in
steel markets before late in the second quarter. Sales in the
first quarter of 1999 include sales from Timken Desford Steel
acquired in the fourth quarter of 1998.
Steel's EBIT was $11 million in the first quarter of 1999
compared to $37.6 million in last year's corresponding period.
In addition to lower sales volumes, lower production volumes and
the shift in mix to lower margin automotive sales contributed to
lower first quarter profits. Lower purchased scrap prices helped
in part to offset higher costs associated with manufacturing
inefficiencies that resulted from lower volume. Steel has
implemented a series of cost improvement actions aimed at
improving efficiency and profitability such as the alignment of
its work force to match lower volumes and the acceleration of
plans to streamline rolling processes. In addition, staffing
reductions in administrative areas have helped to reduce selling
and administrative expenses despite the addition of Timken
Desford Steel.
Financial Condition
- - -------------------
Total assets as shown on the Consolidated Condensed Balance
Sheets increased by $74 million from December 31, 1998.
Approximately $50 million of the increase resulted from the
consolidation of Tata Timken Limited (Tata) assets into the
company's balance sheet. Prior to the March 1999 increase in
ownership to 80%, the company's investment in Tata was accounted
for using the equity method. Inventory balances at the end of
the first quarter were basically unchanged from year-end 1998
levels. The number of days' supply in inventory increased
slightly to 111 days at March 31, 1999, compared to 109 days at
December 31, 1998, due primarily to the addition of Tata
inventory and an increase in steel inventory. Bearings'
inventory (including Tata) decreased by about 3 days. Steel's
inventory increased by about 8 days to accommodate upcoming
planned facility schedule reductions.
11.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
As shown on the Consolidated Condensed Statement of Cash Flows,
the change in inventories used $2.8 million of cash during the
first quarter of 1999. Accounts receivable increased
$21.8 million since year-end. The number of days' sales in
receivables at March 31, 1999, was only slightly higher than
December 31, 1998, levels due to a proportionately higher level
of sales in the last month of the quarter. Cash was provided by
a $37.2 million increase in accounts payable and accrued expenses
related in part to higher retirement and postretirement benefit
liabilities and accruals for performance-based pay. Purchases of
property, plant and equipment used $46.6 million of cash in the
first three months of 1999 compared to $65 million during the
same period in 1998. The company limited capital expenditures in
the first quarter as a means to conserve cash in response to the
business environment. Growth initiatives were continued as the
company invested $27.9 million to acquire an additional 40%
ownership in Tata Timken Limited. Company investments continue
to support activities consistent with the strategies it is
pursuing to achieve industry leadership positions. Further
capital investments in technologies within the company's plants
throughout the world and new acquisitions provide Timken with the
opportunity to improve the company's competitiveness and meet the
needs of its growing base of customers.
The 32.7% debt to total capital ratio at March 31, 1999, was
higher than the 30.8% at year-end 1998. Debt increased by
$41.5 million, from $469.4 million at year-end 1998 to
$510.9 million at the end of the first quarter. Almost $9.8
million of the increase resulted from consolidating Tata Timken
debt. Cash was also needed to fund additional investments in
property, plant and equipment and to finance acquisitions. Any
future cash needs that exceed cash generated from operations will
be met by short-term borrowing and issuance of medium-term notes.
Total shareholders' equity decreased by $5.5 million. The
$16.6 million increase in equity from the first quarter's net
income was more than offset by a $13.5 million foreign currency
translation adjustment and the payment of $11.1 million in
dividends.
Other Information
- - -----------------
The Timken Company has approached year 2000 compliance using a
defined methodology that includes inventory and assessment,
remediation, test, integration, implementation and contingency
plan components. Begun in 1996, this program encompasses Timken
worldwide business systems and operations, manufacturing and
distribution systems, technical architecture, end-user computing
and the company's supplier and customer base. Additionally, the
company's corporate information systems department has instituted
a corporate level reporting and tracking process that monitors
12.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
all Timken year 2000 project efforts worldwide. Critical
business computer information technology (IT) systems were year
2000 ready as of January 1999. Current project plans call for
Timken to have all of its critical non-IT manufacturing and
personal end-user systems year 2000 ready and substantially
implemented in the second quarter of 1999. Testing on all
systems will continue throughout 1999. Although the company
plans to meet these projected completion dates, it can provide no
assurances that all of its year 2000 efforts will be successful.
The company expects that the total costs associated with its year
2000 conversion efforts will not have a material effect on its
financial position, results of operations or cash flows. Between
1996 and 1999, overall costs of the year 2000 project, including
internal and external resources as well as hardware and software,
are expected to approximate $15 million. As of March 1999, the
company spent $10.3 million in support of these efforts. Its
year 2000 efforts have had minimal impact on its other
information technology programs. The company's financial results
are also dependent on the ability of customers, suppliers and
governments to become year 2000 compliant. The company is making
concerted efforts to understand the year 2000 status of its
customers and third parties including, without limitation,
electric utilities, water utilities, communications carriers,
transportation providers, governmental entities, vendors and
other general service suppliers. The company has implemented a
structured plan to communicate and evaluate year 2000 compliance
of its customers and suppliers. This plan includes surveys,
audits, meetings and other applicable methods. These efforts are
to minimize any potential year 2000 compliance impact; however,
it is not possible to guarantee compliance.
The company is currently in the process of developing financial
and operating contingency plans and will be finalizing such plans
during the first half of 1999. The company is also in the
process of identifying fourth quarter 1999 and first quarter 2000
operating support strategies, which include staffing
requirements, communication procedures and installation
schedules, to minimize the impact of potential disruptions.
Failure of the company or any third party with whom the company
has a material relationship to achieve year 2000 compliance could
have a material adverse effect on the company's business,
financial condition or results of operations or involve safety
risk.
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 income. Foreign currency gains
and losses resulting from transactions and the translation of
financial statements of Timken Romania are included in the
results of operations.
13.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
Foreign currency exchange losses included in first quarter 1999
operating results amounted to $6.5 million compared to $0.6
million in the year-ago period. In addition, the company
recorded a foreign currency translation adjustment of
$13.5 million which reduced other comprehensive income compared
to a reduction of $5.1 million in the first quarter of 1998.
Weakening currencies in most of the countries in which the
company operates caused the losses. The January 1999 devaluation
of the Brazilian Real contributed to 1999's foreign currency
losses; however, the company's operations in France and the
United Kingdom recorded the most significant translation losses.
On April 20, 1999, the Board of Directors declared a quarterly
cash dividend of 18 cents per share payable June 7, 1999, to
shareholders of record at the close of business on May 21, 1999.
This is the 308th consecutive dividend paid on the common stock
of the company.
The statements set forth in this document that are not historical
in nature are forward-looking statements. 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. This includes, but is
not limited to, the potential instability of governments and
legal systems in countries in which the company conducts
business, significant changes in currency valuations and the
effects of year 2000 compliance.
b) changes in customer demand on sales and product mix. This
includes the effect of customer strikes and the impact of
changes in industrial business cycles.
c) competitive factors, including changes in market penetration
and the introduction of new products by existing and new
competitors.
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 on-going continuous
improvement programs, its ability, along with that of its
customers and suppliers, to update computer systems to be
year 2000 compliant; its ability to integrate acquisitions
into company operations, the ability of recently acquired
14.
Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont.)
companies to achieve satisfactory operating results and the
company's ability to maintain appropriate relations with
unions that represent company associates in certain
locations in order to avoid disruptions of business.
f) unanticipated litigation, claims or assessments. This
includes, but is not limited to, claims or problems related
to 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 cause changes in the economy
which affect customer demand.
15.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
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 elected Directors in Class II at the 1999
Annual Meeting of Shareholders of The Timken Company held
on April 20, 1999, to serve a term of three years expiring
at the Annual Meeting in 2002 (or until their respective
successors are elected and qualified). All four individuals
had been previously elected as Directors by the shareholders
and were re-elected at the 1999 meeting.
Affirmative Withheld
J. Clayburn La Force, Jr. 55,242,938 773,385
Robert W. Mahoney 55,291,149 725,174
Jay A. Precourt 55,304,696 711,627
Joseph F. Toot, Jr. 54,809,791 1,206,532
(2) The Board of Directors recommended the one individual set
forth below be elected Director in Class I at the 1999
Annual Meeting of Shareholders of The Timken Company held
on April 20, 1999, to serve a term of two years expiring
at the Annual Meeting in 2001 (or until his respective
successor is elected and qualified). The individual was
elected at the 1999 meeting.
Affirmative Withheld
John A. Luke, Jr. 54,889,447 1,126,876
(3) Shareholders approved The Timken Company Senior Executive
Management Performance Plan, effective January 1, 1999.
Affirmative Negative Abstain
52,622,428 2,460,240 933,655
Item 5. Other Information
Not applicable.
16.
Item 6. Exhibits and Reports on Form 8-K
(a). Exhibits
10 The Timken Company 1996 Deferred Compensation Plan
amended and restated effective as of April 20, 1999.
10.1 The Timken Company Senior Executive Management Performance
Plan effective January 1, 1999, and approved by share-
holders April 20, 1999, was filed as Appendix A to Proxy
Statement dated February 24, 1999, and is incorporated
herein by reference.
11 Computation of Per Share Earnings
12 Computation of Ratio of Earnings to Fixed Charges
27 Financial Data Schedule
The company did not file any reports on Form 8-K during the three
months ended March 31, 1999.
17.
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 13, 1999 BY /s/ W. R. Timken, Jr.
________________________ _______________________________
W. R. Timken, Jr.,
Director and Chairman;
President and Chief Executive
Officer
Date May 13, 1999 BY /s/ G. E. Little
________________________ _______________________________
G. E. Little
Senior Vice President - Finance