NEWS RELEASE
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MEDIA CONTACT: WORLDWIDE LEADER IN BEARINGS AND STEEL
Denise L. Bowler
Manager - Communications Planning & Integration
(330) 471-3485
www.timken.com/media
INVESTOR CONTACT:
Kevin R. Beck
Manager - Investor Relations
(330) 471-7181
TIMKEN COMPANY LOWERS EARNINGS OUTLOOK; ANNOUNCES CHANGES IN AUTOMOTIVE GROUP
CANTON, Ohio, Sept. 18 -- The Timken Company (NYSE: TKR) today announced it
is lowering its earnings guidance for the third quarter and the year as a result
of a decline in North American automotive demand, continuation of manufacturing
inefficiencies in the company's automotive group and higher-than-expected raw
materials costs affecting its steel group.
"Our automotive performance is disappointing, and we are taking additional
actions to address it," said James W. Griffith, president and CEO. "As the Big 3
auto makers have moved to cut production levels, we have experienced steeper
volume declines in our automotive group than we had anticipated. North American
passenger car production has been particularly hard hit. This has exacerbated
the performance challenges which our automotive plants have experienced in
recent months and will further delay the benefits of our restructuring efforts."
The company is continuing to reduce employment globally to achieve the
benefits of its rationalization programs and to adjust to falling demand. It
also continues to focus on cost reduction and additional spending cuts are being
made. More than 900 positions are expected to be eliminated during the second
half of the year, with about 700 of these in the automotive business.
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Denise L. Bowler Kevin R. Beck
Mail Code: GNW-37 Mail Code: GNE-26
1835 Dueber Avenue, S.W. 1835 Dueber Avenue, S.W.
P.O. Box 6932 P.O. Box 6928
Canton, OH 44706-0932 U.S.A. Canton, OH 44706-0928 U.S.A.
Telephone: (330) 471-3485 Telephone: (330) 471-7181
Facsimile: (330) 471-4118 Facsimile: (330) 471-3810
THE TIMKEN COMPANY e-mail: bowlerd@timken.com E-mail: beckk@timken.com
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The company also announced plans to reorganize the automotive business to
better leverage the combination of Timken and Torrington and drive improvements
in its manufacturing operations. As a result of these changes, Karl Kimmerling,
president -Automotive, has left the company. Mr. Griffith has assumed direct
operational control of the automotive group during this transition period. He
led the company's automotive organization from 1996 - 1999.
"Karl has made many important contributions to both our automotive and
steel groups during his 24-year career with the company, and we wish him well in
future endeavors," Mr. Griffith said.
The company's steel group also has been hurt by the decline in passenger
car production rates as well as higher raw material costs. It has raised prices
on certain products and reduced spending to mitigate the impact of these
negative factors.
The company's outlook for the industrial group has remained unchanged, with
industrial markets expected to remain flat through the end of the year.
The $860 million Torrington acquisition in February 2003 has created
opportunities to strengthen the company and position Timken for long-term global
competitiveness. The company still expects to achieve $20 million in annualized
pretax savings this year from the integration. Despite the shortfall in earnings
in both the Torrington and Timken businesses, the acquisition is expected to be
neutral to slightly accretive to earnings per share for 2003.
"U.S. manufacturing continues to lag the rest of the economy, with this
recovery the slowest on record," Mr. Griffith said. "While economists recently
have noted some improvement in the manufacturing sector, we have seen very
little evidence of a turnaround in the markets we serve."
The company is revising its earnings estimates for the third quarter to be
in the range of $0.00 to $0.05, excluding special items. For the year, it
anticipates earnings to be in the range of $0.45 to
THE TIMKEN COMPANY
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$0.60, excluding special items. The company had previously provided guidance of
$0.10 to $0.15 per share for the third quarter and $0.80 to $0.95 per share for
the full year, excluding special items.
The company plans to hold a teleconference to discuss its outlook on
September 19 at 2 p.m. Eastern Time. Live Dial-In: (706) 634-0975 (Call in 10
minutes prior to 2 p.m. to be included.) Replay Dial-In: (706) 645-9291
(Beginning at 5 p.m. ET on September 19 through midnight, September 26).
Dial-In and Replay Passcodes: 2902772. Live Webcast: www.timken.com.
The Timken Company is a leading international manufacturer of highly
engineered bearings, alloy and specialty steels and components, and a provider
of related products and services. Following its February 2003 acquisition of The
Torrington Company, Timken employs 28,000 people worldwide in operations in 29
countries. In 2002, the combined companies had sales of approximately $3.8
billion.
Certain statements in this news release (including statements regarding the
Company's forecasts, 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 that actual results may
differ materially from those projected or implied in forward-looking statements
due to a variety of important factors, including: uncertainties in both timing
and amount, if any, of actual benefits realized through the integration of
Torrington with Timken's operations and the timing and amount of the resources
required to achieve those results; risks associated with diversion of
management's attention from operations during the integration process; risks
associated with the greater level of debt associated with the acquisition;
issues associated with the impact of recent accounting pronouncements; and the
impact on operations of general economic conditions, higher raw material and
energy costs, the cyclicality of the Company's business, customer demand and the
Company's ability to achieve the benefits of its ongoing programs, including the
implementation of its manufacturing transformation and rationalization
activities. These and additional factors are described in greater detail in the
Company's Prospectus Supplement dated February 11, 2003 relating to the offering
of the Company's common stock, in the Company's Annual Report on Form 10-K for
the year ended December 31, 2002, in the Company's 2002 Annual Report, page 47,
and in the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31 and June 30, 2003. The Company undertakes no obligation to update or revise
any forward-looking statement.
RECONCILIATION OF OUTLOOK INFORMATION. Expected net income per share for
the third quarter and the full year excludes special items. For the third
quarter we expect to exclude the following special
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items: impairment and restructuring, integration/reorganization expenses and
cumulative effect in accounting principle. Examples of special items excluded
for the full year include the special items previously mentioned, plus payments
under the Continued Dumping and Subsidy Offset Act (CDSOA.) It is not possible
at this time to identify the potential amount or significance of these special
items. We cannot predict whether we will receive any payments under the CDSOA in
2003 and if so, in what amount. If we do receive any CDSOA payments, they will
be received in the fourth quarter.
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THE TIMKEN COMPANY