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þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OHIO
(State or other jurisdiction of |
34-0577130
(I.R.S. Employer |
|
incorporation or organization) | Identification No.) | |
1835 Dueber Ave., SW, Canton, OH | 44706-2798 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Class | Outstanding at March 31, 2010 | |
Common Stock, without par value | 96,822,937 shares |
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in thousands, except per share data) | ||||||||
Net sales
|
$ | 913,690 | $ | 866,616 | ||||
Cost of products sold
|
690,999 | 712,002 | ||||||
|
||||||||
Gross Profit
|
222,691 | 154,614 | ||||||
|
||||||||
Selling, administrative and general expenses
|
133,057 | 123,411 | ||||||
Impairment and restructuring charges
|
5,525 | 13,755 | ||||||
|
||||||||
Operating Income
|
84,109 | 17,448 | ||||||
|
||||||||
Interest expense
|
(9,558 | ) | (8,429 | ) | ||||
Interest income
|
559 | 366 | ||||||
Other (expense) income, net
|
(601 | ) | 7,973 | |||||
|
||||||||
Income from Continuing Operations Before Income Taxes
|
74,509 | 17,358 | ||||||
Provision for income taxes
|
45,854 | 18,793 | ||||||
|
||||||||
Income (Loss) From Continuing Operations
|
28,655 | (1,435 | ) | |||||
|
||||||||
Income (loss) from discontinued operations,
net of income taxes
|
336 | (3,643 | ) | |||||
|
||||||||
Net Income (Loss)
|
28,991 | (5,078 | ) | |||||
Less: Net income (loss) attributable to noncontrolling interest
|
374 | (5,948 | ) | |||||
|
||||||||
Net Income Attributable to The Timken Company
|
$ | 28,617 | $ | 870 | ||||
|
||||||||
|
||||||||
Amounts Attributable to The Timken Company’s
Common Shareholders:
|
||||||||
Income from continuing operations
|
$ | 28,281 | $ | 4,513 | ||||
Income (loss) from discontinued operations, net of income taxes
|
336 | (3,643 | ) | |||||
|
||||||||
Net Income Attributable to The Timken Company
|
$ | 28,617 | $ | 870 | ||||
|
||||||||
|
||||||||
Net Income (Loss) per Common Share Attributable to The Timken
Company Common Shareholders
|
||||||||
|
||||||||
Earnings per share —
Continuing Operations
|
$ | 0.29 | $ | 0.05 | ||||
Earnings (loss) per share —
Discontinued Operations
|
0.01 | (0.04 | ) | |||||
|
||||||||
Basic earnings per share
|
$ | 0.30 | $ | 0.01 | ||||
|
||||||||
|
||||||||
Diluted earnings per share —
Continuing Operations
|
$ | 0.29 | $ | 0.05 | ||||
Diluted
earnings (loss) per share —
Discontinued Operations
|
0.01 | (0.04 | ) | |||||
|
||||||||
Diluted earnings per share
|
$ | 0.30 | $ | 0.01 | ||||
|
||||||||
|
||||||||
Dividends per share
|
$ | 0.09 | $ | 0.18 | ||||
|
2
(Unaudited) | ||||||||
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
(Dollars in thousands) | ||||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$ | 709,301 | $ | 755,545 | ||||
Accounts receivable, less allowances: 2010 — $34,103; 2009 — $41,605
|
489,054 | 411,226 | ||||||
Inventories, net
|
689,372 | 671,236 | ||||||
Deferred income taxes
|
60,877 | 61,508 | ||||||
Deferred charges and prepaid expenses
|
11,624 | 11,758 | ||||||
Other current assets
|
98,763 | 111,287 | ||||||
|
||||||||
Total Current Assets
|
2,058,991 | 2,022,560 | ||||||
|
||||||||
Property, Plant and Equipment—Net
|
1,302,542 | 1,335,228 | ||||||
|
||||||||
Other Assets
|
||||||||
Goodwill
|
221,038 | 221,734 | ||||||
Other intangible assets
|
129,762 | 132,088 | ||||||
Deferred income taxes
|
236,144 | 248,551 | ||||||
Other non-current assets
|
39,637 | 46,732 | ||||||
|
||||||||
Total Other Assets
|
626,581 | 649,105 | ||||||
|
||||||||
Total Assets
|
$ | 3,988,114 | $ | 4,006,893 | ||||
|
||||||||
|
||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current Liabilities
|
||||||||
Short-term debt
|
$ | 29,958 | $ | 26,345 | ||||
Accounts payable
|
221,852 | 156,004 | ||||||
Salaries, wages and benefits
|
161,567 | 142,471 | ||||||
Deferred income taxes
|
9,199 | 9,233 | ||||||
Other current liabilities
|
163,734 | 189,345 | ||||||
Current portion of long-term debt
|
14,679 | 17,035 | ||||||
|
||||||||
Total Current Liabilities
|
600,989 | 540,433 | ||||||
|
||||||||
Non-Current Liabilities
|
||||||||
Long-term debt
|
471,229 | 469,287 | ||||||
Accrued pension cost
|
579,449 | 690,889 | ||||||
Accrued postretirement benefits cost
|
601,419 | 604,250 | ||||||
Deferred income taxes
|
6,611 | 6,091 | ||||||
Other non-current liabilities
|
98,928 | 100,375 | ||||||
|
||||||||
Total Non-Current Liabilities
|
1,757,636 | 1,870,892 | ||||||
|
||||||||
Shareholders’ Equity
|
||||||||
Class I and II Serial Preferred Stock without par value:
|
||||||||
Authorized — 10,000,000 shares each class, none issued
|
— | — | ||||||
Common stock without par value:
|
||||||||
Authorized — 200,000,000 shares
|
||||||||
Issued (including shares in treasury) (2010 — 97,717,490 shares;
2009 — 97,034,033 shares)
|
||||||||
Stated capital
|
53,064 | 53,064 | ||||||
Other paid-in capital
|
858,131 | 843,476 | ||||||
Earnings invested in the business
|
1,422,782 | 1,402,855 | ||||||
Accumulated other comprehensive loss
|
(699,291 | ) | (717,113 | ) | ||||
Treasury shares at cost (2010 — 894,553 shares; 2009 — 179,963 shares)
|
(23,567 | ) | (4,698 | ) | ||||
|
||||||||
Total Shareholders’ Equity
|
1,611,119 | 1,577,584 | ||||||
|
||||||||
Noncontrolling Interest
|
18,370 | 17,984 | ||||||
|
||||||||
Total Equity
|
1,629,489 | 1,595,568 | ||||||
|
||||||||
Total Liabilities and Shareholders’ Equity
|
$ | 3,988,114 | $ | 4,006,893 | ||||
|
3
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in thousands) | ||||||||
CASH PROVIDED (USED)
|
||||||||
Operating Activities
|
||||||||
Net income attributable to The Timken Company
|
$ | 28,617 | $ | 870 | ||||
Net (income) loss from discontinued operations
|
(336 | ) | 3,643 | |||||
Net income (loss) attributable to noncontrolling interest
|
374 | (5,948 | ) | |||||
Adjustments to reconcile income from continuing operations
to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
47,748 | 50,148 | ||||||
Impairment charges
|
— | 3,795 | ||||||
Loss (gain) on sale of assets
|
941 | (492 | ) | |||||
Deferred income tax provision
|
21,659 | (254 | ) | |||||
Stock-based compensation expense
|
4,547 | 4,409 | ||||||
Pension and other postretirement expense
|
25,204 | 26,938 | ||||||
Pension contributions and other postretirement benefit payments
|
(118,702 | ) | (14,720 | ) | ||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(82,134 | ) | 55,429 | |||||
Inventories
|
(22,533 | ) | 59,948 | |||||
Accounts payable and accrued expenses
|
60,405 | (133,863 | ) | |||||
Other — net
|
19,994 | (20,165 | ) | |||||
|
||||||||
Net Cash (Used) Provided by Operating Activities — Continuing Operations
|
(14,216 | ) | 29,738 | |||||
Net Cash Provided by Operating Activities —
Discontinued Operations
|
336 | 3,388 | ||||||
|
||||||||
Net Cash (Used) Provided by Operating Activities
|
(13,880 | ) | 33,126 | |||||
|
||||||||
Investing Activities
|
||||||||
Capital expenditures
|
(13,981 | ) | (32,710 | ) | ||||
Acquisitions
|
— | (42 | ) | |||||
Proceeds from disposals of property, plant and equipment
|
167 | 2,359 | ||||||
Other
|
(1,261 | ) | 1,332 | |||||
|
||||||||
Net Cash Used by Investing Activities — Continuing Operations
|
(15,075 | ) | (29,061 | ) | ||||
Net Cash Used by Investing Activities — Discontinued Operations
|
— | (509 | ) | |||||
|
||||||||
Net Cash Used by Investing Activities
|
(15,075 | ) | (29,570 | ) | ||||
|
||||||||
Financing Activities
|
||||||||
Cash dividends paid to shareholders
|
(8,690 | ) | (17,424 | ) | ||||
Net proceeds from common share activity
|
8,250 | 1,648 | ||||||
Purchase of treasury shares — net
|
(13,986 | ) | — | |||||
Proceeds from issuance of long-term debt
|
2,051 | — | ||||||
Payments on long-term debt
|
(2,471 | ) | (207 | ) | ||||
Short-term
debt activity — net
|
4,119 | 6,241 | ||||||
|
||||||||
Net Cash Used by Financing Activities
|
(10,727 | ) | (9,742 | ) | ||||
|
||||||||
Effect of exchange rate changes on cash
|
(6,562 | ) | (3,086 | ) | ||||
|
||||||||
Decrease In Cash and Cash Equivalents
|
(46,244 | ) | (9,272 | ) | ||||
Cash and cash equivalents at beginning of year
|
755,545 | 133,383 | ||||||
|
||||||||
Cash and Cash Equivalents at End of Year
|
$ | 709,301 | $ | 124,111 | ||||
|
4
March 31, 2010 | December 31, 2009 | |||||||
|
||||||||
Inventories, net:
|
||||||||
Manufacturing supplies
|
$ | 56,187 | $ | 53,022 | ||||
Work in process and raw materials
|
298,652 | 269,075 | ||||||
Finished products
|
334,533 | 349,139 | ||||||
|
||||||||
Total Inventories, net
|
$ | 689,372 | $ | 671,236 | ||||
|
5
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
|
||||||||
Property, Plant and Equipment:
|
||||||||
Land and buildings
|
$ | 594,881 | $ | 611,670 | ||||
Machinery and equipment
|
2,825,392 | 2,786,444 | ||||||
|
||||||||
Subtotal
|
3,420,273 | 3,398,114 | ||||||
Less allowances for depreciation
|
(2,117,731 | ) | (2,062,886 | ) | ||||
|
||||||||
Property, Plant and Equipment — net
|
$ | 1,302,542 | $ | 1,335,228 | ||||
|
Beginning Balance | Acquisitions | Impairment | Other | Ending Balance | ||||||||||||||||
|
||||||||||||||||||||
Segment:
|
||||||||||||||||||||
Process Industries
|
$ | 49,505 | $ | — | $ | — | $ | (410 | ) | $ | 49,095 | |||||||||
Aerospace and Defense
|
162,588 | — | — | (286 | ) | 162,302 | ||||||||||||||
Steel
|
9,641 | — | — | — | 9,641 | |||||||||||||||
|
||||||||||||||||||||
Total
|
$ | 221,734 | $ | — | $ | — | $ | (696 | ) | $ | 221,038 | |||||||||
|
6
|
||||||||||||||||||||||||
As of March 31, 2010 | As of December 31, 2009 | |||||||||||||||||||||||
Gross | Net | Gross | Net | |||||||||||||||||||||
Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | |||||||||||||||||||
Amount | Amortization | Amount | Amount | Amortization | Amount | |||||||||||||||||||
|
||||||||||||||||||||||||
Intangible assets
subject to
amortization:
|
||||||||||||||||||||||||
Customer relationships
|
$ | 79,139 | $ | 15,390 | $ | 63,749 | $ | 79,139 | $ | 14,321 | $ | 64,818 | ||||||||||||
Engineering drawings
|
2,000 | 2,000 | — | 2,000 | 2,000 | — | ||||||||||||||||||
Know-how
|
2,099 | 938 | 1,161 | 2,110 | 917 | 1,193 | ||||||||||||||||||
Land-use rights
|
7,950 | 3,036 | 4,914 | 7,948 | 2,964 | 4,984 | ||||||||||||||||||
Patents
|
4,432 | 3,034 | 1,398 | 4,432 | 2,936 | 1,496 | ||||||||||||||||||
Technology use
|
35,000 | 4,418 | 30,582 | 35,000 | 3,944 | 31,056 | ||||||||||||||||||
Trademarks
|
6,463 | 4,998 | 1,465 | 6,597 | 5,023 | 1,574 | ||||||||||||||||||
PMA licenses
|
8,792 | 2,320 | 6,472 | 8,792 | 2,207 | 6,585 | ||||||||||||||||||
Non-compete agreements
|
2,710 | 1,377 | 1,333 | 2,710 | 1,200 | 1,510 | ||||||||||||||||||
Unpatented technology
|
7,625 | 5,519 | 2,106 | 7,625 | 5,338 | 2,287 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
$ | 156,210 | $ | 43,030 | $ | 113,180 | $ | 156,353 | $ | 40,850 | $ | 115,503 | ||||||||||||
|
||||||||||||||||||||||||
Intangible assets not
subject to
amortization:
|
||||||||||||||||||||||||
Goodwill
|
$ | 221,038 | $ | — | $ | 221,038 | $ | 221,734 | $ | — | $ | 221,734 | ||||||||||||
Tradename
|
1,400 | — | 1,400 | 1,400 | — | 1,400 | ||||||||||||||||||
Industrial license
agreements
|
962 | — | 962 | 965 | — | 965 | ||||||||||||||||||
FAA air agency
certificates
|
14,220 | — | 14,220 | 14,220 | — | 14,220 | ||||||||||||||||||
|
||||||||||||||||||||||||
|
$ | 237,620 | $ | — | $ | 237,620 | $ | 238,319 | $ | — | $ | 238,319 | ||||||||||||
|
||||||||||||||||||||||||
Total intangible assets
|
$ | 393,830 | $ | 43,030 | $ | 350,800 | $ | 394,672 | $ | 40,850 | $ | 353,822 | ||||||||||||
|
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
|
||||||||
|
||||||||
Variable-rate lines of credit for certain of the Company’s foreign subsidiaries with
various banks with interest rates ranging from 1.98% to 4.86% and 1.98% to 5.05%
at March 31, 2010 and December 31, 2009, respectively
|
$ | 29,958 | $ | 26,345 | ||||
|
||||||||
Short-term debt
|
$ | 29,958 | $ | 26,345 | ||||
|
7
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
|
||||||||
Fixed-rate Medium-Term Notes, Series A, due at various dates through
May 2028, with interest rates ranging from 6.74% to 7.76%
|
$ | 175,000 | $ | 175,000 | ||||
Fixed-rate Senior Unsecured Notes, due September 15, 2014, with an interest rate of 6.0%
|
249,697 | 249,680 | ||||||
Variable-rate State of Ohio Water Development Revenue Refunding Bonds,
maturing on November 1, 2025 (0.22% at March 31, 2010)
|
12,200 | 12,200 | ||||||
Variable-rate State of Ohio Air Quality Development Revenue Refunding Bonds,
maturing on November 1, 2025 (0.24% at March 31, 2010)
|
9,500 | 9,500 | ||||||
Variable-rate State of Ohio Pollution Control Revenue Refunding Bonds,
maturing on June 1, 2033 (0.24% at March 31, 2010)
|
17,000 | 17,000 | ||||||
Variable-rate credit facility with US Bank for Advanced Green Components, LLC,
maturing on July 17, 2010 (1.35% at March 31, 2010)
|
6,120 | 6,120 | ||||||
Variable-rate credit facility with US Bank for Advanced Green Components, LLC,
guaranteed by The Timken Company, maturing on July 17, 2010 (4.813% at March 31, 2010)
|
3,320 | 5,620 | ||||||
Other
|
13,071 | 11,202 | ||||||
|
||||||||
|
485,908 | 486,322 | ||||||
Less current maturities
|
14,679 | 17,035 | ||||||
|
||||||||
Long-term debt
|
$ | 471,229 | $ | 469,287 | ||||
|
8
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
|
||||||||
|
||||||||
Beginning balance, January 1
|
$ | 5,420 | $ | 13,515 | ||||
Expense
|
1,358 | 4,699 | ||||||
Payments
|
(783 | ) | (12,794 | ) | ||||
|
||||||||
Ending balance
|
$ | 5,995 | $ | 5,420 | ||||
|
The Timken Company Shareholders | ||||||||||||||||||||||||||||
Earnings | Accumulated | |||||||||||||||||||||||||||
Other | Invested | Other | ||||||||||||||||||||||||||
Stated | Paid-In | in the | Comprehensive | Treasury | Noncontrolling | |||||||||||||||||||||||
Total | Capital | Capital | Business | Income | Stock | Interest | ||||||||||||||||||||||
Balance at December 31, 2009
|
$ | 1,595,568 | $ | 53,064 | $ | 843,476 | $ | 1,402,855 | $ | (717,113 | ) | $ | (4,698 | ) | $ | 17,984 | ||||||||||||
|
||||||||||||||||||||||||||||
Net income
|
28,991 | 28,617 | 374 | |||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Foreign currency translation adjustment
|
(13,187 | ) | (13,187 | ) | ||||||||||||||||||||||||
Pension and postretirement liability adjustment
(income tax benefit of $8,907)
|
29,419 | 29,421 | (2 | ) | ||||||||||||||||||||||||
Unrealized loss on marketable securities
(net of income tax of $28)
|
69 | 55 | 14 | |||||||||||||||||||||||||
Change in fair value of derivative financial
instruments, net of reclassifications
|
1,533 | 1,533 | ||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
Total comprehensive income
|
46,825 | |||||||||||||||||||||||||||
Dividends — $0.09 per share
|
(8,690 | ) | (8,690 | ) | ||||||||||||||||||||||||
Tax benefit from compensation
|
69 | 69 | ||||||||||||||||||||||||||
Stock-based compensation expense
|
4,547 | 4,547 | ||||||||||||||||||||||||||
Tender of 714,590 shares to treasury
|
(17,011 | ) | 1,858 | (18,869 | ) | |||||||||||||||||||||||
Issuance of 683,457 shares from authorized
|
8,181 | 8,181 | ||||||||||||||||||||||||||
Balance at March 31, 2010
|
$ | 1,629,489 | $ | 53,064 | $ | 858,131 | $ | 1,422,782 | $ | (699,291 | ) | $ | (23,567 | ) | $ | 18,370 | ||||||||||||
9
Three Months Ended
March 31, |
||||||||
2010 | 2009 | |||||||
|
||||||||
Numerator:
|
||||||||
Income from continuing operations attributable
to The Timken Company
|
$ | 28,281 | $ | 4,513 | ||||
Less: distributed and undistributed earnings
allocated to nonvested stock
|
115 | 31 | ||||||
|
||||||||
Income from continuing operations available
to common shareholders for basic earnings per
share and diluted earnings per share
|
$ | 28,166 | $ | 4,482 | ||||
|
||||||||
|
||||||||
Denominator:
|
||||||||
Weighted average number of shares outstanding — basic
|
96,360,137 | 96,028,860 | ||||||
Effect of dilutive options
|
340,119 | — | ||||||
|
||||||||
Weighted average number of shares outstanding,
assuming dilution of stock options
|
96,700,256 | 96,028,860 | ||||||
|
||||||||
Basic earnings per share from continuing operations
|
$ | 0.29 | $ | 0.05 | ||||
|
||||||||
Diluted earnings per share from continuing operations
|
$ | 0.29 | $ | 0.05 | ||||
|
10
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
|
||||||||
Net sales to external customers:
|
||||||||
Mobile Industries
|
$ | 367,489 | $ | 300,623 | ||||
Process Industries
|
205,901 | 224,174 | ||||||
Aerospace and Defense
|
92,093 | 109,254 | ||||||
Steel
|
248,207 | 232,565 | ||||||
|
||||||||
|
$ | 913,690 | $ | 866,616 | ||||
|
||||||||
Intersegment sales:
|
||||||||
Process Industries
|
$ | 669 | $ | 922 | ||||
Steel
|
22,120 | 16,003 | ||||||
|
||||||||
|
$ | 22,789 | $ | 16,925 | ||||
|
||||||||
Segment EBIT, as adjusted:
|
||||||||
Mobile Industries
|
$ | 42,454 | $ | (2,345 | ) | |||
Process Industries
|
26,939 | 43,492 | ||||||
Aerospace and Defense
|
12,801 | 18,108 | ||||||
Steel
|
19,902 | (7,262 | ) | |||||
|
||||||||
Total EBIT, as adjusted, for reportable segments
|
$ | 102,096 | $ | 51,993 | ||||
|
||||||||
Unallocated corporate expenses
|
(13,779 | ) | (12,317 | ) | ||||
Impairment and restructuring
|
(5,525 | ) | (13,755 | ) | ||||
Rationalization and integration charges
|
(1,475 | ) | (1,465 | ) | ||||
Other
|
(205 | ) | 1,222 | |||||
Interest expense
|
(9,558 | ) | (8,429 | ) | ||||
Interest income
|
559 | 366 | ||||||
Intersegment adjustments
|
2,396 | (257 | ) | |||||
|
||||||||
Income from continuing operations before income taxes
|
$ | 74,509 | $ | 17,358 | ||||
|
11
Mobile | Process | Aerospace & | ||||||||||||||||||||||
Industries | Industries | Defense | Steel | Corporate | Total | |||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Impairment charges
|
$ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Severance expense and related benefit costs
|
2,253 | 1,527 | 630 | 19 | 570 | 4,999 | ||||||||||||||||||
Exit costs
|
394 | 30 | 102 | — | — | 526 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total
|
$ | 2,647 | $ | 1,557 | $ | 732 | $ | 19 | $ | 570 | $ | 5,525 | ||||||||||||
|
Mobile | Process | Aerospace & | ||||||||||||||||||||||
Industries | Industries | Defense | Steel | Corporate | Total | |||||||||||||||||||
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
Impairment charges
|
$ | 769 | $ | 3,026 | $ | — | $ | — | $ | — | $ | 3,795 | ||||||||||||
Severance expense and related benefit costs
|
6,738 | 959 | 54 | 446 | 1,200 | 9,397 | ||||||||||||||||||
Exit costs
|
— | 562 | — | 1 | — | 563 | ||||||||||||||||||
|
||||||||||||||||||||||||
Total
|
$ | 7,507 | $ | 4,547 | $ | 54 | $ | 447 | $ | 1,200 | $ | 13,755 | ||||||||||||
|
12
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
|
||||||||
|
||||||||
Beginning balance, January 1
|
$ | 33,967 | $ | 17,021 | ||||
Expense
|
5,525 | 55,598 | ||||||
Payments
|
(14,469 | ) | (38,652 | ) | ||||
|
||||||||
Ending balance
|
$ | 25,023 | $ | 33,967 | ||||
|
Pension | Postretirement | |||||||||||||||
Three Months Ended | Three Months Ended | |||||||||||||||
March 31, | March 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
|
||||||||||||||||
Components of net periodic benefit cost
|
||||||||||||||||
Service cost
|
$ | 9,525 | $ | 8,622 | $ | 679 | $ | 789 | ||||||||
Interest cost
|
39,749 | 39,409 | 9,144 | 10,599 | ||||||||||||
Expected return on plan assets
|
(49,290 | ) | (47,328 | ) | — | — | ||||||||||
Amortization of prior service cost (credit)
|
2,267 | 2,861 | (385 | ) | (544 | ) | ||||||||||
Amortization of net actuarial loss
|
12,204 | 9,444 | 1,312 | 1,256 | ||||||||||||
Pension curtailments and settlements
|
— | 1,850 | — | — | ||||||||||||
Amortization of transition asset
|
(1 | ) | (20 | ) | — | — | ||||||||||
|
||||||||||||||||
Net periodic benefit cost
|
$ | 14,454 | $ | 14,838 | $ | 10,750 | $ | 12,100 | ||||||||
|
13
Three Months Ended | ||||||||
March 31, | ||||||||
2010 | 2009 | |||||||
|
||||||||
|
||||||||
Provision for income taxes
|
$ | 45,854 | $ | 18,793 | ||||
Effective tax rate
|
61.5 | % | 108.3 | % | ||||
|
14
Three Months Ended
March 31, |
||||||||
2010 | 2009 | |||||||
|
||||||||
|
||||||||
Net sales
|
$ | — | $ | 93,762 | ||||
Cost of goods sold
|
— | 96,250 | ||||||
|
||||||||
Gross profit
|
— | (2,488 | ) | |||||
Selling, administrative and general expenses
|
— | 15,584 | ||||||
Impairment and restructuring charges
|
— | 989 | ||||||
Interest expense, net
|
— | 21 | ||||||
Other (expense) income, net
|
— | (505 | ) | |||||
|
||||||||
(Loss) before income taxes on operations
|
— | (19,587 | ) | |||||
Income tax benefit on operations
|
— | 15,944 | ||||||
Gain on divestiture
|
777 | — | ||||||
Income tax expense on disposal
|
(441 | ) | — | |||||
|
||||||||
Income (loss) from discontinued operations
|
$ | 336 | $ | (3,643 | ) | |||
|
15
Level 1 — | Unadjusted quoted prices in active markets for identical assets or liabilities. | ||
Level 2 — | Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability. | ||
Level 3 — | Unobservable inputs for the asset or liability. |
Fair Value at March 31, 2010 | ||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | |||||||||||||
|
||||||||||||||||
Assets:
|
||||||||||||||||
Available-for-sale securities
|
$ | 7,286 | $ | 7,286 | $ | — | $ | — | ||||||||
Foreign currency hedges
|
4,490 | — | 4,490 | — | ||||||||||||
|
||||||||||||||||
Total Assets
|
$ | 11,776 | $ | 7,286 | $ | 4,490 | $ | — | ||||||||
|
||||||||||||||||
Liabilities:
|
||||||||||||||||
Foreign currency hedges
|
$ | 7,710 | $ | — | $ | 7,710 | $ | — | ||||||||
|
||||||||||||||||
Total Liabilities
|
$ | 7,710 | $ | — | $ | 7,710 | $ | — | ||||||||
|
16
Asset Derivatives | Liability Derivatives | |||||||||||||||||
Balance Sheet | Fair Value | Fair Value | Fair Value | Fair Value | ||||||||||||||
Location | at 3/31/10 | at 12/31/09 | at 3/31/10 | at 12/31/09 | ||||||||||||||
|
||||||||||||||||||
Derivatives
designated as
hedging
instruments
|
||||||||||||||||||
Foreign currency
forward contracts
|
Other non-current liabilities | $ | 1,922 | $ | 675 | $ | 761 | $ | 1,849 | |||||||||
Total derivatives
designated as
hedging instruments
|
$ | 1,922 | $ | 675 | $ | 761 | $ | 1,849 | ||||||||||
|
||||||||||||||||||
Derivatives not
designated as
hedging instruments
|
||||||||||||||||||
Foreign currency
forward contracts
|
Other non-current assets/liabilities | $ | 2,568 | $ | 1,976 | $ | 6,949 | $ | 4,004 | |||||||||
|
||||||||||||||||||
Total derivatives
|
$ | 4,490 | $ | 2,651 | $ | 7,710 | $ | 5,853 | ||||||||||
17
Amount of gain or (loss) | ||||||||||
Location of gain or | recognized in income | |||||||||
Derivatives in fair value | (loss) recognized in | on derivative | ||||||||
hedging relationships | income on derivative | March 31, 2010 | March 31, 2009 | |||||||
|
||||||||||
Interest rate swaps
|
Interest expense | $ | — | $ | (706 | ) | ||||
Natural gas forward contracts
|
Other (expense) income, net | — | (1,326 | ) | ||||||
Total
|
$ | — | $ | (2,032 | ) | |||||
Amount of gain or (loss) | ||||||||||
Hedged items in | Location of gain or | recognized in income | ||||||||
fair value hedging | (loss) recognized in | on derivative | ||||||||
relationships | income on derivative | March 31, 2010 | March 31, 2009 | |||||||
|
||||||||||
Fixed-rate debt
|
Interest expense | $ | — | $ | 706 | |||||
Natural gas
|
Other (expense) income, net | — | 1,106 | |||||||
Total
|
$ | — | $ | 1,812 | ||||||
Amount of gain or | ||||||||||||||||
Amount of gain or (loss) | (loss) reclassified from | |||||||||||||||
recognized in OCI on | AOCI into income | |||||||||||||||
derivative | (effective portion) | |||||||||||||||
March 31, | March 31, | |||||||||||||||
Derivatives in cash flow hedging relationships | 2010 | 2009 | 2010 | 2009 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Foreign currency forward contracts
|
$ | 1,554 | $ | (299 | ) | $ | 880 | $ | 806 | |||||||
|
||||||||||||||||
Total
|
$ | 1,554 | $ | (299 | ) | $ | 880 | $ | 806 | |||||||
|
Amount of gain or (loss) | ||||||||||
recognized in income on | ||||||||||
Derivatives not | Location of gain or | derivative | ||||||||
designated as | (loss) recognized in | March 31, | ||||||||
hedging instruments | income on derivative | 2010 | 2009 | |||||||
|
||||||||||
Foreign currency forward contracts
|
Cost of sales | $ | (28 | ) | $ | (88 | ) | |||
Foreign currency forward contracts
|
Other (expense) income, net | (2,324 | ) | 1,394 | ||||||
Total
|
$ | (2,352 | ) | $ | 1,306 | |||||
18
19
Overview: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions, except earnings per share)
|
||||||||||||||||
Net sales
|
$ | 913.7 | $ | 866.6 | $ | 47.1 | 5.4 | % | ||||||||
Income (loss) from continuing operations
|
28.7 | (1.4 | ) | 30.1 | NM | |||||||||||
Income (loss) from discontinued operations
|
0.3 | (3.6 | ) | 3.9 | 108.3 | % | ||||||||||
Income (loss) attributable to noncontrolling interest
|
0.4 | (5.9 | ) | 6.3 | 106.8 | % | ||||||||||
Net income attributable to The Timken Company
|
28.6 | 0.9 | 27.7 | NM | ||||||||||||
Diluted earnings (loss) per share:
|
||||||||||||||||
Continuing operations
|
$ | 0.29 | $ | 0.05 | $ | 0.24 | NM | |||||||||
Discontinued operations
|
0.01 | (0.04 | ) | 0.05 | 125.0 | % | ||||||||||
Diluted earnings per share
|
$ | 0.30 | $ | 0.01 | $ | 0.29 | NM | |||||||||
Average number of shares — diluted
|
96,700,256 | 96,028,860 | — | 0.7 | % | |||||||||||
20
Sales by Segment: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions, and exclude intersegment sales)
|
||||||||||||||||
Mobile Industries
|
$ | 367.5 | $ | 300.6 | $ | 66.9 | 22.3 | % | ||||||||
Process Industries
|
205.9 | 224.2 | (18.3 | ) | (8.2 | )% | ||||||||||
Aerospace and Defense
|
92.1 | 109.3 | (17.2 | ) | (15.7 | )% | ||||||||||
Steel
|
248.2 | 232.5 | 15.7 | 6.8 | % | |||||||||||
Total Company
|
$ | 913.7 | $ | 866.6 | $ | 47.1 | 5.4 | % | ||||||||
Gross Profit: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Gross profit
|
$ | 222.7 | $ | 154.6 | $ | 68.1 | 44.0 | % | ||||||||
Gross profit % to net sales
|
24.4 | % | 17.8 | % | — | 660 | bps | |||||||||
Rationalization expenses included in cost of products sold
|
$ | 1.2 | $ | 1.2 | $ | — | 0.0 | % | ||||||||
Selling, Administrative and General Expenses: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Selling, administrative and general expenses
|
$ | 133.1 | $ | 123.4 | $ | 9.7 | 7.9 | % | ||||||||
Selling, administrative and general expenses % to net sales
|
14.6 | % | 14.2 | % | — | 40 | bps | |||||||||
Rationalization expenses included in selling,
administrative and general expenses
|
$ | 0.2 | $ | 0.3 | $ | (0.1 | ) | (33.3 | )% | |||||||
21
Impairment and Restructuring Charges: | ||||||||||||
1Q 2010 | 1Q 2009 | $ Change | ||||||||||
(Dollars in millions)
|
||||||||||||
Impairment charges
|
$ | — | $ | 3.8 | $ | (3.8 | ) | |||||
Severance and related benefit costs
|
5.0 | 9.4 | (4.4 | ) | ||||||||
Exit costs
|
0.5 | 0.6 | (0.1 | ) | ||||||||
Total
|
$ | 5.5 | $ | 13.8 | $ | (8.3 | ) | |||||
22
Rollforward of Restructuring Accruals: | ||||||||
March 31, 2010 | Dec. 31, 2009 | |||||||
(Dollars in millions)
|
||||||||
Beginning balance, January 1
|
$ | 34.0 | $ | 17.0 | ||||
Expense
|
5.5 | 55.6 | ||||||
Payments
|
(14.3 | ) | (38.6 | ) | ||||
Ending balance
|
$ | 25.2 | $ | 34.0 | ||||
Interest Expense and Income: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Interest expense
|
$ | 9.6 | $ | 8.5 | $ | 1.1 | 12.9 | % | ||||||||
Interest income
|
$ | 0.6 | $ | 0.4 | $ | 0.2 | 50.0 | % | ||||||||
Other Income and Expense: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Other (expense) income, net:
|
||||||||||||||||
(Loss) gain on divestitures of non-strategic assets
|
$ | (0.3 | ) | $ | 1.2 | $ | (1.5 | ) | (125.0 | )% | ||||||
Other (expense) income
|
(0.3 | ) | 6.8 | (7.1 | ) | (104.4 | )% | |||||||||
Other (expense) income, net
|
$ | (0.6 | ) | $ | 8.0 | $ | (8.6 | ) | (107.5 | )% | ||||||
23
Income Tax Expense: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Income Tax Expense:
|
$ | 45.9 | $ | 18.8 | $ | 27.1 | 144.1 | % | ||||||||
Effective tax rate
|
61.5 | % | 108.3 | % | — | (4,680 | ) bps | |||||||||
Discontinued Operations: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Operating results, net of tax
|
$ | — | $ | (3.6 | ) | $ | 3.6 | 100.0 | % | |||||||
Gain on disposal, net of tax
|
0.3 | — | 0.3 | NM | ||||||||||||
Income (loss) from discontinued operations, net of income taxes
|
$ | 0.3 | $ | (3.6 | ) | $ | 3.9 | 108.3 | % | |||||||
Net Income (Loss) Attributable to Noncontrolling Interest: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net income (loss) attributable to noncontrolling interest
|
$ | 0.4 | $ | (5.9 | ) | $ | 6.3 | 106.8 | % | |||||||
24
Mobile Industries Segment: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales, including intersegment sales
|
$ | 367.5 | $ | 300.6 | $ | 66.9 | 22.3 | % | ||||||||
Adjusted EBIT
|
$ | 42.5 | $ | (2.3 | ) | $ | 44.8 | NM | ||||||||
Adjusted EBIT margin
|
11.6 | % | (0.8 | )% | — | 1,240 | bps | |||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales, including intersegment sales
|
$ | 367.5 | $ | 300.6 | $ | 66.9 | 22.3 | % | ||||||||
Currency
|
11.7 | — | 11.7 | NM | ||||||||||||
Net sales, excluding the impact of currency
|
$ | 355.8 | $ | 300.6 | $ | 55.2 | 18.4 | % | ||||||||
25
Process Industries Segment: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales, including intersegment sales
|
$ | 206.6 | $ | 225.1 | $ | (18.5 | ) | (8.2 | )% | |||||||
Adjusted EBIT
|
$ | 26.9 | $ | 43.5 | $ | (16.6 | ) | (38.2 | )% | |||||||
Adjusted EBIT margin
|
13.0 | % | 19.3 | % | — | (630 | ) bps | |||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales, including intersegment sales
|
$ | 206.6 | $ | 225.1 | $ | (18.5 | ) | (8.2 | )% | |||||||
Currency
|
8.5 | — | 8.5 | NM | ||||||||||||
Net sales, excluding the impact of currency
|
$ | 198.1 | $ | 225.1 | $ | (27.0 | ) | (12.0 | )% | |||||||
Aerospace and Defense Segment: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales, including intersegment sales
|
$ | 92.1 | $ | 109.3 | $ | (17.2 | ) | (15.7 | )% | |||||||
Adjusted EBIT
|
$ | 12.8 | $ | 18.1 | $ | (5.3 | ) | (29.3 | )% | |||||||
Adjusted EBIT margin
|
13.9 | % | 16.6 | % | — | (270 | ) bps | |||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales, including intersegment sales
|
$ | 92.1 | $ | 109.3 | $ | (17.2 | ) | (15.7 | )% | |||||||
Currency
|
0.7 | — | 0.7 | NM | ||||||||||||
Net sales, excluding the impact of currency
|
$ | 91.4 | $ | 109.3 | $ | (17.9 | ) | (16.4 | )% | |||||||
26
Steel Segment: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales, including intersegment sales
|
$ | 270.3 | $ | 248.6 | $ | 21.7 | 8.7 | % | ||||||||
Adjusted EBIT
|
$ | 19.9 | $ | (7.3 | ) | $ | 27.2 | NM | ||||||||
Adjusted EBIT margin
|
7.4 | % | (2.9 | )% | — | 1,030 | bps | |||||||||
1Q 2010 | 1Q 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Net sales, including intersegment sales
|
$ | 270.3 | $ | 248.6 | $ | 21.7 | 8.7 | % | ||||||||
Currency
|
0.4 | — | 0.4 | NM | ||||||||||||
Net sales, excluding the impact of currency
|
$ | 269.9 | $ | 248.6 | $ | 21.3 | 8.6 | % | ||||||||
Corporate: | ||||||||||||||||
1Q 2010 | 1Q 2009 | $ Change | Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Corporate expenses
|
$ | 13.8 | $ | 12.3 | $ | 1.5 | 12.2 | % | ||||||||
Corporate expenses % to net sales
|
1.5 | % | 1.4 | % | — | 10 | bps | |||||||||
27
Current Assets: | ||||||||||||||||
March 31, | Dec. 31 | |||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Cash and cash equivalents
|
$ | 709.3 | $ | 755.5 | $ | (46.2 | ) | (6.1 | )% | |||||||
Accounts receivable, net
|
489.1 | 411.2 | 77.9 | 18.9 | % | |||||||||||
Inventories, net
|
689.4 | 671.2 | 18.2 | 2.7 | % | |||||||||||
Deferred income taxes
|
60.9 | 61.5 | (0.6 | ) | (1.0 | )% | ||||||||||
Deferred charges and prepaid expenses
|
11.6 | 11.8 | (0.2 | ) | (1.7 | )% | ||||||||||
Other current assets
|
98.7 | 111.3 | (12.6 | ) | (11.3 | )% | ||||||||||
Total current assets
|
$ | 2,059.0 | $ | 2,022.5 | $ | 36.5 | 1.8 | % | ||||||||
Property, Plant and Equipment – Net: | ||||||||||||||||
March 31, | Dec. 31, | |||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Property, plant and equipment
|
$ | 3,420.2 | $ | 3,398.1 | $ | 22.1 | 0.7 | % | ||||||||
Less: allowances for depreciation
|
(2,117.7 | ) | (2,062.9 | ) | (54.8 | ) | (2.7 | )% | ||||||||
Property, plant and equipment — net
|
$ | 1,302.5 | $ | 1,335.2 | $ | (32.7 | ) | (2.4 | )% | |||||||
Other Assets: | ||||||||||||||||
March 31, | Dec. 31, | |||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Goodwill
|
$ | 221.0 | $ | 221.7 | $ | (0.7 | ) | (0.3 | )% | |||||||
Other intangible assets
|
129.8 | 132.1 | (2.3 | ) | (1.7 | )% | ||||||||||
Deferred income taxes
|
236.2 | 248.6 | (12.4 | ) | (5.0 | )% | ||||||||||
Other non-current assets
|
39.6 | 46.8 | (7.2 | ) | (15.4 | )% | ||||||||||
Total other assets
|
$ | 626.6 | $ | 649.2 | $ | (22.6 | ) | (3.5 | )% | |||||||
28
Current Liabilities: | ||||||||||||||||
March 31, | Dec. 31, | |||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Short-term debt
|
$ | 30.0 | $ | 26.3 | $ | 3.7 | 14.1 | % | ||||||||
Accounts payable
|
221.9 | 156.0 | 65.9 | 42.2 | % | |||||||||||
Salaries, wages and benefits
|
161.5 | 142.5 | 19.0 | 13.3 | % | |||||||||||
Deferred income taxes
|
9.2 | 9.2 | — | 0.0 | % | |||||||||||
Other current liabilities
|
163.7 | 189.3 | (25.6 | ) | (13.5 | )% | ||||||||||
Current portion of long-term debt
|
14.7 | 17.1 | (2.4 | ) | (14.0 | )% | ||||||||||
Total current liabilities
|
$ | 601.0 | $ | 540.4 | $ | 60.6 | 11.2 | % | ||||||||
Non-Current Liabilities: | ||||||||||||||||
March 31, | Dec. 31, | |||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Long-term debt
|
$ | 471.2 | $ | 469.3 | $ | 1.9 | 0.4 | % | ||||||||
Accrued pension cost
|
579.4 | 690.9 | (111.5 | ) | (16.1 | )% | ||||||||||
Accrued postretirement benefits cost
|
601.4 | 604.2 | (2.8 | ) | (0.5 | )% | ||||||||||
Deferred income taxes
|
6.6 | 6.1 | 0.5 | 8.2 | % | |||||||||||
Other non-current liabilities
|
99.0 | 100.4 | (1.4 | ) | (1.4 | )% | ||||||||||
Total non-current liabilities
|
$ | 1,757.6 | $ | 1,870.9 | $ | (113.3 | ) | (6.1 | )% | |||||||
Shareholders’ Equity: | ||||||||||||||||
March 31, | Dec. 31, | |||||||||||||||
2010 | 2009 | $ Change | % Change | |||||||||||||
(Dollars in millions)
|
||||||||||||||||
Common stock
|
$ | 911.1 | $ | 896.5 | $ | 14.6 | 1.6 | % | ||||||||
Earnings invested in the business
|
1,422.8 | 1,402.9 | 19.9 | 1.4 | % | |||||||||||
Accumulated other comprehensive loss
|
(699.3 | ) | (717.1 | ) | 17.8 | 2.5 | % | |||||||||
Treasury shares
|
(23.5 | ) | (4.7 | ) | (18.8 | ) | NM | |||||||||
Noncontrolling interest
|
18.4 | 18.0 | 0.4 | 2.2 | % | |||||||||||
Total shareholders’ equity
|
$ | 1,629.5 | $ | 1,595.6 | $ | 33.9 | 2.1 | % | ||||||||
29
Cash Flows: | ||||||||||||
March 31, | March 31, | |||||||||||
2010 | 2009 | $ Change | ||||||||||
(Dollars in millions)
|
||||||||||||
Net cash (used) provided by operating activities
|
$ | (13.8 | ) | $ | 33.1 | $ | (46.9 | ) | ||||
Net cash used by investing activities
|
(15.1 | ) | (29.6 | ) | 14.5 | |||||||
Net cash used by financing activities
|
(10.7 | ) | (9.7 | ) | (1.0 | ) | ||||||
Effect of exchange rate changes on cash
|
(6.6 | ) | (3.1 | ) | (3.5 | ) | ||||||
Decrease in cash and cash equivalents
|
$ | (46.2 | ) | $ | (9.3 | ) | $ | (36.9 | ) | |||
30
Net Debt: | ||||||||
March 31, | Dec. 31, | |||||||
2010 | 2009 | |||||||
(Dollars in millions)
|
||||||||
Short-term debt
|
$ | 30.0 | $ | 26.3 | ||||
Current portion of long-term debt
|
14.7 | 17.1 | ||||||
Long-term debt
|
471.2 | 469.3 | ||||||
Total debt
|
515.9 | 512.7 | ||||||
Less: cash and cash equivalents
|
(709.3 | ) | (755.5 | ) | ||||
Net (cash) debt
|
$ | (193.4 | ) | $ | (242.8 | ) | ||
Ratio of Net Debt to Capital: | ||||||||
March 31, | Dec. 31, | |||||||
2010 | 2009 | |||||||
(Dollars in millions)
|
||||||||
Net (cash) debt
|
$ | (193.4 | ) | $ | (242.8 | ) | ||
Shareholders’ equity
|
1,629.5 | 1,595.6 | ||||||
Net (cash) debt + shareholders’ equity (capital)
|
$ | 1,436.1 | $ | 1,352.8 | ||||
Ratio of net (cash) debt to capital
|
(13.5 | )% | (17.9 | )% | ||||
31
32
33
a) | continued weakness in world economic conditions, including additional adverse effects from the global economic slowdown, terrorism or hostilities. This includes, but is not limited to, political risks associated with the potential instability of governments and legal systems in countries in which the Company or its customers conduct business, and changes in currency valuations; | |
b) | the effects of fluctuations in customer demand on sales, product mix and prices in the industries in which the Company operates. This includes the ability of the Company to respond to the rapid changes in customer demand, the effects of customer bankruptcies or liquidations, the impact of changes in industrial business cycles and whether conditions of fair trade continue in the U.S. markets; | |
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 and manufacturing capacity; higher cost and availability of raw materials and energy; the Company’s ability to mitigate the impact of fluctuations in raw materials and energy costs and the operation of the Company’s surcharge mechanism; changes in the expected costs associated with product warranty claims; changes resulting from inventory management and cost reduction initiatives and different levels of customer demands; the effects of unplanned work stoppages; and changes in the cost of labor and benefits; | |
e) | the success of the Company’s operating plans, including its ability to achieve the benefits from its ongoing continuous improvement and rationalization programs; the ability of acquired 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 intellectual property, product liability or warranty, environmental issues, and taxes; | |
g) | changes in worldwide financial markets, including availability of financing and interest rates to the extent they affect the Company’s ability to raise capital or increase the Company’s cost of funds, including the ability to refinance its unsecured notes, have an impact on the overall performance of the Company’s pension fund investments and/or cause changes in the global economy and financial markets which affect customer demand and the ability of customers to obtain financing to purchase the Company’s products or equipment which contains the Company’s products; and | |
h) | those items identified under Item 1A. Risk Factors in this document and in the Annual Report on Form 10-K for the year ended December 31, 2009. |
34
(a) | Disclosure Controls and Procedures | ||
As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)). Based upon that evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report. | |||
(b) | Changes in Internal Control Over Financial Reporting | ||
During the Company’s most recent fiscal quarter, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. |
35
• | the loss of key associates or customers; | ||
• | the failure to maintain the quality of customer service that we have historically provided; | ||
• | the need to coordinate geographically diverse organizations; and | ||
• | the resulting diversion of management’s attention from our day-to-day business and the need to dedicate additional management personnel to address obstacles to the implementation of Project O.N.E. |
36
Total number | Maximum | |||||||||||||||
of shares | number of | |||||||||||||||
purchased as | shares that | |||||||||||||||
part of publicly | may yet | |||||||||||||||
Total number | Average | announced | be purchased | |||||||||||||
of shares | price paid | plans or | under the plans | |||||||||||||
Period | purchased (1) | per share (2) | programs | or programs (3) | ||||||||||||
1/1/10 - 1/31/10
|
10,539 | $ | 24.09 | — | 4,000,000 | |||||||||||
2/1/10 - 2/28/10
|
91,639 | 23.62 | — | 4,000,000 | ||||||||||||
3/1/10 - 3/31/10
|
504,724 | 27.97 | 500,000 | 3,500,000 | ||||||||||||
Total
|
606,902 | $ | 27.25 | 500,000 | 3,500,000 | |||||||||||
(1) | With respect to the shares purchased in January and February and 4,724 shares purchased in March, amounts present shares of the Company’s common stock that are owned and tendered by employees to exercise stock options, and to satisfy withholding obligations in connection with the exercise of stock options and vesting of restricted shares. | |
(2) | For shares tendered in connection with the vesting of restricted shares, the average price paid per share is an average calculated using the daily high and low of the Company’s common stock as quoted on the New York Stock Exchange at the time of vesting. For shares tendered in connection with the exercise of stock options, the price paid is the real time trading stock price at the time the options are exercised. | |
(3) | Pursuant to the Company’s 2006 common stock purchase plan, the Company may purchase up to four million shares of common stock at an amount not to exceed $180 million in the aggregate. The Company may purchase shares under its 2006 common stock purchase plan until December 31, 2012. The Company may purchase shares from time to time in open market purchases or privately negotiated transactions. The Company may make all or part of the purchases pursuant to accelerated share repurchases or Rule 1065-1 plans. |
10.1 | Form of Performance Unit Agreement was filed on March 30, 2010 with Form 8-K (Commission File No. 1-1169) and incorporated herein by reference. | ||
12 | Computation of Ratio of Earnings to Fixed Charges | ||
31.1 | Certification of James W. Griffith, President and Chief Executive Officer (principal executive officer) of The Timken Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31.2 | Certification of Glenn A. Eisenberg, Executive Vice President – Finance and Administration (principal financial officer) of The Timken Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32 | Certifications of James W. Griffith, President and Chief Executive Officer (principal executive officer) and Glenn A. Eisenberg, Executive Vice President – Finance and Administration (principal financial officer) of The Timken Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
37
THE TIMKEN COMPANY
|
||||
Date May 5, 2010 | By | /s/ James W. Griffith | ||
James W. Griffith | ||||
President, Chief Executive Officer and
Director (Principal Executive Officer) |
||||
Date May 5, 2010 | By | /s/ Glenn A. Eisenberg | ||
Glenn A. Eisenberg | ||||
Executive Vice President — Finance
and
Administration (Principal Financial Officer) |
||||
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
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DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
No Customers Found
Suppliers
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
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